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 announced
certain preliminary, unaudited financial information for the fourth
quarter and full year 2015 in connection with financing activities
related to the pending acquisition of Constant Contact, Inc.
Additionally, the Company announced the date and time of the
release of its fourth quarter and full year 2015 financial results,
and provided an update on certain of its performance metrics.
Preliminary Unaudited Fourth Quarter and Full Year 2015
Information
Based on the information and data currently available, the
Company is releasing the following preliminary, unaudited financial
information for the fourth quarter and full year ending December
31, 2015.
Full year 2015
- GAAP revenue of approximately $741 million
- Adjusted revenue of approximately $747 million (prior guidance*
of $745 million to $750 million)
- GAAP net loss of approximately $24 million
- Adjusted EBITDA of approximately $267 million (prior guidance*
of $265 million to $270 million)
- Free cash flow of approximately $141 million
- Unlevered free cash flow (as reported) of approximately $222
million (prior guidance* of $220 million to $230 million)
Fourth quarter 2015
- GAAP revenue of approximately $193 million
- Adjusted revenue of approximately $195 million
- GAAP net loss of approximately $7 million
- Adjusted EBITDA of approximately $72 million
- Free cash flow of approximately $33 million
- Unlevered free cash flow (as reported) of approximately $55
million
*prior guidance given at November 2, 2015
All information is preliminary and unaudited, and therefore
inherently uncertain and subject to revision in connection with the
finalization of financial statements for Endurance’s fourth quarter
and full year ending December 31, 2015. As a result of the
foregoing considerations and the other limitations on non-GAAP
measures described in this press release, we caution you not to
place undue reliance on this preliminary financial information.
Complete financial results will be presented on the Company’s
fourth quarter and full year 2015 results conference call on
February 18, 2016.
Adjusted revenue, adjusted EBITDA, free cash flow, and unlevered
free cash flow (as reported) are non-GAAP financial measures.
A reconciliation of these non-GAAP financial measures to their most
comparable measure calculated in accordance with GAAP, on a
preliminary basis, is provided in the 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.”
Fourth Quarter and Full Year 2015 Results Conference
Call
Additionally, the Company announced that it will release its
2015 fourth quarter and full year financial results on Thursday,
February 18, 2016 at 7:00 a.m. Management will hold a
conference call and webcast on that day at 8:00 a.m. EST to discuss
the Company's financial results. A prepared presentation to
accompany the conference call will be posted on the Company's
investor relations web site prior to the call.
What: |
Endurance
International Group 2015 Fourth Quarter and Full Year Financial
Results Conference Call |
|
When: |
Thursday, February 18,
2016 |
|
Time: |
8:00 a.m.
EST |
|
Live Call: |
The call
can be accessed ten minutes prior to the start of the call by using
the following telephone numbers: |
|
US/Canada: |
(888)
734-0328 |
|
International: |
(678) 894-3054 |
|
Replay: |
US/Canada: (855)
859-2056 |
|
International:
|
(404) 537-3406 |
|
|
(Available
approximately two hours after the completion of the live call until
11:00 a.m. EST on February 23, 2016) |
|
Conference ID:
22024785 |
|
Webcast: |
http://ir.endurance.com/ |
|
|
|
|
Performance Metrics
The Company did not report monthly recurring revenue, or MRR,
retention rate figures in our Quarterly Report on Form 10-Q for the
three and nine months ended September 30, 2014 and 2015 because we
had identified errors in our business intelligence system that
impacted MRR as well as two of our other previously reported
performance metrics, the number of products per subscriber and the
number of subscribers paying us $500 or more per year. We
undertook to recalculate and verify revised numbers for these
metrics using an upgraded version of the business intelligence
system that we believe has corrected these errors. We have
completed our review and recalculation of MRR for all past periods
beginning with the three and nine months ended September 30, 2013
and have determined that our previously reported MRR figures for
those periods will remain at 99%. In addition, the Company
has determined that MRR for the three and nine months ended
September 30, 2014 and 2015 was approximately 99%. We
continue to recalculate and verify revised numbers for the number
of products per subscriber and the number of subscribers paying us
$500 or more per year. These errors only affected these three
performance metrics and did not impact our GAAP financial results,
our adjusted EBITDA, free cash flow or unlevered free cash flow
metrics, average revenue per subscriber, or total subscriber
figures. We intend to provide updated information for the two
remaining performance metrics on our next quarterly results
conference call.
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, 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 EBITDA is a non-GAAP financial measure
that we calculate as net income (loss) plus (i) changes in deferred
revenue, depreciation, 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, certain legal
advisory expenses, interest expense and income tax 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. We view
adjusted EBITDA as a performance measure. Due to our history of
acquisitions and financings, we have incurred and will continue to
incur charges for integration, restructuring and transaction
expenses that primarily relate to the process of acquiring another
business and integrating that business into our support and/or
technical platforms. We believe that adjusting for these items is
useful to investors in evaluating the post integration performance
of our company. 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 performance 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 in our calculation of adjusted EBITDA for that
period.
