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August 01, 2017

Endurance International Group Reports 2017 Second Quarter Results

  • GAAP revenue of $292.3 million
  • Net loss of $35.4 million
  • Adjusted EBITDA of $82.5 million
  • Cash flow from operations of $48.7 million
  • Free cash flow of $36.8 million 
  • Total subscribers on platform were approximately 5.217 million at June 30, 2017

BURLINGTON, Mass., Aug. 01, 2017 (GLOBE NEWSWIRE) -- Endurance International Group Holdings, Inc. (NASDAQ:EIGI), a leading provider of cloud-based platform solutions designed to help small and medium-sized businesses succeed online, today reported financial results for its second quarter ended June 30, 2017.

"Our second quarter performance reflected our continued drive toward meeting our 2017 operational and strategic goals," commented Hari Ravichandran, chief executive officer and founder of Endurance International Group.  "We are pleased with our overall results.  Performance in our web presence segment was in-line with expectations while we focused on targeting high-value hosting subscribers.  Constant Contact demonstrated steady revenue growth and margin expansion.  Our year to date performance, along with our outlook for the remainder of the year, have reinforced our belief that our plans for 2017 are setting a strong foundation, and positioning us for profitable growth and strong cash flows in future years."

Second Quarter 2017 Financial Highlights

  • Revenue for the second quarter of 2017 was $292.3 million, an increase of one percent compared to $290.7 million for the second quarter of 2016. Revenue for the second quarter of 2017 includes a contribution of $99.1 million from Constant Contact, as compared to a contribution of $94.7 million for the second quarter of 2016.
  • Net loss for the second quarter of 2017 was $35.4 million compared to net loss of $33.4 million for the second quarter of 2016.
  • Net loss attributable to Endurance International Group Holdings, Inc. for the second quarter of 2017 was $39.1 million, or $(0.29) per diluted share, compared to net loss of $28.0 million, or $(0.21) per diluted share, for the second quarter of 2016.
  • Adjusted EBITDA for the second quarter of 2017 was $82.5 million, an increase of 7 percent compared to $76.9 million for the second quarter of 2016.
  • Cash flow from operations for the second quarter of 2017 was $48.7 million, a decrease of 9 percent compared to $53.8 million for the second quarter of 2016. 
  • Free cash flow, defined as cash flow from operations less capital expenditures and capital lease obligations, for the second quarter of 2017 was $36.8 million compared to $41.6 million for the second quarter of 2016. 

Second Quarter Operating Highlights

  • Total subscribers on platform at June 30, 2017 were approximately 5.217 million, compared to approximately 5.480 million subscribers at June 30, 2016 and 5.304 million subscribers at March 31, 2017.  See "Total Subscribers" below. 
  • Average revenue per subscriber, or ARPS, for the second quarter of 2017 was $18.52, compared to $17.74 for the second quarter of 2016 and $18.43 for the first quarter of 2017.  Excluding the impact of Constant Contact, ARPS for the second quarter of 2017 was $13.62, compared to $13.32 for the second quarter of 2016 and $13.71 for the first quarter of 2017.  See "Average Revenue Per Subscriber" below.

Fiscal 2017 Guidance

The company is updating its guidance for revenue, adjusted EBITDA, and free cash flow.  Expectations for revenue and adjusted EBITDA have increased by approximately $8 million and $6 million, respectively, from the midpoint of prior guidance provided on May 2, 2017.  In addition, as the company accelerates streamlining of its operations and focuses on a narrower set of strategic brands, it expects restructuring expenses to increase by approximately $10 million as compared to those reflected in prior guidance.  As a result, expectations for free cash flow have been reduced by approximately $10 million, reflecting the net impact of higher restructuring costs, lower change in deferred revenue, and lower cash interest expense post refinancing.  The streamlining of the company's cost structure and lower annualized cash interest expense due to the June 2017 refinancing of its term loan is expected to be accretive to free cash flow in 2018.

