February 7, 2019 at 7:05 AM EST

Endurance International Group Reports 2018 Fourth Quarter and Full Year Results

Fiscal Year 2018

  • GAAP revenue of $1.145 billion
  • Net income of $4.5 million
  • Adjusted EBITDA of $338.1 million
  • Cash flow from operations of $182.6 million
  • Free cash flow of $129.2 million
  • Total subscribers on platform were approximately 4.802 million at December 31, 2018

Fourth Quarter 2018

  • GAAP revenue of $282.4 million
  • Net income of $12.8 million
  • Adjusted EBITDA of $79.3 million
  • Cash flow from operations of $49.0 million
  • Free cash flow of $23.6 million

BURLINGTON, Mass., Feb. 07, 2019 (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 fourth quarter and fiscal year ended December 31, 2018.

"I am pleased with our financial performance in 2018.  The Endurance team made substantial strategic and operational progress while delivering to our 2018 integrated operating plan," commented Jeffrey H. Fox, president and chief executive officer at Endurance International Group.  "In 2019, we will continue to simplify our operations and maintain focus on increasing the value we deliver to customers on our strategic brands, which we believe provides a foundation for growth."

Full Year and Fourth Quarter 2018 Financial Highlights

  • For fiscal year 2018, revenue was $1.145 billion, a decrease of 3 percent compared to $1.177 billion in fiscal 2017.  Revenue for the fourth quarter of 2018 was $282.4 million, a decrease of 4 percent compared to $294.2 million in the fourth quarter of 2017.
  • For fiscal year 2018, net income was $4.5 million compared to a net loss of $99.8 million for fiscal 2017.  Net income for the fourth quarter of 2018 was $12.8 million compared to net income of $7.5 million for the fourth quarter of 2017.
  • For fiscal year 2018, net income attributable to Endurance International Group Holdings, Inc. was $4.5 million, or $0.03 per diluted share, compared to a net loss of $107.3 million, or $(0.78) per diluted share, for fiscal 2017.  Net income attributable to Endurance International Group Holdings, Inc. for the fourth quarter of 2018 was $12.8 million, or $0.09 per diluted share, compared to net income of $7.5 million, or $0.05 per diluted share, for the fourth quarter of 2017.
  • Adjusted EBITDA for fiscal year 2018 was $338.1 million, a decrease of 4 percent compared to $350.8 million in fiscal 2017.  Adjusted EBITDA for the fourth quarter of 2018 was $79.3 million, a decrease of 16 percent compared to $94.4 million in the fourth quarter of 2017.
  • Cash flow from operations for fiscal year 2018 was $182.6 million, a decrease of 9 percent compared to $201.3 million for fiscal 2017.  Cash flow from operations for the fourth quarter of 2018 was $49.0 million, a decrease of 32 percent compared to $72.4 million for the fourth quarter of 2017.
  • Free cash flow, defined as cash flow from operations less capital expenditures and financed equipment, for fiscal year 2018 was $129.2 million, a decrease of 14 percent compared to $150.8 million in fiscal 2017.  Free cash flow for the fourth quarter of 2018 was $23.6 million, a decrease of 61 percent compared to $59.7 million for the fourth quarter of 2017.
  • During fiscal 2018, the company reduced the balance of its term loan by $100.8 million.

Full Year and Fourth Quarter Operating Highlights

  • Total subscribers on platform at December 31, 2018 were approximately 4.802 million, compared to approximately 4.852 million subscribers at September 30, 2018 and 5.051 million subscribers at December 31, 2017.  See “Total Subscribers” below.
  • Average revenue per subscriber, or ARPS, for fiscal year 2018 was $19.37, compared to $18.82 for fiscal year 2017.  ARPS for the fourth quarter of 2018 was $19.50, compared to $19.28 for the fourth quarter of 2017.

Fiscal 2019 Guidance

The company is providing the following guidance as of the date of this release, February 7, 2019.  For the full year ending December 31, 2019, the company expects:

  2018 Actual
As reported
Guidance
(as of February 7, 2019)
GAAP revenue $1.145 billion $1.140 to $1.160 billion
Adjusted EBITDA $338 million $310 to $330 million
Free cash flow $129 million $115 to $125 million

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.

