Elliot Noss - President and Chief Executive Officer Michael Cooperman - Chief Financial Officer.

Hubert Mak - Cormark Securities David Tomljenovic - Cantor Fitzgerald Patrick Retzer - Retzer Capital Jamie DeYoung - Goudy Park Capital.

Good afternoon, ladies and gentlemen. Welcome to Tucows first quarter 2016 conference call. Earlier this afternoon, Tucows issued a news release reporting its financial results for the first 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 the matters 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, Mike Cooperman, who by the way celebrated his 65 birthday yesterday. Today's call will follow our usual format.

I'll begin with an overview of the financial and operational highlights for Q1, Mike will then provide a detailed review of our financials, and I'll return with some concluding comments before opening the call to questions. The first call was a very solid start to 2016, as we saw strong year-over-year growth in each of our key financial metrics.

Revenue increased 13% from Q1 of last year to a record $45.6 million. And the steady performance of our domains business, combined with the continued growth of Ting Mobile, contributed to further expansion of our gross margin to 33%.

It was also a record quarter for profitability, with adjusted EBITDA coming in at $7.5 million and net income coming in at $4.4 million or $0.42 per share. Ting Mobile had an outstanding quarter, adding over 12,000 accounts and 18,000 devices. That brings our total to over 140,000 accounts and 220,000 devices.

This was a significant spike-in as relative to recent quarters. And I must note was driven by a one-time influx of customers, migrating from another MVNO that closed its doors.

In late January, PlatinumTel Wireless, also known as PTel, alerted its customers that it will be shutting down the service and included Ting among a few recommended mobile providers. Ting welcomed roughly 7,000 of these customers and early behavior and usage indicate that they are satisfied and well-suited to be great additions to our base.

Ting churn also fell to 2.39% in Q1, down from 2.73% in Q4. This appears to be the result of three factors. The first is seasonality. With a history of only four-plus years and hyper growth that has obscured other trends, we are just starting to get meaningful data on seasonable ups and downs.

It appears the first half of the year tends to bring lower churn and the second half of the year higher churn, with Q4 typically being the worst. The second factor, surprisingly, is the growth of GSM customers as a portion of our base. In their first few months, GSM customers appeared to us to be more transient.

In fact, as that base has matured, they are proving to be even slightly more loyal than our CDMA base and are having a positive impact on our retention, when looking at the cohort data. The third factor is our own retention work.

As we mentioned on the last call, we've been identifying predictors of churn in our customer data and have launched same efforts against our at-risk customers. We have begun to see some early success there and will continue to get more aggressive on that front.

To be clear, despite the one-time migrations from PTel and the decline in churn in Q1, the underlying trend on Ting net add is not at all where we wanted to be. There are a numbers of efforts we have undertaken, which I feel good about, but they will take time. We are unlikely to see meaningful change in Q2.

We are continuing our efforts in the three areas I mentioned last quarter, retail distribution, affiliate programs and sales capabilities. None of these will provide instant lifts, but each has the potential to provide long-term impact. In retail distribution, we are learning from our existing relationships and pursuing more of them.

We are particularly interested in working closely with retailers large and possibly very small that offer a high-touch experience. As Ting tends to win, the more shoppers are encouraged to contrast and compare.

On affiliate programs, we're exploring large channel partners and beginning the same sort of experimentation we do with any other marketing vehicles. This is essentially just direct response marketing with an inside track.

So for example, a discrete offer to military personnel through a private website that validates their identity or an offer to large company employees that appear on the back of their biweekly paychecks. For each, we can test target, placement, offer and message to find winners and scale.

On direct sales, we are just beginning to build an internal team, establish our infrastructure and processes and identifying new marketing channels to drive calls. In fact, the greatest initial hit would very likely come from just redirecting prospects that already come to our site everyday.

All visitors to the Ting site today get the same phone number, whether they are customers or prospects, and all reps are expected to juggle those very different types of calls. By pushing prospects towards a dedicated sales team, we are leveraging people who are handpicked and trained to convert those leads.

Just as we have said about improving conversion on the website, a small improvement on thousands of prospect calls a month can make a big difference in our numbers.

With the success of our customer referral program and some of our most effective podcasters and bloggers, it is clear that Ting is most appealing when is explained by someone familiar, passionate and knowledgeable.

At its simplest, the acquisition areas we are pursuing are intended to connect more prospects to retailers, organizations and sales people that will do just that. I note also, that the biggest thing we can do for mobile adds is to deal with our data cost and thereby deal with data pricing.

