Press Releases

Unedited news and product information from vendors.

Tucows Inc. Reports Continuing Strong Financial Results for Fourth Quarter of 2011
Feb 15, 2012 (03:02 PM EST)


- Company Reports 7th Consecutive Quarter of Record Revenue -

TORONTO, Feb. 15, 2012 /PRNewswire/ - 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 fourth quarter ended December 31, 2011. All figures are in U.S. dollars. 

Summary Financial Results
(Numbers in Thousands of US Dollars, Except Per Share Data)

  3 Months
Ended
  December 31,  
2011
(unaudited)
3 Months
Ended
  December 31,  
2010
(unaudited)
12 Months
Ended
  December 31,  
2011
(unaudited)
12 Months
Ended
  December 31,  
2010
(unaudited)
Net revenue 26,370 22,077  97,065  84,579 
Income before provision for income taxes  
and change in fair value of forward
exchange contracts 
1,745  611  3,986  1,455 
Net income (loss) for the period 6,055 1,237 6,170 2,117
Net earnings (loss) per common share* 0.11 0.02 0.12 0.04
Net cash provided by operating activities 2,683 2,341 5,885 6,769

* 2011 results include a tax benefit of $0.06 per share related to the release of deferred tax asset valuation allowances.

Summary of Revenues and Cost of Revenues
(Numbers in Thousands of US Dollars)

  Revenue Cost of Revenue
  3 Months Ended
December 31,
  2011 (unaudited)  
3 Months Ended
December 31,
  2010 (unaudited)  
3 Months Ended
December 31,
  2011 (unaudited)  
3 Months Ended
December 31,
  2010 (unaudited)  
OpenSRS:        
Domain Service 20,743 17,308 17,347 14,565
Email Service 653 529 41 104
Other services 1,136 1,104 385 366
Total OpenSRS services 22,532 18,941 17,773 15,035
         
YummyNames 1,648 1,531 182 181
Hover 1,432 1,172 548 398
Butterscotch 759 433 6 9
         
Network, other costs - - 1,146 1,148
Network, depreciation and
amortization costs
- - 177 313
Total revenue/cost of revenue   26,370 22,077 19,833 17,084

"Our strong performance in the fourth quarter, highlighted by 19% year-over-year revenue growth to a record $26.4 million - our seventh consecutive quarter of record revenue - and solid cash flow from operations, concluded a year that was indicative of the consistency and reliability of our business, as well as our ability to efficiently deliver growth," said Elliot Noss, President and Chief Executive Officer, Tucows Inc.  "As a result, we also delivered our best year ever in terms of revenue at just over $97 million.  Looking ahead, this efficiency, combined with what we believe is the best distribution channel in the Internet economy, firmly positions us to continue to consistently generate cash flow, while introducing new services with minimal capital investment or impact on operating expenses. Ting, our recently launched US mobile phone service, is a testament to our capabilities in this regard."

Net revenue for the fourth quarter of 2011 increased 19% to a record $26.4 million from $22.1 million for the fourth quarter of 2010 and was driven by growth in each of the Company's business groups.

Net income for the fourth quarter of 2011 was $6.1 million, or $0.11 per share, compared with net income for the fourth quarter of 2010 of $1.2 million, or $0.02 per share. Net income per share for the fourth quarter of 2011 includes a tax benefit of $0.06 per share related to the release of deferred tax asset valuation allowances during that quarter.

Deferred revenue at the end of the fourth quarter of 2011 was $69.2 million, an increase of 11% from $62.6 million at the end of the fourth quarter of 2010 and relatively unchanged from the end of the third quarter of 2011.

Cash and cash equivalents at the end of the fourth quarter of 2011 were $6.4 million compared with $4.2 million at the end of the fourth quarter of 2010 and $4.7 million at the end of the third quarter of 2011.  The increase from the end of third quarter of 2011 is primarily the result of cash flow from operations for the fourth quarter of 2011 of $2.7 million, which was partially offset by the use of $0.7 million for repayment of the Company's credit facility and $0.2 million for investment in equipment.

As previously announced, subsequent to the end of the fourth quarter the Company completed the repurchase of 7.6 million of its shares at a purchase price of $0.77 per share for a total of $5.8 million under its modified "Dutch auction" tender announced on December 15, 2011.  Since initiating its first share buyback program in February 2007, the Company has repurchased a total of 30.8 million shares through its buyback programs, representing 40.5% of the Company's total shares outstanding at the end of January 2007.

Conference Call

Tucows management will host a conference call today, Wednesday, February 15, 2012 at 5:00 p.m. (ET) to discuss the Company's fourth 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 48872391 followed by the pound key.  The telephone replay will be available until Wednesday, February 22, 2012 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 eleven million domain names and millions of email boxes through a reseller network of over 12,000 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 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.  In particular, this release includes forward looking statements regarding our expectations as to our financial results, our future growth, the consistency of our business and our ability to generate cash. 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, OpenSRS, Hover, and YummyNames are registered trademarks of Tucows Inc. or its subsidiaries.