As of the date of this release, August 1, 2017, for the full year ending December 31, 2017, the company expects:

 2016 Actual
as Reported
   Previous Guidance
(as of May 2, 2017)
Updated Guidance
   (as of August 1, 2017)*
GAAP revenue   $1.111 billion4 - 5% increase5 - 5.5% increase
Adjusted EBITDA  $288 million12 - 14% increase14 - 16% increase
Free cash flow$112 million~35% increase~25% increase
    

Adjusted EBITDA and free cash flow are non-GAAP financial measures.  A reconciliation of these non-GAAP financial measures to their most comparable measure calculated in accordance with GAAP is provided in the financial statement tables included at the end of this press release.

* Percentage increases shown in the "Guidance" column represent percentage increases over 2016 figures shown in the "Actual as Reported" column.

Conference Call and Webcast Information

Endurance International Group's second quarter 2017 financial results teleconference and webcast is scheduled to begin at 8:00 a.m. EDT on Tuesday, August 1, 2017. To participate on the live call, analysts and investors should dial (888) 734-0328 at least ten minutes prior to the call.  Endurance International Group will also offer a live and archived webcast of the conference call, accessible from the Investor Relations section of the company's website at http://ir.endurance.com

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with GAAP, we use adjusted EBITDA and free cash flow, which are non-GAAP financial measures, to evaluate the operating and financial performance of our business, identify trends affecting our business, develop projections and make strategic business decisions.  A non-GAAP financial measure is a numerical measure of a company's operating performance, financial position or cash flow that excludes amounts that are included in the most directly comparable measure calculated and presented in accordance with GAAP or includes amounts that are excluded from the most directly comparable measure calculated and presented in accordance with GAAP.

Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP and exclude expenses that may have a material impact on our reported financial results. For example, adjusted EBITDA excludes interest expense, which has been and will continue to be for the foreseeable future a significant recurring expense in our business. The presentation of non-GAAP financial information is not meant to be considered in isolation from, or as a substitute for, the most directly comparable financial measures prepared in accordance with GAAP. We urge you to review the additional information about adjusted EBITDA and free cash flow shown below, including the reconciliations of these non-GAAP financial measures to their comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Adjusted EBITDA is a non-GAAP financial measure that we calculate as net (loss) income, excluding the impact of interest expense (net), income tax expense (benefit), depreciation, amortization of other intangible assets, stock-based compensation, restructuring expenses, transaction expenses and charges, (gain) loss of unconsolidated entities, and impairment of other long-lived assets. We view adjusted EBITDA as a performance measure and believe it helps investors evaluate and compare our core operating performance from period to period.

Free Cash Flow, or FCF, is a non-GAAP financial measure that we calculate as cash flow from operations less capital expenditures and capital lease obligations. We believe that FCF provides investors with an indicator of our ability to generate positive cash flows after meeting our obligations with regard to capital expenditures (including capital lease obligations).

Key Operating Metrics

Total Subscribers - We define total subscribers as the approximate number of subscribers that, as of the end of a period, are identified as subscribing directly to our products on a paid basis, excluding accounts that access our solutions via resellers or that purchase only domain names from us. Subscribers of more than one brand, and subscribers with more than one distinct billing relationship or subscription with us, are counted as separate subscribers. Total subscribers for a period reflects adjustments to add or subtract subscribers as we integrate acquisitions and/or are otherwise able to identify subscribers that meet, or do not meet, this definition of total subscribers.  In the second quarter of 2017, these adjustments had a net negative impact of approximately 4,438 subscribers on our total subscriber count.

Average Revenue Per Subscriber (ARPS) - We calculate ARPS as the amount of revenue we recognize in a period, including marketing development funds and other revenue not received from subscribers, divided by the average of the number of total subscribers at the beginning of the period and at the end of the period, which we refer to as average subscribers for the period, divided by the number of months in the period. See definition of "Total Subscribers" above.  We believe ARPS is an indicator of our ability to optimize our mix of products and services and pricing and sell products and services to new and existing subscribers.  ARPS does not represent an exact measure of the average amount a subscriber spends with us each month, since our calculation of ARPS is impacted by revenues generated by non-subscribers.

