TORONTO, May 11 /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 first quarter ended March 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
Mar. 31, 2011
3 Months Ended
Mar. 31, 2010
Net revenue 22,555 20,445
Loss (gain) on change in fair value of forward exchange contracts 113 (114)
Other income 323 -
Net income for the period 728 569
Net earnings per common share 0.01 0.01
Net cash provided by operating activities 762 1,379

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

  Revenue Cost of Revenue
  3 Months
Mar. 31, 2011
3 Months
Mar. 31, 2010
3 Months
Mar. 31, 2011
3 Months
Mar. 31, 2010
Domain services 17,541 15,403 14,573 12,616
Email services 685 638 102 107
Other services 1,235 1,094 400 387
Total OpenSRS services 19,461 17,135 15,075 13,110
YummyNames 1,392 1,711 178 203
Hover 1,195 1,130 419 400
Butterscotch 507 469 23 19
Network, other costs - - 1,263 1,193
Network, depreciation and amortization costs - - 256 385
Total revenue/cost of revenue 22,555 20,445 17,214 15,310

"The first quarter of 2011 saw solid top-line growth, with strong contributions across our business units," said Elliot Noss, President and CEO of Tucows.  "Of particular note, OpenSRS processed more than two million domain registrations in a quarter for the first time and in April, surpassed 11 million domains under management. In addition, email services returned to year-over-year revenue growth with a strong quarter. With the release of our new unified control panel, we have largely completed a re-architecture of OpenSRS that significantly strengthens its potential as a service delivery platform for what we believe is the best distribution channel in the Internet economy.  We remain well positioned to consistently generate cash in the context of growth."

Net revenue for the first quarter of 2011 increased 10.3% to $22.6 million from $20.4 million for the first quarter of 2010. 

Net income for the first quarter of 2011 was $0.7 million, or $0.01 per share, compared with $0.6 million, or $0.01 per share, for the first quarter of 2010.  Net income for the first quarter of 2011 benefited from other income of $0.3 million generated by an additional payment related to patents that the Company assigned to a third party. As a significant proportion of the Company's expenses are incurred in Canadian dollars, the strength of the Canadian dollar, which was on average 6% higher relative to U.S. dollar in the first quarter of 2011 versus the first quarter of 2010, had a dampening effect on net income. The Company has been able to mitigate some of the impact of the stronger Canadian through its currency hedging strategy, as well as improved operating efficiencies. 

Deferred revenue at the end of the first quarter of 2011 was $64.9 million, an increase of 9.0% from $59.5 million at the end of the first quarter of 2010 and an increase of 3.7% from $62.6 million at the end of the fourth quarter of 2010. 

Cash and cash equivalents at the end of the first quarter of 2011 were $4.2 million compared with $5.2 million at the end of the first quarter of 2010 and $4.2 million at the end of fourth quarter of 2010.  Cash flow from operating activities of $0.8 million in the first quarter of 2011 was offset by the use of $0.5 million for repayment of the Company's bank loan and $0.3 million for investment in equipment. 

Conference Call
Tucows management will host a conference call today, Wednesday, May 11, 2011, at 5:00 p.m. (ET) to discuss it's the Company's first quarter 2011 results. Participants can access the conference call via the Internet at 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 [416-849-0833] or [1-800-642-1687] and enter the pass code 63305561 followed by the pound key.  The telephone replay will be available until Wednesday, May 18, 2011 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 eleven million domain names and millions of email boxes through a reseller network of over 11,000 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 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 and our ability to generate cash and return capital to shareholders.  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 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)      
    March 31,   December 31,
    2011   2010
    (unaudited)   (unaudited)
Current assets:        
  Cash and cash equivalents    $     4,164,166    $     4,205,729
  Accounts receivable   4,254,800   3,021,995
  Prepaid expenses and deposits   2,885,523   2,363,876
  Derivative instrument asset, current portion   721,256   833,960
  Prepaid domain name registry and ancillary services fees, current portion   39,029,239   37,016,871
  Income taxes recoverable   485,000   620,000
    Total current assets   51,539,984   48,062,431
Prepaid domain name registry and ancillary services fees, long-term portion   12,808,350   12,820,479
Property and equipment   1,430,242   1,552,349
Deferred financing charges   11,200   15,600
Deferred tax asset, long-term portion   4,232,000   4,155,600
Intangible assets   16,543,926   16,883,401
Goodwill   17,990,807   17,990,807
    Total assets    $ 104,556,509    $ 101,480,667
Liabilities and Stockholders' Equity        
Current liabilities:        
  Accounts payable    $     1,778,092    $     1,664,006
  Accrued liabilities   1,634,522   1,346,436
  Customer deposits   3,868,879   3,960,312
  Loan payable, current portion   827,322   1,305,883
  Deferred revenue, current portion   48,141,934   45,832,374
  Accreditation fees payable, current portion   586,290   547,810
  Deferred tax liability, current portion   1,232,000   1,155,600
    Total current liabilities   58,069,039   55,812,421
Deferred revenue, long-term portion   16,747,268   16,738,429
Accreditation fees payable, long-term portion   166,283   168,580
Deferred rent, long-term portion   6,945   -
Deferred tax liability, long-term portion   4,840,000   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; 53,455,691 shares issued and outstanding as of March 31, 2011 and 53,448,591 shares issued and outstanding as of December 31, 2010   11,331,134   11,324,866
  Additional paid-in capital   40,772,110   40,700,587
  Deficit   (27,376,270)   (28,104,216)
    Total stockholders' equity   24,726,974   23,921,237
Total liabilities and stockholders' equity    $ 104,556,509    $ 101,480,667


