Tucows Inc. reports financial results for the third quarter of 2009
Summary Financial Results
(Numbers in Thousands of US Dollars, Except Per Share Data)
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3 Months Ended 3 Months Ended 9 Months Ended 9 Months Ended
Sept. 30, 2009 Sept. 30, 2008 Sept. 30, 2009 Sept. 30, 2008
(unaudited) (unaudited) (unaudited) (unaudited)
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Net Revenue 20,496 20,147 60,610 59,309
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Net Income
(Loss) 5,051 (71) 10,495 1,056
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Net Income
(Loss)/Share 0.07 (0.00) 0.15 0.01
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Cash Flow from
Operations 82 (102) 3,586 2,595
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Summary of Revenue and Cost of Revenue before Network Costs
(Numbers in Thousands of US Dollars)
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Revenue Cost of Revenue
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3 Months Ended 3 Months Ended 9 Months Ended 9 Months Ended
Sept. 30, 2009 Sept. 30, 2008 Sept. 30, 2009 Sept. 30, 2008
(unaudited) (unaudited) (unaudited) (unaudited)
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OpenSRS:
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Domain Services
(Traditional
Domain
Registration) 15,098 13,680 12,326 11,016
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Email Services 842 1,517 103 162
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Other Services 1,109 1,104 412 403
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Total OpenSRS
Services 17,049 16,309 12,841 11,581
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YummyNames (Domain
Portfolio Services) 1,782 1,265 218 183
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Hover (Retail
Services) 1,204 2,071 493 558
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Butterscotch
(Content Services) 461 502 26 5
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Total 20,496 20,147 13,578 12,327
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"Throughout 2009, we have consistently delivered solid financial results, driven by the strong performance of our OpenSRS wholesale business, the initiatives we have undertaken to improve other components of our business, and the success of our efforts to improve our cost structure," said
Net revenue for the third quarter of 2009 was
Net income for the third quarter of 2009 was
Deferred revenue at the end of the third quarter of fiscal 2009 was
Cash and cash equivalents at the end of the third quarter of fiscal 2009 were
Conference Call
Tucows will host a conference call today,
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 416-640-1917 or 1-877-289-8525 and enter the pass code 4171862 followed by the pound key. The telephone replay will be available until
About Tucows
Tucows is a global Internet services company. OpenSRS manages over 9 million domain names and millions of email boxes through a reseller network of over 9,000 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)
September 30, December 31,
2009 2008
------------ ------------
(unaudited) (unaudited)
Assets
Current assets:
Cash and cash equivalents $ 8,154,455 $ 5,427,467
Accounts receivable 3,929,882 3,200,362
Prepaid expenses and deposits 2,743,505 2,274,043
Derivative instrument assets 1,927,475 -
Prepaid domain name registry and ancillary
services fees, current portion 31,513,882 29,212,610
Deferred tax asset, current portion 590,000 590,000
------------ ------------
Total current assets 48,859,199 40,704,482
Prepaid domain name registry and ancillary
services fees, long-term portion 12,143,175 11,855,971
Property and equipment 2,148,509 3,072,958
Deferred financing charges 49,300 78,500
Deferred tax asset, long-term portion 2,410,000 2,410,000
Intangible assets 19,041,083 20,206,996
Goodwill 17,990,807 17,990,807
Investment - 200,000
------------ ------------
Total assets $102,642,073 $ 96,519,714
------------ ------------
------------ ------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,373,068 $ 1,633,830
Accrued liabilities 1,888,427 2,000,146
Customer deposits 3,764,320 3,319,241
Derivative instrument liabilities - 1,974,919
Loan payable, current portion 3,698,685 2,624,242
Deferred revenue, current portion 40,303,458 37,985,821
Accreditation fees payable, current portion 508,180 510,548
------------ ------------
Total current liabilities 51,536,138 50,048,747
Deferred revenue, long-term portion 16,198,501 16,201,804
Accreditation fees payable, long-term portion 187,285 187,374
Loan payable, long-term portion - 3,235,125
Deferred tax liability, long-term portion 4,899,000 5,396,000
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; 67,865,096 shares issued and
outstanding as of September 30, 2009 and
73,073,782 shares issued and outstanding as of
December 31, 2008 14,187,313 15,198,358
Additional paid-in capital 47,601,377 48,714,676
Deficit (31,967,541) (42,462,370)
------------ ------------
Total stockholders' equity 29,821,149 21,450,664
------------ ------------
Total liabilities and stockholders' equity $102,642,073 $ 96,519,714
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Tucows Inc.
