August 1, 2019 at 7:05 AM EDT

Endurance International Group Reports 2019 Second Quarter Results

  • GAAP revenue of $278.2 million

  • Net loss of $26.2 million

  • Adjusted EBITDA of $76.3 million

  • Cash flow from operations of $59.7 million

  • Free cash flow of $47.6 million

  • Total subscribers on platform were approximately 4.769 million at June 30, 2019

BURLINGTON, Mass., Aug. 01, 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 second quarter ended June 30, 2019.

“We are pleased with our progress simplifying our operations and executing our 2019 plans across the company,” commented Jeffrey H. Fox, president and chief executive officer of Endurance International Group. “The team is focused on delivering increasing solution value to the customers of our two scale businesses, email marketing and web presence.  We are pleased with the progress in our net customer trends and remain focused on executing our transition to revenue growth in the second half of 2019.”

Second Quarter 2019 Financial Highlights

  • Revenue for the second quarter of 2019 was $278.2 million, a decrease of 3.3 percent compared to $287.8 million for the second quarter of 2018.

  • Net loss for the second quarter of 2019 was $26.2 million, or $(0.18) per diluted share, compared to net income of $0.6 million, or $0.00 per diluted share, for the second quarter of 2018.

  • Adjusted EBITDA for the second quarter of 2019 was $76.3 million, a decrease of 10.2 percent compared to $85.0 million for the second quarter of 2018.

  • Cash flow from operations for the second quarter of 2019 was $59.7 million, an increase of 99.7 percent compared to $29.9 million for the second quarter of 2018.

  • Free cash flow, defined as cash flow from operations less capital expenditures and financed equipment obligations, for the second quarter of 2019 was $47.6 million, an increase of 137.2 percent compared to $20.1 million for the second quarter of 2018.

Second Quarter Operating Highlights

  • Total subscribers on platform at June 30, 2019 were approximately 4.769 million, compared to approximately 4.918 million subscribers at June 30, 2018 and approximately 4.802 million subscribers at December 31, 2018.  See “Total Subscribers” below.

  • Average revenue per subscriber, or ARPS, for the second quarter of 2019 was $19.42, compared to $19.32 for the second quarter of 2018 and $19.50 for the fourth quarter of 2018.  See “Average Revenue Per Subscriber” below.

Fiscal 2019 Guidance

For the full year ending December 31, 2019, and as of the date of this release, August 1, 2019, the Company continues to expect:

  2018 Actual
as Reported
  Guidance
(as of August 1, 2019) 
GAAP revenue $1.145 billion   $1.120 to $1.140 billion
Adjusted EBITDA $338 million   $300 to $320 million
Free cash flow $129 million   $110 to $120 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.

First and Second Quarter 2018 Income Tax Expense Revision

As originally disclosed in third quarter of 2018, the Company revised its deferred income tax provision for the first and second quarter of 2018 to reflect a revision that favorably impacted net income (loss) for these periods.  This revision did not impact the previously reported figures for Adjusted EBITDA, Cash Flow from Operations or Free Cash Flow.

Conference Call and Webcast Information

Endurance International Group’s second quarter 2019 financial results teleconference and webcast is scheduled to begin at 8:00 a.m. EDT on Thursday, August 1, 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 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 financed equipment 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 2019, these adjustments had a negligible impact 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. 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 addressing or reflecting our expectation of a transition back to revenue growth in the second half of 2019, our financial guidance for fiscal year 2019, the expected outcome of our investment and operational plans, including our focus on simplifying our business and delivering increased customer value, and our expectations of future growth and 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,” "anticipates," “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, strategies or prospects 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 or our actual financial results may differ from expectations; the possibility that we may not be able to execute our investment or operational plans or that these plans 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 increase sales to our existing subscribers, or retain our existing subscribers; data breaches; 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 those set forth under the caption “Risk Factors” in our Annual Report on Form 10-K for the period ended December 31, 2018 filed with the SEC on February 21, 2019 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 and Domain.com, 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) 418-6716
press@endurance.com



Endurance International Group Holdings, Inc.

