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 second quarter ended June 30, 2018.
“We are pleased with our year to date results, and the team
remains focused on executing our 2018 integrated operating plan,”
commented Jeffrey H. Fox, president and chief executive officer of
Endurance International Group. "Our second quarter results
reflect our focus on meeting our financial and operating goals
while simplifying our business and investing to deliver increased
value to our customers."
Second Quarter 2018 Financial Highlights
- Revenue for the second quarter of 2018 was $287.8 million, a
decrease of 2 percent compared to $292.3 million for the second
quarter of 2017.
- Net loss for the second quarter of 2018 was $2.0 million
compared to net loss of $35.4 million for the second quarter of
2017.
- Net loss attributable to Endurance International Group
Holdings, Inc. for the second quarter of 2018 was $2.0 million, or
$(0.01) per diluted share, compared to net loss of $39.1 million,
or $(0.29) per diluted share, for the second quarter of 2017.
- Adjusted EBITDA for the second quarter of 2018 was $85.0
million, an increase of 3 percent compared to $82.5 million for the
second quarter of 2017.
- Cash flow from operations for the second quarter of 2018 was
$29.9 million, a decrease of 39 percent compared to $48.7 million
for the second quarter of 2017.
- Free cash flow, defined as cash flow from operations less
capital expenditures and capital lease obligations, for the second
quarter of 2018 was $20.1 million, a decrease of 45 percent
compared to $36.8 million for the second quarter of 2017.
Second Quarter Operating Highlights
- Total subscribers on platform at June 30, 2018 were
approximately 4.918 million, compared to approximately 5.217
million subscribers at June 30, 2017 and approximately 5.011
million subscribers at March 31, 2018. See “Total
Subscribers” below.
- Average revenue per subscriber, or ARPS, for the second quarter
of 2018 was $19.32, compared to $18.52 for the second quarter of
2017 and $19.30 for the first quarter of 2018. See “Average
Revenue Per Subscriber” below.
Fiscal 2018 Guidance
As of the date of this release, July 26, 2018, for the full year
ending December 31, 2018, the company expects:
|
|
2017 Actualas Reported |
Guidance(as of July 26,
2018) |
GAAP revenue |
$1.177
billion |
$1.140
to $1.160 billion |
Adjusted EBITDA |
$351
million |
$310 to
$330 million |
Free cash flow |
$151
million |
~$120
million |
|
|
|
As previously disclosed, the Company’s free cash flow guidance
does not reflect the impact of payments made pursuant to its
settlement with the U.S. Securities & Exchange Commission
or the potential securities class action lawsuit settlements
described in the Company’s Form 8-K filed on May 18, 2018,
both of which will impact the Company’s actual free cash flow for
2018. The potential securities class action lawsuit settlements
remain subject to court approval.
Adjusted EBITDA and free cash flow are non-GAAP financial
measures. A reconciliation of these non-GAAP financial measures to
their most comparable measure calculated in accordance with GAAP is
provided in the financial statement tables included at the end of
this press release.
Conference Call and Webcast Information
Endurance International Group’s second quarter 2018 financial
results teleconference and webcast is scheduled to begin at 8:00
a.m. EDT on Thursday, July 26, 2018. To participate on the live
call, analysts and investors should dial (888) 734-0328 at least
ten minutes prior to the call. Endurance International Group will
also offer a live and archived webcast of the conference call,
accessible from the Investor Relations section of the company’s
website at http://ir.endurance.com.
Non-GAAP Financial Measures
In addition to our financial information presented in accordance
with GAAP, we use adjusted EBITDA and free cash flow, which are
non-GAAP financial measures, to evaluate the operating and
financial performance of our business, identify trends affecting
our business, develop projections and make strategic business
decisions. A non-GAAP financial measure is a numerical measure of a
company’s operating performance, financial position or cash flow
that excludes amounts that are included in the most directly
comparable measure calculated and presented in accordance with GAAP
or includes amounts that are excluded from the most directly
comparable measure calculated and presented in accordance with
GAAP.
Our non-GAAP financial measures may not provide information that
is directly comparable to that provided by other companies in our
industry, as other companies in our industry may calculate non-GAAP
financial results differently. In addition, there are limitations
in using non-GAAP financial measures because they are not prepared
in accordance with GAAP and exclude expenses that may have a
material impact on our reported financial results. For example,
adjusted EBITDA excludes interest expense, which has been and will
continue to be for the foreseeable future a significant recurring
expense in our business. The presentation of non-GAAP financial
information is not meant to be considered in isolation from, or as
a substitute for, the most directly comparable financial measures
prepared in accordance with GAAP. We urge you to review the
additional information about adjusted EBITDA and free cash flow
shown below, including the reconciliations of these non-GAAP
financial measures to their comparable GAAP financial measures, and
not to rely on any single financial measure to evaluate our
business.
