Tucows Inc. reports financial results for the second quarter of 2009



    TORONTO, Aug. 12 /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 second quarter of 2009 ended June 30, 2009. All
figures are in U.S. dollars.
    "We're pleased that the strong performance of our OpenSRS wholesale
business has contributed to another quarter of solid financial results amidst
generally weak economic conditions," said Elliot Noss, President and CEO of
Tucows. "Even as our industry started to show signs of the economic downturn
for the first time, our strong competitive position allowed us to achieve
year-over-year growth in domain registrations during the quarter. Our other
services are also performing within plan, positioning us well for the
remainder of the year."

    
                          Summary Financial Results
         (Numbers in Thousands of US Dollars, Except Per Share Data)
    -------------------------------------------------------------------------
                 3 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended
                  Jun. 30, 2009  Jun. 30, 2008  Jun. 30, 2009  Jun. 30, 2008
                    (unaudited)    (unaudited)    (unaudited)    (unaudited)
    -------------------------------------------------------------------------
    Net Revenue        $20,022        $20,450        $40,114        $39,162
    -------------------------------------------------------------------------
    Net Income           4,480          2,209          5,444          1,127
    -------------------------------------------------------------------------
    Net Income/Share      0.07           0.03           0.08           0.02
    -------------------------------------------------------------------------
    Cash Flow from
     Operations          2,591          2,580          3,504          2,697
    -------------------------------------------------------------------------


         Summary of Revenue and Cost of Revenue before Network Costs
                     (Numbers in Thousands of US Dollars)

    -------------------------------------------------------------------------
                             Revenue                  Cost of Revenue
    -------------------------------------------------------------------------
                 3 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended
                  Jun. 30, 2009  Jun. 30, 2008  Jun. 30, 2009  Jun. 30, 2008
                    (unaudited)    (unaudited)    (unaudited)    (unaudited)
    -------------------------------------------------------------------------
    OpenSRS:
      Domain Services
      (Traditional
      Domain
      Registration)    $14,737        $13,269        $11,944         $10,505
    -------------------------------------------------------------------------
      Email Services       874          1,551            153             (24)
    -------------------------------------------------------------------------
      Other Services     1,092          1,137            411             415
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total OpenSRS
     Services           16,703         15,957         12,508          10,896
    -------------------------------------------------------------------------
    YummyNames (Domain
     Portfolio
     Services)           1,456          1,873            251             181
    -------------------------------------------------------------------------
    Hover (Retail
     Services)           1,259          2,046            475             577
    -------------------------------------------------------------------------
    Butterscotch (Content
     Services)             604            574              1               6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total              $20,022        $20,450        $13,235         $11,660
    -------------------------------------------------------------------------
    

    Net revenue for the second quarter of 2009 was $20.0 million compared
with $20.5 million for the second quarter of 2008. Net income for the second
quarter of 2009 was $4.5 million, or $0.07 per share, compared with $2.2
million, or $0.03 per share, for the second quarter of 2008. Net income for
the second quarter of 2009 benefitted from other income of $2.0 million
related to the sale of the Company's equity stake in Afilias and $0.6 million
related to patents that the Company assigned to a third party that continues
to commercialize them, while net income for the second quarter of 2008
benefited from other income of $1.5 million related to the sale of the
Company's retail hosting assets. Net income for the second quarter of 2009
also benefited from a gain on foreign exchange of $1.6 million (inclusive of a
mark to market gain of $1.9 million) compared to a gain on foreign exchange of
$0.2 million (inclusive of a mark to market gain of $0.2 million) for the
second quarter of 2008. The benefits for the second quarter in 2009 were
partially offset by a provision for current income taxes of $0.8 million,
before recognizing a refundable research and development tax credit in Canada
of $0.2 million.
    Deferred revenue at the end the second quarter of fiscal 2009 was $56.9
million, an increase of 4.6% from $54.4 million at the end of the second
quarter of fiscal 2008 and a slight increase from $56.7 million at the end of
the first quarter of fiscal 2009.
    Cash and cash equivalents at the end of the second quarter of fiscal 2009
was $7.4 million compared with $2.9 million at the end of the second quarter
of fiscal 2008 and $4.0 million at the end of the first quarter of fiscal
2009. This increase in cash compared with the first quarter of 2009 is
primarily the result of the generation of cash flow from operations of $2.6
million and the receipt of an additional $2.1 million payment from the sale of
the Company's equity stake in Afilias last year, which were partially offset
by the repayment of $1.2 million of the Company's bank loan.

