Board Initiates Search for Successor; Hari
Ravichandran to Remain CEO Until Successor is Appointed
Endurance International Group (NASDAQ:EIGI) (“Endurance” or the
“Company”), a leading provider of cloud based platform solutions,
today announced that its Board of Directors and its Chief Executive
Officer Hari Ravichandran have adopted a CEO transition plan. Mr.
Ravichandran will remain CEO and serve as a Board member while the
Company conducts a search to identify his successor.
As a founder of the Company, Mr. Ravichandran has
led the Company to many milestones, including the Company’s IPO in
2013 and last year’s acquisition of Constant Contact.
Endurance generated over $1 billion of revenue in 2016 under Mr.
Ravichandran’s leadership.
“The Board thanks Hari for his vision and the
entrepreneurial spirit that led to Endurance’s growth into the
global family of web service providers it is today,” said James C.
Neary, Chairman of the Board of Directors, Endurance International
Group. “The Board and Hari have been engaged in a dialogue over an
extended period of time about an eventual transition of his
leadership, and will work together to bring on a CEO who can take
Endurance to the next level.”
Given the significant expansion of the business,
the substantial focus on free cash flow generation and risk
management, and the previously disclosed SEC investigation
regarding non-GAAP metrics, the Board decided, and Mr. Ravichandran
agreed, to accelerate the succession planning. They believe that
finding a CEO with a breadth of experience growing complex
organizations will enable Endurance to reach its next set of
milestones. The Board has retained Heidrick & Struggles, an
international executive search firm, to assist with the search
process for a new CEO.
“When I started Endurance over 20 years ago, I
never imagined the joys, challenges, and learnings that would come
from travelling the entrepreneurial road. Today, I’m proud to say
we have more than 4,000 talented employees working on behalf of
five million subscribers to our services around the world who rely
on Endurance for their online presence,” said Ravichandran.
“My number one priority has always been to do what is best for
Endurance, our employees and our shareholders, and I am pleased
that the Board and I are aligned on the qualities our next CEO
needs. I look forward to working with my fellow Board members to
identify a successor who can continue to drive growth by powering
small businesses worldwide.”
Business
Outlook
The Company also announced today that it is
confirming its previously announced 2017 GAAP revenue, adjusted
EBITDA and free cash flow guidance.
The Company's expectations for the full year 2017
are as follows:
|
2016 Actual As reported |
|
Fiscal 2017 Guidance |
GAAP revenue |
$1.111
billion |
|
4 – 5%
increase |
Adjusted EBITDA |
$288
million |
|
12 –
14% increase |
Free cash flow |
$112
million |
|
~35%
increase |
Adjusted EBITDA and free cash flow are non-GAAP
financial measures. A reconciliation of these non-GAAP financial
measures to their most comparable measure calculated in accordance
with GAAP is provided in the financial statement tables included at
the end of this press release.
* Percentage increases shown in the “Guidance”
column represent percentage increases over 2016 figures shown in
the adjacent column.
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 includes or excludes amounts that are
included or excluded from the most directly comparable measure
calculated and presented in accordance with GAAP.
Our non-GAAP financial measures may not provide
information that is directly comparable to that provided by other
companies in our industry, as other companies in our industry may
calculate non-GAAP financial results differently. In addition,
there are limitations in using non-GAAP financial measures because
they are not prepared in accordance with GAAP and exclude expenses
that may have a material impact on our reported financial results.
For example, adjusted EBITDA excludes interest expense, which has
been and will continue to be for the foreseeable future a
significant recurring expense in our business. The presentation of
non-GAAP financial information is not meant to be considered in
isolation from, or as a substitute for, the most directly
comparable financial measures prepared in accordance with GAAP. We
urge you to review the additional information about adjusted EBITDA
and free cash flow shown below, including the reconciliations of
these non-GAAP financial measures to their comparable GAAP
financial measures, and not to rely on any single financial measure
to evaluate our business.
Adjusted EBITDA
is a non-GAAP financial measure that we calculate as net (loss)
income, excluding the impact of interest expense (net), income tax
expense (benefit), depreciation, amortization of other intangible
assets, stock-based compensation, restructuring expenses,
transaction expenses and charges, (gain) loss of unconsolidated
entities, and impairment of other long-lived assets. We view
adjusted EBITDA as a performance measure and believe it helps
investors evaluate and compare our core operating performance from
period to period.