Conference Call and Webcast Information

Endurance International Group’s fourth quarter and full year 2018 financial results teleconference and webcast is scheduled to begin at 8:00 a.m. EST on Thursday, February 7, 2019.  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, impairment of other long-lived assets, SEC investigations reserve, and shareholder litigation reserve. 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 financed equipment. 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 financed equipment).

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 in the fourth quarter of 2018.

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.  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 financial guidance for fiscal year 2019; our belief that our continuing efforts to simplify our operations and increase the value we deliver to customers will provide a foundation for growth;; 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 financial guidance may differ from expectations; the possibility that our planned investment initiatives will not result in the anticipated benefits to our business; the possibility 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 grow our subscriber base, 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 and uncertainties discussed in our filings with the SEC, including the “Risk Factors” section of our most recent Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 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) helps millions of small businesses worldwide with products and technology to enhance their online web presence, email marketing, business solutions, and more. The Endurance family of brands includes: Constant Contact, Bluehost, HostGator, Domain.com and SiteBuilder, among others. Headquartered in Burlington, Massachusetts, Endurance employs over 3,800 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.

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 



 Endurance International Group Holdings, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share amounts)

  December 31, 2017   December 31, 2018
Assets      
Current assets:      
Cash and cash equivalents $ 66,493     $ 88,644  
Restricted cash 2,625     1,932  
Accounts receivable 15,945     12,205  
Prepaid domain name registry fees 53,805     56,779  
Prepaid commissions     41,458  
Prepaid and refundable taxes 4,367     7,235  
Prepaid expenses and other current assets 23,908     27,855  
Total current assets 167,143     236,108  
Property and equipment—net 95,452     92,275  
Goodwill 1,850,582     1,849,065  
Other intangible assets—net 455,440     352,516  
Deferred financing costs 3,189     2,656  
Investments 15,267     15,000  
Prepaid domain name registry fees, net of current portion 10,806     11,207  
Prepaid commissions, net of current portion     42,472  
Other assets 2,155     5,208  
Total assets $ 2,600,034     $ 2,606,507  
Liabilities and stockholders’ equity      
Current liabilities:      
Accounts payable 11,058     12,449  
Accrued expenses 78,601     79,279  
Accrued taxes 338     2,498  
Accrued interest 24,457     25,259  
Deferred revenue 361,940     371,758  
Current portion of notes payable 33,945     31,606  
Current portion of financed equipment 7,630     8,379  
Deferred consideration—short term 4,365     2,425  
Other current liabilities 4,031     3,147  
Total current liabilities 526,365     536,800  
Long-term deferred revenue 90,972     96,140  
Notes payable—long term, net of original issue discounts of $25,811 and $21,349, and deferred financing costs of $37,736 and $31,992, respectively 1,858,300     1,770,055  
Financed equipment—long term 7,719      
Deferred tax liability 19,696     16,457  
Deferred consideration—long term 3,551     1,364  
Other liabilities 10,426     11,237  
Total liabilities 2,517,029     2,432,053  
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; 140,190,695 and 143,444,515 shares issued at December 31, 2017 and December 31, 2018, respectively; 140,190,695 and 143,444,178 outstanding at December 31, 2017 and December 31, 2018, respectively 14     14  
Additional paid-in capital 931,033     961,235  
Accumulated other comprehensive loss (541 )   (3,211 )
Accumulated deficit (847,501 )   (783,584 )
Total stockholders’ equity 83,005     174,454  
Total liabilities and stockholders’ equity $ 2,600,034     $ 2,606,507  
               


