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Endurance International Group Reports 2017 Second Quarter Results

  • GAAP revenue of $292.3 million
  • Net loss of $35.4 million
  • Adjusted EBITDA of $82.5 million
  • Cash flow from operations of $48.7 million
  • Free cash flow of $36.8 million
  • Total subscribers on platform were approximately 5.217 million at June 30, 2017

BURLINGTON, Mass., Aug. 01, 2017 (GLOBE NEWSWIRE) -- 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, 2017.

“Our second quarter performance reflected our continued drive toward meeting our 2017 operational and strategic goals,” commented Hari Ravichandran, chief executive officer and founder of Endurance International Group. “We are pleased with our overall results. Performance in our web presence segment was in-line with expectations while we focused on targeting high-value hosting subscribers. Constant Contact demonstrated steady revenue growth and margin expansion. Our year to date performance, along with our outlook for the remainder of the year, have reinforced our belief that our plans for 2017 are setting a strong foundation, and positioning us for profitable growth and strong cash flows in future years.”

Second Quarter 2017 Financial Highlights

  • Revenue for the second quarter of 2017 was $292.3 million, an increase of one percent compared to $290.7 million for the second quarter of 2016. Revenue for the second quarter of 2017 includes a contribution of $99.1 million from Constant Contact, as compared to a contribution of $94.7 million for the second quarter of 2016.
  • Net loss for the second quarter of 2017 was $35.4 million compared to net loss of $33.4 million for the second quarter of 2016.
  • Net loss attributable to Endurance International Group Holdings, Inc. for the second quarter of 2017 was $39.1 million, or $(0.29) per diluted share, compared to net loss of $28.0 million, or $(0.21) per diluted share, for the second quarter of 2016.
  • Adjusted EBITDA for the second quarter of 2017 was $82.5 million, an increase of 7 percent compared to $76.9 million for the second quarter of 2016.
  • Cash flow from operations for the second quarter of 2017 was $48.7 million, a decrease of 9 percent compared to $53.8 million for the second quarter of 2016.
  • Free cash flow, defined as cash flow from operations less capital expenditures and capital lease obligations, for the second quarter of 2017 was $36.8 million compared to $41.6 million for the second quarter of 2016.

Second Quarter Operating Highlights

  • Total subscribers on platform at June 30, 2017 were approximately 5.217 million, compared to approximately 5.480 million subscribers at June 30, 2016 and 5.304 million subscribers at March 31, 2017. See “Total Subscribers” below.
  • Average revenue per subscriber, or ARPS, for the second quarter of 2017 was $18.52, compared to $17.74 for the second quarter of 2016 and $18.43 for the first quarter of 2017. Excluding the impact of Constant Contact, ARPS for the second quarter of 2017 was $13.62, compared to $13.32 for the second quarter of 2016 and $13.71 for the first quarter of 2017. See “Average Revenue Per Subscriber” below.

Fiscal 2017 Guidance

The company is updating its guidance for revenue, adjusted EBITDA, and free cash flow. Expectations for revenue and adjusted EBITDA have increased by approximately $8 million and $6 million, respectively, from the midpoint of prior guidance provided on May 2, 2017. In addition, as the company accelerates streamlining of its operations and focuses on a narrower set of strategic brands, it expects restructuring expenses to increase by approximately $10 million as compared to those reflected in prior guidance. As a result, expectations for free cash flow have been reduced by approximately $10 million, reflecting the net impact of higher restructuring costs, lower change in deferred revenue, and lower cash interest expense post refinancing. The streamlining of the company’s cost structure and lower annualized cash interest expense due to the June 2017 refinancing of its term loan is expected to be accretive to free cash flow in 2018.

As of the date of this release, August 1, 2017, for the full year ending December 31, 2017, the company expects:

2016 Actual
as Reported
Previous Guidance
(as of May 2, 2017)
Updated Guidance
(as of August 1, 2017)*
GAAP revenue $1.111 billion4 - 5% increase5 - 5.5% increase
Adjusted EBITDA $288 million12 - 14% increase14 - 16% increase
Free cash flow$112 million~35% increase~25% increase

Adjusted EBITDA and free cash flow are non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to their most comparable measure calculated in accordance with GAAP is provided in the financial statement tables included at the end of this press release.

* Percentage increases shown in the "Guidance" column represent percentage increases over 2016 figures shown in the "Actual as Reported" column.

