Web.com Reports Record Third Quarter 2012 Financial Results
Web.com Reports Record Third Quarter 2012 Financial Results
* Third quarter revenue and profitability exceed high end of guidance
* Added 18,000 net new subscribers
* Average Revenue Per User increased $0.15 in 3Q, to $13.49
* Customer attrition remains at record low level
* Launched process to re-price First Lien Credit Facility and lower cash
interest expense
JACKSONVILLE, Fla., Oct. 25, 2012 (GLOBE NEWSWIRE) -- Web.com Group, Inc.
(Nasdaq:WWWW), a leading provider of internet services and online marketing
solutions for small- and medium-sized businesses, today announced results for
the third quarter ended September 30, 2012.
"Web.com delivered another strong performance in the third quarter, with
revenue and profitability exceeding the high-end of our guidance," said David
Brown, Chairman and CEO of Web.com. "Our strategy of consistent net subscriber
growth, increasing ARPU across our three million subscribers, and delivering
best-in-class churn levels is driving improved revenue growth and significant
profitability and cash flow generation."
Brown added, "Web.com has executed at a high level since announcing the
acquisition of Network Solutions, and we believe we are in a position of
strength to re-price our First Lien Credit Facility. Our ability to do so is
expected to lead to annualized cash interest savings in the range of $8.5
million, which would further enhance Web.com's profitability and provide us
with increased resources to invest in sales and marketing and de-lever our
balance sheet."
Summary of Third Quarter 2012 Financial Results:
* Total revenue, calculated in accordance with U.S. generally accepted
accounting principles (GAAP), was $105.8 million for the third quarter of
2012, compared to $43.9 million for the third quarter of 2011. Non-GAAP
revenue, which adds back the impact of the fair value adjustment to
acquired deferred revenue, was $124.2 million for the third quarter of
2012, above the company's guidance range of $122 million to $124
million.
* Operating loss, calculated in accordance with GAAP, was $5.6 million for
the third quarter of 2012 and included a $19.0 million negative impact
related to the fair value adjustment to acquired deferred revenue and
deferred expense, and $1.2 million of restructuring charges and corporate
development expenses. For the third quarter of 2011, the company reported
a GAAP operating loss of $3.8 million, which included a $2.8 million
negative impact from the fair value adjustment to acquired deferred
revenue and deferred expense.
* GAAP net loss from continuing operations was $21.5 million, or ($0.45) per
diluted share, for the third quarter of 2012, and included the above
mentioned impact related to the fair value adjustment to acquired deferred
revenue and deferred expense, restructuring charges and corporate
development expenses, and an income tax benefit of $1.3 million. GAAP net
loss from continuing operations was $5.4 million, or ($0.19) per diluted
share, in the third quarter of 2011.
* Non-GAAP operating income was $35.2 million for the third quarter of 2012,
compared to $10.1 million for the third quarter of 2011 and representing a
non-GAAP operating margin of 28%.
* Non-GAAP net income from continuing operations was $20.8 million for the
third quarter of 2012, or $0.41 per diluted share, above the company's
guidance of $19.3 million to $20.4 million, or $0.38 to $0.40 per diluted
share. The Company had non-GAAP net income of $8.6 million, or $0.29 per
diluted share, for the third quarter of 2011.
* Adjusted EBITDA was $37.5 million for the third quarter of 2012, compared
to $10.8 million for the third quarter of 2011 and representing a record
30% adjusted EBITDA margin.
* The Company generated cash from operations of $20.1 million for the third
quarter of 2012 and $21.2 million, excluding the pay down of accrued
restructuring expenses and certain expenses associated with the recent
acquisitions. This compared to $3.7 million and $8.4 million, excluding
the pay down of accrued restructuring expenses, assumed compensation
liability and expenses associated with the recent acquisitions,
respectively, for the third quarter of 2011.
Third Quarter and Recent Business Highlights:
o Web.com's total net subscribers were approximately 2,991,000 at the end of
the third quarter of 2012, up approximately 18,000 from the end of the
second quarter.
o Web.com's average revenue per user (ARPU) was $13.49 for the third quarter
of 2012, representing a sequential increase of 1.1% from the second
quarter of 2012.
o Customer churn remained approximately 1% for the third quarter of 2012,
consistent with the previous record low level after including the
contribution from Network Solutions.
o Web.com used $14.5 million in cash to reduce its debt balance during the
quarter. Since closing the acquisition of Network Solutions, Web.com has
reduced its debt balance by more than $60 million as of the end of the
third quarter. The Company intends to continue using its strong cash flow
to reduce its debt balance.
o Web.com announced (http://ir.web.com) that it has begun a process to
re-price its First Lien Credit Facility, which totaled $590.5 million as
of September 30^th, 2012.
