Mobile nav
October 31, 2017

Endurance International Group Reports 2017 Third Quarter Results

  • GAAP revenue of $295.2 million
  • Net loss of $40.3 million
  • Adjusted EBITDA of $93.8 million
  • Cash flow from operations of $46.4 million
  • Free cash flow of $31.9 million 
  • Total subscribers on platform were approximately 5.122 million at September 30, 2017

BURLINGTON, Mass., Oct. 31, 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 third quarter ended September 30, 2017.

"I am pleased to report third quarter results that reflect solid performance in both web presence and email marketing," commented Jeffrey H. Fox, president and chief executive officer of Endurance International Group.  "Our 2017 plan to deliver profitable growth while focusing on higher lifetime revenue customers has been demonstrated in our year to date performance.  Our priorities for the rest of the year are to continue to simplify our operations and to invest in initiatives that we believe will drive future growth and long-term value for our customers."

Third Quarter 2017 Financial Highlights

  • Revenue for the third quarter of 2017 was $295.2 million, an increase of 1 percent compared to $291.2 million for the third quarter of 2016. Revenue for the third quarter of 2017 includes a contribution of $101.5 million from Constant Contact, as compared to a contribution of $95.9 million for the third quarter of 2016.
  • Net loss for the third quarter of 2017 was $40.3 million compared to net loss of $29.8 million for the third quarter of 2016.
  • Net loss attributable to Endurance International Group Holdings, Inc. for the third quarter of 2017 was $40.3 million, or $(0.29) per diluted share, compared to net loss of $31.7 million, or $(0.24) per diluted share, for the third quarter of 2016.
  • Adjusted EBITDA for the third quarter of 2017 was $93.8 million, an increase of 10 percent compared to $85.2 million for the third quarter of 2016. Third quarter 2017 adjusted EBITDA excludes the impact of an impairment of $14.4 million related to the reduction in value of certain intangibles, primarily associated with domain name assets, and an additional $8.0 million of accrued expense reserved in connection with ongoing discussions with the staff of the SEC to resolve potential claims arising from the SEC investigations initiated against Endurance and Constant Contact in December 2015.
  • Cash flow from operations for the third quarter of 2017 was $46.4 million, an increase of 28 percent compared to $36.2 million for the third quarter of 2016. 
  • Free cash flow, defined as cash flow from operations less capital expenditures and capital lease obligations, for the third quarter of 2017 was $31.9 million, an increase of 21 percent compared to $26.4 million for the third quarter of 2016. 

Third Quarter Operating Highlights

  • Total subscribers on platform at September 30, 2017 were approximately 5.122 million, compared to approximately 5.439 million subscribers at September 30, 2016 and 5.217 million subscribers at June 30, 2017.  See "Total Subscribers" below. 
  • Average revenue per subscriber, or ARPS, for the third quarter of 2017 was $19.03, compared to $17.78 for the third quarter of 2016 and $18.52 for the second quarter of 2017.  Excluding the impact of Constant Contact, ARPS for the third quarter of 2017 was $13.91, compared to $13.25 for the third quarter of 2016 and $13.62 for the second quarter of 2017.  See "Average Revenue Per Subscriber" below.

Fiscal 2017 Guidance

The company is increasing its adjusted EBITDA expectations for the year by approximately $8 million from the midpoint of prior guidance.  As of the date of this release, October 31, 2017, for the full year ending December 31, 2017, the company now expects:

 2016 Actual
as Reported
Prior Guidance
(as of August 1,  2017)*
Guidance
(as of October 31, 2017)*
GAAP revenue$1.111 billion5 - 5.5% increase5 - 5.5% increase
Adjusted EBITDA$288 million14 - 16% increase~18% increase
Free cash flow$112 million~25% 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 "Prior Guidance" and "Guidance" columns represent percentage increases over 2016 figures shown in the "Actual as Reported" column.

Conference Call and Webcast Information

Endurance International Group's third quarter 2017 financial results teleconference and webcast is scheduled to begin at 8:00 a.m. EDT on Tuesday, October 31, 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, SEC investigations reserve, (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.  There were no adjustments for the third quarter of 2017.

