TORONTO, Nov. 9, 2011 /PRNewswire/ - Tucows Inc. (NYSEAMEX:TCX, TSX:TC), a global provider of domain names, email and other Internet services, today reported its financial results for the third quarter ended September 30, 2011. All figures are in U.S. dollars.
Summary Financial Results
(Numbers in Thousands of US Dollars, Except Per Share Data)
3 Months Ended September 30, 2011 (unaudited) |
3 Months Ended September 30, 2010 (unaudited) |
9 Months Ended September 30, 2011 (unaudited) |
9 Months Ended September 30, 2010 (unaudited) |
|
Net revenue | 25,094 | 21,209 | 70,695 | 62,501 |
Income before provision for income taxes and change in fair value of forward exchange contracts |
1,423 | 966 | 3,350 | 2,784 |
Net income (loss) for the period | (1,152) | 1,083 | 141 | 880 |
Net earnings (loss) per common share | (0.02) | 0.02 | 0.00 | 0.01 |
Net cash provided by operating activities | 1,628 | 1,876 | 3,215 | 4,428 |
Summary of Revenues and Cost of Revenues
(Numbers in Thousands of US Dollars)
Revenue | Cost of Revenue | |||
3 Months Ended September 30, 2011 (unaudited) |
3 Months Ended September 30, 2010 (unaudited) |
3 Months Ended September 30, 2011 (unaudited) |
3 Months Ended September 30, 2010 (unaudited) |
|
OpenSRS: | ||||
Domain Service | 19,698 | 16,517 | 16,470 | 13,818 |
Email Service | 636 | 578 | 74 | 97 |
Other services | 1,212 | 1,086 | 433 | 417 |
Total OpenSRS services | 21,546 | 18,181 | 16,977 | 14,332 |
YummyNames | 1,785 | 1,249 | 179 | 180 |
Hover | 1,358 | 1,147 | 495 | 380 |
Butterscotch | 405 | 632 | 8 | 12 |
Network, other costs | - | - | 1,193 | 1,088 |
Network, depreciation and amortization costs | - | - | 183 | 306 |
Total revenue/cost of revenue | 25,094 | 21,209 | 19,035 | 16,298 |
"The momentum of the first half of 2011 continued into the third quarter, which was highlighted by strong growth and solid cash flow from operations, as well as the acquisition of EPAG Domainservices," said Elliot Noss, President and Chief Executive Officer, Tucows Inc. "Revenue was up more than 18% year-over-year to a record $25.1 million, with meaningful growth across all key areas of our business. The OpenSRS domain service had another solid quarter with 19% year-over-year growth in registrations and a third consecutive quarter of domain registrations in excess of 2 million. YummyNames and Hover also had strong quarters as we continue to see the positive results of initiatives we have undertaken to grow those businesses. Quarter after quarter, our financial performance underscores the consistency and reliability of our business, combined with our ability to achieve steady growth. We remain well positioned to consistently generate cash flow from operations while introducing new services with minimal impact on operating expenses."
Net revenue for the third quarter of 2011 increased 18.3% to $25.1 million from $21.2 million for the third quarter of 2010.
Income before provision for income taxes and change in fair value of forward exchange contracts for the third quarter of 2011 increased by $0.5 million, or 47%, to $1.4 million from $966,000 for the third quarter of 2010. Net loss for the third quarter of 2011 was $1.2 million, or $0.02 per share, primarily the result of the impact of the non-cash foreign exchange losses incurred on the fair value of forward exchange contracts. Net income for the third quarter of 2010 was $1.1 million, or $0.02 per share.
Deferred revenue at the end of the third quarter of 2011 was $68.9 million, an increase of 10.6% from $62.3 million at the end of the third quarter of 2010 and an increase of 3.1% from $66.8 million at the end of the second quarter of 2011.