Forward-Looking Statements

This press release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements concerning our updated financial guidance for fiscal year 2017, our belief that our year to date results and outlook for the remainder of the year position us  for profitable growth and strong cash flow in future years, our expectations regarding restructuring expenses, changes in deferred revenue and interest expense for the remainder of the year, our belief that our cost streamlining efforts will be accretive to free cash flow in 2018, and our expected financial and operational performance in general. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts, and statements identified by words such as "expects," "believes," "estimates," "may," "continue," "positions," "confident," and variations of such words or words of similar meaning and the use of future dates. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that these plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation: that we will be unable to successfully enhance the customer product and service experience and improve customer satisfaction and retention through operational and infrastructure improvements; that the senior management transition we are undergoing (including the transition of our chief executive officer) will have an adverse impact on our business; that we will encounter difficulties or delays in our efforts to build brand awareness of our key brands;  that we will be unable to drive revenue growth by increasing ARPS through cross-selling and other product-related initiatives; that we will continue to experience decreases in our subscriber base; an adverse impact on our business from litigation or regulatory proceedings; an adverse impact on our business from our substantial indebtedness and the cost of servicing our debt; the rate of growth of the Small and Medium Business ("SMB") market for our solutions; our inability to increase sales to our existing subscribers, or retain our existing subscribers; system or Internet failures; our inability to maintain or improve our competitive position or market share; and other risks set forth under the caption "Risk Factors" in our Quarterly Report on Form 10-Q for the period ended March 31, 2017 filed with the SEC on May 9, 2017 and other reports we file with the SEC.

We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

About Endurance International Group

Endurance International Group Holdings, Inc. (NASDAQ:EIGI) (em)Powers millions of small businesses worldwide with products and technology to vitalize their online web presence, email marketing, mobile business solutions, and more. The Endurance family of brands includes: Constant Contact, Bluehost, HostGator, iPage, Domain.com, BigRock, SiteBuilder and SinglePlatform, among others. Headquartered in Burlington, Massachusetts, Endurance employs approximately 4,000 people across the United States, Brazil, India and the Netherlands. For more information, visit:  www.endurance.com.

Endurance International Group and the compass logo are trademarks of The Endurance International Group, Inc.  Constant Contact, the Constant Contact logo and other brand names of Endurance International Group are trademarks of The Endurance International Group, Inc. or its subsidiaries.

 
Endurance International Group Holdings, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share amounts)
 
 December 31, 2016 June 30, 2017
Assets   
Current assets:   
Cash and cash equivalents$53,596  $81,409 
Restricted cash3,302  3,401 
Accounts receivable13,088  11,664 
Prepaid domain name registry fees55,444  56,710 
Prepaid expenses and other current assets28,678  28,844 
Total current assets154,108  182,028 
Property and equipment—net95,272  94,625 
Goodwill1,859,909  1,861,608 
Other intangible assets—net612,057  544,990 
Deferred financing costs4,932  4,089 
Investments15,857  15,846 
Prepaid domain name registry fees, net of current portion10,429  10,789 
Other assets3,710  2,504 
Total assets$2,756,274  $2,716,479 
Liabilities, redeemable non-controlling interest and stockholders' equity   
Current liabilities:   
Accounts payable$16,074  $12,841 
Accrued expenses67,722  75,088 
Accrued interest27,246  20,088 
Deferred revenue355,190  369,825 
Current portion of notes payable35,700  33,945 
Current portion of capital lease obligations6,690  4,481 
Deferred consideration—short term5,273  4,250 
Other current liabilities2,890  2,947 
Total current liabilities516,785  523,465 
Long-term deferred revenue89,200  91,256 
Notes payable—long term, net of original issue discounts of $25,853 and $27,939 and deferred financing costs of $43,342 and $40,622 respectively1,951,280  1,936,258 
Capital lease obligations—long term512  1,537 
Deferred tax liability39,943  44,060 
Deferred consideration—long term7,444  3,437 
Other liabilities8,974  9,862 
Total liabilities2,614,138  2,609,875 
Redeemable non-controlling interest17,753  25,000 
Commitments and contingencies (Note 17)   
Stockholders' equity:   
Preferred Stock—par value $0.0001; 5,000,000 shares authorized; no shares issued or outstanding   
Common Stock—par value $0.0001; 500,000,000 shares authorized; 134,793,857 and 137,503,270 shares issued at December 31, 2016 and June 30, 2017, respectively; 134,793,857 and 137,503,270 outstanding at December 31, 2016 and June 30, 2017, respectively  14  14 
Additional paid-in capital868,228  898,445 
Accumulated other comprehensive loss(3,666) (2,144)
Accumulated deficit(740,193) (814,711)
Total stockholders' equity124,383  81,604 
Total liabilities, redeemable non-controlling interest and stockholders' equity$2,756,274  $2,716,479 
        