Adjusted EBITDA is a non-GAAP financial measure
that we calculate as net (loss) income, excluding the impact of
interest expense (net), income tax expense (benefit), depreciation,
amortization of other intangible assets, stock-based compensation,
restructuring expenses, transaction expenses and charges, (gain)
loss of unconsolidated entities, impairment of other long-lived
assets, SEC investigations reserve (with respect to fiscal year and
third quarter 2017), and shareholder litigation reserve. We view
adjusted EBITDA as a performance measure and believe it helps
investors evaluate and compare our core operating performance from
period to period.
Free Cash Flow, or FCF, is a non-GAAP financial
measure that we calculate as cash flow from operations less capital
expenditures and 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).
Key Operating Metrics
Total Subscribers - We define total subscribers
as the approximate number of subscribers that, as of the end of a
period, are identified as subscribing directly to our products on a
paid basis, excluding accounts that access our solutions via
resellers or that purchase only domain names from us. Subscribers
of more than one brand, and subscribers with more than one distinct
billing relationship or subscription with us, are counted as
separate subscribers. Total subscribers for a period reflects
adjustments to add or subtract subscribers as we integrate
acquisitions and/or are otherwise able to identify subscribers that
meet, or do not meet, this definition of total subscribers. In the
second quarter of 2018, these adjustmentshad a net negative impact
of approximately 800 subscribers on our total subscriber count.
Average Revenue Per Subscriber (ARPS) - We
calculate ARPS as the amount of revenue we recognize in a period,
including marketing development funds and other revenue not
received from subscribers, divided by the average of the number of
total subscribers at the beginning of the period and at the end of
the period, which we refer to as average subscribers for the
period, divided by the number of months in the period. See
definition of “Total Subscribers” above. ARPS does not represent an
exact measure of the average amount a subscriber spends with us
each month, since our calculation of ARPS is impacted by revenues
generated by non-subscribers.
Forward-Looking StatementsThis press release
includes certain “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements
concerning our financial guidance for fiscal year 2018, the
anticipated results of our efforts to simplify our business,
deliver increased customer value, and operate more effectively, and
our expected 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,” “believes,”
“estimates,” “may,” “continue,” “positions,” “confident,” and
variations of such words or words of similar meaning and the use of
future dates. These forward-looking statements reflect our current
views about our plans, intentions, expectations, strategies and
prospects, which are based on the information currently available
to us and on assumptions we have made. Although we believe that our
plans, intentions, expectations, strategies and prospects as
reflected in or suggested by those forward-looking statements are
reasonable, we can give no assurance that these plans, intentions,
expectations, strategies or prospects will be attained or achieved.
Furthermore, actual results may differ materially from those
described in the forward-looking statements and will be affected by
a variety of risks and factors that are beyond our control
including, without limitation: the possibility that our financial
guidance may differ from expectations; the possibility that our
planned investment and operational initiatives will not result in
the anticipated benefits to our business; the possibility that we
will 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;
our inability to increase sales to our existing subscribers, or
retain our existing subscribers; data breaches; system or Internet
failures; our inability to maintain or improve our competitive
position or market share; and other risks and uncertainties
discussed in our filings with the SEC, including those set forth
under the caption “Risk Factors” in our Quarterly Report on Form
10-Q for the three months ended March 31, 2018 filed with the SEC
on May 4, 2018 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 GroupEndurance
International Group Holdings, Inc. (NASDAQ:EIGI) helps millions of
small businesses worldwide with products and technology to enhance
their online web presence, email marketing, business solutions, and
more. The Endurance family of brands includes: Constant Contact,
Bluehost, HostGator, Domain.com and SiteBuilder, among others.
Headquartered in Burlington, Massachusetts, Endurance employs over
3,500 people across the United States, Brazil, India and the
Netherlands. For more information, visit: www.endurance.com.
Endurance International Group and the compass logo are
trademarks of The Endurance International Group, Inc.
Constant Contact, the Constant Contact logo and other brand names
of Endurance International Group are trademarks of The Endurance
International Group, Inc. or its subsidiaries.
