Attached files
| file | filename |
|---|---|
| 8-K - WEB.COM GROUP, INC. | v210500_8k.htm |
EXHIBIT
99.1
Web.com
Reports Fourth Quarter and Full Year 2010 Financial Results
Non-GAAP
revenue and net income per diluted share at the high-end or above
guidance
4Q
adjusted EBITDA grows to a record $9.1 million
Customer
churn reduced to record lows
JACKSONVILLE, FL – February 8, 2011 –
Web.com Group, Inc. (NASDAQ: WWWW), a leading provider of
internet services and online marketing solutions for small businesses, today
announced results for the fourth quarter and full year ended December 31,
2010.
David
Brown, Chairman and CEO of Web.com, said, “Continued execution at a high level
led to fourth quarter non-GAAP revenue that was at the high-end of our guidance
and profitability that again exceeded our expectations. This
achievement represents a solid finish to a year in which we stabilized and began
modestly growing our internet services business, improved customer churn to
record low levels and closed the transformative acquisition of
Register.com.”
Brown
added, “Web.com has become one of the largest and most profitable online
marketing businesses in the world. We believe the company has the
potential to accelerate revenue growth as we increase Web.com’s investments in
sales and marketing and execute our cross-sell/upsell strategy with our recently
acquired domain name customers. As we continue to integrate our operations,
realize the significant post-merger cost savings and benefit from increased
scale, we believe that we have the opportunity to generate substantial
shareholder value.”
Summary
of Fourth Quarter 2010 Financial Results:
|
|
·
|
Total
revenue, calculated in accordance with U.S. generally accepted accounting
principles (GAAP), was $37.6 million for the fourth quarter of 2010,
compared to $26.3 million for the fourth quarter of
2009. Non-GAAP revenue, which adds back the impact of the fair
value adjustment to acquired deferred revenue, was $45.0 million for the
fourth quarter of 2010, at the high-end of the company’s guidance of $44.0
million to $45.0 million.
|
|
|
·
|
Operating
loss, calculated in accordance with GAAP, was $4.4 million for the fourth
quarter of 2010 and included a $7.6 million negative impact related to the
fair value adjustment to acquired deferred revenue and prepaid registry
fees. For the fourth quarter of 2009, the company reported GAAP
operating income of $480 thousand.
|
|
|
·
|
GAAP
net loss from continuing operations was $12.8 million, or ($0.50) per
diluted share, for the fourth quarter of 2010, and included the above
mentioned impact related to the fair value adjustment to acquired deferred
revenue and prepaid registry fees. GAAP net income from continuing
operations was $2.1 million, or $0.07 per diluted share, in the fourth
quarter of 2009.
|
|
|
·
|
Non-GAAP
operating income was $8.6 million for the fourth quarter of 2010,
representing a non-GAAP operating margin of 19% and an increase from $4.3
million for the fourth quarter of
2009.
|
|
|
·
|
Non-GAAP
net income from continuing operations was $6.6 million, or $0.24 per
diluted share, for the fourth quarter of 2010, which was above the
company’s guidance of $0.16 to $0.17 per diluted
share. Approximately $0.03 of the per share upside related to a
lower-than-expected cash tax rate, while an additional $0.01 of the per
share upside resulted from one-time purchase accounting adjustments
related to the Register.com acquisition. Non-GAAP net income
from continuing operations was $4.3 million, or $0.16 per diluted share,
for the fourth quarter of 2009.
|
|
|
·
|
Adjusted
EBITDA was $9.1 million for the fourth quarter of 2010, an 87% increase
from $4.9 million for the fourth quarter of 2009. Non-GAAP
operating margin for the fourth quarter was 19%, an increase from 16% in
the fourth quarter of 2009.
|
|
|
·
|
Cash
flow from operations was $6.8 million for the fourth quarter of 2010 and
$7.9 million excluding the pay down of accrued restructuring expenses and
fees associated with the Register.com acquisition. This
represented an increase from $3.8 million and $4.2 million, respectively,
for the fourth quarter of 2009.
