Endurance International Group Holdings, Inc. (Nasdaq:EIGI), a
leading provider of cloud-based platform solutions designed to help
small and medium-sized businesses succeed online, today reported
financial results for its fourth quarter and fiscal year ended
December 31, 2014.
"We are excited to have finished our fiscal 2014 with results
that exceeded expectations. Our results reinforce our confidence in
our two-pronged strategy to increase our subscriber base and grow
average revenue per subscriber, which positions us well to capture
more of what we believe is a large opportunity," commented Hari
Ravichandran, chief executive officer and founder of Endurance
International Group. "We ended the fiscal year with a milestone 4.1
million subscribers, an increase of 17 percent over the end of
2013, and continued to see an increase in average revenue per
subscriber, to $14.48, or 11 percent growth over last fiscal
year."
Below is a summary of our fiscal 2014 results and guidance for
fiscal 2015.
Full Year & Fourth Quarter Financial
Highlights
|
|
|
Year over year |
Fiscal Year 2014 |
Fiscal Year |
Year over year |
(in millions) |
Q4 2014 Actuals |
growth |
Guidance |
2014 Actuals |
growth |
Adjusted Revenue |
$175.2 |
28% |
$648 - $650 |
$651.9 |
23% |
Adjusted EBITDA |
$62.0 |
34% |
$230 - $235 |
$235.6 |
13% |
UFCF |
$50.7 |
35% |
$180 - $190 |
$193.4 |
16% |
- For the fiscal year 2014, GAAP revenue was $629.8 million, an
increase of 21 percent compared to $520.3 million in fiscal
2013. GAAP revenue for the fourth quarter was $171.9 million,
an increase of 26 percent compared to $136.4 million in the fourth
quarter of 2013.
- For the fiscal year 2014, net loss attributable to Endurance
International Group Holdings, Inc. was $42.8 million, or $(0.34)
per diluted share compared to a net loss of $159.2 million, or
$(1.55) per diluted share, for fiscal 2013. Net loss
attributable to Endurance International Group Holdings, Inc. for
the fourth quarter was $2.2 million, or $(0.02) per diluted share,
compared to a net loss of $67.5 million, or $(0.57) per diluted
share, for the fourth quarter of 2013.
- Adjusted revenue for the fiscal year 2014 was $651.9 million,
an increase of 23 percent compared to $528.1 million in fiscal year
2013. Adjusted revenue for the fourth quarter was $175.2
million, an increase of 28 percent compared to $136.9 million in
the fourth quarter of 2013.
- Adjusted revenue for the fiscal year 2014 excluding the impact
of Directi, which contributed $48.5 million of adjusted revenue for
the fiscal year, was $603.4 million, an increase of 14 percent over
fiscal year 2013. Adjusted revenue excluding the impact of
Directi, which contributed $13.2 million of adjusted revenue for
the quarter, was $162.0 million, an increase of 18 percent over the
fourth quarter of 2013.
- Adjusted EBITDA for the fiscal year 2014 was $235.6 million, an
increase of 13 percent compared to $207.9 million in fiscal
2013. Adjusted EBITDA for the fourth quarter was $62.0
million, an increase of 34 percent compared to $46.2 million in the
fourth quarter of 2013.
- Unlevered free cash flow ("UFCF") for the fiscal year 2014 was
$193.4 million, an increase of 16 percent compared to $166.5
million in fiscal 2013. UFCF for the fourth quarter was $50.7
million, an increase of 35 percent compared to $37.5 million in the
same period a year ago.
- Free cash flow ("FCF") for the fiscal year was $136.6 million,
an increase of 64 percent compared to $83.4 million in fiscal 2013.
FCF for the fourth quarter was $35.8 million, an increase of 90
percent compared to $18.9 million in the fourth quarter of 2013.
Full Year & Fourth Quarter Operating
Highlights
- Total subscribers increased by over 380,000 in fiscal 2014.