Investor Contact:Angela WhiteEndurance
International Group(781) 852-3450ir@endurance.com
Press Contact:Kristen AndrewsEndurance
International Group(781) 418-6716press@endurance.com
|
Endurance International Group Holdings,
Inc. |
Consolidated Balance Sheets |
(unaudited) |
(in thousands, except share and per share
amounts) |
|
|
December 31, 2017 |
|
June 30, 2018 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
66,493 |
|
|
$ |
75,499 |
|
Restricted cash |
2,625 |
|
|
1,670 |
|
Accounts
receivable |
15,945 |
|
|
12,085 |
|
Prepaid
domain name registry fees |
53,805 |
|
|
58,944 |
|
Prepaid
commissions |
— |
|
|
41,842 |
|
Prepaid
expenses and other current assets |
29,327 |
|
|
30,328 |
|
Total current
assets |
168,195 |
|
|
220,368 |
|
Property
and equipment—net |
95,452 |
|
|
82,758 |
|
Goodwill |
1,850,582 |
|
|
1,849,529 |
|
Other
intangible assets—net |
455,440 |
|
|
403,835 |
|
Deferred
financing costs |
3,189 |
|
|
3,099 |
|
Investments |
15,267 |
|
|
15,266 |
|
Prepaid
domain name registry fees, net of current portion |
10,806 |
|
|
11,680 |
|
Prepaid
commissions, net of current portion |
— |
|
|
42,034 |
|
Other
assets |
2,155 |
|
|
9,296 |
|
Total assets |
$ |
2,601,086 |
|
|
$ |
2,637,865 |
|
Liabilities,
redeemable non-controlling interest and stockholders’
equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
11,058 |
|
|
$ |
7,871 |
|
Accrued
expenses |
79,991 |
|
|
74,033 |
|
Accrued
interest |
24,457 |
|
|
18,751 |
|
Deferred
revenue |
361,940 |
|
|
385,676 |
|
Current
portion of notes payable |
33,945 |
|
|
31,606 |
|
Current
portion of capital lease obligations |
7,630 |
|
|
7,427 |
|
Deferred
consideration—short term |
4,365 |
|
|
2,651 |
|
Other
current liabilities |
4,031 |
|
|
3,842 |
|
Total current
liabilities |
527,417 |
|
|
531,857 |
|
Long-term deferred
revenue |
90,972 |
|
|
96,828 |
|
Notes payable—long
term, net of original issue discounts of $25,811 and $23,527 and
deferred financing costs of $37,736 and $35,049, respectively |
1,858,300 |
|
|
1,815,221 |
|
Capital lease
obligations—long term |
7,719 |
|
|
4,013 |
|
Deferred tax
liability |
19,696 |
|
|
29,897 |
|
Deferred
consideration—long term |
3,551 |
|
|
1,320 |
|
Other liabilities |
10,426 |
|
|
10,970 |
|
Total liabilities |
2,518,081 |
|
|
2,490,106 |
|
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; 140,190,695
and 142,868,329 shares issued at December 31, 2017 and June 30,
2018, respectively; 140,190,695 and 142,867,992 outstanding at
December 31, 2017 and June 30, 2018, respectively |
14 |
|
|
14 |
|
Additional paid-in capital |
931,033 |
|
|
946,122 |
|
Accumulated other comprehensive loss |
(541 |
) |
|
(1,202 |
) |
Accumulated deficit |
(847,501 |
) |
|
(797,175 |
) |
Total stockholders’
equity |
83,005 |
|
|
147,759 |
|
Total liabilities,
redeemable non-controlling interest and stockholders’ equity |
$ |
2,601,086 |
|
|
$ |
2,637,865 |
|
|
Endurance International Group Holdings,
Inc. |
Consolidated Statements of Operations and
Comprehensive Income (Loss) |
(unaudited) |
(in thousands, except share and per share
amounts) |
|
|
Three Months EndedJune
30, |
|
Six Months EndedJune
30, |
|
2017 |
|
2018 |
|
2017 |
|
2018 |
Revenue |
$ |
292,258 |
|
|
$ |
287,770 |
|
|
$ |
587,395 |
|
|
$ |
579,126 |
|
Cost of revenue |
146,583 |
|
|
130,746 |
|
|
295,332 |
|
|
264,652 |
|
Gross profit |
145,675 |
|
|
157,024 |
|
|
292,063 |
|
|
314,474 |
|
Operating expense: |
|
|
|
|
|
|
|
Sales and
marketing |
72,106 |
|
|
66,546 |
|
|
144,878 |
|
|
133,902 |
|
Engineering and development |
20,149 |
|
|
21,959 |
|
|
40,511 |
|
|
41,876 |
|
General
and administrative |
40,580 |
|
|
30,744 |
|
|
79,660 |
|
|
69,519 |
|
Transaction expenses |
193 |
|
|
— |
|
|
773 |
|
|
— |
|
Total operating
expense |
133,028 |
|
|
119,249 |
|
|
265,822 |
|
|
