TMCNet:  Endurance International Group Reports 2018 Second Quarter Results

[July 26, 2018]

Endurance International Group Reports 2018 Second Quarter Results

  • GAAP revenue of $287.8 million
  • Net loss of $2.0 million
  • Adjusted EBITDA of $85.0 million
  • Cash flow from operations of $29.9 million
  • Free cash flow of $20.1 million
  • Total subscribers on platform were approximately 4.918 million at June 30, 2018

BURLINGTON, Mass., July 26, 2018 (GLOBE NEWSWIRE) -- Endurance International Group Holdings, Inc. (NASDAQ:EIGI), a leading provider of cloud-based platform solutions designed to help small and medium-sized businesses succeed online, today reported financial results for its second quarter ended June 30, 2018.

“We are pleased with our year to date results, and the team remains focused on executing our 2018 integrated operating plan,” commented Jeffrey H. Fox, president and chief executive officer of Endurance International Group.  "Our second quarter results reflect our focus on meeting our financial and operating goals while simplifying our business and investing to deliver increased value to our customers."

Second Quarter 2018 Financial Highlights

  • Revenue for the second quarter of 2018 was $287.8 million, a decrease of 2 percent compared to $292.3 million for the second quarter of 2017.
  • Net loss for the second quarter of 2018 was $2.0 million compared to net loss of $35.4 million for the second quarter of 2017.
  • Net loss attributable to Endurance International Group Holdings, Inc. for the second quarter of 2018 was $2.0 million, or $(0.01) per diluted share, compared to net loss of $39.1 million, or $(0.29) per diluted share, for the second quarter of 2017.
  • Adjusted EBITDA for the second quarter of 2018 was $85.0 million, an increase of 3 percent compared to $82.5 million for the second quarter of 2017.
  • Cash flow from operations for the second quarter of 2018 was $29.9 million, a decrease of 39 percent compared to $48.7 million for the second quarter of 2017.
  • Free cash flow, defined as cash flow from operations less capital expenditures and capital lease obligations, for the second quarter of 2018 was $20.1 million, a decrease of 45 percent compared to $36.8 million for the second quarter of 2017.

Second Quarter Operating Highlights

  • Total subscribers on platform at June 30, 2018 were approximately 4.918 million, compared to approximately 5.217 million subscribers at June 30, 2017 and approximately 5.011 million subscribers at March 31, 2018.  See “Total Subscribers” below.
  • Average revenue per subscriber, or ARPS, for the second quarter of 2018 was $19.32, compared to $18.52 for the second quarter of 2017 and $19.30 for the first quarter of 2018.  See “Average Revenue Per Subscriber” below.

Fiscal 2018 Guidance

As of the date of this release, July 26, 2018, for the full year ending December 31, 2018, the company expects:

 
 2017 Actual
as Reported
Guidance
(as of July 26,  2018)
GAAP revenue$1.177 billion$1.140 to $1.160 billion
Adjusted EBITDA$351 million$310 to $330 million
Free cash flow$151 million~$120 million
   

As previously disclosed, the Company’s free cash flow guidance does not reflect the impact of payments made pursuant to its settlement with the U.S. Securities & Exchange Commission or the potential securities class action lawsuit settlements described in the Company’s Form 8-K filed on May 18, 2018, both of which will impact the Company’s actual free cash flow for 2018. The potential securities class action lawsuit settlements remain subject to court approval.

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

Conference Call and Webcast Information

Endurance International Group’s second quarter 2018 financial results teleconference and webcast is scheduled to begin at 8:00 a.m. EDT on Thursday, July 26, 2018. To participate on the live call, analysts and investors should dial (888) 734-0328 at least ten minutes prior to the call. Endurance International Group will also offer a live and archived webcast of the conference call, accessible from the Investor Relations section of the company’s website at http://ir.endurance.com.

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with GAAP, we use adjusted EBITDA and free cash flow, which are non-GAAP financial measures, to evaluate the operating and financial performance of our business, identify trends affecting our business, develop projections and make strategic business decisions. A non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flow that excludes amounts that are included in the most directly comparable measure calculated and presented in accordance with GAAP or includes amounts that are excluded from the most directly comparable measure calculated and presented in accordance with GAAP.

Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP and exclude expenses that may have a material impact on our reported financial results. For example, adjusted EBITDA excludes interest expense, which has been and will continue to be for the foreseeable future a significant recurring expense in our business. The presentation of non-GAAP financial information is not meant to be considered in isolation from, or as a substitute for, the most directly comparable financial measures prepared in accordance with GAAP. We urge you to review the additional information about adjusted EBITDA and free cash flow shown below, including the reconciliations of these non-GAAP financial measures to their comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Adjusted EBITDA is a non-GAAP financial measure that we calculate as net (loss) income, excluding the impact of interest expense (net), income tax expense (benefit), depreciation, amortization of other intangible assets, stock-based compensation, restructuring expenses, transaction expenses and charges, (gain) loss of unconsolidated entities, impairment of other long-lived assets, SEC investigations reserve (with respect to fiscal year and third quarter 2017), and shareholder litigation reserve. We view adjusted EBITDA as a performance measure and believe it helps investors evaluate and compare our core operating performance from period to period.

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

Key Operating Metrics

Total Subscribers - We define total subscribers as the approximate number of subscribers that, as of the end of a period, are identified as subscribing directly to our products on a paid basis, excluding accounts that access our solutions via resellers or that purchase only domain names from us. Subscribers of more than one brand, and subscribers with more than one distinct billing relationship or subscription with us, are counted as separate subscribers. Total subscribers for a period reflects adjustments to add or subtract subscribers as we integrate acquisitions and/or are otherwise able to identify subscribers that meet, or do not meet, this definition of total subscribers. In the second quarter of 2018, these adjustments
had a net negative impact of approximately 800 subscribers on our total subscriber count.

Average Revenue Per Subscriber (ARPS) - We calculate ARPS as the amount of revenue we recognize in a period, including marketing development funds and other revenue not received from subscribers, divided by the average of the number of total subscribers at the beginning of the period and at the end of the period, which we refer to as average subscribers for the period, divided by the number of months in the period. See definition of “Total Subscribers” above. ARPS does not represent an exact measure of the average amount a subscriber spends with us each month, since our calculation of ARPS is impacted by revenues generated by non-subscribers.

Forward-Looking Statements
This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements concerning our financial guidance for fiscal year 2018, the anticipated results of our efforts to simplify our business, deliver increased customer value, and operate more effectively, and our expected financial and operational performance in general. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts, and statements identified by words such as “expects,” “believes,” “estimates,” “may,” “continue,” “positions,” “confident,” and variations of such words or words of similar meaning and the use of future dates. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that these plans, intentions, expectations, strategies or prospects will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation: the possibility that our financial guidance may differ from expectations; the possibility that our planned investment and operational initiatives will not result in the anticipated benefits to our business; the possibility that we will continue to experience decreases in our subscriber base; an adverse impact on our business from litigation or regulatory proceedings; an adverse impact on our business from our substantial indebtedness and the cost of servicing our debt; the rate of growth of the Small and Medium Business (“SMB”) market for our solutions; our inability to increase sales to our existing subscribers, or retain our existing subscribers; data breaches; system or Internet failures; our inability to maintain or improve our competitive position or market share; and other risks and uncertainties discussed in our filings with the SEC, including those set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the three months ended March 31, 2018 filed with the SEC on May 4, 2018 and other reports we file with the SEC.

We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

About Endurance International Group
Endurance International Group Holdings, Inc. (NASDAQ:EIGI) helps millions of small businesses worldwide with products and technology to enhance their online web presence, email marketing, business solutions, and more. The Endurance family of brands includes: Constant Contact, Bluehost, HostGator, Domain.com and SiteBuilder, among others. Headquartered in Burlington, Massachusetts, Endurance employs over 3,500 people across the United States, Brazil, India and the Netherlands. For more information, visit: www.endurance.com.

Endurance International Group and the compass logo are trademarks of The Endurance International Group, Inc.  Constant Contact, the Constant Contact logo and other brand names of Endurance International Group are trademarks of The Endurance International Group, Inc. or its subsidiaries.

