Tucows Inc. (NASDAQ:TCX, TSX:TC), a provider of network access,
domain names and other Internet services, today reported its
financial results for the second quarter ended June 30, 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:
https://bit.ly/2LavpOc.
Summary Financial
Results(In Thousands of US Dollars, Except Per
Share Data)
|
3 Months ended June 30 |
6 Months ended June 30 |
2020(Un-audited) |
2019(Un-audited) |
% Change |
2020(Un-audited) |
2019(Un-audited) |
% Change |
Net revenue |
82,122 |
84,117 |
(2.4 |
%) |
166,107 |
163,070 |
1.9 |
% |
Gross Profit |
22,966 |
24,507 |
(6.3 |
%) |
48,116 |
47,158 |
2.0 |
% |
Net income1 |
157 |
2,616 |
(94.0 |
%) |
2,991 |
5,415 |
(44.8 |
%) |
Basic Net earnings per common share |
0.01 |
0.25 |
(96.0 |
%) |
0.28 |
0.51 |
(45.1 |
%) |
Adjusted EBITDA2 |
12,175 |
11,486 |
6.0 |
% |
24,856 |
20,917 |
18.8 |
% |
Net cash provided by operating activities |
8,939 |
6,979 |
28.1 |
% |
23,012 |
15,970 |
44.1 |
% |
1. |
Net income for the second quarter of 2020 included two non-cash,
non-recurring charges for asset impairments totalling $2.3 million,
or $0.22 per share. Excluding these two items, net income would
have been $2.5 million, or $0.23 per share. |
|
|
2. |
This Non-GAAP financial measure is described below and reconciled
to GAAP net income in the accompanying table. |
|
|
Summary of Revenues and Gross
profit(In Thousands of US Dollars)
|
Revenue |
Gross Profit |
|
3 Months endedJune 30 |
3 Months ended June 30 |
|
2020(Unaudited) |
2019(Unaudited) |
2020(Unaudited) |
2019(Unaudited) |
Network Access Services: |
Mobile Services |
17,567 |
20,986 |
8,907 |
|
10,180 |
|
Other Services |
4,414 |
2,644 |
2,749 |
|
1,688 |
|
Total Network Access Services |
21,981 |
23,630 |
11,656 |
|
11,868 |
|
Domain Services: |
Wholesale |
|
|
|
|
Domain Services |
46,206 |
46,485 |
9,852 |
|
8,668 |
|
Value Added Services |
5,034 |
4,775 |
4,272 |
|
4,037 |
|
Total Wholesale |
51,240 |
51,260 |
14,124 |
|
12,705 |
|
|
|
|
|
|
Retail |
8,567 |
8,783 |
4,348 |
|
4,374 |
|
Portfolio3 |
334 |
444 |
204 |
|
297 |
|
Total Domain Services |
60,141 |
60,487 |
18,676 |
|
17,376 |
|
Network Expenses: |
Network, other costs |
- |
- |
(2,485 |
) |
(2,385 |
) |
Network, depreciation and amortization costs |
- |
- |
(3,356 |
) |
(2,352 |
) |
Network, impairment |
|
|
(1,525 |
) |
- |
|
Total Network expenses |
- |
- |
(7,366 |
) |
(4,737 |
) |
|
|
|
|
|
Total |
82,122 |
84,117 |
22,966 |
|
24,507 |
|
3. |
Beginning in the first quarter of 2020, portfolio revenue consisted
of individual sales from Tucows’ surname portfolio following the
sale of the Company’s remaining domain name portfolio in the fourth
quarter of 2019. |
|
|
“The second quarter was once again demonstrative of the
consistency and cash generating ability of the Tucows business,”
said Elliot Noss, President and Chief Executive Officer, Tucows
Inc. “Our Domains business had another solid quarter, as we
benefited from significantly higher transaction activity as micro-
and small-sized businesses and start-ups acted quickly to establish
a web presence for the first time amid the pandemic, in addition to
our continued success focusing on the quality of our customer base
for gross margin contribution. Although a somewhat
challenging quarter for our Ting Mobile business, our recently
announced transition to our new Mobile Services Enabler model, with
DISH as our first customer, provides a much-improved near- and
long-term outlook for this business, and strong visibility around
cash flows, particularly amidst a rapidly changing industry
dynamic. Finally, Ting Internet saw another quarter of steady
progress across all facets of that business, meaningfully adding
passed addresses, serviceable addresses and new customers, as we
achieved a record quarter for capital expenditure on our
network.”
