- 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.