Tucows Inc (TCX) 2010 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to Tucows Inc. second quarter fiscal 2010 conference call. Earlier this afternoon Tucows issued a news release reporting its financial results for the second quarter of fiscal 2010. The news release and financial statements are available on the Company's website at www.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 one hour following the completion of this call. Details on how to access the replays are available in today's news release reporting the second quarter financial results as well as at Tucows website.

Before we begin today, let me remind you that the 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 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 would now like to turn the call over to Tucows President and Chief Executive Officer, Mr. Elliot Noss. Please go ahead, sir.

Thank you, operator. Good afternoon, and thanks for joining us today. With me is Michael Cooperman, Tucows Chief Financial Officer. This afternoon's call will follow our usual format. I will begin with a brief overview of our financial results and operational highlights for the quarter. Mike will then review our financial results in detail. And I will return for some concluding comments before opening the call up to questions.

Our second quarter results continue to demonstrate the consistency and reliability that have become the hallmarks of our business. Revenue grew just over 4% year-over-year to $20.8 million. Again this quarter, this growth was achieved in the face of a lower contribution from both our e-mail service and direct navigation name sales that we've discussed on previous calls. Adjusted cash EBITDA for the quarter was $1.7 million. And we once again generated positive cash flow from operations, which totaled $1.2 million for the quarter, and which, I will note, was dampened by the use of approximately $800,000 for working capital requirements. Mike will discuss this in more detail in a few minutes.

I would like now to briefly review some of the operating highlights for the second quarter beginning with OpenSRS. The OpenSRS domain service continued to exhibit steady year-over-year growth in transaction volumes in the second quarter. Total transactions grew by 11% compared to the second quarter of last year, with new registrations growing 9%, and renewals growing 12%. I will note that our renewal rate saw another bump up in the second quarter, again performing above industry average. As a result of continued growth in domain transactions, domains under management at the end of the second quarter grew to well over 10.1 million. All of this contributed to year-over-year growth in domain service revenue of 7%.

Our competitive position remains strong, and we had several significant customer wins during the quarter. Our competitive position continues to improve both in terms of new customers starting to do business with us, and existing customers who use multiple suppliers bring a higher proportion of their business to us. We are winning business in both respects because we excel at building customer relationships along with service innovation like domain lookups. Still, with the domain service, subsequent to the end of the quarter, we saw the successful launch of the new .CO TLD, or top-level domain. .CO, the country code top-level domain for Columbia, is now being positioned as the abbreviation for company and an alternative to .COM. To date, the .CO launch has been our most successful new TLD launch since .EU in 2007, and since launch, has been one of our top-selling TLDs. In fact, since its launch, .CO has been the number two top-level domain for new registrations, topped only by .COM.

Turning to Hover, our retail service, we talked last quarter about having redesigned the front page and that we were ready to reinvigorate the marketing. In Q2 these efforts started to bear fruit, and we were able to grow new domain registrations by 31% quarter-over-quarter, and so far in Q3, we are holding at these new levels. We are also starting to see strong indications that our competitive positioning is succeeding. Transfers in nearly tripled quarter-over-quarter. We think this is a function of some of these efforts exposing us more broadly in the market. Feedback is that Hover represents a fresh change from some of our competitors services. We are excited that our competitive position at retail has been validated by these results.

We've always said that one of the roles of Hover inside of Tucows is for it to be a laboratory within which we could learn best practices and bring them back to our wholesale customers. We think we have started that learning. We think we have learned a little bit around marketing; we think we have learned some interesting lessons around customer experience and usability; and we have discovered some valuable customer service practices. This quarter we have started to institutionalize transferring this knowledge from retail to wholesale, thereby taking something that has impacted 200,000 customers and leveraging that impact across the many millions of customers touched by OpenSRS resellers.

YummyNames, our domain portfolio group, continued to post solid results for Q2 with individual name sales again leading the way as this revenue stream continues to de-emphasize bulk sales of direct navigation names. Revenue for YummyNames increased 12% year-over-year, and, I will note, the second quarter of last year included a large bulk sale of direct navigation names. Growth in both auction sales as well as those generated by our distribution agreements with NameMedia and Sedo drove continued momentum in brandable name sales. In addition, we saw an increase in average selling price in the second quarter. Each passing quarter is further confirmation of our strategy to target marketers and small businesses who recognize the value of quality domain names.