|
Fourth
Quarter and Recent Business Highlights:
|
|
·
|
Consolidated
average revenue per user (ARPU) was $15.39 for the fourth quarter of 2010,
a sequential increase from over $14 (assuming Register.com was integrated
for the full third quarter of
2010).
|
|
|
·
|
Customer
churn was 1.8% for the fourth quarter of 2010, down from 2% in the third
quarter of 2010 (assuming Register.com was integrated for the full third
quarter).
|
|
|
·
|
Web.com’s
total net subscribers were approximately 954,000 at the end of the fourth
quarter of 2010, compared to 974,000 at the end of the prior
quarter. This net subscriber count reflects modest growth in
Web.com’s web services and value add solutions customer base, offset by a
reduction in the number of domain name services
customers.
|
|
|
·
|
Web.com
paid down approximately $6 million in debt in the fourth quarter, which
was $3.8 million more than required under terms of its debt agreement and
the second quarter in a row of accelerated
prepayment.
|
|
|
·
|
Web.com
introduced a new product, a custom Company Facebook page, to help its
small business customers access and leverage the power of social
media.
|
|
|
·
|
Web.com
added two distinguished members to its board of directors: Deborah H.
Quazzo and Philip J. Facchina. Quazzo is the co-founder of
NeXtAdvisors, a merchant bank providing advisory services to the education
and business services sector, and has a 25 year career as an investment
banker and entrepreneur, including the co-founding of ThinkEquity
Partners. Facchina is currently a Partner and Chief Operating
Officer of Ramsey Asset Management, a $500 million long/short hedge fund,
following 10 years with FBR Capital Markets’ Investment Banking unit,
where he was Group Head of Technology, Media &
Telecom. Prior to FBR, Facchina served variously as President,
Executive VP and Chief Financial Officer of both public and private
technology companies.
|
|
|
·
|
Web.com
announced an alliance with SuperMedia, the advertising agency for local
small-to-medium sized businesses across the United States, to provide
greater opportunities for small business customers to develop, support and
expand their online presence.
|
Conference
Call Information
Management
will host a conference call to discuss Web.com’s results and other matters
related to the Company’s business and guidance related to future results, today
February 8, 2011, at 5:00 p.m. (Eastern Time). A live webcast of the call will
be available at the “Investor Relations” page of the Company’s website,
http://www.web.com. To access the call, dial 877-407-0784 (domestic) or
201-689-8560 (international). A replay of this conference call will be available
for a limited time at 877-870-5176 (domestic) or 858-384-5517 (international).
The replay conference ID is 364705. A replay of the webcast will also be
available for a limited time at http://ir.web.com.
About
Web.com
Web.com
Group, Inc. (Nasdaq: WWWW) is a leading provider of internet services and online
marketing solutions for small businesses. Web.com meets the needs of small
businesses anywhere along their lifecycle by offering a full range of online
services and support, including domain name registration services, website
design, logo design, search engine optimization, search engine marketing and
local sales leads, general contractor leads, franchise and homeowner association
websites, shopping cart software, eCommerce web site design and call
center services. 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,
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
Revenue. We exclude from
non-GAAP revenue the impact of the fair value adjustment to acquired
deferred revenue because we believe that excluding such measures helps
management and investors better understand our revenue
trends.
|
|
|
·
|
Non-GAAP Operating
Income. The Company excludes from non-GAAP operating
income amortization of intangibles, fair value adjustment to deferred
revenue and prepaid registry fees, restructuring charges, corporate
development expenses and stock-based compensation
charges. Management believes that excluding these items 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 Diluted Share. The Company
excludes from non-GAAP net income and non-GAAP net income per diluted
share amortization of intangibles, income tax expense, fair value
adjustment to deferred revenue and prepaid registry fees, restructuring
charges, corporate development expenses, amortization of financing fees,
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.
|
|
|
·
|
Adjusted EBITDA. The
Company excludes from Adjusted EBITDA depreciation expense, amortization
of intangibles, income tax, interest expense, interest income, stock-based
compensation, corporate development expenses, and restructuring charges,
because management believes that excluding such items 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 ASC 718-10.
