2014

Tucows Reports Financial Results for the Fourth Quarter of 2013

- Ting Continues Strong Momentum in Customer Growth -

TORONTO, Feb. 12, 2014 /PRNewswire/ - Tucows Inc. (NASDAQ: TCX, TSX:TC), a global provider of domain names and other Internet services, today reported its financial results for the fourth quarter ended December 31, 2013. All figures are in U.S. dollars.

Summary Financial Results
(In Thousands of US Dollars, Except Per Share Data)

   3 Months Ended 
Dec. 31, 2013
(unaudited)
 3 Months Ended 
Dec. 31, 2012
(unaudited)
 12 Months Ended 
Dec. 31, 2013
(unaudited)
 12 Months Ended 
Dec. 31, 2012
(unaudited)
Net revenue 33,139 29,791 129,935 114,727
Income before provision for income taxes and
change in fair value of forward exchange contracts 
1,532 789 6,476 5,745
Net income 923 429 4,180 4,424
Net earnings per common share(1) $0.08 $0.04 $0.40 $0.39
Net cash provided by operating activities 1,651 2,022 8,703 6,343
  1. Net earnings per common share reflects the 1-for-4 reverse split of common shares that became effective December 31, 2013.  As a result of the reverse split, 10,900,842 shares and 11,064,045 shares were used in computing net earnings per common share for the 3 months ended December 31, 2013 and 2012, respectively, and 10,468,250 shares and 11,458,216 shares were used in computing net earnings per common share for the 12 months ended December 31, 2013 and 2012, respectively.

Summary of Revenues and Cost of Revenues
(In Thousands of US Dollars)

  Revenue Revenue  Cost of Revenue   Cost of Revenue 
   3 Months Ended 
Dec. 31, 2013
(unaudited)
 3 Months Ended 
Dec. 31, 2012
(unaudited)
3 Months Ended
Dec. 31, 2013
(unaudited)
3 Months Ended
Dec. 31, 2012
(unaudited)
Wholesale        
 Domain Services 21,595 22,391 17,949 18,893
 Value-Added Services 2,417 2,705 548 456
Total Wholesale 24,012 25,096 18,497 19,349
         
Retail 8,027 3,628 4,966 2,454
Portfolio 1,100 1,067 143 201
         
Network, other costs - - 1,120 1,296
Network, depreciation and amortization costs  - - 175 187
Total revenue/cost of revenue 33,139 29,791 24,901 23,487

"Our financial results for the fourth quarter once again underscore not only the consistency and reliability in our business but also our continued ability to generate sustainable growth," said Elliot Noss, President and Chief Executive Officer, Tucows Inc. "In the domains component of our business, we continue to see solid performance from both our Wholesale and Portfolio services, while our retail channel, Hover, delivered another quarter of 20%-plus year-over-year top-line growth."

"For the seventh straight quarter, Ting set new records for net adds, adding more than 12,000 accounts and 18,000 devices. We ended the year with over 48,000 accounts and 74,000 devices and, in January, surpassed the 50,000 accounts and 80,000 devices milestone. Ting continues to be on track to positively contribute to EBITDA for 2014, although our priority will continue to be aggressive investment in customer acquisition and customer satisfaction to ultimately drive even greater long-term value for shareholders."

Net revenue for the fourth quarter of 2013 increased 11% to $33.1 million from $29.8 million for the fourth quarter of 2012.

Net income for the fourth quarter of 2013 was $0.9 million, or $0.08 per share (based on the number of shares post-reverse split), compared with $0.4 million, or $0.04 per share (based on the number of shares post-reverse split), for the fourth quarter of 2012.  Net income for the fourth quarter of 2013 included a loss on foreign exchange contracts of $0.3 million compared with a loss on foreign exchange contracts of $0.1 million in the fourth quarter of 2012.  Net income for the fourth quarter of 2013 also included the incremental investment of approximately $1.3 million for the acquisition and support of Ting customers as compared to the fourth quarter of 2012.

Deferred revenue at the end of the fourth quarter of 2013 was $70.0 million, a decrease of 1% from $71.0 million at the end of the fourth quarter of 2012 and a decrease of 3% from $72.0 million at the end of the third quarter of 2013.