Tucows  Inc.
Consolidated Balance Sheets
(Dollar amounts in U.S. dollars)
                     
          December 31,         December 31,
          2011         2010
          (unaudited)         (unaudited)
                     
Assets                    
                     
Current assets:                    
  Cash and cash equivalents       $ 6,408,209       $ 4,205,729
  Accounts receivable         3,880,184         3,021,995
  Inventory         205,597         -
  Prepaid expenses and deposits         3,756,308         2,363,876
  Derivative instrument asset, current portion         -         833,960
  Prepaid domain name registry and ancillary services fees,
current portion
        43,209,033         37,016,871
  Income taxes recoverable         867,093         620,000
    Total current assets         58,326,424         48,062,431
                     
Derivative instrument asset, long-term portion         87,023         -
Prepaid domain name registry and ancillary services fees,
long-term portion
        12,600,154         12,820,479
Property and equipment         1,437,564         1,552,349
Deferred financing charges         2,300         15,600
Deferred tax asset, long-term portion         6,880,377         4,155,600
Intangible assets         17,482,590         16,883,401
Goodwill         18,873,127         17,990,807
    Total assets       $ 115,689,559       $ 101,480,667
                     
                     
Liabilities and Stockholders' Equity                    
                     
Current liabilities:                    
  Accounts payable       $ 1,051,115       $ 1,664,006
  Accrued liabilities         2,081,968         1,346,436
  Customer deposits         4,202,899         3,960,312
  Derivative instrument liability, current portion         781,027         -
  Loan payable, current portion         850,000         1,305,883
  Deferred revenue, current portion         52,683,546         45,832,374
  Accreditation fees payable, current portion         555,869         547,810
  Deferred tax liability, current portion         880,008         1,155,600
  Income taxes payable         158,258         -
    Total current liabilities         63,244,690         55,812,421
                     
Derivative instrument liability, long-term portion         5,479         -
Deferred revenue, long-term portion         16,492,155         16,738,429
Accreditation fees payable, long-term portion         156,061         168,580
Deferred rent, long-term portion         26,487         -
Deferred tax liability, long-term portion         5,345,700         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;
53,497,584 shares issued and outstanding as of December 31,
2011 and 53,448,591 shares issued and outstanding as of
December 31, 2010
        11,358,959         11,324,866
  Additional paid-in capital         40,994,013         40,700,587
  Deficit         (21,933,985)         (28,104,216)
    Total stockholders' equity         30,418,987         23,921,237
Total liabilities and stockholders' equity       $ 115,689,559       $ 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 December 31,       Year ended December 31,  
        2011       2010         2011       2010
      (unaudited)       (unaudited)  
                                   
Net revenues     $ 26,369,781     $ 22,077,286       $ 97,064,967     $ 84,578,505
                                   
Cost of revenues:                                  
  Cost of revenues (*)       18,509,663       15,623,360         68,088,387       58,494,849
  Network expenses       1,145,655       1,148,073         4,837,650       4,648,899
  Depreciation of property and equipment       141,494       238,000         750,455       1,032,368
  Amortization of intangible assets       35,910       74,802         85,590       299,208
    Total cost of revenues       19,832,722       17,084,235         73,762,082       64,475,324
                                   
Gross profit       6,537,059       4,993,051         23,302,885       20,103,181
                                   
Expenses:                                  
  Sales and marketing (*)       1,778,922       1,737,526         7,442,681       7,217,754
  Technical operations and development (*)       1,216,446       1,091,180         4,868,228       4,577,898
  General and administrative (*) (note 1)       1,477,153       1,132,954         6,096,596       5,123,074
  Depreciation of property and equipment       46,449       43,285         187,005       170,844
  Loss on disposition of property and equipment       42,165               42,165      
  Amortization of intangible assets       219,030       360,540         1,004,950       1,442,160
  Loss (gain) on currency forward contracts (note 1)       (838,954)       (601,263)         535,223       (872,539)
    Total expenses       3,941,211       3,764,222         20,176,848       17,659,191
                                   
Income from operations       2,595,848       1,228,829         3,126,037       2,443,990
                                   
Other income (expenses):                                  
  Interest (expense) income, net       (11,489)       (16,385)         (50,404)       (116,197)
  Other income       -       -         374,977       -
    Total other income (expenses)       (11,489)       (16,385)         324,573       (116,197)
                                   
Income before provision for income taxes       2,584,359       1,212,444         3,450,610       2,327,793
                                   
Provision for (recovery of) income taxes       (3,470,527)       (24,260)         (2,719,621)       210,845
Net income for the year     $ 6,054,886     $ 1,236,704       $ 6,170,231     $ 2,116,948
                                   
                                   
Basic earnings per common share     $ 0.11     $ 0.02       $ 0.12     $ 0.04
                                   
Shares used in computing basic earnings per
common share
      53,483,508       54,203,289         53,454,675       57,982,248
                                   