Free Cash Flow, or
FCF, is a non-GAAP financial measure that we
calculate as cash flow from operations less capital expenditures
and capital lease obligations. We believe that FCF provides
investors with an indicator of our ability to generate positive
cash flows after meeting our obligations with regard to capital
expenditures (including capital lease obligations).
Forward-Looking
Statements
This press release contains 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 the CEO transition plan and the Company’s financial
guidance for the fiscal year 2017. 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,” “intends,” “will,” “may,” 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: our ability to identify, attract, engage and transition
to a new CEO; that we may be unable to successfully enhance the
customer product and service experience and improve customer
satisfaction and retention through operational and infrastructure
improvements; that we may encounter difficulties or delays in our
efforts to build brand awareness of our key brands; that we may be
unable to drive revenue growth by increasing ARPS through
cross-selling and other product-related initiatives; that we may
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; that we may
be unable to increase sales to our existing subscribers, or retain
our existing subscribers; system or Internet failures; that we may
be unable to maintain or improve our competitive position or market
share; and other risks set forth under the caption “Risk Factors”
in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2016 filed with the SEC on February 24, 2017 and other
reports we file with the SEC. We assume no obligation to update any
forward-looking statements contained in this press release as a
result of new information, future events or otherwise.
About Endurance International
Group
Endurance International Group Holdings, Inc.
(NASDAQ:EIGI) (em)Powers millions of small businesses worldwide
with products and technology to vitalize their online web presence,
email marketing, mobile business solutions, and more. The Endurance
family of brands includes: Constant Contact, Bluehost, HostGator,
iPage, Domain.com, BigRock, SiteBuilder and SinglePlatform, among
others. Headquartered in Burlington, Massachusetts, Endurance
employs more than 4,000 people across the United
States, Brazil, India and the Netherlands. For more
information, visit: www.endurance.com.
Endurance International Group and the compass logo
are trademarks of The Endurance International Group, Inc.
Other brand names of Endurance International Group are trademarks
of The Endurance International Group, Inc. or its subsidiaries.
GAAP to Non-GAAP Reconciliation of Fiscal
Year 2017 Guidance - Adjusted EBITDA
The following table reflects the reconciliation of
fiscal year 2017 estimated net loss calculated in accordance with
GAAP to fiscal year 2017 guidance for adjusted EBITDA at the high
end of the guidance range (i.e. assuming a 12% increase over 2016
adjusted EBITDA as reported). All figures shown are
approximate.
($ in millions) |
Twelve Months Ending December 31,
2017 |
Estimated net
loss |
$ |
(91 |
) |
|
Estimated interest
expense (net) |
148 |
|
|
Estimated income tax
expense (benefit) |
10 |
|
|
Estimated
depreciation |
56 |
|
|
Estimated amortization
of acquired intangible assets |
137 |
|
|
Estimated stock-based
compensation |
57 |
|
|
Estimated restructuring
expenses |
8 |
|
|
Estimated transaction
expenses and charges |
— |
|
|
Estimated (gain) loss
of unconsolidated entities |
— |
|
|
Estimated impairment of
other long-lived assets |
— |
|
|
Adjusted EBITDA guidance |
$ |
325 |
|
GAAP to Non-GAAP Reconciliation of Fiscal Year 2017
Guidance - Free Cash Flow
The following table reflects the reconciliation of
fiscal year 2017 estimated cash flow from operations calculated in
accordance with GAAP to fiscal year 2017 guidance for free cash
flow. All figures shown are approximate.
($ in millions) |
Twelve Months Ending December 31,
2017 |
Estimated cash
flow from operations |
$ |
205 |
|
|
Estimated capital
expenditures and capital lease obligations |
(55 |
) |
|
Free cash flow guidance |
$ |
150 |
|
Investor Contact:
Angela White
Endurance International Group
(781) 852-3450
ir@endurance.com
Press Contact:
Lark-Marie Anton
Endurance International Group
(646) 887-7272
press@endurance.com
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