Cash and cash equivalents at the end of the fourth quarter of 2013 were $12.4 million compared with $11.5 million at the end of the third quarter of 2013 and $6.4 million at the end of the fourth quarter of 2012.  The increase in cash and cash equivalents of $0.9 million when compared to the third quarter of 2013 resulted from the generation of $1.7 million in cash flow from operations, which was partially offset by the use of $0.6 million for principal repayments under the Company's credit facility and investment of $0.2 million in equipment purchases.

Conference Call

Tucows management will host a conference call today, Wednesday, February 12, 2014 at 5:00 p.m. (ET) to discuss the Company's fourth quarter 2013 results. Participants can access the conference call via the Internet at www.tucowsinc.com/investors.

For those unable to participate in the conference call at the scheduled time, it will be archived for replay both by telephone and via the Internet beginning approximately one hour following completion of the call. To access the archived conference call by telephone, dial 416-849-0833 or 1-855-859-2056 and enter the pass code 46588159 followed by the pound key.  The telephone replay will be available until Wednesday, February 19, 2014 at midnight. To access the archived conference call as an MP3 via the Internet, go to http://tucowsinc.com/investors.

About Tucows

Tucows is a global Internet services company. OpenSRS (http://opensrs.com) manages over fourteen million domain names and millions of value-added services through a reseller network of over 13,000 web hosts and ISPs. Hover (http://hover.com) is the easiest way for individuals and small businesses to manage their domain names and email addresses. Ting (https://ting.com) is a mobile phone service provider dedicated to bringing clarity and control to US mobile phone users. YummyNames (http://yummynames.com) owns and operates premium domain names that generate revenue through advertising or resale. More information can be found on Tucows' corporate website (http://tucows.com).

  Tucows  Inc.      
  Consolidated Balance Sheets      
  (Dollar amounts in U.S. dollars)      
           
    December 31,   December 31,
    2013   2012
    (unaudited)   (unaudited)
             
Assets            
             
Current assets:            
  Cash and cash equivalents   $   12,418,888   $ 6,415,679
  Accounts receivable     5,305,403     4,413,265
  Inventory     309,686     587,104
  Prepaid expenses and deposits     4,309,039     5,081,408
  Derivative instrument asset, current portion     -     412,944
  Prepaid domain name registry and ancillary services fees, current portion     44,209,591     45,170,167
  Deferred tax asset, current portion     1,081,526     -
  Income taxes recoverable     475,889     1,730,631
    Total current assets     68,110,022     63,811,198
             
Derivative instrument asset, long-term portion     -     31,838
Prepaid domain name registry and ancillary services fees, long-term portion     11,838,579     12,318,723
Property and equipment     1,757,836     1,352,144
Deferred tax asset, long-term portion     5,370,037     5,970,462
Intangible assets     15,403,228     16,415,651
Goodwill     18,873,127     18,873,127
    Total assets   $  121,352,829   $ 118,773,143
             
             
Liabilities and Stockholders' Equity            
             
Current liabilities:            
  Accounts payable   $ 2,361,481   $ 1,928,459
  Accrued liabilities     3,913,034     2,522,229
  Customer deposits     4,500,946     4,955,671
  Derivative instrument liability, current portion     491,098     -
  Loan payable, current portion     6,300,000     3,700,000
  Deferred revenue, current portion     54,379,719     54,997,887
  Accreditation fees payable, current portion     473,811     512,847
  Deferred tax liability, current portion     -     914,429
  Income taxes payable     1,024,004     1,255,108
    Total current liabilities     73,444,093     70,786,630
             
Deferred revenue, long-term portion     15,638,517     16,002,464
Accreditation fees payable, long-term portion     135,522     145,592
Deferred rent, long-term portion     75,979     54,150
Deferred tax liability, long-term portion     5,141,500     5,234,100
             
Stockholders' equity:            
  Preferred stock - no par value, 1,250,000 shares authorized;
none issued and outstanding
    -     -
  Common stock - no par value, 250,000,000 shares authorized;
10,907,063 shares issued and outstanding as of December 31,
2013 and 11,080,034 shares issued and outstanding as of
December 31, 2012 (1)
    11,859,267     10,084,417
  Additional paid-in capital     28,632,311     33,931,529
  Deficit     (13,329,379)     (17,509,843)
  Accumulated other comprehensive income (loss)     (244,981)     44,104
    Total stockholders' equity     26,917,218     26,550,207
Total liabilities and stockholders' equity   $   121,352,829   $ 118,773,143

(1) Common stock issued and outstanding reflects the 1-for-4 reverse split of common shares that became effective December 31, 2013.

