Tucows 2015 Annual Report Download - page 77

Revenues derived from provisioning mobile phone service to individuals and small businesses through the Ting
website, are recognized once services have been provided. This is based upon either usage (e.g., minutes of traffic/bytes of
data processed), period of time (e.g., monthly service fees), various regulatory fees imposed on us by governmental
authorities or other established fee schedules. Revenues for wireless services are billed based on the actual amount of
monthly services utilized by each customer during their billing cycle on a postpaid basis. Our billing cycle for each
customer is computed based on their activation date and not on our reporting period. As a result, we are required to
estimate the amount of revenues earned but not billed from the end of each billing cycle to the end of each reporting
period. These estimates are based on an assessment of the actual services rendered to each customer since the last billing
period against our rate plans existing at that time. Adjustments affecting revenue may occur in periods subsequent to the
billing period when the services were provided and are recognized as revenue during the current billing cycle. In addition,
revenues associated with the sale of wireless devices and accessories to subscribers is recognized when title and risk of loss
is transferred to the subscriber and shipment has occurred. Incentive marketing credits given to customers are recorded as a
reduction of revenue.
Revenues from providing fixed high speed internet access in select cities including Westminster, Maryland
and Charlottesville, Virginia along with Internet hosting and network consulting services to customers in
Charlottesville, Virginia are recognized when the related services are provided.
With respect to the sale of domain registrations and other value-added services, we earn registration fees in
connection with each new, renewed and transferred-in registration and from providing provisioning services to resellers
and registrars on a monthly basis. We also enter into revenue arrangements in which a reseller may purchase a combination
of services (multiple element arrangements). When a standalone selling price exists for each deliverable, we allocate
revenue to each deliverable based on the relative selling price of each of the deliverables. The standalone selling price is
established for each deliverable by the price charged when that deliverable is sold separately by the Company which is
vendor specific objective evidence (“VSOE”). For arrangements where the Company does not sell the deliverable
separately, the selling price is determined based on third party evidence (“TPE”), which is the price at which a competitor
or third party sells the same or similar and largely interchangeable deliverable on a standalone basis. In instances where
VSOE and TPE do not exist, the Company uses an estimated selling price for the deliverable, which is the price at which a
company would transact if the deliverable were sold by the vendor regularly on a standalone basis. Payments for the full
term of all services are received at the time of activation of service and where appropriate are recorded as deferred revenue
and are recognized as earned ratably over the term of provision of service. This accounting treatment reasonably
approximates a recognition pattern that corresponds with the provision of the services during the quarters and the year.
Revenue from domain portfolio monetization and sales consists primarily of amounts earned for the transfer of
rights to domain names and domain related rights that are currently under the Company's control. Collectability of
revenues generated is subject to a high level of uncertainty; accordingly revenues are recognized only when payment is
received, except where a fixed contract has been negotiated, in which case revenues are recognized once all the terms of
the contract have been satisfied.
We also generate advertising and other revenue through tucows.com as well as advertising revenue from our
OpenSRS expired domain names and our domain name portfolio. Advertising and other revenue is recognized ratably over
the period in which it is presented. To the extent that the minimum number of post-presentation impressions we guarantee
to customers is not met, we defer recognition of the corresponding revenues until the guaranteed impressions are achieved.
Revenue is also generated from vendors who are seeking to expand or maintain their services market position and is
recognized once all the conditions have been met.
Changes to contractual relationships in the future could impact the amounts and timing of revenue recognition.
In those cases where payment is not received at the time of sale, additional conditions for recognition of revenue
apply. The conditions are (i) that the collection of sales proceeds is reasonably assured and (ii) that we have no further
performance obligations. We record expected refunds, rebates and credit card charge-backs as a reduction of revenues at
the time of the sale based on historical experiences and current expectations. Should these expectations not be met,
adjustments will be required in future periods.
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