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
December 31,
  Twelve Months Ended
December 31,
  2017   2018   2017   2018
Revenue $ 294,250     $ 282,395     $ 1,176,867     $ 1,145,291  
Cost of revenue 149,733     127,140     603,930     520,737  
Gross profit 144,517     155,255     572,937     624,554  
Operating expense:              
Sales and marketing 66,306     67,691     277,460     265,424  
Engineering and development 18,379     23,421     78,772     87,980  
General and administrative 33,043     28,992     163,972     124,204  
Impairment of goodwill 12,129         12,129      
Transaction expenses         773      
Total operating expense 129,857     120,104     533,106     477,608  
Income from operations 14,660     35,151     39,831     146,946  
Other income (expense):              
Other income (loss), net         (600 )    
Interest income 230     369     736     1,089  
Interest expense (36,120 )   (37,557 )   (157,142 )   (149,480 )
Total other expense—net (35,890 )   (37,188 )   (157,006 )   (148,391 )
Loss before income taxes and equity earnings of unconsolidated entities (21,230 )   (2,037 )   (117,175 )   (1,445 )
Income tax benefit (28,665 )   (15,072 )   (17,281 )   (6,246 )
Income (loss) before equity earnings of unconsolidated entities 7,435     13,035     (99,894 )   4,801  
Equity (income) loss of unconsolidated entities, net of tax (38 )   265     (110 )   267  
Net income (loss) $ 7,473     $ 12,770     $ (99,784 )   $ 4,534  
Net loss attributable to non-controlling interest         277      
Excess accretion of non-controlling interest         7,247      
Total net loss attributable to non-controlling interest         7,524      
Net income (loss) attributable to Endurance International Group Holdings, Inc. $ 7,473     $ 12,770     $ (107,308 )   $ 4,534  
Comprehensive income (loss):              
Foreign currency translation adjustments 107     256     3,091     (2,233 )
Unrealized gain (loss) on cash flow hedge, net of taxes of $192 and ($763)  and $11 and ($137) for the three and twelve months ended December 31, 2017 and 2018, respectively 343     (2,433 )   34     (437 )
Total comprehensive income (loss) $ 7,923     $ 10,593     $ (104,183 )   $ 1,864  
Net income (loss) per share attributable to Endurance International Group Holdings, Inc.—basic $ 0.05     $ 0.09     $ (0.78 )   $ 0.03  
Net income (loss) per share attributable to Endurance International Group Holdings, Inc.—diluted $ 0.05     $ 0.09     $ (0.78 )   $ 0.03  
Weighted-average number of common shares used in computing net income (loss) per share attributable to Endurance International Group Holdings, Inc.—basic 138,921,118     143,415,944     137,322,201     142,316,993  
Weighted-average number of common shares used in computing net income (loss) per share attributable to Endurance International Group Holdings, Inc.—diluted 141,307,988     145,228,986     137,322,201     145,669,760  
                       


Endurance International Group Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)

  Three Months Ended
December 31,
  Twelve Months Ended
December 31,
  2017   2018   2017   2018
Cash flows from operating activities:              
Net income (loss) $ 7,473     $ 12,770     $ (99,784 )   $ 4,534  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:              
Depreciation of property and equipment 14,452     11,454     55,185     48,207  
Amortization of other intangible assets from acquisitions 35,800     25,258     140,354     103,148  
Amortization of deferred financing costs 1,913     1,746     7,316     6,454  
Amortization of net present value of deferred consideration 128     62     632     373  
Amortization of original issuance discount 1,069     1,096     3,860     4,305  
Impairment of long-lived assets 4,883         18,731      
Impairment of  investments         600      
Impairment of goodwill 12,129         12,129      
Stock-based compensation 11,252     7,132     60,001     29,064  
Deferred tax benefit (26,700 )   (19,277 )   (22,807 )   (10,438 )
(Gain) loss on sale of assets 2     7     (315 )   198  
Gain from unconsolidated entities (38 )       (110 )    
Loss of unconsolidated entities     265         267  
Financing costs expensed         5,487     1,228  
Loss on early extinguishment of debt         992     331  
Dividend from minority interest         100      
Changes in operating assets and liabilities:              
Accounts receivable (2,230 )   1,929     (3,102 )   3,616  
Prepaid expenses and other current assets 3,396     (8,726 )   5,435     (11,759 )
Accounts payable and accrued expenses 15,643     25,060     8,334     9,339  
Deferred revenue (6,765 )   (9,817 )   8,235     (6,315 )
Net cash provided by operating activities 72,407     48,959     201,273     182,552  
Cash flows from investing activities:              
Purchases of property and equipment (10,967 )   (23,537 )   (43,062 )   (45,880 )
Proceeds from sale of assets 238         530     6  
Purchases of intangible assets     (8 )   (1,966 )   (8 )
Net cash used in investing activities (10,729 )   (23,545 )   (44,498 )   (45,882 )
Cash flows from financing activities:              
Proceeds from issuance of term loan         1,693,007     1,580,305  
Repayment of term loan (64,487 )   (25,000 )   (1,797,634 )   (1,681,094 )
Payment of financing costs         (6,304 )   (1,580 )
Payment of deferred consideration (25 )       (5,433 )   (4,500 )
Payment of redeemable non-controlling interest liability         (25,000 )    
Principal payments on financed equipment (1,711 )   (1,830 )   (7,390 )   (7,439 )
Proceeds from exercise of stock options 501     131     2,049     887  
Net cash provided by (used in) financing activities (65,722 )   (26,699 )   (146,705 )   (113,421 )
Net effect of exchange rate on cash and cash equivalents and restricted cash (6 )   355     2,150     (1,791 )
Net increase in cash and cash equivalents and restricted cash (4,050 )   (930 )   12,220     21,458  
Cash and cash equivalents and restricted cash:              
Beginning of period 73,168     91,506     56,898     69,118  
End of period $ 69,118     $ 90,576     $ 69,118     $ 90,576  
Supplemental cash flow information:              
Interest paid $ 22,281     $ 24,006     $ 141,157     $ 134,145  
Income taxes paid $ (589 )   $ 416     $ 3,369     $ 4,141  
Supplemental disclosure of non-cash financing activities:              
Assets acquired under equipment financing $ 12,408     $ 1,179     $ 15,536     $ 1,179  
                               


