- Ting Continues Strong Momentum in Customer Growth -
TORONTO, Feb. 12, 2014 /PRNewswire/ - Tucows Inc. (NASDAQ:TCX, TSX:TC), a global provider of domain names and other Internet services, today reported its financial results for the fourth quarter ended December 31, 2013. All figures are in U.S. dollars.
Summary Financial Results
(In Thousands of US Dollars, Except Per Share Data)
|
3 Months Ended Dec. 31, 2013 (unaudited) |
3 Months Ended Dec. 31, 2012 (unaudited) |
12 Months Ended Dec. 31, 2013 (unaudited) |
12 Months Ended Dec. 31, 2012 (unaudited) | |
| Net revenue | 33,139 | 29,791 | 129,935 | 114,727 |
|
Income before provision for income taxes and change in fair value of forward exchange contracts | 1,532 | 789 | 6,476 | 5,745 |
| Net income | 923 | 429 | 4,180 | 4,424 |
| Net earnings per common share(1) | $0.08 | $0.04 | $0.40 | $0.39 |
| Net cash provided by operating activities | 1,651 | 2,022 | 8,703 | 6,343 |
- Net earnings per common share reflects the 1-for-4 reverse split of common shares that became effective December 31, 2013. As a result of the reverse split, 10,900,842 shares and 11,064,045 shares were used in computing net earnings per common share for the 3 months ended December 31, 2013 and 2012, respectively, and 10,468,250 shares and 11,458,216 shares were used in computing net earnings per common share for the 12 months ended December 31, 2013 and 2012, respectively.
Summary of Revenues and Cost of Revenues
(In Thousands of US Dollars)
| Revenue | Revenue | Cost of Revenue | Cost of Revenue | |
|
3 Months Ended Dec. 31, 2013 (unaudited) |
3 Months Ended Dec. 31, 2012 (unaudited) |
3 Months Ended Dec. 31, 2013 (unaudited) |
3 Months Ended Dec. 31, 2012 (unaudited) | |
| Wholesale | ||||
| Domain Services | 21,595 | 22,391 | 17,949 | 18,893 |
| Value-Added Services | 2,417 | 2,705 | 548 | 456 |
| Total Wholesale | 24,012 | 25,096 | 18,497 | 19,349 |
| Retail | 8,027 | 3,628 | 4,966 | 2,454 |
| Portfolio | 1,100 | 1,067 | 143 | 201 |
| Network, other costs | - | - | 1,120 | 1,296 |
| Network, depreciation and amortization costs | - | - | 175 | 187 |
| Total revenue/cost of revenue | 33,139 | 29,791 | 24,901 | 23,487 |
"Our financial results for the fourth quarter once again underscore not only the consistency and reliability in our business but also our continued ability to generate sustainable growth," said Elliot Noss, President and Chief Executive Officer, Tucows Inc. "In the domains component of our business, we continue to see solid performance from both our Wholesale and Portfolio services, while our retail channel, Hover, delivered another quarter of 20%-plus year-over-year top-line growth."
"For the seventh straight quarter, Ting set new records for net adds, adding more than 12,000 accounts and 18,000 devices. We ended the year with over 48,000 accounts and 74,000 devices and, in January, surpassed the 50,000 accounts and 80,000 devices milestone. Ting continues to be on track to positively contribute to EBITDA for 2014, although our priority will continue to be aggressive investment in customer acquisition and customer satisfaction to ultimately drive even greater long-term value for shareholders."
Net revenue for the fourth quarter of 2013 increased 11% to $33.1 million from $29.8 million for the fourth quarter of 2012.
Net income for the fourth quarter of 2013 was $0.9 million, or $0.08 per share (based on the number of shares post-reverse split), compared with $0.4 million, or $0.04 per share (based on the number of shares post-reverse split), for the fourth quarter of 2012. Net income for the fourth quarter of 2013 included a loss on foreign exchange contracts of $0.3 million compared with a loss on foreign exchange contracts of $0.1 million in the fourth quarter of 2012. Net income for the fourth quarter of 2013 also included the incremental investment of approximately $1.3 million for the acquisition and support of Ting customers as compared to the fourth quarter of 2012.
Deferred revenue at the end of the fourth quarter of 2013 was $70.0 million, a decrease of 1% from $71.0 million at the end of the fourth quarter of 2012 and a decrease of 3% from $72.0 million at the end of the third quarter of 2013.
