Tucows Inc. reports financial results for the fourth quarter of 2009
TORONTO, Feb. 16 /PRNewswire-FirstCall/ - Tucows Inc. (NYSEAMEX:TCX, TSX:TC), a global provider of domain names, email and other Internet services, today reported its financial results for the fourth quarter and the year ended December 31, 2009. All figures are in U.S. dollars.
Summary Financial Results (Numbers in Thousands of US Dollars, Except Per Share Data) ------------------------------------------------------------------------- 3 Months 3 Months 12 Months 12 Months Ended Ended Ended Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2009 2008 2009 2008 (unaudited) (unaudited) (unaudited) (unaudited) ------------------------------------------------------------------------- Net Revenue 20,330 19,159 80,939 78,468 ------------------------------------------------------------------------- Net Income (Loss) 1,746 1,019 12,241 2,075 ------------------------------------------------------------------------- Net Income (Loss)/Share 0.03 0.01 0.18 0.03 ------------------------------------------------------------------------- Cash Flow from Operations 2,880 (229) 6,466 2,361 ------------------------------------------------------------------------- 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 Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2009 2008 2009 2008 (unaudited) (unaudited) (unaudited) (unaudited) ------------------------------------------------------------------------- OpenSRS: ------------------------------------------------------------------------- Domain Services (Traditional Domain Registration) 15,211 14,138 12,578 11,398 ------------------------------------------------------------------------- Email Services 799 1,122 110 95 ------------------------------------------------------------------------- Other Services 1,130 1,137 410 403 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total OpenSRS Services 17,140 16,397 13,098 11,896 ------------------------------------------------------------------------- YummyNames (Domain Portfolio Services) 1,521 854 193 174 ------------------------------------------------------------------------- Hover (Retail Services) 1,208 1,436 443 571 ------------------------------------------------------------------------- Butterscotch (Content Services) 461 472 12 14 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total 20,330 19,159 13,746 12,655 -------------------------------------------------------------------------
"The fourth quarter saw the continued solid financial performance we delivered throughout 2009," said Elliot Noss, President and CEO of Tucows. "The consistently strong performance of our OpenSRS wholesale business combined with the work we have undertaken to revitalize other parts of our business contributed to record revenue of $81 million amidst a very challenging economic environment. We are confident that 2010 will bring continued top-line growth complemented by continued operational efficiency."
"At the same time, we remain committed to returning value to our shareholders. Over the last thirteen months we have repurchased more than 17% of Tucows' outstanding shares."
Net revenue for the fourth quarter of 2009 increased 6.1% to $20.3 million from $19.2 million for the fourth quarter of 2008.
Net income for the fourth quarter of 2009 was $1.7 million, or $0.03 per share, compared with $1.0 million, or $0.01 per share, for the fourth quarter of 2008. Net income for the fourth quarter of 2009 benefitted from a gain on foreign exchange of $0.5 million (inclusive of a mark-to-market gain of $0.3 million) compared to a loss on foreign exchange of $2.2 million (inclusive of a mark-to-market loss of $1.4 million) for the fourth quarter of 2008. Net income for the fourth quarter of 2009 also benefited from an income tax recovery of $0.5 million. Net income for the fourth quarter of 2008 included other income of $3.2 million generated by the sale of the Company's equity position in Afilias.
Deferred revenue at the end of the fourth quarter of fiscal 2009 was $56.3 million, an increase of 4% from $54.2 million at the end of the fourth quarter of fiscal 2008 and a slight decrease from $56.5 million at the end of the third quarter of fiscal 2009.
Cash and cash equivalents at the end of the fourth quarter of fiscal 2009 were $9.6 million compared with $5.4 million at the end of the fourth quarter of fiscal 2008 and $8.2 million at the end of the third quarter of fiscal 2009. The increase in cash compared with the second quarter of 2009 is primarily the result of cash flow from operations for the fourth quarter of $2.9 million, which was partially offset by the repayment of $479,000 of the Company's bank loan and the use of $534,000 for the repurchase of shares under the Company's modified "Dutch auction" tender offer, which concluded in October 2009.
