Web.com Reports Second Quarter 2017 Financial Results
August 03 2017 - 4:05PM
Web.com Group, Inc. (NASDAQ:WEB), a leading global provider of
a full range of Internet services and online marketing solutions
for small businesses, today announced results for the second
quarter ended June 30, 2017.
“Web.com reported second quarter financial
results that beat our revenue and profitability targets. We
achieved our goal of returning to sequential revenue growth driven
by solid performance across all three areas of our business.
The Company also delivered strong adjusted EBITDA and increasing
free cash flow that we continue to deploy to drive shareholder
value," said David L. Brown, chairman, chief executive officer and
president of Web.com.
Brown added, "During the quarter, Web.com made
meaningful progress towards our strategic initiatives for the year
that will position us for improving growth and profitability.
Web Brand Networks, our franchise and multi-location channel, and
our vertical market solutions, including TORCHx and Lighthouse 360,
are showing good results and we continue to improve our
go-to-market efforts in Premium Services, our suite of high end
marketing solutions. We are confident that as we further
execute on our strategy that we will achieve our long term growth
and profitability targets."
Summary of Second Quarter 2017 Financial
Results:
- Total revenue, calculated in accordance with U.S. generally
accepted accounting principles (GAAP), was $186.7 million for the
second quarter of 2017, compared to $187.8 million for the second
quarter of 2016. Non-GAAP revenue was $188.1 million for the second
quarter of 2017, compared to $193.9 million in the year-ago
quarter.
- GAAP operating income was $23.0 million for the second quarter
of 2017, representing a 12% GAAP operating margin, compared to $7.6
million, representing a 4% GAAP operating margin, for the second
quarter of 2016. Non-GAAP operating income was $42.9 million
for the second quarter of 2017, representing a 23% non-GAAP
operating margin, compared to $37.3 million for the second quarter
of 2016, representing a 19% non-GAAP operating margin.
- GAAP net income was $8.0 million, or $0.16 per diluted share,
for the second quarter of 2017, representing a 4% GAAP net income
margin. GAAP net loss was $1.6 million, or $0.03 per diluted
share, for the second quarter of 2016, representing a -1% GAAP net
loss margin.
- Adjusted EBITDA was $48.2 million for the second quarter of
2017, representing an adjusted EBITDA margin of 26%, surpassing the
high end of the Company's adjusted EBITDA guidance of $46.0 to
$48.0 million. The Company had adjusted EBITDA of $42.7
million for the second quarter of 2016, representing a 22% adjusted
EBITDA margin.
- The Company generated cash from operations of $43.8 million for
the second quarter of 2017, compared to $30.8 million of cash flow
from operations for the second quarter of 2016.
Second Quarter and Recent Business
Highlights:
- Web.com's total net subscribers were approximately 3,490,000 at
the end of the second quarter of 2017, declining approximately
12,000 from the end of the first quarter of 2017.
- Web.com's average revenue per user (ARPU) was $17.72 for the
second quarter of 2017 compared to $18.66 for the second quarter of
2016. ARPU increased sequentially during the second quarter
of 2017 from $17.67 during the first quarter of 2017.
- Web.com's trailing twelve month customer retention rate was
84.4% for the second quarter of 2017.
- Web.com reduced debt by $31.8 million in the second quarter of
2017.
- Launched Fill-in, a product enhancement to our dental vertical
Lighthouse 360. Fill-in is the first and only solution that
detects last minute cancellations and finds a patient to take the
opening, improving the profitability of our dental customers.
Conference Call
InformationManagement will host a conference call today,
August 3, 2017, at 5:00 p.m. ET, to discuss Web.com's second
quarter financial results and current business outlook. There will
be an accompanying slide presentation which will be available on
the Investor Relations page of Web.com's website
(http://ir.web.com), along with a live webcast and replay of the
call. To access the call, dial 888-280-4443 (domestic) or
719-457-2634 (international). A replay of this conference call will
be available until August 17, 2017, at 844-512-2921 (domestic) or
412-317-6671 (international). The replay conference ID is
7772558.
About Web.comWeb.com Group,
Inc. (Nasdaq:WEB) is a global provider of a full range of
Internet services to small businesses to help them compete and
succeed online. Web.com meets the needs of small businesses
anywhere along their lifecycle with affordable, subscription-based
solutions including domains, hosting, website design and
management, search engine optimization, online marketing campaigns,
local sales leads, social media, mobile products, eCommerce
solutions and call center services. For more information, please
visit www.web.com; follow the company on Twitter @webdotcom or
on Facebook at www.facebook.com/web.com.
Note to Editors: Web.com is a registered
trademark of Web.com Group, Inc.
