• GAAP revenue of $295.2 million
  • Net loss of $40.3 million
  • Adjusted EBITDA of $93.8 million
  • Cash flow from operations of $46.4 million
  • Free cash flow of $31.9 million 
  • Total subscribers on platform were approximately 5.122 million at September 30, 2017

BURLINGTON, Mass., Oct. 31, 2017 (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 third quarter ended September 30, 2017.

"I am pleased to report third quarter results that reflect solid performance in both web presence and email marketing," commented Jeffrey H. Fox, president and chief executive officer of Endurance International Group.  "Our 2017 plan to deliver profitable growth while focusing on higher lifetime revenue customers has been demonstrated in our year to date performance.  Our priorities for the rest of the year are to continue to simplify our operations and to invest in initiatives that we believe will drive future growth and long-term value for our customers."

Third Quarter 2017 Financial Highlights
  • Revenue for the third quarter of 2017 was $295.2 million, an increase of 1 percent compared to $291.2 million for the third quarter of 2016. Revenue for the third quarter of 2017 includes a contribution of $101.5 million from Constant Contact, as compared to a contribution of $95.9 million for the third quarter of 2016.
  • Net loss for the third quarter of 2017 was $40.3 million compared to net loss of $29.8 million for the third quarter of 2016.
  • Net loss attributable to Endurance International Group Holdings, Inc. for the third quarter of 2017 was $40.3 million, or $(0.29) per diluted share, compared to net loss of $31.7 million, or $(0.24) per diluted share, for the third quarter of 2016.
  • Adjusted EBITDA for the third quarter of 2017 was $93.8 million, an increase of 10 percent compared to $85.2 million for the third quarter of 2016. Third quarter 2017 adjusted EBITDA excludes the impact of an impairment of $14.4 million related to the reduction in value of certain intangibles, primarily associated with domain name assets, and an additional $8.0 million of accrued expense reserved in connection with ongoing discussions with the staff of the SEC to resolve potential claims arising from the SEC investigations initiated against Endurance and Constant Contact in December 2015.
  • Cash flow from operations for the third quarter of 2017 was $46.4 million, an increase of 28 percent compared to $36.2 million for the third quarter of 2016. 
  • Free cash flow, defined as cash flow from operations less capital expenditures and capital lease obligations, for the third quarter of 2017 was $31.9 million, an increase of 21 percent compared to $26.4 million for the third quarter of 2016. 

Third Quarter Operating Highlights
  • Total subscribers on platform at September 30, 2017 were approximately 5.122 million, compared to approximately 5.439 million subscribers at September 30, 2016 and 5.217 million subscribers at June 30, 2017.  See "Total Subscribers" below. 
  • Average revenue per subscriber, or ARPS, for the third quarter of 2017 was $19.03, compared to $17.78 for the third quarter of 2016 and $18.52 for the second quarter of 2017.  Excluding the impact of Constant Contact, ARPS for the third quarter of 2017 was $13.91, compared to $13.25 for the third quarter of 2016 and $13.62 for the second quarter of 2017.  See "Average Revenue Per Subscriber" below.

Fiscal 2017 Guidance

The company is increasing its adjusted EBITDA expectations for the year by approximately $8 million from the midpoint of prior guidance.  As of the date of this release, October 31, 2017, for the full year ending December 31, 2017, the company now expects:
  2016 Actual as Reported Prior Guidance (as of August 1,  2017)* Guidance (as of October 31, 2017)*
GAAP revenue $1.111 billion 5 - 5.5% increase 5 - 5.5% increase
Adjusted EBITDA $288 million 14 - 16% increase ~18% increase
Free cash flow $112 million ~25% increase ~25% increase
       

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.

* Percentage increases shown in the "Prior Guidance" and "Guidance" columns represent percentage increases over 2016 figures shown in the "Actual as Reported" column.

Conference Call and Webcast Information

Endurance International Group's third quarter 2017 financial results teleconference and webcast is scheduled to begin at 8:00 a.m. EDT on Tuesday, October 31, 2017. 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, SEC investigations reserve, (gain) loss of unconsolidated entities, and impairment of other long-lived assets. 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.  There were no adjustments for the third quarter of 2017.