Investor Contact:
Angela White
Endurance International Group
(781) 852-3450
ir@endurance.com

Press Contact:
Kristen Andrews
Endurance International Group
(781) 418-6716
press@endurance.com

 
Endurance International Group Holdings, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share amounts)
 
 December 31, 2017 June 30, 2018
Assets   
Current assets:   
Cash and cash equivalents$66,493  $75,499 
Restricted cash2,625  1,670 
Accounts receivable15,945  12,085 
Prepaid domain name registry fees53,805  58,944 
Prepaid commissions  41,842 
Prepaid expenses and other current assets29,327  30,328 
Total current assets168,195  220,368 
Property and equipment—net95,452  82,758 
Goodwill1,850,582  1,849,529 
Other intangible assets—net455,440  403,835 
Deferred financing costs3,189  3,099 
Investments15,267  15,266 
Prepaid domain name registry fees, net of current portion10,806  11,680 
Prepaid commissions, net of current portion  42,034 
Other assets2,155  9,296 
Total assets$2,601,086  $2,637,865 
Liabilities, redeemable non-controlling interest and stockholders’ equity   
Current liabilities:   
Accounts payable$11,058  $7,871 
Accrued expenses79,991  74,033 
Accrued interest24,457  18,751 
Deferred revenue361,940  385,676 
Current portion of notes payable33,945  31,606 
Current portion of capital lease obligations7,630  7,427 
Deferred consideration—short term4,365  2,651 
Other current liabilities4,031  3,842 
Total current liabilities527,417  531,857 
Long-term deferred revenue90,972  96,828 
Notes payable—long term, net of original issue discounts of $25,811 and $23,527 and deferred financing costs of $37,736 and $35,049, respectively1,858,300  1,815,221 
Capital lease obligations—long term7,719  4,013 
Deferred tax liability19,696  29,897 
Deferred consideration—long term3,551  1,320 
Other liabilities10,426  10,970 
Total liabilities2,518,081  2,490,106 
Stockholders’ equity:   
Preferred Stock—par value $0.0001; 5,000,000 shares authorized; no shares issued or outstanding   
Common Stock—par value $0.0001; 500,000,000 shares authorized; 140,190,695 and 142,868,329 shares issued at December 31, 2017 and June 30, 2018, respectively; 140,190,695 and 142,867,992 outstanding at December 31, 2017 and June 30, 2018, respectively14  14 
Additional paid-in capital931,033  946,122 
Accumulated other comprehensive loss(541) (1,202)
Accumulated deficit(847,501) (797,175)
Total stockholders’ equity83,005  147,759 
Total liabilities, redeemable non-controlling interest and stockholders’ equity$2,601,086  $2,637,865 


 
Endurance International Group Holdings, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited)
(in thousands, except share and per share amounts)
 
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2017 2018 2017 2018
Revenue$292,258  $287,770  $587,395  $579,126 
Cost of revenue146,583  130,746  295,332  264,652 
Gross profit145,675  157,024  292,063  314,474 
Operating expense:       
Sales and marketing72,106  66,546  144,878  133,902 
Engineering and development20,149  21,959  40,511  41,876 
General and administrative40,580  30,744  79,660  69,519 
Transaction expenses193    773   
Total operating expense133,028  119,249  265,822  245,297 
Income from operations12,647  37,775  26,241  69,177 
Other income (expense):       
Interest income185  227  303  431 
Interest expense(45,658) (38,346) (85,174) (74,396)
Total other expense—net(45,473) (38,119) (84,871) (73,965)
Loss before income taxes and equity earnings of unconsolidated entities(32,826) (344) (58,630) (4,788)
Income tax expense (benefit)2,628  1,650  8,402  4,267 
(Loss) income before equity earnings of unconsolidated entities(35,454) (1,994) (67,032) (9,055)
Equity (income) loss of unconsolidated entities, net of tax(39) (25) (39) 2 
Net (loss) income$(35,415) $(1,969) $(66,993) $(9,057)
Net loss attributable to non-controlling interest51    277   
Excess accretion of non-controlling interest3,663    7,247   
Total net loss attributable to non-controlling interest3,714    7,524   
Net (loss) income attributable to Endurance International Group Holdings, Inc.$(39,129) $(1,969) $(74,517) $(9,057)
Comprehensive income (loss):       
Foreign currency translation adjustments1,228  (2,425) 1,914  (1,845)
Unrealized (loss) gain on cash flow hedge, net of taxes of $(192) and $45, and $(230) and $370 for the three months and six months ended June 30, 2017 and 2018, respectively(176) 144  (392) 1,184 
Total comprehensive (loss) income$(38,077) $(4,250) $(72,995) $(9,718)
Basic net (loss) income per share attributable to Endurance International Group Holdings, Inc.$(0.29) $(0.01) $(0.55) $(0.06)
Diluted net (loss) income per share attributable to Endurance International Group Holdings, Inc.$(0.29) $(0.01) $(0.55) $(0.06)
Weighted-average common shares used in computing net loss per share attributable to Endurance International Group Holdings, Inc.:       
Basic137,295,120  142,340,561  136,124,347  141,356,567 
Diluted137,295,120  142,340,561  136,124,347  141,356,567 