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 expectations regarding our planned investment initiatives,  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: the possibility that our updated financial guidance may differ from expectations; that our planned initiatives will not result in a positive return on investment; 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 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 June 30, 2017 filed with the SEC on August 4, 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 over 3,600 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 September 30, 2017
Assets   
Current assets:   
Cash and cash equivalents$53,596  $70,521 
Restricted cash3,302  2,647 
Accounts receivable13,088  13,984 
Prepaid domain name registry fees55,444  55,742 
Prepaid expenses and other current assets28,678  29,170 
Total current assets154,108  172,064 
Property and equipment—net95,272  88,557 
Goodwill1,859,909  1,862,489 
Other intangible assets—net612,057  496,036 
Deferred financing costs4,932  3,645 
Investments15,857  15,230 
Prepaid domain name registry fees, net of current portion10,429  10,874 
Other assets3,710  2,204 
Total assets$2,756,274  $2,651,099 
Liabilities, redeemable non-controlling interest and stockholders' equity   
Current liabilities:   
Accounts payable$16,074  $13,397 
Accrued expenses67,722  75,573 
Accrued interest27,246  14,546 
Deferred revenue355,190  368,613 
Current portion of notes payable35,700  33,945 
Current portion of capital lease obligations6,690  3,166 
Deferred consideration—short term5,273  4,319 
Other current liabilities2,890  3,605 
Total current liabilities516,785  517,164 
Long-term deferred revenue89,200  90,904 
Notes payable—long term, net of original issue discounts of $25,853 and $26,880 and deferred financing costs of $43,342 and $39,194, respectively1,951,280  1,920,258 
Capital lease obligations—long term512  1,485 
Deferred tax liability39,943  46,203 
Deferred consideration—long term7,444  3,493 
Other liabilities8,974  9,889 
Total liabilities2,614,138  2,589,396 
Redeemable non-controlling interest17,753   
Commitments and contingencies   
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 138,074,911 shares issued at December 31, 2016 and September 30, 2017, respectively; 134,793,857 and 138,074,911 outstanding at December 31, 2016 and September 30, 2017, respectively14  14 
Additional paid-in capital868,228  917,655 
Accumulated other comprehensive loss(3,666) (991)
Accumulated deficit(740,193) (854,975)
Total stockholders' equity124,383  61,703 
Total liabilities, redeemable non-controlling interest and stockholders' equity$2,756,274  $2,651,099 
        


Endurance International Group Holdings, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
(in thousands, except share and per share amounts)
 
 Three Months Ended September 30, Nine Months Ended September 30,
 2016 2017 2016 2017
Revenue$291,193  $295,222  $819,019  $882,617 
Cost of revenue149,427  158,865  438,980  454,197 
Gross profit141,766  136,357  380,039  428,420 
Operating expense:       
Sales and marketing75,341  66,276  234,944  211,154 
Engineering and development23,988  19,882  67,930  60,393 
General and administrative33,399  51,269  108,508  130,929 
Transaction expenses159    32,257  773 
Total operating expense132,887  137,427  443,639  403,249 
Income (loss) from operations8,879  (1,070) (63,600) 25,171 
Other income (expense):       
Other income (expense), net(4,845) (600) 6,565  (600)
Interest income162  203  438  506 
Interest expense(41,208) (35,848) (112,573) (121,022)
Total other expense—net(45,891) (36,245) (105,570) (121,116)
Loss before income taxes and equity earnings of unconsolidated entities(37,012) (37,315) (169,170) (95,945)
Income tax expense (benefit)(7,387) 2,982  (121,220) 11,384 
Loss before equity earnings of unconsolidated entities(29,625) (40,297) (47,950) (107,329)
Equity loss (income) of unconsolidated entities, net of tax173  (33) 1,197  (72)
Net loss$(29,798) $(40,264) $(49,147) $(107,257)
Net (loss) income attributable to non-controlling interest(1,206)   (14,326) 277 
Excess accretion of non-controlling interest3,145    3,145  7,247 
Total net income (loss) attributable to non-controlling interest1,939    (11,181) 7,524 
Net loss attributable to Endurance International Group Holdings, Inc.$(31,737) $(40,264) $(37,966) $(114,781)
Comprehensive income (loss):       
Foreign currency translation adjustments112  1,070  994  2,984 
Unrealized loss on cash flow hedge, net of taxes of $(65) and $48, and $(889) and $(182) for the three and nine months ended September 30, 2016 and 2017, respectively72  83  (1,866) (309)
Total comprehensive loss$(31,553) $(39,111) $(38,838) $(112,106)
Basic net loss per share attributable to Endurance International Group Holdings, Inc.$(0.24) $(0.29) $(0.29) $(0.84)
Diluted net loss per share attributable to Endurance International Group Holdings, Inc.$(0.24) $(0.29) $(0.29) $(0.84)
Weighted-average common shares used in computing net loss per share attributable to Endurance International Group Holdings, Inc.:       
Basic 133,550,168  137,793,609  133,038,542  136,688,115 
Diluted133,550,168  137,793,609  133,038,542  136,688,115 
            