Conference Call and Webcast Information

Endurance International Group’s second quarter 2017 financial results teleconference and webcast is scheduled to begin at 8:00 a.m. EDT on Tuesday, August 1, 2017. 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, and impairment of other long-lived assets. We view adjusted EBITDA as a performance measure and believe it helps investors evaluate and compare our core operating performance from period to period.

Free Cash Flow, or FCF, is a non-GAAP financial measure that we calculate as cash flow from operations less capital expenditures and capital lease obligations. We believe that FCF provides investors with an indicator of our ability to generate positive cash flows after meeting our obligations with regard to capital expenditures (including capital lease obligations).

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 2017, these adjustments had a net negative impact of approximately 4,438 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. 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. 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 Statements

This 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 updated financial guidance for fiscal year 2017, our belief that our year to date results and outlook for the remainder of the year position us for profitable growth and strong cash flow in future years, our expectations regarding restructuring expenses, changes in deferred revenue and interest expense for the remainder of the year, our belief that our cost streamlining efforts will be accretive to free cash flow in 2018, 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 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: that we will be unable to successfully enhance the customer product and service experience and improve customer satisfaction and retention through operational and infrastructure improvements; that the senior management transition we are undergoing (including the transition of our chief executive officer) will have an adverse impact on our business; that we will encounter difficulties or delays in our efforts to build brand awareness of our key brands; that we will be unable to drive revenue growth by increasing ARPS through cross-selling and other product-related initiatives; 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; system or Internet failures; our inability to maintain or improve our competitive position or market share; and other risks set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2017 filed with the SEC on May 9, 2017 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 Holdings, Inc. (NASDAQ:EIGI) (em)Powers millions of small businesses worldwide with products and technology to vitalize their online web presence, email marketing, mobile business solutions, and more. The Endurance family of brands includes: Constant Contact, Bluehost, HostGator, iPage, Domain.com, BigRock, SiteBuilder and SinglePlatform, among others. Headquartered in Burlington, Massachusetts, Endurance employs approximately 4,000 people across the United States, Brazil, India and the Netherlands. For more information, visit: www.endurance.com.

Endurance International Group and the compass logo are trademarks of The Endurance International Group, Inc. 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.

Endurance International Group Holdings, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share amounts)
December 31, 2016 June 30, 2017
Assets
Current assets:
Cash and cash equivalents$53,596 $81,409
Restricted cash3,302 3,401
Accounts receivable13,088 11,664
Prepaid domain name registry fees55,444 56,710
Prepaid expenses and other current assets28,678 28,844
Total current assets154,108 182,028
Property and equipment—net95,272 94,625
Goodwill1,859,909 1,861,608
Other intangible assets—net612,057 544,990
Deferred financing costs4,932 4,089
Investments15,857 15,846
Prepaid domain name registry fees, net of current portion10,429 10,789
Other assets3,710 2,504
Total assets$2,756,274 $2,716,479
Liabilities, redeemable non-controlling interest and stockholders’ equity
Current liabilities:
Accounts payable$16,074 $12,841
Accrued expenses67,722 75,088
Accrued interest27,246 20,088
Deferred revenue355,190 369,825
Current portion of notes payable35,700 33,945
Current portion of capital lease obligations6,690 4,481
Deferred consideration—short term5,273 4,250
Other current liabilities2,890 2,947
Total current liabilities516,785 523,465
Long-term deferred revenue89,200 91,256
Notes payable—long term, net of original issue discounts of $25,853 and $27,939 and deferred financing costs of $43,342 and $40,622 respectively1,951,280 1,936,258
Capital lease obligations—long term512 1,537
Deferred tax liability39,943 44,060
Deferred consideration—long term7,444 3,437
Other liabilities8,974 9,862
Total liabilities2,614,138 2,609,875
Redeemable non-controlling interest17,753 25,000
Commitments and contingencies (Note 17)
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; 134,793,857 and 137,503,270 shares issued at December 31, 2016 and June 30, 2017, respectively; 134,793,857 and 137,503,270 outstanding at December 31, 2016 and June 30, 2017, respectively 14 14
Additional paid-in capital868,228 898,445
Accumulated other comprehensive loss(3,666) (2,144)
Accumulated deficit(740,193) (814,711)
Total stockholders’ equity124,383 81,604
Total liabilities, redeemable non-controlling interest and stockholders’ equity$2,756,274 $2,716,479