Conference Call Information
Management will host a conference call today, October 25, 2012, at 5:00 p.m.
(Eastern Time), to discuss Web.com's third quarter financial results, plans to
re-price its First Lien debt, and other matters related to the Company's
business and forward-looking guidance on selected financial metrics. A live
webcast of the call will be available at the "Investor Relations" page of
Web.com's website, http://ir.web.com. To access the call, dial 877-407-3982
(domestic) or 201-493-6780 (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 401642. 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- and medium-sized businesses (SMB's).
Web.com meets the needs of SMBs 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/.
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 measures 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. Web.com's 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 Web.com presents above, management
further sets forth its rationale as follows:
* Non-GAAP Revenue. Web.com excludes from non-GAAP revenue the impact of
the fair value adjustment to deferred revenue because we believe that
excluding such measures helps management and investors better understand
our revenue trends.
* Non-GAAP Operating Income. Web.com excludes from non-GAAP operating income
amortization of intangibles, fair value adjustment to deferred revenue and
deferred expense, restructuring charges, corporate development expenses,
stock-based compensation charges, and gains or losses from asset
sales. Management believes that excluding these items assists investors in
evaluating period-over-period changes in Web.com'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. Web.com
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 deferred expense, restructuring
charges, corporate development expenses, amortization of deferred
financing fees, stock-based compensation, gains or losses from asset sales
and includes cash income tax expense, because management believes that
excluding such measures helps investors better understand the Company's
operating activities.
* Adjusted EBITDA. Web.com excludes from Adjusted EBITDA depreciation
expense, amortization of intangibles, income tax, interest expense,
interest income, stock-based compensation, gains or losses from asset
sales, 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.
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 Web.com and because such
expense is not used by management to assess the core profitability of the
Company's business operations. Web.com 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. Web.com 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. Web.com 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 Web.com,
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
Web.com's historical operating results and comparisons to the Company's
competitors' operating results.
* Depreciation expense. Web.com incurs depreciation expense associated with
its fixed assets. Although the fixed assets generate revenue for Web.com,
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 Web.com's
historical operating results and comparisons to the Company's competitors'
operating results.
* Amortization of deferred financing fees. Web.com incurs amortization
expense related to deferred financing fees. This item is excluded because
Web.com 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 Web.com's
historical operating results and comparisons to the Company's competitors'
operating results.
* Restructuring charges. Web.com has recorded restructuring charges. Web.com
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 Web.com'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. Web.com 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 deferred expense. Web.com
has recorded a fair value adjustment to acquired deferred revenue and
deferred expense in accordance with ASC 805-10-65. Web.com 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 deferred expense therefore facilitates management's internal
comparisons to Web.com's historical operating results.
* Corporate development expenses. Web.com incurred expenses relating to the
acquisition and successful integration of acquisitions. Web.com 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.
* Gains or losses from asset sales. Web.com excludes the impact of asset
sales from its non-GAAP measures because the non-cash impact of this item
is not considered part of our ongoing operations.
Forward-Looking Statements
This press release includes certain "forward-looking statements" including,
without limitation, statements regarding expected growth in ARPU, expected
subscriber growth, expected strong cash flow and continued use of it to
reduce Web.com's debt balance, expected ability to reprice its First Lien
Credit Facility and expected annualized cash interest savings as a result of
any expected repricing, 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," "will," "expect," 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 Network Solutions business into Web.com, disruption created
by the Network Solutions acquisition and from integration efforts 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
business. 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 June 30,
2012, 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.
Web.com Group, Inc.
