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Tucows Reports Earnings & New gTLD’s Accounted For 6.5% of Total New Sales

Posted on the 15 May 2014 by Worldwide @thedomains

Tucows Inc. (NASDAQ:TCX, TSX:TC), a global provider of domain names and other Internet services, today reported its financial results for the first quarter ended March 31, 2014

Beginning in the first quarter of 2014, Tucows has reclassified its revenue streams into Domain Services and Network Access Services.

Domain Services includes Wholesale OpenSRS (Domain Service and Value Added Services), Retail (Hover) and Portfolio.

Network Access Services includes Ting.

“Our performance in the first quarter once again demonstrates the reliability and consistency of the business, alongside our ability to generate growth,” said Elliot Noss, President and Chief Executive Officer, Tucows Inc. “Ting delivered another record quarter, adding more than 13,000 accounts and 20,000 devices to end the quarter at 61,000 accounts and 94,000 devices, and subsequent to quarter end, we achieved another growth milestone, surpassing 100,000 devices. After little more than two years since launch, Ting is on track to match and exceed the size of our Wholesale domains business in terms of gross margin contribution later this year.”

“Our Domain Services business continues to perform well,” added Mr. Noss.

Net revenue for the first quarter of 2014 increased 15% to $34.4 million from $30.0 million for the first quarter of 2013.

Net income for the first quarter of 2014 was $0.5 million, or $0.04 per share, compared with $0.08 million, or $0.01 per share, for the first quarter of 2013.

Cash and cash equivalents at the end of the first quarter of 2014 were $13.5 million compared with $12.4 million at the end of the fourth quarter of 2013 and $4.3 million at the end of the first quarter of 2013.

“Our Wholesale channel and our Portfolio services business both had solid quarters, while our Retail channel, Hover, delivered yet another quarter of year-over-year growth in excess of 20%.”

In the earnings call Tucows chatted a bit about new gTLD registrations:

“”In Q1, new gTLDs accounted for about 6.5% of the total new sales. On one hand, this includes the launch of each of these new gTLDs, which will tend to be larger than their run rate. On the other hand, these certainly were not the most highly anticipated or most attractive new gTLDs.

We have no idea what to expect in Q2, but that number does seem quite encouraging for the program as a whole. Hover’s new gTLD registrations were right around that market average of 6.5% of total sales. Given that we do not participate in any of the land rushes and that we have more attractive margins, especially relative to the businesses that we are driving significant units, we are quite pleased with that performance.

OpenSRS was in the 2% to 3% range in Q1 and trending upwards to 3% to 4% in April and May. This is consistent with our historical performance in new gTLD launches as our broad network of resellers integrate the new offers.

The numbers we watch most closely here in the wholesale business, are resale adoption rates — are resale adoption rates and there we are seeing exactly the trends we want to see. Again, those numbers are not market shared numbers, but percent of our own new registrations coming from the new extensions.””

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