At Butterscotch, our content services group, revenue in Q2 was up 14% year-over-year, and key performance metrics trended favorably, as we continued to migrate traffic from www.tucows.com to www.butterscotch.com and to integrate the two sites. Most notably, www.butterscotch.com page views increased 27%, and site visits increased 24% compared to the first quarter of the year, aided by the launch in April of a new mobile app library containing more than 120,000 titles. While video plays overall on the site were relatively unchanged from Q1, video plays on YouTube were up 35%. We are now seeing over 60% of our video plays taking place off the www.butterscotch.com web site. We also continued to expand our content during the second quarter with the number of videos increasing to more than 3000 at the end of the quarter, up from 2500 at the end of Q1.

In summary, our second quarter results once again demonstrate the consistency and reliability that underlie our business. The domain service continues to steadily grow. Our retail business had a very solid quarter and is gathering momentum. YummyNames is demonstrating continuing strength as we focus on individual name sales, and favorable trends in the underlying key metrics for Butterscotch have us excited there as well. I would now like to turn the call over to Mike to walk through our financial results in detail.

Thanks, Elliot. Mid revenue for the second quarter of fiscal 2010 increased 4.1%, to $20.8 million, from $20 million for the first quarter of last year. I will break down the impact of each of our service offerings on overall revenue when I discuss the gross margin contribution in a moment. Cost of revenues before network costs for the quarter increased by $1 million or 7.6% to $14.2 million, from $13.2 million for the same quarter of last year.

In discussing our operating results, I would like to remind you that a significant portion of our operating costs are in Canadian dollars. Our results, therefore, should be viewed within the context of the negative impact that the strengthening Canadian dollar relative to the US dollar has had when they are compared to last year. To give you some sense of this impact, in the second quarter of this year, the Canadian dollar was approximately 12% higher relative to the US dollar than in the second quarter of last year. Despite this currency impact, network costs did decrease by $209,000 or 11.9% to $1.5 million, from $1.8 million for the second quarter last year, as the impact of the higher Canadian dollar was offset by the efficiencies we have gained in operating and managing our co-location facilities and the fact certain of our older computer hardware, which has now been fully depreciated, has not required replacing.

Gross margin for the second quarter of this year increased slightly to $5.1 million, from $5 million for the same quarter last year. On a percentage basis, gross margin was 24%, down marginally from 25% for the same quarter of last year. Gross margin seemed to have settled in this range following our shift in sales mix from higher-margin services to lower-margin domain name services that we have discussed on prior calls.

Gross margin from our OpenSRS service, which includes domain services, e-mail services, and other wholesale services, was $3.8 million, or 22% of net sales, compared with $4.2 million, or 25% of net sales, for the second quarter of 2009. This decrease is primarily attributable to the expected loss of the three media portal e-mail customers that we have previously discussed, and, to a lesser extent, on our success in growing revenue from higher-volume, lower-price customers, as we compete aggressively to win new business and retain existing resellers.

Gross margin from domain services declined slightly to $2.7 million from $2.8 million for the second quarter of last year. In comparing these numbers, it should be noted that during the second quarter of last year, domain name costs were roughly $200,000 lower than normal as a result of certain supplier programs undertaken during the second quarter last year. In addition, our higher-volume, lower-price strategy has had a dampening impact on gross margin compared to the second quarter of last year, although to a somewhat lesser extent. In the third quarter, our gross margin percentage will be further impacted by an additional 7% price increase that the VeriSign registry implemented on July 1. On a percentage basis, gross margin from domain services fell to 16.9%, from 19%.

Gross margin for e-mail services decreased 36% to $463,000, from $721,000 for the second quarter of last year. The decrease is primarily the result of the loss in revenue from the three media portal customers we have discussed previously. As Elliot discussed, we are now focused on replacing this gross margin with new e-mail business, and we are seeing some positive progress in this regard. As a percentage of revenue, gross margin for e-mail services declined marginally to 80%, from 83% for the corresponding quarter of last year, largely the result of the impact of the media portal customers revenue has had on our largely fixed e-mail costs.

