Web.com Reports Third Quarter 2008 Financial Results

November 6, 2008



 Increased Quarterly Cash Flow from Operations to a Record $6.2 Million

      Total Cash Balances Grew to Approximately $34 Million

JACKSONVILLE, Fla., Nov. 6, 2008 (GLOBE NEWSWIRE) -- Web.com Group, Inc. (Nasdaq:WWWW), a leading provider of online marketing for small businesses, today announced results for the third quarter ended September 30, 2008.

Summary of Third Quarter 2008 Results:



 --  Total revenue was $30.6 million for the third quarter of 2008, an
     increase of 72% compared to $17.8 million for the third quarter
     of 2007.

 --  Operating income, calculated in accordance with U.S. generally
     accepted accounting principles (GAAP), was $1.1 million for the
     third quarter of 2008, representing a GAAP operating margin of
     4%, and an increase of 41% from $0.8 million for the third
     quarter of 2007.

 --  GAAP net income 
was $1.3 million for the third quarter of 2008,
     an increase of 230% from $0.4 million for the third quarter of
     2007. GAAP net income per diluted share was $0.04 per share for
     the third quarter of 2008, an increase of 100% from $0.02 per
     share for the third quarter of 2007.

 --  Non-GAAP operating income was a record $5.5 million for the third
     quarter of 2008, representing a non-GAAP operating margin of 18%,
     and an increase of 127% compared to $2.4 million for the third
     quarter of 2007.

 --  Non-GAAP net income was a record $5.7 million for the third
     quarter of 2008, an increase of 93% compared to $2.9 million for
     the third quarter of 2007. Non-GAAP net income per diluted share
     was $0.19 for the third quarter of 2008, an increase of 27%
     compared to $0.15 for the third quarter of 2007.

 --  Cash flows from operations were $6.2 
million for the third
     quarter of 2008, an increase of 45% compared to $4.3 million for
     the third quarter of 2007.

"Web.com delivered third quarter results that were in-line with our expectations from a revenue and profitability perspective. While near-term market demand continues to face pressure due to the increasingly difficult macroeconomic environment, we believe the long-term earnings power of our company is evidenced by expanding non-GAAP operating margins and record non-GAAP operating profitability," said David Brown, Chairman and CEO of Web.com. "With a strong market position, balance sheet and profitability, combined with a growing base of influential channel partners, we believe Web.com has an opportunity to emerge from the current economic crisis in an even stronger position."

Other Highlights:



 --  Web.com's total net subscribers were 
approximately 274,000 at the
     end of the third quarter, up from approximately 271,000 at the
     end of the previous quarter.

 --  Customer churn remained near record low levels at 4.0% in the
     third quarter, compared to 3.9% in the previous quarter and 5.2%
     on a combined basis in the third quarter of 2007.

 --  During the third quarter, the Company announced that the Board of
     Directors authorized the repurchase of up to $20 million of
     Web.com's outstanding common shares.

 --  On October 28, the Company announced an agreement with PowerPay
     to offer eCommerce customers payment processing solutions
     allowing for up to 25% cost savings for the customers and a new
     way to monetize our new and existing customers.

 --  On October 14, the Company announced an agreement with Yellowbook
     pursuant to which Web.com will create customized stand-alone
     
websites for Yellowbook's advertising customers.

 --  On October 8, the Company announced an exclusive partnership with
     Bob Vila to leverage the Internet to match homeowners with
     contractors and home renovation experts.

 --  On September 23, the Company announced a partnership with
     MerchantCircle, the largest social network of local business
     owners in the nation, to provide local merchants with Web.com's
     online marketing solutions and professional website design
     services.

Conference Call Information

Management will host a conference call to discuss Web.com's results and other matters related to the Company's business, including guidance related to future results, today November 6, 2008, at 5:00 p.m. (Eastern Time). To access this call, dial 877-704-5378 (domestic) or 913-661-9178 (international). A replay of this conference call will be available for a limited time at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 4133109. A webcast of this conference call will also be available for a limited time on the "Investor Relations" page of the Company's Web site, www.web.com.

All per share numbers for non-GAAP net income per share are expressed on a weighted-average diluted per share basis. Non-GAAP net income excludes stock-based compensation expense, amortization expense related to acquisitions, restructuring charges, the deferred revenue adjustment due to purchase accounting, income tax expense, and includes an estimated cash tax rate to be paid during 2008. Non-GAAP operating income excludes stock-based compensation expense, amortization expense related to acquisitions, restructuring charges, and the deferred revenue adjustment related to purchase accounting. A reconciliation of GAAP financial measures to non-GAAP financial measures results has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Use of Non-GAAP Financial Measures."

