Good afternoon, ladies and gentlemen. Welcome to Tucows First Quarter 2013 Conference Call. Earlier this afternoon, Tucows issued a news release reporting its 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 replays 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, as well as at 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 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'd 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. As per our usual format, I will begin today's call with an overview of the financial and operational highlights for the quarter. Mike will then review our financial results for the quarter in detail, and I will return with some closing thoughts, before opening the call to questions. Q1 was a solid start to 2013, as we saw continued consistency and reliability in the overall quarter. Another quarter of double digit growth from Hover, while Ting continues to exceed our expectations. Total revenue for the quarter grew 9% from Q1 of last year, to $30 million, our 12th consecutive quarter of revenue growth. Let me walk through each of the three components of our business, beginning with wholesale. Domain Services, which is the largest component of our wholesale business, continues to perform well, with revenue up 4% compared to Q1 of last year, as we saw last quarter, growth here continued to be muted by the softness in transaction volumes at the industry level that we've discussed previously. Total transactions were down by 5% from the same period last year to $2.3 million. New transactions fell 23% year-over-year, but from an unusually high Q1 of last year. On a more normalized basis, domain transactions for Q1 of this year were down 5% from Q1 of last year. As I mentioned last quarter, the impact on corresponding gross margin was much less than the decrease in revenue, and these were very low margin transactions for us. Renewal Registrations were once again up year-over-year, increasing by 5% and we also saw a return to growth on a sequential basis. Total domains under management at the end of the quarter, grew by 17% from the same point last year, to just…

Thanks Elliot. Net revenue for the first quarter of 2013 increased by $2.4 million or 9% to a record $30 million from $27.5 million from the first quarter of 2012, and marked our 12th consecutive quarter of record revenues. Cost of revenues before network costs were $22.1 million, an increase of $2.8 million or 15% from $19.3 million for the first quarter of last year. Primarily, the result of our -- offsetting Ting devices, [as] was slightly below costs. Gross margin before network costs decreased by $363,000 or 4% to $7.9 million from $8.3 million for the first quarter of last year. This decrease was primarily due to the lower contribution from our portfolio revenue stream, which I will discuss in a moment. As a percentage of net revenue, gross margin before network costs decreased to 26% from 30%. I will now walk through the gross margin performance in each of our three service categories; wholesale, retail and portfolio. Gross margin for wholesale services, which includes domains and other value added services, decreased by $101,000 or 2% to $5.6 million from $5.7 million for the first quarter of last year. As a percentage of revenue, gross margin from wholesale services was 23%, compared with 24% for the first quarter of last year. Gross margins for domains declined slightly to $3.4 million from $3.5 million, primarily, the result of certain marketing initiatives undertaken by both end-user and resellers in 2012, either being significantly scaled back, or cancelled for 2013. In addition, gross margin has been impacted by certain of our customers, acquiring their own registrar accreditation, and therefore no longer registering new domains on our platform. Gross margin from the other value added services component or wholesale, decreased marginally by $55,000 or 3% to $2.1 million from $2.2 million from the…

Thanks Mike. As I stated earlier, it has been our goal to be transparent around Ting, which we have tried to balance with managing expectations around growth and contribution. We are thinking about how to start providing more information about the Ting business, and we plan to do that over the next couple of quarters. We are now more than a year past launch, and Ting is clearly a success, but the path to that success is a little different than we originally envisioned. When we first started down this road, our belief was that the real opportunity for Ting was going to be through our wholesale channel, our network of resellers on our OpenSRS platform. The wholesale channel however, has not meaningfully contributed to the success of Ting. The retail channel, has far surpassed our expectations however. In retrospect, we probably shouldn't be so surprised. We have had great success with Hover, based on a very similar approach to acquiring and supporting customers, and is that exact user experience, skill-set and customer service infrastructure that we are leveraging. Ting is more distinct from OpenSRS than we initially thought, and so we want to think about how we present the businesses going forward. In addition, as investors who follow the company know, we have not provided guidance for several years. With the maturation and stability of the core business, and the rapid growth of Ting, we are rethinking this a bit. While the domain business has some parts, like the sale of gems and registry rebates, which can fluctuate from quarter-to-quarter, with some large numbers, it is quite predictable on an annual basis. Therefore, we would like to initiate annual guidance for the domains business. In 2012, that business generated roughly $10 million of adjusted EBITDA; and the aforementioned single…

[Operator Instructions]. Your first question comes from the line of Thanos Moschopoulos from BMO Capital Markets. Your line is open.

