Tucows 2013 Annual Report Download - page 43

Download and view the complete annual report

Please find page 43 of the 2013 Tucows annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 102

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102

printing services in connection with Platypus. Fees payable for trust certificates are amortized on a basis consistent with the
provision of service, generally one year, while email hosting fees and monthly printing fees are included in cost of revenues
in the month they are incurred.
Retail
Costs of revenues for our provision and management of Internet services through our retail site, Hover.com, include
the amortization of registry fees on a basis consistent with the recognition of revenues from our customers, namely ratably
over the term of provision of the service. Registry fees, the primary component of cost of revenues, are paid in full when the
domain is registered, and are recorded as prepaid domain registry fees.
The costs of revenue for Ting's mobile phone service include hardware (the cost of devices sold to our customers)
and network services (our customers' voice, messaging and data usage) provided by our Mobile Network Operator.
Portfolio
Costs of revenues for our Portfolio represent the amortization of registry fees for domains added to our portfolio
over the renewal period, which is generally one year, the value attributed under intangible assets to any domain name sold
and any impairment charges that may arise from our assessment of our domain name intangible assets. As the total names in
our portfolio continue to grow, this cost will become a more significant component of our cost of revenues. Payments for
domain registrations are payable for the full term of service at the time of activation of service and are recorded as prepaid
domain registry fees and are expensed ratably over the renewal term.
Costs of revenues for our larger ad-supported content site include the fees paid to third-party service providers,
primarily for digital certificates sold through our content sites and content license fees.
44
Network costs
Network costs include personnel and related expenses, depreciation and amortization, communication costs,
equipment maintenance, stock-based compensation and employee and related costs directly associated with the management
and maintenance of our network. Communication costs include bandwidth, co-location and provisioning costs we incur to
support the supply of all our services.
The following table presents our cost of revenues, by revenue source:
Year ended December 31,
2013
2012
Wholesale
Domain Services
$
73,468,824
73,168,196
Value Added Services
2,115,167
2,032,328
Total Wholesale
75,583,991
75,200,524
Retail
16,142,116
6,804,863
Portfolio
1,234,214
832,008
Network, other costs
4,835,939
4,925,058
Network, depreciation and amortization costs
711,763
755,280
$
98,508,023
$
88,517,733
Increase over prior period
$
9,990,290
Increase - percentage
11
%
The following table presents our cost of revenues, as a percentage of total cost of revenues for the periods presented:
Year ended December 31,
2013
2012
Wholesale