Consolidated Statements of Operations
(in thousands except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Revenue:
Subscription $ 102,279 $ 43,398 $ 287,451 $ 123,642
Professional services and other 3,474 505 8,762 1,983
Total revenue 105,753 43,903 296,213 125,625
Cost of revenue (excluding
depreciation and amortization
shown separately below):
Subscription 38,096 17,026 113,196 51,642
Professional services and other 2,099 335 5,407 1,062
Total cost of revenue 40,195 17,361 118,603 52,704
Gross profit 65,558 26,542 177,610 72,921
Operating expenses:
Sales and marketing 30,892 11,080 86,775 32,190
Research and development 7,883 3,264 26,049 10,202
General and administrative 11,417 11,207 38,439 23,908
Restructuring charges 1,171 85 2,524 330
Depreciation and amortization 19,816 4,696 59,228 14,213
Total operating expenses 71,179 30,332 213,015 80,843
Loss from operations (5,621) (3,790) (35,405) (7,922)
Other (expense) income:
Interest expense, net (17,166) (1,486) (52,121) (4,598)
Gain on sale of joint venture -- -- 5,156 --
Loss before income taxes from (22,787) (5,276) (82,370) (12,520)
continuing operations
Income tax benefit (expense) 1,285 (195) 12,031 (657)
Net loss from continuing (21,502) (5,471) (70,339) (13,177)
operations
Discontinued operations:
Gain from discontinued -- 75 -- 325
operations, net of tax
Income from discontinued -- 75 -- 325
operations, net of tax
Net loss $ (21,502) $ (5,396) $ (70,339) $ (12,852)
Basic earnings per share:
Loss from continuing operations $ (0.45) $ (0.19) $ (1.50) $ (0.48)
attributable per common share
Income from discontinued
operations attributable per $ -- $ -- $ -- $ 0.01
common share
Net loss per common share $ (0.45) $ (0.19) $ (1.50) $ (0.47)
Diluted earnings per share:
Loss from continuing operations $ (0.45) $ (0.19) $ (1.50) $ (0.48)
attributable per common share
Income from discontinued
operations attributable per $ -- $ -- $ -- $ 0.01
common share
Net loss per common share $ (0.45) $ (0.19) $ (1.50) $ (0.47)
Weighted-average number of
shares used in per share
amounts:
Basic 47,307 27,705 46,834 27,308
Diluted 47,307 27,705 46,834 27,308
Web.com Group, Inc.
Consolidated Balance Sheets
(in thousands except per share data)
September 30, December 31,
2012 2011
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 11,487 $ 13,364
Restricted investments 601 296
Accounts receivable, net of allowance $2,061 and 17,808 13,094
$1,560, respectively
Prepaid expenses 10,380 5,184
Deferred expenses 58,585 57,302
Deferred taxes 16,089 18,563
Deferred financing fees and other current assets 6,378 4,716
Total current assets 121,328 112,519
Restricted investments 710 714
Property and equipment, net 38,830 25,696
Deferred expenses 64,309 68,136
Goodwill 628,176 631,362
Intangible assets, net 487,025 539,979
Other assets 14,471 21,074
Total assets $ 1,354,849 $ 1,399,480
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 10,909 $ 4,931
Accrued expenses 12,391 15,953
Accrued compensation and benefits 12,658 15,956
Accrued restructuring costs and other reserves 3,307 5,687
Deferred revenue 182,830 142,157
Current portion of debt 15,302 4,182
Other liabilities 2,624 2,496
Total current liabilities 240,021 191,362
Deferred revenue 167,413 132,814
Long-term debt 666,902 714,703
Deferred tax liabilites 66,217 84,832
Other long-term liabilities 3,926 4,013
Total liabilities 1,144,479 1,127,724
Stockholders' equity
Common stock, $0.001 par value per share;
150,000,000 shares authorized; 49,100,570 and
47,359,304 shares issued and outstanding at 49 47
September 30, 2012 and December 31, 2011,
respectively
Additional paid-in capital 450,901 441,955
Accumulated other comprehensive income 5 --
Accumulated deficit (240,585) (170,246)
Total stockholders' equity 210,370 271,756
Total liabilities and stockholders' equity $ 1,354,849 $ 1,399,480
Web.com Group, Inc.