Excluding the impact of Directi, total subscribers increased by
374,000 in fiscal 2014. Total subscribers increased by 91,000
for the fourth quarter. Excluding the impact of Directi, total
subscribers increased by 88,000 in the fourth quarter.
- Total subscribers were 4.087 million at the end of the fiscal
year 2014, an increase of 17 percent compared to 3.502 million at
the end of fiscal year 2013. The subscriber base increase
consisted of the over 380,000 subscriber net adds, which were added
through normal business operations, and approximately 200,000
subscribers on-boarded via acquisitions.
- For the year, average revenue per subscriber ("ARPS") was
$14.48, an increase of 11 percent compared to $13.09 in fiscal
2013. Excluding the impact of Directi, ARPS was $13.58, an increase
of 4 percent compared to $13.09 in fiscal 2013. ARPS was
$14.78 for the fourth quarter, an increase of 12 percent compared
to $13.15 for fourth quarter 2013. Excluding the impact of
Directi, ARPS was $13.86, an increase of 5 percent compared to
$13.15 for fourth quarter 2013.
- On December 31, 2014, the company made an equity investment of
$15.2 million, representing an ownership position of 40 percent in
AppMachine BV, a Dutch developer of mobile applications.
Fiscal Year 2015 and First Quarter 2015 Guidance (at
February 23, 2015)
The company is providing the following guidance:
For the full year 2015 ending December 31, 2015, the company
expects:
|
(in millions) |
Fiscal Year 2015 |
Adjusted Revenue |
$745 - $755 million |
Year over year
growth |
14% - 16% |
Adjusted EBITDA |
$275 - $285 |
Year over year
growth |
17% - 21% |
UFCF |
$220 - $230 |
Year over year
growth |
14% - 19% |
For the first quarter ending March 31, 2015, the company
expects:
|
(in millions) |
Q1 FY2015 |
Adjusted Revenue |
$175 - $178 million |
Year over year
growth |
15% - 17% |
Adjusted EBITDA |
$65 - $66 |
Year over year
growth |
10% - 12% |
The company's first quarter 2015 guidance for adjusted EBITDA
growth reflects the seasonally strong investment in marketing
relative to subsequent quarters of the fiscal year.
Additionally, the company will be providing UFCF guidance on an
annual basis only.
Adjusted revenue, adjusted EBITDA, UFCF, FCF and ARPS 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. An
explanation of these measures is also provided below under the
heading "Use of Non-GAAP Financial Measures." We have not
reconciled our adjusted revenue, adjusted EBITDA or UFCF guidance
to the most comparable GAAP metrics because we do not provide
guidance for the reconciling items between these non-GAAP metrics
and the most comparable GAAP metrics, as certain of these items are
out of our control and/or cannot be reasonably predicted.
Conference Call and Webcast Information
Endurance International Group's fourth quarter 2014
teleconference and webcast is scheduled to begin at 5:00 p.m. ET on
Monday, February 23, 2015. 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/.
Use of Non-GAAP Financial Measures
In addition to our financial information presented in accordance
with GAAP, we use certain "non-GAAP financial measures" described
below to evaluate the operating and financial performance of our
business, identify trends affecting our business, develop
projections and make strategic business decisions. Generally, 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. We monitor the non-GAAP financial measures
described below, and we believe they are helpful to investors,
because we believe they reflect the operating performance of our
business and help management and investors gauge our ability to
generate cash flow, excluding some recurring and non-recurring
expenses that are included in the most directly comparable measures
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, particularly related to adjustments
for integration and restructuring expenses. In addition, there are
limitations in using non-GAAP financial measures because they are
not prepared in accordance with GAAP, may be different from
non-GAAP financial measures used by other companies and exclude
expenses that may have a material impact on our reported financial
results. Furthermore, interest expense, which is excluded from some
of our non-GAAP measures, 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 or as a substitute for the directly
comparable financial measures prepared in accordance with GAAP. We
urge you to review the reconciliations of our non-GAAP financial
measures to the comparable GAAP financial measures included in this
press release, and not to rely on any single financial measure to
evaluate our business.