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
December 31,
  Twelve Months Ended
December 31,
  2017   2018   2017   2018
Net income (loss) $ 7,473     $ 12,770     $ (99,784 )   $ 4,534  
Interest expense, net(1) 35,890     37,188     156,406     148,391  
Income tax expense (benefit) (28,665 )   (15,072 )   (17,281 )   (6,246 )
Depreciation 14,452     11,454     55,185     48,207  
Amortization of other intangible assets 35,800     25,258     140,354     103,148  
Stock-based compensation 11,252     7,132     60,001     29,064  
Restructuring expenses 1,226     347     15,810     3,368  
Transaction expenses and charges         773      
(Gain) loss of unconsolidated entities (38 )   265     (110 )   267  
Impairment of other long-lived assets 17,012         31,460      
SEC investigations reserve         8,000      
Shareholder litigation reserve             7,325  
Adjusted EBITDA $ 94,402     $ 79,342     $ 350,814     $ 338,058  
                               

(1) Interest expense includes impact of amortization of deferred financing costs, original issue discounts and interest income.


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
December 31,
  Twelve Months Ended
December 31,
  2017     2018     2017     2018  
Cash flow from operations $ 72,407     $ 48,959     $ 201,273     $ 182,552  
Less:              
Capital expenditures and financed equipment(1) (12,678 )   (25,367 )   (50,452 )   (53,319 )
               
Free cash flow $ 59,729     $ 23,592     $ 150,821     $ 129,233  
                               

(1) Capital expenditures during the three and twelve months ended December 31, 2017 includes $1.7 million and $7.4 million of principal payments under a three year agreement for equipment financing. Capital expenditures during the three and twelve months ended December 31, 2018 includes $1.8 million and $7.4 million of principal payments under a two year agreement for equipment financing. The remaining balance on the equipment financing is $8.4 million as of December 31, 2018.


Average Revenue Per Subscriber - Calculation and Segment Detail

We present our financial results in the following three segments:

  • Web presence. The web presence segment consists primarily of our web hosting brands and related products such as website security, website design tools and services, and e-commerce products.
  • Email marketing. The email marketing segment consists of Constant Contact email marketing tools and related products and the SinglePlatform digital storefront product.
  • Domain. The domain segment consists of domain-focused brands and certain web hosting brands that are aligned with our domain-focused brands. This segment sells domain names and domain management services to resellers and end users, as well as premium domain names, and also generates advertising revenue from domain name parking.

