- Company Achieves Thirteenth Consecutive Quarter of Record Revenue/Ting Continues Strong Momentum -
TORONTO, Aug. 8, 2013 /PRNewswire/ - Tucows Inc. (NYSEAMEX:TCX, TSX:TC), a global provider of domain names and other Internet services, today reported its financial results for the second quarter ended June 30, 2013. All figures are in U.S. dollars.
Summary Financial Results
(In Thousands of US Dollars, Except Per Share Data)
3 Months Ended June 30, 2013 (unaudited) |
3 Months Ended June 30, 2012 (unaudited) |
6 Months Ended June 30, 2013 (unaudited) |
6 Months Ended June 30, 2012 (unaudited) |
|
Net revenue | 31,173 | 28,153 | 61,158 | 55,690 |
Income before provision for income taxes and change in fair value of forward exchange contracts |
948 | 1,409 | 1,379 | 3,359 |
Net income | 588 | 696 | 664 | 2,360 |
Net earnings per common share | $0.01 | $0.02 | $0.02 | $0.05 |
Net cash provided by operating activities | 2,971 | 4 | 3,388 | 2,084 |
Summary of Revenues and Cost of Revenues
(In Thousands of US Dollars)
Revenue | Cost of Revenue | |||
3 Months Ended June 30, 2013 (unaudited) |
3 Months Ended June 30, 2012 (unaudited) |
3 Months Ended June 30, 2013 (unaudited) |
3 Months Ended June 30, 2012 (unaudited) |
|
Wholesale | ||||
Domain Services | 21,800 | 21,668 | 18,485 | 18,011 |
Value-Added Services | 2,559 | 2,589 | 520 | 537 |
Total Wholesale | 24,359 | 24,257 | 19,005 | 18,548 |
Retail | 5,735 | 2,298 | 3,773 | 1,356 |
Portfolio | 1,079 | 1,598 | 230 | 216 |
Network, other costs | - | - | 1,270 | 1,214 |
Network, depreciation and amortization costs | - | - | 187 | 192 |
Total revenue/cost of revenue | 31,173 | 28,153 | 24,465 | 21,526 |
"The second quarter was once again demonstrative of the consistency and reliability in our business as we achieved our thirteenth consecutive quarter of year-over-year revenue growth, achieving another record," said Elliot Noss, President and Chief Executive Officer, Tucows Inc. "Our Wholesale and Portfolio businesses continue to perform well, while Hover delivered another quarter of outstanding growth."
"The strong momentum at Ting continues with another record quarter for customer additions - more than 9,000 - propelling our total customer count past the 25,000 mark, and the number of devices to nearly 40,000 as of the end of June. Gross margin per account remains strong and our customer acquisition costs remain low. As we get more customers and more experience, we are improving our service and our processes, further strengthening Ting's unique value proposition. While our investment to support the success of Ting is dampening our results in the short term, as previously reported, we expect Ting to cross over the breakeven threshold in the fourth quarter this year."
Net revenue for the second quarter of 2013 increased 11% to a record $31.2 million from $28.2 million for the second quarter of 2012.
Net income for the second quarter of 2013 was $0.6 million, or $0.01 per share, compared with $0.7 million, or $0.02 per share, for the second quarter of 2012. Net income for the second quarter of 2013 benefitted from recognition of a $0.5 million Interactive Digital Media Tax Credit $460,000 from the Ontario government. Net income for the second quarter of 2013 also included the incremental investment of approximately $1.3 million made during the quarter for the acquisition and support of Ting customers, as well as the loss on foreign exchange contracts of $0.1 million. This compares with a loss on foreign exchange contracts of $0.4 million in the second quarter of 2012.
Deferred revenue at the end of the second quarter of 2013 was $73.0 million, a decrease of 2% from $74.5 million at the end of the second quarter of 2012 and an increase of 1% from $72.4 million at the end of the first quarter of 2013.
