Elliot Noss – President and CEO Michael Cooperman – CFO.

Shai Dardashti – DCM Patrick Retzer - Retzer Capital Management Hubert Mak – Cormark Securities Inc..

Good afternoon, ladies and gentlemen. Welcome to Tucows’ Third Quarter 2014 Conference Call. Earlier this afternoon, Tucows issued a news release reporting its financial results for the third quarter. That news release and the financial statements are available on the Company’s website at tucows.com under the investors heading.

Please note that today’s call is being broadcast live over the Internet and will be archived for replay both by telephone and via the Internet beginning approximately one hour following the completion of this call. Details on how to access the replays are available in today’s news release.

Before we begin, let me remind you that matters that the Company will be discussing include forward-looking statements and, as such, are subject to risks and uncertainties that could cause the actual results to differ materially.

These risk factors are described in detail in the Company’s documents filed with the SEC, specifically the most recent reports on the Form 10-K and Form 10-Q. The Company urges you to read its security filings for a full description of the risk factors applicable for its business.

I would now like to turn the call over to Tucows’ President and Chief Executive Officer, Mr. Elliot Noss. Please go ahead Mr. Noss..

Thank you, operator and thanks everyone for joining us today. With me is our Chief Financial Officer, Michael Cooperman. As per our usual format, I’ll begin today’s call with an overview of the financial and operational highlights for the quarter. Mike will then review our financial results for the quarter in detail.

And I’ll return with some closing thoughts before opening the call to questions. In the third quarter, we continued to see the impact of the growing contribution from Ting on our financial results. While our Domain Services business; once again delivered consistent, reliable performance.

Consolidated revenue grew 9% year-over-year to a record $38.9 million. In that, that increase will be even greater, if not for the much larger contribution from the new gTLD arrangement in Q3 of last year, relative to the one completed in Q3 of this year.

Gross margin percentage for Q3 expanded to 26% from 21%, excluding the portfolio group, which inflated Q3 margins both this year and last year due to the pure margin contributions from the new gTLD arrangements. We’ve seen our gross margin percentage rise significantly over the past year, as Ting mobile revenue, has made up a larger share of the pot.

In addition, OpenSRS margins have moved up with product mix and Hover has claimed larger shares of our total business. At the bottom line, we have generated net earnings of $0.40 per share the first nine months of this year surpassing our total earnings for all of 2013. Ting continued its strong customer growth in the third quarter.

We had a roughly 11,000 accounts and 17,000 devices, that represents a 15% increase in our customer base in the quarter, healthy growth for just about any business. But for Ting, it is in fact a bit of a slowdown. Absolute net adds were slightly below both Q2 of this year and Q3 of last year.

This is partly above the success of the iPhone 6 and 6 Plus launches during the quarter, devices we do not yet support on Ting. It is also partly about the climbing perception of the Sprint network relative to other major networks. And it also appears to be about aggressive new price promotions for major carriers to retain and acquire customers.

Looking ahead, we believe each of these areas, device, network and price bring more opportunities for Ting growth than threats.

On devices, we continue to be excited about the growing market share and falling prices of affordable android smart phones like the Moto E and the HTC Desire and the availability of carrier agnostic devices like the Nexus 5 and 6.

We also envision the time lag shortening a bit, from hero devises being launched by the carriers to those devices being supported by Ting. On network, we're encouraged by the recent organizational changes at Sprint, our network partner and heartened that we can really only go in one direction from here.

Of price, we continue to offer huge potential savings to over 300 million cell-phone users in the United States. A recent audit of the Ting base revealed that our average customer has saved $37.57 per device a month since switching, that’s an average of nearly $60 per account.

Meanwhile McKinsey just completed an annual survey, revealing that for the second year in a row price is the number one consideration for customers changing mobile providers and the percentage for whom that is true has grown considerably. That means price ranks above network coverage or device choice.

And we know that last year was the first time that that was true in this McKinsey study. For the past couple of years, we’ve been fighting for our share of a small population of early adopters that are just satisfied and venturous enough to look beyond the major carriers for savings.

We believe the most important trend over the next year, will be more and more people joining that population recognizing that they can be paying less, looking beyond the four major carriers and discovering services like ours.

I want to note, that while we added 11,000 accounts in Q3 we are now counting our total of active accounts at just over 82,000, which is only 9,000 more than the 73,000 we reported last quarter. This is the result of a one-time change in how we measure active accounts.

