October 31, 2019 at 7:05 AM EDT

Endurance International Group Reports 2019 Third Quarter Results

  • GAAP revenue of $277.2 million
  • Net income of $7.8 million
  • Adjusted EBITDA of $80.6 million
  • Cash flow from operations of $41.0 million
  • Free cash flow of $27.8 million
  • Total subscribers on platform were approximately 4.780 million at September 30, 2019

BURLINGTON, Mass., Oct. 31, 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 third quarter ended September 30, 2019.

“We are pleased with the progress we made in the third quarter, which resulted in positive net units as an enterprise.  During the quarter we continued to deliver increased solution value to our customers with focused investment on our strategic brands,” commented Jeffrey H. Fox, president and chief executive officer of Endurance International Group. “We believe our net subscriber and revenue trend reflects continued progress toward our goal of returning our multi-brand scale SMB platform to growth.”

Third Quarter 2019 Financial Highlights

  • Revenue for the third quarter of 2019 was $277.2 million, a decrease of 2.3 percent compared to $283.8 million for the third quarter of 2018.
  • Net income for the third quarter of 2019 was $7.8 million, or $0.05 per diluted share, compared to net loss of $6.3 million, or $(0.04) per diluted share, for the third quarter of 2018.
  • Adjusted EBITDA for the third quarter of 2019 was $80.6 million, a decrease of 7.9 percent compared to $87.5 million for the third quarter of 2018.
  • Cash flow from operations for the third quarter of 2019 was $41.0 million, a decrease of 20.2 percent compared to $51.3 million for the third quarter of 2018.
  • Free cash flow, defined as cash flow from operations less capital expenditures and financed equipment obligations, for the third quarter of 2019 was $27.8 million, a decrease of 31.5 percent compared to $40.7 million for the third quarter of 2018.

Third Quarter 2019 Operating Highlights

  • Total subscribers on platform at September 30, 2019 were approximately 4.780 million, compared to approximately 4.852 million subscribers at September 30, 2018 and approximately 4.802 million subscribers at December 31, 2018.  Total subscribers at the end of the quarter increased by approximately 10,700 as compared to the second quarter, and included approximately 1,300 subscribers from the September 2019 acquisition of Ecomdash disclosed in our Form 8-K filed on September 16, 2019. See “Total Subscribers” below.
  • Average revenue per subscriber, or ARPS, for the third quarter of 2019 was $19.35, compared to $19.36 for the third quarter of 2018 and $19.50 for the fourth quarter of 2018.  See “Average Revenue Per Subscriber” below.

Fiscal 2019 Guidance

The Company is revising its guidance for the full year ending December 31, 2019.  As of the date of this release, October 31, 2019, the Company expects:

  2018 Actual
as Reported
  Prior Guidance   Revised Guidance
(as of October 31, 2019)
GAAP revenue $1.145 billion   $1.120 to $1.140 billion   ~$1.115 billion
Adjusted EBITDA $338 million   $300 to $320 million   $300 to $310 million
Free cash flow $129 million   $110 to $120 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.