Consolidated Balance Sheets
(in thousands, except share and per share amounts)

  December 31,
2018
  June 30, 2019
Assets     (unaudited)
Current assets:      
Cash and cash equivalents $ 88,644     $ 90,818  
Restricted cash 1,932     1,832  
Accounts receivable 12,205     12,989  
Prepaid domain name registry fees 56,779     57,326  
Prepaid commissions 41,458     41,704  
Prepaid and refundable taxes 7,235     6,517  
Prepaid expenses and other current assets 27,855     26,411  
Total current assets 236,108     237,597  
Property and equipment—net 92,275     88,700  
Operating lease right-of-use assets     104,210  
Goodwill 1,849,065     1,848,949  
Other intangible assets—net 352,516     292,191  
Deferred financing costs—net 2,656     2,221  
Investments 15,000     15,000  
Prepaid domain name registry fees, net of current portion 11,207     11,281  
Prepaid commissions, net of current portion 42,472     45,160  
Other assets 5,208     2,778  
Total assets $ 2,606,507     $ 2,648,087  
Liabilities and stockholders’ equity      
Current liabilities:      
Accounts payable $ 12,449     $ 14,933  
Accrued expenses 79,279     64,774  
Accrued taxes 2,498     2,418  
Accrued interest 25,259     24,483  
Deferred revenue 371,758     376,046  
Operating lease liabilities—short term     22,483  
Current portion of notes payable 31,606     31,606  
Current portion of financed equipment 8,379     4,583  
Deferred consideration—short term 2,425     1,408  
Other current liabilities 3,147     2,319  
Total current liabilities 536,800     545,053  
Long-term deferred revenue 96,140     99,249  
Operating lease liabilities—long term     90,989  
Notes payable—long term, net of original issue discounts of $21,349 and $19,151 and deferred financing costs of $31,992 and $28,919, respectively 1,770,055     1,725,326  
Deferred tax liability 16,457     18,785  
Deferred consideration—long term 1,364      
Other liabilities 11,237     6,460  
Total liabilities 2,432,053     2,485,862  
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; 143,444,515 and 145,741,251 shares issued at December 31, 2018 and June 30, 2019, respectively; 143,444,178 and 145,741,251 outstanding at December 31, 2018 and June 30, 2019, respectively 14     14  
Additional paid-in capital 961,235     979,626  
Accumulated other comprehensive loss (3,211 )   (4,115 )
Accumulated deficit (783,584 )   (813,300 )
Total stockholders’ equity 174,454     162,225  
Total liabilities and stockholders’ equity $ 2,606,507     $ 2,648,087  




