Welcome to Tucows Inc. First Quarter Fiscal 2009 Conference Call. I would like to advise everyone that this conference call is being recorded. I will now turn the call over to James McNally. Please go ahead, James.

Thank you, operator. Good afternoon and thank you for joining us today. With me is Elliot Noss, our President and Chief Executive Officer, and Michael Cooperman, our Chief Financial Officer. Earlier this afternoon, Tucows issued a news release reporting our results for the first quarter of fiscal 2009. The news release and financial statements are available on our web site. Please visit tucowsinc.com and click on Investors. Before we begin today, I would like to point out that the matters we will be discussing include forward-looking statements and as such are subject to risks and uncertainties that could cause actual results to differ materially. These risk factors are described in detail in our documents filed with the SEC, specifically the most recent reports on Form 10-K and 10-Q. We urge you to read our securities filings for a full description of the risk factors applicable to our business. I would now like to turn the call over to Elliot. Elliot?

Thank you, James. Good afternoon and thanks for joining us today. For today's call, I will begin with an overview of our performance and some of the highlights for the first quarter of 2009. Michael will then provide a detailed review of our financial results for the quarter and I will close the call with a discussion of two components of our business that I haven't talked about much recently to give you a better understanding of how they fit into our overall strategy. First, the financial review. The first quarter was a solid quarter financially. Revenue came in at over $20 million, up more than 7% from the first quarter of last year. Net income was just shy of $1 million compared with a loss of 1.1 million for the first quarter of 2008. And we generated cash flow from operations in excess of $900,000 compared with just over $100,000 for the same quarter last year. We would now like to review each of our businesses from an operational perspective. First, the OpenSRS domain service. The momentum we saw at the end of 2008 carried into the first quarter of this year. On our last call, we talked about the strong growth in new registrations and early indications were that the first quarter looked even better. That early performance continued through February and March and I'm very pleased to report that the first quarter of 2009 was our best quarter for new registrations since the second quarter of 2000, which was the first full quarter after the launch of OpenSRS and just months after the end of the Network Solutions monopoly. On a year-over-year basis, new registrations were up a healthy 21%. Renewals were also strong again this quarter growing 16%. Strong growth in new registrations and above average…

Thanks, Elliot. Net revenue for the first quarter of fiscal 2009 increased by 7% to 20.1 million from 18.7 million for the first quarter of fiscal 2008, primarily as a result of higher contributions from traditional domain name registration services and portfolio services. Cost of revenues before network costs for the first quarter increased by 13% or 1.4 million to 12.6 million from 11.2 million. The increase was primarily the result of the impact of the registry price increase of 7% that was levied by some of our domain name suppliers last year. I would remind you that ICANN has given the registries the right to levy two additional price increases of up to 7% in two of the next four years. Network costs for the first quarter decreased by 1.2 million or 43% to 1.6 million compared to the first quarter of last year, primary the result of lower co-location costs stemming from the closure and relocation of our US-based co-location facilities following the successful completion of e-mail migration at the end of last summer. The decrease is also the result of the restructuring we implemented last November as well as the decline of 373,000 in network depreciation costs, again primarily due to our retiring most of the older hardware used at our closed co-location facilities. Gross margin for the first quarter increased to 29% from 25% for the corresponding quarter of last year, essentially as a result of the reduction in network costs that I mentioned a moment ago. The positive impact of this decrease in network costs was partially offset by the net decrease in the gross margin contribution from our various service categories that I will now discuss. Gross margin from traditional domain registration services decreased slightly to 2.8 million from 2.9 million for the first…

Thanks, Mike. I would like to spend some time today talking about the role Butterscotch and Hover play within the family of Tucows service offerings. In the past, I have talked at length about the OpenSRS wholesale business and on the last number of calls I have detailed the evolution of YummyNames into a significant part of Tucows. Those two do represent three quarters of the business. However, I've only briefly touched on Butterscotch and Hover and because of that we have had a lot of incoming questions from investors, both existing and prospective, asking us to explain what Butterscotch and Hover are and how they fit into the overall Tucows strategy, and whether we are investing in them, and if so why and how much. First, it is important to remember the launches of Butterscotch and Hover are about reinvigorating long-standing business units. Butterscotch has its roots in the Tucows software libraries, which date back to 1994, and Hover has evolved from Domain Direct, which we launched in 1997. In both cases, for the last few years, these have generally been businesses with flat to slightly declining performance that we ran for efficiency. Neither was the strategic focus of the company and it showed. Invariably the question in such situations is, what do you do with the business? Do you milk it, do you sell it, or do you try and reposition for growth? We have been milking these businesses for many years. For each one, we evaluated our options and in both cases we decided that there was more opportunity in continuing to operate the business than in divestiture. In making that decision, we relived heavily on our core purpose, making the Internet easier and more effective. For both businesses, we asked ourselves, if they are aligned with…

Thank You. We will now conduct a question and answer session. (Operator instructions) Your first question comes from Thanos Moschopoulos from BMO Capital Markets. Please go ahead. Thanos Moschopoulos – BMO Capital Markets: Hi, good afternoon.