Conference Call and Webcast Information

Endurance International Group’s third quarter 2019 financial results teleconference and webcast is scheduled to begin at 8:00 a.m. EDT on Thursday, October 31, 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 third quarter of 2019, these adjustments had a positive impact of approximately 3,000 to 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 reflecting our belief that our net subscriber and revenue trend reflects continued progress toward our goal of returning to growth , our financial guidance for fiscal year 2019, 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 a return to growth or other anticipated benefits to our business; the possibility that we will experience decreases in, or fail to grow, 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 3,700 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
  September 30,
2019
Assets     (unaudited)
Current assets:      
Cash and cash equivalents $ 88,644     $ 84,465  
Restricted cash 1,932     1,832  
Accounts receivable 12,205     12,139  
Prepaid domain name registry fees 56,779     56,555  
Prepaid commissions 41,458     40,528  
Prepaid and refundable taxes 7,235     13,070  
Prepaid expenses and other current assets 27,855     23,137  
Total current assets 236,108     231,726  
Property and equipment—net 92,275     86,318  
Operating lease right-of-use assets     98,064  
Goodwill 1,849,065     1,854,829  
Other intangible assets—net 352,516     273,329  
Deferred financing costs—net 2,656     2,000  
Investments 15,000     15,000  
Prepaid domain name registry fees, net of current portion 11,207     11,139  
Prepaid commissions, net of current portion 42,472     47,776  
Other assets 5,208     2,292  
Total assets $ 2,606,507     $ 2,622,473  
Liabilities and stockholders’ equity      
Current liabilities:      
Accounts payable $ 12,449     $ 10,171  
Accrued expenses 79,279     67,267  
Accrued taxes 2,498     1,783  
Accrued interest 25,259     14,526  
Deferred revenue 371,758     375,729  
Operating lease liabilities—short term     22,474  
Current portion of notes payable 31,606     31,606  
Current portion of financed equipment 8,379     2,637  
Deferred consideration—short term 2,425     2,181  
Other current liabilities 3,147     2,216  
Total current liabilities 536,800     530,590  
Long-term deferred revenue 96,140     99,257  
Operating lease liabilities—long term     84,594  
Notes payable—long term, net of original issue discounts of $21,349 and $18,013 and deferred financing costs of $31,992 and $27,318, respectively 1,770,055     1,703,065  
Deferred tax liability 16,457     20,231  
Deferred consideration—long term 1,364      
Other liabilities 11,237     6,308  
Total liabilities 2,432,053     2,444,045  
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 146,140,876 shares issued at December 31, 2018 and September 30, 2019, respectively; 143,444,178 and 146,140,876 outstanding at December 31, 2018 and September 30, 2019, respectively 14     15  
Additional paid-in capital 961,235     988,773  
Accumulated other comprehensive loss (3,211 )   (4,876 )
Accumulated deficit (783,584 )   (805,484 )
Total stockholders’ equity 174,454     178,428  
Total liabilities and stockholders’ equity $ 2,606,507     $ 2,622,473  
               
               


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 September 30,   Nine Months Ended September 30,
  2018   2019   2018   2019
Revenue $ 283,770     $ 277,193     $ 862,896     $ 836,080  
Cost of revenue (including impairment of $0 and $17,892, respectively, for the three and nine months ended September 30, 2019) 128,945     120,755     393,597     384,196  
Gross profit 154,825     156,438     469,299     451,884  
Operating expense:              
Sales and marketing 63,831     59,143     197,733     191,221  
Engineering and development 22,683     28,257     64,559     77,299  
General and administrative 25,693     30,309     95,212     92,826  
Total operating expense 112,207     117,709     357,504     361,346  
Income from operations 42,618     38,729     111,795     90,538  
Other income (expense):              
Interest income 289     305     720     910  
Interest expense (37,527 )   (36,057 )   (111,923 )   (110,308 )
Total other expense—net (37,238 )   (35,752 )   (111,203 )   (109,398 )
Income (loss) before income taxes and equity earnings of unconsolidated entities 5,380     2,977     592     (18,860 )
Income tax expense (benefit) 11,715     (4,839 )   8,826     3,040  
(Loss) income before equity earnings of unconsolidated entities (6,335 )   7,816     (8,234 )   (21,900 )
Equity loss of unconsolidated entities, net of tax         2      
Net (loss) income $ (6,335 )   $ 7,816     $ (8,236 )   $ (21,900 )
Comprehensive (loss) income:              
Foreign currency translation adjustments (644 )   (1,001 )   (2,489 )   (1,054 )
Unrealized gain (loss) on cash flow hedge, net of tax (expense) benefit of ($182) and $626 for the three and nine months ended September 30, 2018, respectively, and ($70) and $200 for the three and nine months ended September 30, 2019, respectively 812     240     1,996     (611 )
Total comprehensive (loss) income $ (6,167 )   $ 7,055     $ (8,729 )   $ (23,565 )
Basic net (loss) income per share $ (0.04 )   $ 0.05     $ (0.06 )   $ (0.15 )
Diluted net (loss) income per share $ (0.04 )   $ 0.05     $ (0.06 )   $ (0.15 )
Weighted-average common shares used in computing net (loss) income per share:              
Basic 143,107,122     145,951,755     141,946,574     144,932,834  
Diluted 143,107,122     146,301,595     141,946,574     144,932,834  
                       