Reconciliation of GAAP to Non-GAAP Results
(in thousands except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Reconciliation of GAAP revenue
to non-GAAP revenue
GAAP revenue $ 105,753 $ 43,903 $ 296,213 $ 125,625
Fair value adjustment to 18,408 2,755 69,014 12,327
deferred revenue
Non-GAAP revenue $ 124,161 $ 46,658 $ 365,227 $ 137,952
Reconciliation of GAAP net loss
to non-GAAP net income
GAAP net loss $ (21,502) $ (5,396) $ (70,339) $ (12,852)
Amortization of intangibles 17,588 3,912 52,953 11,686
Loss on sale of assets -- 12 402 10
Stock based compensation 3,112 1,760 8,850 4,985
Income tax (benefit) expense (1,285) 195 (12,031) 657
Restructuring charges 1,171 85 2,524 330
Corporate development 16 5,281 660 5,294
Amortization of deferred 3,071 313 9,370 939
financing fees
Cash income tax expense (335) (325) (1,033) (473)
Fair value adjustment to 18,408 2,755 69,014 12,327
deferred revenue
Fair value adjustment to 552 45 1,880 202
deferred expense
Gain on sale of joint venture -- -- (5,156) --
Non-GAAP net income $ 20,796 $ 8,637 $ 57,094 $ 23,105
Reconciliation of GAAP basic
net loss per share to non-GAAP
basic net income per share
Basic GAAP net loss $ (0.45) $ (0.19) $ (1.50) $ (0.47)
Amortization of intangibles 0.38 0.13 1.14 0.43
Gain on sale of assets -- -- 0.01 --
Stock based compensation 0.07 0.06 0.19 0.18
Income tax (benefit) expense (0.03) -- (0.26) 0.02
Restructuring charges 0.02 0.01 0.05 0.01
Corporate development -- 0.19 0.01 0.19
Amortization of deferred 0.06 0.01 0.20 0.03
financing fees
Cash income tax expense (0.01) (0.01) (0.02) (0.02)
Fair value adjustment to 0.39 0.11 1.47 0.47
deferred revenue
Fair value adjustment to 0.01 -- 0.04 0.01
deferred expense
Gain on sale of joint venture -- -- (0.11) --
Basic Non-GAAP net income per $ 0.44 $ 0.31 $ 1.22 $ 0.85
share
Reconciliation of GAAP diluted
net loss per share to non-GAAP
diluted net income per share
Fully diluted shares:
Common stock 47,307 27,705 46,834 27,308
Diluted stock options 2,339 1,556 2,249 2,213
Diluted restricted stock 1,155 905 1,152 1,014
Total 50,801 30,166 50,235 30,535
Diluted GAAP net loss per share $ (0.45) $ (0.19) $ (1.50) $ (0.47)
Diluted equity 0.03 0.01 0.10 0.05
Amortization of intangibles 0.35 0.13 1.05 0.38
Gain on sale of assets -- -- 0.01 --
Stock based compensation 0.06 0.06 0.18 0.16
Income tax (benefit) expense (0.03) 0.01 (0.24) 0.02
Restructuring charges 0.02 -- 0.05 0.01
Corporate development -- 0.18 0.01 0.17
Amortization of deferred 0.06 0.01 0.19 0.03
financing fees
Cash income tax expense (0.01) (0.01) (0.02) (0.02)
Fair value adjustment to 0.37 0.09 1.37 0.42
deferred revenue
Fair value adjustment to 0.01 -- 0.04 0.01
deferred expense
Gain on sale of joint venture -- -- (0.10) --
Diluted Non-GAAP net income per $ 0.41 $ 0.29 $ 1.14 $ 0.76
share
Reconciliation of GAAP
operating loss to non-GAAP
operating income
GAAP operating loss $ (5,621) $ (3,790) $ (35,405) $ (7,922)
Amortization of intangibles 17,588 3,912 52,953 11,686
Loss on sale of assets -- 12 402 10
Stock based compensation 3,112 1,760 8,850 4,985
Restructuring charges 1,171 85 2,524 330
Corporate development 16 5,281 660 5,294
Fair value adjustment to 18,408 2,755 69,014 12,327
deferred revenue
Fair value adjustment to 552 45 1,880 202
deferred expense
Non-GAAP operating income $ 35,226 $ 10,060 $ 100,878 $ 26,912
Reconciliation of GAAP
operating margin to non-GAAP
operating margin
GAAP operating margin -5% -9% -12% -6%
Amortization of intangibles 13% 8% 14% 8%
Restructuring charges 1% 0% 1% 0%
Corporate development 0% 11% 0% 4%
Fair value adjustment to 16% 8% 23% 10%
deferred revenue
Fair value adjustment to 0% 0% 1% 0%
deferred expense