Cash and cash equivalents at the end of the fourth quarter of 2013 were $12.4 million compared with $11.5 million at the end of the third quarter of 2013 and $6.4 million at the end of the fourth quarter of 2012. The increase in cash and cash equivalents of $0.9 million when compared to the third quarter of 2013 resulted from the generation of $1.7 million in cash flow from operations, which was partially offset by the use of $0.6 million for principal repayments under the Company's credit facility and investment of $0.2 million in equipment purchases.
Conference Call
Tucows management will host a conference call today, Wednesday, February 12, 2014 at 5:00 p.m. (ET) to discuss the Company's fourth 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 46588159 followed by the pound key. The telephone replay will be available until Wednesday, February 19, 2014 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 (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).
| Tucows Inc. | ||||||||
| Consolidated Balance Sheets | ||||||||
| (Dollar amounts in U.S. dollars) | ||||||||
| December 31, | December 31, | |||||||
| 2013 | 2012 | |||||||
| (unaudited) | (unaudited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 12,418,888 | $ | 6,415,679 | ||||
| Accounts receivable | 5,305,403 | 4,413,265 | ||||||
| Inventory | 309,686 | 587,104 | ||||||
| Prepaid expenses and deposits | 4,309,039 | 5,081,408 | ||||||
| Derivative instrument asset, current portion | - | 412,944 | ||||||
| Prepaid domain name registry and ancillary services fees, current portion | 44,209,591 | 45,170,167 | ||||||
| Deferred tax asset, current portion | 1,081,526 | - | ||||||
| Income taxes recoverable | 475,889 | 1,730,631 | ||||||
| Total current assets | 68,110,022 | 63,811,198 | ||||||
| Derivative instrument asset, long-term portion | - | 31,838 | ||||||
| Prepaid domain name registry and ancillary services fees, long-term portion | 11,838,579 | 12,318,723 | ||||||
| Property and equipment | 1,757,836 | 1,352,144 | ||||||
| Deferred tax asset, long-term portion | 5,370,037 | 5,970,462 | ||||||
| Intangible assets | 15,403,228 | 16,415,651 | ||||||
| Goodwill | 18,873,127 | 18,873,127 | ||||||
| Total assets | $ | 121,352,829 | $ | 118,773,143 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,361,481 | $ | 1,928,459 | ||||
| Accrued liabilities | 3,913,034 | 2,522,229 | ||||||
| Customer deposits | 4,500,946 | 4,955,671 | ||||||
| Derivative instrument liability, current portion | 491,098 | - | ||||||
| Loan payable, current portion | 6,300,000 | 3,700,000 | ||||||
| Deferred revenue, current portion | 54,379,719 | 54,997,887 | ||||||
| Accreditation fees payable, current portion | 473,811 | 512,847 | ||||||
| Deferred tax liability, current portion | - | 914,429 | ||||||
| Income taxes payable | 1,024,004 | 1,255,108 | ||||||
| Total current liabilities | 73,444,093 | 70,786,630 | ||||||
| Deferred revenue, long-term portion | 15,638,517 | 16,002,464 | ||||||
| Accreditation fees payable, long-term portion | 135,522 | 145,592 | ||||||
| Deferred rent, long-term portion | 75,979 | 54,150 | ||||||
| Deferred tax liability, long-term portion | 5,141,500 | 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; 10,907,063 shares issued and outstanding as of December 31, 2013 and 11,080,034 shares issued and outstanding as of December 31, 2012 (1) | 11,859,267 | 10,084,417 | ||||||
| Additional paid-in capital | 28,632,311 | 33,931,529 | ||||||
| Deficit | (13,329,379) | (17,509,843) | ||||||
| Accumulated other comprehensive income (loss) | (244,981) | 44,104 | ||||||
| Total stockholders' equity | 26,917,218 | 26,550,207 | ||||||
| Total liabilities and stockholders' equity | $ | 121,352,829 | $ | 118,773,143 | ||||