245,297 |
|
Income from
operations |
12,647 |
|
|
37,775 |
|
|
26,241 |
|
|
69,177 |
|
Other income
(expense): |
|
|
|
|
|
|
|
Interest
income |
185 |
|
|
227 |
|
|
303 |
|
|
431 |
|
Interest
expense |
(45,658 |
) |
|
(38,346 |
) |
|
(85,174 |
) |
|
(74,396 |
) |
Total other
expense—net |
(45,473 |
) |
|
(38,119 |
) |
|
(84,871 |
) |
|
(73,965 |
) |
Loss before income
taxes and equity earnings of unconsolidated entities |
(32,826 |
) |
|
(344 |
) |
|
(58,630 |
) |
|
(4,788 |
) |
Income tax expense
(benefit) |
2,628 |
|
|
1,650 |
|
|
8,402 |
|
|
4,267 |
|
(Loss) income before
equity earnings of unconsolidated entities |
(35,454 |
) |
|
(1,994 |
) |
|
(67,032 |
) |
|
(9,055 |
) |
Equity (income) loss of
unconsolidated entities, net of tax |
(39 |
) |
|
(25 |
) |
|
(39 |
) |
|
2 |
|
Net (loss) income |
$ |
(35,415 |
) |
|
$ |
(1,969 |
) |
|
$ |
(66,993 |
) |
|
$ |
(9,057 |
) |
Net loss attributable
to non-controlling interest |
51 |
|
|
— |
|
|
277 |
|
|
— |
|
Excess accretion of
non-controlling interest |
3,663 |
|
|
— |
|
|
7,247 |
|
|
— |
|
Total net loss
attributable to non-controlling interest |
3,714 |
|
|
— |
|
|
7,524 |
|
|
— |
|
Net (loss) income
attributable to Endurance International Group Holdings, Inc. |
$ |
(39,129 |
) |
|
$ |
(1,969 |
) |
|
$ |
(74,517 |
) |
|
$ |
(9,057 |
) |
Comprehensive income
(loss): |
|
|
|
|
|
|
|
Foreign
currency translation adjustments |
1,228 |
|
|
(2,425 |
) |
|
1,914 |
|
|
(1,845 |
) |
Unrealized (loss) gain on cash flow hedge, net of taxes of $(192)
and $45, and $(230) and $370 for the three months and six months
ended June 30, 2017 and 2018, respectively |
(176 |
) |
|
144 |
|
|
(392 |
) |
|
1,184 |
|
Total comprehensive
(loss) income |
$ |
(38,077 |
) |
|
$ |
(4,250 |
) |
|
$ |
(72,995 |
) |
|
$ |
(9,718 |
) |
Basic net (loss) income
per share attributable to Endurance International Group Holdings,
Inc. |
$ |
(0.29 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.55 |
) |
|
$ |
(0.06 |
) |
Diluted net (loss)
income per share attributable to Endurance International Group
Holdings, Inc. |
$ |
(0.29 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.55 |
) |
|
$ |
(0.06 |
) |
Weighted-average common
shares used in computing net loss per share attributable to
Endurance International Group Holdings, Inc.: |
|
|
|
|
|
|
|
Basic |
137,295,120 |
|
|
142,340,561 |
|
|
136,124,347 |
|
|
141,356,567 |
|
Diluted |
137,295,120 |
|
|
142,340,561 |
|
|
136,124,347 |
|
|
141,356,567 |
|
|
Endurance International Group Holdings,
Inc. |
Consolidated Statements of Cash
Flows |
(unaudited) |
(in thousands) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2017 |
|
2018 |
|
2017 |
|
2018 |
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net
(loss) income |
$ |
(35,415 |
) |
|
$ |
(1,969 |
) |
|
$ |
(66,993 |
) |
|
$ |
(9,057 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
|
|
Depreciation of property and equipment |
14,051 |
|
|
12,796 |
|
|
27,162 |
|
|
24,864 |
|
Amortization of other intangible assets |
34,940 |
|
|
25,978 |
|
|
69,207 |
|
|
51,713 |
|
Amortization of deferred financing costs |
1,786 |
|
|
1,092 |
|
|
3,530 |
|
|
2,986 |
|
Amortization of net present value of deferred consideration |
187 |
|
|
123 |
|
|
377 |
|
|
251 |
|
Dividend from minority interest |
50 |
|
|
— |
|
|
50 |
|
|
— |
|
Amortization of original issue discounts |
886 |
|
|
1,068 |
|
|
1,732 |
|
|
2,126 |
|
Stock-based compensation |
16,245 |
|
|
7,390 |
|
|
29,169 |
|
|
14,382 |
|
Deferred tax expense (benefit) |
906 |
|
|
2,180 |
|
|
4,346 |
|
|
2,672 |
|
Loss (gain) on sale of assets |
97 |
|
|
213 |
|
|
(128 |
) |
|
261 |
|
Loss (gain) of unconsolidated entities |
(39 |
) |
|
(25 |
) |
|
(39 |
) |
|
2 |
|
Financing costs expensed |
5,487 |
|
|
1,228 |
|
|
5,487 |
|
|
1,228 |
|
Loss on early