Use of Non-GAAP Financial
Measures
Some of the measures in this press release are
non-GAAP financial measures within the meaning of the SEC
Regulation G. Web.com believes presenting non-GAAP measures is
useful to investors, because it describes the operating performance
of the Company, in ways that management views or uses to assess the
performance of the Company. Web.com's management uses these
non-GAAP measures as important indicators of the Company's past
performance and in planning and forecasting performance in future
periods. The non-GAAP financial information Web.com presents may
not be comparable to similarly-titled financial measures used by
other companies, and investors should not consider non-GAAP
financial measures in isolation from, or in substitution for,
financial information presented in compliance with GAAP.
You are encouraged to review the reconciliation
of non-GAAP financial measures to GAAP financial measures included
elsewhere in this press release.
Relative to each of the non-GAAP measures
Web.com presents, management further sets forth its rationale as
follows:
- Non-GAAP Revenue. Web.com excludes from non-GAAP revenue the
impact of the fair value adjustment to amortized deferred revenue
because management believes that excluding such measures helps
management and investors better understand the Company's revenue
trends.
- Non-GAAP Operating Income and Non-GAAP Operating Margin.
Web.com excludes from non-GAAP operating income and non-GAAP
operating margin, amortization of intangibles, asset
impairment, stock-based compensation charges, restructuring
expenses, corporate development expenses and fair value adjustment
to deferred revenue and deferred expense because management
believes that adjusting for such measures helps management and
investors better understand the Company's operating
activities.
- Adjusted EBITDA and Adjusted EBITDA Margin. Web.com excludes
from adjusted EBITDA and adjusted EBITDA margin depreciation and
amortization expense, asset impairment, income tax provision,
interest expense, interest income, stock-based compensation, fair
value adjustments to deferred revenue and deferred expense,
corporate development expenses and restructuring expenses, because
management believes that excluding such items helps investors
better understand the Company's operating activities.
- Non-GAAP Cost of Revenue (excluding depreciation and
amortization). Web.com excludes from non-GAAP cost of revenue
(excluding depreciation and amortization) the fair value adjustment
to deferred expense and stock based compensation charges because
management believes that adjusting for such measures helps
management and investors better understand the company's operating
activities.
- Free Cash Flow. Free cash flow is a non-GAAP financial measure
that Web.com uses and defines as net cash provided by operating
activities less capital expenditures. The Company considers free
cash flow to be a liquidity measure which provides useful
information to management and investors about the amount of cash
generated by the business after the acquisition of property and
equipment, which can then be used for investment
opportunities.
- Non-GAAP diluted weighted average common shares. Non-GAAP
diluted weighted average shares outstanding include dilutive common
share equivalents outstanding that were excluded from GAAP diluted
weighted average shares outstanding in periods of a GAAP net loss,
as these shares are excluded when calculating GAAP diluted weighted
average common shares because including them would be
anti-dilutive. Management believes that making these adjustments
helps management and investors better understand the potential
dilution to shareholders.
In respect of the foregoing, Web.com provides the following
supplemental information to provide additional context for the use
and consideration of the non-GAAP financial measures used elsewhere
in this press release:
- Stock-based compensation. These expenses consist of expenses
for employee stock options and employee awards under Accounting
Standards Codification ("ASC") 718-10. While stock-based
compensation expense calculated in accordance with ASC 718-10
constitutes an ongoing and recurring expense, such expense is
excluded from non-GAAP results because such expense is not used by
management to assess the core profitability of the Company's
business operations. Web.com further believes these measures are
useful to investors in that they allow for greater transparency to
certain line items in the Company's financial statements. In
addition, when management performs internal comparisons to
Web.com's historical operating results and compares the Company's
operating results to the Company's competitors, management excludes
this item from various non-GAAP measures.
- Amortization of intangibles. Web.com incurs amortization of
acquired intangibles under ASC 805-10-65. Acquired intangibles
primarily consist of customer relationships, customer lists,
non-compete agreements, trade names, and developed technology.
Web.com expects to amortize for accounting purposes the fair value
of the acquired intangibles based on the pattern in which the
economic benefits of the intangible assets will be consumed as
revenue is generated. Although the intangible assets generate
revenue, the Company believes the non-GAAP financial measures
excluding this item provide meaningful supplemental information
regarding the Company's operational performance. In addition, when
management performs internal comparisons to Web.com's historical
operating results and compares the Company's operating results to
the Company's competitors, management excludes this item from
various non-GAAP measures.
- Depreciation expense. Web.com records depreciation expense
associated with its fixed assets. Although its fixed assets
generate revenue for Web.com, the item is excluded because
management believes certain non-GAAP financial measures excluding
this item provide meaningful supplemental information regarding the
Company's operational performance. In addition, when management
performs internal comparisons to Web.com's historical operating
results and compares the Company's operating results to the
Company's competitors, management excludes this item from various
non-GAAP measures.
- Restructuring expense. Web.com has recorded restructuring
expenses and excludes the impact of these expenses from its
non-GAAP measures, because such expense is not used by management
to assess the core profitability of the Company's business
operations.