This is something we continue to work on with both our carrier partners. On Ting Internet, we took some big steps forward in Q1. With our system in place to take $9 pre-orders, we began mapping demand at the neighborhood and street levels in our existing Ting towns to help plan our network builds.

We can also now measure demand in a perspective town like Holly Springs to determine whether the potential justifies the investment. This transition from a world where only serviceable addresses could order to one where everyone in these towns could now pre-order, justified casting a much wider net with our marketing.

Working with an outside creative team and local production crews, talent and musicians, we developed a campaign for each town around the idea, a great town deserves great internet, with movie theater spots, radio, billboards, print, direct mail and in Charlottesville, where there are local network television affiliates television ads.

And I note, those ads are available on YouTube, if you're interested in looking for them. Since launching the campaign in late March, we have seen a sustained lift of 150% in website traffic from these towns.

We are also pleased with the levels of pre-order, particularly in the Holly Springs, where we are now completing the deal and planning the build. In March, we announced our fourth market for consideration, the Greater Sandpoint, Idaho area, where we would serve the town of Sandpoint and eventually the towns of Dover, Ponderay and Kootenai.

The area has a combined population of around 10,000 residents. Smaller than our first three markets. Indeed, Sandpoint is likely smaller than any town that any commercial provider in the new wave of gigabit internet providers has looked at in the U.S. A number of you have asked me, if it make sense to build a fiber network in a market this size.

We look at each market individually and there were a few factors here. First, Sandpoint has reasonable density, over 1,000 people per square mile. Second, Sandpoint has solid connectivity to the greater internet. But Sandpoint has one market condition that none of our other markets have.

The best internet connection you can reliably buy in Sandpoint is 12-megabits per second. That is extremely slow. We are told that it is often also unreliable and expensive. Market like Sandpoint is an important experiment, to see whether the increased take-up rate we expect from less competition makes up for some slight operating inefficiencies.

As we have done in Holly Springs, we will first use pre-orders to determine whether there is sufficient demand, before completing the agreement with Sandpoint and beginning to build the network. In the existing markets, we expect the City of Westminster to commence phase 2 of its build very shortly.

We continue to be comfortable with the take-up rate in Charlottesville and the small exiting footprint in Westminster.

We continue to see build cost coming in within our parameters, thus we continue to be happy with $2,500 per connected home and a $1,000 dollars in annual gross margin as well as take-up rates of 20% in the first year and 50% over five years. Turning to the domains business. We continue to see steady performance in our domains business.

Our retail channel Hover turned in another strong quarter, with revenue up 19% year-over-year and net cash contribution up 32%. The Hover customer base grew another 15% from the end of Q1 last year. The renewal rate at 82% is very strong relative to the industry and remarkable for a pure-play domain service.

In our wholesale channel, average margin remains strong in Q1, up 6% from Q1 of last year, as we continue to benefit from our shift in sales mix to higher margin registrations. We are also quite pleased with how our reseller base has evolved and our volumes have endured, despite what could have been unfavorable trends in the web hosting industry.

I'm thinking of two trends in particular. First, traditional web hosts, which have been the core of our reseller base, since the launch of OpenSRS have lost market share to new website building services. Second, many of those traditional web hosts among our resellers have been acquired by large registrars.

At the same time, however, we have refreshed our reseller base and replace that volume by landing some of the most successful brands in that class of site building services, including company's like Squarespace and Shopify. These services and others like them have made it dead simple to build a website and conduct online.

They continue to gain share and to welcome new users into the category, and we're thrilled to be along for the ride. Our renewal rate was a bit lower again this quarter, as few large resellers that had left us continue to transfer domains away upon renewal.

This is not representative of our larger base and our overall renewal rate remains strong relative to the industry. We added 16 new gTLDs in Q1. This is fewer than we had added in recent quarters, and we do expect the quantity of new gTLD launches to slow as the program matures.

That said, we expect the quality of the new adds to pick up, as some of the most anticipated TLDs under contention are resolved. The number of resellers who have registered at least one new gTLD expanded to more than 2,500. That's up about 7% from the end of Q4 and 30% from Q1 last year.

The contribution from international resellers remains strong, with those outside of North America and Western Europe accounting for 26% of new registrations in Q1. This was a little lower than recent quarters, but that had more to do with some additional growth in North America than any weakness in other markets.