The Company excludes stock-based compensation expenses from our non-GAAP
measures primarily because they are non-cash expenses. Prior to the
adoption of ASC 718-10 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, to
disclose such expenses in the footnotes to its financial statements. As
the Company applies ASC 718-10, it believes that it is useful to its
investors to understand the impact of the application of ASC 718-10 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 ASC 718-10
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 ASC 805-10-65. 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. 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.
|
|
|
·
|
Depreciation
expense. The Company incurs depreciation expense
associated with its fixed assets. Although the fixed 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 certain non-GAAP measures facilitates management’s internal
comparisons to the Company’s historical operating results and comparisons
to the Company’s competitors’ operating
results.
|
|
|
·
|
Interest expense and
amortization of deferred financing fees. The Company
incurs interest expense related to the indebtedness of the
Company. This item is excluded because the Company believes the
non-GAAP measures excluding this item provide meaningful supplemental
information regarding the Company’s operational performance. 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.
|
|
|
·
|
Interest
income. The Company earns interest income related to its
cash and cash equivalents. This item is excluded because the
Company believes the non-GAAP measures excluding this item provide
meaningful supplemental information regarding the Company’s operational
performance. 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. The Company also excludes income tax expense
altogether from certain non-GAAP financial measures because the Company
believes that the non-GAAP measures excluding this item provide 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.
|
|
|
·
|
Fair value adjustment to
deferred revenue and prepaid registry fees. The Company
has recorded a fair value adjustment to acquired deferred revenue and
prepaid registry fees in accordance with ASC 805-10-65. 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 and prepaid registry fees therefore facilitates
management’s internal comparisons to the Company’s historical operating
results.
|
|
·
|
Corporate development
expenses. The Company incurred professional fees to assist us in
performing due diligence procedures for the acquisition of Register.com in
July 2010. 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.
|
Forward-Looking
Statements
This
press release includes certain "forward-looking statements" including, without
limitation, statements regarding the anticipated reach, capabilities and
opportunities for the combined company following the Register.com acquisition,
expected benefits to merchants and other customers, market opportunities, and
expected customer base, 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,” “potential,” “will,” “expect,” “opportunities,”
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 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, Web.com’s ability to integrate the Web.com and Register.com
businesses, disruption from the transaction making it more difficult to maintain
relationships with customers, employees or suppliers; risks related to the
successful offering of the combined company's products and services; the risk
that the anticipated benefits of the acquisition may not be realized; and other
risks that may impact Web.com’s and Register.com’s businesses. 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 September 30, 2010, 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.
Contact:
Web.com
Press
Susan
Datz Edelman
904-680-6909
sedelman@web.com
ICR
for Web.com
Investors
Kori
Doherty
617-956-6730
Kori.doherty@icrinc.com
Source: Web.com
Web.com
Group, Inc.