| (1) Common stock issued and outstanding reflects the 1-for-4 reverse split of common shares that became effective December 31, 2013. |
| 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, | |||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||
| (unaudited) | (unaudited) | |||||||||
| Net revenues | $ | 33,139,440 | $ | 29,790,912 | $ | 129,934,904 | $ | 114,726,901 | ||
| Cost of revenues: | ||||||||||
| Cost of revenues | 23,605,955 | 22,003,975 | 92,960,321 | 82,837,395 | ||||||
| Network expenses (*) | 1,119,468 | 1,295,419 | 4,835,939 | 4,925,058 | ||||||
| Depreciation of property and equipment | 175,262 | 151,381 | 627,973 | 611,640 | ||||||
| Amortization of intangible assets | - | 35,910 | 83,790 | 143,640 | ||||||
| Total cost of revenues | 24,900,685 | 23,486,685 | 98,508,023 | 88,517,733 | ||||||
| Gross profit | 8,238,755 | 6,304,227 | 31,426,881 | 26,209,168 | ||||||
| Expenses: | ||||||||||
| Sales and marketing (*) | 3,348,945 | 2,413,744 | 12,141,036 | 8,701,446 | ||||||
| Technical operations and development (*) | 1,061,309 | 1,073,151 | 4,158,603 | 4,302,820 | ||||||
| General and administrative (*) (note 1) | 1,937,898 | 1,592,641 | 7,204,895 | 6,610,819 | ||||||
| Depreciation of property and equipment | 56,614 | 50,502 | 215,447 | 190,420 | ||||||
| Loss on disposition of property and equipment | - | 118,944 | - | 118,944 | ||||||
| Amortization of intangible assets | 219,030 | 219,030 | 876,120 | 876,120 | ||||||
| Loss (gain) on currency forward contracts (note 1) | 322,911 | 110,665 | 676,120 | (682,851) | ||||||
| Total expenses | 6,946,707 | 5,578,677 | 25,272,221 | 20,117,718 | ||||||
| Income from operations | 1,292,048 | 725,550 | 6,154,660 | 6,091,450 | ||||||
| Other income (expenses): | ||||||||||
| Interest expense, net | (83,101) | (47,153) | (354,857) | (192,863) | ||||||
| Other income | - | - | - | 529,711 | ||||||
| Total other income (expenses) | (83,101) | (47,153) | (354,857) | 336,848 | ||||||
| Income before provision for income taxes | 1,208,947 | 678,397 | 5,799,803 | 6,428,298 | ||||||
| Provision for income taxes | 286,052 | 248,872 | 1,619,339 | 2,004,156 | ||||||
| Net income | 922,895 | 429,525 | 4,180,464 | 4,424,142 | ||||||
|
Other comprehensive income, net of tax of $257,505 for the three months ended September 30, 2013 and $24,800 for the nine months ended September 30, 2013 | (336,693) | 44,104 | (289,085) | 44,104 | ||||||
| Comprehensive income (loss) for the period | $ | 586,202 | $ | 473,629 | $ | 3,891,379 | $ | 4,468,246 | ||
| Basic earnings per common share (1) | $ | 0.08 | $ | 0.04 | $ | 0.40 | $ | 0.39 | ||
| Shares used in computing basic earnings per common share (1) | 10,900,842 | 11,064,045 | 10,468,250 | 11,458,216 | ||||||
| Diluted earnings per common share (1) | $ | 0.08 | $ | 0.04 | $ | 0.37 | $ | 0.36 | ||
| Shares used in computing diluted earnings per common share (1) | 11,538,283 | 11,930,942 | 11,281,409 | 12,283,736 | ||||||
| (*) Stock-based compensation has been included in expenses as follows: | ||||||||||
| Network expenses | $ | 8,851 | $ | 6,126 | $ | 31,664 | $ | 24,480 | ||
| Sales and marketing | $ | 36,302 | $ | 25,121 | $ | 129,302 | $ | 92,168 | ||
| Technical operations and development | $ | 21,634 | $ | 15,651 | $ | 78,800 | $ | 59,141 | ||
| General and administrative | $ | 35,233 | $ | 21,869 | $ | 191,137 | $ | 184,910 | ||
| (1) Net earnings per common share reflects the 1-for-4 reverse split of common shares that became effective December 31, 2013. |
| 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, | |||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||
| Cash provided by: | (unaudited) | (unaudited) | ||||||||
