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Endurance International Group (EIG) reports earnings

Thu, 5th December 2013, 14:34

Endurance International Group (EIG), the company which has consolidated many of the most well known hosting brands including BluehostFatCowHomesteadHostGatorA Small OrangeiPage and iPowerhas reported its first financial results for the third quarter ending September 30, 2013.

The mothership of webhosting companies reported its revenue has increased by 59 percent to $132.9 million compared to $83.4 million for the same period last year,  EIG expects year end revenues of around $525 million.

Hari Ravichandran, CEO and Founder of EIG commented on the results:

We're excited to report great results for the third quarter, our first as a public company. We demonstrated strong organic revenue growth while increasing adjusted EBITDA and unlevered free cash flow. Our company's strategy is based on two simple principles: adding more high quality subscribers to our platform and then selling our subscribers more value added solutions. During the quarter, we added over 70,000 new subscribers, bringing our year to date net new additions to 217,000. Further, we continued to increase our average revenue per subscriber (ARPS), which grew to $13.14 for the quarter.

(editor's note.. that's an average of $3.28 per month. So how much are you paying for your webhosting?)

While EIG highlighted that monthly recurring revenue (MRR) retention rate remained at 99%, consistent with their MRR retention rate for the second quarter of 2013 and the third quarter of 2012, it is unknown what effect, if any, recent data center outages will have on that number in the year end report. The outages affected untold thousands of EIG’s clients. EIG has spent over $87 million on the sales and marketing budget so far this year.

A list of known EIG webhosting brands can be found here

 

Third Quarter Highlights 

  • Revenue increased 59% to $132.9 million compared to $83.4 million for the third quarter of 2012.
  • Adjusted EBITDA increased 36% to $50.3 million compared to $37.1 million for the third quarter of 2012.
  • Net loss was $27.0 million, or $0.28 per diluted share, compared to a net loss of $27.7 million, or $0.29 per diluted share, for the third quarter of 2012.
  • Unlevered free cash flow (UFCF) increased 48% to $43.1 million, compared to $29.2 million for the third quarter of 2012.
  • Total subscribers were approximately 3.440 million as of September 30, 2013, a sequential increase of approximately 70,000 from 3.370 million as of June 30, 2013, and a year-over-year increase of approximately 326,000 from 3.114 million as of September 30, 2012.
  • ARPS was $13.14 for the third quarter of 2013, representing a sequential increase of $0.13 from $13.01 for the second quarter of 2013, and a year-over-year increase of $0.19 from $12.95 for the third quarter of 2012.
  • Monthly recurring revenue (MRR) retention rate remained at 99%, consistent with our MRR retention rate for the second quarter of 2013 and the third quarter of 2012.

 

Recent Developments

The company completed its initial public offering in October 2013, pursuant to which it sold 21,051,000 shares of common stock at an offering price of $12.00 per share, raising gross proceeds of $252.6 million. On November 25, 2013, Endurance completed a refinancing of its bank debt. Using proceeds from its initial public offering, cash on hand and incremental first lien facilities, the company repaid its $315 million second lien term loan and secured a lower effective interest rate. Following the transaction, the company's outstanding bank debt is $1,050 million. As compared with the bifurcated term loan facility in place at September 30, 2013, the new single tranche of first lien debt is expected to lower the company's annualized term loan interest expense by over $35 million, based on the current loan balance and new interest rates. 

About EIG

Endurance International Group is a leading provider of cloud-based platform solutions designed to help small and medium-sized businesses succeed online.    Less than 20 years old, Endurance serves over 3.4 million subscribers through a family of brands that includes Bluehost, HostGator, Domain.com, FatCow, iPower and iPage. Endurance is headquartered in Burlington, Massachusetts, has a presence in Asia and the Americas, and employs approximately 2,500 people. Endurance provides a comprehensive suite of over 150 products and services that includes web presence and mobile sites, email and e-commerce solutions, as well as more advanced offerings, such as SEO services, scalable computing, security, storage and backup, online marketing and productivity solutions.

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