Adjusted Net Income
Adjusted net income is a non-GAAP financial measure that we
calculate as net income (loss) plus (i) changes in deferred
revenue, amortization, stock-based compensation expense, loss of
unconsolidated entities, net loss on sale of assets, expenses
related to integration of acquisitions and restructurings,
transaction expenses and charges including costs associated with
certain litigation matters, preparation for our IPO and any
dividend-related payments accounted for as compensation expense,
less (ii) earnings of unconsolidated entities, net gain on
sale of assets and the impact of purchase accounting related to
reduced fair value of deferred domain registration costs and
(iii) the estimated tax effects of the foregoing adjustments.
Due to our history of acquisitions and financings, we have incurred
accounting charges and expenses that obscure the operating
performance of our business. We believe that adjusting for these
items and the use of adjusted net income is useful to investors in
evaluating the performance of our company.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that we
calculate as adjusted net income plus interest expense,
depreciation, and income tax expense (benefit). We manage our
business based on the cash collected from our subscribers and the
cash required to acquire and service those subscribers. We believe
highlighting cash collected and cash spent in a given period
provides insight to an investor to gauge the overall health of our
business. Under GAAP, although subscription fees are paid in
advance, we recognize the associated revenue over the subscription
term, which does not fully reflect short-term trends in our
operating results. In order to capture these trends and report our
performance consistently with how we manage our business, we
include the change in deferred revenue for the period reported in
our calculation of adjusted EBITDA for that period.
Free Cash Flow
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 and dividend from minority interest,
plus certain transaction and integration and restructuring
expenses. We believe that this presentation of FCF provides
investors with an additional indicator of our ability to generate
positive cash flows after meeting our obligations with regard to
payment of interest on our outstanding indebtedness.
Unlevered Free Cash Flow
Unlevered free cash flow, or UFCF, is a non-GAAP financial
measure that we calculate as free cash flow plus cash interest
paid, net of change in accrued loan interest. We believe the most
useful indicator of our operating performance is the cash
generating potential of our company prior to any accounting charges
related to our acquisitions. We also invest in marketing, our
largest operating expense, which may increase or decrease in a
given period, depending on the cost of attracting new subscribers
to our solutions. We also believe that because our business has
meaningful data center and related infrastructure requirements, the
level of capital expenditures required to run our business is an
important factor for investors to consider. We believe UFCF is a
useful measure that captures the effects of these issues.
Adjusted Revenue
Adjusted revenue is a non-GAAP financial measure that we
calculate as GAAP revenue adjusted to exclude the impact of any
fair value adjustments to deferred revenue resulting from
acquisitions. Historically, we also adjusted the amount of revenue
to include the revenue we generated from subscribers added through
business acquisitions as if those acquired subscribers had been our
subscribers since the beginning of the period presented. Since
the first quarter of 2014, we have included the revenue we add
through business acquisitions from the closing date of the relevant
acquisition. We believe that excluding fair value adjustments
to deferred revenue is useful to investors because it shows our
revenue prior to purchase accounting charges related to our
acquisitions.
Total Subscribers
We define total subscribers as those that, as of the end of a
period, are identified as subscribing directly to our products on a
paid basis. Historically, in calculating total subscribers,
we included the number of end-of-period subscribers we added
through business acquisitions as if those subscribers had
subscribed with us since the beginning of the period presented.
Since the first quarter of 2014, we have included subscribers
we added through business acquisitions from the closing date of the
relevant acquisition. Additionally, in the fourth quarter of
2014, we modified our definition of total subscribers to better
reflect our expanding product mix by including paid subscribers to
all of our subscription-based products, rather than limiting the
definition to paid subscribers to our web presence
solutions. We do not include in total subscribers accounts
that access our solutions via resellers or that purchase only
domain names from us. Subscribers of more than one brand are
counted as separate subscribers. We believe total subscribers
is an indicator of the scale of our platform and our ability to
expand our subscriber base, and is a critical factor in our ability
to monetize the opportunity we have identified in serving the
small- and medium-sized business (SMB) market. Total
subscribers for a period may reflect adjustments to add or subtract
subscribers as we integrate and/or are otherwise able to identify
subscribers that meet this definition of total
subscribers.