extinguishment of debt |
992 |
|
|
331 |
|
|
992 |
|
|
331 |
|
Changes in operating assets and liabilities, net of
acquisitions: |
|
|
|
|
|
|
|
Accounts receivable |
(1,033 |
) |
|
1,292 |
|
|
1,359 |
|
|
3,740 |
|
Prepaid expenses and other current assets |
4,374 |
|
|
(5,863 |
) |
|
(1,343 |
) |
|
(8,560 |
) |
Accounts payable and accrued expenses |
4,463 |
|
|
(13,475 |
) |
|
(9,004 |
) |
|
(12,880 |
) |
Deferred revenue |
771 |
|
|
(2,467 |
) |
|
16,518 |
|
|
8,193 |
|
Net cash provided by
operating activities |
48,748 |
|
|
29,892 |
|
|
82,422 |
|
|
82,252 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Purchases
of property and equipment |
(10,037 |
) |
|
(8,127 |
) |
|
(19,295 |
) |
|
(13,381 |
) |
Proceeds
from sale of assets |
36 |
|
|
— |
|
|
287 |
|
|
— |
|
Purchases
of intangible assets |
(1,647 |
) |
|
— |
|
|
(1,680 |
) |
|
— |
|
Net cash used in
investing activities |
(11,648 |
) |
|
(8,127 |
) |
|
(20,688 |
) |
|
(13,381 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
Proceeds
from issuance of term loan and notes, net of original issue
discounts |
1,693,007 |
|
|
1,580,305 |
|
|
1,693,007 |
|
|
1,580,305 |
|
Repayments of term loans |
(1,705,736 |
) |
|
(1,605,207 |
) |
|
(1,714,661 |
) |
|
(1,630,693 |
) |
Payment
of financing costs |
(5,968 |
) |
|
(1,295 |
) |
|
(6,060 |
) |
|
(1,295 |
) |
Payment
of deferred consideration |
(4,590 |
) |
|
(4,196 |
) |
|
(5,408 |
) |
|
(4,196 |
) |
Principal
payments on capital lease obligations |
(1,871 |
) |
|
(1,679 |
) |
|
(3,908 |
) |
|
(3,909 |
) |
Proceeds
from exercise of stock options |
504 |
|
|
431 |
|
|
1,132 |
|
|
456 |
|
Net cash used in
financing activities |
(24,654 |
) |
|
(31,641 |
) |
|
(35,898 |
) |
|
(59,332 |
) |
Net effect of exchange
rate on cash and cash equivalents and restricted cash |
(251 |
) |
|
(1,405 |
) |
|
2,076 |
|
|
(1,488 |
) |
Net increase (decrease)
in cash and cash equivalents and restricted cash |
12,195 |
|
|
(11,281 |
) |
|
27,912 |
|
|
8,051 |
|
Cash and cash
equivalents and restricted cash: |
|
|
|
|
|
|
|
Beginning
of period |
72,615 |
|
|
88,450 |
|
|
56,898 |
|
|
69,118 |
|
End of
period |
$ |
84,810 |
|
|
$ |
77,169 |
|
|
$ |
84,810 |
|
|
$ |
77,169 |
|
Supplemental cash flow
information: |
|
|
|
|
|
|
|
Interest paid |
$ |
33,576 |
|
|
$ |
30,370 |
|
|
$ |
80,122 |
|
|
$ |
72,461 |
|
Income taxes paid |
$ |
1,507 |
|
|
$ |
1,519 |
|
|
$ |
2,459 |
|
|
$ |
2,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP to Non-GAAP Reconciliation - Adjusted
EBITDA
The following table presents a reconciliation of net income
(loss) calculated in accordance with GAAP to adjusted EBITDA (all
data in thousands):
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2017 |
|
2018 |
|
2017 |
|
2018 |
Net (loss) income |
$ |
(35,415 |
) |
|
$ |
(1,969 |
) |
|
$ |
(66,993 |
) |
|
$ |
(9,057 |
) |
Interest expense,
net(1) |
45,473 |
|
|
38,119 |
|
|
84,871 |
|
|
73,965 |
|
Income tax expense
(benefit) |
2,628 |
|
|
1,650 |
|
|
8,402 |
|
|
4,267 |
|
Depreciation |
14,051 |
|
|
12,796 |
|
|
27,162 |
|
|
24,864 |
|
Amortization of other
intangible assets |
34,940 |
|
|
25,978 |
|
|
69,207 |
|
|
51,713 |
|
Stock-based
compensation |
16,245 |
|
|
7,390 |
|
|
29,169 |
|
|
14,382 |
|
Restructuring
expenses |
4,468 |
|
|
1,295 |
|
|
10,095 |
|
|
2,824 |
|
Transaction expenses
and charges |
193 |
|
|
— |
|
|
773 |
|
|
— |
|
(Income) loss of
unconsolidated entities |
(39 |
) |
|
(25 |
) |
|
(39 |
) |
|
2 |
|
Impairment of other
long-lived assets |
— |
|
|
— |
|
|
— |
|
|
— |
|
Shareholder litigation
reserve |
— |
|
|
(240 |
) |
|
— |
|
|
8,260 |
|
Adjusted
EBITDA |
$ |
82,544 |
|
|
$ |
84,994 |
|
|
$ |
162,647 |
|
|
$ |
171,220 |
|
(1) Interest expense includes impact of amortization of deferred
financing costs, original issuance discounts and interest
income.
