Tucows Inc. reports financial results for first quarter 2010
TORONTO, May 12 /CNW/ - Tucows Inc. (NYSE AMEX:TCX, TSX:TC), a global provider of domain names, email and other Internet services, today reported its financial results for the first quarter ended March 31, 2010. All figures are in U.S. dollars.
Summary Financial Results
(Numbers in Thousands of US Dollars, Except Per Share Data)
3 Months Ended 3 Months Ended
Mar. 31, Mar. 31,
2010 2009
(unaudited) (unaudited)
Net Revenue 20,445 20,091
Net Income (Loss) 569 1,028
Net Income (Loss)/Share 0.01 0.01
Cash Flow from Operations 1,379 913
Summary of Revenue and Cost of Revenue before Network Costs
(Numbers in Thousands of US Dollars)
Revenue Cost of Revenue
3 Months 3 Months 3 Months 3 Months
Ended Ended Ended Ended
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
2010 2009 2010 2009
(unaudited) (unaudited) (unaudited) (unaudited)
OpenSRS:
Domain Services 15,403 14,202 12,616 11,355
Email Services 638 1,122 107 180
Other Services 1,094 1,094 387 389
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Total OpenSRS Services 17,135 16,418 13,110 11,924
YummyNames 1,711 1,865 203 185
Hover 1,130 1,301 400 513
Butterscotch 469 507 19 7
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Total 20,445 20,091 13,732 12,629
"Our results for the first quarter of fiscal 2010 underscore the consistency in our business, anchored by the OpenSRS Domain Service, which grew 9% year-over-year in both transactions and revenue," said Elliot Noss, President and CEO of Tucows. "We are experiencing growth both in the number of new OpenSRS customers as well as the speed at which these customers roll our service out to their customers. Our ability to consistently and reliably generate cash flow from operations continues to support our ability to return capital to our shareholders. Since implementing our open market share purchase program in February 2010, we have repurchased an additional 956,000 shares, and since the beginning of the year we have repurchased a total of 7.3 million shares, or 11% of our total shares outstanding as of the end of 2009."
Net revenue for the first quarter of 2010 increased 1.8% to $20.4 million from $20.1 million for the first quarter of 2009.
Net income for the first quarter of 2010 was $0.6 million, or $0.01 per share, compared with $1.0 million, or $0.01 per share, for the first quarter of 2009. Net income for the first quarter of 2010 benefitted from a pre-tax gain on foreign exchange of $0.7 million (inclusive of a mark-to-market gain of $0.1 million) compared to a pre-tax loss on foreign exchange of $0.7 million (inclusive of a mark-to-market gain of $0.1 million) for the first quarter of 2009.
Deferred revenue at the end of the first quarter of fiscal 2010 was $59.5 million, an increase of 5.1% from $56.7 million at the end of the first quarter of fiscal 2009 and an increase of 5.7% from $56.3 million at the end of the fourth quarter of fiscal 2009.
Cash and cash equivalents at the end of the first quarter of fiscal 2010 were $5.2 million compared with $4.0 million at the end of the first quarter of fiscal 2009 and $9.6 million at the end of the fourth quarter of fiscal 2009. The decrease in cash compared with the fourth quarter of 2009 is primarily the result of the use of $5.2 million for the repurchase of common stock under the Company's modified "Dutch auction" tender offer, which concluded in January 2010 and the current open market share repurchase program that was initiated in February 2010, as well as the repayment of $0.5 million of the Company's bank loan. This use of funds was partially offset by cash flow from operations for the first quarter of 2010 of $1.4 million.
Conference Call
Tucows will host a conference call today, Wednesday, May 12, 2010 at 5:00 p.m. ET to discuss the Company's first quarter fiscal 2010 results. To access the conference call via the Internet, go to http://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 1-416-849-0833 or 1-800-642-1687 and enter the pass code 72055618. The telephone replay will be available until Wednesday, May 19, 2010 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 manages over ten million domain names and millions of email boxes through a reseller network of over 10,000 web hosts and ISPs. Hover is the easiest way for individuals and small businesses to manage their domain names and email addresses. YummyNames owns premium domain names that generate revenue through advertising or resale. Butterscotch.com is an online video network building on the foundation of Tucows.com. More information can be found at http://tucowsinc.com.
This news release contains, in addition to historical information, forward-looking statements related to such matters as our business, including the price per share at which Tucows will purchase shares and the level of under subscription. Such statements are based on management's current expectations and are subject to a number of uncertainties and risks, which could cause actual results to differ materially from those described in the forward-looking statements. Information about 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 included in this document are based on information available to Tucows as of the date of this document, and except to the extent Tucows may be required to update such information under any applicable securities laws, Tucows assumes no obligation to update such forward-looking statements.
TUCOWS is a registered trademark of Tucows Inc. or its subsidiaries. All other trademarks and service marks are the properties of their respective owners.
Tucows Inc.