Gross margin for YummyNames increased by 14.4% to $1.4 million, from $1.2 million for the same quarter of last year. YummyNames' gross margin performance continues to be defined by our continued success in selling both brandable names and our regular bi-monthly sales of names. This increase was partially offset by the impact the sale of domain names has on the names we have available for parked pages revenue. Gross margin percentage for YummyNames increased slightly to 85%, from 83% for the second quarter of last year.

Gross margin for Hover decreased slightly to $761,000, from $783,000 for the second quarter of 2009. In assessing this result, please remember that during fiscal 2009, we undertook significant development efforts to provide our retail customers with a more streamlined platform to register and manage domain names and e-mail addresses. During this initiative, we de-emphasized new customer acquisitions and concentrated on stabilizing renewal rates and traunched (inaudible) existing customers to the Hover platform. These initiatives resulted in the decrease in the deferred revenue balance during fiscal 2009, as the cash receipts added to deferred revenue were lower than the revenue being recognized from prior periods. With this initiative behind us, we are concentrating on launching longer-term programs to drive new customer acquisitions. Our early success with these initiatives has resulted in increased sales volumes, higher cash receipts, and a return to growth in deferred revenue during the first half of this year.

Gross margin for Hover increased to 69%, from 62% for the second quarter of last year. The increase is mainly the result of the sales mix resulting from the introduction of newer higher-margin offerings. Gross margin for Butterscotch increased 10% to $664,000, from $603,000 for the same quarter of 2009. This performance was achieved in an environment where advertisers continue to show a preference for more content-rich traffic on websites like www.butterscotch.com. We have been able to capitalize on this trend by increasing advertiser spend on www.butterscotch.com as well as by undertaking corporate video initiatives. These increases have been partially offset by the muting affect this changing advertiser preference has had on demand for advertising on our www.tucows.com web site and our Author Resource Center. At the same time, we continue to experience dramatic decline in AdSense revenue as a result of Google's elimination of the Enterprise AdSense program.

As a percentage of net revenue, gross margin decreased slightly to 96%, from 99.8% in the second quarter of last year. Total operating expenses for the second quarter of 2010 increased by $3.3 million, or 125%, to $5.9 million, or 28%, of net revenue, from $2.6 million, or 13% of net revenue, for the corresponding quarter of last year. As we highlighted on past calls, the change in the fair value of foreign exchange contracts remains the principal course of this variance in our operating expense from period to period. During the second quarter the impact of the fair value adjustment on unrealized foreign exchange from our contracts was a net loss of $1.9 million, as compared to a net gain of $1.9 million for the same quarter last year, a differential of $3.8 million between the two periods.

Looking at our operating expenses in terms of core and other operating expenses, core operating expenses, which we define as those expenses relating to on going sales, marketing, development, and administrative costs, increased 14.1% to $4.2 million from $3.5 million for the second quarter of last year. Roughly half of this increase resulted from the negative impact the approximately 12% strengthening on average of the Canadian dollar relative to the US dollar, compared to the second quarter last year, has had on our operating expenses. In addition, the increase is attributable to higher work force costs that resulted from the additional people we have employed in both our marketing and customer service areas to increase our focus on sales and marketing initiatives. As a percentage of revenue, core operating expenses increased to 20.4%, from 17.6%. Other operating expenses for the quarter were $1.7 million, compared with other operating income of $1.1 million for the second quarter of last year. The $2.8 million swing is primarily the result of the changing fair value of foreign exchange contracts that I mentioned moment ago. And in the second quarter of this year, we recognized a loss on foreign exchange of $1.2 million, inclusive of the mark-to-market loss of $1.9 million, compared with a gain on foreign exchange of $1.6 million, inclusive of the mark-to-market gain of $1.9 million for the second quarter of last year. I will also note that the impact of the maturation of some of our foreign exchange contracts during the quarter reduced the net value of our non-cash derivative instruments on our balance sheet to $394,000 at the end of the second quarter, from $3.2 million at the end of the first quarter.

Net loss for the second quarter of 2010 was $772,000, or $0.01 per share, compared with net income of $4.4 million, or $0.06 per share for the second quarter of 2009. In assessing these results, I would like to remind you that the second quarter last year included a gain on the fair value of our foreign exchange contracts of $1.9 million compared to a loss in the fair value for this year of $1.9 million. In addition, net income included last year included $2.6 million, $2 million related to the sale of our equity stake in Afilias, and another $600,000 from the patents that we assigned in 2002 to a third party who continues to commercialize them. Excluding the impact of the changing fair value on our foreign exchange contracts and the impact from the nonrecurring other income from the second quarter last year, year-over-year profitability increased.