 
Endurance International Group Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
 
 Three Months Ended June 30, Six Months Ended June 30,
 2017 2018 2017 2018
Cash flows from operating activities:       
Net (loss) income$(35,415) $(1,969) $(66,993) $(9,057)
Adjustments to reconcile net loss to net cash provided by operating activities:       
  Depreciation of property and equipment14,051  12,796  27,162  24,864 
  Amortization of other intangible assets34,940  25,978  69,207  51,713 
  Amortization of deferred financing costs1,786  1,092  3,530  2,986 
  Amortization of net present value of deferred consideration187  123  377  251 
  Dividend from minority interest50    50   
  Amortization of original issue discounts886  1,068  1,732  2,126 
  Stock-based compensation16,245  7,390  29,169  14,382 
  Deferred tax expense (benefit)906  2,180  4,346  2,672 
  Loss (gain) on sale of assets97  213  (128) 261 
  Loss (gain) of unconsolidated entities(39) (25) (39) 2 
  Financing costs expensed5,487  1,228  5,487  1,228 
Loss on early extinguishment of debt992  331  992  331 
  Changes in operating assets and liabilities, net of acquisitions:       
     Accounts receivable(1,033) 1,292  1,359  3,740 
     Prepaid expenses and other current assets4,374  (5,863) (1,343) (8,560)
     Accounts payable and accrued expenses4,463  (13,475) (9,004) (12,880)
     Deferred revenue771  (2,467) 16,518  8,193 
Net cash provided by operating activities48,748  29,892  82,422  82,252 
Cash flows from investing activities:       
Purchases of property and equipment(10,037) (8,127) (19,295) (13,381)
Proceeds from sale of assets36    287   
Purchases of intangible assets(1,647)   (1,680)  
Net cash used in investing activities(11,648) (8,127) (20,688) (13,381)
Cash flows from financing activities:       
Proceeds from issuance of term loan and notes, net of original issue discounts1,693,007  1,580,305  1,693,007  1,580,305 
Repayments of term loans(1,705,736) (1,605,207) (1,714,661) (1,630,693)
Payment of financing costs(5,968) (1,295) (6,060) (1,295)
Payment of deferred consideration(4,590) (4,196) (5,408) (4,196)
Principal payments on capital lease obligations(1,871) (1,679) (3,908) (3,909)
Proceeds from exercise of stock options504  431  1,132  456 
Net cash used in financing activities(24,654) (31,641) (35,898) (59,332)
Net effect of exchange rate on cash and cash equivalents and restricted cash(251) (1,405) 2,076  (1,488)
Net increase (decrease) in cash and cash equivalents and restricted cash12,195  (11,281) 27,912  8,051 
Cash and cash equivalents and restricted cash:       
Beginning of period72,615  88,450  56,898  69,118 
End of period$84,810  $77,169  $84,810  $77,169 
Supplemental cash flow information:       
Interest paid$33,576  $30,370  $80,122  $72,461 
Income taxes paid$1,507  $1,519  $2,459  $2,122 
                

GAAP to Non-GAAP Reconciliation - Adjusted EBITDA

The following table presents a reconciliation of net income (loss) calculated in accordance with GAAP to adjusted EBITDA (all data in thousands):

 Three Months Ended June 30, Six Months Ended June 30,
 2017 2018 2017 2018
Net (loss) income$(35,415) $(1,969) $(66,993) $(9,057)
Interest expense, net(1)45,473  38,119  84,871  73,965 
Income tax expense (benefit)2,628  1,650  8,402  4,267 
Depreciation14,051  12,796  27,162  24,864 
Amortization of other intangible assets34,940  25,978  69,207  51,713 
Stock-based compensation16,245  7,390  29,169  14,382 
Restructuring expenses4,468  1,295  10,095  2,824 
Transaction expenses and charges193    773   
(Income) loss of unconsolidated entities(39) (25) (39) 2 
Impairment of other long-lived assets       
Shareholder litigation reserve  (240)   8,260 
Adjusted EBITDA$82,544  $84,994  $162,647  $171,220 

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income.


