Endurance International Group Holdings, Inc. today reported financial results for its third quarter ended September 30, 2014 and it announced the purchase of the BuyDomains assets, a company related to web design called Webzai and web hosting company Arvixe for a total of about $77 million.
“We are pleased to report a quarter that exceeded expectations for revenue, adjusted EBITDA and unlevered free cash flow,” commented Hari Ravichandran, chief executive officer and founder of Endurance International Group. “During the quarter our paying subscribers increased by 94,000, or 12 percent over the third quarter of 2013, to more than 3.8 million total paying subscribers, and our average revenue per subscriber increased by 10 percent over the third quarter of 2013 to $14.49. We believe our results are a reflection of the effectiveness of our marketing and distribution platforms, which we expect will continue to propel our growth drivers and provide a solid basis for a sustainable, strong top line which will in turn drive healthy cash flows for the future.”
Third Quarter Financial Highlights
|(in millions)||Q3 2014 Actuals||Year over year growth|
- GAAP revenue was $160.2 million, an increase of approximately 21 percent compared to $132.9 million in the third quarter of 2013.
- Net loss attributable to Endurance International Group Holdings, Inc. was $7.9 million, or $(0.06) per diluted share, compared to a net loss of $27.0 million, or $(0.28) per diluted share, for the third quarter of 2013.
- Adjusted revenue was $164.9 million, an increase of approximately 23 percent compared to $134.2 million in the third quarter of 2013.
- Adjusted revenue, excluding the impact of Directi, which contributed $13.0 million to adjusted revenue for the quarter, was $152.0 million, an increase of over 13 percent over the third quarter of 2013.
- Adjusted EBITDA was $58.0 million, an increase of over 16 percent compared to $49.9 million in the third quarter of 2013.
- Unlevered free cash flow (UFCF) was $50.1 million, an increase of approximately 17 percent compared to $43.0 million in the same period a year ago.
- Free cash flow (FCF) was $35.8 million, an increase of over 72 percent compared to $20.8 million in the third quarter of 2013.
Third Quarter Operating Highlights
- Total paying subscribers increased by 94,000 in Q3 2014. Excluding the impact of Directi, total paying subscribers increased by 93,000.
- Total paying subscribers were approximately 3.841 million at the end of Q3 2014, an increase of 12 percent compared to approximately 3.440 million at the end of Q3 2013.
- Average revenue per subscriber (ARPS) was $14.49, an increase of 10 percent compared to $13.14 for Q3 2013. Excluding the impact of Directi, ARPS was $13.54, an increase of 3 percent compared to $13.14 for Q3 2013 and an increase of $0.19 over Q2 2014.
- During the quarter, the company acquired Webzai, Ltd. and the assets of BuyDomains. In addition, on October 31, 2014, the company acquired the assets of Arvixe, LLC. The total consideration for these acquisitions is expected to be approximately $77 million.
Fiscal Year 2014 Guidance
The company is providing the following guidance:
Full year 2014 ending December 31, 2014
|(in millions)||Prior Guidance
(at August 7, 2014)
(at November 4, 2014)
|Adjusted Revenue||$639 — $643||$648 — $650|
|Year over year growth||21% – 22%||23%|
|Adjusted EBITDA||$230 — $235||$230 — $235|
|Year over year growth||11% – 13%||11% – 13%|
|UFCF||$180 — $190||$180 — $190|
|Year over year growth||8% to 14%||8% to 14%|
Adjusted revenue, adjusted EBITDA, UFCF, FCF and ARPS 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. An explanation of these measures is also provided below under the heading “Use of Non-GAAP Financial Measures.” We have not reconciled our adjusted revenue, adjusted EBITDA or UFCF guidance to the most comparable GAAP metrics because we do not provide guidance for the reconciling items between these non-GAAP metrics and the most comparable GAAP metrics, as certain of these items are out of our control and/or cannot be reasonably predicted.