Endurance International Group Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
 
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2016 2017 2016 2017
Cash flows from operating activities:       
Net loss$(29,798) $(40,264) $(49,147) $(107,257)
Adjustments to reconcile net loss to net cash provided by operating activities:       
Depreciation of property and equipment17,010  13,571  46,942  40,733 
Amortization of other intangible assets37,982  35,347  105,679  104,554 
Impairment of long lived assets  13,848  8,285  13,848 
Impairment of investments  600    600 
Amortization of deferred financing costs1,760  1,873  4,322  5,403 
Amortization of net present value of deferred consideration844  127  2,426  504 
Dividend from minority interest  50  50  100 
Amortization of original issue discounts844  1,059  2,116  2,791 
Stock-based compensation14,806  19,580  48,218  48,749 
Deferred tax (benefit) expense(7,085) 2,096  (124,547) 6,442 
Loss (gain) on sale of assets57  (189) (168) (317)
Loss (gain) from unconsolidated entities4,845  (33) (6,565) (72)
Loss of unconsolidated entities173    1,197   
Gain from change in deferred consideration(54)   (33)  
Financing costs expensed      5,487 
Loss on early extinguishment of debt      992 
Changes in operating assets and liabilities, net of acquisitions:       
Accounts receivable(170) (2,231) 1,376  (872)
Prepaid expenses and other current assets5,680  833  (9,206) (510)
Accounts payable and accrued expenses(14,223) 1,695  12,294  (7,309)
Deferred revenue3,518  (1,518) 58,565  15,000 
Net cash provided by operating activities36,189  46,444  101,804  128,866 
Cash flows from investing activities:       
Businesses acquired in purchase transactions, net of cash acquired10,255    (889,634)  
Cash paid for minority investment    (5,600)  
Purchases of property and equipment(8,356) (12,800) (29,317) (32,095)
Proceeds from sale of assets(10) 5  242  292 
Purchases of intangible assets  (286) (27) (1,966)
Deposits (withdrawals) of principal balances in restricted cash accounts30  755  (738) 655 
Net cash provided by (used in) investing activities1,919  (12,326) (925,074) (33,114)
Cash flows from financing activities:       
Proceeds from issuance of term loan and notes, net of original issue discounts    1,056,178  1,693,007 
Repayments of term loans(8,925) (18,486) (42,775) (1,733,147)
Proceeds from borrowing of revolver33,500    49,500   
Repayment of revolver    (83,000)  
Payment of financing costs(834) (244) (52,561) (6,304)
Payment of deferred consideration(42,373)   (43,080) (5,408)
Payment of redeemable non-controlling interest(33,425) (25,000) (33,425) (25,000)
Principal payments on capital lease obligations(1,476) (1,771) (4,372) (5,679)
Capital investment from minority partner1,776    2,776   
Proceeds from exercise of stock options976  416  2,304  1,548 
Net cash (used in) provided by financing activities(50,781) (45,085) 851,545  (80,983)
Net effect of exchange rate on cash and cash equivalents229  79  1,843  2,156 
Net increase (decrease) in cash and cash equivalents(12,444) (10,888) 30,118  16,925 
Cash and cash equivalents:       
Beginning of period75,592  81,409  33,030  53,596 
End of period$63,148  $70,521  $63,148  $70,521 
Supplemental cash flow information:       
Interest paid$47,010  $38,154  $91,181  $118,276 
Income taxes paid$951  $1,499  $3,399  $3,958 
                
