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-sizedbusinesses, 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:

  oWeb.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.
    
  oWeb.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.
    
  oCustomer churn remained approximately 1% for the third quarter of 2012,
    consistent with the previous record low level after including the
    contribution from Network Solutions.
    
  oWeb.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.
    
  oWeb.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-sizedbusinesses (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
atwww.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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