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,
  2018   2019   2018   2019
Revenue $ 287,770     $ 278,204     $ 579,126     $ 558,887  
Cost of revenue 130,746     139,587     264,652     263,441  
Gross profit 157,024     138,617     314,474     295,446  
Operating expense:              
Sales and marketing 66,546     65,490     133,902     132,078  
Engineering and development 21,959     25,348     41,876     49,042  
General and administrative 30,744     31,124     69,519     62,517  
Total operating expense 119,249     121,962     245,297     243,637  
Income from operations 37,775     16,655     69,177     51,809  
Other income (expense):              
Interest income 227     314     431     605  
Interest expense (38,346 )   (37,037 )   (74,396 )   (74,251 )
Total other expense—net (38,119 )   (36,723 )   (73,965 )   (73,646 )
Loss before income taxes and equity earnings of unconsolidated entities (344 )   (20,068 )   (4,788 )   (21,837 )
Income tax (benefit) expense (946 )   6,160     (2,889 )   7,879  
Income (loss) before equity earnings of unconsolidated entities 602     (26,228 )   (1,899 )   (29,716 )
Equity (income) loss of unconsolidated entities, net of tax (25 )       2      
Net income (loss) $ 627     $ (26,228 )   $ (1,901 )   $ (29,716 )
Comprehensive income (loss):              
Foreign currency translation adjustments (2,425 )   348     (1,845 )   (53 )
Unrealized gain (loss) on cash flow hedge, net of tax (expense) benefit of ($45) and ($370) for the three and six months ended June 30, 2018, respectively, and ($35) and $269 for the three and six months ended June 30, 2019, respectively 144     110     1,184     (851 )
Total comprehensive loss $ (1,654 )   $ (25,770 )   $ (2,562 )   $ (30,620 )
Basic net income (loss) per share attributable to Endurance International Group Holdings, Inc. $ 0.00     $ (0.18 )   $ (0.01 )   $ (0.21 )
Diluted net income (loss) per share attributable to Endurance International Group Holdings, Inc. $ 0.00     $ (0.18 )   $ (0.01 )   $ (0.21 )
Weighted-average common shares used in computing net income (loss) per share:              
Basic 142,340,561     145,308,823     141,356,567     144,414,929  
Diluted 144,702,002     145,308,823     141,356,567     144,414,929  




Endurance International Group Holdings, Inc.

Consolidated Statements of Cash Flows
(unaudited)
(in thousands)

  Three Months Ended June 30,   Six Months Ended June 30,
  2018   2019   2018   2019
Cash flows from operating activities:              
Net income (loss) $ 627     $ (26,228 )   $ (1,901 )   $ (29,716 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:              
Depreciation of property and equipment 12,796     10,899     24,864     22,105  
Amortization of other intangible assets 25,978     21,349     51,713     42,469  
Impairment of long lived assets     17,892         17,892  
Amortization of deferred financing costs 1,092     1,776     2,986     3,509  
Amortization of net present value of deferred consideration 123     59     251     120  
Amortization of original issue discounts 1,068     1,111     2,126     2,198  
Stock-based compensation 7,390     9,354     14,382     18,370  
Deferred tax expense (benefit) (416 )   3,533     (4,484 )   2,627  
Loss on sale of assets 213     110     261     136  
Loss from unconsolidated entities (25 )       2      
Financing costs expensed 1,228         1,228      
Loss on early extinguishment of debt 331         331      
Changes in operating assets and liabilities, net of acquisitions:              
Accounts receivable 1,292     590     3,740     (793 )
Prepaid expenses and other current assets (5,857 )   4,620     (8,668 )   2,328  
Prepaid and refundable taxes (1,461 )   1,316     (1,102 )   725  
Leases right-of-use asset, net     80         653  
Accounts payable and accrued expenses (12,020 )   16,377     (11,670 )   (15,135 )
Deferred revenue (2,467 )   (3,158 )   8,193     7,241  
Net cash provided by operating activities 29,892     59,680     82,252     74,729  
Cash flows from investing activities:              
Purchases of property and equipment (8,127 )   (10,741 )   (13,381 )   (16,164 )
Net cash used in investing activities (8,127 )   (10,741 )   (13,381 )   (16,164 )
Cash flows from financing activities:              
Proceeds from issuance of term loan and notes, net of original issue discounts 1,580,305         1,580,305      
Repayments of term loans (1,605,207 )   (25,000 )   (1,630,693 )   (50,000 )
Payment of financing costs (1,295 )       (1,295 )    
Payment of deferred consideration (4,196 )   (2,500 )   (4,196 )   (2,500 )
Principal payments on financed equipment (1,679 )   (1,291 )   (3,909 )   (3,861 )
Proceeds from exercise of stock options 431     17     456     22  
Net cash used in financing activities (31,641 )   (28,774 )   (59,332 )   (56,339 )
Net effect of exchange rate on cash and cash equivalents and restricted cash (1,405 )   470     (1,488 )   (152 )
Net increase (decrease) in cash and cash equivalents and restricted cash (11,281 )   20,635     8,051     2,074  
Cash and cash equivalents and restricted cash:              
Beginning of period 88,450     72,015     69,118     90,576  
End of period $ 77,169     $ 92,650     $ 77,169     $ 92,650  
Supplemental cash flow information:              
Interest paid $ 30,370     $ 24,094     $ 72,461     $ 68,353  
Income taxes paid (received) $ 1,519     $ (1,142 )   $ 2,122     $ 724  