Consolidated
Statements of Operations
(in
thousands except per share data)
|
Three
Months Ended
December 31, |
Twelve
Months Ended
December 31, |
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(audited)
|
|||||||||||||
|
Revenue:
|
||||||||||||||||
|
Subscription
|
$ | 37,193 | $ | 25,501 | $ | 117,691 | $ | 102,166 | ||||||||
|
Professional
services
|
456 | 842 | 2,598 | 3,323 | ||||||||||||
|
Other
revenue
|
- | - | - | 1,000 | ||||||||||||
|
Total
revenue
|
37,649 | 26,343 | 120,289 | 106,489 | ||||||||||||
|
Cost
of revenue (excluding depreciation and amortization shown
separately below):
|
||||||||||||||||
|
Subscription
|
17,248 | 10,067 | 51,371 | 38,311 | ||||||||||||
|
Professional
services
|
379 | 577 | 1,861 | 2,081 | ||||||||||||
|
Total
cost of revenue
|
17,627 | 10,644 | 53,232 | 40,392 | ||||||||||||
|
Gross
profit
|
20,022 | 15,699 | 67,057 | 66,097 | ||||||||||||
|
Operating
expenses:
|
||||||||||||||||
|
Sales
and marketing
|
9,673 | 5,712 | 28,678 | 23,338 | ||||||||||||
|
Research
and development
|
3,383 | 2,175 | 10,910 | 8,477 | ||||||||||||
|
General
and administrative
|
6,639 | 4,181 | 24,110 | 19,140 | ||||||||||||
|
Depreciation
and amortization
|
4,434 | 3,132 | 15,724 | 13,295 | ||||||||||||
|
Restructuring
charges
|
315 | 19 | 2,171 | 1,940 | ||||||||||||
|
Total
operating expenses
|
24,444 | 15,219 | 81,593 | 66,190 | ||||||||||||
|
(Loss)
income from operations
|
(4,422 | ) | 480 | (14,536 | ) | (93 | ) | |||||||||
|
Other
income:
|
||||||||||||||||
|
Interest
(expense) income, net
|
(1,885 | ) | 88 | (2,832 | ) | 233 | ||||||||||
|
(Loss)
income before income taxes from continuing operations
|
(6,307 | ) | 568 | (17,368 | ) | 140 | ||||||||||
|
Income
tax (expense) benefit
|
(6,506 | ) | 1,499 | 14,019 | 1,429 | |||||||||||
|
Net
(loss) income from continuing operations
|
(12,813 | ) | 2,067 | (3,349 | ) | 1,569 | ||||||||||
|
Discontinued
operations:
|
||||||||||||||||
|
(Loss)
income from discontinued operations, net of tax
|
- | - | (9 | ) | 232 | |||||||||||
|
(Loss)
gain on sale of discontinued operations, net of tax
|
- | (13 | ) | 125 | 808 | |||||||||||
|
Income
from discontinued operations, net of tax
|
- | (13 | ) | 116 | 1,040 | |||||||||||
|
Net
(loss) income
|
$ | (12,813 | ) | $ | 2,054 | $ | (3,233 | ) | $ | 2,609 | ||||||
|
Basic
earnings per share:
|
||||||||||||||||
|
(Loss)
income from continuing operations attributable per common
share
|
$ | (0.50 | ) | $ | 0.08 | $ | (0.13 | ) | $ | 0.06 | ||||||
|
Income
from discontinued operations attributable per common share
|
$ | - | $ | - | $ | - | $ | 0.04 | ||||||||
|
Net
(loss) income per common share
|
$ | (0.50 | ) | $ | 0.08 | $ | (0.13 | ) | $ | 0.10 | ||||||
|
Diluted
earnings per share:
|
||||||||||||||||
|
(Loss)
income from continuing operations attributable per common
share
|
$ | (0.50 | ) | $ | 0.07 | $ | (0.13 | ) | $ | 0.06 | ||||||
|
Income
from discontinued operations attributable per common share
|
$ | - | $ | - | $ | - | $ | 0.04 | ||||||||
|
Net
(loss) income per common share
|
$ | (0.50 | ) | $ | 0.07 | $ | (0.13 | ) | $ | 0.10 | ||||||
|
Weighted-average
number of shares used in per share amounts:
|
||||||||||||||||
|
Basic
|
25,710 | 25,333 | 25,515 | 25,312 | ||||||||||||
|
Diluted
|
25,710 | 27,439 | 25,515 | 26,985 | ||||||||||||
Web.com
Group, Inc.