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
December 31,
  Twelve Months Ended
December 31,
  2017   2018   2017   2018
Consolidated revenue $ 294,250     $ 282,395     $ 1,176,867     $ 1,145,291  
Consolidated total subscribers 5,051     4,802     5,051     4,802  
Consolidated average subscribers 5,087     4,827     5,211     4,927  
Consolidated average revenue per subscriber (ARPS) $ 19.28     $ 19.50     $ 18.82     $ 19.37  
               
Web presence revenue $ 158,332     $ 147,712     $ 641,993     $ 605,315  
Web presence subscribers 3,849     3,639     3,849     3,639  
Web presence average subscribers 3,903     3,661     4,024     3,744  
Web presence ARPS $ 13.52     $ 13.45     $ 13.29     $ 13.47  
               
Email marketing revenue $ 102,849     $ 103,340     $ 401,250     $ 410,052  
Email marketing subscribers 519     497     519     497  
Email marketing average subscribers 521     498     531     508  
Email marketing ARPS $ 65.79     $ 69.22     $ 62.92     $ 67.28  
               
Domain revenue $ 33,069     $ 31,343     $ 133,624     $ 129,924  
Domain subscribers 683     666     683     666  
Domain average subscribers 663     668     656     675  
Domain ARPS $ 16.63     $ 15.63     $ 16.98     $ 16.05  
 


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

  Three Months Ended December 31, 2018
  Web presence Email
marketing
Domain Total
   
Revenue(1) $ 147,712   $ 103,340   $ 31,343   $ 282,395  
Gross profit $ 72,441   $ 73,114   $ 9,700   $ 155,255  
         
Net income (loss) $ (1,985 ) $ 16,278   $ (1,523 ) $ 12,770  
Interest expense, net(2) $ 17,453   $ 17,451   $ 2,284   $ 37,188  
Income tax benefit $ (5,921 ) $ (7,894 ) $ (1,257 ) $ (15,072 )
Depreciation $ 8,146   $ 2,407   $ 901   $ 11,454  
Amortization of other intangible assets $ 11,208   $ 13,384   $ 666   $ 25,258  
Stock-based compensation $ 3,934   $ 2,470   $ 728   $ 7,132  
Restructuring expenses $ 481   $ (134 ) $   $ 347  
Transaction expenses and charges $   $   $   $  
(Gain) loss of unconsolidated entities $ 265   $   $   $ 265  
Impairment of other long-lived assets $   $   $   $  
SEC investigations reserve $   $   $   $  
Shareholder litigation reserve $   $   $   $  
Adjusted EBITDA $ 33,581   $ 43,962   $ 1,799   $ 79,342  
         
  Twelve Months Ended December 31, 2018
  Web presence Email
marketing
Domain Total
         
Revenue(1) $ 605,315   $ 410,052   $ 129,924   $ 1,145,291  
Gross profit $ 297,590   $ 288,023   $ 38,941   $ 624,554  
         
Net income (loss) $ (22,534 ) $ 38,628   $ (11,560 ) $ 4,534  
Interest expense, net(2) $ 70,956   $ 68,317   $ 9,118   $ 148,391  
Income tax benefit $ (4,961 ) $ 115   $ (1,400 ) $ (6,246 )
Depreciation $ 32,915   $ 11,497   $ 3,795   $ 48,207  
Amortization of other intangible assets $ 47,020   $ 53,100   $ 3,028   $ 103,148  
Stock-based compensation $ 16,000   $ 9,638   $ 3,426   $ 29,064  
Restructuring expenses $ 2,135   $ 589   $ 644   $ 3,368  
Transaction expenses and charges $   $   $   $  
(Gain) loss of unconsolidated entities $ 267   $   $   $ 267  
Impairment of other long-lived assets $   $   $   $  
SEC investigations reserve $   $   $   $  
Shareholder litigation reserve $ 4,780   $ 1,500   $ 1,045   $ 7,325  
Adjusted EBITDA $ 146,578   $ 183,384   $ 8,096   $ 338,058  



  Three months ended December 31, 2017
  Web presence Email
marketing
Domain Total
   
Revenue(1) $ 158,332   $ 102,849   $ 33,069   $ 294,250  
Gross profit $ 76,402   $ 66,760   $ 1,355   $ 144,517  
         