Cash and cash equivalents at the end of the third quarter of 2011 were $4.7 million compared with $5.4 million at the end of the third quarter of 2010 and $4.3 million at the end of the second quarter of 2011. Operating cash flow for the third quarter of 2011 was $1.6 million and the Company borrowed $2.5 million under its amended credit facility with Bank of Montreal to fund the acquisition of EPAG Domainservices GMBH ("EPAG") in July 2011. In August 2011, the Company repaid $1.0 million of the EPAG loan and during the quarter repaid $320,000 of its previous outstanding balance on its credit facility. In addition, the company invested $139,000 in acquiring property and equipment. As of September 30, 2011, the Company had an amount payable of $1.6 million under its amended credit facility.
Conference Call
Tucows management will host a conference call today, Wednesday, November 9, 2011 at 5:00 p.m. (ET) to discuss the Company's third quarter 2011 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 22092643 followed by the pound key. The telephone replay will be available until Wednesday, November 16, 2011 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 eleven million domain names and millions of email boxes through a reseller network of over 12,000 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 Downloads. More information can be found at http://tucowsinc.com.
This release includes forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995. In particular, this release includes forward looking statements regarding our expectations as to our financial results, our future growth and our ability to generate cash and return capital to shareholders. 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. 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 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.
Tucows Inc.
Consolidated Balance Sheets
(Dollar amounts in U.S. dollars)
September 30, | December 31, | ||||||||
2011 | 2010 | ||||||||
(unaudited) | (unaudited) | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 4,653,765 | $ | 4,205,729 | |||||
Accounts receivable | 4,289,462 | 3,021,995 | |||||||
Prepaid expenses and deposits | 3,756,375 | 2,363,876 | |||||||
Derivative instrument asset, current portion | 1,090 | 833,960 | |||||||
Prepaid domain name registry and ancillary services fees, current portion | 43,005,543 | 37,016,871 | |||||||
Income taxes recoverable | 330,093 | 620,000 | |||||||
Total current assets | 56,036,328 | 48,062,431 | |||||||
Prepaid domain name registry and ancillary services fees, long-term portion | 12,693,752 | 12,820,479 | |||||||
Property and equipment | 1,313,611 | 1,552,349 | |||||||
Deferred financing charges | 4,500 | 15,600 | |||||||
Deferred tax asset, long-term portion | 3,569,000 | 4,155,600 | |||||||
Intangible assets | 17,741,695 | 16,883,401 | |||||||
Goodwill | 18,873,127 | 17,990,807 | |||||||
Total assets | $ | 110,232,013 | $ | 101,480,667 | |||||
Liabilities and Stockholders' Equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | $ 1,301,612 | $ | $ 1,664,006 | |||||
Accrued liabilities | 1,720,279 | 1,346,436 | |||||||
Customer deposits | 3,903,564 | 3,960,312 | |||||||
Derivative instrument liability current portion | 1,193,751 | - | |||||||
Loan payable, current portion | 1,559,722 | 1,305,883 | |||||||
Deferred revenue, current portion | 52,372,852 | 45,832,374 | |||||||
Accreditation fees payable, current portion | 562,374 | 547,810 | |||||||
Deferred tax liability, current portion | 569,000 | 1,155,600 | |||||||
Income taxes payable | 200,940 | - | |||||||
Total current liabilities | 63,384,094 | 55,812,421 | |||||||