 
Endurance International Group Holdings, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited)
(in thousands, except share and per share amounts)
 
  Three Months Ended June 30,  Six Months Ended June 30, 
 2016 2017 2016 2017
Revenue$290,713  $292,258  $527,826  $587,395 
Cost of revenue153,077  146,583  289,553  295,332 
Gross profit137,636  145,675  238,273  292,063 
Operating expense:       
Sales and marketing80,309  72,106  159,603  144,878 
Engineering and development27,687  20,149  43,942  40,511 
General and administrative34,830  40,580  75,109  79,660 
Transactions expenses978  193  32,098  773 
Total operating expense143,804  133,028  310,752  265,822 
Income (loss) from operations(6,168) 12,647  (72,479) 26,241 
Other income (expense):       
Other income    11,410   
Interest income142  185  276  303 
Interest expense(40,994) (45,658) (71,365) (85,174)
Total other expense—net(40,852) (45,473) (59,679) (84,871)
Loss before income taxes and equity earnings of unconsolidated entities(47,020) (32,826) (132,158) (58,630)
Income tax expense (benefit)(13,931) 2,628  (113,833) 8,402 
Loss before equity earnings of unconsolidated entities(33,089) (35,454) (18,325) (67,032)
Equity loss (income) of unconsolidated entities, net of tax341  (39) 1,024  (39)
Net loss$(33,430) $(35,415) $(19,349) $(66,993)
Net (loss) income attributable to non-controlling interest(5,390) 51  (13,120) 277 
Excess accretion of non-controlling interest  3,663    7,247 
Total net (loss) income attributable to non-controlling interest(5,390) 3,714  (13,120) 7,524 
Net loss attributable to Endurance International Group Holdings, Inc.$(28,040) $(39,129) $(6,229) $(74,517)
Comprehensive income (loss):       
Foreign currency translation adjustments540  1,228  882  1,914 
Unrealized loss on cash flow hedge, net of taxes of $(218) and $(192), and $(824) and $(230) for the three and six months ended June 30, 2016 and 2017, respectively  (427) (176) (1,938) (392)
Total comprehensive loss$(27,927) $(38,077) $(7,285) $(72,995)
Basic net loss per share attributable to Endurance International Group Holdings Inc.$(0.21) $(0.29) $(0.05) $(0.55)
Diluted net loss per share attributable to Endurance International Group Holdings Inc.$(0.21) $(0.29) $(0.05) $(0.55)
Weighted-average common shares used in computing net loss per share attributable to Endurance International Group Holdings, Inc.:       
Basic132,566,622  137,295,120  132,736,382  136,124,347 
Diluted132,566,622  137,295,120  132,736,382  136,124,347 
            


 
Endurance International Group Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
 