Cash and cash equivalents at the end of the second quarter of 2013 were $6.5 million compared with $4.3 million at the end of the first quarter of 2013 and $4.5 million from the end of the second quarter of 2012. The increase in cash and cash equivalents compared to the first quarter of 2013 is the result of generation of $3.0 million in cash flow from operations and $0.3 million from the exercise of stock options, which were partially offset by the use of $0.6 million for principal repayments under the Company's credit facility and investment of $0.5 million in equipment purchases. Cash flow from operations for the second quarter of 2013 was positively impacted by changes in working capital resulting from the timing of payments in the normal course of business.
Conference Call
Tucows management will host a conference call today, Thursday, August 8, 2013 at 5:00 p.m. (ET) to discuss the Company's second 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 22224502 followed by the pound key. The telephone replay will be available until Thursday, August 15, 2013 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.com (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).
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.
Tucows Inc. | ||||||||
Consolidated Balance Sheets | ||||||||
(Dollar amounts in U.S. dollars) | ||||||||
June 30, | December 31, | |||||||
2013 | 2012 | |||||||
(unaudited) | (unaudited) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 6,465,126 | $ | 6,415,679 | ||||
Accounts receivable | 5,627,555 | 4,413,265 | ||||||
Inventory | 187,424 | 587,104 | ||||||
Prepaid expenses and deposits | 4,784,513 | 5,081,408 | ||||||
Derivative instrument asset, current portion | - | 412,944 | ||||||
Prepaid domain name registry and ancillary services fees, current portion | 46,629,631 | 45,170,167 | ||||||
Income taxes recoverable | 628,476 | 1,730,631 | ||||||
Total current assets | 64,322,725 | 63,811,198 | ||||||
Derivative instrument asset, long-term portion | - | 31,838 | ||||||
Prepaid domain name registry and ancillary services fees, long-term portion | 12,242,246 | 12,318,723 | ||||||
Property and equipment | 1,784,875 | 1,352,144 | ||||||
Deferred tax asset, long-term portion | 6,006,995 | 5,970,462 | ||||||
Intangible assets | 15,870,402 | 16,415,651 | ||||||
Goodwill | 18,873,127 | 18,873,127 | ||||||
Total assets | $ | 119,100,370 | $ | 118,773,143 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,444,529 | $ | 1,928,459 | ||||
Accrued liabilities | 3,023,913 | 2,522,229 | ||||||
Customer deposits | 4,668,101 | 4,955,671 | ||||||
Derivative instrument liability, current portion | 800,635 | - | ||||||
Loan payable, current portion | 7,500,000 | 3,700,000 | ||||||
Deferred revenue, current portion | 57,003,871 | 54,997,887 | ||||||
Accreditation fees payable, current portion | 535,311 | 512,847 | ||||||
Deferred tax liability, current portion | 795,741 | 914,429 | ||||||
Income taxes payable | 259,317 | 1,255,108 | ||||||
Total current liabilities | 77,031,418 | 70,786,630 | ||||||
Deferred revenue, long-term portion | 15,973,216 | 16,002,464 | ||||||
Accreditation fees payable, long-term portion | 139,045 | 145,592 | ||||||
Deferred rent, long-term portion | 64,026 | 54,150 | ||||||
Deferred tax liability, long-term portion | 5,178,300 | 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; 40,641,488 shares issued and outstanding as of June 30, 2013 and 44,322,159 shares issued and outstanding as of December 31, 2012 |