Consolidated
Balance Sheets
(in
thousands except per share data)
|
December
31,
2010 |
December
31,
2009 |
|||||||
|
(unaudited)
|
(audited)
|
|||||||
|
Assets
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 16,307 | $ | 39,427 | ||||
|
Restricted
investments
|
300 | 545 | ||||||
|
Accounts
receivable, net of allowance $523 and $428, respectively
|
8,100 | 4,561 | ||||||
|
Prepaid
expenses
|
2,551 | 2,315 | ||||||
|
Prepaid
registry fees
|
14,193 | - | ||||||
|
Deferred
taxes
|
1,233 | 1,482 | ||||||
|
Deferred
financing fees and other current assets
|
1,221 | 95 | ||||||
|
Total
current assets
|
43,905 | 48,425 | ||||||
|
Restricted
investments
|
1,110 | 927 | ||||||
|
Property
and equipment, net
|
8,765 | 7,388 | ||||||
|
Prepaid
registry fees
|
13,569 | - | ||||||
|
Goodwill
|
125,110 | 12,895 | ||||||
|
Intangible
assets, net
|
106,843 | 53,059 | ||||||
|
Other
assets
|
3,770 | 191 | ||||||
|
Total
assets
|
$ | 303,072 | $ | 122,885 | ||||
|
Liabilities
and stockholders' equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 3,276 | $ | 1,306 | ||||
|
Accrued
expenses
|
11,326 | 7,190 | ||||||
|
Accrued
restructuring costs
|
2,325 | 1,064 | ||||||
|
Deferred
revenue
|
36,664 | 6,172 | ||||||
|
Current
portion of debt and capital lease obligations
|
9,533 | 223 | ||||||
|
Other
current liabilities
|
1,180 | 299 | ||||||
|
Total
current liabilities
|
64,304 | 16,254 | ||||||
|
Accrued
rent expense
|
914 | 676 | ||||||
|
Deferred
revenue
|
25,445 | 159 | ||||||
|
Long-term
debt and capital lease obligations
|
93,623 | 198 | ||||||
|
Deferred
tax liabilites
|
10,742 | 1,429 | ||||||
|
Other
liabilities
|
1,138 | 473 | ||||||
|
Total
liabilities
|
196,166 | 19,189 | ||||||
|
Stockholders'
equity
|
||||||||
|
Common
stock, $0.001 par value; 150,000,000 shares
authorized; 27,756,227 and 27,796,824 shares issued and
27,340,062 and 26,176,967 shares outstanding at December 31, 2010 and
December 31, 2009, respectively.
|
27 | 26 | ||||||
|
Additional
paid-in capital
|
263,453 | 260,552 | ||||||
|
Treasury
Stock, at cost, 416,165 and 1,619,857 shares at December 31, 2010 and
December 31, 2009, respectively.
|
(1,896 | ) | (5,477 | ) | ||||
|
Accumulated
other comprehensive loss
|
(40 | ) | - | |||||
|
Accumulated
deficit
|
(154,638 | ) | (151,405 | ) | ||||
|
Total
stockholders' equity
|
106,906 | 103,696 | ||||||
|
Total
liabilities and stockholders' equity
|
$ | 303,072 | $ | 122,885 | ||||
Web.com
Group, Inc.
Reconciliation
of GAAP to Non-GAAP Results
(in
thousands except per share data)
(unaudited)
|
Three
Months Ended
December 31, |
Twelve
Months Ended
December 31, |
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Reconciliation
of GAAP revenue to non-GAAP revenue
|
||||||||||||||||
|
GAAP
revenue
|
$ | 37,649 | $ | 26,343 | $ | 120,289 | $ | 106,489 | ||||||||
|
Fair
value adjustment to deferred revenue
|
7,338 | 2 | 13,080 | 59 | ||||||||||||
|
Non-GAAP
revenue
|