About Web.com

Web.com Group, Inc. (Nasdaq:WWWW) is a leading provider of online marketing for small businesses. Web.com offers a full range of online services, including Internet marketing and advertising, local search, search engine marketing, search engine optimization, lead generation, home contractor specific leads, website design and publishing, and shopping cart solutions, meeting the needs of small businesses anywhere along their lifecycle. For more information on the company, please visit http://www.web.com or call 1-800-GETSITE.

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 net income attributable to common stockholders, non-GAAP net income per share attributable to common stockholders and non-GAAP operating income is useful to investors, because it describes the operating performance of the company and helps investors gauge the company's ability to generate cash flow, excluding some recurring charges that are included in the most directly comparable measures calculated and presented in accordance with GAAP. Company 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 the company presents above, management further sets forth its rationale as follows:



 --  Non-GAAP Operating Income. The Company excludes from non-GAAP
     operating income amortization of intangibles, fair value
     adjustment to deferred revenue, restructuring charges and stock
     based compensation charges. Management believes that excluding
     these non-cash charges assists investors in evaluating
     period-over-period changes in the Company's 
operating income
     without the impact of items that are not a result of the
     Company's day-to-day business and operations.

 --  Non-GAAP Net Income and Non-GAAP Net Income Per Share. The
     Company excludes from non-GAAP net income and non-GAAP net income
     per share amortization of intangibles, income tax expense, fair
     value adjustment to deferred revenue, restructuring charges and
     stock based compensation, and includes cash income tax expense,
     because management believes that excluding such measures helps
     investors better understand the Company's operating activities.

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 stock purchases under SFAS
     123(R). The Company excludes stock-based compensation expenses
     from our non-GAAP measures primarily because they are non-cash
     expenses. Prior to the adoption of SFAS 123(R) in fiscal 2006,
     the Company did not include expenses related to employee stock
     options and employee stock purchases directly in its financial
     statements, but elected, as permitted by SFAS 123, to disclose
     such expenses in the footnotes to its financial statements. As
     the Company applies SFAS 123(R), it believes that it is useful to
     its investors to understand the impact of the application of SFAS
     123(R) to its operational performance, liquidity and its ability
     to invest in research and development and fund acquisitions and
     capital expenditures. While stock-based 
compensation expense
     calculated in accordance with SFAS 123(R) constitutes an ongoing
     and recurring expense, such expense is excluded from non-GAAP
     results because it is not an expense that typically requires or
     will require cash settlement by the Company and because such
     expense is not used by management to assess the core
     profitability of the Company's business operations. The Company
     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, excluding this item from
     various non-GAAP measures facilitates comparisons to the
     Company's competitors' operating results.

 --  Amortization of intangibles. The Company incurs amortization of
     acquired intangibles under SFAS 141. Acquired intangibles
     primarily consist of customer 
relationships, non-compete
     agreements, trade names, and developed technology. The Company
     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 for
     the Company, the item is excluded because this expense is
     non-cash in nature and because the Company believes the non-GAAP
     financial measures excluding this item provide meaningful
     supplemental information regarding the Company's operational
     performance, liquidity and its ability to invest in research and
     development and fund acquisitions and capital expenditures. In
     addition, excluding this item from various non-GAAP measures
     facilitates management's internal comparisons to the 
Company's
     historical operating results and comparisons to the Company's
     competitors' operating results.

 --  Restructuring charges. The Company has recorded restructuring
     charges. The Company 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 the Company's
     historical net operating losses and related deferred tax asset,
     the Company excludes income tax expense from its non-GAAP
     measures primarily because they are not indicative of the cash
     tax paid by the Company and therefore are not reflective of
     ongoing operating results. Further, excluding this non-cash item
     from non-GAAP measures facilitates management's internal
     comparisons to the 
Company's historical operating results.

 --  Fair value adjustment to deferred revenue. The Company has
     recorded a fair value adjustment to acquired deferred revenue in
     accordance with SFAS 141. The Company excludes the impact of this
     adjustment 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 therefore facilitates management's
     internal comparisons to the Company's historical operating
     results.