Financial Results
Net revenue for the second quarter of 2020 was $82.1 million, a
decrease of 2.4% from $84.1 million for the second quarter of
2019. Gross profit for the second quarter of 2020 was $23.0
million, a decrease of 6.3% from $24.5 million for the second
quarter of 2019. The decreases in net revenue and gross
margin were the result of decreases for each in the Ting Mobile
business, with gross margin additionally impacted by a
non-recurring asset impairment charge related to a change in
strategy for the Ting Internet TV product. Excluding the
impact of the asset impairment, gross margin for the second quarter
of 2020 would have increased 4.0% compared to the second quarter of
2019.
Net income for the second quarter of 2020 was $0.2 million, or
$0.01 per share, compared with $2.6 million, or $0.25 per share,
and included two non-cash, non-recurring charges for asset
impairments totalling on an after-tax basis $2.3 million ($1.3
million related to the wind up of the Ting Mobile ROAM Mobility
business and $1.0 million related to the aforementioned change in
strategy for the Ting Internet TV product), or $0.22 per share.
Excluding these two items, net income would have been $2.5 million,
or $0.23 per share. This compares with net income for the
second quarter of 2019 of $2.6 million, or $0.25 per share.
Adjusted EBITDA1 for the second quarter of 2020 increased 6% to
$12.2 million from $11.5 million for the second quarter of
2019.
Cash and cash equivalents at the end of the second quarter of
2020 was $8.9 million compared with $12.4 million at the end of the
first quarter of 2020 and $12.0 million at the end of the second
quarter of 2019.
Notes:
1. Adjusted EBITDA
Tucows 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 June 30 |
6 months ended June 30 |
|
2020 (unaudited) |
2019 (unaudited) |
2020 (unaudited) |
2019 (unaudited) |
Net income for the period |
157 |
|
2,616 |
|
2,991 |
|
5,415 |
|
Depreciation of property and equipment |
3,155 |
|
2,172 |
|
6,145 |
|
4,097 |
|
Impairment of property and equipment |
1,525 |
|
- |
|
1,525 |
|
- |
|
Amortization of intangible assets |
2,830 |
|
2,565 |
|
6,131 |
|
4,605 |
|
Impairment of definite life intangible assets |
1,431 |
|
- |
|
1,431 |
|
- |
|
Interest expense, net |
846 |
|
1,314 |
|
1,996 |
|
2,286 |
|
Accretion of contingent consideration |
85 |
|
- |
|
172 |
|
- |
|
Provision for income taxes |
449 |
|
1,819 |
|
1,550 |
|
3,076 |
|
Stock-based compensation |
847 |
|
685 |
|
1,648 |
|
1,210 |
|
Unrealized loss (gain) on change in fair value of forward
contracts |
(436 |
) |
(70 |
) |
(88 |
) |
(188 |
) |
Unrealized loss (gain) on foreign exchange revaluation of foreign
denominated monetary assets and liabilities |
441 |
|
(162 |
) |
399 |
|
(490 |
) |
Acquisition and transition costs* |
845 |
|
547 |
|
956 |
|
906 |
|
|
|
|
|
|
Adjusted EBITDA |
12,175 |
|
11,486 |
|
24,856 |
|
20,917 |
|
*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, Cedar in January 2020, the
shut-down of Roam Mobility in June of 2020 and the costs associated
with various DISH agreements executed in August of 2020.
