Web.com Reports Second Quarter 2016 Financial Results

August 4, 2016

  • Reduced debt by $20 million and repurchased 335,000 shares for $5.7 million
  • 3.4 million subscribers with 20,000 net additions
  • Executing on vertical market strategy by adding real estate vertical

JACKSONVILLE, Fla., Aug. 04, 2016 (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 second quarter ended June 30, 2016.   

"Web.com reported solid second quarter results that were driven by the strength of our diverse portfolio of value added digital marketing solutions.  As we progress with the integration of Yodle and learn more about the asset, the strategic value of their products and capabilities have become more clear and compelling to us.  In particular, the vertical market solutions and multi-location product are highly differentiated and present an attractive growth opportunity going forward," said David L. Brown, chairman, chief executive officer and president of Web.com.

Brown added, "Following the acquisition of Yodle, we restructured the organization to better align the Company with its customers, products and services.  This positions us to better leverage our offerings to small businesses and execute on our strategy more effectively.  Given the size of the Yodle transaction, we planned for 2016 to be a significant transition year, and we believe this new structure sets the foundation for improved long-term revenue growth and financial strength.  Generating strong free cash flow remains a priority for us, and we will continue to use our cash flow to pay down debt and repurchase shares in order to drive shareholder value."

Summary of Second Quarter 2016 Financial Results:

  • Total revenue, calculated in accordance with U.S. generally accepted accounting principles (GAAP), was $187.8 million for the second quarter of 2016, compared to $135.7 million for the second quarter of 2015. Non-GAAP revenue was $193.9 million for the second quarter of 2016, compared to $140.0 million in the year-ago quarter, and in line with the Company's guidance range of $192.5 million to $195.5 million.  The year over year increase in revenue is primarily due to the acquisition of Yodle.
     
  • GAAP operating income was $7.6 million for the second quarter of 2016, representing a 4% GAAP operating margin, compared to $14.9 million, representing a 11% GAAP operating margin, for the second quarter of 2015.  Non-GAAP operating income was $37.3 million for the second quarter of 2016, representing a 19% non-GAAP operating margin, compared to $34.3 million for the second quarter of 2015, representing a 25% non-GAAP operating margin.
     
  • GAAP net loss was $1.6 million, or $0.03 per diluted share, for the second quarter of 2016, representing a -1% GAAP net loss margin. GAAP net income was $4.6 million, or $0.09 per diluted share, for the second quarter of 2015, representing a 3% GAAP net income margin. Non-GAAP net income was $31.5 million for the second quarter of 2016, or $0.62 per diluted share, exceeding the high end of the Company's net income guidance of $29 million to $31 million, or $0.57 to $0.61 per diluted share. The Company had non-GAAP net income of $31.5 million, or $0.60 per diluted share, for the second quarter of 2015.
     
  • Adjusted EBITDA was $42.7 million for the second quarter of 2016, compared to $38.4 million for the second quarter of 2015, representing a 22% and 27% adjusted EBITDA margin during the three months ended June 30, 2016 and 2015, respectively. 
     
  • The Company generated cash from operations of $30.8 million for the second quarter of 2016, compared to $45.5 million of cash flow from operations for the second quarter of 2015.

Second Quarter and Recent Business Highlights:

  • Web.com's total net subscribers were approximately 3,443,000 at the end of the second quarter of 2016, up approximately 20,000 from the end of the first quarter of 2016.
     
  • Web.com's average revenue per user (ARPU) was $18.66 for the second quarter of 2016 compared to $13.91 for the second quarter of 2015.  ARPU was up sequentially during the second  quarter of 2016 from $15.10 during the first quarter of 2016.  ARPU during the first quarter of 2016 included a partial period impact of Yodle, and ARPU during the second quarter of 2016 included a full period impact of Yodle.
     
  • Web.com's trailing twelve month customer retention rate was 86.5% for the second quarter of 2016.
     
  • Web.com used $20.0 million in cash to reduce debt during the quarter.
     
  • Repurchased 335,000 shares for $5.7 million in the second quarter of 2016.

Conference Call Information

Management will host a conference call today, August 4, 2016, at 5:00 p.m. ET, to discuss Web.com's second 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 800-210-9006 (domestic) or 719-457-0349 (international). A replay of this conference call will be available until August 18, 2016, at 877-870-5176 (domestic) or 858-384-5517 (international). The replay conference ID is 6329004.