Average Revenue per Subscriber
Average revenue per subscriber, or ARPS, is a non-GAAP financial
measure that we calculate as the amount of adjusted revenue we
recognize in a period divided by the average of the number of total
subscribers at the beginning of the period and at the end of the
period. We believe ARPS is an indicator of our ability to optimize
our mix of products and services and pricing, and sell products and
services to new and existing subscribers.
Forward-Looking Statements
This press release includes certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements concerning our financial guidance for
fiscal year 2015 (including the first quarter of fiscal year 2015),
our beliefs and expectations regarding the success of our strategy
to increase our subscriber base and grow ARPS, the size of our
market opportunity, and our future 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," "intends," "plans," "believes,"
"seeks," "estimates," "confident," "positions," and variations of
such words or words of similar meaning. 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, risks set forth
under the caption "Risk Factors" in our Quarterly Report on Form
10-Q for the period ending September 30, 2014 filed with the
Securities and Exchange Commission (SEC) on November 7, 2014 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 (Nasdaq:EIGI) helps small and
medium-sized business owners establish, manage and grow their
businesses by harnessing the power and promise of the web. As a
leading provider of cloud-based platform solutions to help small
and medium-sized business owners succeed online, Endurance, through
its family of brands – including Bluehost, HostGator, iPage,
Domain.com, A Small Orange, and ResellerClub – supports
approximately 4.1 million subscribers and is able to tailor
solutions for small businesses at every stage and level of
sophistication. Endurance is headquartered in Burlington,
Massachusetts, has a presence in Asia and the Americas, and employs
over 2,500 people. For more information, visit
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.
Endurance International
Group Holdings, Inc. |
Consolidated Balance
Sheets |
(unaudited) |
(in thousands, except
share and per share amounts) |
|
|
|
|
|
|
|
December 31,
2013 |
December 31,
2014 |
|
|
|
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$66,815 |
$32,379 |
Restricted cash |
1,983 |
1,325 |
Accounts receivable |
7,160 |
10,201 |
Deferred tax asset—short term |
12,981 |
13,961 |
Prepaid domain name registry
fees |
22,812 |
49,605 |
Prepaid expenses and other current
assets |
7,050 |
13,173 |
Total current assets |
118,801 |
120,644 |
Property and equipment—net |
49,715 |
56,837 |
Goodwill |
984,207 |
1,105,023 |
Other intangible assets—net |
406,140 |
410,338 |
Deferred financing costs |
430 |
400 |
Investments |
6,535 |
40,447 |
Prepaid domain name registry fees, net of
current portion |
4,295 |
7,957 |
Other assets |
10,815 |
4,397 |
Total assets |
$1,580,938 |
$1,746,043 |
|
|
|
Liabilities, redeemable
non-controlling interest and stockholders' equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$7,950 |
$8,960 |
Accrued expenses |
35,433 |
38,275 |
Deferred revenue |
194,196 |
259,567 |
Current portion of notes
payable |
10,500 |
60,500 |
Current portion of capital lease
obligations |
— |
3,793 |
Deferred consideration—short
term |
24,437 |
13,917 |
Other current liabilities |
6,796 |
10,358 |
