TORONTO, Nov. 11 /PRNewswire-FirstCall/ -- 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 third quarter of 2009 ended September 30, 2009. All figures are
in U.S. dollars. 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 Elliot Noss, President and CEO of
Tucows. "Fundamentally, our business is strong and we are
performing very well operationally. Amidst a weakening Internet
services environment, our strong competitive position, supported by
continuing improvements to our OpenSRS platform, has enabled us to
grow new registrations in excess of industry performance. All of
this continues to position us well for the remainder of 2009 and
beyond." Net revenue for the third quarter of 2009 was $20.5
million compared with $20.1 million for the third quarter of 2008.
Net income for the third quarter of 2009 was $5.1 million, or $0.07
per share, compared with a net loss of $71,000, or less than $0.01
per share, for the third quarter of 2008. Net income for the third
quarter of 2009 benefitted from other income of $1.9 million
generated by receipt of the third and final payment related to the
sale of the Company's equity stake in Afilias, as well as a gain on
foreign exchange of $1.9 million (inclusive of a mark-to-market
gain of $1.9 million) compared to a loss on foreign exchange of
$0.7 million (inclusive of a mark-to-market loss of $0.5 million)
for the third quarter of 2008. In addition, because the Company is
no longer subject to state taxes in certain jurisdictions, it has
amended its tax rate payable in connection with its deferred tax
liability resulting in an income tax recovery of $0.4 million in
the third quarter of 2009. Deferred revenue at the end of the third
quarter of fiscal 2009 was $56.5 million, an increase of 4% from
$54.4 million at the end of the third quarter of fiscal 2008 and a
slight decrease from $56.9 million at the end of the second quarter
of fiscal 2009. Cash and cash equivalents at the end of the third
quarter of fiscal 2009 were $8.2 million compared with $2.7 million
at the end of the third quarter of fiscal 2008 and $7.4 million at
the end of the second quarter of fiscal 2009. This increase in cash
compared with the second quarter of 2009 is primarily the result of
the receipt of the $2.0 million payment related to the sale of the
Company's equity stake in Afilias last year, which was partially
offset by the repayment of $479,000 of the Company's bank loan and
the use of $570,000 for the repurchase of shares under the
Company's second modified "Dutch auction" tender offer, which
concluded in July of this year. Cash flow from operations for the
quarter was $82,000 and was impacted by a change in non-cash
working capital related to the timing of payables and receivables
of $1.5 million, the result of the receipt of $0.5 million in
receivables shortly after quarter end and the payment of $1.0
million in certain payables to comply with changes in the Company's
relationships with certain suppliers. Conference Call Tucows will
host a conference call today, Wednesday, November 11, 2009 at 5:00
p.m. ET to discuss the Company's third 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 416-640-1917 or
1-877-289-8525 and enter the pass code 4171862 followed by the
pound key. The telephone replay will be available until Wednesday,
November 18, 2009 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 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 ------------ ------------ ------------
------------ 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 DATASOURCE: Tucows Inc. CONTACT:
Lawrence Chamberlain, The Equicom Group for Tucows Inc., (416)
815-0700 ext. 257,
Copyright