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Tucows Inc. Reports Continuing Strong Financial Results for Fourth Quarter of 2011
(Canada Newswire Via Acquire Media NewsEdge) - Company Reports 7th Consecutive Quarter of Record Revenue -
TORONTO, Feb. 15, 2012 /CNW/ - 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 endedDecember 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
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