With regard to taxation, we recorded a provision for 2010 taxes of $316,000 in March. When we reassessed our tax provision in June, we assessed that only $306,000 was required. In addition, as we have now filed our 2009 ITT claim, we recorded a recovery of $95,000 in this regard.

Turning to the balance sheet and cash flow, cash and cash equivalents at the end of the second quarter of this year decreased to $4.1 million, from $7.4 million at the end of the second quarter of last year, and from $5.2 million at the end of the first quarter of this year. The main reason for the decrease in cash of $1.1 million at the end of the first quarter is the result of our using an additional $1.7 million to repurchase 2.5 million shares under the open market buy back program we launched in February. In addition, we also made capital payments of $479,000 on our credit facility with the Bank of Montreal, reducing it to under $2.3 million at the end of the quarter. I will note that on our last quarter's conference call, we had expected that this facility would be fully repaid by the end of the second quarter as a result of the annual cash sweep contemplated in the terms of the facility. Since that time, however, we have begun negotiating with the bank to put a new facility in place. As part of our discussions, they have deferred the cash sweep payment pending the outcome of these negotiations. These uses of cash were partially offset by our generating $1.2 million in cash from operating activities during the quarter.

Cash flow from operating activities before changes in non-cash operating working capital for the second quarter, was $2 million compared to $1.6 million, in the same quarter last year. This generation of cash was partially offset by our using $800,000 in non-cash operating working capital during the quarter, compared to our generating $1 million in non-cash working capital during the same quarter last year.

The use of the additional $1.8 million of cash to fund other working capital compared to the second quarter of last year primarily arose from the following. Accounts payable and accrued liabilities decreased by $700,000; a combination of the lowest spend on fixed assets that we are currently experiencing; the clearing of certain longer-term payables; and our agreeing to tighter payment terms with some of our suppliers. Income tax receivable decreased by $800,000, primarily due to the higher accrual we had for 2009 and a reversal of a portion of the tax prepayment from 2009 to offset our estimated provisional tax liability for 2010; and customer deposits decreased by $600,000 as a result of certain customers having placed money on deposit to fund expected purchases, that when made ran the deposit level down to more typical levels. These uses of working capital were partially offset by our reducing our registry supplier's deposits by $300,000.

Deferred revenue at the end of the second quarter of this year was $60 million, an increase of $5.5 million from $56.9 million at the end of the second quarter of last year, and up marginally from $59.5 million at the end of the first quarter of this year.

To conclude, our financial results in the second quarter continue to demonstrate the consistency in our business. We continue to see momentum in our domain services and YummyNames port -- domain portfolio revenue, as well as positive underlying trends in the repositioned Butterscotch and Hover businesses, both of which are well positioned for future growth. At the same time, improvements in our cost structure are having a positive impact on profitability in the face of a strong Canadian dollar. And we continue to generate sufficient cash from operating activities to allow us to continue to execute on our commitment to return value to our shareholders through stock repurchases. I would now like to turn the call back to Elliot.

Thanks, Mike. The consistency and reliability in our business has enabled us to continue to deliver on our stated intention to return capital to shareholders. During the second quarter, as Mike noted, we repurchased an additional 2.5 million shares under our open market buy back program, bringing the total number of shares repurchased this year, including those repurchased under our Dutch tender offer at the beginning of the year, to 9.8 million shares, or more than 14% of our outstanding shares at the end of last year. All told, since we commenced our first Dutch auction tender at the beginning of 2009, we have taken up almost 16 million shares, or more than 21% of our outstanding shares at the end of 2008. We remain committed to returning capital to shareholders, and we feel the specific tactic of Dutch auctions has been very successful for us.

We believe that at our current valuation, our shares continue to represent excellent value. We also believe that returning capital to shareholders is the most appropriate use of our capital. It is preferable to M&A as a core strategy, which empirically is rarely efficient. It is also preferable to holding large cash balances, as our growth opportunities are simply not capital intensive. We also believe that operating efficiency, as I talked about at length last quarter, is simply good business practice and something that is even more important in the future as all businesses and markets become even more competitive.