                       


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

  Three Months Ended September 30,   Nine Months Ended September 30,
  2018   2019   2018   2019
Cash flows from operating activities:              
Net (loss) income $ (6,335 )   $ 7,816     $ (8,236 )   $ (21,900 )
Adjustments to reconcile net (loss) income to net cash provided by operating activities:              
Depreciation of property and equipment 11,889     11,280     36,753     33,385  
Amortization of other intangible assets 26,177     21,668     77,890     64,137  
Impairment of long-lived assets             17,892  
Amortization of deferred financing costs 1,722     1,822     4,708     5,331  
Amortization of net present value of deferred consideration 60     23     311     143  
Amortization of original issue discounts 1,083     1,138     3,209     3,336  
Stock-based compensation 7,550     9,143     21,932     27,513  
Deferred tax expense 13,323     (685 )   8,839     1,942  
(Gain) loss on sale of assets (70 )   (8 )   191     128  
Loss from unconsolidated entities         2      
Financing costs expensed         1,228      
Loss on early extinguishment of debt         331      
Changes in operating assets and liabilities, net of acquisitions:              
Accounts receivable (2,053 )   827     1,687     34  
Prepaid and refundable taxes (2,344 )   (6,633 )   (3,446 )   (5,908 )
Prepaid expenses and other current assets 11,371     2,780     2,703     5,108  
Leases right-of-use asset, net     (258 )       395  
Accounts payable and accrued expenses (6,341 )   (8,357 )   (18,011 )   (23,492 )
Deferred revenue (4,691 )   395     3,502     7,636  
Net cash provided by operating activities 51,341     40,951     133,593     115,680  
Cash flows from investing activities:              
Businesses acquired in purchase transactions, net of cash acquired     (8,875 )       (8,875 )
Purchases of property and equipment (8,962 )   (10,632 )   (22,343 )   (26,796 )
Proceeds from sale of assets 6     1     6     1  
Net cash used in investing activities (8,956 )   (19,506 )   (22,337 )   (35,670 )
Cash flows from financing activities:              
Proceeds from issuance of term loan and notes, net of original issue discounts         1,580,305      
Repayments of term loans (25,401 )   (25,000 )   (1,656,094 )   (75,000 )
Payment of financing costs (285 )       (1,580 )    
Payment of deferred consideration (304 )       (4,500 )   (2,500 )
Principal payments on financed equipment (1,700 )   (2,471 )   (5,609 )   (6,332 )
Proceeds from exercise of stock options 300     4     756     26  
Net cash used in financing activities (27,390 )   (27,467 )   (86,722 )   (83,806 )
Net effect of exchange rate on cash and cash equivalents and restricted cash (658 )   (331 )   (2,146 )   (483 )
Net increase (decrease) in cash and cash equivalents and restricted cash 14,337     (6,353 )   22,388     (4,279 )
Cash and cash equivalents and restricted cash:              
Beginning of period 77,169     92,650     69,118     90,576  
End of period $ 91,506     $ 86,297     $ 91,506     $ 86,297  
Supplemental cash flow information:              
Interest paid $ 37,678     $ 42,533     $ 110,139     $ 110,886  
Income taxes paid $ 1,603     $ 991     $ 3,725     $ 1,715  
                               