9,755,391 | 10,084,417 | ||||||
Additional paid-in capital | 28,207,230 | 33,931,529 | ||||||
Deficit | (16,845,634) | (17,509,843) | ||||||
Accumulated other comprehensive income (loss) | (402,622) | 44,104 | ||||||
Total stockholders' equity | 20,714,365 | 26,550,207 | ||||||
Total liabilities and stockholders' equity | $ | 119,100,370 | $ | 118,773,143 |
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 June 30, | Six months ended June 30, | |||||||||
2013 | 2012 | 2013 | 2012 | |||||||
(unaudited) | (unaudited) | |||||||||
Net revenues | $ | 31,173,357 | $ | 28,152,614 | $ | 61,158,379 | $ | 55,689,920 | ||
Cost of revenues: | ||||||||||
Cost of revenues | 23,007,506 | 20,120,211 | 45,085,405 | 39,387,336 | ||||||
Network expenses (*) | 1,269,808 | 1,213,864 | 2,524,021 | 2,470,754 | ||||||
Depreciation of property and equipment | 151,356 | 155,638 | 288,428 | 303,056 | ||||||
Amortization of intangible assets | 35,910 | 35,910 | 71,820 | 71,820 | ||||||
Total cost of revenues | 24,464,580 | 21,525,623 | 47,969,674 | 42,232,966 | ||||||
Gross profit | 6,708,777 | 6,626,991 | 13,188,705 | 13,456,954 | ||||||
Expenses: | ||||||||||
Sales and marketing (*) | 2,946,586 | 2,065,729 | 5,793,672 | 4,250,364 | ||||||
Technical operations and development (*) | 748,137 | 1,105,575 | 1,881,967 | 2,218,720 | ||||||
General and administrative (*) (note 1) | 1,698,697 | 1,748,402 | 3,397,329 | 3,531,855 | ||||||
Depreciation of property and equipment | 54,922 | 45,522 | 105,861 | 92,937 | ||||||
Amortization of intangible assets | 219,030 | 219,030 | 438,060 | 438,060 | ||||||
Loss (gain) on currency forward contracts (note 1) | 146,639 | 383,838 | 381,277 | (178,271) | ||||||
Total expenses | 5,814,011 | 5,568,096 | 11,998,166 | 10,353,665 | ||||||
Income from operations | 894,766 | 1,058,895 | 1,190,539 | 3,103,289 | ||||||
Other income (expenses): | ||||||||||
Interest expense, net | (93,428) | (54,513) | (192,790) | (95,482) | ||||||
Other income | - | 20,911 | - | 529,711 | ||||||
Total other income (expenses) | (93,428) | (33,602) | (192,790) | 434,229 | ||||||
Income before provision for income taxes | 801,338 | 1,025,293 | 997,749 | 3,537,518 | ||||||
Provision for income taxes | 213,708 | 329,295 | 333,540 | 1,177,901 | ||||||
Net income | 587,630 | 695,998 | 664,209 | 2,359,617 | ||||||
Other comprehensive loss, net of tax of $133,761 for the three months ended June 30, 2013 and $230,538 for the six months ended June 30, 2013 |
260,941 | - | 446,726 | - | ||||||
Comprehensive income (loss) for the period | $ | 326,689 | $ | 695,998 | $ | 217,483 | $ | 2,359,617 | ||
Basic earnings per common share | $ | 0.01 | $ | 0.02 | $ | 0.02 | $ | 0.05 | ||
Shares used in computing basic earnings per common share | 40,323,261 | 45,912,458 | 40,327,324 | 47,003,016 | ||||||
Diluted earnings per common share | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.05 | ||
Shares used in computing diluted earnings per common share | 44,278,852 | 49,449,430 | 44,294,015 | 50,203,163 | ||||||
(*) Stock-based compensation has been included in expenses as follows: | ||||||||||
Network expenses | $ | 7,932 | $ | 6,329 | $ | 14,058 | $ | 12,375 | ||
Sales and marketing | $ | 33,909 | $ | 20,149 | $ | 60,319 | $ | 42,931 | ||
Technical operations and development | $ | 20,370 | $ | 15,047 | $ | 35,617 | $ | 27,890 | ||
General and administrative | $ | 29,044 | $ | 21,571 | $ | 56,103 | $ | 42,365 |