                

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
September 30,
 Nine Months Ended
September 30,
 2016 2017 2016 2017
Net income (loss)$(29,798) $(40,264) $(49,147) $(107,257)
Interest expense, net (1)41,046  35,645  112,135  120,516 
Income tax expense (benefit)(7,387) 2,982  (121,220) 11,384 
Depreciation17,010  13,571  46,942  40,733 
Amortization of other intangible assets37,982  35,347  105,679  104,554 
Stock-based compensation14,806  19,580  48,218  48,749 
Restructuring expenses6,377  4,488  23,642  14,584 
Transaction expenses and charges159    32,257  773 
SEC investigations reserve  8,000    8,000 
Loss (gain) of unconsolidated entities (2)5,018  (33) (5,368) (72)
Impairment of other long-lived assets (3)  14,448  8,285  14,448 
Adjusted EBITDA$85,213  $93,764  $201,423  $256,412 
                

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income. For the nine months ended September 30, 2017, it also includes $6.5 million of deferred financing costs and OID 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 nine months ended September 30, 2016. The three months ended September 30, 2016 includes a loss of $4.8 million on our investment in AppMachine. This loss was generated on July 27, 2016, when we increased our ownership stake in AppMachine from 40.0% to 100.0%, which required a revaluation of our existing investment to its implied fair value. The three months ended September 30, 2016 also includes a net loss of $0.2 million from our proportionate share of net losses from unconsolidated entities. The nine months ended September 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 49.0% 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 $1.2 million.

(3) The impairment of other long-lived assets for the three and nine months ended September 30, 2016 includes $6.3 million of impairment charges related to developed and in-process technology related to the Webzai acquisition, and $2.0 million of internally developed software that was abandoned.  The impairment of other long-lived assets for the three and nine months ended September 30, 3017 includes $13.8 million related to certain domain name intangible assets, and $0.6 million to write off a debt investment in a privately held entity.


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 September
30,
 Nine Months Ended September
30,
 2016
 2017
 2016
 2017
Cash flow from operations$36,189  $46,444  $101,804  $128,866 
Less:       
Capital expenditures and capital lease obligations (1)(9,832) (14,571) (33,689) (37,774)
Free cash flow$26,357  $31,873  $68,115  $91,092 
                

(1) Capital expenditures during the three and nine months ended September 30, 2016 includes $1.5 million and $4.4 million, respectively, of principal payments under a two year capital lease for software. Capital expenditures during the three and nine months ended September 30, 2017 includes $1.8 million and $5.7 million, respectively, of principal payments under a three year capital lease for software. The remaining balance on the capital lease is $4.7 million as of September 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
September 30,
 Nine Months Ended
September 30,
  2016 2017 2016 2017
Consolidated revenue $291,193  $295,222  $819,019  $882,617 
Consolidated total subscribers 5,439  5,122  5,439  5,122 
Consolidated average subscribers for the period 5,460  5,170  5,296  5,247 
Consolidated average revenue per subscriber (ARPS) $17.78  $19.03  $17.18  $18.69 
         
Web presence revenue $195,275  $193,696  $589,364  $584,217 
Web presence subscribers 4,893  4,599  4,893  4,599 
Web presence average subscribers for the period 4,911  4,643  4,821  4,714 
Web presence average revenue per subscriber (ARPS) $13.25  $13.91  $13.58  $13.77 
         
Email marketing revenue $95,918  $101,526  $229,655  $298,400 
Email marketing subscribers 546  523  546  523 
Email marketing average subscribers for the period 549  527  475  533 
Email marketing average revenue per subscriber (ARPS) $58.27  $64.26  $53.75  $62.16 
                 
                 

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
September 30, 2016
 Three Months Ended
September 30, 2017

 Web
presence
 Email
marketing
 Total Web
presence
 Email
marketing
 Total
Revenue$195,275  $95,918  $291,193  $193,696  $101,526  $295,222 
Gross profit89,059  52,707  141,766  71,071  65,286  136,357 
            
