Tucows Inc. (NASDAQ:TCX) Q3 2019 Earnings Conference Call Transcript

Nov 06, 2019 • 05:00 pm ET

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Tucows Inc. (NASDAQ:TCX) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Monica Webb

Welcome to Tucows' Third Quarter 2019 Management Commentary. We've pre-recorded prepared remarks, regarding the quarter and outlook for the Company. A transcript of these remarks is also available on the Company's website.

In lieu of a live question-and-answer period following the prepared remarks, shareholders, analysts and prospective investors are invited to submit their questions to Tucows' management via email, at ir@tucows.com, until Tuesday, November 12. Management will address your questions directly or in a recorded audio response and transcript that will be posted to the Tucows website on Thursday November 21, at approximately 4:00 PM Eastern Time. We have extended the timeline to respond this quarter, due to the Company's Board of Directors offsite meeting.

Last month, we rebranded Tucows to better reflect both our legacy in the technology space, and the core philosophy that guides our business, making the Internet better. A big part of that effort is a new website, including an enhanced Investors Section. We encourage you to take a look and provide feedback on ways we can continue to improve our online resources for investors. We would also like to advise that the updated Tucows quarterly KPI summary, which provides key metrics for all of our businesses by quarter, since Q1 2018, is now available in the Investors Section of the website, along with the updated Ting Build Scorecard.

Now for management's prepared remarks. On Wednesday November 6th, Tucows issued a news release reporting its financial results for the third quarter ended September 30, 2019. That news release and the Company's financial statements are available on the Company's website at tucows.com, under the Investors section.

Please note that the following discussion may include forward-looking statements, which, as such, are subject to risks and uncertainties that could cause 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 Forms 10-K and 10-Q. The Company urges you to read its security filings for a full description of the risk factors applicable for its business.

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

Executive
Elliot Noss

Thanks, Monica. I will begin our remarks with a review of the third quarter. Dave Singh, our Chief Financial Officer, will then review the third quarter financial results in detail. And I will return for some concluding comments. Now on to the quarter. The third quarter was highlighted by year-over-year growth in revenue, gross margin, and adjusted EBITDA. Total revenue increased 6% year-over-year to $88.1 million from $83.5 million for the third quarter last year, while gross margin dollars increased 17%, when correcting for the non-cash impact of the purchase price accounting treatment for the Ascio transaction.

The as reported number was up 14%. Adjusted EBITDA increased to $14.8 million from a $11.9 million for Q3 of last year. Net income was $4.2 million, compared with $5.3 million in Q3 last year. Our Domains business continued to perform well in the