- Fair value adjustment to deferred revenue and deferred expense.
Web.com has recorded a fair value adjustment to acquired deferred
revenue and deferred expense in accordance with ASC 805-10-65.
Web.com excludes the impact of these adjustments from its non-GAAP
measures, because doing so results in non-GAAP revenue and non-GAAP
net income which are reflective of ongoing operating results and
more comparable to historical operating results, since the majority
of the Company's revenue is recurring subscription revenue.
Excluding the fair value adjustment to deferred revenue and
deferred expense therefore facilitates management's internal
comparisons to Web.com's historical operating results.
- Corporate development expenses. Web.com incurred expenses
relating to acquisitions and the successful integration of
acquisitions. Web.com excludes the impact of these expenses from
its non-GAAP measures, because such expense is not used by
management to assess the core profitability of the Company's
business operations.
- Gains or losses from asset sales or impairment and certain
other transactions. Web.com excludes the impact of asset sales
or impairment and certain other transactions including debt
extinguishments and the sale of equity method investment from its
non-GAAP measures because the impact of these items is not
considered part of the company's ongoing operations.
- Monthly average revenue per user, or ARPU. ARPU is a metric the
Company measures on a quarterly basis. The Company defines ARPU as
quarterly non-GAAP subscription revenue divided by the average of
the number of subscribers at the beginning of the quarter and the
number of subscribers at the end of the quarter, divided by three
months. The Company excludes from subscription revenue the impact
of the fair value adjustments to deferred revenue resulting from
acquisition-related write downs.
Forward-Looking StatementsThis
press release includes "forward-looking statements" including,
without limitation, the statement regarding Web.com's confidence in
its strategy achieving long term growth and profitability targets,
are subject to risks, uncertainties and other factors that could
cause actual results or outcomes to differ materially from those
contemplated by the forward-looking statements. As a result
of the ultimate outcome of such risks and uncertainties, Web.com's
actual results could differ materially from those anticipated in
these forward-looking statements. These statements are based on
Web.com's current beliefs or expectations, and there are a number
of important factors that could cause the actual results or
outcomes to differ materially from those indicated by these
forward-looking statements, including, without limitation, risks
related to the successful offering of the products and services of
Web.com; and other risks that may impact Web.com's business. Other
risk factors are set forth under the caption, "Risk Factors," in
Web.com's Annual Report on Form 10-K for the year ended December
31, 2016 and Form 10-Q for the quarter ended March 31, 2017, as
filed with the Securities and Exchange Commission, which are
available on a website maintained by the Securities and Exchange
Commission at www.sec.gov. Web.com expressly disclaims any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein as a
result of new information, future events or otherwise.
Web.com Group, Inc. |
Consolidated Statements of Comprehensive
Income |
(in thousands, except for per share
data) |
(unaudited) |
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2017 |
|
2016 (1) |
|
2017 |
|
2016 (1) |
|
|
|
|
|
|
|
|
Revenue |
$ |
186,731 |
|
|
$ |
187,818 |
|
|
$ |
371,850 |
|
|
$ |