Hi good afternoon.

Hey Thanos.

Hi Elliot. The guidance you provided for 2013 is very helpful. As we think about the GTLDs starting to get up and going, what do you think they will do for your growth rate in the wholesale registration business at that point?

I am still not ready to put a stake on the ground around that, primarily because, it's still difficult to tell when -- not only when new GTLDs will be coming out, but when the ones that will meaningfully contribute will come out. As you'd appreciate, the most desirable new GTLDs, are the ones where there's contention; and where there's contention, they will tend to be towards the back of the line. The one exception to that is the city TLDs, and we do think we could still see a couple of attractive city TLDs in the very late part of 2013, certainly in early 2014. I am more looking at it as -- we do think new GTLDs will provide a step function to the whole domain market, and I am really roughly swagging a kind of a 20% number. But you want to think about that pop as -- the pop that will -- that the industry will experience, once all of the material launches have taken place.

Right. So more towards latter part of 2014, or maybe even to 2015?

Hopefully. Because these issues are political, it often makes it that much more difficult to predict.

Okay. Fair enough. On the Ting side, you mentioned that the gross margin per account is going up, and so, can you just expand on drivers for that? Is that more on the cost side, as you are getting some economies of scale, or its also on the ARPU side?

Both. So little bit ARPU, even just the extra devices provide some extra ARPU, right. So it's a little bit of ARPU, little bit of costs.

Okay. And now you have the Galaxy S4 ad launched, which seems to be a competitive differentiator, relative to your number of the other MVNOs, and so has that had a material impact in your growth, or is it kind of really the same?

Not yet. With the S4 -- so first of all, previously, we announced that we would be getting it shortly after or almost contemporaneous with Sprint. We just yesterday, started taking pre-orders. So I don't mind saying we had a good first day of pre-orders on the S4, and what some people, with the sharper pool -- no sorry, the less patient people will do, is go to Sprint, and pay full ticket for an S4, and then immediately port at the same. So we could see some -- impacted our BYOD numbers there as well.

Okay. (Inaudible) your portfolio business, you called out some of the factors there, and you mentioned that you are seeing an uptick in Q2. But I guess you highlighted, maybe a longer term factor about the domainers being less active in that market. And so, as we think about it towards the second half of the year, can that number start to get more back up to what we saw historically, or will it be subdued because of that factor?

It's tough to say, because when you are dealing with these big ticket transactions, five or 10 of them really can have a big swing. So what goes on in the macro market, may or may not impact us because of the smaller unit numbers. So we could end up having a huge second half or gems, while the macro market is really continuing to struggle, or the reverse can be true.

Right. Which is why you are not providing guidance for that line?

Yeah. That's very [critical].

Fair enough. Great. Thanks. I will get off the line.

Thanks Thanos.

Your next question comes from the line of [Stuart May] from Cormark Securities. Your line is open.

Hey guys. Just on Ting. I guess, what is it, that is driving this sort of momentum here, in terms of the sub-adds, like -- I know obviously marketing is one, what's working with (inaudible), maybe you can talk about that, and is it like serving a viral growth, where people are trying to talk about a lot more? Like, what are you guys seeing?

We think that almost all of our growth is viral. So it really is people coming over, saving money. So they will come for the savings, and they will stay and proselytize and stay and promote, because of the great customer service experience. So we are seeing that pattern happen repeatedly, and I think we are doing a great job of using social media tools like Facebook and Twitter, and always, you are going to hear me say all the time, if I was an investor and I wanted to follow along, we think the best place to do it is the Facebook site, you know facebook.com/ting. You really get to see customers interacting with the company in a very-very transparent way, and a great set of that customer connection to the service. The other bit is, we are continuing to push down the road, not just podcasters now, but also some YouTube celebrities. And there's two things, there is the good news, which is we again have had a little bit of good fortune, or success in finding a couple of YouTube celebrities that have really worked well in promoting the brand; and by the way, the ones that work well, are the ones that immediately get what we are selling. They connect to the service, they love it themselves, and they promote it within them. The bad news of that side, is we are definitely seeing more and more traditional marketing money coming into those mediums. We have one of our very early successes of the podcasting site that's basically -- where our dollars have basically now been crowded out by a large automobile manufacturer. So we think what that means is, we have got to keep our head down, keep looking and finding and cultivating these successes, and then over time, we may end up losing to the mainstream media, and we've got to keep pushing harder.