Specifically we have now removed all accounts going back throughout our history that we proactively suspended for nonpayment. Our revenue as well our account of active devices which now sits at 130,000 are unaffected by this change. So our active accounts total goes down a bit. Our revenue per account and device per account actually pick up slightly.

As I last quarter I will quickly summarize the Ting business for easy modeling. We finished the quarter at 82,000 customers with 130,000 devices. Customers are spending about $35 a month on their phone bills. Growth margins are 45% to 50%. We spent under $100 to acquire a customer.

We are adding about 16,000 new customers on growth basis each quarter and continue to chart between 2.5% of our base each month.

As I stated at the outset, our domains business continued to deliver consistent and reliable performance and is better standing from a resurgence and growth margin in the OpenSRS Wholesale domains channel due to a shift in sales mix to higher margin domains and services.

This trend continued in Q3 with growth margin from Domain Services up 7% on a year-over-year basis. Our registrations volumes that were relatively flat. Hover continued its trends of stead growth during the quarter once again delivering year-over-year revenue and gross margin growth in excess of 20%. In fact both were over 25% for Q3.

With respect to new gTLDs, at the end of September we had added support for 228 new gTLDs up from 170 at the end of June and 81 at the end of March. In our Wholesale channel, registrations in new gTLDs in Q3 represented 6% of total call net and new gTLD registrations up from 5% in Q2 and 3% in Q1.

In our retail channel, that metric grew to 21% from 10% in Q2 and 7% in Q1. For the entire industry registrations of new gTLDs increased to 11% of total call net new gTLD registrations in Q3 from 10% in Q2 and 6%in Q1.

I remind you that these metrics include some registries giving away a large number of domains for free, although there was much more of that activity in Q2 than Q3. Hover has successfully positioned itself as a source for these new extensions and is getting significantly more than its fair share of registrations.

As we would expect, OpenSRS lags behind as resellers of docs and integrate new gTLDs into our offerings. And I do want to correct I believe I said 21% of up for Hover, I think that's 16%.

Although we expect the pace of introductions to slow for the remainder of the year, many of the most eagerly anticipated new gTLDs are actually slated to launch in 2015.

As I alluded to earlier, our Q3 results included a large gain we recognized from an arrangement related to the resolution of contention for the .group in new gTLDs strength in which we had a minority stake with a group of applicants.

While the amount is confidential, I can tell you that it was much less than the amount received last year for a similar situation related to marketing and media. Another new gTLD we continued to have an interest is .online and I'm pleased to report that our joint venture with Radix and NameCheap won the auction to operate the online registry.

While we are bound by confidentiality with respect to the value of the transaction, we can point to amounts paid in other gTLDs auctions in the public domain, like $6.8 million for Tech, $5.6 million for $5.6 million for Realty, for the $4.6 million that Amazon paid for dot Buy and let you decide what you think online should be valued relative to those more narrowly targeted extensions.

What I can do, what I can share is that each of the partners will contribute $4 million to $5 million to cover the cost of the auction and the initial funding of seed capital for the registry. And I will note that our contribution will be treated as an investment for the purpose of the financial reporting.

I would now like to turn the call over to Mike to review our financial results for the quarter in greater detail.

Mike?.

Thanks Elliot. As Elliot discussed, we again delivered solid year-over-year top line growth in the third quarter with net revenue increasing by 9% to $38.9 from $35.6 million for the third quarter of last year. Cos of revenues before network costs were $26 million, up $1.7 million or 7% from $24.3 million.

Gross margin before network costs increased by $1.5 million or 13% to $12.9 million from $11.4 million and as a percentage of net revenue increased to 33% from 32 % compared to Q3 of last year. I’ll now review gross margin performance of each of our service categories.

As a reminder, in the first quarter of this year, we began breaking our teams separately on the heading Network Access with our wholesale, retail and portfolio domain revenue streams being classified as Domain Services.

Starting with Domain Services, gross margin for all domain services in aggregate was $8.9 million compared to $10.2 million for the same quarter last year, decline of $1.3 million or 13% was attributable to the significantly larger payments we received for withdrawing our applications for the media and the marketing streams in the third quarter of last year when compared to that we received from the withdrawal of .group in Q3 of this year.