332,616 |
|
|
|
|
|
|
|
|
|
Cost of Revenue and
Operating Expenses: |
|
|
|
|
|
|
|
Cost of revenue
(excluding depreciation and amortization)
|
58,527 |
|
|
58,758 |
|
|
116,450 |
|
|
108,809 |
|
Sales and
marketing |
49,230 |
|
|
60,135 |
|
|
100,141 |
|
|
102,562 |
|
Technology and
development |
17,323 |
|
|
19,732 |
|
|
34,324 |
|
|
32,358 |
|
General and
administrative |
21,252 |
|
|
18,564 |
|
|
41,108 |
|
|
35,296 |
|
Restructuring
expense |
— |
|
|
778 |
|
|
312 |
|
|
914 |
|
Asset Impairment |
— |
|
|
— |
|
|
143 |
|
|
— |
|
Depreciation and
amortization |
17,401 |
|
|
22,273 |
|
|
35,834 |
|
|
38,186 |
|
Total cost of revenue
and operating expenses |
163,733 |
|
|
180,240 |
|
|
328,312 |
|
|
318,125 |
|
Income from
operations |
22,998 |
|
|
7,578 |
|
|
43,538 |
|
|
14,491 |
|
|
|
|
|
|
|
|
|
Interest expense,
net |
(8,146 |
) |
|
(8,662 |
) |
|
(16,036 |
) |
|
(14,259 |
) |
Net income (loss)
before income taxes |
14,852 |
|
|
(1,084 |
) |
|
27,502 |
|
|
232 |
|
Income tax expense |
(6,806 |
) |
|
(522 |
) |
|
(12,940 |
) |
|
(1,500 |
) |
Net income (loss) |
$ |
8,046 |
|
|
$ |
(1,606 |
) |
|
$ |
14,562 |
|
|
$ |
(1,268 |
) |
|
|
|
|
|
|
|
|
Other comprehensive
income: |
|
|
|
|
|
|
|
Foreign
currency translation adjustments |
(624 |
) |
|
(891 |
) |
|
(25 |
) |
|
(1,207 |
) |
Unrealized gain on investments, net of tax |
— |
|
|
— |
|
|
1 |
|
|
28 |
|
Total comprehensive
income (loss) |
$ |
7,422 |
|
|
$ |
(2,497 |
) |
|
$ |
14,538 |
|
|
$ |
(2,447 |
) |
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share: |
|
|
|
|
|
|
|
Net income (loss) per
basic common share |
$ |
0.16 |
|
|
$ |
(0.03 |
) |
|
$ |
0.30 |
|
|
$ |
(0.03 |
) |
Diluted earnings (loss)
per share: |
|
|
|
|
|
|
|
Net income (loss) per
diluted common share |
$ |
0.16 |
|
|
$ |
(0.03 |
) |
|
$ |
0.29 |
|
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
(1)
Included in the three and six months ended June 30, 2016 are
adjustments for the correction of an immaterial error in
theclassification of infrastructure costs, which were previously
classified within cost of revenue and were reclassified
totechnology and development. In addition, the Company changed its
accounting classification to record infrastructure costssupporting
administrative platforms to be included in general and
administrative expense. These were previously recorded intechnology
and development expense. |
Web.com Group, Inc. |
|
Consolidated Balance Sheets |
|
(in thousands, except share
amounts) |
|
|
|
|
|
|
|
|
|
June 30, 2017 |
|
December 31, 2016 |
|
Assets |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
33,449 |
|
|
$ |
20,447 |
|
|
Accounts
receivable, net of allowance of $1,631 and $1,695,respectively |
|
20,285 |
|
|
20,567 |
|
|
Prepaid
expenses |
|
13,538 |
|
|
12,311 |
|
|
Deferred
expenses |
|
63,178 |
|
|
60,217 |
|
|
Other
current assets |
|
1,868 |
|
|
1,872 |
|
|
Total current
assets |
|
132,318 |
|
|
115,414 |
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
55,248 |
|
|
53,132 |
|
|
Deferred expenses |
|
48,417 |
|
|
49,127 |
|
|
Goodwill |
|
881,590 |
|
|
871,751 |
|
|
Intangible assets,
net |
|
392,359 |
|
|
413,127 |
|
|
Other assets |
|
21,011 |
|
|
11,282 |
|
|
Total assets |
|
$ |
1,530,943 |
|
|
$ |
1,513,833 |
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
$ |
20,243 |
|
|
$ |
19,619 |
|
|
Accrued
expenses |
|
14,001 |
|
|
14,475 |
|
|
Accrued
compensation and benefits |
|
15,074 |
|
|
18,307 |
|
|
Deferred
revenue |
|
240,675 |
|
|
230,206 |
|
|
Current
portion of debt |
|
4,765 |
|
|
16,847 |
|
|
Deferred
consideration |
|
22,902 |
|
|
20,244 |
|
|
Other
liabilities |
|
4,236 |
|
|
5,034 |
|
|
Total current
liabilities |
|
