Web.com Reports Fourth Quarter and Full Year 2017 Financial Results

February 8, 2018
  • Strong financial and operating performance in the fourth quarter
  • Significant progress on strategic priorities for the year
  • Generated $53.6 million of GAAP net income and $193.3 million of adjusted EBITDA during the year
  • Used $108.5 million of cash to pay down debt and repurchase stock during the year

JACKSONVILLE, Fla., Feb. 08, 2018 (GLOBE NEWSWIRE) -- Web.com Group, Inc. (NASDAQ:WEB), a leading provider of Internet services and online marketing solutions for small businesses, today announced results for the fourth quarter and full year ended December 31, 2017.   

“Web.com reported a solid finish to the year, with year over year growth in revenue and profitability during the fourth quarter.  Throughout 2017, we successfully executed against our four strategic priorities.  In particular, we are pleased with the sales productivity improvements we've made in premium services, and our progress in the multi-location, franchise market, both of which are significant long-term growth drivers for Web.com,” said David L. Brown, chairman, chief executive officer and president of Web.com.

Brown added, “We enter 2018 focused on building on the improvements we've already made across the Company.  Key priorities for the year include improvement in customer retention, additional synergy realization, continuing to invest in growth areas, and optimizing retail.  We are confident that delivering on these objectives will help us achieve our near and long-term financial goals, and ultimately enhance the value we deliver to our shareholders."

Summary of Fourth Quarter 2017 Financial Results

  • Total revenue, calculated in accordance with U.S. generally accepted accounting principles (GAAP), was $188.8 million for the fourth quarter of 2017, compared to $187.2 million for the fourth quarter of 2016. Non-GAAP revenue was $191.1 million for the fourth quarter of 2017, compared to $188.9 million in the year ago quarter.   Results were in line with GAAP revenue and at the high end of non-GAAP revenue guidance of $187.4 to $190.4 million and $188.5 to $191.5 million, respectively.

  • GAAP operating income was $21.5 million for the fourth quarter of 2017, compared to $12.1 million for the fourth quarter of 2016, representing a 11% and 6% GAAP operating margin, respectively. Non-GAAP operating income was $43.0 million for the fourth quarter of 2017, representing a 23% non-GAAP operating margin, compared to $41.9 million for the fourth quarter of 2016, representing a 22% non-GAAP operating margin.

  • GAAP net income was $30.8 million, or $0.62 per diluted share, for the fourth quarter of 2017, representing a 16% GAAP net income margin.  GAAP net income was $1.9 million, or $0.04 per diluted share, in the fourth quarter of 2016, representing a 1% GAAP net income margin.  GAAP net income in the fourth quarter of 2017 was favorably impacted by changes in the tax law, which contributed a net tax benefit of $22.9 million

  • Adjusted EBITDA was $49.1 million for the fourth quarter of 2017, representing a 26% adjusted EBITDA margin, in line with the Company's adjusted EBITDA guidance of $48.0 to $50.0 million.  The Company had adjusted EBITDA of $47.4 million for the fourth quarter of 2016, representing a 25% adjusted EBITDA margin. 

  • The Company generated cash from operations of $39.3 million for the fourth quarter of 2017, compared to $37.8 million of cash from operations for the fourth quarter of 2016.   Free cash flow was $34.6 million for the fourth quarter of 2017, compared to $33.3 million for the fourth quarter of 2016.

Fourth Quarter and Recent Business Highlights

  • Web.com's total net subscribers were approximately 3,411,000 at the end of the fourth quarter of 2017, down approximately 49,000 from the end of the third quarter of 2017.

  • Web.com's average revenue per user (ARPU) was $18.38 for the fourth quarter of 2017 compared to  $18.07 for the fourth quarter of 2016.  ARPU was up sequentially during the fourth quarter of 2017 from $18.04 for the third quarter of 2017.

  • Web.com's trailing twelve month customer retention rate was 84.5% for the fourth quarter of 2017.

  • Web.com reduced debt by $22.0 million in the fourth quarter of 2017.

Summary of Full Year 2017 Financial Results

  • Total revenue, calculated in accordance with GAAP, was $749.3 million for 2017, compared to $710.5 million for 2016. Non-GAAP revenue was $755.8 million for 2017, compared to $728.9 million in 2016.

