Tucows 2014 Annual Report Download - page 62

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The following discussion and analysis should be read together with the audited consolidated financial statements
of Tucows Inc. (the “Company”, “we”, “us” or “our”) for the years ended December 31, 2014, 2013 and 2012 and
accompanying notes set forth elsewhere in this report. All financial information is presented in U.S. dollars.
Some of the statements set forth in this section are forward-looking statements relating to our future results of
operations. Our actual results may vary from the results anticipated by these statements. Please see “Information
Concerning Forward-Looking Statements” on page 1.
OVERVIEW
Our mission is to provide simple useful services that help people unlock the power of the Internet. We
accomplish this by reducing the complexity our customers’ experience as they acquire, deliver or use the Internet or
Internet services such as domain name registration, email, mobile telephony services and other Internet services. We are
organized and managed based on two service offerings, Domain Services and Network Access Services, which are
differentiated primarily by their services, the markets they serve and the regulatory environments in which they operate.
Our principal place of business is located in Canada. We report our financial results as two operating segments,
Domain Services, which derives revenue from three distinct service offerings – Wholesale, Retail and Portfolio, and
Network Access Services, which derives revenue from the sale of retail mobile phones and services to individuals and
small businesses. Our chief operating decision maker regularly reviews our operating results for the Domain Services and
Network Access Services segments, principally to make decisions about how we utilize our resources and to measure our
consolidated operating performance. To assist us in forecasting growth and to help us monitor the effectiveness of our
operational strategies, our chief operating decision maker regularly reviews revenue for each of our service offerings in
order to gain more depth and understanding of the key business metrics driving our business. Accordingly, we report
Domain Services and Network Access Services revenue separately.
Domain Services
Domain Services include wholesale and retail domain name registration services; value added services and
portfolio services. We earn revenues primarily from the registration fees charged to resellers in connection with new,
renewed and transferred domain name registrations; the sale of retail Internet domain name registration and email
services to individuals and small businesses; and by making our portfolio of domain names available for sale or lease.
Domain Services revenues are attributed to the country in which the contract originates, primarily Canada.
Our primary distribution channel is a global network of more than 13,000 resellers in more than 100 countries
who typically provide their customers, the end-users of the Internet, with a critical component for establishing and
maintaining an online presence. Our primary focus is serving the needs of this network of resellers by providing superior
services, easy-to-use interfaces, proactive and attentive customer service, reseller-oriented technology and agile design
and development processes. We seek to provide superior customer service to our resellers by anticipating their business
needs and technical requirements. This includes providing easy-to-use interfaces that enable resellers to quickly and
easily integrate our services into their individual business processes, and offering brandable end-user interfaces that
emphasize simplicity and visual appeal. We also provide “second tier” support to our resellers by email and phone in the
event resellers experience issues or problems with our services. In addition, our Network Operating Center provides
proactive support to our resellers by monitoring all services and network infrastructure to address deficiencies before
customer services are impacted.
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