  Three Months Ended June 30,   Six Months Ended June 30, 
 2016 2017 2016 2017
Cash flows from operating activities:       
Net loss$(33,430) $(35,415) $(19,349) $(66,993)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:         
Depreciation of property and equipment16,760  14,051  29,932  27,162 
Amortization of other intangible assets37,823  34,940  67,697  69,207 
Impairment of long lived assets6,848    8,285   
Amortization of deferred financing costs1,651  1,786  2,562  3,530 
Amortization of net present value of deferred consideration799  187  1,582  377 
Dividend from minority interest50  50  50  50 
Amortization of original issue discounts823  886  1,272  1,732 
Stock-based compensation15,024  16,245  33,412  29,169 
Deferred tax (benefit) expense(14,259) 906  (117,462) 4,346 
(Gain) loss on sale of assets(224) 97  (225) (128)
(Gain) loss from unconsolidated entities341  (39) (10,386) (39)
(Gain) loss from change in deferred consideration    21   
Financing costs expensed  5,487    5,487 
Loss on early extinguishment of debt  992    992 
Changes in operating assets and liabilities, net of acquisitions:       
  Accounts receivable(598) (1,034) 1,546  1,359 
  Prepaid expenses and other current assets787  4,374  (14,886) (1,343)
  Accounts payable and accrued expenses9,544  4,463  26,517  (9,004)
  Deferred revenue11,904  771  55,047  16,518 
Net cash provided by operating activities53,843  48,747  65,615  82,422 
Cash flows from investing activities:       
Businesses acquired in purchase transactions, net of cash acquired(18,180)   (899,889)  
Cash paid for minority investment(5,000)   (5,600)  
Purchases of property and equipment(10,821) (10,037) (20,961) (19,295)
Proceeds from sale of assets252  36  252  287 
Purchases of intangible assets(27) (1,647) (27) (1,680)
(Withdrawals) deposits of principal balances in restricted cash accounts(31) 244  (768) (100)
Net cash used in investing activities(33,807) (11,404) (926,993) (20,788)
Cash flows from financing activities:       
Proceeds from issuance of term loan and notes, net of original issue discounts  1,693,007  1,056,178  1,693,007 
Repayments of term loans(24,925) (1,705,736) (33,850) (1,714,661)
Proceeds from borrowing of revolver    16,000   
Repayment of revolver    (83,000)  
Payment of financing costs(122) (5,968) (51,727) (6,060)
Payment of deferred consideration  (4,590) (707) (5,408)
Principal payments on capital lease obligations(1,457) (1,871) (2,896) (3,908)
Capital investment from minority partner1,000    1,000   
Proceeds from exercise of stock options735  504  1,328  1,132 
Net cash provided by (used in) financing activities(24,769) (24,654) 902,326  (35,898)
Net effect of exchange rate on cash and cash equivalents1,048  (250) 1,614  2,077 
Net increase in cash and cash equivalents(3,685) 12,439  42,562  27,813 
Cash and cash equivalents:       
Beginning of period79,277  68,970  33,030  53,596 
End of period$75,592  $81,409  $75,592  $81,409 
Supplemental cash flow information:       
Interest paid$27,512  $33,576  $44,171  $80,122 
Income taxes paid$1,480  $1,507  $2,448  $2,459 
                


GAAP to Non-GAAP reconciliation - Adjusted EBITDA

The following table presents a reconciliation of net income (loss) calculated in accordance with GAAP to adjusted EBITDA (all data in thousands):

  Three Months Ended June 30,   Six Months Ended June 30, 
 2016 2017 2016 2017
Net income (loss)$ (33,430) $ (35,415) $ (19,349) $(66,993)
Interest expense, net (1)40,852  45,473  71,089  84,871 
Income tax expense (benefit)(13,931) 2,628  (113,833) 8,402 
Depreciation16,760  14,051  29,932  27,162 
Amortization of other intangible assets37,823  34,940  67,697  69,207 
Stock-based compensation15,024  16,245  33,412  29,169 
Restructuring expenses5,663  4,468  17,265  10,096 
Transaction expenses and charges978  193  32,098  773 
Loss (gain) of unconsolidated entities (2)  341  (39) (10,386) (39)
Impairment of other long-lived assets6,848    8,285   
Adjusted EBITDA$76,928  $82,544  $116,210  $ 162,648 
                

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income. For the three and six months ended June 30, 2017, it also includes $6.5 million of deferred financing costs and original issuance discounts immediately expensed upon refinancing of our term loan in June 2017.

