TORONTO, Feb. 11, 2015 (GLOBE NEWSWIRE) -- Tucows Inc. (Nasdaq:TCX) (TSX:TC), a provider of network access, domain names and other Internet services, today reported its financial results for the fourth quarter ended December 31, 2014. All figures are in U.S. dollars.
| Summary Financial Results | ||||
| (In Thousands of US Dollars, Except Per Share Data) | ||||
| 3 Months | 3 Months | 12 Months | 12 Months | |
| Ended | Ended | Ended | Ended | |
| Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Net revenue | 38,802 | 33,139 | 147,667 | 129,935 |
| Income before provision for income taxes and change in fair value of forward exchange contracts | 3,277 | 1,532 | 10,739 | 6,476 |
| Net income | 1,859 | 923 | 6,374 | 4,180 |
| Net earnings per common share1 | $0.16 | $0.08 | $0.57 | $0.40 |
| Net cash provided by operating activities | 2,768 | 1,651 | 8,878 | 8,703 |
| 1.Net earnings per common share reflects the 1-for-4 reverse split of common shares that became effective December 31, 2013. | ||||
| Summary of Revenues and Cost of Revenues | ||||
| (In Thousands of US Dollars) | ||||
| Revenue | Revenue | Cost of Revenue | Cost of Revenue | |
| 3 Months Ended | 3 Months Ended | 3 Months | 3 Months | |
| Dec. 31, 2014 | Dec. 31, 2013 | Ended | Ended | |
| (unaudited) | (unaudited) | Dec. 31, 2014 | Dec. 31, 2013 | |
| (unaudited) | (unaudited) | |||
| Domain Services | ||||
| Wholesale | ||||
| OpenSRS Domain Service | 21,609 | 21,595 | 18,079 | 17,949 |
| Value-Added Services | 2,305 | 2,417 | 531 | 548 |
| Total Wholesale | 23,914 | 24,012 | 18,610 | 18,497 |
| Retail | 2,805 | 2,298 | 1,216 | 991 |
| Portfolio1 | 917 | 1,100 | 241 | 143 |
| Total Domain Services | 27,636 | 27,410 | 20,067 | 19,631 |
| Network Access Services (Ting) | 11,166 | 5,729 | 6,755 | 3,975 |
| Network, other costs | -- | -- | 1,127 | 1,120 |
| Network, depreciation and amortization costs | -- | -- | 171 | 175 |
| Total revenue/cost of revenue | 38,802 | 33,139 | 28,120 | 24,901 |
"The fourth quarter was a solid finish to a strong year for Tucows," said Elliot Noss, President and Chief Executive Officer, Tucows Inc. "The continuing growth in contribution from Ting Mobile, combined with steady performance of our Domain Services business, enabled us to deliver net earnings per share of $0.16 for the fourth quarter, bringing EPS for the year to a record $0.57, an increase of 43% over 2013. Importantly, we continue to realize the benefit from the operating leverage in our business as consolidated gross margin for the quarter grew to 26% from 23%, excluding the Portfolio Group, for the same period last year."
"Ting Mobile's momentum continued in the fourth quarter, adding more than 11,000 accounts and more than 17,000 devices to end the year with approximately 94,000 active accounts and 147,000 active devices. Over the course of 2014, we essentially doubled the size of our customer base. We look forward to continued growth in Ting Mobile over the course of 2015 as we begin to leverage Ting's world-leading customer experience for significant opportunity in the fixed access market."
Net revenue for the fourth quarter of 2014 increased 17% to $38.8 million from $33.1 million for the fourth quarter of 2013.
Net income for the fourth quarter of 2014 was $1.9 million, or $0.16 per share, compared with $0.9 million, or $0.08 per share, for the fourth quarter of 2013.