321,896 |
|
|
324,732 |
|
|
|
|
|
|
|
|
Deferred revenue |
|
193,661 |
|
|
195,859 |
|
|
Long-term debt |
|
640,202 |
|
|
647,294 |
|
|
Deferred tax
liabilities |
|
64,567 |
|
|
80,135 |
|
|
Other long-term
liabilities |
|
17,625 |
|
|
30,361 |
|
|
Total liabilities |
|
1,237,951 |
|
|
1,278,381 |
|
|
Stockholders'
equity: |
|
|
|
|
|
Common stock, $0.001
par value per share: 150,000,000 sharesauthorized, 51,435,214 and
50,278,137 shares issued and outstandingat June 30, 2017 and
December 31, 2016, respectively |
|
51 |
|
|
50 |
|
|
Additional paid-in
capital |
|
579,083 |
|
|
578,486 |
|
|
Treasury stock at cost,
1,723,706 shares as of June 30, 2017 and3,146,012 shares as of
December 31, 2016 |
|
(48,035 |
) |
|
(62,430 |
) |
|
Accumulated other
comprehensive loss |
|
(4,044 |
) |
|
(4,020 |
) |
|
Accumulated deficit
(1) |
|
(234,063 |
) |
|
(276,634 |
) |
|
Total stockholders'
equity |
|
292,992 |
|
|
235,452 |
|
|
Total liabilities and
stockholders' equity |
|
$ |
1,530,943 |
|
|
$ |
1,513,833 |
|
|
(1) The
Company adopted Accounting Standards Update ("ASU") 2016-09 on
January 1, 2017 using the modified retrospectivetransition method
and recorded a $28.0 million adjustment for previously unrecognized
excess tax benefits in opening accumulateddeficit on January 1,
2017. |
|
Web.com Group, Inc. |
Consolidated Statements of Cash
Flows |
(in thousands) |
(unaudited) |
|
|
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Cash flows from
operating activities |
|
|
|
|
|
|
|
Net income (loss) |
8,046 |
|
|
$ |
(1,606 |
) |
|
$ |
14,562 |
|
|
$ |
(1,268 |
) |
Adjustments to
reconcile net income to net cash providedby operating
activities: |
|
|
|
|
|
|
|
Depreciation and
amortization |
17,401 |
|
|
22,273 |
|
|
35,834 |
|
|
38,186 |
|
Stock based
compensation |
6,102 |
|
|
5,392 |
|
|
11,659 |
|
|
10,200 |
|
Deferred income
taxes |
5,502 |
|
|
(214 |
) |
|
11,176 |
|
|
599 |
|
Amortization of debt
issuance costs and other |
3,702 |
|
|
3,687 |
|
|
7,399 |
|
|
6,685 |
|
Asset impairment |
— |
|
|
— |
|
|
143 |
|
|
— |
|
Changes in operating
assets and liabilities: |
|
|
|
|
|
|
|
Accounts
receivable, net |
(1,999 |
) |
|
(512 |
) |
|
986 |
|
|
(1,758 |
) |
Prepaid
expenses and other assets |
1,652 |
|
|
80 |
|
|
(5,216 |
) |
|
(10,935 |
) |
Deferred
expenses |
159 |
|
|
362 |
|
|
(1,535 |
) |
|
(2,586 |
) |
Accounts
payable |
5,987 |
|
|
5,173 |
|
|
(169 |
) |
|
(1,585 |
) |
Accrued
expenses and other liabilities |
(2,236 |
) |
|
(6,713 |
) |
|
347 |
|
|
(519 |
) |
Accrued
compensation and benefits |
1,614 |
|
|
1,105 |
|
|
(3,672 |
) |
|
(7,375 |
) |
Deferred
revenue |
(2,152 |
) |
|
1,786 |
|
|
5,452 |
|
|
15,644 |
|
Net cash provided by
operating activities |
43,778 |
|
|
30,813 |
|
|
76,966 |
|
|
45,288 |
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
|
|
|
Business
acquisitions |
— |
|
|
(2,975 |
) |
|
(8,587 |
) |
|
(303,262 |
) |
Capital
expenditures |
(5,394 |
) |
|
(4,451 |
) |
|
(10,573 |
) |
|
(8,306 |
) |
Other |
— |
|
|
(1,300 |
) |
|
— |
|
|
(1,300 |
) |
Net cash used in
investing activities |
(5,394 |
) |
|
(8,726 |
) |
|
(19,160 |
) |
|
(312,868 |
) |
|
|
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
|
|
Stock issuance
costs |
(1 |
) |
|
(1 |
) |
|
(4 |
) |
|
(6 |
) |
Common stock
repurchased |
(199 |
) |
|
(27 |
) |
|
(3,559 |
) |
|
(3,233 |
) |
Payments of long-term
debt |
(25,516 |
) |
|
(2,437 |
) |
|
(27,954 |
) |
|
(4,937 |
) |
Payments on revolving
credit facility |
(56,313 |
) |
|
(17,563 |
) |
|
(56,313 |
) |
|
(27,563 |
) |
Proceeds from exercise
of stock options |
4,563 |
|
|
666 |
|
|
8,979 |
|
|
1,205 |
|
Deferred consideration
payment |
— |
|
|
— |
|
|
(18,933 |
) |
|
— |
|