Consolidated Statements of Operations
(Dollar amounts in U.S. dollars)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
------------ ------------ ------------ ------------
(unaudited) (unaudited)
Net revenues $ 20,496,129 $ 20,147,195 $ 60,609,673 $ 59,308,731
Cost of revenues:
Cost of
revenues(*) 14,770,868 13,981,247 42,942,314 40,794,276
Depreciation of
property and
equipment 475,445 795,445 1,416,834 2,437,542
Amortization of
intangible
assets 29,199 29,199 87,597 134,597
------------ ------------ ------------ ------------
Total cost of
revenues 15,275,512 14,805,891 44,446,745 43,366,415
------------ ------------ ------------ ------------
Gross profit 5,220,617 5,341,304 16,162,928 15,942,316
Expenses:
Sales and
marketing(*) 1,568,727 1,705,512 4,261,070 5,132,380
Technical operations
and development(*) 1,142,331 1,527,237 3,421,825 4,666,832
General and
administrative(*) 1,145,951 1,714,563 4,608,173 4,805,853
Depreciation of
property and
equipment 64,704 57,386 230,336 177,317
Loss on disposition
of property and
equipment 40,369 498,529 40,369 498,529
Amortization of
intangible assets 360,540 360,540 1,081,620 1,122,655
(Gain) / loss in
fair value of
forward exchange
contracts (1,878,230) 525,571 (3,902,394) 555,364
------------ ------------ ------------ ------------
Total expenses 2 ,444,392 6,389,338 9,740,999 16,958,930
------------ ------------ ------------ ------------
Income from
operations 2,776,225 (1,048,034) 6,421,929 (1,016,614)
Other income
(expenses):
Interest income
(expense), net (52,887) (90,859) (178,669) (467,264)
Other income 1,880,000 1,098,245 4,493,190 2,631,010
------------ ------------ ------------ ------------
Total other income
(expenses) 1,827,113 1,007,386 4,314,521 2,163,746
------------ ------------ ------------ ------------
Income before
provision for
income taxes 4,603,338 (40,648) 10,736,450 1,147,132
Income tax
(recovery)
expense (447,455) 30,000 241,621 91,134
------------ ------------ ------------ ------------
Net income (loss)
for the period $ 5,050,793 $ (70,648)$ 10,494,829 $ 1,055,998
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Basic earnings
(loss) per
common share $ 0.07 $ (0.00)$ 0.15 $ 0.01
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Shares used in
computing basic
earnings per
common share 68,008,871 73,923,542 69,841,981 73,903,998
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Diluted earnings
(loss) per
common share $ 0.07 $ (0.00)$ 0.15 $ 0.01
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Shares used in
computing diluted
earnings per
common share 68,874,517 74,817,244 70,156,521 75,245,047
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
(*)Stock-based
compensation has
been included in
expenses as
follows:
Cost of
revenues $ 3,860 $ 5,500 $ 12,227 $ 14,600
Sales and
marketing $ 12,807 $ 17,200 $ 42,764 $ 48,500
Technical
operations and
development $ 12,395 $ 13,100 $ 34,116 $ 41,800
General and
administrative $ 70,748 $ 52,500 $ 142,641 $ 128,600
Tucows Inc.