GAAP to Non-GAAP Reconciliation – Free Cash
Flow
The following table reflects the reconciliation of cash flow
from operations to free cash flow (“FCF”) (all data in
thousands):
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
Cash flow from
operations |
$ |
48,748 |
|
|
$ |
29,892 |
|
|
$ |
82,422 |
|
|
$ |
82,252 |
|
Less: |
|
|
|
|
|
|
|
Capital expenditures
and capital lease obligations(1) |
(11,908 |
) |
|
(9,806 |
) |
|
(23,203 |
) |
|
(17,290 |
) |
Free cash
flow |
$ |
36,840 |
|
|
$ |
20,086 |
|
|
$ |
59,219 |
|
|
$ |
64,962 |
|
(1) Capital expenditures during the three and six months
ended June 30, 2017 and 2018 includes $1.9 million and $1.7
million, and $3.9 million and $3.9 million, respectively, of
principal payments under a three year capital lease for software.
The remaining balance on the capital lease is $11.4 million as of
June 30, 2018.
Average Revenue Per Subscriber - Calculation and Segment
Detail
We present our financial results in the following three
segments.
- Web presence. The web presence segment consists primarily of
our web hosting brands and related products such as website
security, website design tools and services, and e-commerce
products.
- Email marketing. The email marketing segment consists of
Constant Contact email marketing tools and related products and the
SinglePlatform digital storefront product.
- Domain. The domain segment consists of domain-focused brands
and certain web hosting brands that are aligned with our
domain-focused brands. This segment sells domain names and domain
management services to resellers and end users, as well as premium
domain names, and also generates advertising revenue from domain
name parking.
The following table presents the calculation of ARPS, on a
consolidated basis and by segment (all data in thousands, except
ARPS data):
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2017 |
|
2018 |
|
2017 |
|
2018 |
Consolidated
revenue |
$ |
292,258 |
|
|
$ |
287,770 |
|
|
$ |
587,395 |
|
|
$ |
579,126 |
|
Consolidated total
subscribers |
5,217 |
|
|
4,918 |
|
|
5,217 |
|
|
4,918 |
|
Consolidated average
subscribers for the period |
5,261 |
|
|
4,965 |
|
|
5,294 |
|
|
4,985 |
|
Consolidated
ARPS |
$ |
18.52 |
|
|
$ |
19.32 |
|
|
$ |
18.49 |
|
|
$ |
19.36 |
|
|
|
|
|
|
|
|
|
Web presence
revenue |
$ |
160,122 |
|
|
$ |
152,715 |
|
|
$ |
324,131 |
|
|
$ |
307,732 |
|
Web presence
subscribers |
4,041 |
|
|
3,737 |
|
|
4,041 |
|
|
3,737 |
|
Web presence average
subscribers for the period |
4,088 |
|
|
3,774 |
|
|
4,120 |
|
|
3,793 |
|
Web presence
ARPS |
$ |
13.06 |
|
|
$ |
13.49 |
|
|
$ |
13.11 |
|
|
$ |
13.52 |
|
|
|
|
|
|
|
|
|
Email marketing
revenue |
$ |
99,086 |
|
|
$ |
102,154 |
|
|
$ |
196,875 |
|
|
$ |
204,601 |
|
Email marketing
subscribers(1) |
530 |
|
|
504 |
|
|
530 |
|
|
504 |
|
Email marketing average
subscribers for the period |
534 |
|
|
511 |
|
|
537 |
|
|
512 |
|
Email marketing
ARPS |
$ |
61.88 |
|
|
$ |
66.60 |
|
|
$ |
61.10 |
|
|
$ |
66.64 |
|
|
|
|
|
|
|
|
|
Domain revenue |
$ |
33,050 |
|
|
$ |
32,901 |
|
|
$ |
66,389 |
|
|
$ |
66,793 |
|
Domain subscribers |
646 |
|
|
677 |
|
|
646 |
|
|
677 |
|
Domain average
subscribers for the period |
639 |
|
|
680 |
|
|
637 |
|
|
680 |
|
Domain
ARPS |
$ |
17.23 |
|
|
$ |
16.13 |
|
|
$ |
17.36 |
|
|
$ |
16.36 |
|
(1) Total email marketing subscriber count for the three and six
month periods ending June 30, 2018 was impacted by a loss of
approximately 10,500 subscribers, which resulted from changes made
to Constant Contact’s account cancellation policy. Excluding
this impact, the total subscribers at period end would have been
approximately 514,000.