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,
  2018   2019   2018   2019
Net income (loss) $ 627     $ (26,228 )   $ (1,901 )   $ (29,716 )
Interest expense, net(1) 38,119     36,723     73,965     73,646  
Income tax (benefit) expense (946 )   6,160     (2,889 )   7,879  
Depreciation 12,796     10,899     24,864     22,105  
Amortization of other intangible assets 25,978     21,349     51,713     42,469  
Stock-based compensation 7,390     9,354     14,382     18,370  
Restructuring expenses 1,295     183     2,824     2,198  
(Gain) loss from unconsolidated entities (25 )       2      
Impairment of other long-lived assets     17,892         17,892  
Shareholder litigation reserve (240 )       8,260      
Adjusted EBITDA $ 84,994     $ 76,332     $ 171,220     $ 154,843  

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance 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 June 30,   Six Months Ended June 30,
  2018     2019     2018     2019  
Cash flows from operations $ 29,892     $ 59,680     $ 82,252     $ 74,729  
Less:              
Capital expenditures and financed equipment(1) (9,806 )   (12,032 )   (17,290 )   (20,025 )
Free cash flow $ 20,086     $ 47,648     $ 64,962     $ 54,704  


(1) Capital expenditures during the three months ended June 30, 2018 and 2019 includes $1.7 million and $1.3 million, respectively, of principal payments under a three year agreement for equipment financing. Capital expenditures during the six months ended June 30, 2018 and 2019 includes $3.9 million and $3.9 million, respectively, of principal payments under a three year agreement for equipment financing. The remaining balance on the equipment financing is $4.6 million as of June 30, 2019.
   


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, including Bluehost and HostGator. This segment also includes related products such as domain names, 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 solution. This segment also generates revenue from sales of our Constant Contact-branded website builder tool.

  • Domain. The domain segment consists of domain-focused brands such as Domain.com, ResellerClub and LogicBoxes as well as certain web hosting brands that are under common management 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. It also resells domain names and domain management services to our web presence segment.

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,
  2018   2019   2018   2019
Consolidated revenue $ 287,770     $ 278,204     $ 579,126     $ 558,887  
Consolidated total subscribers 4,918     4,769     4,918     4,769  
Consolidated average subscribers for the period 4,965     4,776     4,985     4,786  
Consolidated ARPS $ 19.32     $ 19.42     $ 19.36     $ 19.46  
               
Web presence revenue $ 152,715     $ 144,197     $ 307,732     $ 290,157  
Web presence subscribers 3,737     3,588     3,737     3,588  
Web presence average subscribers for the period 3,774     3,600     3,793     3,614  
Web presence ARPS $ 13.49     $ 13.35     $ 13.52     $ 13.38  
               
Email marketing revenue $ 102,154     $ 102,479     $ 204,601     $ 205,219  
Email marketing subscribers 504     492     504     492  
Email marketing average subscribers for the period 511     493     512     494  
Email marketing ARPS $ 66.60     $ 69.28     $ 66.64     $ 69.21  
               
Domain revenue $ 32,901     $ 31,528     $ 66,793     $ 63,511  
Domain subscribers 677     689     677     689  
Domain average subscribers for the period 680     683     680     678  
Domain ARPS $ 16.13     $ 15.39     $ 16.36     $ 15.62  