GAAP to Non-GAAP Reconciliation – Free Cash Flow

The following table reflects the reconciliation of cash flow from operations to free cash flow (“FCF”) (all data in thousands):

 Three Months Ended June 30, Six Months Ended June 30,
 2017  2018  2017  2018 
Cash flow from operations$48,748  $29,892  $82,422  $82,252 
Less:       
Capital expenditures and capital lease obligations(1)(11,908) (9,806) (23,203) (17,290)
Free cash flow$36,840  $20,086  $59,219  $64,962 

(1)  Capital expenditures during the three and six months ended June 30, 2017 and 2018 includes $1.9 million and $1.7 million, and $3.9 million and $3.9 million, respectively, of principal payments under a three year capital lease for software. The remaining balance on the capital lease is $11.4 million as of June 30, 2018.


Average Revenue Per Subscriber - Calculation and Segment Detail

We present our financial results in the following three segments.

  • Web presence. The web presence segment consists primarily of our web hosting brands and related products such as website security, website design tools and services, and e-commerce products.
  • Email marketing. The email marketing segment consists of Constant Contact email marketing tools and related products and the SinglePlatform digital storefront product.
  • Domain. The domain segment consists of domain-focused brands and certain web hosting brands that are aligned with our domain-focused brands. This segment sells domain names and domain management services to resellers and end users, as well as premium domain names, and also generates advertising revenue from domain name parking.

The following table presents the calculation of ARPS, on a consolidated basis and by segment (all data in thousands, except ARPS data):

 Three Months Ended June 30, Six Months Ended June 30,
 2017 2018 2017 2018
Consolidated revenue$292,258  $287,770  $587,395  $579,126 
Consolidated total subscribers5,217  4,918  5,217  4,918 
Consolidated average subscribers for the period5,261  4,965  5,294  4,985 
Consolidated ARPS$18.52  $19.32  $18.49  $19.36 
        
Web presence revenue$160,122  $152,715  $324,131  $307,732 
Web presence subscribers4,041  3,737  4,041  3,737 
Web presence average subscribers for the period4,088  3,774  4,120  3,793 
Web presence ARPS$13.06  $13.49  $13.11  $13.52 
        
Email marketing revenue$99,086  $102,154  $196,875  $204,601 
Email marketing subscribers(1)530  504  530  504 
Email marketing average subscribers for the period534  511  537  512 
Email marketing ARPS$61.88  $66.60  $61.10  $66.64 
        
Domain revenue$33,050  $32,901  $66,389  $66,793 
Domain subscribers646  677  646  677 
Domain average subscribers for the period639  680  637  680 
Domain ARPS$17.23  $16.13  $17.36  $16.36 

(1) Total email marketing subscriber count for the three and six month periods ending June 30, 2018 was impacted by a loss of approximately 10,500 subscribers, which resulted from changes made to Constant Contact’s account cancellation policy.  Excluding this impact, the total subscribers at period end would have been approximately 514,000.


The following table presents revenue, gross profit, and a reconciliation by segment of net income (loss) calculated in accordance with GAAP to adjusted EBITDA (all data in thousands):

 Three Months Ended June 30, 2017
 Web presence Email
marketing
 Domain Total
 Revised(2)
Revenue$160,122  $99,086  $33,050  $292,258 
Gross profit$74,284  $63,123  $8,268  $145,675 
        
Net (loss) income$(27,805) $(2,276) $(5,334) $(35,415)
Interest expense, net(1)19,801  25,179  493  45,473 
Income tax expense (benefit)3,354  (1,367) 641  2,628 
Depreciation9,583  3,526  942  14,051 
Amortization of other intangible assets14,996  18,565  1,379  34,940 
Stock-based compensation12,723  1,900  1,622  16,245 
Restructuring expenses3,348  769  351  4,468 
Transaction expenses and charges  193    193 
(Gain) loss of unconsolidated entities(39)     (39)
Impairment of other long-lived assets       
SEC investigations reserve       
Shareholder litigation reserve       
Adjusted EBITDA$35,961  $46,489  $94  $82,544 
        
 Three Months Ended June 30, 2018
 Web presence Email
marketing
 Domain Total
Revenue$152,715  $102,154  $32,901  $287,770 
Gross profit$75,702  $71,376  $9,946  $157,024 
        