Hi, Thanos. Thanos Moschopoulos – BMO Capital Markets: Hi. Elliot, to begin with regarding your comments on the recession and the fact that you are starting to see it impacting your business, just first of all curious as to why we didn't see much of an impact in the last two quarters, and then how we should think about the magnitude of the potential impact going forward in your view?

Sure. So as to why we didn't see it earlier, that I couldn't say. We started to see what I would call a slowdown in the growth we're seeing, and it talked about the great growth in new registrations, we saw that slow down a bit. So it wasn't going as fast. And we immediately started to dig into both the numbers across all of our customers, checking across the industry and with the registries, and it was something that was out there. So it would be pure guesswork on my part. I think that where we are holding that today and sort of what the impact will be to our business in particular, again, we feel good about the way the business has been growing. We feel good about sort of how we're doing competitively. So it is a little early to say what the impact will be. We're hoping that kind of that internal growth will make up for any macro slowdown. Thanos Moschopoulos – BMO Capital Markets: Okay. Should we think about maybe in this kind of climate the ongoing price decline that you're seeing becoming maybe more aggressive or for the time being you people seem to be holding on pricing in this current climate?

Yes, we are not saying that manifest itself in price or specific price conversations with customers. So you know again, it is conjecture, but it might be people letting just some extra names lapse. They might have registered a number of variations, ten variations and go down to five, that kind of thing. Thanos Moschopoulos – BMO Capital Markets: Okay.

You know we're at the point where we are doing that extra second level of taking and it is nothing – you again we're seeing that good growth, but it was enough that we wanted to note it. Again you would have heard a parallel comment on the VeriSign call. Thanos Moschopoulos – BMO Capital Markets: Great, okay. On the premium domain business, you had the bulk sale, you mentioned that you have this agreement in place with the buyer, how should we think about names going forward? I guess within the parameters of the deal your signed, there are some implicit [ph] variables that will be there, might it be fair to think about sort of a million dollar sale every quarter or at this point is that kind of an aggressive assumption to make?

Yes, I think that's a little aggressive. You know I think that we would hope that at least in bulk sales in total that we would try and get closer to where we were in 2007 rather than 2008 where that really fell off. And most importantly, we are trying to be a little more predictable with it. Thanos Moschopoulos – BMO Capital Markets: Which I think is a good thing?

Yes. Thanos Moschopoulos – BMO Capital Markets: Yes, it is helpful. Okay, and then on the Butterscotch side, you mentioned that your video views are up to several hundred thousand a month now at this point. Why isn't the revenue kicking in sooner, is that just a function of the fact that you may be holding off on aggressively monetizing it at this point, or how should we think about the revenues starting to contribute?

You know I think it's early days. First of all, video advertising, I made a brief reference to this in my comments, is really nascent. You know you can whether you go from the very low end, user generated content on YouTube right up through the classic TV translated onto the Internet in Hulu, you will see experimentation and real early days everywhere. And when you turn a couple few hundred thousand video views and you sort of convert that into CPMs, it is not huge money. So it is not so much that it is lagging or delaying, it is more that the model is playing out and that it is early. Thanos Moschopoulos – BMO Capital Markets: Okay. And then the OpEx side, we saw the benefit from the cost-cutting initiatives in November. At this point, should we think about OpEx remaining fairly stable going forward or are there other initiatives underway that might lower that further?

We are pretty happy with where we are right now and we think we have got a real – we feel more productive than we have ever been. So what we are really thinking about is how much growth can we build on the existing cost base. I think that is the best way to think about it, it is the way we are thinking about it. Thanos Moschopoulos – BMO Capital Markets: Okay perfect. All right, thank you.

Thanks.

(Operator instructions) We have no further questions at this time. Please continue.

Great. Thank you very much for joining us, and we look forward to speaking with you next quarter.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.