  • GAAP operating income was $88.6 million for 2017 compared to $44.7 million for 2016, representing a 12% and 6% GAAP operating margin, respectively. Non-GAAP operating income was $171.1 million for 2017, representing a 23% non-GAAP operating margin, compared to $158.2 million for 2016, representing a 22%  non-GAAP operating margin.

  • GAAP net income was $53.6 million, or $1.06 per diluted share, for 2017, representing a 7% GAAP net income margin. GAAP net income was $4.0 million, or $0.08 per diluted share, in 2016, representing a 1% GAAP net income margin.  GAAP net income in 2017 was favorably impacted by changes in the tax law, which contributed a net tax benefit of $22.9 million

  • Adjusted EBITDA was $193.3 million for the twelve months ended December 31, 2017, representing a 26% adjusted EBITDA margin, compared to $179.5 million for the twelve months ended December 31, 2016, representing a 25% adjusted EBITDA margin.

  • Cash from operations was $149.8 million for 2017 compared to $132.9 million for 2016. Free cash flow was $128.3 million for 2017, compared to $110.7 million for 2016.

Conference Call Information
Management will host a conference call today, February 8, 2018, at 5:00 p.m. ET, to discuss Web.com's fourth quarter financial results and current business outlook. There will be an accompanying slide presentation which will be available on the Investor Relations page of Web.com's website  (http://ir.web.com), along with a live webcast and replay of the call. To access the call, dial 800-239-9838 (domestic) or 323-794-2551 (international). A replay of this conference call will be available until February 22, 2018 at 844-512-2921 (domestic) or 412-317-6671 (international). The replay conference ID is 7585075.

About Web.com
Web.com Group, Inc. (Nasdaq: WEB) is a global provider of a full range of Internet services to small businesses to help them compete and succeed online. Web.com meets the needs of small businesses anywhere along their lifecycle with affordable, subscription-based solutions including domains, hosting, website design and management, search engine optimization, online marketing campaigns, local sales leads, social media, mobile products, eCommerce solutions and call center services. For more information, please visit www.web.com; follow the company on Twitter @webdotcom or on Facebook at www.facebook.com/web.com.

Note to Editors: Web.com is a registered trademark of Web.com Group, Inc.

Use of Non-GAAP Financial Measures
Some of the measures in this press release are non-GAAP financial measures within the meaning of the SEC Regulation G. Web.com believes presenting non-GAAP measures is useful to investors, because it describes the operating performance of the company, in ways that management views or uses to assess the performance of the company. Web.com's management uses these non-GAAP measures as important indicators of the company's past performance and in planning and forecasting performance in future periods. The non-GAAP financial information Web.com presents may not be comparable to similarly-titled financial measures used by other companies, and investors should not consider non-GAAP financial measures in isolation from, or in substitution for, financial information presented in compliance with GAAP.

You are encouraged to review the reconciliation of non-GAAP financial measures to GAAP financial measures included elsewhere in this press release.

Relative to each of the non-GAAP measures Web.com presents, management further sets forth its rationale as follows:

  • Non-GAAP Revenue. Web.com excludes from non-GAAP revenue the impact of the fair value adjustment to amortized deferred revenue because management believes that excluding such measures helps management and investors better understand the company's revenue trends.

  • Non-GAAP Operating Income and Non-GAAP Operating Margin. Web.com excludes from non-GAAP operating income and non-GAAP operating margin, amortization of intangibles, loss on sale of assets, asset impairment, fair value adjustment to deferred revenue and deferred expense, restructuring expenses, corporate development expenses, and stock-based compensation charges, because management believes that adjusting for such measures helps management and investors better understand the company's operating activities.

  • Adjusted EBITDA and Adjusted EBITDA Margin. Web.com excludes from adjusted EBITDA and adjusted EBITDA margin depreciation and amortization expense, loss on sale of assets, asset impairment, income tax provision, interest expense, interest income, stock-based compensation, fair value adjustments to deferred revenue and deferred expense, corporate development expenses and restructuring expenses, because management believes that excluding such items helps investors better understand the company's operating activities.

  • Non-GAAP Cost of Revenue (excluding depreciation and amortization). Web.com excludes from non-GAAP cost of revenue (excluding depreciation and amortization) the fair value adjustment to deferred expense and stock based compensation charges because management believes that adjusting for such measures helps management and investors better understand the company's operating activities.