Total current liabilities |
279,312 |
395,370 |
Long-term deferred revenue |
55,298 |
65,850 |
Notes payable—long term |
1,036,875 |
1,026,375 |
Capital lease obligations |
— |
4,302 |
Deferred tax liability—long term |
26,171 |
35,579 |
Deferred consideration |
4,207 |
10,722 |
Other liabilities |
3,041 |
2,806 |
Total liabilities |
$1,404,904 |
$1,541,004 |
Redeemable non-controlling
interest |
20,772 |
30,543 |
Commitments and contingencies |
|
|
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; 124,788,853 and 130,959,113 shares
issued at December 31, 2013 and December 31, 2014,
respectively; 124,766,544 and 130,914,333 shares outstanding at
December 31, 2013 and December 31, 2014,
respectively |
13 |
14 |
Additional paid-in capital |
754,061 |
816,591 |
Accumulated other comprehensive
loss |
(55) |
(517) |
Accumulated deficit |
(598,757) |
(641,592) |
Total stockholders' equity |
155,262 |
174,496 |
Total liabilities, redeemable non-controlling
interest and stockholders' equity |
$1,580,938 |
$1,746,043 |
|
|
Endurance International
Group Holdings, Inc. |
Consolidated Statements
of Operations and Comprehensive Loss |
(unaudited) |
(in thousands, except
share and per share amounts) |
|
|
|
|
|
|
Three Months
ended December 31, |
Year Ended
December 31, |
|
2013 |
2014 |
2013 |
2014 |
Revenue |
$136,420 |
$171,936 |
$520,296 |
$629,845 |
Cost of revenue |
87,758 |
102,270 |
350,103 |
381,488 |
Gross profit |
48,662 |
69,666 |
170,193 |
248,357 |
Operating expense: |
|
|
|
|
Sales and marketing |
30,458 |
32,187 |
117,689 |
146,797 |
Engineering and development |
5,561 |
5,052 |
23,205 |
19,549 |
General and administrative |
48,242 |
18,619 |
92,347 |
69,533 |
Total operating expense |
84,261 |
55,858 |
233,241 |
235,879 |
Income (loss) from operations |
(35,599) |
13,808 |
(63,048) |
12,478 |
Other expense: |
|
|
|
|
Interest income |
61 |
76 |
122 |
331 |
Interest expense |
(32,338) |
(15,195) |
(98,449) |
(57,414) |
Total other expense—net |
(32,277) |
(15,119) |
(98,327) |
(57,083) |
Loss before income taxes and equity earnings
of unconsolidated entities |
(67,876) |
(1,311) |
(161,375) |
(44,605) |
Income tax expense (benefit) |
(2,169) |
1,410 |
(3,596) |
6,186 |
Loss before equity earnings of unconsolidated
entities |
(65,707) |
(2,721) |
(157,779) |
(50,791) |
Equity (income) loss of unconsolidated
entities, net of tax |
2,426 |
87 |
2,067 |
61 |
Net loss |
$(68,133) |
$(2,808) |
$(159,846) |
$(50,852) |
Net loss attributable to non-controlling
interest |
(659) |
(604) |
(659) |
(8,017) |
Net loss attributable to Endurance
International Group Holdings, Inc. |
$(67,474) |
$(2,204) |
$(159,187) |
$(42,835) |
Comprehensive loss: |
|
|
|
|
Foreign currency translation
adjustments |
(31) |
(267) |
(55) |
(462) |
Total comprehensive loss |
$(67,505) |
$(2,471) |
$(159,242) |
$(43,297) |
Net loss per share attributable to Endurance
International Group Holdings, Inc.—basic and diluted |
$(0.57) |
$(0.02) |
$(1.55) |
$(0.34) |
Weighted-average number of common shares used
in computing net loss per share attributable to Endurance
International Group Holdings, Inc.—basic and diluted |
117,770,547 |
128,939,943 |
102,698,773 |
127,512,346 |
|
|
Endurance International
Group Holdings, Inc. |
Consolidated Statements
of Cash Flows |
(unaudited) |
(in
thousands) |
|
|
|
|
|
|
Three Months
Ended December 31, |
Year Ended
December 31, |
|
2013 |
2014 |
2013 |
2014 |
Cash flows from operating activities: |