Cash and cash equivalents at the end of the fourth quarter of 2014 were $8.3 million, compared with $13.6 million at the end of the third quarter of 2014 and $12.4 million at the end of the fourth quarter of 2013. During the fourth quarter of 2014, Tucows generated cash flow in operating activities of $2.8 million. The Company also invested $8.2 million in the previously announced auction cost for the .online gTLD and registry seed capital for the joint venture, as well as in escrow accounts established to fund its previously announced acquisition of 70% ownership of an independent Internet service provider in Charlottesville, Virginia doing business primarily as Blue Ridge InternetWorks (BRI).
Conference Call
Tucows management will host a conference call today, Wednesday, February 11, 2014 at 5:00 p.m. (ET) to discuss the Company's fourth quarter 2014 results. Participants can access the conference call by dialing 1-888-231-8191 or 647-427-7450 or via the Internet at http://www.tucows.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 75735101 followed by the pound key. The telephone replay will be available until Wednesday, February 18, 2015 at midnight. To access the archived conference call as an MP3 via the Internet, go to http://www.tucows.com/investors.
About Tucows
Tucows is a provider of network access, domain name and other Internet services. Ting (https://ting.com) is a mobile phone service provider dedicated to bringing clarity and control to US mobile phone users. OpenSRS (http://opensrs.com) manages over 13 million domain names and millions of value-added services through a global 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. 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, | |
| 2014 | 2013 | |
| (unaudited) | (unaudited) | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 8,271,377 | $ 12,418,888 |
| Accounts receivable | 6,789,685 | 5,305,403 |
| Inventory | 393,774 | 309,686 |
| Prepaid expenses and deposits | 3,697,292 | 4,309,039 |
| Prepaid domain name registry and ancillary services fees, current portion | 44,614,858 | 44,209,591 |
| Other Assets | 8,199,000 | |
| Deferred tax asset, current portion | 2,498,196 | 1,081,526 |
| Income taxes recoverable | 997 | 475,889 |
| Total current assets | 74,465,179 | 68,110,022 |
| Derivative instrument asset, long-term portion | -- | -- |
| Prepaid domain name registry and ancillary services fees, long-term portion | 11,764,765 | 11,838,579 |
| Property and equipment | 1,609,787 | 1,757,836 |
| Deferred tax asset, long-term portion | 4,880,423 | 5,370,037 |
| Intangible assets | 14,202,585 | 15,403,228 |
| Goodwill | 18,873,127 | 18,873,127 |
| Total assets | $ 125,795,866 | $ 121,352,829 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Accounts payable | $ 3,579,920 | $ 2,361,481 |
| Accrued liabilities | 3,941,549 | 3,913,034 |
| Customer deposits | 4,461,727 | 4,500,946 |
| Derivative instrument liability, current portion | 1,115,805 | 491,098 |
| Loan payable, current portion | -- | 6,300,000 |
| Deferred revenue, current portion | 55,495,566 | 54,379,719 |
| Accreditation fees payable, current portion | 466,201 | 473,811 |
| Income taxes payable | 473,480 | 1,024,004 |
| Total current liabilities | 69,534,248 | 73,444,093 |
| Deferred revenue, long-term portion | 15,610,753 | 15,638,517 |
| Accreditation fees payable, long-term portion | 128,243 | 135,522 |
| Deferred rent, long-term portion | 92,878 | 75,979 |
| Deferred tax liability, long-term portion | 4,787,351 | 5,141,500 |