Expenses include severance or transitional costs associated with
department, operational or overall company restructuring efforts,
including geographic alignments. |
|
Conference Call
Concurrent 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
http://www.tucows.com/investors/financials. In lieu of a live
question and answer period, for the next six days (until Wednesday,
August 12), shareholders, analysts and prospective investors can
submit questions to Tucows’ management at ir@tucows.com. Management
will post responses to questions of general interest to the
Company’s web site at http://www.tucows.com/investors/financials/
on Monday, August 17 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 Tucows
Tucows is a provider of network access, mobile technology
services, domain names and other Internet services. Ting Internet
(https://ting.com/internet) delivers fixed fiber Internet access
with outstanding customer support. Tucows’ mobile services enabler
(MSE) platform provides network access, provisioning and billing
services for mobile virtual network operators (MVNOs). OpenSRS
(https://opensrs.com), Enom (https://www.enom.com) and Ascio
(https://ascio.com) combined manage approximately 25 million domain
names and millions of value-added services through a global
reseller network of over 36,000 web hosts and ISPs. Hover
(https://hover.com) 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
(https://tucows.com).
|
|
Tucows Inc. |
|
June
30, |
|
December
31, |
|
Consolidated Balance Sheets |
|
|
2020 |
|
|
2019 |
|
(Dollar amounts in thousands of U.S. dollars) |
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
8,859 |
|
$ |
20,393 |
|
Accounts
receivable |
|
|
7,506 |
|
|
14,564 |
|
Inventory |
|
|
965 |
|
|
3,457 |
|
Prepaid
expenses and deposits |
|
|
16,549 |
|
|
13,478 |
|
Derivative
instrument asset, current portion |
|
|
1,080 |
|
|
731 |
|
Prepaid
domain name registry and ancillary services fees, current
portion |
|
|
96,322 |
|
|
91,252 |
|
Assets
held-for-sale |
|
|
9,027 |
|
|
- |
|
Income taxes
recoverable |
|
|
1,326 |
|
|
1,800 |
|
Total
current assets |
|
|
141,634 |
|
|
145,675 |
|
|
|
|
|
|
|
Derivative
instrument asset, long-term portion |
|
|
611 |
|
|
- |
|
Prepaid
domain name registry and ancillary services fees, long-term
portion |
|
|
17,902 |
|
|
17,915 |
|
Property and
equipment |
|
|
101,292 |
|
|
82,121 |
|
Right of use
operating lease asset |
|
|
11,066 |
|
|
11,335 |
|
Contract
costs |
|
|
344 |
|
|
1,400 |
|
Deferred tax
asset |
|
|
340 |
|
|
- |
|
Intangible
assets |
|
|
52,732 |
|
|
57,654 |
|
Goodwill |
|
|
116,270 |
|
|
109,818 |
|
Total
assets |
|
$ |
442,191 |
|
$ |
425,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
$ |
6,511 |
|
$ |
6,671 |
|
Accrued
liabilities |
|
|
9,915 |
|
|
9,373 |
|
Customer
deposits |
|
|
14,468 |
|
|
14,074 |
|
Derivative
instrument liability |
|
|
561 |
|
|
- |
|
Liabilities
held-for-sale |
|
|
751 |
|
|
- |
|
Operating
lease liability, current portion |
|
|
1,506 |
|
|
1,413 |
|
Deferred
revenue, current portion |
|
|
129,072 |
|
|
123,101 |
|
Accreditation fees payable, current portion |
|
|
1,018 |
|
|
952 |
|
Income taxes
payable |
|
|
1,291 |
|
|
1,324 |
|
Total
current liabilities |
|
|
165,093 |
|
|
156,908 |
|
|
|
|
|
|
|
Derivative
instrument liability |
|
|
158 |
|
|
- |
|
Deferred
revenue, long-term portion |
|
|
26,228 |
|
|
26,202 |
|
Accreditation fees payable, long-term portion |
|
|
204 |
|
|
216 |
|
Operating
lease liability, long-term portion |
|
|
9,169 |
|
|
9,424 |
|
Loan
payable, long-term portion |
|
|
113,608 |
|
|
113,503 |
|
Other
long-term liability |
|
|
3,244 |
|
|
- |
|
Deferred tax
liability |
|
|
27,113 |
|
|
25,471 |
|
|
|
|
|
|
|
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; 10,570,360 shares
issued and outstanding as of June 30, 2020 and 10,585,159 shares
issued and outstanding as of December 31, 2019 |
|
|
18,865 |
|
|
16,633 |
|
Additional
paid-in capital |
|
|
591 |
|
|
880 |
|
Retained
earnings |
|
|
77,322 |
|
|
76,208 |
|
Accumulated
other comprehensive income (loss) |
|
|
596 |
|
|
473 |
|
Total
stockholders' equity |
|
|
97,374 |
|
|
94,194 |
|
Total
liabilities and stockholders' equity |
|
$ |
442,191 |
|
$ |
425,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tucows Inc. |
|
Three months
ended June 30, |
|
|
Six months
ended June 30, |
|
Consolidated Statements of Operations and Comprehensive
Income |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
(Dollar amounts in thousands of U.S.