$ | 44,987 | $ | 26,345 | $ | 133,369 | $ | 106,548 | ||||||||
|
Reconciliation
of GAAP net income (loss) to non-GAAP net income
|
||||||||||||||||
|
GAAP
net income (loss)
|
$ | (12,813 | ) | $ | 2,054 | $ | (3,233 | ) | $ | 2,609 | ||||||
|
Amortization
of intangibles
|
3,937 | 2,540 | 12,879 | 10,453 | ||||||||||||
|
Loss
(gain) on sale of assets
|
2 | (3 | ) | 6 | 2 | |||||||||||
|
Stock
based compensation
|
1,319 | 1,235 | 4,711 | 4,898 | ||||||||||||
|
Income
tax (income) expense
|
6,506 | (1,499 | ) | (14,019 | ) | (1,429 | ) | |||||||||
|
Restructuring
charges
|
315 | 19 | 2,171 | 1,940 | ||||||||||||
|
Corporate
development
|
(128 | ) | - | 2,892 | - | |||||||||||
|
Amortization
of deferred financing fees
|
395 | - | 573 | - | ||||||||||||
|
Cash
income tax expense
|
(488 | ) | (64 | ) | (721 | ) | (269 | ) | ||||||||
|
Fair
value adjustment to deferred revenue
|
7,338 | 2 | 13,080 | 59 | ||||||||||||
|
Fair
value adjustment to prepaid registry fees
|
258 | - | 214 | - | ||||||||||||
|
Non-GAAP
net income
|
$ | 6,641 | $ | 4,284 | $ | 18,553 | $ | 18,263 | ||||||||
|
Reconciliation
of GAAP basic net income (loss) per share to non-GAAP basic net income per
share
|
||||||||||||||||
|
Basic
GAAP net income (loss) per share
|
$ | (0.50 | ) | $ | 0.08 | $ | (0.13 | ) | $ | 0.10 | ||||||
|
Amortization
of intangibles per share
|
0.15 | 0.10 | 0.50 | 0.41 | ||||||||||||
|
Loss
(gain) on sale of assets per share
|
- | - | - | - | ||||||||||||
|
Stock
based compensation per share
|
0.05 | 0.05 | 0.18 | 0.19 | ||||||||||||
|
Income
tax expense per share
|
0.25 | (0.06 | ) | (0.54 | ) | (0.05 | ) | |||||||||
|
Restructuring
charges per share
|
0.01 | - | 0.09 | 0.08 | ||||||||||||
|
Corporate
development per share
|
- | - | 0.11 | - | ||||||||||||
|
Amortization
of deferred financing fees per share
|
0.02 | - | 0.02 | - | ||||||||||||
|
Cash
income tax expense per share
|
(0.02 | ) | - | (0.03 | ) | (0.01 | ) | |||||||||
|
Fair
value adjustment to deferred revenue per share
|
0.29 | - | 0.52 | - | ||||||||||||
|
Fair
value adjustment to prepaid registry fees
|
0.01 | - | 0.01 | - | ||||||||||||
|
Basic
Non-GAAP net income per share
|
$ | 0.26 | $ | 0.17 | $ | 0.73 | $ | 0.72 | ||||||||
|
Reconciliation
of GAAP diluted net income (loss) per share to non-GAAP net income per
share
|
||||||||||||||||
|
Fully
diluted shares:
|
||||||||||||||||
|
Common
stock
|
25,710 | 25,333 | 25,515 | 25,312 | ||||||||||||
|
Diluted
stock options
|
1,717 | 1,726 | 1,335 | 1,502 | ||||||||||||
|
Diluted
restricted stock
|
751 | 380 | 438 | 168 | ||||||||||||
|
Warrants
|
- | - | - | 3 | ||||||||||||
|
Total
|
28,178 | 27,439 | 27,288 | 26,985 | ||||||||||||
|
Diluted
GAAP net income (loss) per share
|
$ | (0.50 | ) | $ | 0.07 | $ | (0.13 | ) | $ | 0.10 | ||||||
|
Diluted
equity per share
|
0.05 | - | 0.01 | - | ||||||||||||
|
Amortization
of intangibles per share
|
0.14 | 0.09 | 0.47 | 0.39 | ||||||||||||
|
Loss
(gain) on sale of assets per share
|