| Operating activities: | ||||||||||
| Net income for the period | $ | 922,895 | $ | 429,525 | $ | 4,180,464 | $ | 4,424,142 | ||
| Items not involving cash: | ||||||||||
| Depreciation of property and equipment | 231,876 | 201,883 | 843,420 | 802,060 | ||||||
| Loss on write off of property and equipment | - | 118,944 | - | 118,944 | ||||||
| Amortization of deferred financing charges | - | - | - | 2,300 | ||||||
| Amortization of intangible assets | 219,030 | 254,940 | 959,910 | 1,019,760 | ||||||
| Deferred income taxes (recovery) | (169,268) | 499,625 | (247,371) | 832,736 | ||||||
| Excess tax benefits on share-based compensation expense | (34,157) | - | (1,090,171) | - | ||||||
| Deferred rent | 4,081 | 6,205 | 21,829 | 27,663 | ||||||
| Acquisition of domain names | - | - | - | (3,664) | ||||||
| Disposal of domain names | 8,221 | 12,662 | 52,513 | 50,843 | ||||||
| Gain on disposition of intangible assets | - | - | - | (508,800) | ||||||
| (Gain) loss on change in the fair value of forward contracts | 134,561 | 54,986 | 496,207 | (1,100,161) | ||||||
| Stock-based compensation | 102,020 | 68,767 | 430,903 | 360,699 | ||||||
| Changes in non-cash operating working capital: | ||||||||||
| Accounts receivable | (435,937) | 413,511 | (892,138) | (533,081) | ||||||
| Inventory | 28,424 | (173,894) | 277,418 | (381,507) | ||||||
| Prepaid expenses and deposits | (67,637) | (278,001) | 772,369 | (1,325,100) | ||||||
| Prepaid fees for domain name registry and ancillary services fees | 1,785,439 | 1,712,684 | 1,440,720 | (1,679,703) | ||||||
| Income taxes recoverable/payable | (63,695) | (233,573) | 1,023,638 | 233,312 | ||||||
| Accounts payable | (170,657) | 283,217 | 529,537 | 931,467 | ||||||
| Accrued liabilities | 725,821 | 302,852 | 1,390,805 | 547,590 | ||||||
| Customer deposits | 428,621 | 689,955 | (454,725) | 752,772 | ||||||
| Deferred revenue | (1,972,072) | (2,315,219) | (982,115) | 1,824,650 | ||||||
| Accreditation fees payable | (25,188) | (26,831) | (49,106) | (53,491) | ||||||
| Net cash provided by operating activities | 1,652,378 | 2,022,238 | 8,704,107 | 6,343,431 | ||||||
| Financing activities: | ||||||||||
| Proceeds received on exercise of stock options | 37,919 | 54,210 | 1,492,174 | 418,108 | ||||||
| Excess tax benefits on share-based compensation expense | 34,157 | - | 1,090,171 | - | ||||||
| Repurchase of common stock | - | - | (6,537,616) | (9,115,833) | ||||||
| Proceeds received on loan payable | - | - | 5,200,000 | 4,000,000 | ||||||
| Repayment of loan payable | (600,000) | (300,000) | (2,600,000) | (1,150,000) | ||||||
| Net cash used in financing activities | (527,924) | (245,790) | (1,355,271) | (5,847,725) | ||||||
| Investing activities: | ||||||||||
| Additions to property and equipment | (255,514) | (330,502) | (1,345,627) | (997,036) | ||||||
| Proceeds on disposition of intangible assets | - | - | - | 508,800 | ||||||
| Net cash used in investing activities | (255,514) | (330,502) | (1,345,627) | (488,236) | ||||||
| Increase in cash and cash equivalents | 868,940 | 1,445,946 | 6,003,209 | 7,470 | ||||||
| Cash and cash equivalents, beginning of period | 11,549,948 | 4,969,733 | 6,415,679 | 6,408,209 | ||||||
| Cash and cash equivalents, end of period | $ | 12,418,888 | $ | 6,415,679 | $ | 12,418,888 | $ | 6,415,679 | ||
| Supplemental cash flow information: | ||||||||||
| Interest paid | $ | 83,370 | $ | 99,504 | $ | 372,853 | $ | 97,369 | ||
| Supplementary disclosure of non-cash investing activity: | ||||||||||
| Property and equipment acquired during the period not yet paid for | $ | - | $ | 96,515 | $ | - | $ | 96,515 | ||
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.
SOURCE Tucows Inc.
