Tucows 2012 Annual Report Download - page 41

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36
Value-Added Services increased by $1.3 million or 14% to $10.6 million when compared to Fiscal 2011. These
increases resulted primarily from the sale of domain names and advertising from the OpenSRS Domain Expiry Stream
and increased digital certificate sales.
During Fiscal 2012, the number of transactions from all new, renewed and transferred-in domain name
registrations that we processed increased by 0.6 million transactions to 9.2 million when compared to Fiscal 2011. While
we anticipate that the number of new, renewed and transferred-in domain name registrations will continue to
incrementally increase in the long term, the volatility in the market could affect the growth of domain names that we
manage.
As of December 31, 2012, the total domain names under our management increased by 0.2 million to
10.6 million, when compared to December 31, 2011. This increase was impacted by certain of our customers transferring
a significant number of domain names from our registrar accreditation to their own registrar accreditation. In addition,
we provide provisioning services on a monthly basis to accredited registrars who use our technical systems to process
domain registrations with their own accreditation. As of December 31, 2012, we managed 3.4 million domain names on
behalf of other accredited registrars, an increase of 2.0 million compared to the 1.4 million we managed as of
December 31, 2011. The increase is attributable to one of our accredited registrars transferring 1.8 million domain names
they were directly managing under their own accreditation onto our platform.
Retail
Net revenues from Retail for Fiscal 2012, as compared to Fiscal 2011, increased by $5.5 million to
$10.7 million. This increase reflects the impact of $4.0 million in Ting's mobile device and service sales made during
Fiscal 2012 as well as the success that our retail marketing initiatives and improved websites are having on our ability to
attract new customers and retain existing ones for Hover.
As of December 31, 2012, Ting had approximately 10,000 customers and approximately 15,000 mobile devices
under our management.
Portfolio
During Fiscal 2012, Portfolio revenue decreased by $0.4 million, or 5%, to $6.0 million when compared to
Fiscal 2011. This decrease primarily resulted from advertising and other revenue through our two ad-supported content
sites, butterscotch.com and tucows.com decreasing by $0.8 million and the delivery of third-party advertisements on
parked pages decreasing by $0.4 million. These decreases were partially offset by the increase in sales of domain names
from our domain name portfolio. The decrease in revenue from our ad-supported sites was primarily the result of certain
of our vendors electing not to repeat market development programs that they undertook during Fiscal 2011 while parked
pages advertising declined as a result of the impact our domain name sales have on our advertising revenue. The
increase in portfolio sales primarily reflects the timing of portfolio domain name sales and may not be repeatable in
future quarters. The market for monetization of domain names is rapidly evolving and there is no guarantee that we will
be able to continue to acquire the same caliber of names for our portfolio from future expiring domains or that names we
acquire in future will provide the same revenue impact as we have experienced from past acquisitions. In addition, the
revenue we derive from our Portfolio is driven by general macroeconomic factors that affect Internet advertising. Our
advertising revenues are typically sensitive to economic conditions and tend to decline in recessionary periods and other
periods of economic uncertainty.