(2) The loss (gain) of unconsolidated entities is reported on a net basis for the three and six months ended June 30, 2016. The six months ended June 30, 2016 includes a gain of $11.4 million on our investment in WZ UK Ltd.  This gain was generated on January 6, 2016, when we increased our ownership stake in WZ UK Ltd. from 49% to 57.5%, which required a revaluation of our existing investment to its implied fair value.  This $11.4 million gain was partially offset by our proportionate shares of net losses from unconsolidated entities of $1.0 million.


GAAP to Non-GAAP reconciliation — Free Cash Flow

The following table reflects the reconciliation of cash flow from operations to free cash flow ("FCF") (all data in thousands):

  Three Months Ended June 30,   Six Months Ended June 30, 
 2016
 2017
 2016
 2017
Cash flow from operations$53,843  $48,747  $65,615  $82,422 
Less:       
Capital expenditures and capital lease obligations (1)  (12,278) (11,908) (23,857) (23,203)
Free cash flow$41,565  $36,839  $41,758  $59,219 
                

(1) Capital expenditures during the three and six months ended June 30, 2016 includes $1.5 million and $2.9 million, respectively, of principal payments under a three year capital lease for software. Capital expenditures during the three and six months ended June 30, 2017 includes $1.9 million and $3.9 million, respectively, of principal payments under a three year capital lease for software. The remaining balance on the capital lease is $6.0 million as of June 30, 2017.


Average Revenue Per Subscriber - Calculation and Segment Detail

We present our financial results in two segments.  Our web presence segment is our historical business before the acquisition of Constant Contact, and includes primarily our web hosting products, domains, website builders and related add-on products.  Our email marketing segment consists of the Constant Contact business, including email marketing, event management, survey tools and the SinglePlatform digital storefront service.

The following table presents the calculation of ARPS, on a consolidated basis and by segment (all data in thousands, except ARPS data):

     
   Three Months Ended June 30,   Six Months Ended June 30, 
  2016 2017 2016 2017
Consolidated revenue $290,713  $292,258  $527,826  $587,395 
Consolidated total subscribers 5,480  5,217  5,480  5,217 
Consolidated average subscribers for the period 5,463  5,261  5,274  5,294 
Consolidated average revenue per subscriber (ARPS) $17.74  $18.52  $16.68  $18.49 
         
Web presence revenue 196,041  193,172  394,089  390,520 
Web presence subscribers 4,929  4,687  4,929  4,687 
Web presence average subscribers for the period 4,906  4,727  4,838  4,757 
Web presence average revenue per subscriber (ARPS) $13.32  $13.62  $13.58  $13.68 
         
Email marketing revenue 94,672  99,086  133,737  196,875 
Email marketing subscribers 551  530  551  530 
Email marketing average subscribers for the period 557  534  436  537 
Email marketing average revenue per subscriber (ARPS)   $56.68  $61.88  $51.15  $61.10 
                 
                 

The following table presents revenue, gross profit, and a reconciliation by segment of net income (loss) calculated in accordance with GAAP to adjusted EBITDA (all data in thousands):

    
 Three Months Ended
June 30, 2016
 Three Months Ended
June 30, 2017
 Web
presence
 Email
marketing
 Total Web
presence
 Email
marketing
 Total
Revenue$ 196,041  $  94,672  $ 290,713  $ 193,172  $  99,086  $ 292,258 
Gross profit86,666  50,970  137,636  82,552  63,123  145,675 
            
Net income (loss)(17,461) (15,969) (33,430) $(33,139) $(2,276) $(35,415)
Interest expense, net (1)18,077  22,775  40,852  20,294  25,179  45,473 
Income tax expense (benefit)(4,341) (9,590) (13,931) 3,995  (1,367) 2,628 
Depreciation9,098  7,662  16,760  10,525  3,526  14,051 
Amortization of other intangible assets19,768  18,055  37,823  16,375  18,565  34,940 
Stock-based compensation10,429  4,595  15,024  14,345  1,900  16,245 
Restructuring expenses789  4,874  5,663  3,699  769  4,468 
Transaction expenses and charges757  221  978    193  193 
(Gain) loss of unconsolidated entities (2)  341    341  (39)   (39)
Impairment of other long-lived assets6,848    6,848       
Adjusted EBITDA$44,305  $32,623  $76,928  $36,055  $46,489  $82,544 