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, 2018
  Web presence   Email
marketing
  Domain   Total
Revenue $ 152,715     $ 102,154     $ 32,901     $ 287,770  
Gross profit $ 75,702     $ 71,376     $ 9,946     $ 157,024  
               
Net (loss) income $ (6,876 )   $ 10,395     $ (2,892 )   $ 627  
Interest expense, net(1) 18,385     17,329     2,405     38,119  
Income tax (benefit) expense (497 )   (333 )   (116 )   (946 )
Depreciation 8,391     3,406     999     12,796  
Amortization of other intangible assets 11,863     13,239     876     25,978  
Stock-based compensation 5,424     1,288     678     7,390  
Restructuring expenses 788     420     87     1,295  
(Gain) loss of unconsolidated entities (25 )           (25 )
Impairment of other long-lived assets              
Shareholder litigation reserve (197 )       (43 )   (240 )
Adjusted EBITDA $ 37,256     $ 45,744     $ 1,994     $ 84,994  
               
  Three Months Ended June 30, 2019
  Web presence   Email
marketing
  Domain   Total
Revenue $ 144,197     $ 102,479     $ 31,528     $ 278,204  
Gross profit $ 73,217     $ 73,589     $ (8,189 )   $ 138,617  
               
Net (loss) income $ (10,262 )   $ 4,164     $ (20,130 )   $ (26,228 )
Interest expense, net(1) 17,093     19,110     520     36,723  
Income tax (benefit) expense 3,193     2,269     698     6,160  
Depreciation 7,767     2,229     903     10,899  
Amortization of other intangible assets 9,210     11,408     731     21,349  
Stock-based compensation 5,042     3,222     1,090     9,354  
Restructuring expenses 155     23     5     183  
(Gain) loss of unconsolidated entities              
Impairment of other long-lived assets         17,892     17,892  
Shareholder litigation reserve              
Adjusted EBITDA $ 32,198     $ 42,425     $ 1,709     $ 76,332  


  Six Months Ended June 30, 2018
  Web presence   Email
marketing
  Domain   Total
Revenue $ 307,732     $ 204,601     $ 66,793     $ 579,126  
Gross profit $ 150,075     $ 143,553     $ 20,846     $ 314,474  
               
Net (loss) income $ (12,984 )   $ 15,754     $ (4,671 )   $ (1,901 )
Interest expense, net(1) 35,371     33,738     4,856     73,965  
Income tax (benefit) expense (5,176 )   3,830     (1,543 )   (2,889 )
Depreciation 16,368     6,552     1,944     24,864  
Amortization of other intangible assets 23,871     26,332     1,510     51,713  
Stock-based compensation 10,497     2,696     1,189     14,382  
Restructuring expenses 1,600     582     642     2,824  
(Gain) loss of unconsolidated entities 2             2  
Impairment of other long-lived assets              
Shareholder litigation reserve 5,548     1,500     1,212     8,260  
Adjusted EBITDA $ 75,097     $ 90,984     $ 5,139     $ 171,220  
               
  Six Months Ended June 30, 2019
  Web presence   Email
marketing
  Domain   Total
Revenue $ 290,157     $ 205,219     $ 63,511     $ 558,887  
Gross profit $ 145,458     $ 147,636     $ 2,352     $ 295,446  
               
Net (loss) income $ (16,804 )   $ 10,102     $ (23,014 )   $ (29,716 )
Interest expense, net(1) 34,188     36,504     2,954     73,646  
Income tax (benefit) expense 4,088     2,897     894     7,879  
Depreciation 15,716     4,553     1,836     22,105  
Amortization of other intangible assets 18,289     22,691     1,489     42,469  
Stock-based compensation 9,935     6,305     2,130     18,370  
Restructuring expenses 789     1,377     32     2,198  
(Gain) loss of unconsolidated entities              
Impairment of other long-lived assets         17,892     17,892  
Shareholder litigation reserve              
Adjusted EBITDA $ 66,201     $ 84,429     $ 4,213     $ 154,843  