About Web.com

Web.com Group, Inc. (Nasdaq:WEB) provides 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 and eCommerce solutions. For more information, please visit www.web.com; follow Web.com on Twitter @webdotcom or on Facebook at 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 we believe that excluding such measures helps management and investors better understand our 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, 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.
  • Non-GAAP Net Income and Non-GAAP Net Income Per Basic and Diluted Share. Web.com excludes from non-GAAP net income and non-GAAP net income per basic and diluted share amortization of intangibles, income tax provision, fair value adjustment to deferred revenue and deferred expense, restructuring expenses, corporate development expenses, amortization of debt discounts and fees, and stock-based compensation, and includes estimated cash income tax payments, 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, 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 Gross Profit and Non-GAAP Gross Margin. Web.com excludes from non-GAAP gross profit  and  non-GAAP gross margin, fair value adjustment to deferred revenue and 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 our 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.
  • 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.
  • Amortization of debt discounts and fees. Web.com incurs amortization expense related to debt discounts and deferred financing fees. The difference between the effective interest expense and the coupon interest expense (i.e. debt discount), as well as, amortized deferred financing fees are excluded because Web.com believes the non-GAAP measures excluding these items 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.
  • Income tax expense. Due to the magnitude of Web.com's historical net operating losses and related deferred tax asset, the Company excludes income tax from its non-GAAP measures primarily because it is not indicative of the actual tax to be paid by the Company and therefore is not reflective of ongoing operating results. The Company believes that excluding this item provides meaningful supplemental information regarding the Company's operational performance and facilitates management's internal comparisons to the Company's historical operating results and comparisons to the Company's competitors' operating results. The Company includes the estimated tax that the Company expects to pay for operations during the periods presented.
  • 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 and non-GAAP net income 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.
  • Monthly average revenue per user, or ARPU.  ARPU is a metric we measure on a quarterly basis. We define 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. We exclude 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, statements regarding the Yodle vertical market solutions and multi-location product presenting an attractive growth opportunity for Web.com going forward, and that Web.com will continue to use its cash flow to pay down debt and repurchase shares to drive shareholder value, 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, 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; and other risks that may impact Web.com's business. Other risk factors are set forth under the caption, "Risk Factors," in Web.com's Annual Report on Form 10-K for the year ended December 31, 2015 and Form 10-Q for the quarter ended March 31, 2016, as filed with the Securities and Exchange Commission, which are 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.

 

Web.com Group, Inc.
Consolidated Statements of Comprehensive (Loss) Income
(in thousands, except for per share data)
(unaudited)
 
  Three months ended June 30,   Six months ended June 30,
  2016   2015   2016   2015
               
Revenue $ 187,818     $ 135,719     $ 332,616     $ 268,319  
Cost of Revenue 59,743     47,102     110,826     95,804  
               
Gross profit 128,075     88,617     221,790     172,515  
               
Operating expenses:              
Sales and marketing 58,448     35,680     100,459     71,359  
Technology and development 15,533     5,858     24,611     11,660  
General and administrative 23,465     18,273     43,129     35,484  
Restructuring expense 778     22     914     335  
Depreciation and amortization 22,273     13,849     38,186     27,593  
Total operating expenses 120,497     73,682     207,299     146,431  
Income from operations 7,578     14,935     14,491     26,084  
               
Interest expense, net (8,662 )   (5,182 )   (14,259 )   (10,431 )
Net (loss) income before income taxes (1,084 )   9,753     232     15,653  
Income tax expense (522 )   (5,203 )   (1,500 )   (8,764 )
Net (loss) income $ (1,606 )   $ 4,550     $ (1,268 )   $ 6,889  
               
Other comprehensive (loss) income:              
Foreign currency translation adjustments (891 )   797     (1,207 )   90  
Unrealized (loss) gain on investments, net of tax     (4 )   28     1  
Total comprehensive (loss) income $ (2,497 )   $ 5,343     $ (2,447 )   $ 6,980  
               
Basic (loss) earnings per share:              
Net (loss) income per basic common share $ (0.03 )   $ 0.09     $ (0.03 )   $ 0.14  
Diluted (loss) earnings per share:              
Net (loss) income per diluted common share $ (0.03 )   $ 0.09     $ (0.03 )   $ 0.13  
               

 

Web.com Group, Inc.  
Consolidated Balance Sheets  
(in thousands, except share amounts)  
           