Net income (loss) $ 2,264   $ (2,589 ) $ 7,798   $ 7,473  
Interest expense, net(2) $ 16,614   $ 18,702   $ 574   $ 35,890  
Income tax expense (benefit) $ (8,582 ) $ 9,973   $ (30,056 ) $ (28,665 )
Depreciation $ 10,233   $ 3,280   $ 939   $ 14,452  
Amortization of other intangible assets $ 15,846   $ 18,770   $ 1,184   $ 35,800  
Stock-based compensation $ 8,618   $ 1,542   $ 1,092   $ 11,252  
Restructuring expenses $ 187   $ 838   $ 201   $ 1,226  
Transaction expenses and charges $   $   $   $  
(Gain) loss of unconsolidated entities $ (38 ) $   $   $ (38 )
Impairment of other long-lived assets $   $   $ 17,012   $ 17,012  
SEC investigations reserve $   $   $   $  
Shareholder litigation reserve $   $   $   $  
Adjusted EBITDA $ 45,142   $ 50,516   $ (1,256 ) $ 94,402  
         
  Twelve months ended December 31, 2017
  Web presence Email
marketing
Domain Total
   
Revenue(1) $ 641,993   $ 401,250   $ 133,624   $ 1,176,867  
Gross profit $ 305,588   $ 254,941   $ 12,408   $ 572,937  
         
Net income (loss) $ (64,962 ) $ (10,615 ) $ (24,207 ) $ (99,784 )
Interest expense, net(2) $ 67,491   $ 86,914   $ 2,001   $ 156,406  
Income tax expense (benefit) $ 4,063   $ 5,152   $ (26,496 ) $ (17,281 )
Depreciation $ 37,634   $ 13,912   $ 3,639   $ 55,185  
Amortization of other intangible assets $ 60,277   $ 74,467   $ 5,610   $ 140,354  
Stock-based compensation $ 46,641   $ 6,934   $ 6,426   $ 60,001  
Restructuring expenses $ 9,131   $ 5,581   $ 1,098   $ 15,810  
Transaction expenses and charges $   $ 773   $   $ 773  
(Gain) loss of unconsolidated entities $ (110 ) $   $   $ (110 )
Impairment of other long-lived assets $ 600   $   $ 30,860   $ 31,460  
SEC investigations reserve $ 4,323   $ 2,751   $ 926   $ 8,000  
Shareholder litigation reserve $   $   $   $  
Adjusted EBITDA $ 165,088   $ 185,869   $ (143 ) $ 350,814  

(1) Revenue excludes intercompany transactions relating to domain sales and domain services from the domain segment to the web presence segment of $2.2 million and $2.4 million for the three months ended December 31, 2017 and 2018, respectively, and $10.3 million and $10.0 million for the twelve months ended December 31, 2017 and 2018, respectively.
(2) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income.


GAAP to Non-GAAP Reconciliation of Fiscal Year 2019 Guidance (as of February 7, 2019) - Adjusted EBITDA

The following table reflects the reconciliation of fiscal year 2019 estimated net loss calculated in accordance with GAAP to fiscal year 2019 guidance for adjusted EBITDA. All figures shown are approximate.

($ in millions) Twelve Months Ending
December 31, 2019
Estimated net loss $ 2   $ 11  
Estimated interest expense (net) 145   147  
Estimated income tax expense (benefit) (2 ) (4 )
Estimated depreciation 46   50  
Estimated amortization of acquired intangible assets 83   85  
Estimated stock-based compensation 33   37  
Estimated restructuring expenses 3   4  
Estimated transaction expenses and charges    
Estimated (gain) loss of unconsolidated entities    
Estimated impairment of other long-lived assets    
Adjusted EBITDA guidance $ 310   $ 330  

GAAP to Non-GAAP Reconciliation of Fiscal Year 2019 Guidance (as of February 7, 2019) - Free Cash Flow

The following table reflects the reconciliation of fiscal year 2019 estimated cash flow from operations calculated in accordance with GAAP to fiscal year 2019 guidance for free cash flow. All figures shown are approximate.

($ in millions) Twelve Months Ending
December 31, 2019
Estimated cash flow from operations $ 165   $ 180  
Estimated capital expenditures and financed equipment (50 ) (55 )
Free cash flow guidance $ 115   $ 125  

 

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Source: Endurance International Group Holdings, Inc.