Gross margin for the wholesale component of domain services, which includes also domain services and other value-added services decreased $119,000 or 2% to $5.4 million from $5.5 million from the same quarter last year. As percentage of revenue, gross margin for Wholesale Services was more or less unchanged at just over 22%.

Within the wholesale, gross margin from Wholesale Domain Services grew $228,000 or 7% to $3.7 million compared to $3.4 million for the same quarter last year. As Elliot mentioned, the increase is primarily is the result of the continuing shift in sales mix to higher margin services.

The benefit of this shift is partially offset by the impact of several large customers by grading the business to their own accreditations. Gross margin for value-added services decrease by $347,000 on 16% to $1.8 million from $2.1 million.

As we've discussed on our last call, this decrease is primarily the result of what one large customer no-logging using our email platform as well as the general softness that still exists in secondary domain name market and the lower advertising yields that the industry is experiencing in general.

Gross margin for Retail Services increased by $293,000 or 25% to $1.5 million from $1.2 million from Q3 of last year as Hover continues to be successfully netting customers and growing sales users in customers. As a percentage of revenue gross margin for retail services was relatively unchanged at 56%.

Gross margin for portfolio services was $2 million compared to $3.5 million for Q3 last year. This decrease is primarily related to relative contributions from the sale of our interest in new gTLDs streams in each quarter that I mentioned earlier, the amounts of which are confidential under our agreements.

In addition, portfolio revenues were impacted by lower sales of – domains as well as the softness in the secondary domain name market generally continues to experience. On a percentage basis, gross margin from portfolio services was 91% up from 84% for Q3 of 2013.

Gross margin for network access, which consists entirely of the contribution of Ting, increased $2.9 million or 253% to $4 million from $1.1 million for Q3 of last year and reflects the growth in Tings customer base to 82,000 accounts and 130,000 devices at the end of the quarter.

Gross margin for Ting as a percentage of revenue, was 40% compared to 24% for Q3 of last year. The increase is largely due to the result of the much larger Ting customer base and resulting contribution from services relative to the contribution from devices which was sold at or slightly below cost as part of our customer acquisition initiatives.

Turning to costs, network expenses for the third quarter of this year were just over $1.3 million down $57,000 or 4% from just under $1.4 million for the same period a year ago. The decrease reflects our continued ability to generate efficiencies in the operation and management of our co-location facilities in costs.

Total operating expenses from the quarter were $7.7 million up $1.4 million or 21% from $6.3 million from Q3 of last year. The increase is primarily the result of four factors. First, we continue to invest in work force, marketing and other costs primarily relating to acquiring and supporting Ting customers.

Second, we incurred a loss on policy evaluation and foreign exchange contracts of $500,000 when compared to the third quarter of last year.

Third, we incurred higher credit card processing fees and bad debt expenses of about $300,000 primarily related to the growth of Ting and finally, we expensed due diligence on other costs of $200,000 during Q3 of this year that related to a potential acquisition that was abandoned, once we determined that it’s completion is not fallible.

As a percentage of revenue, total operating expenses increased to 20%from 18%. Net income for the third quarter of 2014 was $2.7 million or $0.24 per share compared with $2.6 million or $0.24 per share for the same period last year.

In comparing net income on a year-over-year basis, I would again note for you the significantly large contribution we received for withdrawing our .Media and .Marketing new gTLD applications in Q3 last year relative to the withdrawal of .Group in Q3 of this year as works for pre-acquisition due diligence costs we expensed in Q3 this year.

Cash and cash equivalents at the end of the third quarter of this year, were $13.6 million compared with $14.2 million at the end of the second quarter of this year and $11.5 million at the end of the third quarter of last year.

During the third quarter of this year, we generated cash flow from operating activities of $5 million and $1.1 million from the first use of stock options.

This was offset by our using $5.4 million to repay our bank loan in full, $1.1 million to repurchase 73,000 of our shares under our normal course issuer bid and $200,000 in acquiring [indiscernible].

The third revenue at the end of the third quarter was $73 million up about 1% from $72 million at the end of the third quarter of last year and down about 1% from $73.6 million for the second quarter of this year. And with that, I’d like to now turn the call back to Elliot.

Elliot?.

Thanks Mike, I would be remiss if I didn’t take this opportunity to acknowledge the recently announced retirement of one of our long time directors, Mr. Lloyd Morrisett founder of Sesame Workshop and the long time past president for the Markle Foundation, who stepped down from our board in September at a very youthful 84 years of age.