dollares) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
Net
revenues |
$ |
82,122 |
|
$ |
84,117 |
|
$ |
166,107 |
|
$ |
163,070 |
|
|
|
|
|
|
|
|
|
|
Cost of
revenues: |
|
|
|
|
|
|
|
|
Cost of
revenues |
|
51,790 |
|
|
54,873 |
|
|
104,978 |
|
|
106,805 |
|
Network
expenses (*) |
|
2,485 |
|
|
2,385 |
|
|
4,901 |
|
|
4,780 |
|
Depreciation
of property and equipment |
|
3,030 |
|
|
2,038 |
|
|
5,907 |
|
|
3,839 |
|
Amortization
of intangible assets |
|
326 |
|
|
314 |
|
|
680 |
|
|
488 |
|
Impairment
of property and equipment |
|
1,525 |
|
|
- |
|
|
1,525 |
|
|
- |
|
Total cost
of revenues |
|
59,156 |
|
|
59,610 |
|
|
117,991 |
|
|
115,912 |
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
22,966 |
|
|
24,507 |
|
|
48,116 |
|
|
47,158 |
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
Sales and
marketing (*) |
|
9,218 |
|
|
8,856 |
|
|
18,203 |
|
|
17,597 |
|
Technical
operations and development (*) |
|
3,067 |
|
|
2,752 |
|
|
5,818 |
|
|
5,275 |
|
General and
administrative (*) |
|
5,465 |
|
|
4,796 |
|
|
10,206 |
|
|
9,244 |
|
Depreciation
of property and equipment |
|
125 |
|
|
134 |
|
|
238 |
|
|
258 |
|
Amortization
of intangible assets |
|
2,504 |
|
|
2,251 |
|
|
5,451 |
|
|
4,117 |
|
Impairment
of definite life intangible assets |
|
1,431 |
|
|
- |
|
|
1,431 |
|
|
- |
|
Loss (gain)
on currency forward contracts |
|
(381 |
) |
|
(31 |
) |
|
60 |
|
|
(110 |
) |
Total
expenses |
|
21,429 |
|
|
18,758 |
|
|
41,407 |
|
|
36,381 |
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
1,537 |
|
|
5,749 |
|
|
6,709 |
|
|
10,777 |
|
|
|
|
|
|
|
|
|
|
Other income
(expenses): |
|
|
|
|
|
|
|
|
Interest
expense, net |
|
(846 |
) |
|
(1,314 |
) |
|
(1,996 |
) |
|
(2,286 |
) |
Other
expense, net |
|
(85 |
) |
|
- |
|
|
(172 |
) |
|
- |
|
Total other
income (expenses) |
|
(931 |
) |
|
(1,314 |
) |
|
(2,168 |
) |
|
(2,286 |
) |
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes |
|
606 |
|
|
4,435 |
|
|
4,541 |
|
|
8,491 |
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
449 |
|
|
1,819 |
|
|
1,550 |
|
|
3,076 |
|
Net income
for the period |
|
157 |
|
|
2,616 |
|
|
2,991 |
|
|
5,415 |
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income, net of tax |
|
|
|
|
|
|
|
|
Unrealized
income (loss) on hedging activities |
|
1,114 |
|
|
240 |
|
|
(120 |
) |
|
789 |
|
Net amount
reclassified to earnings |
|
200 |
|
|
80 |
|
|
243 |
|
|
141 |
|
Other
comprehensive income (loss) net of tax (expense) recovery of $398
and $103 for the three months ended June 30, 2020 and June 30, 2019
and $32 and $298 for the six months ended June 30, 2020 and June
30, 2019 |
|
1,314 |
|
|
320 |
|
|
123 |
|
|
930 |
|
|
|
|
|
|
|
|
|
|
Comprehensive income, net of tax for the period |
$ |
1,471 |
|
$ |
2,936 |
|
$ |
3,114 |
|
$ |
6,345 |
|
|
|
|
|
|
|
|
|
|
Basic
earnings per common share |