We've had some investors and potential investors ask us how these things, returning capital and focusing on operating efficiency, relate to growth. More pointedly, we've had some people suggest that returning capital to shareholders and focusing on operating efficiency could be seen as the Company not having growth opportunities. This is not the case. There are two kinds of growth, incremental and transformational. Incremental growth is that like we see now with Hover or that we see from things like the recent successful .CO launch. It is improvements in the existing business that make it growing, healthy, and profitable. Transformational growth is more like the launch of OpenSRS, which ten years ago took Tucows from an ad-supported model to its current large subscription services business. Or to a lesser extent, the launch of our portfolio business that is now YummyNames.

We are always doing things to introduce an increase incremental growth. We also live in markets that are hypercompetitive. We need that incremental growth to move forward, and sometimes just to stay in place. The transformational growth cannot be planned for in the same way. It is about trying things on an educated basis and being able to fail while learning, while not consuming great amounts of capital. We have built one of the best, and perhaps the best, distribution network on the Internet. That network is central to us being able to explore and test transformational growth opportunities inexpensively. And then, it allows us to potentially achieve those transformational growth inexpensively.

We believe in returning capital to shareholders and see it as playing a greater role in the future of all public companies. We believe in operating efficiency and think that smaller, more focused and efficient companies will be the most successful in the future. We also believe in always looking for growth opportunities, both incremental and transformational. We deeply believe these three things are complimentary, not contradictory. With that, I would like to open the call to questions. Operator?

(Operator Instructions) We will pause for just a moment to compile a Q&A roster. Your first question comes from the line of Thanos Moschopoulos, BMO Capital Markets. Your line is open.

Hi. Good afternoon. You talked earlier about how you feel good about the competitive position of your OpenSRS business. You had 11% transaction growth there. I know it's kind of hard to get some of the industry stats on that, but what is your sense as to how that 11% transaction growth compares to the broader industry?

I think that we are doing -- relative to most of our competitors, we are doing extremely well or well. I think that for better or worse, it is still in many respects a GoDaddy world, and we are all just living in it. So, GoDaddy, I think, uniquely has had an outsized performance, and that's certainly something that we want to watch and study as much as possible. Now, GoDaddy's wholesale business, when we're going up directly for web hosting customers, we don't see them very much. They do have a smaller wholesale business. But where GoDaddy's success does impact us is in smaller site designers, things like that. So we feel very, very good about our competitive position. And in order to take that further, we think we've got to reach better and more effectively in to some of those smaller design and consultancy type customers.

Okay. That's fair. ICANN earlier today approved Chinese character domain names. Is that something that you can benefit from? Or is that going to be tricky just as a function of not having a presence in the geographies that that will pertain to?

Well, we really -- we do have partners in over 120 countries now, if I'm not mistaken. And I think that when you are talking about those Chinese characters, we think that there's some opportunity in -- they're called IDNs, internationalized domain names -- in some of the other IDN markets, potentially a little more than China. China in particular tends to be a market characterized by two things. One, it's primarily served by Chinese companies; and two, there is a lot of regulatory questions in the Chinese market. Don't know if you followed, but with the Chinese top-level domain .CN, there was a radical pronouncement made recently that fundamentally changed that market and drove most of the international registrars out of it. So, China in particular is kind of a tough go. I will tell you that with IDNs, internationalized domain names, in particular, and with global growth in general, we're very excited with both some of the progress and some of the plans we have in developing markets around the world.

Okay. As far as the direct navigation business, you alluded to the fact that's still under pressure. How much further before that hits bottom? Or is it such -- is it a small enough part of the business now that it's not really lead material at this point?

I would say it's not killing us. We've never been a company that focuses on direct navigation. When you are looking at that market more broadly, I think us, like the rest of the industry, are just hoping from big things from the Bing, from the Microsoft-Yahoo merger through Bing, so that there is real competition there. I think that as some of the bigger dominos start to fall, the AOL business is out for bid right now as an example. There's one or two more big pieces like that. The next large market share swings very likely will be in the direct navigation space with domain names, and so we are hoping that that starts to heat up from a competitive standpoint as well.