The quarter saw us take advantage of our leadership in our wholesale domains business through acquisition of the international reseller channel of Melbourne IT. To be clear, by international I mean everything outside of their domestic markets of Australia and New Zealand.

This was an excellent opportunity to acquire a loyal profitable base of resellers that share the same core needs as our existing wholesale customers. In total, the deal added 1.6 million domain names under management that generate $13 million in annual revenue and $2 million in gross margin, for which we paid $6 million.

We expect to generate a little bit of operating synergy from the acquisition. But given that we didn't acquire any operations, there isn't much more on the expense side than a few hundred thousand dollars. There are some additional service opportunities that we will explore in that we offer a much broader range of ccTLDs and new gTLDs.

I'd 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 mentioned at the outset, Q1 of 2016 was another quarter of solid performance, highlighted by strong growth across all of our key financial metric.

Revenue grew 13% to a record $45.6 million from $40.5 million in the first quarter of 2015, and primarily reflects the impact the large Ting subscriber base is having on Ting Mobile service revenue. Cost of revenues, before network cost, increased 8% to $28.9 million from $26.8 million.

This resulted in increasing gross margin before network costs of 23% to $16.8 million from $13.6 million in the same quarter of last year. As a percentage of revenue, gross margin before network cost expanded to 37% from 34%. Looking at gross margin by line of business.

Gross margin for network access increased by $3.3 million or 59% to $8.9 million from $5.6 million of Q1 last year. Most of this growth was generated by Ting Mobile services gross margin, which grew by $2.8 million to $8.4 million compared to the first quarter of last year.

In addition, we generated $0.5 million in gross margin from the provisioning of high-speed internet access, internet hosting and network consulting services, which was an increase of $0.3 million over Q1 of last year. As a percentage of revenue, gross margin for network access increased to 50% from 43%.

Gross margin for domain services decreased by 2% to $7.9 million from $8.1 million in Q1 of last year, the result of an outside portfolio sale that occurred during Q1 of last year that wasn't repeated. As a percentage of revenue gross margin for domain services fell slightly to 28.5% from 29.3%.

Breaking domain sales down into its individual components. Gross margin for the wholesale channel is up 2% to $5.5 million from $5.3 million and as a percentage of revenue remained essentially flat at 23%. Gross margin for retail services increased 11% to $1.8 million from $1.7 million of Q1 of last year.

As a percentage of revenue, gross margin for retail services was 54% compared with 58%. Gross margin for portfolio services was $0.6 million compared with $1.1 million in Q1 of last year, largely as a result of the Q1 last year benefiting from the outside portfolio sale I mentioned earlier.

As a percentage of revenue, gross margin for portfolio services was 80% compared with 86% in Q1 last year. Turning to costs. Network expenses in the first quarter of 2016 increased by 12% to $1.6 million from $1.4 million for the same period last year.

The increase is primarily due to the additional cost associated without providing high-speed internet access, internet hosting and network consulting services to customers, following our acquisition of the minority stake in BRI in February of 2015.

Total operating expenses for the quarter were $8.9 million, a 14% increase from $7.8 million of Q1 of last year. The increase is primarily the result of incremental costs to support our network access initiatives in the following areas.

First, marketing spend increased by 1.1% when compared to the first quarter of last year, largely to support and acquire Ting Mobile and fixed internet access subscribers. Second, incremental workforce-related expenses increased $0.3 million, primarily for incremental customer services to support our larger team subscriber base compared to last year.

And third, credit card processing fees increased by $130,000. In addition, stock-based compensation and facility-related costs increased by $170,000 when compared to the first quarter of last year. These increases were partially offset by the impact of foreign exchange as follows.

First, during the first quarter of this year, we incurred a gain on foreign exchange, primary related to revaluation of our foreign denominated assets and liabilities of $79,000 compared to a loss of $239,000 during Q1 of 2015.

And second, we entered into certain forward exchange contracts that do not comply with requirements of hedge accounting to meet a portion of our future Canadian dollar requirements.

The impact of the fair value adjustment on these outstanding contracts during the first quarter of this year resulted in a net gain of $243,000 compared to a net loss of $159,000 for the same period last year. As a percentage of revenue, total operating expenses were relatively unchanged from a year earlier at 19.5%.

Adjusted EBITDA for Q1 of 2016 increased 10% to a record $7.5 million from $6.8 million in Q1 of last year.

I would like to take this opportunity to note that in April of this year, as part of our assessment of our compensation program for 2016, our compensation committee revised the definition for adjusted EBITDA to eliminate any adjustment for the effect of realized gains or losses from foreign currency contracts, and we believe we are able to manage realized gains and losses from foreign currency contracts with proper planning and budgeting.

