Good afternoon ladies and gentlemen. Welcome to Tucows' First Quarter 2015 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 Web site at tucows.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 one hour following the completion of this call. Details on how to access the replays are available in today's news release. Before we begin, let me remind you that matters the Company will be discussing including 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. Please go ahead Mr. Noss.

Thank you, operator, and thanks everyone for joining us today. With me is our Chief Financial Officer, Michael Cooperman. As per our usual format, I'll 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'll return with some closing thoughts before opening the call to questions. The first quarter was an excellent start to 2015. With each quarter, the growth in the Ting Mobile business is having a greater impact on our financial results as we benefit from the operating leverage in the business as a whole. Consolidated revenue for Q1 grew 18% from the same period last year to a record $40.5 million. Once again, we saw our gross margin percentage exclusive in the portfolio group expand to 28% from 24% a year ago and I will note that's up from 19% for Q1 2013. Net income per share was up more than 5 times to $0.25 from $0.04 and adjusted EBITDA more than doubled from Q1 of last year to $6.9 million. I will note that the quarter did benefit from small onetime items, including another mid-six figure contribution from the last of our new gTLD arrangements. Ting Mobile added over 9,000 accounts and almost 16,000 devices in Q1, bringing us to 103,000 active accounts and 163,000 active devices. While that represents an impressive 10% growth in our base, it is disappointing, compared to the 10,000 to 12,000 accounts and 16,000 to 18,000 devices, we've added over each of the last several quarters. The good news that it's the result of a single lamentable but addressable event. On February 15th, Sprint changed the criteria for devices that are eligible to activate with Ting Mobile and other Sprint MVNO's. The…

Thanks Elliot. As Elliot indicted at the outset Q1 was an excellent start to 2015. Revenue grew 18% to a record $40.5 million from $34.4 million in Q1 of last year. Cost of revenues before network costs were $26.8 million, up $2.5 million or 10% from $24.3 million in Q1 of last year. Gross margin before network costs increased $3.6 million or 35% to $13.6 million from $10.1 million. As a percentage of net revenue, gross margin before network costs increased to 34% from 29%. For the Domain Services component of our business, gross margin grew 5.4% or $410,000 to $8.1 million with the increase being primarily the result of the continuing shift in sales mix to higher gross margin services we have discussed on previous calls as well as continued growth in Hover. Domain Services gross margin, also benefitted from another onetime gain related to the new gTLD arrangement, which I'll discuss in a moment. As a percentage of revenue, gross margin for Domain Services improved by 1 percentage point to 29% from 28% in Q1 of last year. Gross margin for the other component of our business, Network Access for the first quarter increased by $3.2 million or 130% to $5.6 million primarily due to the continued growth in the Ting Mobile customer base relative to the first quarter of last year. Our Network Access gross margins in Q1 of this year included a small contribution from the acquisition of BRI, which we closed in late February. Gross margin as a percentage of revenue for Network Access expanded to 43% from 36% in Q4 last year. The increase is mainly due to a much larger Ting Mobile customer base relative to the same period last year resulting in a much larger contribution from services relative to devices, which…

Thanks Mike. At the time of our last call in mid-February we announced the renewal of our open market stock buyback programs, under which we have the ability to repurchase up to 20 million of our common shares until February 15th of next year. As Mike had noted, we were quite active with the program during the first quarter, repurchasing 214,089 shares for a total of $4.1 million. This is in addition to the approximately 194,000 shares we repurchased under the modified Dutch tender that closed in early January for just under $3.6 million. In aggregate, in Q1, we repurchased a total of just over 408,000 shares for a total spend of $7.7 million. We're thrilled that in the long term, Ting Internet has given us another option to allocate capital profitably. We continue to view share buybacks as an important tactic to increase shareholder returns. Before I address our guidance for the year, I wanted to take a moment to provide some clarity around our adjusted EBITDA metric. We have long relationships with a majority of our shareholders and it's been some time since we've provided a definition of adjusted EBITDA. As some of those shareholders have to varying degrees taken some of the profits off the table, we've seen new shareholders come into the stock, who've asked about how this metric is calculated. We have thus included a reconciliation of adjusted EBITDA to net income in the financial statements attached to our news release this quarter. We use this metric because we believe, adjusting for certain non-cash and other items enhances understanding of the performance of the business. The primary measure that we use for planning and budgeting purposes, incentive compensation and to monitor and evaluate our financial and operating results. It's the metric we use when we think about ourselves as owners of the business. With respect to our guidance around this metric for 2015, I will remind you that we said last quarter that we expected adjusted EBITDA for this year to be in the $20 million. With the first quarter now in the books, it does look like we will be comfortably above that number. Although, we do not want to be in the habit of resetting guidance every quarter. It is clear that Ting Mobile is providing the financial leverage we had hoped and expected. The additional cash generation combined with the consistent contribution of the Domains business, should make for continued strong results. We still have lots to work on with great opportunities to further grow Ting Mobile and other very exciting opportunities provided by Ting Internet. We are excited for the next few quarters. With that, I'd like to open the call to questions. Operator?

