Tucows 2015 Annual Report Download - page 38
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Please find page 38 of the 2015 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.-
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various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to
our business.
Because we are required to recognize revenue for our services over the term of the applicable customer agreement,
changes in our sales may not be immediately reflected in our operating results.
We recognize revenue from our customers ratably over the respective terms of their agreements with us as
required by GAAP. Typically, our domain name registration agreements have terms that range from one to ten years, and
our website hosting agreements have annual or month-to-month terms. Accordingly, any increases or decreases in sales
during a particular period do not translate into immediate, proportional increases or decreases in revenue during that
period, and a substantial portion of the revenue that we recognize during a quarter, is derived from deferred revenue from
customer agreements that we entered into during previous quarters. As a result, we may not generate net earnings despite
substantial sales activity during a particular period, since we are not permitted under GAAP to recognize all of the revenue
from these sales immediately, and because we are required to reflect a significant portion of our related operating expenses
in full during that period. Conversely, the existence of substantial deferred revenue may prevent deteriorating sales activity
from becoming immediately observable in our consolidated statement of operations.
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