Good afternoon ladies and gentlemen. Welcome to Tucows Inc.'s First Quarter 1012 Conference Call. Earlier this afternoon Tucows issued a news release reporting the financial results for the first quarter. That news release and the financial statements are available on the company's website at tucowsinc.com under the investors 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 1 hour following the completion of this call. Details on how to access the replays are available in today's news release as well as Tucows’ website. Before we begin 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 can 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 report on form 10K and form 10Q. The company urges you to read its security filings for a full description of the risk factors available for this business. I would now like to turn the call over to Tucows’ President and Chief Executive Officer, Mr. Elliot Noss. Please go ahead Mr. 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…

Thanks Elliot. Net revenue for the first quarter of 2012 grew by $4.9 million or 22% to a record $27.5 million, from $22.6 million for the same quarter of last year. Cost of revenues before network costs was $19.3 million, an increase of $3.6 million, or 23%, from $15.7 million. Gross margin before network costs increased $1.4 million or 21% to $8.3 million from $6.9 million for the same quarter of 2011. As a percentage of net revenue, gross margin was unchanged at 30%. I'd now like to highlight our gross margin performance for each of our service offerings. As Elliot discussed, we are now breaking out our gross margin performance into three distinct service categories: wholesale, retail and portfolio. We took this step to better reflect the manner in which our revenue streams are generated and assessed by management. First, wholesale services. Wholesale services continued to generate over 60% of our gross margin primarily from provisioning domain services and supplying other value-added services such as hosted email, [inaudible] services and the sale of domain names and advertising from the OpenSRS Expiry Stream which I will note, we previously included in our disclosure as part of YummyNames. Gross margin for wholesale services increased by $950,000 or 20%, to $5.7 million from 4.7 million. The increase was primarily the result of continued strong growth from domain name services as well as from a higher level of development market funds we received from vendors during the quarter, which I will discuss in a moment. As a percentage of revenue, gross margin from wholesale services was unchanged from the first quarter last year at 24%. Gross margin for the domain services component of wholesale serviced increased by $520,000 or 18% to $3.5 million. A result of higher transaction volumes from existing customers, a…

Thanks Mike. As those who regularly listen to these calls have heard me say many times, Tucows' business is all about consistency and reliability, within the context of steady efficient growth, not catalysts. That's why we view this as such a good quarter. You see solid growth across all three areas of the business and you see the leverage in the business. It's the snowball getting bigger. We believe this type of performance rewards investors who have taken a long term view of the company, investors not traders. As those of you who listen to our calls regularly know, I normally don't talk about the share price. But given the increase in the share price in the last quarter, I've had many shareholders asking me why. I'm not sure anyone could have predicted the timing of the upward move. I might be close to the company than anyone, and I couldn't have predicted it. I have been saying for a number of year, that the stock would be recognized at some point. I just couldn't tell you when. But that long-term investors, that appreciated the consistency and reliability and steady build, will eventually be rewarded. Certainly reducing the float by over 40% in the last few years has an impact. Certainly people are excited about Ting. But more than anything else, this is just the market as a weighing machine. Our whole sale business is going well, with more service introductions, more customer wins, and the benefit of our unique focus on service providers, showing in the results. Our retail business has great gains in the number of customers, improving performance with add-ons, and fantastic word of mouth and renewal, due to a relentless attention to customer experience. Our portfolio business is benefiting from the work we have put in to making those revenue streams more predictable, to focusing on long term value and brandables, and to the maturing of the secondary market for domain names, when these are combined with our capacity for innovation as evidenced by Ting. The leverage in our business, as top line, growth is out stripped by bottom line growth, and with our relentless focus on returning capital for shareholders, we believe that best for Tucows is yet to come. And with that I'd like to open the call over to questions. Operator?

(Operator instructions) Your first question comes from the line of Thanos Moschopoulos. Your line is open.

Hi, good afternoon.

Hi, Thanos.

Hi, Elliott. It seems like a strong quarter. On the Ting front there's probably not much you could share with us in terms of metrics but maybe just going back to the comment you made on last quarter's call. Is Ting still on track to become your second largest revenue stream by year-end?

Well, you know, there's nothing that would have happened in this quarter that really would've made it more or less likely to frankly. I think that in the second or third quarter it'll be easier to comment on that. Thanos Moschopoulos - BMO Capital Markets Okay. I mean but it sounds like overall in the early days of the launch the business seems to be on track with your plans?

Yes, we're happy with where we are right now.

Okay. Now how should we think about OpEx going forward? We saw an up-tick in OpEx which makes sense given that the overall business is growing. Just as we sort of try to model and quantify that going forward, do we think about OpEx remaining fairly consistent at these levels relative to revenues? Or should we continue to see some operating leverage going forward?

es, there was a little bit of a pop sequentially but not much year over year when you look at it. So if you look forward to Q1 which is I think what you've probably done there.

Yes.

It might look like there's a little bit of a pop there, but look at Q1 versus Q1 and you'll see some consistency. There tends to be because labor is such a high components of our OpEx that you get a few expenses early in the year that are just that. So we think that when you look at that leverage metrics that we're always putting out we think we're doing great like that. And OpEx should continue to be in this range. There's nothing material that's going to happen there.