      Tucows Inc.
      Consolidated Statements of Operations
      (Dollar amounts in U.S. dollars)
      Three months ended March 31,
    2011   2010
Net revenues $           22,555,207 $           20,445,153
Cost of revenues:        
  Cost of revenues (*)             15,695,140             13,731,550
  Network expenses               1,262,828               1,193,324
  Depreciation of property and equipment                  236,681                  310,058
  Amortization of intangible assets                    19,290                    74,802
  Total cost of revenues   17,213,939   15,309,734
Gross profit   5,341,268   5,135,419
  Sales and marketing (*)               2,024,703               1,862,336
  Technical operations and development (*)               1,199,236               1,243,013
  General and administrative (*)               1,096,926                  815,580
  Depreciation of property and equipment                    46,187                    43,889
  Amortization of intangible assets                  306,990                  360,540
  Loss (gain) on change in fair value of forward exchange contracts                  112,704                (113,973)
  Total expenses   4,786,746   4,211,385
Income from operations   554,522   924,034
Other income (expenses):        
  Interest (expense) income, net   (11,540)   (39,168)
  Other income   323,329   -
  Total other income (expenses)   311,789   (39,168)
Income before provision for income taxes   866,311   884,866
Provision for income taxes   138,365   316,000
 Net income for the period   $  727,946  $  568,866
Basic earnings per common share $ 0.01 $ 0.01
Shares used in computing basic earnings per common share   53,437,672   61,265,903
Diluted earnings per common share $ 0.01 $ 0.01
Shares used in computing diluted earnings per common share   55,747,952   63,338,084
(*) Stock-based compensation has been included in expenses as follows:        
  Cost of revenues $ 6,013 $ 3,628
  Sales and marketing $ 25,333 $ 15,686
  Technical operations and development $ 15,708 $ 14,581
  General and administrative $ 27,277 $ 22,734




      Tucows Inc. 
    Consolidated Statements of Cash Flows 
     (Dollar amounts in U.S. dollars)
      Three months ended March 31, 
    2011   2010
Cash provided by (used in):      
Operating activities:        
  Net income for the period   $          727,946  $                 568,866
  Items not involving cash:        
    Depreciation of property and equipment           282,868                  353,947
    Amortization of deferred financing charges               4,400                      7,400
    Amortization of intangible assets           326,280                  435,342
    Deferred rent               6,945                            -  
    Disposal of domain names             13,195                      7,572
    Unrealized loss (gain) in the fair value of forward contracts           112,704                (113,973)
    Stock-based compensation             74,331                    56,629
  Changes in non-cash operating working capital:        
    Accounts receivable       (1,232,805)                (875,500)
    Prepaid expenses and deposits          (521,647)                (361,702)
    Prepaid fees for domain name registry and ancillary services fees       (2,000,239)             (2,615,569)
    Income taxes recoverable           135,000                  316,000
    Accounts payable           253,897                  186,569
    Accrued liabilities           316,472                (126,804)
    Customer deposits            (91,433)                  270,799
    Deferred revenue        2,318,399               3,204,593
    Accreditation fees payable             36,183                    64,397
  Net cash provided by operating activities   762,496   1,378,566
  Financing activities:        
    Proceeds received on exercise of stock options               3,460                  4,501
    Repurchase of common stock                     -           (5,212,272)
    Repayment of loan payable          (478,561)            (478,561)
    Net cash used in financing activities   (475,101)   (5,686,332)
  Investing activities:        
    Additions to property and equipment          (328,958)            (142,732)
    Net cash used in investing activities   (328,958)   (142,732)
  Decrease in cash and cash equivalents   (41,563)   (4,450,498)
  Cash and cash equivalents, beginning of period        4,205,729           9,632,394
  Cash and cash equivalents, end of period $ 4,164,166 $ 5,181,896
  Supplemental cash flow information:        
    Interest paid $           11,589  $               39,276
  Supplementary disclosure of non-cash investing activity:        
    Property and equipment acquired during the period not yet paid for $         105,136  $               98,040




SOURCE Tucows Inc.

For further information:

Lawrence Chamberlain
TMX Equicom for Tucows Inc.
(416) 815-0700 ext. 257

Profil de l'entreprise

Tucows Inc.

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