           
      Tucows  Inc.   Tucows  Inc.
      Consolidated Statements of Operations   Consolidated Statements of Operations
      (Dollar amounts in U.S. dollars)   (Dollar amounts in U.S. dollars)
                 
      Three months ended December 31,   Year ended December 31,
    2013   2012   2013   2012
      (unaudited)   (unaudited)
                 
Net revenues $ 33,139,440 $ 29,790,912 $ 129,934,904 $ 114,726,901
                 
Cost of revenues:                
  Cost of revenues   23,605,955   22,003,975   92,960,321   82,837,395
  Network expenses (*)   1,119,468   1,295,419   4,835,939   4,925,058
  Depreciation of property and equipment   175,262   151,381   627,973   611,640
  Amortization of intangible assets   -   35,910   83,790   143,640
    Total cost of revenues   24,900,685   23,486,685   98,508,023   88,517,733
                 
Gross profit   8,238,755   6,304,227   31,426,881   26,209,168
                 
Expenses:                
  Sales and marketing (*)   3,348,945   2,413,744   12,141,036   8,701,446
  Technical operations and development (*)   1,061,309   1,073,151   4,158,603   4,302,820
  General and administrative (*) (note 1)   1,937,898   1,592,641   7,204,895   6,610,819
  Depreciation of property and equipment   56,614   50,502   215,447   190,420
  Loss on disposition of property and equipment   -   118,944   -   118,944
  Amortization of intangible assets   219,030   219,030   876,120   876,120
  Loss (gain) on currency forward contracts (note 1)   322,911   110,665   676,120   (682,851)
    Total expenses   6,946,707   5,578,677   25,272,221   20,117,718
                 
Income from operations   1,292,048   725,550   6,154,660   6,091,450
                 
Other income (expenses):                
  Interest expense, net   (83,101)   (47,153)   (354,857)   (192,863)
  Other income   -   -   -   529,711
    Total other income (expenses)   (83,101)   (47,153)   (354,857)   336,848
                 
Income before provision for income taxes   1,208,947   678,397   5,799,803   6,428,298
                 
Provision for income taxes   286,052   248,872   1,619,339   2,004,156
Net income   922,895   429,525   4,180,464   4,424,142
                 
Other comprehensive income, net of tax of $257,505 for the three months
ended September 30, 2013 and $24,800 for the nine months ended
September 30, 2013
  (336,693)   44,104   (289,085)   44,104
Comprehensive income (loss) for the period  $  586,202  $  473,629  $  3,891,379  $  4,468,246
                 
Basic earnings per common share (1) $ 0.08 $ 0.04 $ 0.40 $ 0.39
                 
Shares used in computing basic earnings per common share (1)   10,900,842   11,064,045   10,468,250   11,458,216
                 
Diluted earnings per common share (1) $ 0.08 $ 0.04 $ 0.37 $ 0.36
                 
Shares used in computing diluted earnings per common share (1)   11,538,283   11,930,942   11,281,409   12,283,736
                 
                 
                 
(*) Stock-based compensation has been included in expenses as follows:                
  Network expenses $ 8,851 $ 6,126 $ 31,664 $ 24,480
  Sales and marketing $ 36,302 $ 25,121 $ 129,302 $ 92,168
  Technical operations and development $ 21,634 $ 15,651 $ 78,800 $ 59,141
  General and administrative $ 35,233 $ 21,869 $ 191,137 $ 184,910

(1) Net earnings per common share reflects the 1-for-4 reverse split of common shares that became effective December 31, 2013.