$ |
0.01 |
|
$ |
0.25 |
|
$ |
0.28 |
|
$ |
0.51 |
|
|
|
|
|
|
|
|
|
|
Shares used
in computing basic earnings per common share |
|
10,567,382 |
|
|
10,657,124 |
|
|
10,589,806 |
|
|
10,646,045 |
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share |
$ |
0.01 |
|
$ |
0.24 |
|
$ |
0.28 |
|
$ |
0.50 |
|
|
|
|
|
|
|
|
|
|
Shares used
in computing diluted earnings per common share |
|
10,653,527 |
|
|
10,840,005 |
|
|
10,684,304 |
|
|
10,837,456 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*)
Stock-based compensation has been included in expenses as
follows: |
|
|
|
|
|
|
|
|
Network
expenses |
$ |
109 |
|
$ |
72 |
|
$ |
196 |
|
$ |
129 |
|
Sales and
marketing |
$ |
375 |
|
$ |
297 |
|
$ |
745 |
|
$ |
494 |
|
Technical
operations and development |
$ |
184 |
|
$ |
132 |
|
$ |
351 |
|
$ |
249 |
|
General and
administrative |
$ |
179 |
|
$ |
183 |
|
$ |
356 |
|
$ |
338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tucows Inc. |
|
Three
months ended June 30, |
|
Six
months ended June 30, |
Consolidated Statements of Cash Flows |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
(Dollar amounts in thousands of U.S. dollars) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
Cash
provided by: |
|
|
|
|
|
|
|
|
Operating
activities: |
|
|
|
|
|
|
|
|
Net income
for the period |
$ |
157 |
|
$ |
2,616 |
|
$ |
2,991 |
|
$ |
5,415 |
|
Items not
involving cash: |
|
|
|
|
|
|
|
|
Depreciation
of property and equipment |
|
3,155 |
|
|
2,172 |
|
|
6,145 |
|
|
4,097 |
|
Loss on
write off/impairment of property and equipment |
|
1,525 |
|
|
- |
|
|
1,525 |
|
|
22 |
|
Amortization
of debt discount and issuance costs |
|
67 |
|
|
90 |
|
|
134 |
|
|
168 |
|
Amortization
of intangible assets |
|
2,830 |
|
|
2,565 |
|
|
6,131 |
|
|
4,605 |
|
Net
amortization contract costs |
|
95 |
|
|
34 |
|
|
124 |
|
|
53 |
|
Accretion of
contingent consideration |
|
85 |
|
|
- |
|
|
172 |
|
|
- |
|
Impairment
of definite life intangible asset |
|
1,431 |
|
|
- |
|
|
1,431 |
|
|
- |
|
Other |
|
223 |
|
|
- |
|
|
223 |
|
|
- |
|
Deferred
income taxes (recovery) |
|
(917 |
) |
|
1,449 |
|
|
(1,107 |
) |
|
1,911 |
|
Excess tax
benefits on share-based compensation expense |
|
(164 |
) |
|
(381 |
) |
|
(344 |
) |
|
(737 |
) |
Net Right of
use operating assets/Operating lease liability |
|
291 |
|
|
79 |
|
|
112 |
|
|
49 |
|
Loss on
disposal of domain names |
|
2 |
|
|
2 |
|
|
15 |
|
|
6 |
|
Loss (gain)
on change in the fair value of forward contracts |
|
(436 |
) |
|
(70 |
) |
|
(88 |
) |
|
(188 |
) |
Stock-based
compensation |
|
847 |
|
|
685 |
|
|
1,648 |
|
|
1,210 |
|
Change in
non-cash operating working capital: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
401 |
|
|
1,031 |
|
|
2,552 |
|
|
(157 |
) |
Inventory |
|
900 |
|
|
108 |
|
|
1,804 |
|
|
516 |
|
Prepaid
expenses and deposits |
|