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




The following table represents the impact of the income statement revision to the second quarter of 2018 due to the revised deferred income tax provision (in thousands, except per share data):

  Three Months Ended June 30, 2018   Six Months Ended June 30, 2018
  Originally
Filed
Adjustment Revised   Originally
Filed
Adjustment Revised
Loss before income taxes and equity earnings of unconsolidated subsidiaries $ (344 ) $   $ (344 )   $ (4,788 ) $   $ (4,788 )
Income tax expense (benefit) 1,650   (2,596 ) (946 )   4,267   (7,156 ) (2,889 )
(Loss) income before equity earnings of unconsolidated subsidiaries (1,994 ) 2,596   602     (9,055 ) 7,156   (1,899 )
Equity (income) loss of unconsolidated subsidiaries (25 )   (25 )   2     2  
Net income (loss) $ (1,969 ) $ 2,596   $ 627     $ (9,057 ) $ 7,156   $ (1,901 )
Comprehensive income (loss)              
Foreign currency translation (2,425 )   (2,425 )   (1,845 )   (1,845 )
Unrealized (gain) loss on cash flow hedge, net of tax 144     144     1,184     1,184  
Total comprehensive loss $ (4,250 ) $ 2,596   $ (1,654 )   $ (9,718 ) $ 7,156   $ (2,562 )
Basic net income (loss) per share $ (0.01 ) $ 0.01   $     $ (0.06 ) $ 0.05   $ (0.01 )
Diluted net income (loss) per share $ (0.01 ) $ 0.01   $     $ (0.06 ) $ 0.05   $ (0.01 )
Weighted-average common shares used in computing net income (loss) per share              
Basic 142,340,561     142,340,561     141,356,567     141,356,567  
Diluted 142,340,561   2,361,441   144,702,002     141,356,567     141,356,567  




The following table represents the impact of the revised deferred income tax provision on the impacted balance sheet accounts as of the date shown (in thousands):

  June 30, 2018
  Originally
Filed
Adjustment Revised
Deferred tax liability $ 29,897   $ (7,156 ) $ 22,741  
Total liabilities 2,490,106   (7,156 ) 2,482,950  
Accumulated deficit (797,175 ) 7,156   (790,019 )
Total stockholders' equity 147,759   7,156   154,915  
Total liabilities and stockholders' equity 2,637,865     2,637,865  




The following table represents the impact of the revised deferred income tax provision on the impacted lines of the statement of cash flows for the periods shown (in thousands):

  Three Months Ended June 30, 2018   Six Months Ended June 30, 2018
  Originally
Filed
Adjustment Revised   Originally
Filed
Adjustment Revised
Net income (loss) $ (1,969 ) $ 2,596   $ 627     $ (9,057 ) $ 7,156   $ (1,901 )
Deferred tax expense 2,180   (2,596 ) (416 )   2,672   (7,156 ) (4,484 )
Net cash provided by operating activities 29,892     29,892     82,252     82,252  




GAAP to Non-GAAP Reconciliation of Fiscal Year 2019 Guidance (as of August 1, 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 $ (39 ) $ (32 )
Estimated interest expense (net)   146     148  
Estimated income tax expense (benefit)   6     8  
Estimated depreciation   44     48  
Estimated amortization of acquired intangible assets   85     87  
Estimated stock-based compensation   36     38  
Estimated restructuring expenses   4     5  
Estimated transaction expenses and charges        
Estimated (gain) loss of unconsolidated entities        
Estimated impairment of other long-lived assets   18     18  
Adjusted EBITDA guidance $ 300   $ 320  




GAAP to Non-GAAP Reconciliation of Fiscal Year 2019 Guidance (as of August 1, 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 $ 160   $ 175  
Estimated capital expenditures and financed equipment obligations   (50 )   (55 )
Free cash flow guidance $ 110   $ 120  

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Source: Endurance International Group Holdings, Inc.