The following table presents revenue, gross profit, and a
reconciliation by segment of net income (loss) calculated in
accordance with GAAP to adjusted EBITDA (all data in
thousands):
|
Three Months Ended June 30, 2017 |
|
Web presence |
|
Email marketing |
|
Domain |
|
Total |
|
Revised(2) |
Revenue |
$ |
160,122 |
|
|
$ |
99,086 |
|
|
$ |
33,050 |
|
|
$ |
292,258 |
|
Gross profit |
$ |
74,284 |
|
|
$ |
63,123 |
|
|
$ |
8,268 |
|
|
$ |
145,675 |
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(27,805 |
) |
|
$ |
(2,276 |
) |
|
$ |
(5,334 |
) |
|
$ |
(35,415 |
) |
Interest expense,
net(1) |
19,801 |
|
|
25,179 |
|
|
493 |
|
|
45,473 |
|
Income tax expense
(benefit) |
3,354 |
|
|
(1,367 |
) |
|
641 |
|
|
2,628 |
|
Depreciation |
9,583 |
|
|
3,526 |
|
|
942 |
|
|
14,051 |
|
Amortization of other
intangible assets |
14,996 |
|
|
18,565 |
|
|
1,379 |
|
|
34,940 |
|
Stock-based
compensation |
12,723 |
|
|
1,900 |
|
|
1,622 |
|
|
16,245 |
|
Restructuring
expenses |
3,348 |
|
|
769 |
|
|
351 |
|
|
4,468 |
|
Transaction expenses
and charges |
— |
|
|
193 |
|
|
— |
|
|
193 |
|
(Gain) loss of
unconsolidated entities |
(39 |
) |
|
— |
|
|
— |
|
|
(39 |
) |
Impairment of other
long-lived assets |
— |
|
|
— |
|
|
— |
|
|
— |
|
SEC investigations
reserve |
— |
|
|
— |
|
|
— |
|
|
— |
|
Shareholder litigation
reserve |
— |
|
|
— |
|
|
— |
|
|
— |
|
Adjusted
EBITDA |
$ |
35,961 |
|
|
$ |
46,489 |
|
|
$ |
94 |
|
|
$ |
82,544 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018 |
|
Web presence |
|
Email marketing |
|
Domain |
|
Total |
Revenue |
$ |
152,715 |
|
|
$ |
102,154 |
|
|
$ |
32,901 |
|
|
$ |
287,770 |
|
Gross profit |
$ |
75,702 |
|
|
$ |
71,376 |
|
|
$ |
9,946 |
|
|
$ |
157,024 |
|
|
|
|
|
|
|
|
— |
|
Net (loss) income |
$ |
(8,243 |
) |
|
$ |
9,481 |
|
|
$ |
(3,207 |
) |
|
$ |
(1,969 |
) |
Interest expense,
net(1) |
18,385 |
|
|
17,329 |
|
|
2,405 |
|
|
38,119 |
|
Income tax expense
(benefit) |
870 |
|
|
581 |
|
|
199 |
|
|
1,650 |
|
Depreciation |
8,391 |
|
|
3,406 |
|
|
999 |
|
|
12,796 |
|
Amortization of other
intangible assets |
11,863 |
|
|
13,239 |
|
|
876 |
|
|
25,978 |
|
Stock-based
compensation |
5,424 |
|
|
1,288 |
|
|
678 |
|
|
7,390 |
|
Restructuring
expenses |
788 |
|
|
420 |
|
|
87 |
|
|
1,295 |
|
Transaction expenses
and charges |
— |
|
|
— |
|
|
— |
|
|
— |
|
(Gain) loss of
unconsolidated entities |
(25 |
) |
|
— |
|
|
— |
|
|
(25 |
) |
Impairment of other
long-lived assets |
— |
|
|
— |
|
|
— |
|
|
— |
|
SEC investigations
reserve |
— |
|
|
— |
|
|
— |
|
|
— |
|
Shareholder litigation
reserve |
(197 |
) |
|
— |
|
|
(43 |
) |
|
(240 |
) |
Adjusted
EBITDA |
$ |
37,256 |
|
|
$ |
45,744 |
|
|
$ |
1,994 |
|
|
$ |
84,994 |
|
|
|
|
Six Months Ended June 30, 2017 |
|
Web presence |
|
Email marketing |
|
Domain |
|
Total |
|
Revised(2) |
Revenue |
$ |
324,131 |
|
|
$ |
196,875 |
|
|
$ |
66,389 |
|
|
$ |
587,395 |
|
Gross profit |
$ |
152,154 |
|
|
$ |
122,895 |
|
|
$ |
17,014 |
|
|
$ |
292,063 |
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(46,823 |
) |
|
$ |
(10,228 |
) |
|
$ |
(9,942 |
) |
|
$ |
(66,993 |
) |
Interest expense,
net(1) |
36,191 |
|
|
47,698 |
|
|
982 |
|
|
84,871 |
|
Income tax expense
(benefit) |
11,847 |
|
|
(6,144 |
) |
|
2,699 |
|
|
8,402 |
|
Depreciation |
18,002 |
|
|
7,399 |
|
|
1,761 |
|
|
27,162 |
|
Amortization of other
intangible assets |
29,547 |
|
|
36,927 |
|
|
2,733 |
|
|
69,207 |
|
Stock-based
compensation |
22,513 |
|
|
3,724 |
|
|
2,932 |
|
|
29,169 |
|
Restructuring
expenses |
5,476 |
|
|
4,061 |
|
|
558 |
|
|
10,095 |
|
Transaction expenses
and charges |
— |
|
|
773 |
|
|
— |
|
|
773 |
|
(Gain) loss of
unconsolidated entities |
(39 |
) |
|
— |
|
|
— |
|
|
(39 |
) |
Impairment of other
long-lived assets |
— |
|
|
— |
|
|
— |
|
|
— |
|
SEC investigations
reserve |
— |
|
|
— |
|
|
— |
|
|
— |
|
Shareholder litigation