[Operator Instructions] And your first question comes from the line of Hubert Mak from Cormark Securities. Your line is open.

Hey guys. I guess the first question I have is really on the Ting Mobile, you said you had an impact from Sprint and it sounds like things are being addressed and then you also had the GSM network available I believe March 1st here, so, as of today, can you tell us whether that run rate in terms of the additions, was there a pent up demand as you guys captured or -- and also how's the GSM being available or does that increase the subscriber additions here?

So, there's a couple of pieces there. First, as I noted on the call, we pushed GSM out a little bit early because of what was going on with FED, which is kind of the internal name for the device eligibility issue, and so you do see, even in the results that we reported, you do see the first little bit of GSM. We had some backlog of SIMs that were involved there. So, we've already got a little bit of that benefit in there. In addition, as I said, to sort of expand a little bit on what I said on the call, we noted that we have not yet turned back on marketing. So, you're seeing in what you saw in the quarter, we're still in a similar run rate through the first portion of Q2 and, we expect to start to go at that with some additional marketing. What we don't know, I mean, if there's an upside to having to deal with this problem, is we're getting quite an interesting AB test around all of our marketing programs and the ability to look in a way that you normally wouldn't get to look at their efficacy and so, we're seeing already some interesting things with what it does around awareness, around conversion, around gross adds in general. So, I think, you'll start to -- we hope that as we turn marketing back on, we'll start to see some pick up there. We don't know what the lag is going to be like and that's one of the things that'll be interesting to learn through this process and we're also and have been working on improving the process around GSM. So, we certainly felt that when we launched it, it was a little sub-optimal. We've been refining it and we think we'll see some pickups going forward, but all of that, so sort of the impact of re-launching the marketing, the impact of reworking around GSM, it'll all be things I'll be able to talk about in a lot more detail next quarter.

Okay, and just related to that, your sales and marketing was down in the quarter here, and I kept assuming that's partly due to this, so as you guys ramp up the marketing again, are we expecting that level to sort of go back to the historical around 4 million run rate? Is that the right way to think about it?

Yeah. I think it's, if I'm not mistaken a little bit north of 4 million run rate. You would see it return to the normal run rate, remember that last year, Q1, that included a bunch of those experiments. So, you'll see it return to the normal run rate, not the last year Q1 run rate. And, if you compare this quarter to Q1 of last year, the bulk of the difference is actually those experiments and a little bit, some of the difference is the cutting of marketing.

Okay, and then, and just on a competition, can you talk about, given the update here, whether -- have you seen any more aggressive pricing? You know, I think there has been in the last, late last year. So, are you seeing that impact in your business on the mobile side here?

No, we haven't seen anything -- in the quarter, we haven't seen anything new. So, it's as it was. I mean, my reset on that, which I think, I'd spoken some length about last quarter is it's a lot more competitive now than it was a year or two years ago, but we saw nothing change in the quarter, and I'd include in that, is the launch of Google which actually brought some awareness to us and we think it's a very interesting for a couple of reasons primarily around what they've done with multi-home SIMs and global roaming, we think those are just sort of positive impacts on the industry as a whole and we think that, it's a creative offering, but not one that we're much worried about competitively.