In that case, then I guess in terms of marketing spend, I mean -- I know you don't give guidance, but I guess just really between customer acquisition costs, do you think there is leverage there in terms of where it may be, in 2014, you sort of like -- whether it's flat or is scaled back, and while the subsequent new adds are increased, I guess?

You know, I won't be surprised if you should -- if I look at it, and the way we are thinking in modeling the business, we never like to waste money, so it's definitely not linear. As size of the base goes up and obviously the revenue and gross margin go up, the marketing spend is not going to go up correspondingly. That being said, we are always trying things, and so we love experiments like the ETF funds that we did last quarter, or experimenting with the bounties that we put into our Refer a Friend program. We have a couple funds promotions that we will try with next quarter as well, and because there is such leverage in the model, I am really encouraging folks to be experimental there. So, generally there is sort of great efficiencies in that marketing spend, as it grows, marketing spend should come down as a percentage of sales, but I am again, encouraging experimentation wherever possible; because it is such a great business model.

And I guess what's the -- are you seeing sort of the renewals coming through, I sense you guys have sort of a one year for (inaudible), maybe couple of thousand subscribers. But is that maybe your margin kind of profile sort of --

The one bit I am sure and I will tell you though, we are still very happy with where the churn numbers are, and of course, as time goes on, we dig more and more and more into the data. The one nugget that I will share this quarter is the vast -- not the vast, but for the single biggest group of handfuls, and for us, it's more -- it's a little bit different; because remember, there is no contracts, and there is no, you know, annual events. Anybody simply goes, tick a radio button on the website and leave tomorrow. The biggest chunk of cancels come in the first 30-45 days; and so what we -- when we connect that to some of the -- just kind of the anecdotal data, or the comments that we collect on cancels, what we think we are seeing there, is predominantly people who weren't from the Sprint network before, coming over, experiencing less than satisfactory network coverage, and leaving. So there is kind of nothing we can do about that, and the two comments I will make there is again, those numbers in absolute terms are really very healthy and low. And two, Sprint is continuing to rollout their Network Vision, which not only expands their LTE footprint, but also should be increasing coverage more broadly. So we feel good about where that is today, and we hope that gets better.

Right. Okay. And just, I know previously you talked about the net quality adds being, I guess, in absolute terms increasing (inaudible) order. Is that still the same thinking, based on what you guys are seeing right now, or?

Nothing big a change. The one thing that we want to be heads-up about, there's certainly nothing in the data where we see that changing now. The one thing we want to be heads up about, is we are always reminded of the seasonality in this business. Summer tends to be a little bit slow. Now, we didn't see that last year, but we were so new. So maybe, we will, but we don't -- again, we see nothing to suggest that's the case.

Just on your -- can you just sort of give guidance, because it's really [good to hear]. In 2014, do you expect Ting to sort of cut through positive margins here or?

Yes.

Okay.

I didn't mold that clearly enough. Yeah 2014, we see Ting as a contributor.

And just in the domains retail business, you guys are sort of suggesting low to mid single digits. So I guess, based on your view, is that sort of a growing rate probably until mid next year, given that sort of -- when the new GTLDs might come through?

Depends when the introductions are. It depends sort of -- so what nobody on the registrar side yet really knows is what the economics of the launches are going to be. We have all lived in a calm world for a long time, and it's going to be different. There is no question of power shifts from registry to registrars, as you go from a very small oligopoly through a competitive registry environment. It's really tough to know what that's going to look like, and when it's going to look like that. So I kind of want to take you through 2013, and then, going forward from there, all I can do is, sort of [teak] you a price as we are learning. But all of the registry applicants today are so head down on dealing with their contention sets, dealing with their startups, that they really haven't turned their minds fully yet, to the way they are going to manage and incent distribution.

Okay. All right great. Thank you.

Thanks.

Your next question comes from the line of Aram Fuchs from Fertilemind Capital. Your line is open. Aram Fuchs, your line is now open. There are no further questions at this time.

Thanks very much to all, and I look forward to seeing you all again, next quarter.

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