    June 30, 2016   December 31, 2015  
    (unaudited)      
Assets          
Current assets:          
Cash and cash equivalents   $ 8,950     $ 18,706    
Accounts receivable, net of allowance of $1,677 and $1,815, respectively   19,356     12,892    
Prepaid expenses   14,353     8,151    
Deferred expenses   61,829     59,400    
Other current assets   3,719     4,380    
Total current assets   108,207     103,529    
           
Property and equipment, net   58,880     41,963    
Deferred expenses   50,271     50,113    
Goodwill   854,295     639,145    
Intangible assets, net   473,624     318,107    
Other assets   12,784     4,482    
Total assets   $ 1,558,061     $ 1,157,339    
           
Liabilities and stockholders' equity          
Current liabilities:          
Accounts payable   $ 20,621     $ 9,974    
Accrued expenses   17,118     13,303    
Accrued compensation and benefits   11,501     13,765    
Deferred revenue   238,526     219,187    
Current portion of debt   12,016     11,169    
Deferred consideration   19,073        
Other liabilities   3,683     3,802    
Total current liabilities   322,538     271,200    
           
Deferred revenue   196,267     191,426    
Long-term debt   693,570     411,409    
Deferred tax liabilities   85,571     37,840    
Other long-term liabilities   30,795     7,287    
Total liabilities   1,328,741     919,162    
Stockholders' equity:          
Common stock, $0.001 par value per share: 150,000,000 shares authorized, 50,634,010 and 50,683,717 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively   51     51    
Additional paid-in capital   572,735     565,648    
Treasury stock at cost, 2,833,748 shares as of June 30, 2016 and 2,120,944 shares as of December 31, 2015   (58,247 )   (44,750 )  
Accumulated other comprehensive loss   (3,327 )   (2,148 )  
Accumulated deficit   (281,892 )   (280,624 )  
Total stockholders' equity   229,320     238,177    
Total liabilities and stockholders' equity   $ 1,558,061     $ 1,157,339    

 

Web.com Group, Inc.
Reconciliations of GAAP to Non-GAAP Results
(in thousands, except for per share data)
(unaudited)
       
  Three months ended June 30,   Six months ended June 30,
  2016   2015   2016   2015
Reconciliation of GAAP revenue to non-GAAP revenue              
GAAP revenue $ 187,818     $ 135,719     $ 332,616     $ 268,319  
  Fair value adjustment to deferred revenue 6,038     4,252     14,596     9,345  
Non-GAAP revenue $ 193,856     $ 139,971     $ 347,212     $ 277,664  
               
Reconciliation of GAAP net (loss) income to non-GAAP net income              
GAAP net (loss) income $ (1,606 )   $ 4,550     $ (1,268 )   $ 6,889  
  Amortization of intangibles 16,844     9,822     28,148     19,638  
  Stock based compensation 5,392     5,137     10,200     10,184  
  Income tax expense 522     5,203     1,500     8,764  
  Restructuring expense 778     22     914     335  
  Corporate development 529         3,868     597  
  Amortization of debt discounts and fees 3,687     2,822     6,685     5,620  
  Cash income tax expense (730 )   (520 )   (1,055 )   (787 )
  Fair value adjustment to deferred revenue 6,038     4,252     14,596     9,345  
  Fair value adjustment to deferred expense 94     167     152     358  
Non-GAAP net income $ 31,548     $ 31,455     $ 63,740     $ 60,943  
               
Reconciliation of GAAP net (loss) income per basic share to non-GAAP net income per basic share              
GAAP net (loss) income per basic share $ (0.03 )   $ 0.09     $ (0.03 )   $ 0.14  
  Amortization of intangibles 0.34     0.20     0.56     0.39  
  Stock based compensation 0.11     0.10     0.21     0.20  
  Income tax expense 0.01     0.10     0.03     0.17  
  Restructuring expense 0.02         0.02     0.01  
  Corporate development 0.01         0.08     0.01  
  Amortization of debt discounts and fees 0.07     0.06     0.14     0.11  
  Cash income tax expense (0.01 )   (0.01 )   (0.02 )   (0.02 )
  Fair value adjustment to deferred revenue 0.12     0.08     0.30     0.18  
  Fair value adjustment to deferred expense             0.01  
Non-GAAP net income per basic share $ 0.64     $ 0.62     $ 1.29     $ 1.20  
               