| 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; 11,329,732 shares issued and outstanding as of December 31, 2014 and 10,907,063 shares issued and outstanding as of December 31, 2013 | 14,130,059 | 11,859,267 |
| Additional paid-in capital | 29,090,058 | 28,632,311 |
| Deficit | (6,955,283) | (13,329,379) |
| Accumulated other comprehensive income (loss) | (622,441) | (244,981) |
| Total stockholders' equity | 35,642,393 | 26,917,218 |
| Total liabilities and stockholders' equity | $ 125,795,866 | $ 121,352,829 |
| 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, | |||
| 2014 | 2013 | 2014 | 2013 | |
| (unaudited) | (unaudited) | |||
| Net revenues | $ 38,802,529 | $ 33,139,440 | $ 147,667,107 | $ 129,934,904 |
| Cost of revenues: | ||||
| Cost of revenues | 26,822,484 | 23,605,955 | 101,861,002 | 92,960,321 |
| Network expenses (*) | 1,126,779 | 1,119,468 | 4,554,635 | 4,835,939 |
| Depreciation of property and equipment | 170,714 | 175,262 | 699,670 | 627,973 |
| Amortization of intangible assets | -- | -- | -- | 83,790 |
| Total cost of revenues | 28,119,977 | 24,900,685 | 107,115,307 | 98,508,023 |
| Gross profit | 10,682,552 | 8,238,755 | 40,551,800 | 31,426,881 |
| Expenses: | ||||
| Sales and marketing (*) | 4,016,364 | 3,348,945 | 15,394,065 | 12,141,036 |
| Technical operations and development (*) | 1,067,149 | 1,061,309 | 4,305,715 | 4,158,603 |
| General and administrative (*) | 2,211,933 | 1,937,898 | 8,505,920 | 7,204,895 |
| Depreciation of property and equipment | 58,905 | 56,614 | 226,432 | 215,447 |
| Amortization of intangible assets | 51,330 | 219,030 | 596,620 | 876,120 |
| Impairment of indefinite life intangible assets | -- | 577,145 | ||
| Loss on currency forward contracts | 424,947 | 322,911 | 1,310,848 | 676,120 |
| Total expenses | 7,830,628 | 6,946,707 | 30,916,745 | 25,272,221 |
| Income from operations | 2,851,924 | 1,292,048 | 9,635,055 | 6,154,660 |
| Other income (expenses): | ||||
| Interest expense, net | (51) | (83,101) | (206,730) | (354,857) |
| Total other income (expenses) | (51) | (83,101) | (206,730) | (354,857) |
| Income before provision for income taxes | 2,851,873 | 1,208,947 | 9,428,325 | 5,799,803 |
| Provision for income taxes | 992,703 | 286,052 | 3,054,229 | 1,619,339 |
| Net income | 1,859,170 | 922,895 | 6,374,096 | 4,180,464 |
| Other comprehensive loss, net of tax | ||||
| Unrealized loss on hedging activities | (401,214) | (399,150) | (1,004,115) | (470,779) |
| Net amount reclassified to earnings | 188,762 | 62,457 | 626,655 | 181,694 |
| Other comprehensive loss net of tax of $110,668 and $175,387 for the three months ended December 31, 2014 and December 31, 2013, and $196,623 and $150,587 for the twelve months ended December 31, 2014 and December 31, 2013 | (212,452) | (336,693) | (377,460) | (289,085) |
| Comprehensive income for the period | $ 1,646,718 | $ 586,202 | $ 5,996,636 | $ 3,891,379 |
| Basic earnings per common share | $ 0.16 | $ 0.08 | $ 0.57 | $ 0.40 |
| Shares used in computing basic earnings per common share | 11,310,469 | 10,900,842 | 11,220,874 | 10,468,250 |
| Diluted earnings per common share | $ 0.16 | $ 0.08 | $ 0.54 | $ 0.37 |
| Shares used in computing diluted earnings per common share | 11,763,744 | 11,538,283 | 11,730,398 | 11,281,409 |
| (*) Stock-based compensation has been included in expenses as follows: | ||||
| Network expenses | $ 8,541 | $ 8,851 | $ 30,938 | $ 31,664 |
| Sales and marketing | $ 39,074 | $ 36,302 | $ 143,514 | $ 129,302 |