Net (loss) income$(8,243) $9,481  $(3,207) $(1,969)
Interest expense, net(1)18,385  17,329  2,405  38,119 
Income tax expense (benefit)870  581  199  1,650 
Depreciation8,391  3,406  999  12,796 
Amortization of other intangible assets11,863  13,239  876  25,978 
Stock-based compensation5,424  1,288  678  7,390 
Restructuring expenses788  420  87  1,295 
Transaction expenses and charges       
(Gain) loss of unconsolidated entities(25)     (25)
Impairment of other long-lived assets       
SEC investigations reserve       
Shareholder litigation reserve(197)   (43) (240)
Adjusted EBITDA$37,256  $45,744  $1,994  $84,994 


  
 Six Months Ended June 30, 2017
 Web presence Email
marketing
 Domain Total
 Revised(2)
Revenue$324,131  $196,875  $66,389  $587,395 
Gross profit$152,154  $122,895  $17,014  $292,063 
        
Net (loss) income$(46,823) $(10,228) $(9,942) $(66,993)
Interest expense, net(1)36,191  47,698  982  84,871 
Income tax expense (benefit)11,847  (6,144) 2,699  8,402 
Depreciation18,002  7,399  1,761  27,162 
Amortization of other intangible assets29,547  36,927  2,733  69,207 
Stock-based compensation22,513  3,724  2,932  29,169 
Restructuring expenses5,476  4,061  558  10,095 
Transaction expenses and charges  773    773 
(Gain) loss of unconsolidated entities(39)     (39)
Impairment of other long-lived assets       
SEC investigations reserve       
Shareholder litigation reserve       
Adjusted EBITDA$76,714  $84,210  $1,723  $162,647 
        
 Six Months Ended June 30, 2018
 Web presence Email
marketing
 Domain Total
Revenue$307,732  $204,601  $66,793  $579,126 
Gross profit$150,075  $143,553  $20,846  $314,474 
        
Net (loss) income$(25,351) $24,610  $(8,316) $(9,057)
Interest expense, net(1)35,371  33,738  4,856  73,965 
Income tax expense (benefit)7,191  (5,026) 2,102  4,267 
Depreciation16,368  6,552  1,944  24,864 
Amortization of other intangible assets23,871  26,332  1,510  51,713 
Stock-based compensation10,497  2,696  1,189  14,382 
Restructuring expenses1,600  582  642  2,824 
Transaction expenses and charges       
Loss of unconsolidated entities2      2 
Impairment of other long-lived assets       
SEC investigations reserve       
Shareholder litigation reserve5,548  1,500  1,212  8,260 
Adjusted EBITDA$75,097  $90,984  $5,139  $171,220 

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income.
(2) As disclosed in the first quarter of 2018, we revised the allocation of our 2017 adjusted EBITDA between our web presence and domain segment to correct a misallocation of domain registration costs in our previously reported segment figures. This correction resulted in the reallocation of adjusted EBITDA from the domain segment to the web presence segment of $1.8 million and $3.0 million for the three and six months ending June 30, 2017, respectively.  Consolidated adjusted EBITDA figures for these periods were not affected by this correction.


GAAP to Non-GAAP Reconciliation of Fiscal Year 2018 Guidance (as of July 26, 2018) - Adjusted EBITDA

The following table reflects the reconciliation of fiscal year 2018 estimated net loss calculated in accordance with GAAP to fiscal year 2018 guidance for adjusted EBITDA. All figures shown are approximate.

($ in millions)Twelve Months Ending
December 31, 2018
Estimated net loss$(35)$(21)
Estimated interest expense (net) 149  150 
Estimated income tax expense (benefit) 5  6 
Estimated depreciation 50  50 
Estimated amortization of acquired intangible assets 100  100 
Estimated stock-based compensation 30  32 
Estimated restructuring expenses 3  5 
Estimated transaction expenses and charges    
Estimated (gain) loss of unconsolidated entities    
Estimated impairment of other long-lived assets    
Estimated shareholder litigation reserve 8.25  8.25 
Adjusted EBITDA guidance$310 $330 


GAAP to Non-GAAP Reconciliation of Fiscal Year 2018 Guidance (as of July 26, 2018) - Free Cash Flow

The following table reflects the reconciliation of fiscal year 2018 estimated cash flow from operations calculated in accordance with GAAP to fiscal year 2018 guidance for free cash flow. All figures shown are approximate.

($ in millions)Twelve Months
Ending
December 31, 2018
Estimated cash flow from operations$178 
Estimated capital expenditures and capital lease obligations (58)
Free cash flow guidance$120 

 

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