Derivative instrument liability long-term portion | 431,483 | - | |||||||
Deferred revenue, long-term portion | 16,564,604 | 16,738,429 | |||||||
Accreditation fees payable, long-term portion | 159,614 | 168,580 | |||||||
Deferred rent, long-term portion | 19,274 | - | |||||||
Deferred tax liability, long-term portion | 5,373,600 | 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; 53,477,874 shares issued and outstanding as of September 30, 2011 and 53,448,591 shares issued and outstanding as of December 31, 2010 |
11,349,613 | 11,324,866 | |||||||
Additional paid-in capital | 40,938,602 | 40,700,587 | |||||||
Accumulated other comprehensive income | (26,121) | - | |||||||
Deficit | (27,962,750) | (28,104,216) | |||||||
Total stockholders' equity | 24,299,344 | 23,921,237 | |||||||
Total liabilities and stockholders' equity | $ | $ 110,232,013 | $ | $ 101,480,667 |
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 September 30, | Nine months ended September 30, | |||||||||
2011 | 2010 | 2011 | 2010 | |||||||
(unaudited) | (unaudited) | |||||||||
Net revenues | $ | 25,094,056 | $ | 21,209,468 | $ | 70,695,186 | $ | 62,501,219 | ||
Cost of revenues: | |
|||||||||
Cost of revenues (*) | 17,658,648 | 14,903,525 | 49,578,724 | 42,871,489 |
||||||
Network expenses | 1,193,669 | 1,087,930 | 3,691,995 | 3,500,826 |
||||||
Depreciation of property and equipment | 159,191 | 231,253 | 608,961 | 794,368 |
||||||
Amortization of intangible assets | 23,960 | 74,802 | 49,680 | 224,406 |
||||||
Total cost of revenues | 19,035,468 | 16,297,510 | 53,929,360 | 47,391,089 | ||||||
Gross profit | 6,058,588 | 4,911,958 | 16,765,826 | 15,110,130 | ||||||
Expenses: | |
|||||||||
Sales and marketing (*) | 1,867,085 | 1,830,999 | 5,663,759 | 5,480,228 |
||||||
Technical operations and development (*) | 1,220,953 | 1,053,768 | 3,651,782 | 3,486,718 |
||||||
General and administrative (*) | 1,279,082 | 633,457 | 3,509,395 | 2,049,813 |
||||||
Depreciation of property and equipment | 48,874 | 40,239 | 140,556 | 127,559 |
||||||
Amortization of intangible assets | 201,180 | 360,540 | 785,920 | 1,081,620 |
||||||
Loss (gain) on change in fair value of forward exchange contracts | 2,152,243 | (141,981) | 2,458,104 | 1,669,031 |
||||||
Total expenses | 6,769,417 | 3,777,022 | 16,209,516 | 13,894,969 | ||||||
Income (loss) from operations | (710,829) | 1,134,936 | 556,310 | 1,215,161 | ||||||
Other income (expenses): | |
|||||||||
Interest (expense) income, net | (18,718) | (26,917) | (38,915) | (99,812) |
||||||
Other income | - | - | 374,977 | - |
||||||
Total other income (expenses) | (18,718) | (26,917) | 336,062 | (99,812) | ||||||
Income (loss) before provision for income taxes | (729,547) | 1,108,019 | 892,372 | 1,115,349 | ||||||
Provision for income taxes | 422,592 | 24,863 | 750,906 | 235,105 |
||||||
Net income (loss) for the period | $ | (1,152,139) | $ | 1,083,156 | $ | 141,466 | $ | 880,244 | ||
Basic earnings (loss) per common share | $ | (0.02) | $ | 0.02 | $ | - | $ | 0.01 | ||
Shares used in computing basic earnings (loss) per common share | 53,452,205 | 57,351,161 | 53,444,959 | 59,255,739 | ||||||
Diluted earnings (loss) per common share | $ | (0.02) | $ | 0.02 | $ | - | $ | 0.01 | ||
Shares used in computing diluted earnings (loss) per common share | 53,452,205 | 59,185,793 | 55,748,777 | 61,223,369 | ||||||
(*) Stock-based compensation has been included in expenses as follows: | |
|||||||||
Network expenses | $ | 5,808 | $ | 6,557 | $ | 17,170 | $ | 15,759 |
||
Sales and marketing | $ | 22,695 | $ | 30,358 | $ | 67,155 | $ | 71,589 |
||
Technical operations and development | $ | 13,020 | $ | 19,058 | $ | 40,122 | $ | 51,903 |
||