(3,247 |
) |
|
(2,524 |
) |
|
(3,222 |
) |
|
(2,914 |
) |
Prepaid
domain name registry and ancillary services fees |
|
(2,204 |
) |
|
1,651 |
|
|
(5,057 |
) |
|
(65 |
) |
Income taxes
recoverable |
|
294 |
|
|
(1,639 |
) |
|
794 |
|
|
(2,875 |
) |
Accounts
payable |
|
(1,521 |
) |
|
(1,170 |
) |
|
250 |
|
|
(384 |
) |
Accrued
liabilities |
|
2,165 |
|
|
2,266 |
|
|
334 |
|
|
3,587 |
|
Customer
deposits |
|
336 |
|
|
(808 |
) |
|
394 |
|
|
(521 |
) |
Deferred
revenue |
|
2,655 |
|
|
(1,131 |
) |
|
5,997 |
|
|
2,138 |
|
Accreditation fees payable |
|
(31 |
) |
|
(46 |
) |
|
54 |
|
|
34 |
|
Net cash
provided by operating activities |
|
8,939 |
|
|
6,979 |
|
|
23,012 |
|
|
15,970 |
|
|
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
|
|
Proceeds
received on exercise of stock options |
|
29 |
|
|
122 |
|
|
46 |
|
|
194 |
|
Payment of
tax obligations resulting from net exercise of stock options |
|
(165 |
) |
|
(185 |
) |
|
(347 |
) |
|
(524 |
) |
Repurchase
of common stock |
|
(164 |
) |
|
- |
|
|
(3,281 |
) |
|
- |
|
Proceeds
received on loan payable |
|
- |
|
|
7,431 |
|
|
- |
|
|
40,371 |
|
Repayment of
loan payable |
|
- |
|
|
(3 |
) |
|
- |
|
|
(4,603 |
) |
Payment of
loan payable costs |
|
(7 |
) |
|
(434 |
) |
|
(32 |
) |
|
(641 |
) |
Net cash
(used in) provided by financing activities |
|
(307 |
) |
|
6,931 |
|
|
(3,614 |
) |
|
34,797 |
|
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
|
|
Additions to
property and equipment |
|
(12,150 |
) |
|
(10,414 |
) |
|
(22,093 |
) |
|
(20,849 |
) |
Acquisition
of other assets |
|
- |
|
|
(2,501 |
) |
|
- |
|
|
(2,501 |
) |
Acquisition
of Cedar Holdings Group (net of cash of $66) |
|
- |
|
|
- |
|
|
(8,770 |
) |
|
- |
|
Acquisition
of Ascio Technologies (net of cash of $1) |
|
- |
|
|
- |
|
|
- |
|
|
(28,024 |
) |
Acquisition
of intangible assets |
|
(69 |
) |
|
(27 |
) |
|
(69 |
) |
|
(27 |
) |
Net cash
used in investing activities |
|
(12,219 |
) |
|
(12,942 |
) |
|
(30,932 |
) |
|
(51,401 |
) |
|
|
|
|
|
|
|
|
|
(Decrease)
increase in cash and cash equivalents |
|
(3,587 |
) |
|
968 |
|
|
(11,534 |
) |
|
(634 |
) |
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents, beginning of period |
|
12,446 |
|
|
11,035 |
|
|
20,393 |
|
|
12,637 |
|
Cash and
cash equivalents, end of period |
$ |
8,859 |
|
$ |
12,003 |
|
$ |
8,859 |
|
$ |
12,003 |
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information: |
|
|
|
|
|
|
|
|
Interest
paid |
$ |
686 |
|
$ |
1,318 |
|
$ |
1,840 |
|
$ |
2,294 |
|
Income taxes
paid, net |
$ |
1,243 |
|
$ |
2,046 |
|
$ |
2,200 |
|
$ |
4,164 |
|
|
|
|
|
|
|
|
|
|
Supplementary disclosure of non-cash investing and financing
activities: |
|
|
|
|
|
|
|
|
Property and
equipment acquired during the period not yet paid for |
$ |
635 |
|
$ |
674 |
|
$ |
635 |
|
$ |
674 |
|
Fair value