Consolidated Statements of Cash Flows
(Dollar amounts in U.S. dollars)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
------------ ------------ ------------ ------------
(unaudited) (unaudited)
Cash provided by
(used in):
Operating activities:
Net income (loss)
for the period $ 5,050,793 $ (70,648) $10,494,829 $ 1,055,998
Items not involving
cash:
Depreciation of
property and
equipment 540,149 852,831 1,647,170 2,614,859
Loss on disposition
of property and
equipment 40,369 498,529 40,369 498,529
Amortization of
deferred financing
charges 9,100 12,200 29,200 38,400
Amortization of
intangible assets 389,739 389,739 1,169,217 1,257,252
Gain on disposal
of investment in
Afilias (1,880,000) - (3,890,395) -
Gain on sale of
customer
relationships - (921,384) - (2,042,449)
Reduction of
deferred tax
liability (497,000) - (497,000) -
Disposal of
domain names 649 4,705 2,596 4,705
Unrealized
(gain)/loss in the
fair value of
forward contracts (1,878,230) 525,571 (3,902,394) 555,364
Stock-based
compensation 99,810 88,300 231,748 233,500
Change in non-cash
operating working
capital:
Accounts receivable (465,454) (518,310) (729,520) (234,387)
Prepaid expenses
and deposits 419,761 641,629 (469,462) 536,392
Prepaid fees for
domain name registry
and ancillary services
fees 33,425 (775,955) (2,588,476) (4,482,752)
Accounts payable (977,967) (480,839) (597,560) (231,770)
Accrued liabilities (115,362) (177,701) (111,719) (868,765)
Customer deposits 592,612 (167,691) 445,079 (148,692)
Deferred revenue (398,657) (9,699) 2,314,334 3,767,955
Accreditation fees
payable (46,762) 6,245 (2,457) 40,365
Income taxes payable (835,398) - - -
------------ ------------ ------------ ------------
Net cash provided by
(used in) operating
activities 81,577 (102,478) 3,585,559 2,594,504
------------ ------------ ------------ ------------
Financing activities:
Proceeds received
on exercise of
stock options - - 25,422 9,450
Repurchase of common
stock (570,335) - (2,381,514) -
Repayment of loan
payable (478,561) (478,561) (2,160,682) (8,435,681)
------------ ------------ ------------ ------------
Net cash used in
financing
activities (1,048,896) (478,561) (4,516,774) (8,426,231)
------------ ------------ ------------ ------------
Investing activities:
Cost of domain
names acquired - - (5,900) (8,944)
Additions to property
and equipment (281,282) (627,024) (426,292) (1,922,764)
Sale of customer
relationships - 921,384 - 2,343,114
Proceeds on
disposition of
property and
equipment - 66,039 - 66,039
Proceeds on disposal
of investment in
Afilias 1,980,000 - 4,090,395 -
Decrease in cash
held in escrow - (5,396) - (18,161)
------------ ------------ ------------ ------------
Net cash provided
by investing
activities 1,698,718 355,003 3,658,203 459,284
------------ ------------ ------------ ------------
Increase (decrease)
in cash and cash
equivalents 731,399 (226,036) 2,726,988 (5,372,443)
Cash and cash
equivalents,
beginning of period 7,423,056 2,947,069 5,427,467 8,093,476
------------ ------------ ------------ ------------
Cash and cash
equivalents, end of
period $ 8,154,455 $ 2,721,033 $ 8,154,455 $ 2,721,033
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Supplemental cash
flow information:
Interest paid $ 52,983 $ 100,060 $ 181,012 $ 552,298
Supplementary
disclosure of
non-cash investing
activity:
Property and
equipment acquired
during the period
not yet paid for $ 343,777 $ 117,733 $ 343,777 $ 117,733
For further information: Lawrence Chamberlain, The Equicom Group for Tucows Inc., (416) 815-0700 ext. 257, [email protected]
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