reserve |
— |
|
|
— |
|
|
— |
|
|
— |
|
Adjusted
EBITDA |
$ |
76,714 |
|
|
$ |
84,210 |
|
|
$ |
1,723 |
|
|
$ |
162,647 |
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2018 |
|
Web presence |
|
Email marketing |
|
Domain |
|
Total |
Revenue |
$ |
307,732 |
|
|
$ |
204,601 |
|
|
$ |
66,793 |
|
|
$ |
579,126 |
|
Gross profit |
$ |
150,075 |
|
|
$ |
143,553 |
|
|
$ |
20,846 |
|
|
$ |
314,474 |
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(25,351 |
) |
|
$ |
24,610 |
|
|
$ |
(8,316 |
) |
|
$ |
(9,057 |
) |
Interest expense,
net(1) |
35,371 |
|
|
33,738 |
|
|
4,856 |
|
|
73,965 |
|
Income tax expense
(benefit) |
7,191 |
|
|
(5,026 |
) |
|
2,102 |
|
|
4,267 |
|
Depreciation |
16,368 |
|
|
6,552 |
|
|
1,944 |
|
|
24,864 |
|
Amortization of other
intangible assets |
23,871 |
|
|
26,332 |
|
|
1,510 |
|
|
51,713 |
|
Stock-based
compensation |
10,497 |
|
|
2,696 |
|
|
1,189 |
|
|
14,382 |
|
Restructuring
expenses |
1,600 |
|
|
582 |
|
|
642 |
|
|
2,824 |
|
Transaction expenses
and charges |
— |
|
|
— |
|
|
— |
|
|
— |
|
Loss of unconsolidated
entities |
2 |
|
|
— |
|
|
— |
|
|
2 |
|
Impairment of other
long-lived assets |
— |
|
|
— |
|
|
— |
|
|
— |
|
SEC investigations
reserve |
— |
|
|
— |
|
|
— |
|
|
— |
|
Shareholder litigation
reserve |
5,548 |
|
|
1,500 |
|
|
1,212 |
|
|
8,260 |
|
Adjusted
EBITDA |
$ |
75,097 |
|
|
$ |
90,984 |
|
|
$ |
5,139 |
|
|
$ |
171,220 |
|
(1) Interest expense includes impact of amortization of deferred
financing costs, original issuance discounts and interest
income.(2) As disclosed in the first quarter of 2018, we revised
the allocation of our 2017 adjusted EBITDA between our web presence
and domain segment to correct a misallocation of domain
registration costs in our previously reported segment figures. This
correction resulted in the reallocation of adjusted EBITDA from the
domain segment to the web presence segment of $1.8 million and $3.0
million for the three and six months ending June 30, 2017,
respectively. Consolidated adjusted EBITDA figures for these
periods were not affected by this correction.
GAAP to Non-GAAP Reconciliation of Fiscal Year 2018
Guidance (as of July 26, 2018) - Adjusted EBITDA
The following table reflects the reconciliation of fiscal year
2018 estimated net loss calculated in accordance with GAAP to
fiscal year 2018 guidance for adjusted EBITDA. All figures shown
are approximate.
($ in millions) |
Twelve Months Ending December 31,
2018 |
Estimated net
loss |
$ |
(35 |
) |
$ |
(21 |
) |
Estimated interest
expense (net) |
|
149 |
|
|
150 |
|
Estimated income tax
expense (benefit) |
|
5 |
|
|
6 |
|
Estimated
depreciation |
|
50 |
|
|
50 |
|
Estimated amortization
of acquired intangible assets |
|
100 |
|
|
100 |
|
Estimated stock-based
compensation |
|
30 |
|
|
32 |
|
Estimated restructuring
expenses |
|
3 |
|
|
5 |
|
Estimated transaction
expenses and charges |
|
— |
|
|
— |
|
Estimated (gain) loss
of unconsolidated entities |
|
— |
|
|
— |
|
Estimated impairment of
other long-lived assets |
|
— |
|
|
— |
|
Estimated shareholder
litigation reserve |
|
8.25 |
|
|
8.25 |
|
Adjusted EBITDA
guidance |
$ |
310 |
|
$ |
330 |
|
GAAP to Non-GAAP Reconciliation of Fiscal Year 2018
Guidance (as of July 26, 2018) - Free Cash Flow
The following table reflects the reconciliation of fiscal year
2018 estimated cash flow from operations calculated in accordance
with GAAP to fiscal year 2018 guidance for free cash flow. All
figures shown are approximate.
($ in millions) |
Twelve Months Ending December 31,
2018 |
Estimated cash
flow from operations |
$ |
178 |
|
Estimated capital
expenditures and capital lease obligations |
|
(58 |
) |
Free cash flow
guidance |
$ |
120 |
|
Endurance (NASDAQ:EIGI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Endurance (NASDAQ:EIGI)
Historical Stock Chart
From Jul 2023 to Jul 2024