Okay, and then, just moving onto the interest side, okay, I know you gave a brief update here, but can you just give us a little more color in terms of both the Blue Ridge as well as Westminster in terms of on we would see sort of more meaningful revenue and I guess the other part is that, was there any contribution from Blue Ridge in the quarter?

Yes. I think Mike mentioned the numbers are in there for the quarter. There's not a lot -- the bottom line, there's not a lot of impact -- I mean, Mike is there anything you --?

Yeah, I would say that the impact in the short term of the Blue Ridge acquisition is going to be more or less breakeven is the way to look at it.

In terms of timing around revenue, you're not going to see what I would call meaningful revenue from the Ting Internet business, really through much of the bulk of this year, if I think about it, so, let me use, as a threshold for meaningful -- the revenue that I generate from the Portfolio business, which we really have stopped mentioning in calls, because it's gotten a little bit smaller as the businesses kept growing, with the exception of sort of one offer [indiscernible] we really stopped reporting on it every quarter. I'm pretty comfortable saying although and going off the top of my head, you're not going to see the Ting Internet business get to even a portfolio level of revenue this year. We're going to keep you apprised because we think obviously long term strategically very important business. So, we want to be thoughtful about the operating metrics we put out and allow you to follow along and home as we always like to do, but in terms of meaningful for this year, I wouldn't think twice about it.

Okay. One last thing on the CapEx though, I see it ramping up for this internet division, are you able to give us an idea what the CapEx requirements are given that it's a more [indiscernible] higher interest account based requirements?

You know, I think it's going to be less than you would expect. We're getting a clear picture of that as we're putting out our specific plans. As we're communicating sort of in and with the people in Charlottesville in particular, remember, in Westminster, we don't really have CapEx in a meaningful way. We certainly have to buy some electronics, but that's in the couple of few hundred thousand dollar range. In Charlottesville, where we're building our network, we communicated with the people of Charlottesville that we're focusing our build and persistence on four particular neighborhoods. We're going to be building out those neighborhoods through the balance of 2015. You're going to be looking at, and again, you're not going to talk about in broad generalities, you're probably in the low to mid seven figures there.

Okay. Thanks, I'll pass the line here.

Your next question comes from the line of Alex Rackwitz of Samphire. Your line is open.

Hi guys. I missed the part where you mentioned the net ads of customer's accounts and accounts and devices, could you just tell me that again please?

Sure. That was 9,000 accounts and 16,000 devices,

Okay great, and I mean, congratulations to you guys, while it's just a little of a surprise how small the impact has been from the financial eligibility stuff and GSM came in quite late in the quarter. Can you kind of quantify what sort of extra support costs you had or I know you gave refunds on phones, you sent out SIMs. I mean, how big was the impact?

It wasn't a lot of cost that you see there. This certainly has -- I think the best way to describe it on the cost side, and then you'll tell me if this is responsive or not, you can direct me a little bit right or left. I think it's -- the best way to describe it, is it's accelerated a little bit some of our hiring. We had to bring people in to step up around a bit of a crisis and there is both with what we went through with some of the financial eligibility stuff and the launch of GSM, there's been a bit of a change in the sort of in the level of support that's needed and nothing there that long term fusses us, in terms of the cost model. In fact, I'd say, at a sort of all-in costs perspective, I was quite pleased at how we've been able to scale both from an operational perspective and from a cost perspective and that's not to say this wasn't a real bump. There's no question that it was. We've put our customer sat [ph] it's the most important thing in the building. We were unhappy with what went on, but I really was quite pleased with the way we were able to come through.

Okay. So, will we see a little bit more of that run rate in Q2 and your general and admin expenses de-levered, your sales and marketing obviously decreased, is that going to show more in Q2?

You'll see it, but I mean, it's in numbers that don't know that will be much visible to you. Just the natural role of growth in the Ting Mobile business is going to really make that look not that noticeable. The number that I most sort of track and be careful about is, what's my customer service per dollar of revenue and while that number has ticked up a little bit and I'm talking points or two, 1% or 2%. It's as the model, is kind of getting closer to steady state although still far away from it. So, you're still going to see the net margins improve. They're not -- some of the growth in the business strips that little bump there.