Endurance International Group Holdings, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited)
(in thousands, except share and per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
Revenue$290,713 $292,258 $527,826 $587,395
Cost of revenue153,077 146,583 289,553 295,332
Gross profit137,636 145,675 238,273 292,063
Operating expense:
Sales and marketing80,309 72,106 159,603 144,878
Engineering and development27,687 20,149 43,942 40,511
General and administrative34,830 40,580 75,109 79,660
Transactions expenses978 193 32,098 773
Total operating expense143,804 133,028 310,752 265,822
Income (loss) from operations(6,168) 12,647 (72,479) 26,241
Other income (expense):
Other income 11,410
Interest income142 185 276 303
Interest expense(40,994) (45,658) (71,365) (85,174)
Total other expense—net(40,852) (45,473) (59,679) (84,871)
Loss before income taxes and equity earnings of unconsolidated entities(47,020) (32,826) (132,158) (58,630)
Income tax expense (benefit)(13,931) 2,628 (113,833) 8,402
Loss before equity earnings of unconsolidated entities(33,089) (35,454) (18,325) (67,032)
Equity loss (income) of unconsolidated entities, net of tax341 (39) 1,024 (39)
Net loss$(33,430) $(35,415) $(19,349) $(66,993)
Net (loss) income attributable to non-controlling interest(5,390) 51 (13,120) 277
Excess accretion of non-controlling interest 3,663 7,247
Total net (loss) income attributable to non-controlling interest(5,390) 3,714 (13,120) 7,524
Net loss attributable to Endurance International Group Holdings, Inc.$(28,040) $(39,129) $(6,229) $(74,517)
Comprehensive income (loss):
Foreign currency translation adjustments540 1,228 882 1,914
Unrealized loss on cash flow hedge, net of taxes of $(218) and $(192), and $(824) and $(230) for the three and six months ended June 30, 2016 and 2017, respectively (427) (176) (1,938) (392)
Total comprehensive loss$(27,927) $(38,077) $(7,285) $(72,995)
Basic net loss per share attributable to Endurance International Group Holdings Inc.$(0.21) $(0.29) $(0.05) $(0.55)
Diluted net loss per share attributable to Endurance International Group Holdings Inc.$(0.21) $(0.29) $(0.05) $(0.55)
Weighted-average common shares used in computing net loss per share attributable to Endurance International Group Holdings, Inc.:
Basic132,566,622 137,295,120 132,736,382 136,124,347
Diluted132,566,622 137,295,120 132,736,382 136,124,347


Endurance International Group Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
Cash flows from operating activities:
Net loss$(33,430) $(35,415) $(19,349) $(66,993)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation of property and equipment16,760 14,051 29,932 27,162
Amortization of other intangible assets37,823 34,940 67,697 69,207
Impairment of long lived assets6,848 8,285
Amortization of deferred financing costs1,651 1,786 2,562 3,530
Amortization of net present value of deferred consideration799 187 1,582 377
Dividend from minority interest50 50 50 50
Amortization of original issue discounts823 886 1,272 1,732
Stock-based compensation15,024 16,245 33,412 29,169
Deferred tax (benefit) expense(14,259) 906 (117,462) 4,346
(Gain) loss on sale of assets(224) 97 (225) (128)
(Gain) loss from unconsolidated entities341 (39) (10,386) (39)
(Gain) loss from change in deferred consideration 21
Financing costs expensed 5,487 5,487
Loss on early extinguishment of debt 992 992
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable(598) (1,034) 1,546 1,359
Prepaid expenses and other current assets787 4,374 (14,886) (1,343)
Accounts payable and accrued expenses9,544 4,463 26,517 (9,004)
Deferred revenue11,904 771 55,047 16,518
Net cash provided by operating activities53,843 48,747 65,615 82,422
Cash flows from investing activities:
Businesses acquired in purchase transactions, net of cash acquired(18,180) (899,889)
Cash paid for minority investment(5,000) (5,600)
Purchases of property and equipment(10,821) (10,037) (20,961) (19,295)
Proceeds from sale of assets252 36 252 287
Purchases of intangible assets(27) (1,647) (27) (1,680)
(Withdrawals) deposits of principal balances in restricted cash accounts(31) 244 (768) (100)
Net cash used in investing activities(33,807) (11,404) (926,993) (20,788)
Cash flows from financing activities:
Proceeds from issuance of term loan and notes, net of original issue discounts 1,693,007 1,056,178 1,693,007
Repayments of term loans(24,925) (1,705,736) (33,850) (1,714,661)
Proceeds from borrowing of revolver 16,000
Repayment of revolver (83,000)
Payment of financing costs(122) (5,968) (51,727) (6,060)
Payment of deferred consideration (4,590) (707) (5,408)
Principal payments on capital lease obligations(1,457) (1,871) (2,896) (3,908)
Capital investment from minority partner1,000 1,000
Proceeds from exercise of stock options735 504 1,328 1,132
Net cash provided by (used in) financing activities(24,769) (24,654) 902,326 (35,898)
Net effect of exchange rate on cash and cash equivalents1,048 (250) 1,614 2,077
Net increase in cash and cash equivalents(3,685) 12,439 42,562 27,813
Cash and cash equivalents:
Beginning of period79,277 68,970 33,030 53,596
End of period$75,592 $81,409 $75,592 $81,409
Supplemental cash flow information:
Interest paid$27,512 $33,576 $44,171 $80,122
Income taxes paid$1,480 $1,507 $2,448 $2,459