Okay. And then finally, as far as the Butterscotch business, what do you see as being the key in terms of accelerating the revenue growth there? Is it just going to be progressive growth as you keep monetizing some of that traffic that you are getting? Or is there some way to accelerate that?

Well, I think that there's two things that are true. Broadly, anywhere you read, everybody is excited about video on the Internet. The second thing that's also true, broadly, everywhere you read, nobody has really figured out how to monetize it yet. We are coming at -- with Butterscotch we think that we want to just keep growing that business, staking out our place in the world. We think we've done really well in establishing ourselves as a player in producing real high-quality technology video, not user generated stuff, but a level up from that. Where we think some of the earlier positives might come from is some of the places where we're looking to drive synergies, so we think, two, one that I've mentioned before, is what we loosely call corporate video or doing purpose built videos for companies, usually in technology. That might be in a show format; it might be in promotional video format. But there's a big cost advantage when Butterscotch is producing something relative to the traditional competitors of TV production houses. There is a huge cost, and therefore, price advantage, and we are seeing the benefits of that because the quality is virtually not differentiable.

The second place is, we're looking for places where we can bring that video potential to the rest of our business, Hover and OpenSRS. We deeply believe that one of the best uses of video on the Internet is helping people use things, helping people use things that they don't know how to use well enough. So we've had some real success using some of the production capabilities of Butterscotch. We recently did a transfer series for OpenSRS that was really excellent in its quality. And we just launched this, so we are just starting to see the impact. But also, looking for places where we can put video production together for some of our wholesale OpenSRS customers for hosting companies and ISPs who have huge customer bases that can use certainly much more help in getting the most out of their Internet services. So, that's some stuff that we think really could really hold some potential.

Okay. That's great. I'll pass the line. Thank you.

Thanks, Thanos.

Your next question comes from the line of Alex Grassino, Laurentian Bank Securities. Your line is open.

Good afternoon, guys. Just on the messaging side of the business, curious to see how you see things unfolding from there. I'm guessing at about 600k a quarter you -- the sense is that you've stabilized at this point, and any growth coming from that will probably be, as you say, incremental. Anything else you can add to that in terms of qualifications? Or is that essentially what the bottom line is?

I think it's the right assessment. We are always looking at the pipeline with happy eyes. I think that there's a lot in there that we're excited about. One of the reasons you didn't hear me comment about it, you heard Mike comment about it, is because I feel I've said that once or twice recently. And I'd really like to, next, talk about a couple of nice wins coming out the other side.

Sure, sure.

That's really -- I much more like to do than say, and so that's really why you didn't hear me comment on that this quarter.

Sure. And in terms of the .CO, just curious to see if you could perhaps break out what kind of contribution in terms of new business is added to the registration side of the business.

It's all Q3, so you won't see it in the Q2 numbers yet. It's virtually all Q3. There might have been some of the early Landrush, Sunrise stuff in Q2. No. Mike is shaking his head, no. So it all settled in Q3.

Perfect. The next question I have is just on the TLDs. There's been a lot of debate recently about the .XXX domain names. Do you have thoughts on that as well?

I guess I have one lament, which is, sadly, I fear that this might have some negative impact on the speed in which we'll see the new TLD around, the new top-level domain around. There's going to be this broad liberalization. I think we are all hoping that at the Cartagena ICANN meeting in December that there's a significant step forward with new top-level domains. There is, and it was just last week, a whole new issue introduced by governments bringing to ICANN -- I shouldn't say completely new, but certainly very late in the day issue, around what they are calling morality and public order, and nothing at ICANN would be complete without acronym, so this is MAPO, morality and public order. And now, there's an issue arising out of that. And it's really, to a large extent, driven by XXX. There's an old aphorism, on old saying, "Bad facts make bad law." While I have no -- I was going to say no skin in the game, but that would have been bad pun, around XXX. Well, I have no direct thoughts, and I'm very -- no direct thoughts around XXX and its potential revenue capability. I do -- it's a tough case and a lot more complicated than a lot of other things that might happen with top-level domains. So, I just hope that this doesn't slow things down.

Perfect. Thank you.

There are no further questions at this time, Mr. Noss. I turn the call back over to you.

Thanks very much, and we look forward to speaking with you all again next quarter. Thank you operator.

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