Okay, understood and then just generally on your sales and marketing, I mean over the last three years that's kind of ticked up as you've grown Ting, in terms of revenue and obviously in absolute dollars, but it's kind of flat lined in the last six, seven quarters. Have we kind of reached that tipping point where that becomes scalable versus your revenue?

It's -- here's what I -- I mean, I guess, you know, I'm struggling with the word scalable and the reason because, whenever I'm talking with shareholders, we are jointly lamenting that we can't just sort of take the economics, the fantastic sort of customer acquisition, low customer acquisition costs, high returns on that and just turn it up to 11. So, I don't know what, it's kind of -- the word scalable sets me back, I think it'd say that, you know, what you saw this quarter, I mean we literally turned off the tap there. I think, any time you go through that, you're going to learn to come out the other side. I mean, I've got a marketing team that's kind of chomping at the bit right now and, as you can imagine, they've had both refinements on it with the good thing marketing and new ideas to play around with. So, I mean, I'm always encouraging them to conduct intelligent experiments and I don't mind them having those experiments cost money. So, it's going to be quarter to quarter and we'll always give you great visibility to it.

Okay, understood. So, scalable was kind of the wrong word. I meant, It's kind of been increasing as a percentage of revenue, which is good, because obviously the return's very good and it's kind of because it's plateaued you're seeing some leveraging off those costs rather than scaling, so that's a wrong word. I was just wondering, you know, you're still guiding towards just north of $4 million. That's kind of sort of where the level has been for a few quarters, while your revenues obviously continue growing quite strongly. So, you're seeing more of that drop to the bottom line and I was wondering if that's a trend or whether that's just a pause.

Yeah. I think it's good. I mean, that helps me answer a little bit more accurately. In any given quarter there will be some portion -- so, there's some portion of the marketing effort that I would describe as steady state. It's the podcast sponsorships, the YouTube sponsorships, the referral fees, the coupon codes. The stuff we generally do from Facebook, AdWords et cetera and then you're going to have other things we're trying. Now, you can have two very different types of efforts. We could be experimenting with television and then contrast that with experimenting with some channel efforts, one is very cash intensive, the other costs almost nothing. So, they'll have very different profiles. So, it's almost going to depend more on the nature of the experimentation in that quarter.

Okay, understood and apologies for harking on about it.

Well, good. We got two complaints there I think.

One last question please. What percentage of your customers have Nexus 5 and Nexus 6 phones?

So, I have some exposure to those numbers on a run rate basis, not on a total basis. So, I don't have a good answer for you. I mean, Michael did you want to guess? Yeah no, I think that's even a little high. So, at its peak, the Nexus 5, was kind of 15%, 17% of our ads. The Nexus 6 is a lot more expensive of a phone. So, we're seeing Nexus 6 way below that. And that was in a run rate basis. By the way, if you're looking at sort of -- if you're worried about Google -- 5 -- Nexus 5 does not currently work with Google 5 [ph]. So, I know there's some talk that they could turn it on for the 5, knowing what I think they want to accomplish strategically, I don't know that they'll do that, but in any event, combined, boy those will comfortably be sub-10%. Michael Goldstein who runs acquisition is sitting here. He was guessing 8, I would probably guess, but it's really that more 5%, 6% and that's 5 and 6 combined with the majority of that being 5.

Then on Ting Internet, is it too early to kind of see what's an uptake rate you have from the houses that you passed?

Oh yeah, way early.

Way early, okay.

Yeah, we're not official launched. We'll probably be launching -- we're expecting -- the launch is planned for sort of very late this month. We'll see that might flip into June. At this point we're more looking at things like what's the take on the current network build. So, it's really -- any numbers don't matter at this point.

Okay. Awesome. Thanks a lot.

Thanks very much.

[Operator Instructions] And we have no further questions at this time. I will turn the call back to Mr. Noss.

Thank you all for joining us and I look forward to speaking with you next quarter. Thanks. Thank you, operator.

Ladies and gentlemen, thank you for your participation. This concludes today's conference call and you may now disconnect.