| Technical operations and development | $ 26,536 | $ 21,634 | $ 85,904 | $ 78,800 |
| General and administrative | $ 51,541 | $ 35,233 | $ 282,382 | $ 191,137 |
| 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, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Cash provided by: | (unaudited) | (unaudited) | ||
| Operating activities: | ||||
| Net income for the period | $ 1,859,170 | $ 922,895 | $ 6,374,096 | $ 4,180,464 |
| Items not involving cash: | ||||
| Depreciation of property and equipment | 229,619 | 231,876 | 926,102 | 843,420 |
| Amortization of intangible assets | 51,330 | 219,030 | 596,620 | 959,910 |
| Impairment of indefinite life intangible assets | -- | -- | 577,145 | -- |
| Deferred income taxes (recovery) | (127,877) | (169,268) | (935,568) | (247,371) |
| Excess tax benefits on share-based compensation expense | 101,653 | (34,157) | (148,902) | (1,090,171) |
| Deferred rent | 2,687 | 4,081 | 16,899 | 21,829 |
| Disposal of domain names | 7,301 | 8,221 | 26,878 | 52,513 |
| (Gain) loss on change in the fair value of forward contracts | 30,633 | 134,561 | 50,624 | 496,207 |
| Stock-based compensation | 125,692 | 102,020 | 542,738 | 430,903 |
| Changes in non-cash operating working capital: | ||||
| Accounts receivable | 125,005 | (435,937) | (1,484,282) | (892,138) |
| Inventory | (2,748) | 28,424 | (84,088) | 277,418 |
| Prepaid expenses and deposits | 624,939 | (67,637) | 611,747 | 772,369 |
| Prepaid fees for domain name registry and ancillary services fees | 1,516,718 | 1,785,439 | (331,453) | 1,440,720 |
| Income taxes recoverable/payable | 718,357 | (63,695) | (75,744) | 1,023,638 |
| Accounts payable | 21,490 | (170,657) | 1,152,042 | 529,537 |
| Accrued liabilities | (1,016,351) | 725,821 | 28,515 | 1,390,805 |
| Customer deposits | 392,395 | 428,621 | (39,219) | (454,725) |
| Deferred revenue | (1,871,865) | (1,972,072) | 1,088,083 | (982,115) |
| Accreditation fees payable | (20,711) | (25,188) | (14,889) | (49,106) |
| Net cash provided by operating activities | 2,767,437 | 1,652,378 | 8,877,344 | 8,704,107 |
| Financing activities: | ||||
| Proceeds received on exercise of stock options | 93,108 | 37,919 | 1,478,924 | 1,492,174 |
| Excess tax benefits on share-based compensation expense | 133,422 | 34,157 | 1,888,734 | 1,090,171 |
| Repurchase of common stock | -- | -- | (1,181,857) | (6,537,616) |
| Proceeds received on loan payable | -- | -- | -- | 5,200,000 |
| Repayment of loan payable | -- | (600,000) | (6,300,000) | (2,600,000) |
| Net cash provided by (used in) financing activities | 226,530 | (527,924) | (4,114,199) | (1,355,271) |
| Investing activities: | ||||
| Additions to property and equipment | (112,836) | (255,514) | (711,656) | (1,345,627) |
| Acquisition of other assets | (8,199,000) | -- | (8,199,000) | -- |
| Net cash used in investing activities | (8,311,836) | (255,514) | (8,910,656) | (1,345,627) |
| Increase in cash and cash equivalents | (5,317,869) | 868,940 | (4,147,511) | 6,003,209 |
| Cash and cash equivalents, beginning of period | 13,589,246 | 11,549,948 | 12,418,888 | 6,415,679 |
| Cash and cash equivalents, end of period | $ 8,271,377 | $ 12,418,888 | $ 8,271,377 | $ 12,418,888 |
| Supplemental cash flow information: | ||||
| Interest paid | $ 143 | $ 83,370 | $ 207,777 | $ 372,853 |
| Supplementary disclosure of non-cash investing activity: | ||||
| Property and equipment acquired during the period not yet paid for | $ 66,397 | $ -- | $ 66,397 | $ -- |
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.