Conference Call
Tucows will host a conference call today, Tuesday, February 16, 2010 at 5:00 p.m. ET to discuss the Company's fourth quarter fiscal 2009 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 416-849-0833 or 1-800-642-1687 and enter the pass code 53582860. The telephone replay will be available until Tuesday, February 23, 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 9 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) December 31, December 31, 2009 2008 -------------- -------------- (unaudited) (unaudited) Assets Current assets: Cash and cash equivalents $ 9,632,394 $ 5,427,467 Accounts receivable 2,822,045 3,200,362 Prepaid expenses and deposits 2,498,922 2,274,043 Derivative instrument assets, current portion 2,107,825 - Prepaid domain name registry and ancillary services fees, current portion 31,596,236 29,212,610 Deferred tax asset, current portion - 590,000 Income taxes recoverable 674,000 - -------------- -------------- Total current assets 49,331,422 40,704,482 Derivative instrument assets, long-term portion 96,845 - Prepaid domain name registry and ancillary services fees, long-term portion 12,126,515 11,855,971 Property and equipment 1,986,768 3,072,958 Deferred financing charges 41,000 78,500 Deferred tax asset, long-term portion 3,907,476 2,410,000 Intangible assets 18,656,353 20,206,996 Goodwill 17,990,807 17,990,807 Investment - 200,000 -------------- -------------- Total assets $ 104,137,186 $ 96,519,714 -------------- -------------- -------------- -------------- Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 1,547,863 $ 1,633,830 Accrued liabilities 1,889,980 2,000,146 Customer deposits 3,624,317 3,319,241 Derivative instrument liabilities - 1,974,919 Loan payable, current portion 3,220,125 2,624,242 Deferred revenue, current portion 40,211,766 37,985,821 Deferred tax liability, current portion 907,476 - Accreditation fees payable, current portion 530,656 510,548 -------------- -------------- Total current liabilities 51,932,183 50,048,747 Deferred revenue, long-term portion 16,098,812 16,201,804 Accreditation fees payable, long-term portion 169,620 187,374 Loan payable, long-term portion - 3,235,125 Deferred tax liability, long-term portion 4,840,000 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; 67,068,253 shares issued and outstanding as of December 31, 2009 and 73,073,782 shares issued and outstanding as of December 31, 2008 14,030,384 15,198,358 Additional paid-in capital 47,287,351 48,714,676 Deficit (30,221,164) (42,462,370) -------------- -------------- Total stockholders' equity 31,096,571 21,450,664 -------------- -------------- Total liabilities and stockholders' equity $ 104,137,186 $ 96,519,714 -------------- -------------- -------------- -------------- Tucows Inc. Consolidated Statements of Operations (Dollar amounts in U.S. dollars) Three months ended Year ended December 31, December 31, 2009 2008 2009 2008 ------------ ------------ ----------- ------------ (unaudited) (unaudited) Net revenues $ 20,329,540 $ 19,159,149 $ 80,939,212 $ 78,467,880 Cost of revenues: Cost of revenues(*) 14,993,792 13,819,760 57,936,106 54,614,036 Depreciation of property and equipment 256,357 472,311 1,673,191 2,909,853 Amortization of intangible assets 29,199 29,199 116,796 163,796 ------------ ------------ ------------ ------------ Total cost of revenues 15,279,348 14,321,270 59,726,093 57,687,685 ------------ ------------ ------------ ------------ Gross profit 5,050,192 4,837,879 21,213,119 20,780,195 Expenses: Sales and marketing (*) 1,550,937 1,536,504 5,812,007 6,668,884 Technical operations and development (*)1,128,879 1,505,596 4,550,704 6,172,428 General and administrative (*) 950,749 2,003,748 5,558,921 6,809,601 Depreciation of property and equipment 35,915 86,428 266,251 263,745 Loss on disposition of property and equipment 524 - 40,893 498,529 Amortization of intangible assets 360,540 360,540 1,442,160 1,483,195 (Gain)/loss in fair value of forward exchange contracts (277,195) 1,419,555 (4,179,589) 1,974,919 ------------ ------------ ------------ ------------ Total expenses 3,750,349 6,912,371 13,491,347 23,871,301 ------------ ------------ ------------ ------------ Income from operations 1,299,843 (2,074,492) 7,721,772 (3,091,106) Other income (expenses): Interest income (expense), net (46,471) (116,647) (225,140) (583,911) Other income - 3,239,950 4,493,190 5,870,960 ------------ ------------ ------------ ------------ Total other income (expenses) (46,471) 3,123,303 4,268,050 5,287,049 ------------ ------------ ------------ ------------ Income before provision for income taxes 1,253,372 1,048,811 11,989,822 2,195,943 Income tax (recovery) expense (493,005) 30,000 (251,384) 