Tucows Inc. (NASDAQ:TCX) Q4 2018 Earnings Conference Call Transcript

Feb 13, 2019 • 05:05 pm ET

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Tucows Inc. (NASDAQ:TCX) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Welcome to Tucows Fourth Quarter 2018 Investor Call. Management has pre-recorded its prepared remarks regarding the quarter and outlook for the company. In lieu of a live question-and-answer period following the prepared remarks, shareholders and analysts are invited to submit their questions to Tucows management via email at ir@tucows.com. Management will then post a recorded audio response to questions, as well as a transcription to the Tucows website on Tuesday, February 26, at approximately 4:00 PM Eastern Time.

Now onto management's prepared remarks. On Wednesday, February 13, Tucows issued a news release reporting its financial results for the fourth quarter and full year ended December 31, 2018. That news release, along with the company's financial statements, are available on the company's website at tucows.com, under the Investors heading.

Please note that the 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 detail in the company's documents filed with the SEC, specifically the most recent reports on the Form 10-K and Form 10-Q. The company urges you to read its security filings for a full description of the risk factors applicable for its business.

I would now like to turn the call over to Tucows' President and Chief Executive Officer, Mr. Elliot Noss.

Executive
Elliot Noss

Thanks, Michael. I will begin our remarks with a review of the quarter. Dave Singh, our Chief Financial Officer, will then review the fourth quarter financial results in detail, and I'll return for some concluding comments.

We are now into a third quarter with the new pre-recorded conference call format. If you have questions coming out of the call, please e-mail them to ir@tucows.com, we will be addressing your questions either directly or in a recorded call that will be posted February 26th at 4:00 PM.

We would also like to direct you to a new document we've made available to investors, the Tucows quarterly KPI Summary, which provides key metrics for all of our businesses by quarter for 2017 and 2018. It's available on the Investors section of the Tucows website.

Now onto the quarter. The Fourth quarter, once again, saw solid consistent performance across the business. Total revenue was $86.6 million compared with $90.6 million for Q4 last year. Excluding one-time events, revenue grew 2% compared to Q4 2017. Gross margin dollars increased 8%. Net income was $4.4 million, which was down 60% from Q4 2017. However, I will note that Q4 2017 did benefit by almost $6 million due to the implementation of the Tax Cuts and Jobs Act of 2017.

Adjusted EBITDA for Q4 2018 increased 9% to $16.6 million. The quarter capped off another record year in terms of revenue, gross margin, adjusted EBITDA and cash flow from operations with the exception being net income with again 2017 net income being outsized as a result of the positive impact of the Tax Cuts and Jobs Act.

2018 revenues increased 5%