    Conference Call

    Tucows will host a conference call tomorrow, Thursday, August 13, 2009 at
5:00 p.m. ET to discuss the Company's second 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 21311901 followed by the pound key. The telephone
replay will be available until Thursday, August 20, 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 8
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
statements regarding the expected expiration date, the number of shares to be
purchased and the purchase price per share. 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 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)

                                                    June 30      December 31,
                                                     2009            2008
                                                -------------   -------------
                                                 (unaudited)     (unaudited)

    Assets

    Current assets:
      Cash and cash equivalents                 $ 7,423,056     $ 5,427,467
      Accounts receivable                         3,464,428       3,200,362
      Prepaid expenses and deposits               3,163,266       2,274,043
      Derivative instrument assets                   49,245               -
      Prepaid domain name registry and ancillary
       services fees, current portion            31,494,579      29,212,610
      Deferred tax asset, current portion           590,000         590,000
                                                -------------   -------------
    Total current assets                         46,184,574      40,704,482

    Prepaid domain name registry and ancillary
     services fees, long-term portion            12,195,903      11,855,971
    Property and equipment                        2,354,702       3,072,958
    Deferred financing charges                       58,400          78,500
    Deferred tax asset, long-term portion         2,410,000       2,410,000
    Intangible assets                            19,431,471      20,206,996
    Goodwill                                     17,990,807      17,990,807
    Investment                                      100,000         200,000
                                                -------------   -------------
    Total assets                              $ 100,725,857    $ 96,519,714
                                                -------------   -------------
                                                -------------   -------------


    Liabilities and Stockholders' Equity

    Current liabilities:
      Accounts payable                          $ 2,257,992     $ 1,633,830
      Accrued liabilities                         2,003,789       2,000,146
      Customer deposits                           3,171,708       3,319,241
      Derivative instrument liabilities                   -       1,974,919
      Loan payable, current portion               3,114,242       2,624,242
      Deferred revenue, current portion          40,508,091      37,985,821
      Accreditation fees payable, current portion   553,447         510,548
      Income taxes payable                          835,398               -
                                                -------------   -------------
        Total current liabilities                52,444,667      50,048,747

    Deferred revenue, long-term portion          16,392,525      16,201,804
    Accreditation fees payable, long-term portion   188,780         187,374
    Loan payable, long-term portion               1,063,004       3,235,125
    Deferred tax liability, long-term portion     5,396,000       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; 68,969,320 shares
       issued and outstanding at June 30, 2009
       and 73,073,782 shares issued and
       outstanding at December 31, 2008          14,408,078      15,198,358
      Additional paid-in capital                 47,851,137      48,714,676
      Deficit                                   (37,018,334)    (42,462,370)
                                                -------------   -------------
        Total stockholders' equity               25,240,881      21,450,664
                                                -------------   -------------
    Total liabilities and stockholders'
     equity                                   $ 100,725,857    $ 96,519,714
                                                -------------   -------------
                                                -------------   -------------



                                 Tucows Inc.
                    Consolidated Statements of Operations
                       (Dollar amounts in U.S. dollars)

                        Three months ended June 30, Six months ended June 30,
                              2009         2008         2009         2008
                        ------------- ------------ ------------ -------------
                                 (unaudited)               (unaudited)