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,
2016 2017 2016 2017
Net income (loss)$ (33,430) $ (35,415) $ (19,349) $(66,993)
Interest expense, net (1)40,852 45,473 71,089 84,871
Income tax expense (benefit)(13,931) 2,628 (113,833) 8,402
Depreciation16,760 14,051 29,932 27,162
Amortization of other intangible assets37,823 34,940 67,697 69,207
Stock-based compensation15,024 16,245 33,412 29,169
Restructuring expenses5,663 4,468 17,265 10,096
Transaction expenses and charges978 193 32,098 773
Loss (gain) of unconsolidated entities (2) 341 (39) (10,386) (39)
Impairment of other long-lived assets6,848 8,285
Adjusted EBITDA$76,928 $82,544 $116,210 $ 162,648

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income. For the three and six months ended June 30, 2017, it also includes $6.5 million of deferred financing costs and original issuance discounts immediately expensed upon refinancing of our term loan in June 2017.

(2) The loss (gain) of unconsolidated entities is reported on a net basis for the three and six months ended June 30, 2016. The six months ended June 30, 2016 includes a gain of $11.4 million on our investment in WZ UK Ltd. This gain was generated on January 6, 2016, when we increased our ownership stake in WZ UK Ltd. from 49% to 57.5%, which required a revaluation of our existing investment to its implied fair value. This $11.4 million gain was partially offset by our proportionate shares of net losses from unconsolidated entities of $1.0 million.


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,
2016
2017
2016
2017
Cash flow from operations$53,843 $48,747 $65,615 $82,422
Less:
Capital expenditures and capital lease obligations (1) (12,278) (11,908) (23,857) (23,203)
Free cash flow$41,565 $36,839 $41,758 $59,219

(1) Capital expenditures during the three and six months ended June 30, 2016 includes $1.5 million and $2.9 million, respectively, of principal payments under a three year capital lease for software. Capital expenditures during the three and six months ended June 30, 2017 includes $1.9 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 $6.0 million as of June 30, 2017.


Average Revenue Per Subscriber - Calculation and Segment Detail

We present our financial results in two segments. Our web presence segment is our historical business before the acquisition of Constant Contact, and includes primarily our web hosting products, domains, website builders and related add-on products. Our email marketing segment consists of the Constant Contact business, including email marketing, event management, survey tools and the SinglePlatform digital storefront service.

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,
2016 2017 2016 2017
Consolidated revenue $290,713 $292,258 $527,826 $587,395
Consolidated total subscribers 5,480 5,217 5,480 5,217
Consolidated average subscribers for the period 5,463 5,261 5,274 5,294
Consolidated average revenue per subscriber (ARPS) $17.74 $18.52 $16.68 $18.49
Web presence revenue 196,041 193,172 394,089 390,520
Web presence subscribers 4,929 4,687 4,929 4,687
Web presence average subscribers for the period 4,906 4,727 4,838 4,757
Web presence average revenue per subscriber (ARPS) $13.32 $13.62 $13.58 $13.68
Email marketing revenue 94,672 99,086 133,737 196,875
Email marketing subscribers 551 530 551 530
Email marketing average subscribers for the period 557 534 436 537
Email marketing average revenue per subscriber (ARPS) $56.68 $61.88 $51.15 $61.10