On a prospective basis therefore, we will only be earning back any gains and losses from unrealized foreign currency transactions to remove the effect of the change in mark-to-market values on outstanding unhedged foreign currency contracts, as well as the unrealized effect from the translation of monetary accounts denominated in non-U.S.

dollars to U.S. dollars amounts. As our future performance will be assessed against this revised definition, we have also amended our disclosure of adjusted EBITDA in Q1 of this year to conform to this new definition.

Net income for the first quarter of 2016 increased 37% to a record $4.4 million or $0.42 per share from $2.8 million or $0.25 per share from Q1 of 2015. Turning to the balance sheet.

Cash and cash equivalents at the end of the first quarter of 2016 was $10 million compared to $7.7 million at the end of 2015 and $13.7 million at the end of Q1 a year ago.

The increase relative to the end of 2015 is primarily the result of our generating $5.6 million in cash flow from operations, and the advancement of $6 million under our credit facility that was used to fund the acquisition of the international wholesale domain reseller channel of Melbourne IT that Elliot discussed earlier.

In addition, we use $2.2 million to repurchase just over 98,000 shares under our open market share buyback program and invested $0.9 million in property and equipment, mainly in continuing to build out the footprint for Ting Internet. Finally, we repaid $220,000 of our bank loan. As of the end of March 2016, our bank loan stood at $9.3 million.

Deferred revenue at the end of the first quarter of 2016 was $73.1 million, down less than 1% from $73.3 million at the end of the same quarter a year ago and up 2% from $71.6 million at the end of Q4 2015. And with that, I'd like to turn the call back to Elliot.

Elliot?.

Thanks, Mike. As Mike noted a moment ago, we bought back a little stock during the quarter. This is not reflective of any change in our philosophy around returning capital to shareholders. We've always said that repurchases would vary from quarter-to-quarter.

The more the stock falls in a given quarter, the more we are likely to buy, and more the stock rises in a given quarter, the less we are likely to buy. This is simply a matter of moment and process. The Board setting a price subsequent to the meeting that takes place just before the calls.

The stock right now is up over 25% from the time of the last earnings call. And all things being equal that is likely to be a quarter in which we buy less than another. With a solid start to 2016, we are comfortable reiterating our previous guidance for the year of $30 million in adjusted EBITDA.

With respect to capital expenditures, for our Ting Internet fiber buildout, on our last call, I provided a range of between $15 million and $20 million for this year with the caveat that the actual number will depend on the type of builds and the speed of the builds.

The first quarter ended up being a little slower in this regard than we initially thought. That said we expect spending in the new markets to commence in the second and third quarters. But at this point, I won't be surprised if we come in below $15 million for the year. To conclude, the first quarter of 2016 unfolded on-plan.

Our domains business continues to perform well, and we took advantage of a great opportunity to generate some efficient step function growth in that business through the acquisition. Ting Mobile earnings continue to grow, while Ting Internet takes crucial steps towards being a strong competitor to earnings in the future.

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..

Can we just talk about the Ting Mobile business?.

Sure..

I think I heard you talked about some meaningful changes in Q2 for this business. Can you elaborate on that whether that were just the marketing initiatives or is there something else that I guess, maybe you can just provide some color on that? And then the other part is that, obviously, you had a pretty strong sub-adds this quarter over 12,000.

And if I were to back out sort of the one-time, you look at 5,000, so obviously that's potentially some seasonality here in Q1 from the Q4.

Are you able to sort of give us an idea how do you see the outlook here on a quarterly basis, I guess, or what do you think is a good target that you're looking for?.

So first of all, I don't remember in what context I used the word meaningful. There is a lot of work going on in Ting Mobile; almost all of it is with respect to generating more gross add.

Certainly, a fair amount of work going into continuing to drive that churn number down, but the real focus is on generating more gross adds; and I think that with all of the three headings or three buckets that I have talked about, they all take real work to put the pieces in place. So that work is certainly meaningful.

That work is kind of the core focus of all of the people in that group.

And I think the simplest way to think about it, if you want to take a good positive look at that, I talked about the simple exercise of routing calls between support calls and presales calls, that's something that just about every company, every mobile phone company in the world does, and they tends to do it with an aggravating IVR system.