    Net revenues         $ 20,022,119 $ 20,450,329 $ 40,113,543 $ 39,161,536

    Cost of revenues:
      Cost of revenues
       ((*))               14,386,048   13,663,097   28,171,446   26,813,029
      Depreciation of
       property and
       equipment              488,680      816,260      941,389    1,642,097
      Amortization of
       intangible assets       29,199       31,941       58,398      105,398
                        ------------- ------------ ------------ -------------
        Total cost of
         revenues          14,903,927   14,511,298   29,171,233   28,560,524
                        ------------- ------------ ------------ -------------

    Gross profit            5,118,192    5,939,031   10,942,310   10,601,012

    Expenses:
      Sales and
       marketing ((*))      1,339,167    1,730,736    2,692,343    3,426,868
      Technical
       operations and
       development ((*))    1,175,355    1,573,741    2,279,494    3,139,595
      General and
       administrative ((*)) 1,592,325    1,551,858    3,462,221    3,091,290
      Depreciation of
       property and
       equipment               79,227       58,861      165,632      119,931
      Amortization of
       intangible assets      360,540      376,954      721,080      762,115
      (Gain)/loss in
        fair value of
        forward exchange
        contracts          (1,938,821)    (225,640)  (2,024,164)      29,793
                        ------------- ------------ ------------ -------------
        Total expenses      2,607,793    5,066,510    7,296,606   10,569,592
                        ------------- ------------ ------------ -------------

    Income from
     operations             2,510,399      872,521    3,645,704       31,420

    Other income
     (expenses):
      Interest income
       (expense), net         (62,334)    (166,421)    (125,796)    (376,405)
      Other income          2,613,204    1,532,765    2,613,204    1,532,765
                        ------------- ------------ ------------ -------------
        Total other
         income (expenses)  2,550,870    1,366,344    2,487,408    1,156,360
                        ------------- ------------ ------------ -------------

    Income before
     provision for
     income taxes           5,061,269    2,238,865    6,133,112    1,187,780

    Income tax expense        581,651       30,000      689,076       61,134
                        ------------- ------------ ------------ -------------
    Net income for
     the period           $ 4,479,618  $ 2,208,865  $ 5,444,036    1,126,646
                        ------------- ------------ ------------ -------------
                        ------------- ------------ ------------ -------------


    Basic earnings per
     common share         $      0.08  $      0.03  $      0.08         0.02
                        ------------- ------------ ------------ -------------
                        ------------- ------------ ------------ -------------

    Shares used in
     computing basic
     earnings per common
     share                 68,923,313   73,899,695   70,778,950   73,894,119
                        ------------- ------------ ------------ -------------
                        ------------- ------------ ------------ -------------

    Diluted earnings
     per common share     $      0.07   $     0.03   $     0.08         0.01
                        ------------- ------------ ------------ -------------
                        ------------- ------------ ------------ -------------

    Shares used in
     computing diluted
     earnings per
     common share          69,092,946   75,348,108   70,785,712   75,439,926
                        ------------- ------------ ------------ -------------
                        ------------- ------------ ------------ -------------


    ((*)) Stock-based
     compensation has
     been included in
     expenses as follows:
      Cost of revenues    $     3,367   $    4,800   $    8,367        9,100
      Sales and marketing $    15,057   $   13,000   $   29,957       31,300
      Technical
       operations and
       development        $    11,121   $    8,000   $   21,721       28,700
      General and
       administrative     $    53,193   $   47,200   $   71,893       76,100



                                 Tucows Inc.
                    Consolidated Statements of Operations
                       (Dollar amounts in U.S. dollars)