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 generated from subscribers we 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.
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. 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 and
payment of interest on our outstanding indebtedness.
Unlevered Free Cash Flow, or UFCF, is a
non-GAAP financial measure that we calculate as FCF plus interest
paid. 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 and after
investment in capital expenditures to operate our technology
platform. Given our substantial bank debt, we believe it is
important to present to our investors the cash generation potential
of our business prior to interest payments.
Unlevered Free Cash Flow (as reported), or UFCF (as
reported), is a non-GAAP financial measure that we
calculate as UFCF plus integration and restructuring expenses,
transaction expenses and charges, certain legal advisory expenses,
and dividend related payments. We believe that this
presentation provides investors with an alternative view of UFCF by
adding back expenses that primarily relate to the process of
acquiring another business and integrating that business into our
support and/or technical platforms, which we believe is useful to
investors in evaluating the post integration performance of our
company. UFCF (as reported) also adds back certain legal
advisory and dividend related expenses that we believe do not
reflect our ongoing operating performance.
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 regarding preliminary financial results for
the fourth quarter and full year 2015 and the anticipated timing of
our release of certain revised performance metrics. These
forward-looking statements reflect our current expectations, which
are based on the information currently available to us and on
assumptions we have made. Although we believe that our expectations
as reflected in or suggested by those forward-looking statements
are reasonable, we can give no assurance that these expectations
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
application of quarter-end and year-end accounting procedures and
adjustments; other developments that may arise between the date of
this press release and the time that the financial results for the
quarter and year ended December 31, 2015 are finalized; and other
risks and uncertainties discussed in Endurance’s filings with the
SEC, including the “Risk Factors” sections of Endurance’s most
recent Quarterly Report on Form 10-Q for the period ended September
30, 2015 and most recent Annual Report on Form 10-K for the year
ended December 31, 2014. You can obtain copies of Endurance’s
filings with the SEC for free at the SEC’s website (www.sec.gov).
Endurance does not assume any obligation to update any
forward-looking statements contained in this document as a result
of new information, future events or otherwise.
This filing includes data based on our internal estimates. While
we believe that our internal estimates are reasonable, no
independent source has verified such estimates.All information
presented for fiscal year 2015 is preliminary and
unaudited.
About Endurance International Group
Endurance International Group is a publicly traded
(NASDAQ:EIGI) technology company that helps power small and
medium-sized businesses online. Through its proprietary cloud
platform, Endurance provides web presence solutions including web
hosting, eCommerce, eMarketing and mobile business tools to
approximately 4.5 million subscribers around the globe. The
company’s world-class family of brands includes Bluehost,
HostGator, iPage, Domain.com, A Small Orange, MOJO Marketplace,
BigRock and ResellerClub, among others. Headquartered in
Burlington, Massachusetts, Endurance employs more than 2,500 people
across the United States in Utah, Texas, Washington and Arizona and
in the United Kingdom, India, Israel and Brazil. For more
information on how Endurance can help grow your business, visit
endurance.com, follow us on Twitter @EnduranceIntl and like us on
Facebook at www.facebook.com/EnduranceInternational.
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.
The following table reflects the reconciliation of preliminary
adjusted EBITDA to preliminary net income (loss) calculated in
accordance with GAAP (all data in millions). All information
is preliminary and unaudited, and therefore subject to revision in
connection with the finalization of financial statements for
Endurance’s fourth quarter and year end periods ending December 31,
2015. Complete financial results will be presented on the
Company’s fourth quarter and full year 2015 results conference call
on February 18, 2016.