We're really looking at taking the 15% to 20% of our interactions today that are presales and trying to more efficiently route, maybe it does end up being IVR much simplified, but even getting that 15% to 20% of interactions in the hands of folks that are more trained up and skilled up to convert those leads into sales will have an impact, so it's really simple blocking and tackling like that.

Sorry, I didn't answer your second question, apologies. So its easy to do the math 12 minus 7 is 5. We also said Q2 looks kind of like Q1. I think you want to be modeling in that 5%, 6%, 7% and we'll take you up and keep you tracking as we're going along there..

And then on the domain business, obviously you acquired the assets this, I guess, post quarter. I just want to make sure I understand, you had some classification on EBITDA line, but you're reiterating the guidance for $30 million.

But I think am I correct, like it's not adding much EBITDA from your acquisition or is there something I'm missing here?.

Sorry, no. There is nothing you're missing. I'm just not restating guidance. So I'm not adjusting guidance. I'm always going to make a comment on it. I'm reiterating -- I don't want to be moving the number every quarter. So I don't think you should read anything into that.

I would be as happy reiterating that $30 million number, if we didn't have the acquisitions that we did..

And then sort of, just to go back, a quick follow-up here on the Ting Mobile side.

Given these initiatives you're putting in place, do you foresee additional sales and marketing spend over the next few quarters?.

Possibly some, but it should be meaningfully noticeable in the numbers. I think we're trying to put wood behind the arrows that are hitting their targets. And so that really should kind of come concomitant with some successes.

Now, certainly with any [ph] calc you're going to have a little bit of upfront, but there is nothing going on right now, where all sort of meaningfully take that number up and ask you to adjust your model..

And then lastly, other than marketing initiative you're putting in place, what is the actual key one that you think from currently is the actually support call or is that the main one or is it really the pushing to different channels like?.

So I think the simplest way to think about it, the way that I've been expressing it is, we did a great job for four years doing things differently than everybody else has been doing. We've kind of taken that to where we've gotten and now we need to start learning from the things that everybody else is doing.

The good news in that for me is we have loads of examples to learn from. It's a lot easier to try and layer in things that are working consistently for most are all of your competitors around you than it is to try and come up with new and normal strategies.

So I think if we can just do an okay to pretty good job of doing what everybody else is doing that in the coming quarters that starts to have a real impact..

And I think you may have alluded to this during your comments, but is pricing part of that strategy?.

Well, I think I had always said two things or have consistently said them for the last little while, one, that our data prices are too high, and as competition in the industry has stepped up that's really been exposed more and more, and then that that's because our costs are too high, and that our gross margins are towards the top end of our range.

So there is nothing that I have to announce, so that's evident, but certainly those two things are both true..

Your next question comes from the line of David Tomljenovic with Cantor Fitzgerald..

Just a quick question about Melbourne IT, I just wanted to make sure that did close, there was none of that in this quarter?.

That's right. No, nothing in the quarter; 1 April. It was nice and neat for everyone..

Sorry, say that again..

Nice and neat for everyone..

Yes, how convenient. Thank you. With regard to the Melbourne, you had given some general parameters around the $13 million of revenue and $2 million of, we could say, gross margin.

Did you mean EBITDA?.

No, I meant gross margin..

Like contribution margin?.

Yes, like contribution margin, right?.

Right..

And in that range is a little bit more that we've got opportunities around when it comes to some cross-sell and some up-sell, there is a little bit of natural efficiencies we get just by bringing some pieces of business over, that what would I call that, sort of the wiring and the machine, our arcane domain stuff, as I explained it.

So we think, we can do a little bit better than $2 million, but we think that the some people saw the revenue number and their eyes got a little wide..

To be fair, I was among those because --.

I didn't even remember that, so..

I thought there was an opportunity there to leave behind more cost than there were..

I think the one thing we want to make sure people appreciate was it was a nice pick up at a multiple level. It worked for both companies, because it was really an orphan in their hands..

I noticed that the selling and marketing expense was up quite a bit.

Where there some one-time cost in there related to the Ting Internet advertising that you had told us about or is it some more new normalized selling and marketing expense run rate?.

I guess, there is two things that I'd call out there. One, with those 7,000 PTel customers, we offered a service credit to bring them over and turning out to be great piece of [ph] calc, but all of that gets taken in, in the quarter. So there's a fair bit there.

And we did that program that I've talked about with the ad campaign in the various Ting towns, there was a bit of chunk of upfront cost in production, et cetera, et cetera, as we were rolling that out.