For more than 13 years Tucows has benefited immensely from Lloyd's insight, wisdom and inspiration and I know I’m speaking on behalf of the entire board when I express my gratitude for his guidance and counsel.

With Lloyds retirement came the opportunity to add some new perspective to our board and we're pleased to welcome Robin Chase our newest board member. Robin founded Zipcar which grew to become the world's largest car sharing company and then took that concept a step further founding Buzzcar in France. She is a pioneer of the peer economy.

She has built businesses that challenge conventions and the list customers as partners. It was exactly what we aspire to do with all our services at Tucows. And I have no doubt that Robin's passion and experience will be extremely valuable to us.

As I have discussed many times, we believe that the ability to return capital to shareholders, is one of the fundamental benefits of being a publicly traded company. And we remain committed to doing so over the long term. Today we’ve announced our plan to launch our eighth modified Dutch auction tender offer within the next 30 days.

We expect to repurchase up to $8 million worth of common stock at a range which we expect the price per share do not to be not more less than $16 and not greater than $18 with an overallotment option of 2%.

With continued strong performance in the third quarter and good visibility as the remainder of the year, at this time we are comfortable reiterating the guidance we provided on our last call of adjusted EBITDA for 2014 in the range of $14.5 million to $15 million. In closing Ting continues to grow rapidly.

The domains business continues to deliver reliable results. As we look forward to 2015 we are excited and expected of Tucows having its best year ever. And with that, I’d like to open the call to questions.

Operator?.

[Operator instructions] Your first question comes from the line of Hubert Mak with Cormark Securities, you line is open..

Hey guys..

Hi. Hubert..

Hi, just a couple quick questions actually on Ting, you commented on the negative perception on the Sprint Network of increased competition and you know I guess it was backed off how do you see you customer as for Q4 given as usually the seasonally the strongest and as well you know the negative perception in terms of network for Sprint here, it seems like it’s pretty tough to eliminate that kind of view you know at least what options or flexibility you have in where you eliminate that impact here for you guys, I mean you just rely on their network here?.

Yeah, first in terms of Q4, Q4 is probably the toughest quarter to predict because you kind of see the first half as generally you know, I mean that’s what we’ve now seen into the third year as relatively slow. So to date the quarter is kind of looked like Q3 has looked.

And then you see you know maybe a little bit slower than how Q3 has looked, but it’s in the back half of the year when you have kind of the biggest six weeks that were here traditionally. So it becomes a very difficult quarter to predict.

So you know the most I can say is, you know that to date it looks even little slower than Q3 we have no reason not to think that the last six weeks you know will be traditionally strong and we don’t know where that factors in.

In terms of the Sprint Network, and I think probably the most important thing the Sprint has announced some changes, both in the network organization and in the organization in general and we found those changes encouraging.

I never lose sight of the fact that they have the biggest spectrum troll of any of these four major carriers and it is also the case you’ve heard that, [multi] [ph] didn’t anti-opt the dollars that he did to watch this network suffer.

So I think you’re going to see significant additional investment in network and significant additional reloads that are most, you have noticed. They now have the two most senior network executives here who’re recording to a Japanese executive who was integral in the Two Dot Buy build at Japan.

All of that is reality and how that does that works at a perception level that’s I think going to be up to their marketing. But we think again as we said in several remarks that it only gets better from here..

And maybe just could be specifically on this one, I’m not sure you can, but what is the bigger impact among your customer base or new customers, is it do they talk more about this network or it is just more pricing competition like or is it maybe one and the same?.

They still talk more about network..

Okay, and in terms of the Sprint….

You know we’ll be specific, I mean you know those are clearly factors one and two, but with third and probably you know when I say distance are not insignificant with this the third is you know nor do iPhones but certainly network is number one..

Right and just a quick followup on that that Sprint just mentioned that they actually did cost cutting, you are seeing impact on you operations are you or….

Very well you know really the changes were just announced, so we see no more than probably is public as to kind of the new structure of the organization so it is much, much early for us to see impact..

Okay, and then switching on to domain side, last quarter you did talk to how the new gTLD you’re seeing better margins given the pricing on those there up higher, are you still seeing that going forward here like I know that kind of looks like the domain margins and how old their margins takedown slightly and that if this a trend or anything like that, but it’s just if you can give me some color on that in terms of the….