                        Three months ended June 30, Six months ended June 30,
                              2009         2008         2009         2008
                        ------------- ------------ ------------ -------------
    Cash provided by            (unaudited)               (unaudited)
     (used in):
    Operating activities:
      Net income for
       the period         $ 4,479,618  $ 2,208,865  $ 5,444,036  $ 1,126,646
      Items not involving
       cash:
        Depreciation
         of property
         and equipment        567,907      875,121    1,107,021    1,762,028
        Amortization of
         deferred
         financing charges      9,700       12,700       20,100       26,200
        Amortization of
         intangible assets    389,739      408,895      779,478      867,513
        Gain on disposal
         of investment
         in Afilias        (2,010,395)           -   (2,010,395)           -
        Gain on sale of
         customer
         relationships              -   (1,121,065)           -   (1,121,065)
        Disposal of
         domain names             974            -        1,947            -
        Unrealized
         (gain)/loss in
         the fair value
         of forward
         contracts         (1,938,821)    (225,640)  (2,024,164)      29,793
        Stock-based
         compensation          82,738       73,000      131,938      145,200
      Change in non-cash
       operating working
       capital:
        Accounts
         receivable           252,927      350,043     (264,066)     283,923
        Prepaid expenses
         and deposits        (310,655)    (244,926)    (889,223)    (105,237)
        Prepaid fees for
         domain name
         registry and
         ancillary
         services fees       (496,502)  (1,176,196)  (2,621,901)  (3,706,797)
        Accounts payable      561,228      682,896      380,407      249,069
        Accrued liabilities  (125,130)    (159,226)       3,643     (691,064)
        Customer deposits     161,969      119,589     (147,533)      18,999
        Deferred revenue      249,615      798,720    2,712,991    3,777,654
        Accreditation fees
         payable              (34,302)     (22,696)      44,305       34,120
        Income taxes payable  750,216            -      835,398            -
                        ------------- ------------ ------------ -------------
      Net cash provided
       by operating
       activities           2,590,826    2,580,080    3,503,982    2,696,982
                        ------------- ------------ ------------ -------------

    Financing activities:
      Proceeds received
       on exercise of
       stock options           25,422        9,450       25,422        9,450
      Repurchase of
       common stock                 -            -   (1,811,179)           -
      Repayment of loan
       payable             (1,203,560)  (7,478,560)  (1,682,121)  (7,957,120)
                        ------------- ------------ ------------ -------------
      Net cash used in
       financing
       activities          (1,178,138)  (7,469,110)  (3,467,878)  (7,947,670)
                        ------------- ------------ ------------ -------------

    Investing activities:
      Cost of domain names
       acquired                     -       (2,524)      (5,900)      (8,944)
      Additions to property
       and equipment         (102,770)  (1,084,209)    (145,010)  (1,295,740)
      Sale of customer
       relationships                -    1,421,730            -    1,421,730
      Proceeds on disposal
       of investment in
       Afilias              2,110,395            -    2,110,395            -
      Decrease in cash
       held in escrow               -       (5,366)           -      (12,765)
                        ------------- ------------ ------------ -------------
      Net cash provided
       by investing
       activities           2,007,625      329,631    1,959,485      104,281
                        ------------- ------------ ------------ -------------

    Increase (decrease)
     in cash and cash
    Increase (decrease)
     in cash and cash
     equivalents            3,420,313   (4,559,399)   1,995,589   (5,146,407)
    Cash and cash
     equivalents,
     beginning of period    4,002,743    7,506,468    5,427,467    8,093,476
                        ------------- ------------ ------------ -------------
    Cash and cash
     equivalents, end
     equivalents, end
     of period            $ 7,423,056  $ 2,947,069  $ 7,423,056  $ 2,947,069
                        ------------- ------------ ------------ -------------
                        ------------- ------------ ------------ -------------

    Supplemental cash
     flow information:
      Interest paid       $    62,508  $  192,900   $   128,029  $   452,237

    Supplementary
     disclosure of
     non-cash investing
     activity:
      Property and
       equipment acquired
       during the period
       not yet paid for   $   250,734  $  663,767   $   250,734  $   663,767

    




For further information:

For further information: Lawrence Chamberlain, The Equicom Group for
Tucows Inc., (416) 815-0700 ext. 257, lchamberlain@equicomgroup.com

Organization Profile

Tucows Inc.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890