|
|
|
|
Net loss |
$(68,133) |
$(2,808) |
$(159,846) |
$(50,852) |
Adjustments to reconcile net loss to net
cash provided by operating activities: |
|
|
|
|
Depreciation of property and
equipment |
5,545 |
8,403 |
18,615 |
30,956 |
Amortization of other intangible
assets |
27,134 |
26,935 |
105,915 |
102,723 |
Amortization of deferred financing
costs |
2,579 |
26 |
2,768 |
83 |
Amortization of net present value of
deferred consideration |
197 |
178 |
1,590 |
183 |
Stock-based compensation |
9,658 |
4,681 |
10,763 |
16,043 |
Deferred tax expense (benefit) |
(2,638) |
2,106 |
(4,777) |
3,640 |
(Gain) loss on sale of assets |
(23) |
123 |
309 |
(168) |
Income of unconsolidated
entities |
2,426 |
87 |
2,067 |
61 |
Dividend from minority
interest |
— |
— |
— |
167 |
Gain from change in deferred
consideration |
(466) |
(36) |
(466) |
384 |
Financing costs expensed |
10,833 |
— |
10,833 |
— |
Changes in operating assets and
liabilities: |
|
|
|
|
Accounts receivable |
(701) |
710 |
(1,075) |
(691) |
Prepaid expenses and other current
assets |
3,275 |
(3,702) |
(7,147) |
(25,675) |
Accounts payable and accrued
expenses |
(2,099) |
(4,059) |
2,020 |
(1,615) |
Deferred revenue |
6,552 |
5,722 |
51,047 |
67,654 |
Net cash provided by (used in) operating
activities |
(5,861) |
38,366 |
32,616 |
142,893 |
Cash flows from investing activities: |
|
|
|
|
Business acquired in purchase
transaction, net of cash acquired |
(22,339) |
(17,600) |
(38,659) |
(93,698) |
Proceeds from sale of assets |
— |
— |
23 |
100 |
Cash paid for minority
investment |
— |
(15,200) |
— |
(34,140) |
Purchases of property and
equipment |
(8,139) |
(5,889) |
(33,523) |
(23,904) |
Purchases of intangible assets |
(182) |
— |
(751) |
(200) |
Proceeds from sale of property and
equipment |
41 |
8 |
54 |
94 |
Net (deposits) and withdrawals of
principal balances in restricted cash accounts |
53 |
360 |
(231) |
433 |
Net cash used in investing
activities |
(30,566) |
(38,321) |
(73,087) |
(151,315) |
Cash flows from financing activities: |
|
|
|
|
Proceeds from issuance of term
loan |
1,055,000 |
— |
1,145,000 |
— |
Repayment of term loan |
(1,206,399) |
(2,625) |
(1,212,625) |
(10,500) |
Proceeds from borrowing of
revolver |
— |
43,000 |
57,000 |
150,000 |
Repayment of revolver |
— |
(54,000) |
(72,000) |
(100,000) |
Payment of financing costs |
(11,272) |
(41) |
(12,552) |
(53) |
Payment of deferred
consideration |
(2,529) |
(16,815) |
(55,635) |
(98,318) |
Partial settlement of redeemable
non-controlling interest liability |
— |
— |
— |
(4,190) |
Principal payments on capital lease
obligations |
— |
(918) |
— |
(3,608) |
Proceeds from exercise of stock
options |
— |
125 |
— |
137 |
Proceeds from issuance of common
stock |
252,612 |
43,500 |
252,612 |
43,500 |
Issuance costs of common stock |
(17,512) |
(2,173) |
(17,512) |
(2,904) |
Net cash provided by (used in) financing
activities |
69,900 |
10,053 |
84,288 |
(25,936) |
Net effect of exchange rate on cash and cash
equivalents |
(41) |
(122) |
(247) |
(78) |
Net increase (decrease) in cash and cash
equivalents |
33,432 |
9,976 |
43,570 |
(34,436) |
Cash and cash equivalents: |
|
|
|
|
Beginning of period |
33,383 |
22,403 |
23,245 |
66,815 |
End of period |
$66,815 |
$32,379 |
$66,815 |
$32,379 |
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
Interest paid |
$31,788 |
$14,840 |
$100,856 |
$57,418 |
Income taxes paid |
$152 |
$1,118 |
$1,502 |
$2,615 |