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.  We believe ARPS is an indicator of our ability to optimize our mix of products and services and pricing and sell products and services to new and existing subscribers.  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 updated financial guidance for fiscal year 2017, our expectations regarding our planned investment initiatives,  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 or strategies 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 updated financial guidance may differ from expectations; that our planned initiatives will not result in a positive return on investment; that we will be unable to successfully enhance the customer product and service experience and improve customer satisfaction and retention through operational and infrastructure improvements; that we will encounter difficulties or delays in our efforts to build brand awareness of our key brands;  that we will be unable to drive revenue growth by increasing ARPS through cross-selling and other product-related initiatives; 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; system or Internet failures; our inability to maintain or improve our competitive position or market share; and other risks set forth under the caption "Risk Factors" in our Quarterly Report on Form 10-Q for the period ended June 30, 2017 filed with the SEC on August 4, 2017 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) (em)Powers millions of small businesses worldwide with products and technology to vitalize their online web presence, email marketing, mobile business solutions, and more. The Endurance family of brands includes: Constant Contact, Bluehost, HostGator, iPage, Domain.com, BigRock, SiteBuilder and SinglePlatform, among others. Headquartered in Burlington, Massachusetts, Endurance employs over 3,600 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. 
 
Endurance International Group Holdings, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share amounts)
 
  December 31, 2016   September 30, 2017
Assets      
Current assets:      
Cash and cash equivalents $ 53,596     $ 70,521  
Restricted cash 3,302     2,647  
Accounts receivable 13,088     13,984  
Prepaid domain name registry fees 55,444     55,742  
Prepaid expenses and other current assets 28,678     29,170  
Total current assets 154,108     172,064  
Property and equipment—net 95,272     88,557  
Goodwill 1,859,909     1,862,489  
Other intangible assets—net 612,057     496,036  
Deferred financing costs 4,932     3,645  
Investments 15,857     15,230  
Prepaid domain name registry fees, net of current portion 10,429     10,874  
Other assets 3,710     2,204  
Total assets $ 2,756,274     $ 2,651,099  
Liabilities, redeemable non-controlling interest and stockholders' equity      
Current liabilities:      
Accounts payable $ 16,074     $ 13,397  
Accrued expenses 67,722     75,573  
Accrued interest 27,246     14,546  
Deferred revenue 355,190     368,613  
Current portion of notes payable 35,700     33,945  
Current portion of capital lease obligations 6,690     3,166  
Deferred consideration—short term 5,273     4,319  
Other current liabilities 2,890     3,605  
Total current liabilities 516,785     517,164  
Long-term deferred revenue 89,200     90,904  
Notes payable—long term, net of original issue discounts of $25,853 and $26,880 and deferred financing costs of $43,342 and $39,194, respectively 1,951,280     1,920,258  
Capital lease obligations—long term 512     1,485  
Deferred tax liability 39,943     46,203  
Deferred consideration—long term 7,444     3,493  
Other liabilities 8,974     9,889  
Total liabilities 2,614,138     2,589,396  
Redeemable non-controlling interest 17,753      
Commitments and contingencies      
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; 134,793,857 and 138,074,911 shares issued at December 31, 2016 and September 30, 2017, respectively; 134,793,857 and 138,074,911 outstanding at December 31, 2016 and September 30, 2017, respectively 14     14  
Additional paid-in capital 868,228     917,655  
Accumulated other comprehensive loss (3,666 )   (991 )
Accumulated deficit (740,193 )   (854,975 )
Total stockholders' equity 124,383     61,703  
Total liabilities, redeemable non-controlling interest and stockholders' equity $ 2,756,274     $ 2,651,099  
               