Diluted weighted average shares              
Diluted shares:              
  Basic weighted average common shares 49,293     50,362     49,334     50,616  
  Diluted stock options 1,383     1,800     1,384     1,584  
  Diluted restricted stock 210     273     318     310  
Total diluted weighted average common shares 50,886     52,435     51,036     52,510  
               
Reconciliation of GAAP net (loss) income per diluted share to non-GAAP net income per diluted share              
GAAP net (loss) income per diluted share $ (0.03 )   $ 0.09     $ (0.03 )   $ 0.13  
  Diluted equity         0.01      
  Amortization of intangibles 0.32     0.19     0.54     0.37  
  Stock based compensation 0.11     0.10     0.20     0.18  
  Income tax expense 0.01     0.10     0.03     0.17  
  Restructuring expense 0.02         0.02     0.01  
  Corporate development 0.01         0.08     0.01  
  Amortization of debt discounts and fees 0.07     0.05     0.13     0.11  
  Cash income tax expense (0.01 )   (0.01 )   (0.02 )   (0.01 )
  Fair value adjustment to deferred revenue 0.12     0.08     0.29     0.18  
  Fair value adjustment to deferred expense             0.01  
Non-GAAP net income per diluted share $ 0.62     $ 0.60     $ 1.25     $ 1.16  
               
Reconciliation of GAAP operating income to non-GAAP operating income              
GAAP operating income $ 7,578     $ 14,935     $ 14,491     $ 26,084  
  Amortization of intangibles 16,844     9,822     28,148     19,638  
  Stock based compensation 5,392     5,137     10,200     10,184  
  Restructuring expense 778     22     914     335  
  Corporate development 529         3,868     597  
  Fair value adjustment to deferred revenue 6,038     4,252     14,596     9,345  
  Fair value adjustment to deferred expense 94     167     152     358  
Non-GAAP operating income $ 37,253     $ 34,335     $ 72,369     $ 66,541  
               
Reconciliation of GAAP operating margin to non-GAAP operating margin              
GAAP operating margin 4 %   11 %   4 %   10 %
  Amortization of intangibles 9     7     9     7  
  Stock based compensation 3     4     3     4  
  Restructuring expense              
  Corporate development         1      
  Fair value adjustment to deferred revenue 3     3     4     3  
  Fair value adjustment to deferred expense              
Non-GAAP operating margin 19 %   25 %   21 %   24 %
               
Reconciliation of GAAP net (loss) income to adjusted EBITDA              
GAAP net (loss) income $ (1,606 )   $ 4,550     $ (1,268 )   $ 6,889  
  Depreciation and amortization 22,273     13,849     38,186     27,593  
  Stock based compensation 5,392     5,137     10,200     10,184  
  Restructuring expense 778     22     914     335  
  Corporate development 529         3,868     597  
  Fair value adjustment to deferred revenue 6,038     4,252     14,596     9,345  
  Fair value adjustment to deferred expense 94     167     152     358  
  Interest expense, net 8,662     5,182     14,259     10,431  
  Income tax expense 522     5,203     1,500     8,764  
Adjusted EBITDA $ 42,682     $ 38,362     $ 82,407     $ 74,496  
               
Reconciliation of GAAP net (loss) income margin to adjusted EBITDA margin              
GAAP net (loss) income margin (1 )%   3 %   %   3 %
  Depreciation and amortization 12     9     12     10  
  Stock based compensation 3     4     3     4  
  Restructuring expense              
  Corporate development         1      
  Fair value adjustment to deferred revenue 3     3     4     3  
  Fair value adjustment to deferred expense              
  Interest expense, net 5     4     4     4  
  Income tax expense     4         3  
Adjusted EBITDA margin 22 %   27 %   24 %   27 %
               
Reconciliation of GAAP gross profit to non-GAAP gross profit          
Gross Profit $ 128,075     $ 88,617     $ 221,790     $ 172,515  
  Fair value adjustment to deferred revenue 6,038     4,252     14,596     9,345  
  Fair value adjustment to deferred cost 94     167     152     358  
  Stock based compensation 268     512     763     1,020  
Non-GAAP gross profit $ 134,475     $ 93,548     $ 237,301     $ 183,238  
Non-GAAP gross margin 69 %   67 %   68 %   66 %

 