Consolidated Balance Sheets
(Dollar amounts in U.S. dollars)
March 31, December 31,
2010 2009
(unaudited) (unaudited)
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Assets
Current assets:
Cash and cash equivalents $ 5,181,896 $ 9,632,394
Accounts receivable 3,697,545 2,822,045
Prepaid expenses and deposits 2,860,624 2,498,922
Derivative instrument asset, current
portion 2,185,688 2,107,825
Prepaid domain name registry and ancillary
services fees, current portion 33,750,000 31,596,236
Income taxes recoverable 358,000 674,000
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Total current assets 48,033,753 49,331,422
Derivative instrument asset, long-term
portion 140,913 112,553
Prepaid domain name registry and ancillary
services fees, long-term portion 12,588,320 12,126,515
Property and equipment 1,779,999 1,986,768
Deferred financing charges 33,600 41,000
Deferred tax asset, long-term portion 4,102,929 3,907,476
Intangible assets 18,213,439 18,656,353
Goodwill 17,990,807 17,990,807
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Total assets $102,883,760 $104,152,894
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,738,878 $1,547,863
Accrued liabilities 1,763,176 1,889,980
Customer deposits 3,895,116 3,624,317
Loan payable, current portion 2,741,564 3,220,125
Deferred revenue, current portion 42,837,249 40,211,766
Accreditation fees payable, current portion 594,968 530,656
Deferred tax liability, current portion 1,102,929 907,476
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Total current liabilities 54,673,880 51,932,183
Derivative instrument liability, long-term
portion 7,958 15,708
Deferred revenue, long-term portion 16,677,922 16,098,812
Accreditation fees payable, long-term portion 169,705 169,620
Deferred tax liability, long-term portion 4,840,000 4,840,000
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; 59,792,816 shares
issued and outstanding as of March 31,
2010 and 67,080,353 shares issued and
outstanding as of December 31, 2009 12,579,210 14,030,384
Additional paid-in capital 43,587,383 47,287,351
Deficit (29,652,298) (30,221,164)
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Total stockholders' equity 26,514,295 31,096,571
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Total liabilities and stockholders' equity $102,883,760 $104,152,894
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Tucows Inc.
Consolidated Statements of Operations
(Dollar amounts in U.S. dollars)
Three months ended March 31,
2010 2009
------------- -------------
(unaudited)
Net revenues $ 20,445,153 $ 20,091,424
Cost of revenues:
Cost of revenues(*) 14,924,874 13,785,398
Depreciation of property and equipment 310,058 392,947
Amortization of intangible assets 74,802 29,199
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Total cost of revenues 15,309,734 14,207,544
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Gross profit 5,135,419 5,883,880
Expenses:
Sales and marketing(*) 1,862,336 1,353,176
Technical operations and development(*) 1,243,013 1,104,139
General and administrative(*) 815,580 1,869,896
Depreciation of property and equipment 43,889 82,453
Amortization of intangible assets 360,540 360,540
Gain in fair value of forward exchange
contracts (113,973) (85,343)
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Total expenses 4,211,385 4,684,861
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Income from operations 924,034 1,199,019
Other income:
Interest income (expense), net (39,168) (63,462)
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Total other income (39,168) (63,462)
------------- -------------
Income before provision for income taxes 884,866 1,135,557
Provision for income taxes 316,000 107,425
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Net income for the period $ 568,866 $ 1,028,132
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Basic earnings per common share $ 0.01 $ 0.01
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Shares used in computing basic earnings per
common share 61,265,903 72,655,213
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Diluted earnings per common share $ 0.01 $ 0.01
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Shares used in computing diluted earnings
per common share 63,338,084 72,657,604
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(*)Stock-based compensation has been
included in expenses as follows:
Cost of revenues $ 3,628 $ 5,000
Sales and marketing $ 15,686 $ 14,900
Technical operations and development $ 14,581 $ 10,600
General and administrative $ 22,734 $ 18,700
Tucows Inc.
Consolidated Statements of Cash Flows
(Dollar amounts in U.S. dollars)
Three months ended March 31,
2010 2009
------------- -------------
Cash provided by (used in): (unaudited)
Operating activities:
Net income for the period $ 568,866 $ 1,028,132
Items not involving cash:
Depreciation of property and equipment 353,947 475,400
Amortization of deferred financing charges 7,400 10,400
Amortization of intangible assets 435,342 389,739
Disposal of domain names 7,572 973
Unrealized gain in the fair value of
forward contracts (113,973) (85,343)
Stock-based compensation 56,629 49,200
Change in non-cash operating working capital:
Accounts receivable (875,500) (516,993)
Prepaid expenses and deposits (361,702) (578,568)
Prepaid fees for domain name registry and
ancillary services fees (2,615,569) (2,125,399)
Income taxes recoverable/payable 316,000 85,182
Accounts payable 186,569 (180,821)
Accrued liabilities (126,804) 128,773
Customer deposits 270,799 (309,502)
Deferred revenue 3,204,593 2,463,376
Accreditation fees payable 64,397 78,607
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Net cash provided by operating activities 1,378,566 913,156
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Financing activities:
Proceeds received on exercise of stock
options 4,501 -
Repurchase of common stock (5,212,272) (1,811,179)
Repayment of loan payable (478,561) (478,561)
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Net cash used in financing activities (5,686,332) (2,289,740)
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Investing activities:
Cost of domain names acquired - (5,900)
Additions to property and equipment (142,732) (2,240)
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Net cash used in investing activities (142,732) (8,140)
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Decrease in cash and cash equivalents (4,450,498) (1,384,724)
Cash and cash equivalents, beginning of
period 9,632,394 5,427,467
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Cash and cash equivalents, end of period $ 5,181,896 $ 4,042,743
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Supplemental cash flow information:
Interest paid $ 65,521 $ 39,276
Supplementary disclosure of non-cash
investing activity:
Property and equipment acquired during the
period not yet paid for $ 2,784 $ 98,040
For further information: Lawrence Chamberlain, The Equicom Group for Tucows Inc., (416) 815-0700 ext. 257, [email protected]
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