Endurance International Group Holdings, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
(in thousands, except share and per share amounts)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
  2016   2017   2016   2017
Revenue $ 291,193     $ 295,222     $ 819,019     $ 882,617  
Cost of revenue 149,427     158,865     438,980     454,197  
Gross profit 141,766     136,357     380,039     428,420  
Operating expense:              
Sales and marketing 75,341     66,276     234,944     211,154  
Engineering and development 23,988     19,882     67,930     60,393  
General and administrative 33,399     51,269     108,508     130,929  
Transaction expenses 159         32,257     773  
Total operating expense 132,887     137,427     443,639     403,249  
Income (loss) from operations 8,879     (1,070 )   (63,600 )   25,171  
Other income (expense):              
Other income (expense), net (4,845 )   (600 )   6,565     (600 )
Interest income 162     203     438     506  
Interest expense (41,208 )   (35,848 )   (112,573 )   (121,022 )
Total other expense—net (45,891 )   (36,245 )   (105,570 )   (121,116 )
Loss before income taxes and equity earnings of unconsolidated entities (37,012 )   (37,315 )   (169,170 )   (95,945 )
Income tax expense (benefit) (7,387 )   2,982     (121,220 )   11,384  
Loss before equity earnings of unconsolidated entities (29,625 )   (40,297 )   (47,950 )   (107,329 )
Equity loss (income) of unconsolidated entities, net of tax 173     (33 )   1,197     (72 )
Net loss $ (29,798 )   $ (40,264 )   $ (49,147 )   $ (107,257 )
Net (loss) income attributable to non-controlling interest (1,206 )       (14,326 )   277  
Excess accretion of non-controlling interest 3,145         3,145     7,247  
Total net income (loss) attributable to non-controlling interest 1,939         (11,181 )   7,524  
Net loss attributable to Endurance International Group Holdings, Inc. $ (31,737 )   $ (40,264 )   $ (37,966 )   $ (114,781 )
Comprehensive income (loss):              
Foreign currency translation adjustments 112     1,070     994     2,984  
Unrealized loss on cash flow hedge, net of taxes of $(65) and $48, and $(889) and $(182) for the three and nine months ended September 30, 2016 and 2017, respectively 72     83     (1,866 )   (309 )
Total comprehensive loss $ (31,553 )   $ (39,111 )   $ (38,838 )   $ (112,106 )
Basic net loss per share attributable to Endurance International Group Holdings, Inc. $ (0.24 )   $ (0.29 )   $ (0.29 )   $ (0.84 )
Diluted net loss per share attributable to Endurance International Group Holdings, Inc. $ (0.24 )   $ (0.29 )   $ (0.29 )   $ (0.84 )
Weighted-average common shares used in computing net loss per share attributable to Endurance International Group Holdings, Inc.:              
Basic  133,550,168     137,793,609     133,038,542     136,688,115  
Diluted 133,550,168     137,793,609     133,038,542     136,688,115  
                       

Endurance International Group Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
  2016   2017   2016   2017
Cash flows from operating activities:              
Net loss $ (29,798 )   $ (40,264 )   $ (49,147 )   $ (107,257 )
Adjustments to reconcile net loss to net cash provided by operating activities:              
Depreciation of property and equipment 17,010     13,571     46,942     40,733  
Amortization of other intangible assets 37,982     35,347     105,679     104,554  
Impairment of long lived assets     13,848     8,285     13,848  
Impairment of investments     600         600  
Amortization of deferred financing costs 1,760     1,873     4,322     5,403  
Amortization of net present value of deferred consideration 844     127     2,426     504  
Dividend from minority interest     50     50     100  
Amortization of original issue discounts 844     1,059     2,116     2,791  
Stock-based compensation 14,806     19,580     48,218     48,749  
Deferred tax (benefit) expense (7,085 )   2,096     (124,547 )   6,442  
Loss (gain) on sale of assets 57     (189 )   (168 )   (317 )
Loss (gain) from unconsolidated entities 4,845     (33 )   (6,565 )   (72 )
Loss of unconsolidated entities 173         1,197      
Gain from change in deferred consideration (54 )       (33 )    
Financing costs expensed             5,487  
Loss on early extinguishment of debt             992  
Changes in operating assets and liabilities, net of acquisitions:              
Accounts receivable (170 )   (2,231 )   1,376     (872 )
Prepaid expenses and other current assets 5,680     833     (9,206 )   (510 )
Accounts payable and accrued expenses (14,223 )   1,695     12,294     (7,309 )
Deferred revenue 3,518     (1,518 )   58,565     15,000  
Net cash provided by operating activities 36,189     46,444     101,804     128,866  
Cash flows from investing activities:              
Businesses acquired in purchase transactions, net of cash acquired 10,255         (889,634 )    
Cash paid for minority investment         (5,600 )    
Purchases of property and equipment (8,356 )   (12,800 )   (29,317 )   (32,095 )
Proceeds from sale of assets (10 )   5     242     292  
Purchases of intangible assets     (286 )   (27 )   (1,966 )
Deposits (withdrawals) of principal balances in restricted cash accounts 30     755     (738 )   655  
Net cash provided by (used in) investing activities 1,919     (12,326 )   (925,074 )   (33,114 )
Cash flows from financing activities:              
Proceeds from issuance of term loan and notes, net of original issue discounts         1,056,178     1,693,007  
Repayments of term loans (8,925 )   (18,486 )   (42,775 )   (1,733,147 )
Proceeds from borrowing of revolver 33,500         49,500      
Repayment of revolver         (83,000 )    
Payment of financing costs (834 )   (244 )   (52,561 )   (6,304 )
Payment of deferred consideration (42,373 )       (43,080 )   (5,408 )
Payment of redeemable non-controlling interest (33,425 )   (25,000 )   (33,425 )   (25,000 )
Principal payments on capital lease obligations (1,476 )   (1,771 )   (4,372 )   (5,679 )
Capital investment from minority partner 1,776         2,776      
Proceeds from exercise of stock options 976     416     2,304     1,548  
Net cash (used in) provided by financing activities (50,781 )   (45,085 )   851,545     (80,983 )
Net effect of exchange rate on cash and cash equivalents 229     79     1,843     2,156  
Net increase (decrease) in cash and cash equivalents (12,444 )   (10,888 )   30,118     16,925  
Cash and cash equivalents:              
Beginning of period 75,592     81,409     33,030     53,596  
End of period $ 63,148     $ 70,521     $ 63,148     $ 70,521  
Supplemental cash flow information:              
Interest paid $ 47,010     $ 38,154     $ 91,181     $ 118,276  
Income taxes paid $ 951     $ 1,499     $ 3,399     $ 3,958  
                               