  • Free Cash Flow. Free cash flow is a non-GAAP financial measure that Web.com uses and defines as net cash provided by operating activities less capital expenditures. The company considers free cash flow to be a liquidity measure which provides useful information to management and investors about the amount of cash generated by the business after the acquisition of property and equipment, which can then be used for investment opportunities.

In respect of the foregoing, Web.com provides the following supplemental information to provide additional context for the use and consideration of the non-GAAP financial measures used elsewhere in this press release:

  • Stock-based compensation. These expenses consist of expenses for employee stock options and employee awards under Accounting Standards Codification ("ASC") 718-10. While stock-based compensation expense calculated in accordance with ASC 718-10 constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because such expense is not used by management to assess the core profitability of the company's business operations. Web.com further believes these measures are useful to investors in that they allow for greater transparency to certain line items in the company's financial statements. In addition, when management performs internal comparisons to Web.com's historical operating results and compares the company's operating results to the company's competitors, management excludes this item from various non-GAAP measures.

  • Asset impairment. Web.com has recorded expenses related to asset impairment and excludes the impact of these expenses from its non-GAAP measures, because such expense is not used by management to assess the core profitability of the company's business operations.

  • Amortization of intangibles. Web.com incurs amortization of acquired intangibles under ASC 805-10-65. Acquired intangibles primarily consist of customer relationships, customer lists, non-compete agreements, trade names, and developed technology. Web.com expects to amortize for accounting purposes the fair value of the acquired intangibles based on the pattern in which the economic benefits of the intangible assets will be consumed as revenue is generated. Although the intangible assets generate revenue, the company believes the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding the company's operational performance. In addition, when management performs internal comparisons to Web.com's historical operating results and compares the company's operating results to the company's competitors, management excludes this item from various non-GAAP measures.

  • Depreciation expense. Web.com records depreciation expense associated with its fixed assets. Although its fixed assets generate revenue for Web.com, the item is excluded because management believes certain non-GAAP financial measures excluding this item provide meaningful supplemental information regarding the company's operational performance. In addition, when management performs internal comparisons to Web.com's historical operating results and compares the company's operating results to the company's competitors, management excludes this item from various non-GAAP measures.

  • Restructuring expense. Web.com has recorded restructuring expenses and excludes the impact of these expenses from its non-GAAP measures, because such expense is not used by management to assess the core profitability of the company's business operations.

  • Fair value adjustment to deferred revenue and deferred expense. Web.com has recorded a fair value adjustment to acquired deferred revenue and deferred expense in accordance with ASC 805-10-65. Web.com excludes the impact of these adjustments from its non-GAAP measures, because doing so results in non-GAAP revenue, non-GAAP operating income, adjusted EBITDA and ARPU which are reflective of ongoing operating results and more comparable to historical operating results, since the majority of the company's revenue is recurring subscription revenue. Excluding the fair value adjustment to deferred revenue and deferred expense therefore facilitates management's internal comparisons to Web.com's historical operating results.

  • Corporate development expenses. Web.com incurred expenses relating to acquisitions and the successful integration of acquisitions. Web.com excludes the impact of these expenses from its non-GAAP measures, because such expense is not used by management to assess the core profitability of the company's business operations.

  • Gains or losses from asset sales or impairment and certain other transactions. Web.com excludes the impact of asset sales or impairment and certain other transactions including debt extinguishments and the sale of equity method investment from its non-GAAP measures because the impact of these items is not considered part of the company's ongoing operations.

  • Monthly average revenue per user, or ARPU. ARPU is a metric the company measures on a quarterly basis. The company defines ARPU as quarterly non-GAAP subscription revenue divided by the average of the number of subscribers at the beginning of the quarter and the number of subscribers at the end of the quarter, divided by three months. The company excludes from subscription revenue the impact of the fair value adjustments to deferred revenue resulting from acquisition-related write downs.