Proceeds from
borrowings on long-term debt |
50,000 |
|
|
— |
|
|
50,000 |
|
|
200,000 |
|
Proceeds from
borrowings on revolving credit facility |
— |
|
|
— |
|
|
7,000 |
|
|
115,000 |
|
Debt issuance
costs |
(1,927 |
) |
|
— |
|
|
(1,927 |
) |
|
(5,700 |
) |
Common stock purchases
under stock repurchase plan |
— |
|
|
(5,744 |
) |
|
(2,081 |
) |
|
(16,909 |
) |
Net cash (used in)
provided by financing activities |
(29,393 |
) |
|
(25,106 |
) |
|
(44,792 |
) |
|
257,857 |
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash |
(10 |
) |
|
(22 |
) |
|
(12 |
) |
|
(33 |
) |
|
|
|
|
|
|
|
|
Net increase (decrease)
in cash and cash equivalents |
8,981 |
|
|
(3,041 |
) |
|
13,002 |
|
|
(9,756 |
) |
Cash and cash
equivalents, beginning of period |
24,468 |
|
|
11,991 |
|
|
20,447 |
|
|
18,706 |
|
Cash and cash
equivalents, end of period |
$ |
33,449 |
|
|
$ |
8,950 |
|
|
$ |
33,449 |
|
|
$ |
8,950 |
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information |
|
|
|
|
|
|
|
Interest paid |
$ |
3,851 |
|
|
$ |
4,529 |
|
|
$ |
8,812 |
|
|
$ |
6,851 |
|
Income taxes paid |
$ |
1,212 |
|
|
$ |
632 |
|
|
$ |
1,573 |
|
|
$ |
2,046 |
|
Web.com Group, Inc. |
Reconciliations of GAAP to Non-GAAP
Results |
(in thousands, except for per share
data) |
(unaudited) |
|
|
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Reconciliation
of GAAP revenue to non-GAAPrevenue |
|
|
|
|
|
|
|
GAAP revenue |
$ |
186,731 |
|
|
$ |
187,818 |
|
|
$ |
371,850 |
|
|
$ |
332,616 |
|
Fair
value adjustment to deferred revenue |
1,328 |
|
|
6,038 |
|
|
3,038 |
|
|
14,596 |
|
Non-GAAP revenue |
$ |
188,059 |
|
|
$ |
193,856 |
|
|
$ |
374,888 |
|
|
$ |
347,212 |
|
|
|
|
|
|
|
|
|
Reconciliation
of GAAP operating income tonon-GAAP operating income |
|
|
|
|
|
|
|
GAAP operating
income |
$ |
22,998 |
|
|
$ |
7,578 |
|
|
$ |
43,538 |
|
|
$ |
14,491 |
|
Amortization of intangibles |
12,085 |
|
|
16,844 |
|
|
24,964 |
|
|
28,148 |
|
Asset
impairment |
— |
|
|
— |
|
|
143 |
|
|
— |
|
Stock
based compensation |
6,102 |
|
|
5,392 |
|
|
11,659 |
|
|
10,200 |
|
Restructuring expense |
— |
|
|
778 |
|
|
312 |
|
|
914 |
|
Corporate
development |
340 |
|
|
529 |
|
|
767 |
|
|
3,868 |
|
Fair
value adjustment to deferred revenue |
1,328 |
|
|
6,038 |
|
|
3,038 |
|
|
14,596 |
|
Fair
value adjustment to deferred expense |
46 |
|
|
94 |
|
|
104 |
|
|
152 |
|
Non-GAAP operating
income |
$ |
42,899 |
|
|
$ |
37,253 |
|
|
$ |
84,525 |
|
|
$ |
72,369 |
|
|
|
|
|
|
|
|
|
Reconciliation
of GAAP operating margin tonon-GAAP operating margin |
|
|
|
|
|
|
|
GAAP operating
margin |
12 |
% |
|
4 |
% |
|
12 |
% |
|
4 |
% |
Amortization of intangibles |
6 |
|
|
9 |
|
|
7 |
|
|
8 |
|
Asset
impairment |
— |
|
|
— |
|
|
— |
|
|
— |
|
Stock
based compensation |
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
Restructuring expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
Corporate
development |
1 |
|
|
— |
|
|
— |
|
|
2 |
|
Fair
value adjustment to deferred revenue |
1 |
|
|
3 |
|
|
1 |
|
|
4 |
|
Fair
value adjustment to deferred expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
Non-GAAP operating
margin |
23 |
% |
|
19 |
% |
|
23 |
% |
|
21 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of GAAP net income (loss) toadjusted EBITDA |
|
|
|
|
|
|
|
GAAP net income
(loss) |
$ |
8,046 |
|
|
$ |
(1,606 |
) |
|
$ |
14,562 |
|
|
$ |
(1,268 |
) |
Depreciation and amortization |
17,401 |
|
|
22,273 |
|
|
35,834 |
|
|
38,186 |
|
Asset
impairment |
— |
|
|
— |
|
|
143 |
|
|
— |
|
Stock
based compensation |
6,102 |
|
|
5,392 |
|
|
11,659 |
|
|
10,200 |
|
Restructuring expense |
— |
|
|
778 |
|
|
312 |
|
|
914 |
|
Corporate
development |
340 |
|
|
529 |
|
|
767 |
|
|
3,868 |
