Tucows Inc. Q3 2009 Financial Results

TORONTO, Nov. 11 -- 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 third quarter of 2009 ended September 30, 2009. All figures are in U.S. dollars.

"Throughout 2009, we have consistently delivered solid financial results, driven by the strong performance of our OpenSRS wholesale business, the initiatives we have undertaken to improve other components of our business, and the success of our efforts to improve our cost structure," said Elliot Noss, President and CEO of Tucows. "Fundamentally, our business is strong and we are performing very well operationally. Amidst a weakening Internet services environment, our strong competitive position, supported by continuing improvements to our OpenSRS platform, has enabled us to grow new registrations in excess of industry performance. All of this continues to position us well for the remainder of 2009 and beyond."

Net revenue for the third quarter of 2009 was $20.5 million compared with $20.1 million for the third quarter of 2008.

Net income for the third quarter of 2009 was $5.1 million, or $0.07 per share, compared with a net loss of $71,000, or less than $0.01 per share, for the third quarter of 2008. Net income for the third quarter of 2009 benefitted from other income of $1.9 million generated by receipt of the third and final payment related to the sale of the Company's equity stake in Afilias, as well as a gain on foreign exchange of $1.9 million (inclusive of a mark-to-market gain of $1.9 million) compared to a loss on foreign exchange of $0.7 million (inclusive of a mark-to-market loss of $0.5 million) for the third quarter of 2008. In addition, because the Company is no longer subject to state taxes in certain jurisdictions, it has amended its tax rate payable in connection with its deferred tax liability resulting in an income tax recovery of $0.4 million in the third quarter of 2009.

Deferred revenue at the end of the third quarter of fiscal 2009 was $56.5 million, an increase of 4% from $54.4 million at the end of the third quarter of fiscal 2008 and a slight decrease from $56.9 million at the end of the second quarter of fiscal 2009.

Cash and cash equivalents at the end of the third quarter of fiscal 2009 were $8.2 million compared with $2.7 million at the end of the third quarter of fiscal 2008 and $7.4 million at the end of the second quarter of fiscal 2009. This increase in cash compared with the second quarter of 2009 is primarily the result of the receipt of the $2.0 million payment related to the sale of the Company's equity stake in Afilias last year, which was partially offset by the repayment of $479,000 of the Company's bank loan and the use of $570,000 for the repurchase of shares under the Company's second modified "Dutch auction" tender offer, which concluded in July of this year. Cash flow from operations for the quarter was $82,000 and was impacted by a change in non-cash working capital related to the timing of payables and receivables of $1.5 million, the result of the receipt of $0.5 million in receivables shortly after quarter end and the payment of $1.0 million in certain payables to comply with changes in the Company's relationships with certain suppliers.

Source: Tucows