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.
“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.”
Summary Financial Results
(In Thousands of US Dollars, Except Per Share Data)
3 Months 3 Months 12 Months 12 Months Ended Dec. Ended Dec. Ended Dec. Ended Dec. 31, 2013 31, 2012 31, 2013 31, 2012 (unaudited) (unaudited) (unaudited) (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 1. 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)
Cost of Cost of Revenue Revenue Revenue Revenue 3 Months 3 Months Ended Dec. Ended Dec. 3 Months Ended 3 Months Ended 31, 2013 31, 2012 Dec. 31, 2013 Dec. 31, 2012 (unaudited) (unaudited) (unaudited) (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.
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.
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).