|
Fair
value adjustment to deferred revenue |
1,328 |
|
|
6,038 |
|
|
3,038 |
|
|
14,596 |
|
Fair
value adjustment to deferred expense |
46 |
|
|
94 |
|
|
104 |
|
|
152 |
|
Interest
expense, net |
8,146 |
|
|
8,662 |
|
|
16,036 |
|
|
14,259 |
|
Income
tax expense |
6,806 |
|
|
522 |
|
|
12,940 |
|
|
1,500 |
|
Adjusted EBITDA |
$ |
48,215 |
|
|
$ |
42,682 |
|
|
$ |
95,395 |
|
|
$ |
82,407 |
|
|
|
|
|
|
|
|
|
Reconciliation
of GAAP net income (loss)margin to adjusted EBITDA
margin |
|
|
|
|
|
|
|
GAAP net income (loss)
margin |
4 |
% |
|
(1 |
)% |
|
4 |
% |
|
— |
% |
Depreciation and amortization |
8 |
|
|
12 |
|
|
10 |
|
|
11 |
|
Asset
impairment |
— |
|
|
— |
|
|
— |
|
|
— |
|
Stock
based compensation |
3 |
|
|
3 |
|
|
3 |
|
|
3 |
|
Restructuring expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
Corporate
development |
1 |
|
|
— |
|
|
— |
|
|
2 |
|
Fair
value adjustment to deferred revenue |
1 |
|
|
3 |
|
|
1 |
|
|
4 |
|
Fair
value adjustment to deferred expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
Interest
expense, net |
5 |
|
|
5 |
|
|
4 |
|
|
4 |
|
Income
tax expense |
4 |
|
|
— |
|
|
3 |
|
|
— |
|
Adjusted EBITDA
margin |
26 |
% |
|
22 |
% |
|
25 |
% |
|
24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of net cash provided by operatingactivities to free cash
flow |
|
|
|
|
|
|
|
Net cash provided by
operating activities |
$ |
43,778 |
|
|
$ |
30,813 |
|
|
$ |
76,966 |
|
|
$ |
45,288 |
|
Capital
expenditures |
(5,394 |
) |
|
(4,451 |
) |
|
(10,573 |
) |
|
(8,306 |
) |
Free cash flow |
$ |
38,384 |
|
|
$ |
26,362 |
|
|
$ |
66,393 |
|
|
$ |
36,982 |
|
|
|
|
|
|
|
|
|
Net cash used in
investing activities |
$ |
(5,394 |
) |
|
$ |
(8,726 |
) |
|
$ |
(19,160 |
) |
|
$ |
(312,868 |
) |
Net cash (used in)
provided by financing activities
|
$ |
(29,393 |
) |
|
$ |
(25,106 |
) |
|
$ |
(44,792 |
) |
|
$ |
257,857 |
|
|
|
|
|
|
|
|
|
Reconciliation
of GAAP cost of revenue(excluding depreciation and amortization)
tonon-GAAP cost of revenue (excludingdepreciation and
amortization) |
|
|
|
|
|
|
|
Cost of revenue
(excluding depreciation andamortization) |
$ |
58,527 |
|
|
$ |
58,758 |
|
|
$ |
116,450 |
|
|
$ |
108,809 |
|
Less: Fair value adjustment to deferred expenses |
(46 |
) |
|
(94 |
) |
|
(104 |
) |
|
(152 |
) |
Less: Stock based compensation |
(281 |
) |
|
(268 |
) |
|
(550 |
) |
|
(763 |
) |
Non-GAAP cost of
revenue (excludingdepreciation and amortization)
|
$ |
58,200 |
|
|
$ |
58,396 |
|
|
$ |
115,796 |
|
|
$ |
107,894 |
|
|
|
|
|
|
|
|
|
Reconciliation
of GAAP diluted weightedaverage common shares to non-GAAP
dilutedweighted average common shares |
|
|
|
|
|
|
|
Diluted shares: |
|
|
|
|
|
|
|
Basic
weighted average common shares |
49,488 |
|
|
49,293 |
|
|
49,283 |
|
|
49,334 |
|
Diluted
stock options |
1,352 |
|
|
— |
|
|
1,322 |
|
|
— |
|
Diluted
performance shares |
— |
|
|
— |
|
|
6 |
|
|
— |
|
Diluted
restricted stock |
346 |
|
|
— |
|
|
456 |
|
|
— |
|
GAAP diluted
weighted-average shares used tocompute net income/(loss) per share
attributable tocommon stockholders |
51,186 |
|
|
49,293 |
|
|
51,067 |
|
|
49,334 |
|
Diluted
stock options |
— |
|
|
1,383 |
|
|
— |
|
|
1,384 |
|
Diluted
restricted stock |
— |
|
|
210 |
|
|
— |
|
|
318 |
|
Non-GAAP diluted
weighted average commonshares |
51,186 |
|
|
50,886 |
|
|
51,067 |
|
|
51,036 |
|
|
|
|
|
|
|
|
|
Reconciliation
of GAAP revenue to non-GAAPsubscription revenue used in
ARPU |
|
|
|
|
|
|
|
GAAP revenue |
$ |
186,731 |
|
|
$ |
187,818 |
|
|
|
|
|
Fair
value adjustment to deferred revenue |
1,328 |
|
|
6,038 |
|
|
|
|
|
Non-GAAP
revenue |
$ |
188,059 |
|
|
$ |
193,856 |
|
|
|
|
|
Professional services and other revenue |
(2,220 |
) |
|