Forward-Looking Statements
This press release includes "forward-looking statements" including, without limitation, the statement that Web.com is confident that achievement of its priorities will result in achievement of its near and long term financial goals and will enhance the value delivered to its shareholders, that are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements. As a result of the ultimate outcome of such risks and uncertainties (including the impacts of the adoption of the Tax Cuts and Jobs Act), Web.com's actual results could differ materially from those anticipated in these forward-looking statements. These statements are based on Web.com's current beliefs or expectations, and there are a number of important factors that could cause the actual results or outcomes to differ materially from those indicated by these forward-looking statements, including, without limitation: risks related to the successful offering of the products and services of Web.com; the risk that the integration of Yodle may not  result in in further benefits, and other risks that may impact Web.com's business are set forth under the caption, "Risk Factors," in Web.com's Annual Report Form 10-K for the year ended December 31, 2016 and Form 10-Q for the quarter ended September 30, 2017, as filed with the Securities and Exchange Commission, which is  available on a website maintained by the Securities and Exchange Commission at www.sec.gov. Web.com expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein as a result of new information, future events or otherwise.

Contacts
Investors:
Ira Berger
904-680-6909
Ira.Berger@web.com         

Media:
Brian Wright
904-371-6856
Brian.Wright@web.com

Source:  Web.com


Web.com Group, Inc.
Consolidated Statement of Comprehensive Income
(in thousands, except for per share data)
(Unaudited)
       
  Three months ended December 31,   Twelve months ended December 31,
  2017   2016   2017   2016
               
Revenue $ 188,845     $ 187,203     $ 749,261     $ 710,505  
               
Cost of revenue and operating expenses              
Cost of revenue (excluding depreciation and amortization) 60,667     56,843     236,530     224,032  
Sales and marketing 50,375     52,427     201,543     210,294  
Technology and development 19,329     17,904     69,984     65,800  
General and administrative 18,220     20,530     79,494     74,919  
Restructuring charges 524     1,570     1,260     3,617  
Asset impairments 148     7,111     291     9,091  
Depreciation and amortization 18,109     18,697     71,544     78,048  
Total cost of revenue and operating expenses 167,372     175,082     660,646     665,801  
               
Income from operations 21,473     12,121     88,615     44,704  
               
Interest expense, net (8,459 )   (7,932 )   (33,061 )   (30,462 )
Net income before income taxes 13,014     4,189     55,554     14,242  
Income tax benefit (expense) 17,751     (2,276 )   (1,925 )   (10,252 )
Net income 30,765     1,913     53,629     3,990  
               
Other comprehensive income:              
Foreign currency translation adjustments (486 )   (496 )   (484 )   (1,900 )
Unrealized gain on investments, net of tax         1     28  
Total comprehensive income $ 30,279     $ 1,417     $ 53,146     $ 2,118  
               
               
Net income per basic common share $ 0.65     $ 0.04     $ 1.10     $ 0.08  
               
Net income per diluted common share $ 0.62     0.04     $ 1.06     0.08  
               


Web.com Group, Inc.  
Consolidated Balance Sheets  
(in thousands, except share count)  
(Unaudited)  
    December 31, 2017   December 31, 2016  
Assets          
Current assets:          
Cash and cash equivalents   $ 11,976     $ 20,447    
Accounts receivable, net of allowance of $1,454 and $1,695, respectively   25,424     20,567    
Prepaid expenses   10,220     12,311    
Deferred expenses   63,267     60,217    
Other current assets   3,054     1,872    
Total current assets   113,941     115,414    
           
Property and equipment, net   57,188     53,132    
Deferred expenses   46,316     49,127    
Goodwill   885,662     871,751    
Intangible assets, net   371,571     413,127    
Other assets   21,565     11,282    
Total assets   $ 1,496,243     $ 1,513,833    
           
Liabilities and stockholders' equity          
Current liabilities:          
Accounts payable   $ 23,357     $ 19,619    
Accrued expenses   15,957     14,475    
Accrued compensation and benefits   15,560     18,307    
Deferred revenue   233,574     230,206    
Current portion of debt   16,612     16,847    
Deferred consideration   22,466     20,244    
Other liabilities   6,321     5,034    
Total current liabilities   333,847     324,732    
           