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,
  2018   2019   2018   2019
Net (loss) income $ (6,335 )   $ 7,816     $ (8,236 )   $ (21,900 )
Interest expense, net(1) 37,238     35,752     111,203     109,398  
Income tax expense (benefit) 11,715     (4,839 )   8,826     3,040  
Depreciation 11,889     11,280     36,753     33,385  
Amortization of other intangible assets 26,177     21,668     77,890     64,137  
Stock-based compensation 7,550     9,143     21,932     27,513  
Restructuring expenses 197     (193 )   3,021     2,005  
Loss from unconsolidated entities         2      
Impairment of other long-lived assets             17,892  
Shareholder litigation reserve (935 )       7,325      
Adjusted EBITDA $ 87,496     $ 80,627     $ 258,716     $ 235,470  
                               

(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 September 30,   Nine Months Ended September 30,
  2018     2019     2018     2019  
Cash flows from operations $ 51,341     $ 40,951     $ 133,593     $ 115,680  
Less:              
Capital expenditures and financed equipment(1) (10,662 )   (13,103 )   (27,952 )   (33,128 )
Free cash flow $ 40,679     $ 27,848     $ 105,641     $ 82,552  
                               

(1) Capital expenditures during the three months ended September 30, 2018 and 2019 includes $1.7 million and $2.5 million, respectively, of principal payments under a three year agreement for equipment financing. Capital expenditures during the nine months ended September 30, 2018 and 2019 includes $5.6 million and $6.3 million, respectively, of principal payments under a three year agreement for equipment financing. The remaining balance on the equipment financing is $2.6 million as of September 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 and our Ecomdash inventory management and marketplace listing solution.
  • 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 September 30,   Nine Months Ended September 30,
  2018   2019   2018   2019
Consolidated revenue $ 283,770     $ 277,193     $ 862,896     $ 836,080  
Consolidated total subscribers 4,852     4,780     4,852     4,780  
Consolidated average subscribers for the period 4,885     4,774     4,951     4,791  
Consolidated ARPS $ 19.36     $ 19.35     $ 19.36     $ 19.39  
               
Web presence revenue $ 149,871     $ 143,196     $ 457,603     $ 433,353  
Web presence subscribers 3,682     3,579     3,682     3,579  
Web presence average subscribers for the period 3,709     3,584     3,765     3,610  
Web presence ARPS $ 13.47     $ 13.32     $ 13.50     $ 13.34  
               
Email marketing revenue $ 102,111     $ 102,765     $ 306,712     $ 307,984  
Email marketing subscribers(1) 499     491     499     491  
Email marketing average subscribers for the period 502     491     509     493  
Email marketing ARPS $ 67.88     $ 69.79     $ 66.97     $ 69.40  
               
Domain revenue $ 31,788     $ 31,232     $ 98,581     $ 94,743  
Domain subscribers 671     710     671     710  
Domain average subscribers for the period 674     699     677     688  
Domain ARPS $ 15.71     $ 14.88     $ 16.18     $ 15.30  

(1) Total email marketing subscriber count as of September 30, 2018 was impacted by a loss of approximately 10,500 subscribers, which resulted from changes made to Constant Contact's account cancellation policy to make it more consistent with the rest of our business. These changes took place in the three months ended June 30, 2018, as previously disclosed. In addition, the total email marketing subscriber count as of September 30, 2019 includes approximately 1,300 subscribers added as part of our September 2019 acquisition of Ecomdash.


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, 2018
  Web presence   Email
marketing
  Domain   Total
Revenue $ 149,871     $ 102,111     $ 31,788     $ 283,770  
Gross profit $ 75,074     $ 71,356     $ 8,395     $ 154,825  
               
Net (loss) income $ (7,565 )   $ 6,596     $ (5,366 )   $ (6,335 )
Interest expense, net(1) 18,132     17,128     1,978     37,238  
Income tax expense (benefit) 6,136     4,179     1,400     11,715  
Depreciation 8,401     2,538     950     11,889  
Amortization of other intangible assets 11,941     13,384     852     26,177  
Stock-based compensation 1,569     4,472     1,509     7,550  
Restructuring expenses 54     141     2     197  
Loss of unconsolidated entities              
Impairment of other long-lived assets              
Shareholder litigation reserve (768 )       (167 )   (935 )
Adjusted EBITDA $ 37,900     $ 48,438     $ 1,158     $ 87,496  
               