|
Three
Months Ended December 31, |
|
Twelve
Months Ended December 31, |
|
2015 |
|
2015 |
Net loss |
$ |
(7.5 |
) |
|
$ |
(24.3 |
) |
|
|
|
|
Stock-based
compensation |
|
9.7 |
|
|
|
29.9 |
|
|
|
|
|
Gain on sale of
assets |
|
- |
|
|
|
(0.2 |
) |
|
|
|
|
Loss of unconsolidated
entities (1) |
|
3.9 |
|
|
|
7.6 |
|
|
|
|
|
Amortization of
intangible assets |
|
23.9 |
|
|
|
91.1 |
|
|
|
|
|
Amortization of
deferred financing costs |
|
- |
|
|
|
0.1 |
|
|
|
|
|
Changes in deferred
revenue |
|
5.0 |
|
|
|
34.2 |
|
|
|
|
|
Impact of reduced fair
value of deferred domain registration costs |
|
(0.4 |
) |
|
|
(2.0 |
) |
|
|
|
|
Transaction expenses
and charges |
|
5.0 |
|
|
|
9.6 |
|
|
|
|
|
Integration and
restructuring expenses |
|
4.7 |
|
|
|
16.3 |
|
|
|
|
|
Legal advisory expenses
(2) |
|
0.2 |
|
|
|
1.3 |
|
|
|
|
|
Depreciation |
|
9.4 |
|
|
|
34.0 |
|
|
|
|
|
Income tax expense |
|
2.2 |
|
|
|
11.5 |
|
|
|
|
|
Interest expense, net
(excluding amortization of deferred financing costs) |
|
15.7 |
|
|
|
58.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
71.8 |
|
|
$ |
267.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The loss of unconsolidated entities is reported on a
net basis for the twelve months ended December 31, 2015. The twelve
months ended December 31, 2015 includes a $5.4 million gain for the
redemption of our equity interest in World Wide Web Hosting,
partially offset by our proportionate share of net losses from
unconsolidated entities of $13.0 million.
(2) Consists of legal and related advisory expense
associated with matters that are the subject of a class action
lawsuit filed against the Company in May 2015.
The following table reflects the reconciliation of preliminary
adjusted revenue to preliminary revenue calculated in accordance
with GAAP (all data in millions). All information is
preliminary and unaudited, and therefore subject to revision in
connection with the finalization of financial statements for
Endurance’s fourth quarter and year end periods ending December 31,
2015. Complete financial results will be presented on the
Company’s fourth quarter and full year 2015 results conference call
on February 18, 2016.
|
Three
Months Ended December 31, |
|
Twelve Months Ended December
31, |
|
2015 |
|
2015 |
Revenue |
$ |
193.0 |
|
|
$ |
741.3 |
|
|
|
|
|
Purchase Accounting
Adjustment |
|
1.7 |
|
|
|
5.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Revenue |
$ |
194.7 |
|
|
$ |
747.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reflects the reconciliation of preliminary
cash flows from net cash provided by operating activities to
preliminary Free Cash Flow (“FCF”), preliminary Unlevered Free Cash
Flow (“UFCF”), and preliminary Unlevered Free Cash Flow (as
reported) (all data in millions). All information is preliminary
and unaudited, and therefore subject to revision in connection with
the finalization of financial statements for Endurance’s fourth
quarter and year end periods ending December 31, 2015. Complete
financial results will be presented on the Company’s fourth quarter
and full year 2015 results conference call on February 18, 2016.
|
Three
Months Ended December 31, |
|
Twelve Months Ended December
31, |
|
2015 |
|
2015 |
GAAP Cash Flow from
Operations |
$ |
43.4 |
|
|
$ |
177.2 |
|
|
|
|
|
Less: |
|
|
Dividend from minority
interest |
|
- |
|
|
|
- |
|
|
|
|
|
Capital expenditures and capital
lease obligations (1) |
|
(10.0 |
) |
|
|
(36.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow |
$ |
33.4 |
|
|
$ |
141.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: |
|
|
Interest paid |
|
14.9 |
|
|
|
57.3 |
|
|
|
|
|
Unlevered Free
Cash Flow |
$ |
48.3 |
|
|
$ |
198.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
AdjustmentsPlus: |
|
|
|
|
|
|
|
Transaction expenses and
charges |
|
1.3 |
|
|
|
5.0 |
|
|
|
|
|
Integration and restructuring
expenses |
|
5.6 |
|
|
|
17.0 |
|
|
|
|
|
Legal advisory expenses (2) |
|
- |
|
|
|
1.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unlevered Free
Cash Flow (as reported) (3) |
$ |
55.2 |
|
|
$ |
221.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Capital expenditures include capital lease payments
for software leases. During the three months ended December
31, 2015, these payments amounted to $2.0 million. During the
twelve months ended December 31, 2015, these payments amounted to
$4.8 million. The remaining balance on the capital lease is
$13.1 million as of December 31, 2015.
(2) Consists of legal and related advisory expense
associated with matters that are the subject of a class action
lawsuit filed against the Company in May 2015.
(3) Interest paid in the above table is disclosed in the
consolidated statement of cash flows. As previously reported,
interest paid in the FCF/UFCF reconciliation table was net of
accrued loan interest and net interest income. If we used the
previous method, the Unlevered Free Cash Flow (as reported) amount
for the three months ended December 31, 2015 would be $55.3
million, and the amount reported for the twelve months ended
December 31, 2015 would be $221.4 million.
Endurance Investor Contact:
Angela White
Endurance International Group
(781) 852-3450
ir@endurance.com
Endurance Press Contact:
Dani LaSalvia
Endurance International Group
(781) 852-3212
press@endurance.com
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