Supplemental disclosure of non-cash financing
activities: |
|
|
|
Shares issued in connection with the
acquisition of Directi |
$ — |
$ — |
$ — |
$27,235 |
Assets acquired under capital
lease |
$ — |
$ — |
$ — |
$11,704 |
|
|
|
|
|
|
|
|
|
|
The following table reflects the reconciliation of Adjusted Net
Income and Adjusted EBITDA to net loss calculated in accordance
with GAAP (all data in thousands):
|
Three Months Ended
December 31, |
Year Ended
December 31, |
|
2013 |
2014 |
2013 |
2014 |
Net loss |
$(68,133) |
$(2,808) |
$(159,846) |
$(50,852) |
Stock-based compensation |
9,658 |
4,681 |
10,763 |
16,043 |
(Gain) loss on sale of assets |
(23) |
123 |
309 |
(168) |
Loss of unconsolidated entities |
2,426 |
87 |
2,067 |
61 |
Amortization of intangible assets |
27,134 |
26,935 |
105,915 |
102,723 |
Amortization of deferred financing
costs |
2,579 |
26 |
2,768 |
83 |
Changes in deferred revenue |
6,552 |
5,722 |
51,047 |
67,654 |
Impact of reduced fair value of deferred
domain registration costs |
— |
(2,190) |
— |
(18,782) |
Transaction expenses and charges
(1) |
33,879 |
881 |
45,036 |
4,787 |
Integration and restructuring
expenses |
5,368 |
3,590 |
45,594 |
19,927 |
Tax-affected impact of adjustments |
(756) |
1,285 |
(5,929) |
(4,202) |
Adjusted Net Income |
$18,684 |
$38,332 |
$97,724 |
$137,274 |
Depreciation |
5,545 |
8,403 |
18,615 |
30,956 |
Income tax expense (benefit) |
(1,413) |
125 |
2,333 |
10,388 |
Interest expense, net (net of impact of
amortization of deferred financing costs) |
23,398 |
15,093 |
89,259 |
57,000 |
Adjusted EBITDA |
$46,214 |
$61,953 |
$207,931 |
$235,618 |
|
|
|
|
|
(1) Includes loan
prepayment penalty of $6.3 million for the year ended December 31
2013, which is included in interest expense in the consolidated
statements of operations and comprehensive loss. |
|
|
The following table reflects the reconciliation of cash flows
from operating activities, or operating cash flow, to FCF to UFCF
(all data in thousands):
|
Three Months Ended
December 31, |
Year Ended
December 31, |
|
2013 |
2014 |
2013 |
2014 |
|
|
|
|
|
Operating cash flow |
$(5,861) |
$38,366 |
$32,616 |
$142,893 |
Less: |
|
|
|
|
Dividend from minority interest |
— |
— |
— |
(167) |
Capital expenditures and capital lease
obligations (1) |
(8,139) |
(6,807) |
(33,523) |
(27,512) |
Plus: |
|
|
|
|
Costs excluded in FCF net of costs also
excluded in operating cash flow: |
|
|
|
|
Transaction expenses and charges |
27,493 |
399 |
38,745 |
3,885 |
Integration and restructuring
expenses |
5,368 |
3,845 |
45,594 |
17,479 |
Free cash flow |
$18,861 |
$35,803 |
$83,432 |
$136,578 |
Plus: |
|
|
|
|
Cash interest paid (net of change in accrued
loan interest) |
18,652 |
14,915 |
83,025 |
56,817 |
Unlevered Free Cash
Flow |
$37,513 |
$50,718 |
$166,457 |
$193,395 |
|
|
|
|
|
(1) Capital expenditures during
the three and twelve months ended December 31, 2014 includes
$0.9 million and $3.6 million, respectively, of payments under a
three year capital lease for software of $11.7 million beginning in
January 2014. The remaining balance on the capital lease is $8.1
million as of December 31, 2014. |
|
|
The following table provides a reconciliation of income tax
expense (benefit) included in the adjusted EBITDA table above to
the income tax expense (benefit) in our consolidated statements of
operations and comprehensive loss and to the income taxes paid
amount in our consolidated statements of cash flows (all data in
thousands).