Deferred revenue   185,886     195,859    
Long-term debt   630,358     647,294    
Deferred tax liabilities   51,042     80,135    
Other long-term liabilities   20,474     30,361    
Total liabilities   1,221,607     1,278,381    
Stockholders' equity:          
Common stock, $0.001 par value per share: 150,000,000 shares authorized, 48,845,352 and 50,278,137 shares issued and outstanding at December 31, 2017 and 2016, respectively   49     50    
Additional paid-in capital   585,179     578,486    
Treasury stock at cost, 4,305,221 and 3,146,012 shares at December 31, 2017 and 2016, respectively   (111,093 )   (62,430 )  
Accumulated other comprehensive loss   (4,503 )   (4,020 )  
Accumulated deficit   (194,996 )   (276,634 )  
Total stockholders' equity   274,636     235,452    
Total liabilities and stockholders' equity   $ 1,496,243     $ 1,513,833    
           


Web.com Group, Inc.
Consolidated Statement of Cash Flows
(in thousands)
(Unaudited)
           
    Three months ended December 31,   Twelve months ended December 31,  
    2017   2016   2017   2016  
Cash flows from operating activities                  
Net income   $ 30,765     $ 1,913     $ 53,629     $ 3,990    
Adjustments to reconcile net income to net cash provided by operating activities:                  
Depreciation and amortization   18,109     18,697     71,544     78,048    
Stock compensation expense   5,844     5,506     23,201     20,714    
Deferred income taxes   (18,945 )   1,506     (2,287 )   7,714    
Amortization of debt issuance costs and other   3,784     3,700     15,321     14,015    
Asset impairment   148     7,112     291     9,091    
Changes in operating assets and liabilities:                  
Accounts receivable, net   (1,137 )   (523 )   (4,390 )   (3,056 )  
Prepaid expenses and other assets   4,637     2,726     (1,574 )   (2,515 )  
Deferred expenses   1,247     1,153     228     170    
Accounts payable   3,309     (1,476 )   2,690     (1,388 )  
Accrued expenses and other liabilities   2,591     632     2,574     (1,473 )  
Accrued compensation and benefits   (3,753 )   1,900     (3,415 )   (406 )  
Deferred revenue   (7,294 )   (5,054 )   (7,992 )   7,961    
Net cash provided by operating activities   39,305     37,792     149,820     132,865    
                   
Cash flows from investing activities                  
Business acquisitions, net of cash acquired   (8,688 )       (17,275 )   (303,262 )  
Capital expenditures   (4,682 )   (4,466 )   (21,474 )   (22,140 )  
Other       (4 )       (1,551 )  
Net cash used in investing activities   (13,370 )   (4,470 )   (38,749 )   (326,953 )  
                   
Cash flows from financing activities                  
Stock issuance costs   (1 )   (5 )   (22 )   (27 )  
Common stock repurchased   (935 )   (15 )   (4,573 )   (4,261 )  
Payments of long-term debt       (4,876 )   (42,954 )   (9,813 )  
Payments of revolving credit facility   (22,000 )   (20,124 )   (88,313 )   (70,687 )  
Proceeds from exercise of stock options   2,573     1,154     15,701     4,970    
Deferred consideration payment   (1,500 )       (20,433 )      
Proceeds from long-term debt issued           50,000     200,000    
Proceeds from borrowings on revolving credit facility           49,000     115,000    
Debt issuance costs           (1,935 )   (5,700 )  
Common stock purchases under repurchase plan   185     (11,101 )   (76,278 )   (28,565 )  
Other   (129 )       (129 )      
Net cash (used in) provided by financing activities   (21,807 )   (34,967 )   (119,936 )   200,917    
                   
Effect of exchange rate changes on cash   3     (27 )   (22 )   (63 )  
Net increase (decrease) in cash, cash equivalents, and restricted cash   4,131     (1,672 )   (8,887 )   6,766    
Cash, cash equivalents and restricted cash, beginning of period   12,755     27,445     25,773     19,007    
Cash, cash equivalents and restricted cash, end of year   $ 16,886     $ 25,773     $ 16,886     $ 25,773    
                   
                   
                   
Web.com Group, Inc.
Consolidated Statement of Cash Flows
(in thousands)
(Unaudited)
           
    Three months ended December 31,   Twelve months ended December 31,  
    2017   2016   2017   2016  
Supplemental cash flow information                  
Interest paid   $ 3,882     $ 3,543     $ 17,562     $ 15,764    
Income taxes paid   $ 1,243     $ 803     $ 4,406     $ 3,590    
                   
In fiscal 2017, we adopted ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and restricted cash and cash equivalents.  Prior year amounts have been restated to reflect the adoption which increased net cash flows provided by operating activities for the year ending December 31, 2016 by approximately $5.0 million from the previously as filed amounts.