Diluted earnings per common share     $ 0.11     $ 0.02       $ 0.11     $ 0.04
                                   
Shares used in computing diluted earnings per
common share
      55,780,131       56,294,238         55,749,433       59,955,788
                                   
(Note 1) The Company accounts for the fair value of currency forward contracts within the consolidated Balance Sheet as a derivative financial asset
or liability and the corresponding change in fair value is recorded in the consolidated Statement of Operations.  In prior periods, the Company
recorded the realized gain or loss upon settlement of the currency forward contracts in "General and administrative expenses" and recorded the
unrealized gain or loss in "Loss (gain) on change in fair value of forward contracts".  The Company has determined that both of these amounts are
more appropriately classified in expenses as "Loss (gain) on currency forward contracts" and as a result a gain of $0.3 million for the three months
ended December 31, 2010 and a gain of $2.2 million for the year ended December 31, 2010 have been reclassified from "General and administrative
expense" to "Loss (gain) on currency forward contracts". As a result of this reclassification, there was no change to previously reported net income
(loss), income from operations, net revenues, gross profit, reported cash flows
or the amounts recorded in the consolidated Balance Sheets.      
                                   
                                   
(*) Stock-based compensation has been included in
expenses as follows:
                                 
  Network expenses     $ 5,802     $ 6,647       $ 22,972     $ 22,406
  Sales and marketing     $ 24,088     $ 24,711       $ 91,244     $ 96,300
  Technical operations and development     $ 11,862     $ 19,109       $ 51,984     $ 71,012
  General and administrative     $ 20,588     $ 35,847       $ 144,757     $ 210,284
                                     

        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 December 31,       Year ended December 31,  
          2011       2010         2011       2010
Cash provided by (used in):       (unaudited)       (unaudited)  
Operating activities:                                    
                                     
Net income for the period       $ 6,054,886     $ 1,236,704       $ 6,170,231     $ 2,116,948
Items not involving cash:                                    
  Depreciation of property and equipment         187,943       281,285         937,460       1,203,212
  Loss on write off of property and equipment         42,165               42,165      
  Amortization of deferred financing charges         2,200       5,300         13,300       25,400
  Amortization of intangible assets         254,940       435,342         1,090,540       1,741,368
  Deferred income taxes (recovery)         (3,028,269)               (3,046,669)      
  Deferred rent         7,213               26,487      
  Disposal of domain names         4,164       14,494         34,071       31,584
  (Gain) loss on change in fair value of forward exchange
contracts
        (924,661)       (298,321)         1,533,443       1,370,710
  Stock-based compensation         62,339       86,314         310,956       400,002
Changes in non-cash operating working capital:                                    
  Accounts receivable         409,278       310,282         (270,594)       (199,950)
  Inventory         (205,597)               (205,597)      
  Prepaid expenses and deposits         67       73,690         (923,909)       135,046
  Prepaid fees for domain name registry and ancillary
services fees
        (109,892)       (328,041)         (4,855,039)       (6,114,599)
  Income taxes recoverable         (579,682)       (73,000)         (261,215)       54,000
  Accounts payable         (276,156)       408,414         (611,532)       (35,210)
  Accrued liabilities         254,361       (307,613)         515,931       (571,930)
  Customer deposits         299,335       257,848         209,984       335,995
  Deferred revenue         238,245       236,335         5,179,716       6,260,225
  Accreditation fees payable         (10,058)       2,232         (4,460)       16,114
Net cash provided by operating activities         2,682,821       2,341,265         5,885,269       6,768,915
                                     
Financing activities:                                    
  Proceeds received on exercise of stock options         17,201               31,346       14,809
  Repurchase of common stock         (18,442)       (2,792,301)         (18,442)       (9,707,093)
  Proceeds received on Short Swing Sale         3,659               3,659      
  Repayment of loan payable         (709,722)       (478,560)         (455,883)       (1,914,242)
  Net cash used in financing activities         (707,304)       (3,270,861)         (439,320)       (11,606,526)
                                     
Investing activities:                                    
  Additions to property and equipment         (221,073)       (296,264)         (851,008)       (589,054)
  Acquisition of EPAG Domainservices GMBH, net of
cash acquired
                      (2,392,461)      
  Net cash used in investing activities         (221,073)       (296,264)         (3,243,469)       (589,054)
                                     
Increase (decrease) in cash and cash equivalents         1,754,444       (1,225,860)         2,202,480       (5,426,665)
                                     
Cash and cash equivalents, beginning of year         4,653,765       5,431,589         4,205,729       9,632,394
Cash and cash equivalents, end of year       $ 6,408,209     $ 4,205,729       $ 6,408,209     $ 4,205,729
                                     
Supplemental cash flow information:                                    
  Interest paid       $ 13,969     $ 16,444       $ 53,166     $ 116,242
                                     
Supplementary disclosure of non-cash investing activity:                                    
  Property and equipment acquired during the period
not yet paid for
      $ 257,967     $ 273,333       $ 257,967     $ 273,333

 

SOURCE Tucows Inc.