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, 2016
Three Months Ended
June 30, 2017
Web
presence
Email
marketing
Total Web
presence
Email
marketing
Total
Revenue$ 196,041 $ 94,672 $ 290,713 $ 193,172 $ 99,086 $ 292,258
Gross profit86,666 50,970 137,636 82,552 63,123 145,675
Net income (loss)(17,461) (15,969) (33,430) $(33,139) $(2,276) $(35,415)
Interest expense, net (1)18,077 22,775 40,852 20,294 25,179 45,473
Income tax expense (benefit)(4,341) (9,590) (13,931) 3,995 (1,367) 2,628
Depreciation9,098 7,662 16,760 10,525 3,526 14,051
Amortization of other intangible assets19,768 18,055 37,823 16,375 18,565 34,940
Stock-based compensation10,429 4,595 15,024 14,345 1,900 16,245
Restructuring expenses789 4,874 5,663 3,699 769 4,468
Transaction expenses and charges757 221 978 193 193
(Gain) loss of unconsolidated entities (2) 341 341 (39) (39)
Impairment of other long-lived assets6,848 6,848
Adjusted EBITDA$44,305 $32,623 $76,928 $36,055 $46,489 $82,544


Six Months Ended
June 30, 2016
Six Months Ended
June 30, 2017
Web
presence
Email
marketing
Total Web
presence
Email
marketing
Total
Revenue$ 394,089 $ 133,737 $ 527,826 $ 390,522 $ 196,875 $ 587,397
Gross profit176,551 61,722 238,273 169,168 122,895 292,063
Net income (loss)$22,673 $(42,022) $(19,349) $(56,766) $(10,227) $(66,993)
Interest expense, net (1)35,093 35,996 71,089 37,173 47,698 84,871
Income tax expense (benefit)(88,598) (25,235) (113,833) 14,544 (6,142) 8,402
Depreciation18,075 11,857 29,932 19,763 7,399 27,162
Amortization of other intangible assets39,523 28,174 67,697 32,280 36,927 69,207
Stock-based compensation25,075 8,337 33,412 25,445 3,724 29,169
Restructuring expenses960 16,305 17,265 6,036 4,060 10,096
Transaction expenses and charges31,114 984 32,098 773 773
(Gain) loss of unconsolidated entities (2) (10,386) (10,386) (39) (39)
Impairment of other long-lived assets8,285 8,285
Adjusted EBITDA$81,814 $34,396 $116,210 $78,436 $84,212 $162,648

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income. For the three and six months ended June 30, 2017, it also includes $6.5 million of deferred financing costs and original issuance discounts immediately expensed upon refinancing of our term loan in June 2017.

(2) The (gain) loss of unconsolidated entities is reported on a net basis for the three and six months ended June 30, 2016. The six months ended June 30, 2016 includes a gain of $11.4 million on our investment in WZ UK Ltd. This gain was generated on January 6, 2016, when we increased our ownership stake in WZ UK Ltd. from 49% to 57.5%, which required a revaluation of our existing investment to its implied fair value. This $11.4 million gain was partially offset by our proportionate shares of net losses from unconsolidated entities of $1.0 million.


GAAP to Non-GAAP Reconciliation of Fiscal Year 2017 Guidance (as of August 1, 2017) - Adjusted EBITDA

The following table reflects the reconciliation of fiscal year 2017 estimated net loss calculated in accordance with GAAP to fiscal year 2017 guidance for adjusted EBITDA at the midpoint of the guidance range (i.e. assuming a 15% increase over 2016 adjusted EBITDA as reported). All figures shown are approximate.

($ in millions)Twelve Months Ending
December 31, 2017
Estimated net loss$(103)
Estimated interest expense (net) 156
Estimated income tax expense (benefit) 10
Estimated depreciation 58
Estimated amortization of acquired intangible assets 137
Estimated stock-based compensation 59
Estimated restructuring expenses 15
Estimated transaction expenses and charges -
Estimated (gain) loss of unconsolidated entities -
Estimated impairment of other long-lived assets -
Adjusted EBITDA guidance $332

GAAP to Non-GAAP Reconciliation of Fiscal Year 2017 Guidance (as of August 1, 2017) - Free Cash Flow

The following table reflects the reconciliation of fiscal year 2017 estimated cash flow from operations calculated in accordance with GAAP to fiscal year 2017 guidance for free cash flow. All figures shown are approximate.

($ in millions)Twelve Months Ending
December 31, 2017
Estimated cash flow from operations$190
Estimated capital expenditures and capital lease obligations (50)
Free cash flow guidance $140


Investor Contact: Angela White Endurance International Group (781) 852-3450 ir@endurance.com Press Contact: Kristen Andrews Endurance International Group (781) 482-7038 press@endurance.com

Source:Endurance International Group