of shares issued for acquisition of Cedar Holdings Group |
$ |
- |
|
$ |
- |
|
$ |
2,000 |
|
$ |
- |
|
Fair value
of contingent consideration for acquisition of Cedar Holdings
Group |
$ |
7 |
|
$ |
- |
|
$ |
3,072 |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tucows Inc. |
|
Three months
ended June 30, |
|
Six months
ended June 30, |
|
Reconciliation of Net income to Adjusted
EBITDA |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
(Dollar amounts in thousands of U.S. dollars) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Net
income for the period |
$ |
157 |
|
$ |
2,616 |
|
$ |
2,991 |
|
$ |
5,415 |
|
|
Depreciation
of property and equipment |
|
3,155 |
|
|
2,172 |
|
|
6,145 |
|
|
4,097 |
|
|
Loss on
write off/impairment of property and equipment |
|
1,525 |
|
|
- |
|
|
1,525 |
|
|
- |
|
|
Amortization
of intangible assets |
|
2,830 |
|
|
2,565 |
|
|
6,131 |
|
|
4,605 |
|
|
Impairment
of definite life intangible asset |
|
1,431 |
|
|
- |
|
|
1,431 |
|
|
- |
|
|
Interest
expense, net |
|
846 |
|
|
1,314 |
|
|
1,996 |
|
|
2,286 |
|
|
Accretion of
contingent consideration |
|
85 |
|
|
- |
|
|
172 |
|
|
- |
|
|
Provision
for income taxes |
|
449 |
|
|
1,819 |
|
|
1,550 |
|
|
3,076 |
|
|
Stock-based
compensation |
|
847 |
|
|
685 |
|
|
1,648 |
|
|
1,210 |
|
|
Unrealized
loss (gain) on change in fair value of forward contracts |
|
(436 |
) |
|
(70 |
) |
|
(88 |
) |
|
(188 |
) |
|
Unrealized
loss (gain) on foreign exchange revaluation of foreign denominated
monetary assets and liabilities |
|
441 |
|
|
(162 |
) |
|
399 |
|
|
(490 |
) |
|
Acquisition
and other costs1 |
|
845 |
|
|
547 |
|
|
956 |
|
|
906 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
12,175 |
|
$ |
11,486 |
|
$ |
24,856 |
|
$ |
20,917 |
|
|
|
|
|
|
|
|
|
|
|
|
1Acquisition and other
costs represents transaction-related expenses, transitional
expenses, such as duplicative post-acquisition expenses, primarily
related to our acquisition of eNom in January 2017, Ascio in March
2019, Cedar in January 2020 and the costs associated with various
DISH agreements executed in August of 2020. Expenses include
severance or transitional costs associated with department,
operational or overall company restructuring efforts, including
geographic alignments. |
|
|
|
|
|
|
|
|
|
|
|
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, including, without limitation, our
expectations regarding our ability to realize synergies from the
Enom acquisition and our expectation for growth of Ting Internet.
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 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, Ting, OpenSRS, Enom, Ascio and Hover are registered
trademarks of Tucows Inc. or its subsidiaries.
Contact:Lawrence Chamberlain(416) 519-4196
| lawrence.chamberlain@loderockadvisors.com
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