           
      Tucows  Inc.   Tucows  Inc.
      Consolidated Statements of Cash Flows   Consolidated Statements of Cash Flows
      (Dollar amounts in U.S. dollars)   (Dollar amounts in U.S. dollars)
                 
      Three months ended December 31,   Year ended December 31,
    2013   2012   2013   2012
Cash provided by:   (unaudited)   (unaudited)
Operating activities:                
  Net income for the period   $  922,895  $  429,525  $  4,180,464  $  4,424,142
  Items not involving cash:                
    Depreciation of property and equipment   231,876   201,883   843,420   802,060
    Loss on write off of property and equipment   -   118,944   -   118,944
    Amortization of deferred financing charges   -   -   -   2,300
    Amortization of intangible assets   219,030   254,940   959,910   1,019,760
    Deferred income taxes (recovery)   (169,268)   499,625   (247,371)   832,736
    Excess tax benefits on share-based compensation expense   (34,157)   -   (1,090,171)   -
    Deferred rent   4,081   6,205   21,829   27,663
    Acquisition of domain names   -   -   -   (3,664)
    Disposal of domain names   8,221   12,662   52,513   50,843
    Gain on disposition of intangible assets   -   -   -   (508,800)
    (Gain) loss on change in the fair value of forward contracts   134,561   54,986   496,207   (1,100,161)
    Stock-based compensation   102,020   68,767   430,903   360,699
                 
  Changes in non-cash operating working capital:                
    Accounts receivable   (435,937)   413,511   (892,138)   (533,081)
    Inventory   28,424   (173,894)   277,418   (381,507)
    Prepaid expenses and deposits   (67,637)   (278,001)   772,369   (1,325,100)
    Prepaid fees for domain name registry and ancillary services fees   1,785,439   1,712,684   1,440,720   (1,679,703)
    Income taxes recoverable/payable   (63,695)   (233,573)   1,023,638   233,312
    Accounts payable   (170,657)   283,217   529,537   931,467
    Accrued liabilities   725,821   302,852   1,390,805   547,590
    Customer deposits   428,621   689,955   (454,725)   752,772
    Deferred revenue   (1,972,072)   (2,315,219)   (982,115)   1,824,650
    Accreditation fees payable   (25,188)   (26,831)   (49,106)   (53,491)
  Net cash provided by operating activities   1,652,378   2,022,238   8,704,107   6,343,431
                 
Financing activities:                
  Proceeds received on exercise of stock options   37,919   54,210   1,492,174   418,108
  Excess tax benefits on share-based compensation expense   34,157   -   1,090,171   -
  Repurchase of common stock   -   -   (6,537,616)   (9,115,833)
  Proceeds received on loan payable   -   -   5,200,000   4,000,000
  Repayment of loan payable   (600,000)   (300,000)   (2,600,000)   (1,150,000)
  Net cash used in financing activities   (527,924)   (245,790)   (1,355,271)   (5,847,725)
                 
Investing activities:                
  Additions to property and equipment   (255,514)   (330,502)   (1,345,627)   (997,036)
  Proceeds on disposition of intangible assets   -   -   -   508,800
  Net cash used in investing activities   (255,514)   (330,502)   (1,345,627)   (488,236)
                 
Increase in cash and cash equivalents   868,940   1,445,946   6,003,209   7,470
                 
Cash and cash equivalents, beginning of period   11,549,948   4,969,733   6,415,679   6,408,209
Cash and cash equivalents, end of period $ 12,418,888 $ 6,415,679 $ 12,418,888 $ 6,415,679
                 
Supplemental cash flow information:                
  Interest paid $ 83,370  $  99,504 $ 372,853  $  97,369
                 
Supplementary disclosure of non-cash investing activity:                
  Property and equipment acquired during the period not yet paid for $ - $ 96,515 $ - $ 96,515

  

This release includes forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995 including statements regarding our expectations regarding our future financial results and, in particular, our expectations for Ting and its impact on our financial performance. These statements are based on management's current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements, including the acceptance of Ting in the market.  Information about other potential factors that could affect Tucows' business, results of operations and financial condition is included in the Risk Factors sections of Tucows' filings with the Securities and Exchange Commission. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All forward-looking statements are based on information available to Tucows as of the date they are made.  Tucows assumes no obligation to update any forward-looking statements, except as may be required by law.

TUCOWS is a registered trademark of Tucows Inc. or its subsidiaries. All other trademarks and service marks are the properties of their respective owners.  

 

SOURCE Tucows Inc.



More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.