Source: Benzinga

Tucows: Tucows Reports Financial Results for First Quarter 2020

TORONTO, May 07, 2020 (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 first quarter ended March 31, 2020. All figures are in U.S. dollars.COVID-19: Tucows shareholders and prospective investors are encouraged to read Tucows' public statement regarding COVID-19, which is available here: Financial Results(In Thousands of US Dollars, Except Per Share Data) 3 Months Ended March 312020(Unaudited)2019(Unaudited)% ChangeNet revenue83,98578,9536%Gross Profit25,15022,65111%Net income2,8342,7991%Basic Net earnings per common share0.270.264%Adjusted EBITDA1,212,6819,43134%Net cash provided by operating activities14,0738,99157%1. This Non-GAAP financial measure is described below and reconciled to GAAP net income in the accompanying table.2. Adjusted EBITDA for the three-month period ended March 31, 2020 reflects the impact of the purchase price accounting adjustment related to the fair value write down of deferred revenue from the Ascio acquisition on March 18, 2019, which lowered Adjusted EBITDA by $0.1 million, compared to $0.2 million for the three-month period ended March 31, 2019. Summary of Revenues and Gross profit(In Thousands of US Dollars) RevenueGross Profit 3 Months endedMarch 31 3 Months ended March 31 2020(Unaudited)2019(Unaudited)2020(Unaudited)2019(Unaudited)Network Access Services:Mobile Services20,14820,80910,291 10,066 Other Services4,3082,4432,592 1,374 Total Network Access Services24,45623,25212,883 11,440 Domain Services:Wholesale Domain Services45,96442,5919,495 7,752 Value Added Services4,7074,1843,922 3,390 Total Wholesale50,67146,77513,417 11,142 Retail8,4498,6424,215 4,283 Portfolio3409284282 156 Total Domain Services59,52955,70117,914 15,581 Network Expenses:Network, other costs--(2,416)(2,395)Network, depreciation and amortization costs--(3,231)(1,975)Total Network expenses--(5,647)(4,370) Total83,98578,95325,150 22,651 3. During the first quarter of 2020, portfolio revenue consisted of individual sales from its surname portfolio following the sale of the Company's remaining domain name portfolio in the fourth quarter of 2019. Going forward, portfolio revenue will only consist of surname portfolio sales. "The first quarter was a very solid start to 2020, highlighted by year-over-year growth in revenue and gross profit of 6% and 11%, respectively, and cash flow from operations of more than $14 million," said Elliot Noss, President and Chief Executive Officer, Tucows Inc. "Our Domains business continued to benefit from our focus on high-quality reseller customers, which contributed to more than a 20% year-over-year increase in gross margin in the Wholesale channel. In our Ting Mobile business, as expected we benefited from the improved economics of our carrier relationships. And at Ting Internet, we continued to steadily expand the network, adding another new town, further expanding potential serviceable addresses, increasing the number of homes passed, adding new customers, and nearly doubling gross profit year-over-year with the contribution of the acquisition of Cedar Holdings, which we closed on January 1."Financial ResultsNet revenue for the first quarter of 2020 increased 6% to $84.0 million from $79.0 million for the first quarter of 2019.Net income for the first quarter of 2020 increased 1.3% to just over $2.8 million, or $0.27 per share, from just under $2.8 million, or $0.26 per share, for the first quarter of 2019. Adjusted EBITDA1 for the first quarter of 2020 increased 34% to $12.7 million from $9.4 million for the first quarter of 2019. Adjusted EBITDA for the first quarter of 2020 reflects a full quarter of contribution from the Ascio and Cedar Holdings acquisitions in March 2019 and January 2020, respectively. Cash and cash equivalents at the end of the first quarter of 2020 was $12.4 million compared with $20.4 million at the end of the fourth quarter of 2019 and $11.0 million at the end of the first quarter of 2019.Notes:1. Adjusted EBITDATucows reports all financial information required in accordance with United States generally accepted accounting principles (GAAP). Along with this information, to assist financial statement users in an assessment of our historical performance, the Company typically discloses and discusses a non-GAAP financial measure, adjusted EBITDA, in press releases and on investor conference calls and related events that exclude certain non-cash and other charges as the Company believes that the non-GAAP information enhances investors' overall understanding of our financial performance.The Company believes that the provision of this supplemental non-GAAP measure allows investors to evaluate the operational and financial performance of the Company's core business using similar evaluation measures to those used by management. The Company uses adjusted EBITDA to measure its performance and prepare its budgets. Since adjusted EBITDA is a non-GAAP financial performance measure, the Company's calculation of adjusted EBITDA may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. Because adjusted EBITDA is calculated before recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a liquidity measure. Non-GAAP financial measures do not reflect a comprehensive system of accounting and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies and/or analysts and may differ from period to period. The Company endeavors to compensate for these limitations by providing the relevant disclosure of the items excluded in the calculation of adjusted EBITDA to net income based on U.S. GAAP, which should be considered when evaluating the Company's results. Tucows strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure.The Company's adjusted EBITDA definition excludes depreciation, amortization of intangible assets, income tax provision, interest expense (net), accretion of contingent consideration, stock-based compensation, asset impairment, gains and losses from unrealized foreign currency transactions and infrequently occurring items, including acquisition and transition costs. Gains and losses from unrealized foreign currency transactions removes the unrealized effect of the change in the mark-to-market values on outstanding unhedged foreign currency contracts, as well as the unrealized effect from the translation of monetary accounts denominated in non-U.S. dollars to U.S. dollars.The following table reconciles net income to adjusted EBITDA (dollars in thousands): 3 months ended March 31 2020 (unaudited)2019 (unaudited)Net income for the period 2,834 2,799 Depreciation of property and equipment2,990 1,925 Amortization of intangible assets3,301 2,040 Interest expense, net1,150 972 Accretion of contingent consideration87 - Provision for income taxes1,101 1,257 Stock-based compensation801 525 Unrealized loss (gain) on change in fair value of forward contracts348 (118)Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities(42)(328)Acquisition and transition costs*111 359 Adjusted EBITDA12,681 9,431 *Acquisition and other costs represent transaction-related expenses, transitional expenses, such as duplicative post-acquisition expenses, primarily related to the Company's acquisition of Ascio in March 2019 and Cedar in January 2020. Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments.Conference CallConcurrent with the dissemination of this news release, management's pre-recorded commentary discussing the quarter and outlook for the Company have been posted to the Tucows web site at In lieu of a live question and answer period, for the next six days (until Wednesday, May 13), shareholders, analysts and prospective investors can submit questions to Tucows' management at [email protected] Management will post responses to questions of general interest to the Company's web site at on Wednesday, May 20 at approximately 4:00 p.m. ET. All questions will receive a response, however, questions of a more specific nature may be responded to directly.About TucowsTucows is a provider of network access, domain names and other Internet services. Ting ( delivers mobile phone service and fixed Internet access with outstanding customer support. OpenSRS (, Enom ( and Ascio ( combined manage approximately 24 million domain names and millions of value-added services through a global reseller network of over 36,000 web hosts and ISPs. Hover ( makes it easy for individuals and small businesses to manage their domain names and email addresses. More information can be found on Tucows' corporate website (

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Tucows provides network access, domain name registration, mobile telephony and other Internet services. Read more