Yeah so, I think in terms of the mix you know the gTLD margins are whole. You probably might be seeing a little bit of a change on the Hover side because of a, I mean really I might even be in the tens of thousands or hundreds, or would be in the hundreds of thousands dollars here through the email and personal names bars.

So that was a little bit slower this quarter and so that might be what you were seeing. We made some changes in some of the pricing around email too. So the new gTLDs will continue to put higher volumes..

So you would still expect as the new gTLD continues to add to your base your margins will let's say slowly you moderately increase going forward?.

Yeah I think that's exactly right, slowly or moderately increase and that's going to be true until the day who knows when that is when [indiscernible]. You know it's still the day that really still dominates the price initiatives..

Okay and then on the online gTLD that has won I know you guys can't talk much about it but can you maybe talk to sort of high level what your overall is in this or any economics that you can put out there for maybe 2015 when this….

Yeah, so I think only the only thing I can say with some degree of clarity is I think we'd all be just a point in the market by the end of the first quarter next year. We are all discussing when the operating approach in the future is going to look like. So I'd really, I don’t want to get too far ahead of that..

Okay, are you capable or are there technical capabilities to eat a registry?.

Oh no, so that's in the application, you know we're partnered with the insurance pre-services provider. You know that will be, that's a surely technical relationship and you know will be a very small percentage of the margin dollars, of the revenue dollars..

Okay, all right thank you..

Thanks..

Your next question comes from the line of Shai Dardashti with DCM. Your line is open..

Hi good evening. Thank you for taking my call..

Hi Shai..

I believe in the prior quarter you mentioned that as the user base gets larger and larger and your churn on the existing clientele it becomes difficult to grow the total base because the churn number of so many people leaving is being compared against new people signing up.

I'm wondering if that was an issue in the past quarter and if there was an issue just there becomes a point where growth should actually plateau going forward? Thank you..

Yeah, so I think there's probably two parts of that. You know, it is just math as long as the base is drilling and that churn percentage is holding, the absolute number is going up. So you know the little bit of a whole that we start from will continue to increase. That's okay, that is just business.

You know I look forward to having the pro forma of Verizon and AT&T where their tiny churn is actually a huge absolute number. But I think more importantly here we still think we've got lots of bullets in the gun to try and continue to increase the growth adds, so we see nothing that looks like that actually going to ever start to turn the other way.

We really think we still got lots of ideas to play with here. And as always we'll be giving you lots of visibility every quarter as we go along..

Okay and I mean I'm a customer of Ting and I love the service I get, I think the hands on approach, and I have to assume there is certain amount of time it takes to onboard each new customer on a forward basis what are reasonable estimates, how long does it takes to sign somebody up for an employee, one employee could sign so many people up per day type of math?.

We don’t really look at it like that. We measure things a little bit differently. First of all to be clear that would never be a limiting factor for us because we always make sure we have excess capacity in customer service.

Second,, you know I think the numbers that we track pretty closely are on boarding for the time of first interaction when we know somebody is going to be bringing a phone on.

And there you know we try and sort of maximize and grow they started in five days, ten days, fifteen days from the time of the first interaction with customer service, because often the first interaction with customer service is really in the nature of all of the sales call, what phone should I buy? Asking questions through that process and I think the last point I’d make there is we also look at the purchase cycle as being relatively long with cellular phones, so you know we expect that people can and will be signing up two, three, six months from the time they are first interacting with the website.

So those are the kind of numbers we look at..

Okay, thank you very much..

Thank you..

[Operator Instructions] Your next question comes from the line of Patrick Retzer with Retzer Capital Management. Your line is open..

Hi guys, congratulations on another great quarter..

Hi Patrick, thank you. You know, I'm kind of concerned about the churn relative to the network we've switched our operation with the Ting recently. Your customer service is incredible. The coverage according to our people is as good or better than they were getting through Verizon in their area and our bill frankly is 40% of what it was with Verizon.

So it seems to me that the biggest challenge is just getting the word out. It seems like a lot of people we talked to still haven’t heard of Ting.

Do you have any new ideas as far as spreading the word?.

Do you remember that network coverage is always very much a function of where you are or where one is and where Sprint is in the build-out.

And if I recall correctly, you know where you are did get kind of pretty early in the build-out and so I think that what you're seeing is what the end game looks like for the whole country which is obviously very encouraging to hear. Yes we have some new ideas.