- | - | - | - | ||||||||||||
|
Stock
based compensation per share
|
0.05 | 0.05 | 0.17 | 0.18 | ||||||||||||
|
Income
tax expense (benefit) per share
|
0.23 | (0.05 | ) | (0.51 | ) | (0.05 | ) | |||||||||
|
Restructuring
charges per share
|
0.01 | - | 0.08 | 0.07 | ||||||||||||
|
Corporate
development
|
- | - | 0.11 | - | ||||||||||||
|
Amortization
of deferred financing fees per share
|
0.01 | - | 0.02 | - | ||||||||||||
|
Cash
income tax expense per share
|
(0.02 | ) | - | (0.03 | ) | (0.01 | ) | |||||||||
|
Fair
value adjustment to deferred revenue per share
|
0.26 | - | 0.48 | - | ||||||||||||
|
Fair
value adjustment to prepaid registry fees per share
|
0.01 | - | 0.01 | - | ||||||||||||
|
Diluted
Non-GAAP net income per share
|
$ | 0.24 | $ | 0.16 | $ | 0.68 | $ | 0.68 | ||||||||
|
Reconciliation
of GAAP operating (loss) income to non-GAAP operating
income
|
||||||||||||||||
|
GAAP
operating (loss) income
|
$ | (4,422 | ) | $ | 480 | $ | (14,536 | ) | $ | (93 | ) | |||||
|
Amortization
of intangibles
|
3,937 | 2,540 | 12,879 | 10,453 | ||||||||||||
|
Stock
based compensation
|
1,319 | 1,235 | 4,711 | 4,898 | ||||||||||||
|
Restructuring
charges
|
315 | 19 | 2,171 | 1,940 | ||||||||||||
|
Corporate
development
|
(128 | ) | - | 2,892 | - | |||||||||||
|
Fair
value adjustment to deferred revenue
|
7,338 | 2 | 13,080 | 59 | ||||||||||||
|
Fair
value adjustment to prepaid registry fees
|
258 | - | 214 | - | ||||||||||||
|
Non-GAAP
operating income
|
$ | 8,617 | $ | 4,276 | $ | 21,411 | $ | 17,257 | ||||||||
|
Reconciliation
of GAAP operating margin to non-GAAP operating margin
|
||||||||||||||||
|
GAAP
operating margin
|
-12 | % | 2 | % | -12 | % | 0 | % | ||||||||
|
Amortization
of intangibles
|
9 | % | 9 | % | 10 | % | 9 | % | ||||||||
|
Restructuring
charges
|
1 | % | 0 | % | 2 | % | 2 | % | ||||||||
|
Corporate
development
|
0 | % | 0 | % | 2 | % | 0 | % | ||||||||
|
Fair
value adjustment to deferred revenue
|
17 | % | 0 | % | 10 | % | 0 | % | ||||||||
|
Fair
value adjustment to prepaid registry fees
|
1 | % | 0 | % | 0 | % | 0 | % | ||||||||
|
Stock
based compensation
|
3 | % | 5 | % | 4 | % | 5 | % | ||||||||
|
Non-GAAP
operating margin
|
19 | % | 16 | % | 16 | % | 16 | % | ||||||||
|
Reconciliation
of GAAP operating (loss) income to adjusted EBITDA
|
||||||||||||||||
|
GAAP
operating (loss) income
|
$ | (4,422 | ) | $ | 480 | $ | (14,536 | ) | $ | (93 | ) | |||||
|
Depreciation
and amortization
|
4,434 | 3,132 | 15,724 | 13,295 | ||||||||||||
|
Stock
based compensation
|
1,319 | 1,235 | 4,711 | 4,898 | ||||||||||||
|
Restructuring
charges
|
315 | 19 | 2,171 | 1,940 | ||||||||||||
|
Corporate
development
|
(128 | ) | - | 2,892 | - | |||||||||||
|
Fair
value adjustment to deferred revenue
|
7,338 | 2 | 13,080 | 59 | ||||||||||||
|
Fair
value adjustment to prepaid registry fees
|
258 | - | 214 | - | ||||||||||||
|
Adjusted
EBITDA
|
$ | 9,114 | $ | 4,868 | $ | 24,256 | $ | 20,099 | ||||||||
Web.com
Group, Inc.