Forward-Looking Statements

This press release includes certain "forward-looking statements" including, without limitation, statements regarding Web.com's expectations about its future financial performance and market position, 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 These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this presentation that are not historical facts. These statements are sometimes identified by words such as "believe", "growing", "emerge" or words of similar meaning. 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 our 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, our ability to integrate Web.com businesses, our ability to maintain our sales efficiency, our ability to maintain our existing, and develop new, strategic relationships, the number of our net subscriber additions and our monthly customer turnover. These and other risk factors are set forth under the caption "Risk Factors" in Web.com's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, 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.



                          Web.com Group, Inc.
                 Consolidated Statements of Operations
                 (in thousands except per share data)


                            Three Months Ended     Nine Months Ended
                               September 30,          September 30,
                              2008        2007      2008       2007
                           (unaudited)(unaudited)(unaudited)(unaudited)
                            ---------  ---------  ---------  ---------
  Revenue:
   Subscription             $  29,224  $  16,820  $  89,224  $  48,006
   License                        560        383      2,128      2,095
   Professional services          822        613      2,093      1,539
                            ---------  ---------  ---------  ---------
    Total revenue              30,606     17,816     93,445     51,640

  
Cost of revenue
   (excluding
   depreciation and
   amortization shown
   separately below):

   Subscription (a)            10,776      7,124     32,717     21,225
   License                        149        190        433        667
   Professional services          327        347        994        947
                            ---------  ---------  ---------  ---------
     Total cost of
      revenue                  11,252      7,661     34,144     22,839
                            ---------  ---------  ---------  ---------

 Gross profit                  19,354    10,155     59,301      28,801

 Operating expenses:
  Sales and marketing (a)       7,345      4,202     22,414     12,413
  Research and
   development (a)              2,394        915      7,825      2,637
  General and
   administrative (a)           4,557      3,271     15,057      9,348
  Restructuring charges  
         529        242        529        242
  Depreciation and
   amortization                 3,395        719      9,976      2,113
                            ---------  ---------  ---------  ---------
   Total operating
    expenses                   18,220      9,349     55,801     26,753
                            ---------  ---------  ---------  ---------
 Income from operations         1,134        806      3,500      2,048

 Other income:
  Interest, net                   188        528        635      1,539
                            ---------  ---------  ---------  ---------
 Income before income
  taxes                         1,322      1,334      4,135      3,587
 Income tax expense                30        942         96      2,011
                            ---------  ---------  ---------  ---------
 Net income                 $   1,292  $     392  $   4,039  $   
1,576
                            =========  =========  =========  =========

 Net income per common
  share
 Basic                      $    0.05  $    0.02  $    0.15  $    0.09
                            =========  =========  =========  =========
 Diluted                    $    0.04  $    0.02  $    0.13  $    0.08
                            =========  =========  =========  =========
 Weighted-average
  number of shares
  used in per
  share amounts:
 Basic                         27,944     17,989     27,767     17,603
                            =========  =========  =========  =========
 Diluted                       30,169     19,944     30,416     19,768
                            =========  =========  =========  =========

 (a) Stock based compensation
   included above:
  Subscription (cost of
   revenue)                 $      93  $      57  $     257  $     168
  Sales 
and marketing             256        175        695        508
  Research and
   development                    105         67        321        206
  General and
   administration                 879        618      2,229      1,718
                            ---------  ---------  ---------  ---------
 Total                      $   1,333  $     917  $   3,502  $   2,600
                            =========  =========  =========  =========



                          Web.com Group, Inc.
                      Consolidated Balance Sheets
                 (in thousands except per share data)


                                       September 30,       December 31,
                                           2008               2007
                                        (unaudited)         (audited)
                                       ------------       ------------
 Assets
 Current 
assets:
  Cash and cash equivalents            $     33,615       $     29,746
  Restricted investments                         --              4,805
  Accounts receivable, net of
   allowance $678 and $791
   thousand, respectively                     6,197              6,204
  Inventories, net of reserves
   of $73 and $67, respectively                  50                 26
  Prepaid expenses                            1,231              4,248
  Prepaid marketing fees                        714                793
  Deferred taxes                              1,818              1,723
  Other current assets                          487                759
                                       ------------       ------------
 Total current assets                        44,112             48,304

 Restricted investments                         316              1,675
 Property and 
equipment, net                  9,123              7,153
 Goodwill                                   111,783            107,933
 Intangible assets, net                      64,702             69,422
 Other assets                                   337                526
                                       ------------       ------------
 Total assets                          $    230,373       $    235,013
                                       ============       ============