Web.com Group, Inc.
Reconciliation of GAAP to Non-GAAP Results
(in thousands, except for per share data)
(unaudited)
         
    Three months ended December 31,   Twelve months ended December 31,
    2017   2016   2017   2016
Reconciliation of GAAP revenue to non-GAAP revenue                
GAAP revenue   $ 188,845     $ 187,203     $ 749,261     $ 710,505  
  Fair value adjustment to deferred revenue   2,289     1,658     6,529     18,363  
Non-GAAP revenue   $ 191,134     $ 188,861     $ 755,790     $ 728,868  
                 
Reconciliation of GAAP operating income to non-GAAP operating income                
GAAP operating income   $ 21,473     $ 12,121     $ 88,615     $ 44,704  
  Amortization of intangibles   12,047     13,197     49,335     56,805  
  Loss on sale of assets   42     7     44     7  
  Asset impairment   148     7,111     291     9,091  
  Stock based compensation   5,844     5,506     23,201     20,714  
  Restructuring charges   524     1,570     1,260     3,617  
  Corporate development   626     706     1,642     4,631  
  Fair value adjustment to deferred revenue   2,289     1,658     6,529     18,363  
  Fair value adjustment to deferred expense   30     68     171     301  
Non-GAAP operating income   $ 43,023     $ 41,944     $ 171,088     $ 158,233  
                 
Reconciliation of GAAP operating margin to non-GAAP operating margin                
GAAP operating margin   11 %   6 %   12 %   6 %
  Amortization of intangibles   6     7     7     8  
  Loss on sale of assets                
  Asset impairment       4         1  
  Stock based compensation   3     3     3     3  
  Restructuring charges   1     1          
  Corporate development   1             1  
  Fair value adjustment to deferred revenue   1     1     1     3  
  Fair value adjustment to deferred expense                
Non-GAAP operating margin   23 %   22 %   23 %   22 %


 
Web.com Group, Inc.
Reconciliation of GAAP to Non-GAAP Results
(in thousands, except for per share data)
(unaudited)
         
    Three months ended December 31,   Twelve months ended December 31,
    2017   2016   2017   2016
Reconciliation of GAAP net income to adjusted EBITDA        
GAAP net income   $ 30,765     $ 1,913     $ 53,629     $ 3,990  
  Depreciation and amortization   18,109     18,697     71,544     78,048  
  Loss on sale of assets   42     7     44     7  
  Asset impairment   148     7,111     291     9,091  
  Stock based compensation   5,844     5,506     23,201     20,714  
  Restructuring charges   524     1,570     1,260     3,617  
  Corporate development   626     706     1,642     4,631  
  Fair value adjustment to deferred revenue   2,289     1,658     6,529     18,363  
  Fair value adjustment to deferred expense   30     68     171     301  
  Interest expense, net   8,459     7,932     33,061     30,462  
  Income tax (benefit) expense   (17,751 )   2,276     1,925     10,252  
Adjusted EBITDA   $ 49,085     $ 47,444     $ 193,297     $ 179,476  
                 
Reconciliation of GAAP net income margin to adjusted EBITDA margin                
GAAP net income margin   16 %   1 %   7 %   1 %
  Depreciation and amortization   10     10     10     11  
  Loss on sale of assets                
  Asset impairment       4         1  
  Stock based compensation   3     3     3     3  
  Restructuring charges       1          
  Corporate development               1  
  Fair value adjustment to deferred revenue   1     1     1     3  
  Fair value adjustment to deferred expense                
  Interest expense, net   5     4     5     4  
  Income tax (benefit) expense   (9 )   1         1  
Adjusted EBITDA margin   26 %   25 %   26 %   25 %
                 
Reconciliation of net cash provided by operating activities to free cash flow                
Net cash provided by operating activities   $ 39,305     $ 37,792     $ 149,820     $ 132,865  
  Capital expenditures   (4,682 )   (4,466 )   (21,474 )   (22,140 )
Free cash flow   $ 34,623     $ 33,326     $ 128,346     $ 110,725  
                 