    
 Six Months Ended
June 30, 2016
 Six Months Ended
June 30, 2017
 Web
presence
 Email
marketing
 Total Web
presence
 Email
marketing
 Total
Revenue$ 394,089  $ 133,737  $ 527,826  $ 390,522  $ 196,875  $ 587,397 
Gross profit176,551  61,722  238,273  169,168  122,895  292,063 
            
Net income (loss)$22,673  $(42,022) $(19,349) $(56,766) $(10,227) $(66,993)
Interest expense, net (1)35,093  35,996  71,089  37,173  47,698  84,871 
Income tax expense (benefit)(88,598) (25,235) (113,833) 14,544  (6,142) 8,402 
Depreciation18,075  11,857  29,932  19,763  7,399  27,162 
Amortization of other intangible assets39,523  28,174  67,697  32,280  36,927  69,207 
Stock-based compensation25,075  8,337  33,412  25,445  3,724  29,169 
Restructuring expenses960  16,305  17,265  6,036  4,060  10,096 
Transaction expenses and charges31,114  984  32,098    773  773 
(Gain) loss of unconsolidated entities (2)  (10,386)   (10,386) (39)   (39)
Impairment of other long-lived assets8,285    8,285       
Adjusted EBITDA$81,814  $34,396  $116,210  $78,436  $84,212  $162,648 
                        

(1)  Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income. For the three and six months ended June 30, 2017, it also includes $6.5 million of deferred financing costs and original issuance discounts immediately expensed upon refinancing of our term loan in June 2017.

(2)  The (gain) loss of unconsolidated entities is reported on a net basis for the three and six months ended June 30, 2016. The six months ended June 30, 2016 includes a gain of $11.4 million on our investment in WZ UK Ltd.  This gain was generated on January 6, 2016, when we increased our ownership stake in WZ UK Ltd. from 49% to 57.5%, which required a revaluation of our existing investment to its implied fair value.  This $11.4 million gain was partially offset by our proportionate shares of net losses from unconsolidated entities of $1.0 million.


GAAP to Non-GAAP Reconciliation of Fiscal Year 2017 Guidance (as of August 1, 2017) - Adjusted EBITDA

The following table reflects the reconciliation of fiscal year 2017 estimated net loss calculated in accordance with GAAP to fiscal year 2017 guidance for adjusted EBITDA at the midpoint of the guidance range (i.e. assuming a 15% increase over 2016 adjusted EBITDA as reported). All figures shown are approximate.

  
($ in millions)Twelve Months Ending
December 31, 2017
Estimated net loss$(103)    
Estimated interest expense (net) 156     
Estimated income tax expense (benefit) 10     
Estimated depreciation 58     
Estimated amortization of acquired intangible assets   137     
Estimated stock-based compensation 59     
Estimated restructuring expenses 15     
Estimated transaction expenses and charges -     
Estimated (gain) loss of unconsolidated entities -     
Estimated impairment of other long-lived assets -     
Adjusted EBITDA guidance    $332 
        
        

GAAP to Non-GAAP Reconciliation of Fiscal Year 2017 Guidance (as of August 1, 2017) - Free Cash Flow

The following table reflects the reconciliation of fiscal year 2017 estimated cash flow from operations calculated in accordance with GAAP to fiscal year 2017 guidance for free cash flow. All figures shown are approximate.

  
($ in millions)Twelve Months Ending
December 31, 2017
Estimated cash flow from operations$190     
Estimated capital expenditures and capital lease obligations   (50)    
Free cash flow guidance    $140 

 

Investor Contact:
Angela White
Endurance International Group
(781) 852-3450
ir@endurance.com

Press Contact:
Kristen Andrews
Endurance International Group
(781) 482-7038
press@endurance.com
 
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