                               

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 September 30,   Nine Months Ended September 30,
  2016   2017   2016   2017
Net income (loss) $ (29,798 )   $ (40,264 )   $ (49,147 )   $ (107,257 )
Interest expense, net (1) 41,046     35,645     112,135     120,516  
Income tax expense (benefit) (7,387 )   2,982     (121,220 )   11,384  
Depreciation 17,010     13,571     46,942     40,733  
Amortization of other intangible assets 37,982     35,347     105,679     104,554  
Stock-based compensation 14,806     19,580     48,218     48,749  
Restructuring expenses 6,377     4,488     23,642     14,584  
Transaction expenses and charges 159         32,257     773  
SEC investigations reserve     8,000         8,000  
Loss (gain) of unconsolidated entities (2) 5,018     (33 )   (5,368 )   (72 )
Impairment of other long-lived assets (3)     14,448     8,285     14,448  
Adjusted EBITDA $ 85,213     $ 93,764     $ 201,423     $ 256,412  
                               

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income. For the nine months ended September 30, 2017, it also includes $6.5 million of deferred financing costs and OID immediately expensed upon refinancing of our term loan in June 2017.

(2) The loss (gain) of unconsolidated entities is reported on a net basis for the three and nine months ended September 30, 2016. The three months ended September 30, 2016 includes a loss of $4.8 million on our investment in AppMachine. This loss was generated on July 27, 2016, when we increased our ownership stake in AppMachine from 40.0% to 100.0%, which required a revaluation of our existing investment to its implied fair value. The three months ended September 30, 2016 also includes a net loss of $0.2 million from our proportionate share of net losses from unconsolidated entities. The nine months ended September 30, 2016 includes a gain of $11.4 million on our investment in WZ UK Ltd.  This gain was generated on January 6, 2016, when we increased our ownership stake in WZ UK Ltd. from 49.0% to 57.5%, which required a revaluation of our existing investment to its implied fair value.  This $11.4 million gain was partially offset by our proportionate shares of net losses from unconsolidated entities of $1.2 million.

(3) The impairment of other long-lived assets for the three and nine months ended September 30, 2016 includes $6.3 million of impairment charges related to developed and in-process technology related to the Webzai acquisition, and $2.0 million of internally developed software that was abandoned.  The impairment of other long-lived assets for the three and nine months ended September 30, 3017 includes $13.8 million related to certain domain name intangible assets, and $0.6 million to write off a debt investment in a privately held entity.