Net income (loss)$(19,886) $(9,912) $(29,798) $(42,466) $2,202  $(40,264)
Interest expense, net (1)18,244  22,802  41,046  15,131  20,514  35,645 
Income tax expense (benefit)(1,435) (5,952) (7,387) 1,659  1,323  2,982 
Depreciation9,173  7,837  17,010  10,338  3,233  13,571 
Amortization of other intangible assets19,729  18,253  37,982  16,577  18,770  35,347 
Stock-based compensation12,703  2,103  14,806  17,912  1,668  19,580 
Restructuring expenses541  5,836  6,377  3,806  682  4,488 
Transaction expenses and charges159    159       
SEC investigations reserve      5,249  2,751  8,000 
(Gain) loss of unconsolidated entities (2)5,018    5,018  (33)   (33)
Impairment of other long-lived assets (3)      14,448    14,448 
Adjusted EBITDA$44,246  $40,967  $85,213  $42,621  $51,143  $93,764 
                        


 Nine Months Ended
September 30, 2016
 Nine Months Ended
September 30, 2017

 Web
presence
 Email
marketing
 Total Web
presence
 Email
marketing
 Total
Revenue$589,364  $229,655  $819,019  $584,217  $298,400  $882,617 
Gross profit265,610  114,429  380,039  240,239  188,181  428,420 
              
Net income (loss)$2,787  $(51,934) $(49,147) $(99,232) $(8,025) $(107,257)
Interest expense, net (1)53,337  58,798  112,135  52,304  68,212  120,516 
Income tax expense (benefit)(90,033) (31,187) (121,220) 16,203  (4,819) 11,384 
Depreciation27,248  19,694  46,942  30,101  10,632  40,733 
Amortization of other intangible assets59,252  46,427  105,679  48,857  55,697  104,554 
Stock-based compensation37,778  10,440  48,218  43,357  5,392  48,749 
Restructuring expenses1,501  22,141  23,642  9,842  4,742  14,584 
Transaction expenses and charges31,273  984  32,257    773  773 
SEC investigations reserve      5,249  2,751  8,000 
(Gain) loss of unconsolidated entities (2)(5,368)   (5,368) (72)   (72)
Impairment of other long-lived assets (3)8,285    8,285  14,448    14,448 
Adjusted EBITDA$126,060  $75,363  $201,423  $121,057  $135,355  $256,412 
                        

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income. For the nine months ended September 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 nine months ended September 30, 2016. The three months ended September 30, 2016 includes a loss of $4.8 million on our investment in AppMachine. This loss was generated on July 27, 2016, when we increased our ownership stake in AppMachine from 40.0% to 100.0%, which required a revaluation of our existing investment to its implied fair value. The three months ended September 30, 2016 also includes a net loss of $0.2 million from our proportionate share of net losses from unconsolidated entities. The nine months ended September 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 49.0% 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 $1.2 million.

(3) The impairment of other long-lived assets for the three and nine months ended September 30, 2016 includes $6.3 million of impairment charges related to developed and in-process technology related to the Webzai acquisition, and $2.0 million of internally developed software that was abandoned.  The impairment of other long-lived assets for the three and nine months ended September 30, 3017 includes $13.8 million related to certain domain name intangible assets, and $0.6 million to write off a debt investment in a privately held entity.


GAAP to Non-GAAP Reconciliation of Fiscal Year 2017 Guidance (as of October 31, 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 (i.e. assuming an increase of approximately 18% from 2016 adjusted EBITDA as reported). All figures shown are approximate.

($ in millions)Twelve Months Ending
December 31, 2017
Estimated net loss$(121)  
Estimated interest expense (net)156   
Estimated income tax expense (benefit)12   
Estimated depreciation55   
Estimated amortization of acquired intangible assets139   
Estimated stock-based compensation60   
Estimated restructuring expenses16   
Estimated transaction expenses and charges1   
Estimated SEC investigations reserve8   
Estimated (gain) loss of unconsolidated entities-   
Estimated impairment of other long-lived assets14   
Adjusted EBITDA guidance$340 


GAAP to Non-GAAP Reconciliation of Fiscal Year 2017 Guidance (as of October 31, 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) 482-5809
press@endurance.com


							
 
close

shareholder tools