Net cash used in investing activities   $ (13,370 )   $ (4,470 )   $ (38,749 )   $ (326,953 )
Net cash (used in) provided by financing activities   $ (21,807 )   $ (34,967 )   $ (119,936 )   $ 200,917  
                 
                 
                 
Web.com Group, Inc.
Reconciliation of GAAP to Non-GAAP Results
(in thousands, except for per share data)
(unaudited)
                 
    Three months ended
December 31,
  Twelve months ended
December 31,
    2017   2016   2017   2016
Reconciliation of GAAP cost of revenue (excluding depreciation and amortization) to non-GAAP cost of revenue (excluding depreciation and amortization)                
Cost of revenue (excluding depreciation and amortization)   $ 60,667     $ 56,843     $ 236,530     $ 224,032  
  Fair value adjustment to deferred expense   (30 )   (68 )   (171 )   (301 )
  Stock based compensation   (289 )   (64 )   (1,115 )   (1,097 )
Non-GAAP cost of revenue (excluding depreciation and amortization)   $ 60,348     $ 56,711     $ 235,244     $ 222,634  
                 
    Three months
ended December 31, 2017
  Three months
ended December 31, 2016
  Three months
ended September 30, 2017
   
Reconciliation of GAAP revenue to non-GAAP subscription revenue used in ARPU                
GAAP revenue   $ 188,845     $ 187,203     $ 188,567      
  Fair value adjustment to deferred revenue   2,289     1,658     1,202      
  Non-GAAP revenue   $ 191,134     $ 188,861     $ 189,769      
  Professional services and other revenue   (1,806 )   (1,724 )   (1,809 )    
Non-GAAP subscription revenue used in ARPU   $ 189,328     $ 187,137     $ 187,960      
  Average subscribers (in thousands)   3,434     3,452     3,472      
ARPU (Non-GAAP subscription revenue per subscriber over 3 month period)   $ 18.38     $ 18.07     $ 18.04      
                 
    Guidance for three months
ended December 31, 2017
as of  November 7, 2017
       
Reconciliation of GAAP revenue to non-GAAP revenue                
GAAP revenue   $ 187,400     $ 190,400          
  Fair value adjustment to deferred revenue   1,100     1,100          
Non-GAAP revenue   $ 188,500     $ 191,500          
                 
Note that the Company has not reconciled Adjusted EBITDA guidance to GAAP net income because it does not provide guidance on GAAP net income or the reconciling items between Adjusted EBITDA and net income as a result of the substantial uncertainty regarding, and the potential substantial variability of, these items. The actual amount of net income and such responding reconciling items will have a significant effect on Adjusted EBITDA. Accordingly a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.

 


Web.com Group, Inc.
Supplemental Information
(in thousands, except for per share data)
(unaudited)
                 
    Three months ended December 31,   Twelve months ended December 31,
    2017   2016   2017   2016
Stock based compensation                
  Cost of revenue   $ 289     $ 64     $ 1,115     $ 1,097  
  Sales and marketing   1,175     1,497     4,943     5,266  
  Technology and development   1,110     1,074     4,036     3,799  
  General and administrative   3,270     2,871     13,107     10,552  
Total   $ 5,844     $ 5,506     $ 23,201     $ 20,714  
                 
Revenue                
  Subscription   $ 187,039     $ 185,479     $ 741,655     $ 703,562  
  Professional services and other   1,806     1,724     7,606     6,943  
Total   $ 188,845     $ 187,203     $ 749,261     $ 710,505  
                 
Other Information                
Non-GAAP operating income   $ 43,023     $ 41,944     $ 171,088     $ 158,233  
GAAP interest expense, net   $ 8,459     $ 7,932     $ 33,061     $ 30,462  
Amortization of debt issuance costs and other   $ 3,784     $ 3,700     $ 15,321     $ 14,015  
Income taxes paid   $ 1,243     $ 803     $ 4,406     $ 3,590  
GAAP diluted weighted average common shares   49,274     50,550     50,654     50,880  

Primary Logo

Source: Web.com Group, Inc.

Email Alerts
Printed Materials
RSS News Feeds
Print Page
E-mail Page
Search