  Three Months Ended September 30, 2019
  Web presence   Email
marketing
  Domain   Total
Revenue $ 143,196     $ 102,765     $ 31,232     $ 277,193  
Gross profit $ 73,592     $ 73,763     $ 9,083     $ 156,438  
               
Net (loss) income $ (3,477 )   $ 12,546     $ (1,253 )   $ 7,816  
Interest expense, net(1) 16,665     18,599     488     35,752  
Income tax expense (benefit) (2,499 )   (1,795 )   (545 )   (4,839 )
Depreciation 8,302     2,114     864     11,280  
Amortization of other intangible assets 9,311     11,553     804     21,668  
Stock-based compensation 4,751     3,301     1,091     9,143  
Restructuring expenses (37 )   (157 )   1     (193 )
Loss of unconsolidated entities              
Impairment of other long-lived assets              
Shareholder litigation reserve              
Adjusted EBITDA $ 33,016     $ 46,161     $ 1,450     $ 80,627  
                               


  Nine Months Ended September 30, 2018
  Web presence   Email
marketing
  Domain   Total
Revenue $ 457,603     $ 306,712     $ 98,581     $ 862,896  
Gross profit $ 225,149     $ 214,909     $ 29,241     $ 469,299  
               
Net (loss) income $ (20,549 )   $ 22,350     $ (10,037 )   $ (8,236 )
Interest expense, net(1) 53,503     50,866     6,834     111,203  
Income tax expense (benefit) 960     8,009     (143 )   8,826  
Depreciation 24,769     9,090     2,894     36,753  
Amortization of other intangible assets 35,812     39,716     2,362     77,890  
Stock-based compensation 12,066     7,168     2,698     21,932  
Restructuring expenses 1,654     723     644     3,021  
Loss of unconsolidated entities 2             2  
Impairment of other long-lived assets              
Shareholder litigation reserve 4,780     1,500     1,045     7,325  
Adjusted EBITDA $ 112,997     $ 139,422     $ 6,297     $ 258,716  
               
  Nine Months Ended September 30, 2019
  Web presence   Email
marketing
  Domain   Total
Revenue $ 433,353     $ 307,984     $ 94,743     $ 836,080  
Gross profit $ 219,050     $ 221,399     $ 11,435     $ 451,884  
               
Net (loss) income $ (20,281 )   $ 22,648     $ (24,267 )   $ (21,900 )
Interest expense, net(1) 50,853     55,103     3,442     109,398  
Income tax expense (benefit) 1,589     1,102     349     3,040  
Depreciation 24,018     6,667     2,700     33,385  
Amortization of other intangible assets 27,600     34,244     2,293     64,137  
Stock-based compensation 14,686     9,606     3,221     27,513  
Restructuring expenses 752     1,220     33     2,005  
Loss of unconsolidated entities              
Impairment of other long-lived assets         17,892     17,892  
Shareholder litigation reserve              
Adjusted EBITDA $ 99,217     $ 130,590     $ 5,663     $ 235,470  
                               

(1) 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 October 31, 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 $ (37 ) $ (40 )
Estimated interest expense (net)   145     147  
Estimated income tax expense (benefit)   7     9  
Estimated depreciation   44     48  
Estimated amortization of acquired intangible assets   85     87  
Estimated stock-based compensation   36     38  
Estimated restructuring expenses   2     3  
Estimated (gain) loss of unconsolidated entities        
Estimated impairment of other long-lived assets   18     18  
Shareholder litigation reserve        
Adjusted EBITDA guidance $ 300   $ 310  
             

GAAP to Non-GAAP Reconciliation of Fiscal Year 2019 Guidance (as of October 31, 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.