Tucows CEO Discusses Q3 2010 Results - Earnings Call Transcript
Tucows Inc. (
)
Q3 2010 Earnings Call
November 10, 2010 5:00 PM ET
Executives
Elliot Noss – President and CEO
Michael Cooperman – Chief Financial Officer
Analysts
Thanos Moschopoulos – BMO Capital Markets
Presentation
Operator
Compare to:
Previous Statements by TCX
»
Tucows Inc. Q2 2010 Earnings Call Transcript
»
Tucows Inc. Q1 2010 Earnings Call Transcript
»
Tucows, Inc. Q4 2009 Earnings Call Transcript
»
Tucows, Inc. Q3 2009 Earnings Call Transcript
Good afternoon, ladies and gentlemen. Welcome to Tucows Inc Third Quarter Fiscal 2010 Conference Call. Earlier this afternoon, Tucows issued a news release reporting its financial results for the third quarter of fiscal 2010. The news release and the financial statements are available on the company’s website at tucowsinc.com under the investor heading.
Please note that today’s call is being broadcast live over the Internet and will be archived for replay both by telephone and via the Internet, beginning approximately one hour following the completion of this call. Details on how to access the replays are available in today’s news release reporting the third quarter financial results as well as at Tucows website.
Before we begin today, let me remind you that matters the company will be discussing include forward-looking statements and as such are subject to risks and uncertainties that could cause the actual results to differ materially. These risk factors are described in details in the company’s documents filed with the SEC. Specifically, the most recently report on Form 10-K and Form 10-Q. The company urges you to read its security filings a full description of the risk factors applicable for its business.
I would now like to turn them over to Tucows, President and Chief Executive Officer, Mr. Elliot Noss. Please go ahead, sir.
Elliot Noss
Thank you, Operator. Good afternoon and thanks for joining us today. With me is Michael Cooperman, Tucows Chief Financial Officer. This afternoon’s call will follow our usual format. I will begin with a brief overview of our financial results and operational highlights for the quarter. Mike will then review our financial results in more detail and I will return for some concluding comments before opening the call up to questions.
The third quarter saw the continuation of the solid results that we delivered in the first half of the year, as each of our business units continued to perform well. Revenue grew by 3.5% compared to the third quarter of last year to a record $21.2 million. And as was the case in Q1 and Q2, we achieved this growth despite the lower contributions from our email service and direct navigation name sales.
Adjusted cash EBITDA for the quarter was $1.8 million and cash flow from operations was $1.9 million. I will now briefly review some of the operating highlights for the quarter beginning with OpenSRS. Again this quarter, OpenSRS domain service saw strong year-over-year growth in transaction volumes. Total transactions grew 16% compared to the third quarter of last year and new registrations grew 25%. Both of which were buoyed by the launch of the new .CO TLD that I discussed last quarter.
Net of the CO launch, new transactions grew a healthy 15%. Renewal transactions remain strong with year-over-year growth of 11% and our renewal rate held steady at a level that is firmly above the industry average. Domains under management were up 8.6% year-over-year to $10.1 million.
Growth in transactions contributed to a year-over-year increase in domain service revenue of 9.4% and our strong competitive position once again resulted in a number of a significant customer wins during the quarter. We have continued to post solid growth numbers as a result of our core competitive strength. Our ability to build and maintain long-term customer relationships, as well as our ability to deliver innovative new services.
In this win, subsequent to the end of the third quarter, we introduced the first phase of a major enhancements of the OpenSRS platform, a unified control panel that provides resellers with a single modern interface for managing all OpenSRS services. This is a big piece of work. The first major update to our reseller interfaces since they became available in 2000. When complete, this unified control panel will not only make it much easier for resellers to support their customers, it will also make it much easier for us to cross sell and upsell our services.
Cross-selling and up selling our services, getting more domain customers to buy email for example, is a significant opportunity that we can now take greater advantage of. The first service to benefit from the unified control panel is our expanded trust service, what we refer to in the past as our SSL or digital certificates business launched this quarter.
As the Internet continues to grow and evolve, the issues of security authentication and privacy are becoming increasingly important to users. And therefore increasingly essential to the sites with which they are interacting. We’ve offered SSL or digital certificates for almost a decade. However, they are just one element of the broader trust service spectrum. We are expanding this offering to include a density verification, malware scanning and other related services in a flexible format that allows resellers to pick the services that best meet their customer’s needs.
It is worth other noting that our SSL service has posted strong growth recently with a number of certificates sold up 18% from 12 months ago, a clear demonstration of our ability to introduce and be successful with new services. And we are confident that the expanded trust service offering will continue that trend.
YummyNames, our domain portfolio group continues to perform well. We continue to see the revenue mix transition from the sale of direct navigation names to brandable’s and to a lesser extent jams. In fact, this category of name sales brandable’s and jams more than doubled from Q3 last year. This quarter’s results should be viewed in the context of last year’s clearing out of excess track navigation inventory and general softness in per page ad revenue in the domain parking sector broadly.
Read the rest of this transcript for free on seekingalpha.com