(1,697 |
) |
|
|
|
|
Non-GAAP subscription
revenue used in ARPU |
$ |
185,839 |
|
|
$ |
192,159 |
|
|
|
|
|
Average
subscribers (in thousands) |
3,497 |
|
|
3,433 |
|
|
|
|
|
ARPU (Non-GAAP
subscription revenue persubscriber over 3 month period)
|
$ |
17.72 |
|
|
$ |
18.66 |
|
|
|
|
|
Web.com Group, Inc. |
Reconciliations of GAAP to Non-GAAP Results |
(in thousands, except for per share data) |
(unaudited) |
|
|
|
|
|
|
|
|
Reconciliation
of GAAP revenue to non-GAAP subscription revenue used in ARPU
|
Three monthsended March31, 2017 |
|
|
|
|
|
|
GAAP revenue |
$ |
185,118 |
|
|
|
|
|
|
|
Fair value adjustment
to deferred revenue |
1,710 |
|
|
|
|
|
|
|
Non-GAAP
revenue |
$ |
186,828 |
|
|
|
|
|
|
|
Professional services and other revenue |
(1,771 |
) |
|
|
|
|
|
|
Non-GAAP subscription
revenue used in ARPU |
$ |
185,057 |
|
|
|
|
|
|
|
Average
subscribers (in thousands) |
3,490 |
|
|
|
|
|
|
|
ARPU (Non-GAAP
subscription revenue per subscriber over 3 month period) |
$ |
17.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of GAAP revenue to non-GAAP revenue |
Guidance for three months endedJune 30, 2017 as
of May 4, 2017 |
|
|
|
|
GAAP revenue |
$ |
183,700 |
|
- |
$ |
186,700 |
|
|
|
|
|
Fair
value adjustment to deferred revenue |
1,300 |
|
|
1,300 |
|
|
|
|
|
Non-GAAP revenue |
$ |
185,000 |
|
- |
$ |
188,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note that the Company has not reconciled Adjusted EBITDA
guidance to GAAP net income (loss) because it does not provide
guidance on GAAP net income (loss) or the reconciling items between
Adjusted EBITDA and net income (loss) as a result of the
substantial uncertainty regarding, and the potential substantial
variability of, these items. The actual amount of net income
(loss) and such responding reconciling items will have a
significant effect on Adjusted EBITDA. Accordingly a
reconciliation of the non-GAAP financial measure guidance to the
corresponding GAAP measure is not available without unreasonable
effort.
|
Web.com Group, Inc. |
Supplemental Information |
(in thousands, except for per share
data) |
(unaudited) |
|
|
|
|
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Stock based
compensation |
|
|
|
|
|
|
|
Cost of
revenue |
$ |
281 |
|
|
$ |
268 |
|
|
$ |
550 |
|
|
$ |
763 |
|
Sales and
marketing |
1,261 |
|
|
1,426 |
|
|
2,631 |
|
|
2,563 |
|
Technology and
development |
1,032 |
|
|
921 |
|
|
2,032 |
|
|
1,614 |
|
General and
administrative |
3,528 |
|
|
2,777 |
|
|
6,446 |
|
|
5,260 |
|
Total |
$ |
6,102 |
|
|
$ |
5,392 |
|
|
$ |
11,659 |
|
|
$ |
10,200 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
Subscription |
$ |
184,511 |
|
|
$ |
186,121 |
|
|
$ |
367,859 |
|
|
$ |
329,312 |
|
Professional
services and other |
2,220 |
|
|
1,697 |
|
|
3,991 |
|
|
3,304 |
|
Total |
$ |
186,731 |
|
|
$ |
187,818 |
|
|
$ |
371,850 |
|
|
$ |
332,616 |
|
|
|
|
|
|
|
|
|
Other
Information |
|
|
|
|
|
|
|
Non-GAAP operating
income |
$ |
42,899 |
|
|
$ |
37,253 |
|
|
$ |
84,525 |
|
|
$ |
72,369 |
|
GAAP interest
expense |
$ |
8,146 |
|
|
$ |
8,662 |
|
|
$ |
16,036 |
|
|
$ |
14,259 |
|
Amortization of debt
issuance costs and other
|
$ |
3,702 |
|
|
$ |
3,687 |
|
|
$ |
7,399 |
|
|
$ |
6,685 |
|
Income taxes paid |
$ |
1,212 |
|
|
$ |
632 |
|
|
$ |
1,573 |
|
|
$ |
2,046 |
|
Non-GAAP diluted
weighted average commonshares |
51,186 |
|
|
50,886 |
|
|
51,067 |
|
|
51,036 |
|
|
|
|
|
|
|
|
|
Contacts
Investors:
Ira Berger
904-680-6909
Ira.Berger@web.com
Media:
Brian Wright
904-371-6856
Brian.Wright@web.com
Web.com Group, Inc. (NASDAQ:WEB)
Historical Stock Chart
From Mar 2024 to Apr 2024
Web.com Group, Inc. (NASDAQ:WEB)
Historical Stock Chart
From Apr 2023 to Apr 2024