And should note, the placements are up, I mean we're spending little bit more; not as noticeable as it would be, but we are spending a little bit more as we're going more aggressively at those Ting towns..

And just a general comment about, I know, you had mentioned about some of the initiatives with regard to Ting Mobile.

Do you see any other non-organic opportunities out there that might come to closure in the next, I don't know, six to 12 months?.

Unlikely; and I mean one of the biggest challenges, David, is price points. And so you have to be able to bring over another company's customer base at something similar around price points.

So for instance, a deal or two that we look at, you might see, and only from a distance because by the way there's not a lot of action in the vertical in the space, you might see a chunk of unlimited customers with really, really high daily usage. You've almost got to assume them as a 100% churn when you're bringing over.

And if you're vendor, you want to get paid for that, right. So you're going to want to find somebody who has got plans that you can map on to a little better. So it's tricky. I think its, what? It's good business, but it's hard to find..

Your next question comes from the line of Patrick Retzer with Retzer Capital..

I have a couple of questions on the fiber business..

Yes..

Do you anticipate adding any additional markets this year?.

Short answer is yes..

Could u give us a little color on how many do you expect perhaps or what?.

I would say best guess two or three. Four is not impossible; one is not impossible; but best guess two or three..

How many markets are you actively talking to now, can you tell us that?.

It's really a function of how you define active. I'd bet you if I just look at what's in the pipeline, well, like 12, 15 anyway. But there's plenty. And those are ones that we've decided to actually enter into the internal tracking system.

There's probably another a dozen, 20 on top of that, where there has been a contact, the discussion, an engagement of sort of. It's very much sellers market in that regard..

And then the last question, do you anticipate the backbone of the buildout and Charlottesville will be completed by the end of this year?.

I don't know if backbone is quite the right language. I think I know what you mean. By the end of this year, the overwhelmingly most addresses in Charlottesville will be able to order. There will be the odd little pocket where that's not the case, and of course, with MDUs that's a building-by-building another thing.

And Charlottesville does have a fair number of MDUs over a third of the residences. But we're actually just starting in this last quarter, we've really just started to get to the final stages and start to light up our very first MDUs..

Your next question comes from the line of Jamie DeYoung with Goudy Park Capital..

Elliot, I just had a couple of questions for you.

I may have jumped on a couple of minutes late, but if you could just provide a little more detail into kind of what you're seeing on the affinity marketing front, where you feel you've got the most opportunities over the next 12, 18 months to make some progress as another potential revenue channel for the company?.

Within affinity, in particular -- and I would say, if I had to rank the three buckets that I've been talking about, I'd probably put, direct sales, one; affinity, two; and retail, three; although, each of them come along differently. Affinity, in particular, is quite kind of step function. You're going after kind of a longer lead time big fish there.

And I think when I say about affinity is we continue to have good discussions, there are a couple of interesting trials going on this quarter. Those tend to be -- they're not things that are visible. It would be great, if we have one or two of them to begin to talk about specifically next quarter.

But I'd have to take a step back and think about short of something that's very visible, like consumer cellular with AARP. If we really want to be on the call talking about detail around some of that, I know, that I'd love if some of my competitors is were. So I'd want to give that some thought..

And then, I just wanted to make sure I was clear, strong EBITDA in the quarter, kind of run rate for the year of $30 million, and then with the Melbourne IT acquisition, that would be on top of kind of what you hope to accomplish this year, given the close on April 1, did I read that correctly?.

Yes. And just again, I don't want to be back every quarter readjusting that number or working with precision. And I think, I'd probably think a little bit more about that, if we were trading at a higher multiple as well. So I am not feeling too fast about the $30 million number at this price..

And then lastly, I just wanted to touch basically, you bought a little stock in the quarter, last quarter you had $40 million buyback, you had put in place that you were going to end in February of '17.

So is that really just being opportunistic going forward?.

It's always being opportunistic. And to put a final point on it, we'll decide what we're going to do for quarter typically in our Board meeting, which will take place typically the day of the call, the day before the call. If you go back to the last call, stock was in the 18s at that point, so we're going start price on that basis.

I think you as a smart trader will appreciate as much as anyone. You don't want us kind of being super aggressive off that price. And the stock traded up pretty quickly, and so that's really going to be an impact there, but tactically we go through that exercise on a regular basis..

There are no further questions at this time. I'll turn the call back to Elliot Noss for closing remarks. End of Q&A.

Thanks, very much and I look forward to speaking with you all again next quarter. Thank you, operator..

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