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 September 30,   Nine Months Ended September 30,
  2016   2017   2016   2017
Cash flow from operations $ 36,189     $ 46,444     $ 101,804     $ 128,866  
Less:              
Capital expenditures and capital lease obligations (1) (9,832 )   (14,571 )   (33,689 )   (37,774 )
Free cash flow $ 26,357     $ 31,873     $ 68,115     $ 91,092  
                               

(1) Capital expenditures during the three and nine months ended September 30, 2016 includes $1.5 million and $4.4 million, respectively, of principal payments under a two year capital lease for software. Capital expenditures during the three and nine months ended September 30, 2017 includes $1.8 million and $5.7 million, respectively, of principal payments under a three year capital lease for software. The remaining balance on the capital lease is $4.7 million as of September 30, 2017.

Average Revenue Per Subscriber - Calculation and Segment Detail

We present our financial results in two segments.  Our web presence segment is our historical business before the acquisition of Constant Contact, and includes primarily our web hosting products, domains, website builders and related add-on products.  Our email marketing segment consists of the Constant Contact business, including email marketing, event management, survey tools and the SinglePlatform digital storefront service.

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 September 30,   Nine Months Ended September 30,
    2016   2017   2016   2017
Consolidated revenue   $ 291,193     $ 295,222     $ 819,019     $ 882,617  
Consolidated total subscribers   5,439     5,122     5,439     5,122  
Consolidated average subscribers for the period   5,460     5,170     5,296     5,247  
Consolidated average revenue per subscriber (ARPS)   $ 17.78     $ 19.03     $ 17.18     $ 18.69  
                 
Web presence revenue   $ 195,275     $ 193,696     $ 589,364     $ 584,217  
Web presence subscribers   4,893     4,599     4,893     4,599  
Web presence average subscribers for the period   4,911     4,643     4,821     4,714  
Web presence average revenue per subscriber (ARPS)   $ 13.25     $ 13.91     $ 13.58     $ 13.77  
                 
Email marketing revenue   $ 95,918     $ 101,526     $ 229,655     $ 298,400  
Email marketing subscribers   546     523     546     523  
Email marketing average subscribers for the period   549     527     475     533  
Email marketing average revenue per subscriber (ARPS)   $ 58.27     $ 64.26     $ 53.75     $ 62.16  
                                 
                                 

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 September 30, 2016   Three Months Ended September 30, 2017
  Web presence   Email marketing   Total   Web presence   Email marketing   Total
Revenue $ 195,275     $ 95,918     $ 291,193     $ 193,696     $ 101,526     $ 295,222  
Gross profit 89,059     52,707     141,766     71,071     65,286     136,357  
                       
Net income (loss) $ (19,886 )   $ (9,912 )   $ (29,798 )   $ (42,466 )   $ 2,202     $ (40,264 )
Interest expense, net (1) 18,244     22,802     41,046     15,131     20,514     35,645  
Income tax expense (benefit) (1,435 )   (5,952 )   (7,387 )   1,659     1,323     2,982  
Depreciation 9,173     7,837     17,010     10,338     3,233     13,571  
Amortization of other intangible assets 19,729     18,253     37,982     16,577     18,770     35,347  
Stock-based compensation 12,703     2,103     14,806     17,912     1,668     19,580  
Restructuring expenses 541     5,836     6,377     3,806     682     4,488  
Transaction expenses and charges 159         159              
SEC investigations reserve             5,249     2,751     8,000  
(Gain) loss of unconsolidated entities (2) 5,018         5,018     (33 )       (33 )
Impairment of other long-lived assets (3)             14,448         14,448  
Adjusted EBITDA $ 44,246     $ 40,967     $ 85,213     $ 42,621     $ 51,143     $ 93,764  
                                               

  Nine Months Ended September 30, 2016   Nine Months Ended September 30, 2017
  Web presence   Email marketing   Total   Web presence   Email marketing   Total
Revenue $ 589,364     $ 229,655     $ 819,019     $ 584,217     $ 298,400     $ 882,617  
Gross profit 265,610     114,429     380,039     240,239     188,181     428,420  
                           