|
Three Months Ended
December 31, |
Year Ended
December 31, |
|
2013 |
2014 |
2013 |
2014 |
Income tax expense (benefit) |
$(1,413) |
$125 |
$2,333 |
$10,388 |
Tax-affected impact of adjustments |
(756) |
1,285 |
(5,929) |
(4,202) |
Income tax expense (benefit) in consolidated
statement of operations |
$(2,169) |
$1,410 |
$(3,596) |
$6,186 |
Less: movement in deferred tax
benefit |
2,638 |
(2,106) |
4,777 |
(3,640) |
Decrease (increase) in accrued income
taxes |
(317) |
1,814 |
321 |
69 |
Income taxes paid in consolidated statements
of cash flows |
$152 |
$1,118 |
$1,502 |
$2,615 |
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation of net interest
expense included in the adjusted EBITDA table above to the net
interest expense in our consolidated statements of operations and
comprehensive loss and to interest paid in our consolidated
statements of cash flows (all data in thousands).
|
Three Months Ended
December 31, |
Year Ended
December 31, |
|
2013 |
2014 |
2013 |
2014 |
Interest expense (net of impact of deferred
financing costs) |
$23,398 |
$15,093 |
$89,259 |
$57,000 |
Amortization of deferred financing
costs |
2,579 |
26 |
2,768 |
83 |
Transaction expense - loan prepayment
penalty |
6,300 |
-- |
6,300 |
-- |
Other expense in consolidated statements of
operations and comprehensive loss |
$32,277 |
$15,119 |
$98,327 |
$57,083 |
Amortization of deferred financing
costs |
(2,579) |
(26) |
(2,768) |
(83) |
Amortization of net present value of deferred
consideration |
(197) |
(178) |
(1,590) |
(183) |
Decrease (increase) in accrued
interest |
2,226 |
(151) |
6,765 |
270 |
Interest income |
61 |
76 |
122 |
331 |
Interest paid in consolidated statements of
cash flows |
$31,788 |
$14,840 |
$100,856 |
$57,418 |
|
|
|
|
|
|
|
|
|
|
The following table reflects the reconciliation of ARPS to
revenue calculated in accordance with GAAP (all data in thousands,
except ARPS data):
|
Three Months
Ended December 31, |
Year Ended
December 31, |
|
2013 |
2014 |
2013 |
2014 |
Revenue |
$136,420 |
$171,936 |
$520,296 |
$629,845 |
Purchase accounting adjustment |
529 |
3,270 |
7,311 |
22,100 |
Pre-acquisition revenue from acquired
properties |
— |
— |
512 |
— |
Adjusted revenue |
$136,949 |
$175,206 |
$528,119 |
$651,945 |
Total subscribers |
3,502 |
4,087 |
3,502 |
4,087 |
ARPS |
$13.15 |
$14.78 |
$13.09 |
$14.48 |
Adjusted revenue attributable to
Directi |
— |
13,213 |
— |
48,499 |
Adjusted revenue excluding Directi |
$136,949 |
$161,993 |
$528,119 |
$603,446 |
Total subscribers excluding
Directi |
3,502 |
4,031 |
3,502 |
4,031 |
ARPS excluding Directi |
$13.15 |
$13.86 |
$13.09 |
$13.58 |
|
|
|
|
|
CONTACT: Investor Contact:
Angela White
Endurance International Group
(781) 852-3450
ir@endurance.com
Press Contact:
Dani LaSalvia
Endurance International Group
(781) 852-3212
press@endurance.com
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