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 June 30, | Six months ended June 30, | |||||||||
2013 | 2012 | 2013 | 2012 | |||||||
Cash provided by: | (unaudited) | (unaudited) | ||||||||
Operating activities: | ||||||||||
Net income for the period | $ | 587,630 | $ | 695,998 | $ | 664,209 | $ | 2,359,617 | ||
Items not involving cash: | ||||||||||
Depreciation of property and equipment | 206,278 | 201,160 | 394,289 | 395,993 | ||||||
Amortization of deferred financing charges | - | 700 | - | 2,200 | ||||||
Amortization of intangible assets | 254,940 | 254,940 | 509,880 | 509,880 | ||||||
Deferred income taxes (recovery) | 113,748 | (107,146) | 21,683 | 104,942 | ||||||
Deferred rent | 4,372 | 5,931 | 9,876 | 13,200 | ||||||
Acquisition of domain names | - | - | - | (3,664) | ||||||
Disposal of domain names | 20,876 | 7,301 | 35,369 | 23,039 | ||||||
Gain on disposition of intangible assets | - | - | - | (508,800) | ||||||
(Gain) loss on change in the fair value of forward contracts | 114,846 | 245,477 | 565,987 | (456,366) | ||||||
Stock-based compensation | 91,255 | 63,096 | 166,097 | 125,561 | ||||||
Changes in non-cash operating working capital: | ||||||||||
Accounts receivable | (665,972) | (22,102) | (1,214,290) | (1,036,831) | ||||||
Inventory | 121,380 | - | 399,680 | - | ||||||
Prepaid expenses and deposits | 635,193 | (783,370) | 296,895 | (1,891,468) | ||||||
Prepaid fees for domain name registry and ancillary services fees | (341,273) | (1,378,771) | (1,382,987) | (4,298,194) | ||||||
Income taxes recoverable/payable | (2,789) | (378,492) | 106,364 | 240,581 | ||||||
Accounts payable | 1,797 | (308,892) | 607,721 | 605,077 | ||||||
Accrued liabilities | 1,025,886 | 255,254 | 501,684 | 524,165 | ||||||
Customer deposits | 273,851 | (191,402) | (287,570) | 65,598 | ||||||
Deferred revenue | 557,152 | 1,460,816 | 1,976,736 | 5,284,648 | ||||||
Accreditation fees payable | (28,082) | (16,775) | 15,917 | 25,179 | ||||||
Net cash provided by operating activities | 2,971,088 | 3,723 | 3,387,540 | 2,084,357 | ||||||
Financing activities: | ||||||||||
Proceeds received on exercise of stock options | 279,685 | 219,000 | 318,194 | 349,712 | ||||||
Repurchase of common stock | - | (1,591,743) | (6,537,616) | (7,485,190) | ||||||
Proceeds received on loan payable | - | - | 5,200,000 | 4,000,000 | ||||||
Repayment of loan payable | (600,000) | (311,667) | (1,400,000) | (850,000) | ||||||
Net cash used in financing activities | (320,315) | (1,684,410) | (2,419,422) | (3,985,478) | ||||||
Investing activities: | ||||||||||
Additions to property and equipment | (471,966) | (174,054) | (918,671) | (504,327) | ||||||
Proceeds on disposition of intangible assets | - | - | - | 508,800 | ||||||
Net cash provided by (used in) investing activities | (471,966) | (174,054) | (918,671) | 4,473 | ||||||
Increase (decrease) in cash and cash equivalents | 2,178,807 | (1,854,741) | 49,447 | (1,896,648) | ||||||
Cash and cash equivalents, beginning of period | 4,286,319 | 6,366,302 | 6,415,679 | 6,408,209 | ||||||
Cash and cash equivalents, end of period | $ | 6,465,126 | $ | 4,511,561 | $ | 6,465,126 | $ | 4,511,561 | ||
Supplemental cash flow information: | ||||||||||
Interest paid | $ | 97,369 | $ | 54,655 | $ | 196,873 | $ | 95,831 | ||
Supplementary disclosure of non-cash investing activity: | ||||||||||
Property and equipment acquired during the period not yet paid for | $ | 4,864 | $ | 42,343 | $ | 4,864 | $ | 42,343 |
SOURCE Tucows Inc.
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