Stock
Based Compensation Expense
(in
thousands)
|
Three
Months Ended
December 31, |
Twelve
Months Ended
December 31, |
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Stock
based compensation
|
||||||||||||||||
|
Subscription
(cost of revenue)
|
$ | 148 | $ | 135 | $ | 573 | $ | 450 | ||||||||
|
Sales
and marketing
|
233 | 268 | 727 | 913 | ||||||||||||
|
Research
and development
|
167 | 150 | 614 | 520 | ||||||||||||
|
General
and administration
|
771 | 682 | 2,797 | 3,015 | ||||||||||||
|
Restructuring
charges
|
- | - | - | 1,183 | ||||||||||||
|
Total
|
$ | 1,319 | $ | 1,235 | $ | 4,711 | $ | 6,081 | ||||||||
Web.com
Group, Inc.
Consolidated
Statement of Cash Flows
(in
thousands)
|
Twelve
Months Ended
December 31, |
||||||||
|
2010
|
2009
|
|||||||
|
(unaudited)
|
(audited)
|
|||||||
|
Cash
flows from operating activities
|
||||||||
|
Net
income
|
$ | (3,233 | ) | $ | 2,609 | |||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
|
Gain
on sale of discontinued operations, net of tax
|
(125 | ) | (808 | ) | ||||
|
Depreciation
and amortization
|
15,724 | 13,295 | ||||||
|
Stock-based
compensation expense
|
4,711 | 4,898 | ||||||
|
Deferred
income taxes
|
(14,919 | ) | (1,672 | ) | ||||
|
Restructuring
charges
|
2,171 | 1,940 | ||||||
|
Other
non cash expenses
|
578 | 2 | ||||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Accounts
receivable
|
(355 | ) | 1,065 | |||||
|
Prepaid
expenses and other assets
|
1,562 | 73 | ||||||
|
Net
change in restricted cash
|
1,531 | (1,156 | ) | |||||
|
Accounts
payable, accrued expenses and other liabilities
|
(2,748 | ) | (3,955 | ) | ||||
|
Deferred
revenue
|
10,854 | (1,995 | ) | |||||
|
Net
cash provided by operating activities
|
15,751 | 14,296 | ||||||
|
Cash
flows from investing activities
|
||||||||
|
Business
acquisitions
|
(130,142 | ) | (3,740 | ) | ||||
|
Proceeds
from gain on sale of discontinued operations
|
125 | 808 | ||||||
|
Purchase
of property and equipment
|
(1,656 | ) | (1,131 | ) | ||||
|
Investment
in intangible assets
|
(1,396 | ) | (5 | ) | ||||
|
Net
cash used in investing activities
|
(133,069 | ) | (4,068 | ) | ||||
|
Cash
flows from financing activities
|
||||||||
|
Stock
issuance costs
|
(14 | ) | (19 | ) | ||||
|
Stock
repurchased
|
(53 | ) | (5,678 | ) | ||||
|
Issuance
of long term debt
|
110,000 | - | ||||||
|
Payment
of debt obligations
|
(12,256 | ) | (641 | ) | ||||
|
Deferred
financing fees
|
(5,318 | ) | - | |||||
|
Proceeds
from exercise of stock options
|
1,839 | 1,410 | ||||||
|
Net
cash provided by (used in) financing activities
|
94,198 | (4,928 | ) | |||||
|
Net
(decrease) increase in cash and cash equivalents
|
(23,120 | ) | 5,300 | |||||
|
Cash
and cash equivalents, beginning of year
|
39,427 | 34,127 | ||||||
|
Cash
and cash equivalents, end of year
|
$ | 16,307 | $ | 39,427 | ||||
|
Supplemental
cash flow information:
|
||||||||
|
Interest
paid
|
$ | 2,605 | $ | 47 | ||||
|
Income
tax paid
|
$ | 287 | $ | 296 | ||||
|
Supplemental
disclosure of non-cash transactions:
|
||||||||
|
Acquisition-related
note payable
|
$ | 5,000 | $ | - | ||||