Reconciliation of net cash provided by operating activities to free cash flow                              
Net cash provided by operating activities $ 30,813     $ 45,488     $ 45,288     $ 77,411  
  Capital expenditures (4,451 )   (4,307 )   (8,306 )   (7,911 )
Free cash flow $ 26,362     $ 41,181     $ 36,982     $ 69,500  
               
Revenue              
  Subscription $ 186,121     $ 133,685     $ 329,312     $ 264,145  
  Professional services and other 1,697     2,034     3,304     4,174  
Total $ 187,818     $ 135,719     $ 332,616     $ 268,319  
               
Stock based compensation              
  Cost of revenue $ 268     $ 512     $ 763     $ 1,020  
  Sales and marketing 1,426     1,214     2,563     2,449  
  Technology and development 921     747     1,614     1,510  
  General and administrative 2,777     2,664     5,260     5,205  
Total $ 5,392     $ 5,137     $ 10,200     $ 10,184  
               
               
  Three months
ended June 30,
  Three months
ended March 31,
  Three months
ended June 30,
   
  2016   2016   2015    
Reconciliation of GAAP revenue to non-GAAP subscription revenue used in ARPU                                        
GAAP revenue $ 187,818     $ 144,798     $ 135,719      
  Fair market value adjustment to deferred revenue 6,038     8,558     4,252      
  Non-GAAP revenue 193,856     153,356     139,971      
  Professional services and other revenue (1,697 )   (1,606 )   (2,034 )    
Non-GAAP subscription revenue used in ARPU 192,159     151,750     137,937      

 

Web.com Group, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
       
  Three months ended June 30,   Six months ended June 30,
  2016   2015   2016   2015
Cash flows from operating activities              
Net (loss) income $ (1,606 )   $ 4,550     $ (1,268 )   $ 6,889  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:              
Depreciation and amortization 22,273     13,849     38,186     27,593  
Stock based compensation 5,392     5,137     10,200     10,184  
Deferred income taxes (214 )   4,767     599     8,047  
Amortization of debt discounts and issuance costs 3,687     2,824     6,685     5,620  
Changes in operating assets and liabilities:              
Accounts receivable, net (512 )   2,898     (1,758 )   2,643  
Prepaid expenses and other assets 80     396     (10,935 )   (219 )
Deferred expenses 362     5,283     (2,586 )   1,002  
Accounts payable 5,173     2,509     (1,585 )   (373 )
Accrued expenses and other liabilities (6,713 )   (386 )   (519 )   1,629  
Accrued compensation and benefits 1,105     2,756     (7,375 )   2,690  
Deferred revenue 1,786     905     15,644     11,706  
Net cash provided by operating activities 30,813     45,488     45,288     77,411  
               
Cash flows from investing activities              
Business acquisitions (2,975 )       (303,262 )   (475 )
Capital expenditures (4,451 )   (4,307 )   (8,306 )   (7,911 )
Other (1,300 )       (1,300 )    
Net cash used in investing activities (8,726 )   (4,307 )   (312,868 )   (8,386 )
               
Cash flows from financing activities              
Stock issuance costs (1 )   (26 )   (6 )   (50 )
Common stock repurchased (27 )   (41 )   (3,233 )   (2,302 )
Payments of long-term debt (20,000 )   (30,000 )   (32,500 )   (47,500 )
Proceeds from exercise of stock options 666     2,250     1,205     4,221  
Proceeds from borrowings on long-term debt         200,000      
Proceeds from borrowings on revolving credit facility         115,000      
Common stock purchases under stock repurchase plan (5,744 )   (14,189 )   (16,909 )   (29,975 )
Debt issuance costs         (5,700 )    
Net cash (used in) provided by financing activities (25,106 )   (42,006 )   257,857     (75,606 )
               
Effect of exchange rate changes on cash (22 )   5     (33 )   2  
               
Net decrease in cash and cash equivalents (3,041 )   (820 )   (9,756 )   (6,579 )
Cash and cash equivalents, beginning of period 11,991     16,726     18,706     22,485  
Cash and cash equivalents, end of period $ 8,950     $ 15,906     $ 8,950     $ 15,906  
               
Supplemental cash flow information              
Interest paid $ 4,529     $ 1,774     $ 6,851     $ 4,882  
Income tax paid $ 632     $ 420     $ 2,046     $ 902  
Investors:
Ira Berger
904-680-6909
Ira.Berger@web.com

Media:
Amy Ebenstein
646-209-3312
amy.ebenstein@bm.com
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