General and administrative | $ | 79,364 | $ | 99,813 | $ | 124,170 | $ | 174,437 |
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 September 30, | Nine months ended September 30, | ||||||||
2011 | 2010 | 2011 | 2010 | ||||||
(unaudited) | (unaudited) | ||||||||
Cash provided by (used in): | |
||||||||
Operating activities: | |||||||||
Net income (loss) for the period | $ | (1,152,139) | $ | 1,083,156 | $ | 141,466 | $ | 880,244 |
|
Items not involving cash: | |
||||||||
Depreciation of property and equipment | 208,065 | 271,492 | 749,517 | 921,927 |
|||||
Amortization of deferred financing charges | 3,000 | 6,000 | 11,100 | 20,100 |
|||||
Amortization of intangible assets | 225,140 | 435,342 | 835,600 | 1,306,026 |
|||||
Decrease in deferred tax liability | (18,400) | - | (18,400) | - |
|||||
Deferred rent | 5,310 | - | 19,274 | - |
|||||
Disposal of domain names | 8,816 | 5,084 | 29,907 | 17,090 |
|||||
Unrealized loss (gain) in the fair value of forward contracts | 2,152,243 | (141,981) | 2,458,104 | 1,669,031 |
|||||
Stock-based compensation | 120,887 | 155,786 | 248,617 | 313,688 |
|||||
Changes in non-cash operating working capital: | |
||||||||
Accounts receivable | 412,735 | 53,373 | (715,829) | (510,232) |
|||||
Prepaid expenses and deposits | 264,660 | 489,843 | (958,989) | 61,356 |
|||||
Prepaid fees for domain name registry and ancillary services fees | (1,074,068) | (2,355,886) | (4,823,650) | (5,786,558) |
|||||
Income taxes recoverable | 173,008 | (165,000) | 333,008 | 127,000 |
|||||
Accounts payable | (531,095) | (244,194) | (327,272) | (443,624) |
|||||
Accrued liabilities | (113,972) | (231,633) | 267,595 | (264,317) |
|||||
Customer deposits | 170,762 | 240,907 | (86,941) | 78,147 |
|||||
Deferred revenue | 788,835 | (14,435) | 5,046,102 | 6,023,890 |
|||||
Accreditation fees payable | (15,607) | 2,287,739 | 6,185 | 13,882 |
|||||
Net cash provided by operating activities | 1,628,180 | 1,875,593 | 3,215,394 | 4,427,650 | |||||
|
|||||||||
Financing activities: | |
||||||||
Proceeds received on exercise of stock options | 10,685 | - | 14,145 | 14,809 |
|||||
Repurchase of common stock | - | - | - | (6,914,792) |
|||||
Proceeds received on loan payable | 2,530,000 | (478,561) | 2,530,000 | (1,435,682) |
|||||
Repayment of loan payable | (1,319,040) | - | (2,276,161) | - |
|||||
Net cash provided by (used in) financing activities | 1,221,645 | (478,561) | 267,984 | (8,335,665) | |||||
|
|||||||||
Investing activities: | |
||||||||
Additions to property and equipment | (138,909) | (33,111) | (629,935) | (292,790) |
|||||
Acquisition of EPAG Domainservices GMBH, net of cash acquired | (2,392,461) | - | (2,392,461) | - |
|||||
Net cash used in investing activities | (2,531,370) | (33,111) | (3,022,396) | (292,790) |
|||||
Foreign exchange loss on cash held in foreign currencies | (12,946) | - | (12,946) | - | |||||
|
|||||||||
Increase (decrease) in cash and cash equivalents | 305,509 | 1,363,921 | 448,036 | (4,200,805) |
|||||
Cash and cash equivalents, beginning of period | 4,348,256 | 4,067,668 | 4,205,729 | 9,632,394 |
|||||
Cash and cash equivalents, end of period | $ | 4,653,765 | $ | 5,431,589 | $ | 4,653,765 | $ | 5,431,589 | |
|
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Supplemental cash flow information: | |
||||||||
Interest paid | $ | 18,890 | $ | 27,001 | $ | 39,197 | $ | 99,798 | |
|
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Supplementary disclosure of non-cash investing activity: | |
||||||||
Property and equipment acquired during the period not yet paid for | $ | 124,979 | $ | 146,158 | $ | 124,979 | $ | 146,158 |
SOURCE Tucows Inc.
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