Stock based compensation 3% 4% 1% 4%
Non-GAAP operating margin 28% 22% 28% 20%
Reconciliation of GAAP
operating loss to adjusted
EBITDA
GAAP operating loss $ (5,621) $ (3,790) $ (35,405) $ (7,922)
Depreciation and amortization 19,816 4,696 59,228 14,213
Loss on sale of assets -- 12 402 10
Stock based compensation 3,112 1,760 8,850 4,985
Restructuring charges 1,171 85 2,524 330
Corporate development 16 5,281 660 5,294
Fair value adjustment to 18,408 2,755 69,014 12,327
deferred revenue
Fair value adjustment to 552 45 1,880 202
deferred expense
Adjusted EBITDA $ 37,454 $ 10,844 $ 107,153 $ 29,439
Reconciliation of GAAP
operating margin to adjusted
EBITDA margin
GAAP operating margin -5% -9% -12% -6%
Depreciation and amortization 15% 11% 15% 10%
Stock based compensation 3% 4% 2% 4%
Restructuring charges 1% 0% 1% 0%
Corporate development 0% 11% 0% 4%
Fair value adjustment to 16% 6% 22% 9%
deferred revenue
Fair value adjustment to 0% 0% 1% 0%
deferred expense
Adjusted EBITDA margin 30% 23% 29% 21%
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Stock based compensation
Subscription (cost of revenue) $ 322 $ 231 $ 965 $ 628
Sales and marketing 705 321 2,066 884
Research and development 500 231 1,488 667
General and administration 1,585 977 4,331 2,806
Total $ 3,112 $ 1,760 $ 8,850 $ 4,985
Web.com Group, Inc.
Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Cash flows from operating activities
Net loss $(21,502) $ (5,395) $(70,339) $(12,852)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Gain on sale of equity method -- -- (5,156) --
investment
Gain on sale of discontinued -- (75) -- (325)
operations, net of tax
Depreciation and amortization 19,816 4,696 59,228 14,213
Stock-based compensation expense 3,112 1,759 8,850 4,985
Deferred income tax (benefit) (1,627) (130) (13,084) 184
expense
Amortization of debt issuance 3,071 325 9,770 949
costs and other
Changes in operating assets and
liabilities:
Accounts receivable, net (2,365) (430) (4,707) 371
Prepaid expenses and other (1,416) 281 (6,156) (796)
assets
Deferred expense 2,888 395 2,512 817
Accounts payable 5,950 623 5,116 (160)
Accrued expenses and other (1,260) 1,935 (3,618) 496
liabilities
Accrued compensation and 453 (738) (3,332) (3,944)
benefits
Accrued restructuring (59) (267) (3,013) (2,010)
Deferred revenue 13,037 697 75,275 8,542
Net cash provided by operating 20,098 3,676 51,346 10,470
activities
Cash flows from investing
activities
Proceeds from sale of -- 75 -- 325
discontinued operations
Proceeds from sale of equity -- -- 7,197 --
method investment
Investment in intangible assets --
Purchase of property and (11,673) (915) (18,990) (3,598)
equipment
Other -- (130) -- 82
Net cash used in investing (11,673) (970) (11,793) (3,191)
activities
Cash flows from financing
activities
Stock issuance costs (11) (2) (11) (9)
Common stock repurchased (298) -- (3,497) (448)
Payment of debt obligations (14,500) (3,240) (42,500) (16,010)
Proceeds from exercise of stock 1,123 316 4,578 8,633
options and other
Net cash used in financing $(13,686) $ (2,926) $(41,430) $ (7,834)
activities
Net decrease in cash and cash (5,261) (220) (1,877) (555)
equivalents
Cash and cash equivalents, 16,748 15,972 13,364 16,307
beginning of period
Cash and cash equivalents, end $ 11,487 $ 15,752 $ 11,487 $ 15,752
of period
Supplemental cash flow
information:
Interest paid $ 14,216 $ 1,232 $ 42,690 $ 3,762
Income tax paid $ 95 $ 152 $ 196 $ 927
CONTACT: Web.com
Susan Datz Edelman
Director, Investor Relations and Corporate Communications
904-680-6909
sedelman@web.com
ICR for Web.com
Brian Denyeau
646-277-1251
Brian.denyeau@icrinc.com
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