 Liabilities and stockholders'
  equity
 Current liabilities:
  Accounts payable                     $      2,098       $      2,034
  Accrued expenses                            8,135              9,097
  Accrued restructuring costs
   and other reserves                         2,905             10,484
  Deferred revenue                            8,570              8,501
  Accrued marketing fees                 
       402                279
  Notes payable, current                         88              1,186
  Obligations under capital
   lease, current                                --                  1
  Other liabilities                             161                197
                                       ------------       ------------
 Total current liabilities                   22,359             31,779

 Accrued rent expense                           378                105
 Deferred revenue                               140                147
 Notes payable, long term                        --                 59
 Accrued restructuring costs
  and other reserves, long term               1,533              3,116
 Deferred tax liabilities, long
  term                                        3,351              3,351
 Other long term liabilities                     94                 
25
                                       ------------       ------------
 Total liabilities                           27,855             38,582


 Stockholders' equity

 Common stock, $0.001 par
  value; 150,000,000 shares
  authorized;  27,837,371
  shares and 27,472,686 shares
  issued and outstanding at
  September 30, 2008 and
  December 31, 2007,
  respectively.                                  28                 27
 Additional paid-in capital                 258,737            254,208
 Treasury Stock, at cost,
  438,934 shares                             (2,482)                --
 Accumulated deficit                        (53,765)           (57,804)
                                       ------------       ------------
 Total stockholders' equity                 202,518            196,431
                                       ------------       ------------

 Total liabilities 
and
  stockholders' equity                 $    230,373       $    235,013
                                       ============       ============


                          Web.com Group, Inc.
              Reconciliation of GAAP to Non-GAAP Results
                 (in thousands except per share data)
                              (unaudited)

                                Three Months Ended   Nine Months Ended
                                  September 30,        September 30,
                                  2008      2007      2008      2007
                                --------  --------  --------  --------
 Reconciliation of GAAP
  revenue to non-GAAP
  revenue
 GAAP revenue                   $ 30,606  $ 17,816  $ 93,445  $ 51,640
 Fair value adjustment
  to deferred revenue                 42        32       267       105
                                --------  --------  
--------  --------
 Non-GAAP revenue               $ 30,648  $ 17,848  $ 93,712  $ 51,745
                                ========  ========  ========  ========

 Reconciliation of GAAP
  net income attributable
  to common stockholders
  to non-GAAP net income
 GAAP Net income                 $ 1,292     $ 392   $ 4,039   $ 1,576
 Amortization of
  intangibles                      2,507       448     7,620     1,322
 Income tax expense                   30       942        96     2,011
 Cash income tax expense             (72)      (38)     (157)      (92)
 Fair value adjustment to
  deferred revenue                    42        32       267       105
 Restructure expense                 529       242       529       242
 Stock based compensation          1,333       917     3,502     2,600
                                --------  --------  --------  --------
 Non-GAAP net income       
     $  5,661  $  2,935  $ 15,896  $  7,764
                                ========  ========  ========  ========

 Reconciliation of GAAP
  basic net income per
  share to non-GAAP net
  income per share
 Basic GAAP net income
  (loss) per share              $   0.05  $   0.02  $   0.15  $   0.09
 Amortization of
  intangibles per share             0.09      0.03      0.27      0.08
 Income tax expense per
  share                             0.00      0.05      0.00      0.11
 Cash income tax expense
  per share                        (0.00)    (0.00)    (0.01)    (0.01)
 Fair value adjustment
  to deferred revenue
  per share                         0.00      0.00      0.01      0.01
 Restructure expense per
  share                             0.02      0.01      0.02      0.01
 Stock based compensation
  per share                         0.04      0.05      0.13      0.15
            
                    --------  --------  --------  --------
 Basic Non-GAAP net
  income per share              $   0.20  $   0.16  $   0.57  $   0.44
                                ========  ========  ========  ========

 Reconciliation of GAAP
  diluted net income per
  share to non-GAAP net
  income per share

 Fully diluted shares:

 Common stock                     27,944    17,989    27,767    17,603
 Diluted stock options             1,954     1,485     2,333     1,695
 Warrants                            133       193       177       192
 Escrow shares                       138       277       139       278
                                --------  --------  --------  --------
     Total                        30,169    19,944    30,416    19,768
                                ========  ========  ========  ========