121,134 ------------ ------------ ------------ ------------ Net income for the period $ 1,746,377 $ 1,018,811 $ 12,241,206 $ 2,074,809 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Basic earnings (loss) per common share $ 0.03 $ 0.01 $ 0.18 $ 0.03 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Shares used in computing basic earnings per common share 67,076,782 73,559,276 69,145,001 73,817,347 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Diluted earnings (loss) per common share $ 0.03 $ 0.01 $ 0.17 $ 0.03 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Shares used in computing diluted earnings per common share 68,860,034 72,274,490 70,356,013 74,830,217 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ (*) Stock-based compensation has been included in expenses as follows: Cost of revenues $ 3,730 $ 5,100 $ 15,957 $ 19,700 Sales and marketing $ 16,018 $ 15,700 $ 58,782 $ 64,200 Technical operations and development $ 15,186 $ 10,900 $ 49,302 $ 52,700 General and administrative $ 28,579 $ 22,600 $ 171,220 $ 151,200 Tucows Inc. Consolidated Statements of Cash Flows (Dollar amounts in U.S. dollars) Three months ended Year ended December 31, December 31, 2009 2008 2009 2008 ------------ ------------ ----------- ------------ (unaudited) (unaudited) Cash provided by (used in): Operating activities: Net income for the period $ 1,746,377 $ 1,018,811 $ 12,241,206 $ 2,074,809 Items not involving cash: Depreciation of property and equipment 292,272 558,739 1,939,442 3,173,598 Loss on disposition of property and equipment 524 - 40,893 498,529 Amortization of deferred financing charges 8,300 11,300 37,500 49,700 Amortization of intangible assets 389,739 389,739 1,558,956 1,646,991 Reduction of deferred tax liability (59,000) - (556,000) - Gain on sale of customer relationships - (49,546) - (2,091,995) Disposal of domain names 2,866 5,030 5,462 5,030 Unrealized (gain)/loss in the fair value of forward contracts (277,195) 1,419,555 (4,179,589) 1,974,919 Stock-based compensation 63,513 54,300 295,261 287,800 Gain on disposal of investment in Afilias - (3,090,404) (3,890,395) (3,090,404) Change in non-cash operating working capital: Accounts receivable 1,107,837 456,205 378,317 221,818 Prepaid expenses and deposits 244,583 321,694 (224,879) 858,086 Prepaid fees for domain name registry and ancillary services fees (65,694) (346,502) (2,654,170) (4,829,254) Income taxes receivable/payable (674,000) - (674,000) - Accounts payable 424,977 (557,655) (172,583) (789,425) Accrued liabilities 1,553 (420,176) (110,166) (1,288,941) Customer deposits (140,003) 200,149 305,076 51,457 Deferred revenue (191,381) (193,558) 2,122,953 3,574,397 Accreditation fees payable 4,811 (6,878) 2,354 33,487 ------------ ------------ ------------ ------------ Net cash provided by (used in) operating activities 2,880,079 (229,197) 6,465,638 2,360,602 ------------ ------------ ------------ ------------ Financing activities: Proceeds received on exercise of stock options - - 25,422 9,450 Repurchase of common stock (534,467) (272,444) (2,915,981) (272,444) Repayment of loan payable (478,560) (478,560) (2,639,242) (8,914,241) ------------ ------------ ------------ ------------ Net cash used in financing activities (1,013,027) (751,004) (5,529,801) (9,177,235) ------------ ------------ ------------ ------------ Investing activities: Cost of domain names acquired (7,875) (4,705) (13,775) (8,944) Additions to property and equipment (381,238) (191,140) (807,530) (2,113,904) Proceeds on disposition of property and equipment - - - 66,039 Acquisition of Innerwise Inc., net of cash acquired - (500,000) - (500,000) Proceeds on disposal of investment in Afilias - 3,244,141 4,090,395 3,244,141 Sale of customer relationships - 49,546 - 2,392,660 Decrease in cash held in escrow - 1,088,793 - 1,070,632 ------------ ------------ ------------ ------------ Net cash provided by (used in) investing activities (389,113) 3,686,635 3,269,090 4,150,624 ------------ ------------ ------------ ------------ Increase (decrease) in cash and cash equivalents 1,477,939 2,706,434 4,204,927 (2,666,009) Cash and cash equivalents, beginning of period 8,154,455 2,721,033 5,427,467 8,093,476 ------------ ------------ ------------ ------------ Cash and cash equivalents, end of period $ 9,632,394 $ 5,427,467 $ 9,632,394 $ 5,427,467 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Supplemental cash flow information: Interest paid $ 46,604 $ 78,431 $ 227,616 $ 630,729 Supplementary disclosure of non-cash investing activity: Property and equipment acquired during the period not yet paid for $ 93,594 $ 6,979 $ 93,594 $ 6,979
SOURCE Tucows Inc.
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