Net income (loss) $ 2,787     $ (51,934 )   $ (49,147 )   $ (99,232 )   $ (8,025 )   $ (107,257 )
Interest expense, net (1) 53,337     58,798     112,135     52,304     68,212     120,516  
Income tax expense (benefit) (90,033 )   (31,187 )   (121,220 )   16,203     (4,819 )   11,384  
Depreciation 27,248     19,694     46,942     30,101     10,632     40,733  
Amortization of other intangible assets 59,252     46,427     105,679     48,857     55,697     104,554  
Stock-based compensation 37,778     10,440     48,218     43,357     5,392     48,749  
Restructuring expenses 1,501     22,141     23,642     9,842     4,742     14,584  
Transaction expenses and charges 31,273     984     32,257         773     773  
SEC investigations reserve             5,249     2,751     8,000  
(Gain) loss of unconsolidated entities (2) (5,368 )       (5,368 )   (72 )       (72 )
Impairment of other long-lived assets (3) 8,285         8,285     14,448         14,448  
Adjusted EBITDA $ 126,060     $ 75,363     $ 201,423     $ 121,057     $ 135,355     $ 256,412  
                                               

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income. For the nine months ended September 30, 2017, it also includes $6.5 million of deferred financing costs and original issuance discounts immediately expensed upon refinancing of our term loan in June 2017.

(2) The loss (gain) of unconsolidated entities is reported on a net basis for the three and nine months ended September 30, 2016. The three months ended September 30, 2016 includes a loss of $4.8 million on our investment in AppMachine. This loss was generated on July 27, 2016, when we increased our ownership stake in AppMachine from 40.0% to 100.0%, which required a revaluation of our existing investment to its implied fair value. The three months ended September 30, 2016 also includes a net loss of $0.2 million from our proportionate share of net losses from unconsolidated entities. The nine months ended September 30, 2016 includes a gain of $11.4 million on our investment in WZ UK Ltd.  This gain was generated on January 6, 2016, when we increased our ownership stake in WZ UK Ltd. from 49.0% to 57.5%, which required a revaluation of our existing investment to its implied fair value.  This $11.4 million gain was partially offset by our proportionate shares of net losses from unconsolidated entities of $1.2 million.

(3) The impairment of other long-lived assets for the three and nine months ended September 30, 2016 includes $6.3 million of impairment charges related to developed and in-process technology related to the Webzai acquisition, and $2.0 million of internally developed software that was abandoned.  The impairment of other long-lived assets for the three and nine months ended September 30, 3017 includes $13.8 million related to certain domain name intangible assets, and $0.6 million to write off a debt investment in a privately held entity.

GAAP to Non-GAAP Reconciliation of Fiscal Year 2017 Guidance (as of October 31, 2017) - Adjusted EBITDA

The following table reflects the reconciliation of fiscal year 2017 estimated net loss calculated in accordance with GAAP to fiscal year 2017 guidance for adjusted EBITDA (i.e. assuming an increase of approximately 18% from 2016 adjusted EBITDA as reported). All figures shown are approximate.
($ in millions) Twelve Months Ending December 31, 2017
Estimated net loss $ (121 )    
Estimated interest expense (net) 156      
Estimated income tax expense (benefit) 12      
Estimated depreciation 55      
Estimated amortization of acquired intangible assets 139      
Estimated stock-based compensation 60      
Estimated restructuring expenses 16      
Estimated transaction expenses and charges 1      
Estimated SEC investigations reserve 8      
Estimated (gain) loss of unconsolidated entities -      
Estimated impairment of other long-lived assets 14      
Adjusted EBITDA guidance $ 340  

GAAP to Non-GAAP Reconciliation of Fiscal Year 2017 Guidance (as of October 31, 2017) - Free Cash Flow

The following table reflects the reconciliation of fiscal year 2017 estimated cash flow from operations calculated in accordance with GAAP to fiscal year 2017 guidance for free cash flow. All figures shown are approximate.
($ in millions) Twelve Months Ending December 31, 2017
Estimated cash flow from operations $ 190      
Estimated capital expenditures and capital lease obligations (50 )    
Free cash flow guidance $ 140  
       

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

Press Contact:Kristen AndrewsEndurance International Group(781) 482-5809press@endurance.com