 Diluted GAAP net income
  per share                     $   
0.04  $   0.02  $   0.13  $   0.08
 Amortization of
  intangibles per share             0.08      0.02      0.25      0.07
 Income tax expense per
  share                             0.00      0.05      0.00      0.10
 Cash income tax expense
  per share                        (0.00)    (0.00)    (0.01)    (0.00)
 Fair value adjustment
  to deferred revenue
  per share                         0.00      0.00      0.01      0.01
 Restructure expense per
  share                             0.02      0.01      0.02      0.01
 Stock based compensation
  per share                         0.05      0.05      0.12      0.12
                                --------  --------  --------  --------
 Diluted Non-GAAP net
  income per share              $   0.19  $   0.15  $   0.52  $   0.39
                                ========  ========  ========  ========

 Reconciliation of GAAP
  operating 
income to
  non-GAAP operating
  income
 GAAP operating income          $  1,134  $    806   $ 3,500  $  2,048
 Amortization of
  intangibles                      2,507       448     7,620     1,322
 Fair value adjustment to
  deferred revenue                    42        32       267       105
 Restructuring charges               529       242       529       242
 Stock based compensation          1,333       917     3,502     2,600
                                --------  --------  --------  --------
 Non-GAAP operating
  income                        $  5,545  $  2,445  $ 15,418  $  6,317
                                ========  ========  ========  ========

 Reconciliation of GAAP
  operating margin to
  non-GAAP operating margin
 GAAP operating margin                4%        5%        4%        4%
 Amortization of
  intangibles                         8%        3%        7%       
 3%
 Fair value adjustment
  to deferred revenue                 0%        0%        0%        0%
 Restructuring charges                2%        1%        1%        0%
 Stock based compensation             4%        5%        4%        5%
                                --------  --------  --------  --------
 Non-GAAP operating margin           18%       14%       16%       12%
                                ========  ========  ========  ========


                         Web.com Group, Inc.
                 Consolidated Statement of Cash Flows
                            (in thousands)


                                                  Nine Months Ended
                                                     September 30,
                                                 2008            2007
                                            (unaudited)     (unaudited)
                         
                    ---------       ---------
 Cash flows from operating activities

 Net income                                  $   4,039       $   1,576
 Adjustments to reconcile net income
  to net cash (used in) provided by
  operating activities:
 Depreciation and amortization                   9,976           2,113
 Gain on disposal of assets                         (1)             --
 Stock-based compensation expense                3,502           2,600
 Restructuring charges                             529             242
 Deferred income tax                               (95)          1,875
 Changes in operating assets and
  liabilities:
    Accounts receivable                             52             (13)
    Inventories                                    (24)             39
    Prepaid expenses and other assets            3,108              (2)
    Accounts payable, accrued 
expenses
     and other liabilities                     (10,551)             84
    Deferred revenue                              (326)            341
                                             ---------       ---------
 Net cash provided by operating
  activities                                    10,209           8,855

 Cash flows from investing activities

 Business acquisition, net of cash
  received                                      (4,573)          7,812
 Proceeds from sale of investment                8,500              --
 Purchase of investment                         (3,502)             --
 Change in restricted investments                1,228              --
 Purchase of property and equipment             (4,436)         (3,190)
 Investment in intangible assets                  (945)           (102)
                                             ---------       ---------
 
Net cash (used in) provided by
  investing activities                          (3,728)          4,520

 Cash flows from financing activities

 Stock issuance costs                              (19)             --
 Common Stock Repurchased                       (2,482)             --
 Payment of debt obligations                    (1,158)           (156)
 Proceeds from exercise of stock
  options                                        1,047           1,248
                                             ---------       ---------
 Net cash (used in) provided by
  financing activities                          (2,612)          1,092
                                             ---------       ---------

 Net increase in cash and cash
  equivalents                                    3,869          14,467
 Cash and cash equivalents, beginning
  of period                                     29,746 
         42,155
                                             ---------       ---------
 Cash and cash equivalents, end of
  period                                     $  33,615       $  56,622
                                             =========       =========
 Supplemental cash flow information:

     Interest paid                           $      25       $      13
                                             =========       =========

     Income tax paid                         $     126       $     199
                                             =========       =========
CONTACT:  ICR
          Kori Doherty
          617-956-6730
          kori.doherty@icrinc.com

          Web.com
          Peter Delgrosso
          904-680-6696
          pdelgrosso@web.com

(C) Copyright 2008 GlobeNewswire, Inc. All rights reserved.

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