I don’t think I'm going to be talking about that on this call, but I do expect you are going to hear about a couple of them on the next call..

Okay. So today it was reported Sprint is supposedly in taxed to acquire FreedomPop so they can accelerate their growth and lower the customer acquisition cost, it seems like Ting has the secret size for rapid growth and low customer acquisition costs.

If Sprint knocked at your door how would you think about the value of Ting?.

Yeah, so I probably will take, you know I don’t want to comment on the Sprint FreedomPop rumour. You know, companies on either side can have lots of reasons for doing something and can present the lot two different ways. From my perspective Patrick this opportunity is not newly ripe enough right now.

I think if Sprint or anyone else knocked on our door we will only be answering that knock if it was strategic.

In other words if somebody said hey, we recognize that you guys have that factor around building provisioning around website, around purchase path, around control panel and you have clearly the secret sell off for customer service and one is up to try it out to a bigger footprint.

So clearly a strategic point, then Patrick we'd be interested in at this point..

Okay..

You know we think we have the hired part of the business figured out..

Right I would agree with that. And then finally the rate expenditure with the rates to data on line and it seems to me that could be a big deal for Tucows.

I mean can you tell us, I understand the confidentiality, but can you give a little color to the potential that venture has for you?.

Well because there’s three of us, we could be pretty coordinated in our methods, I’ll say two thing, the confidentiality is with respect to what the String cost as in the first place, so we’ve given the financial information we’re going to give there about what it cost and what our kind of upfront investment looks like.

You know but in the terms of the potential look, we think that part of the reason that we love this String, you know you have three strong distribution partners each of us we know each other well, we’re all large players in the domain name space, we all have distribution channels.

Second thing is, online as a term is incredibly prevalent right now in the zone file in the number of domain names is over things over two thirds of a million names in the .com zone file in online.com so you know that could be pat.online.com as an example.

So hugely popular in the terms that has international resonates it works really well in China, it works very well in a lot of international countries and that’s not true for a lot of Strings.

And finally we think it’s the best sort of generic competitor to .com with the exception probably of .web but .web is likely to be tied up in resolution for another year or so. So we think it’s kind of a great String that can really kind of capture the generic space. Now remember nothing will ever be .com.

The new gTLD program is all about long tale, it's all, why would you all hear us talking about new gTLDs in total. But we do think that online can be one of the strongest streams you know to compete there..

Okay, okay well keep up the good work thanks..

Thank you..

You have a follow-up question from the line of Shai Dardashti with DCM, you line is open..

Hi, Elliot hi I’m working at a website called www.cartt.ci. .

Yeah..

And there is an article that came out on October 2 I believe and midway through there’s a quote that they’re getting here in front of me. For example, Ting operates on the Sprint network and makes money for Sprint which earns more profits for every dollar in wholesale revenue and for every dollar of retail revenue.

I’d be curious to better understand the math that you did from your side to make the statement in the public forum, so what are you assuming or the cost structure that’s Sprint operates with….

Simply, we said this for a long time that by avoiding customer acquisition and customer service costs, you know what your networks up we are dead simple to provide service too, you can think that whole swath of OpEx layer and you just remove it from what you have to deal with, with us. So it’s a very simple calculation there.

You can look at how much they make, you can look a little bit how much it cost them to acquire a customer, how much they’re you know, the technical carriers numbers around a customer acquisition customer service and you can just do your math..

And is there any sensitivity in terms of the economics that you have with Sprint if the gross margin changes the math could change as well?.

Well, sure. You’re going to be working around the edges there, but the lower our price gets you know the less through the saving is a little more relatively you know the more that relative profitability between retail and wholesale changes..

Okay, and finally can you give a comment….

You look forward to that changing..

Okay, and if it is appropriate to ask, can you comment on the headcount at this point?.

Our headcount is in the kind of around the 200 number..

Okay, thank you very much..

Oh wait Mike, Mike is correcting me, what do you say Mike?.

It’s actually up and a little more than that it’s around the 220 range..

Oh you know what, I was looking at a report just recently shot and it didn’t have the U.S. and it didn’t have the stock on it yeah, so it's about 225..

Okay, thank you very much..

Thank you..

You have another follow-up question from the line of Hubert Mak with Cormark Securities. Your line is open..