Okay. So what I'm hearing is that there's some seasonality in the number, but that going forward this is probably around a consistent range?

Yes, yes. You'll see it sort of tick up at a much slower rate than you'll see the built gross margin tick up, which is the important thing.

Hover work continues to see some really good growth in that business. And can you just remind us in terms of what's driving the performance there?

Really with Hover it's a very encouraging example for us of what happens when you focus on social marketing over time. So what's happening there is just happy customers, great word of mouth and then that being reinforced through that focused podcast marketing. So, one of the things that we're always looking at is Twitter mentions, because that gives you a good sense of the Site gist. And we consistently see that I'm growing and growing. And we check with our customers as to where they're coming from and they're coming from exactly where we want them to be coming from; word of mouth, and to some extent, from our key advertisers. We think that we've learned some fantastic lessons for Hover. Again, it's that kind of snowball, building and building. And then it starts to take on a life of its own. And we think that we're going to be able to apply a lot of those same lessons to the take.

Finally, you talked about the excess gem revenue in the quarter. I'm just trying to quantify that, given that the segmentations also changed at the same time. Would it be right to think of that being in the 500 day kind of range?

No, I think that's a little bit too high. I would put the excess number more in the 200 to 300 range.

Okay. That's fine, then. I'll pass the line. Thanks.

Great. Thanks, Thanos.

Your next question comes from the line of Aaron Fuchs. Your line is open. Aaron Fuchs - Fertilemind Capital Regarding Ting, I was wondering if you can break down with more precision the cogs or the gross margin in general. That will at least give us a chance to model and guess at customers in ARPO.

Sure. First of all, hi, Aaron. Nice to hear from you. I think what I'd be comfortable saying at this point. First of all, what I'm going to be talking about cogs or ARPO margin. I want to refer to my comments on the call, where I want to be talking about is the service margin. The equipment is app, at-cost, or at a very slight loss, and that's by design. On the service side, we want to see margins coming in the 30% to 50% range. And so far, with where we are, we're quite happy.

You mentioned using the Web 2.0 community Baysides [sounds like] to hope for a viral word-of-mouth marketing.

Yes.

But why haven't you thought of experimenting with some PPC ads? They're easily scalable, they're easily turn-on, turn-off. What's your thought process there?

We have done some experimentation. The great thing about the Internet is that you can experiment with a lot of things relatively inexpensively. And our thesis pretty much played out, which is when you're really boiling the ocean, you get a less qualified visitor who spends less time on the site. And who tends to be less engaged. And when we track things through the conversions, we found that it just really wasn't very efficient. There's another bit too, which is, unlike Hover or the domain registration business in general, where the advertising tends to lead to a transaction pretty quickly. One of the things we are learning with Ting is that we have people who are coming and getting informed and then they might be waiting for a specific piece of hardware. They might be waiting for a contract to end. There are a number... they might just be watching the service and watching the Facebook page, seeing what the dialogue is like. What we're really trying to do is engage at this point. We looked at the way that conversions track through and we've learned pretty quickly that it's a different, sort of a longer lived sales process. Where that's, I'll give you two examples of where that becomes important for us. One of the key metrics we're looking at when we're looking at marketing sources is how long the visit to the site was from that source. Because you're seeing the engagement, you're seeing how interested. How many pages did they turn? How long did they stay? The second thing I'll note for you is we're trying to think through metrics gold, let me call it, that are something less than a sale, that are still going to be material in leading to more sales in the longer term. So we got a couple of things we're starting to play with now there but it's a really, really important piece of learning. I'm not sure I explained it well, but if you like, we can go offline on it too.

Okay. You basically mean a sort of engagement between a land on your page and a sale, right?

Trying to rush somebody to the cash register here is, we've clearly learned, unlike domain names, not necessarily the best idea here. We might want to have drinks and dinner first.

Okay. And the portfolio business was this just the one-off sale from inventory or was this something that you left out and Expiry Stream this quarter or is there anything that we can read into?

I think there are a couple of things there. The Expiry Stream performance was extremely strong this quarter and that's because we've got great, better performance from our primary partner who's becoming more and more comfortable with the relationship over time. So that's going up. And we've also added a secondary partner. So that's really just had a bit of a step function for the Expiry Stream. But expect current levels to be relatively consistent. And you've heard me say in the past, my goal with that whole area was to make it as consistent as possible. When it comes to the one-off sales, especially the big ticket items, you just really can't plan for them, you engage where you can and you bring things to conclusion where you can. So, I don't think there's anything... I don't think there's anything really out of the ordinary if you look at it over the course of a few quarters of the year. But there were a couple few big sales in there. The great thing is, Aaron, our inventory is so deep that there are no concerns about this not being repeatable.

It is just difficult to predict when, I understand.

Right, right.

Great, thanks for your time.

There are no further questions at this time.

Thank you, Operator. We look forward to having you all join us again next quarter.

This concludes today's conference call. You may now disconnect.