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Tucows CEOs Discuss 1Q 2012 Results - Earnings Call Transcript

Elliott Noss

Thank you, Operator. With me is Michael Cooperman our Chief Financial Officer. I'll begin today with a brief overview of the financial and operational highlights for the quarter. Mike will then review our financial results in more detail. Then I will return with some concluding comments before opening the call up to questions.

Q1 was another solid quarter for Tucows and our results again, underscore the growth consistency and reliability in our business. We saw growth across all the areas of our business and generated strong cash flow from operations. We recorded our 8th consecutive quarter of record revenue at $27.5 million, up 22% from the same quarter of last year. Cash provided by operating activities was $2.1 million, up significantly, from $0.8 million for Q1 last year.

While already a strong quarter, I will note that Q1 did benefit from items that while typical in the course of a year stand out in the course of a quarter. An unusually high level of sales of gems from our domain portfolio and marketing funds we receive from domain registries that were front-end loaded.

Importantly, Q1 was quarter in which you can really see the leverage in our business. Growth in revenue and gross margin far exceeded growth and operating expenses. Typically, we look, for at least $0.50 of every of incremental dollar in billed gross margin to drop to the bottom line. This year, our leverage was much better.

Before I walk through more highlights of the quarter, I will note, that we changed the way in which we classify the different sources of revenue in our disclosure. Beginning this quarter, we are breaking up revenue and gross margin by wholesale, retail, and portfolio. We believe this realignment better reflects the manner in which revenue is generated and the way in which management currently assesses the business.

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