Hey, just in terms of your customer acquisition cost, I may have missed it but I know it’s below 100, first of all is it well below 100? And then secondly, given the competitive landscapes here that looks quickly changing, like how comfortable you guys are moving this up a bar, any flexibility up if you're on a 100 or what's sort of a thinking there?.

Yes, so you know I used the same phrase because the costs are staying rather the same as comfortably below 100. So you can model kind of if you’re modeling a 100 you’ll give yourself some slots, if you model a little you know little bit below a 100 you’re probably comfortable.

And again I’m just doing that for those with those models which are most of the people call me. And in terms of us moving that up it’s the same its above a year since Q3 last year when we were talking about the experiments we were going to conduct, we conducted and they didn’t work.

You know we certainly are more budgeting for 2015 we’re planning on doing some experimentation. So we would be thrilled to have that number tick up a little bit, if it was in connection with some things at work and again we’ll continue to give you visibility.

I mentioned when I was talking to Patrick earlier that we have, there are a couple things we’re going to play around with and that we’ll probably talk about on the next call on the Q4 call and there we’ll give you a little bit of indication you know those things goes swimmingly then maybe we’ll pull that number up a little bit..

And then just lastly then you know you did mention that when you added your 11,000 was the net adds 9,000 because I just went through it I guess you just got your accounts, can you give me a little bit more color in terms like, like in terms of people not suspended for not paying and how you’re going to process some place here going forward about you guys make sure that your….

It’s really about accounts because you know we have a funny, so this is about, this is really about sort of what is a customer? And we got a bit of a funny situation where we have some really number what we call transient accounts. So these are Canadians or Europeans or other who have a Ting phone and when they come to the U.S.

three, four, six times a year activate our phone on an account and when they leave they turn it off. So we have to decide how to sort of characterize those. It’s simple layers as to what we did and by the way just so you understand the way we deal with those transients when they activate the phones they’re on add when they leave the U.S.

and they turn the last phone off in an account they’re considered a churn and if their phone is not active on the account they’re not a customer. So it’s a very clean read. We know again that we’re trying to report the numbers into the way that you model most effectively we want those numbers to lineup so that you sums work.

And so here you’re talking about people who are suspended for not paying their bill. We have people who, they get suspended they come back, they get suspended they come back so it’s amazing a bit with that, so it’s really just about trying to more accurately tell what we call an active customer..

Okay, so I guess going forward does it reflect in churn?.

You won't notice a difference there because of the way we’re doing it..

Right..

Because we report net and we’ve calculated churn in a clean way..

Right, okay hey great, thanks..

Thank you..

You have another follow-up question from the line of Shai Dardashti with DCM, your line is open..

Hi, hello it’s my final question for tonight. I’ve noticed Ting.com is now giving more space for business accounts and I’m assuming business accounts have very different economics than residential accounts.

So I'm curious if you could comment how material business site is and at what point we might start seeing the impact on the financials? Thank you..

So in that there’s two things, so we were noticing the reason we dedicated some more space is because we were noticing a little bit of success and we deeply believe that our offering resonates well with business customers.

You know there is, it moves a couple of the variables, but in a way that net out to not much difference and so when I say that, what our business accounts tend to have is more devices, five, six, twenty devices and lower revenue per device. You know one segment that we're having particular success with is people who have fleets of cars.

You know you've got a maid service or you've got an on-call plumbing service, and it allows the owner to give their employees a particular device either for chatting or tracking or mapping or you know a number of narrow purposes they can pick up a smart phone and send a $100 and they could really sort of standardize their experience in an incredibly efficient way.

So those devices they're working off a common bucket. You may have a $6 fee and a couple bucks of usage because they are all working off the same bucket, right. So you know might have a dollar or two or three average usage across five or ten devices.

So they have a different profile, but they haven’t yet become big enough for the business that they'd move any of the variables. And again, we'll continue to do what we do every quarter which is to give you the variables that are coming along and give you any changes of them.

Our view of it is if we make money on an account we're thrilled to do business with them. So we're less worried about those variable than we are about the absolute dollars that we're bringing in..

Okay, thank you very much..

Elliot Noss:.

.:.

There are no further questions at this time. I will turn the call back over to Mr. Noss for closing remarks..

Thank you and we look forward to speaking with your all again next quarter. Thank you, operator..

This concludes today's conference call. You may now disconnect..