EIGI - Endurance International Group Reports 2019 Second Quarter Results

August, 01 2019 07:05 AM Endurance International Group Holdings Inc.

GAAP revenue of $278.2 million
Net loss of $26.2 million
Adjusted EBITDA of $76.3 million
Cash flow from operations of $59.7 million
Free cash flow of $47.6 million
Total subscribers on platform were approximately 4.769 million at June 30, 2019

BURLINGTON, Mass., Aug. 01, 2019 (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 second quarter ended June 30, 2019.

“We are pleased with our progress simplifying our operations and executing our 2019 plans across the company,” commented Jeffrey H. Fox, president and chief executive officer of Endurance International Group. “The team is focused on delivering increasing solution value to the customers of our two scale businesses, email marketing and web presence. We are pleased with the progress in our net customer trends and remain focused on executing our transition to revenue growth in the second half of 2019.”

Second Quarter 2019 Financial Highlights

Revenue for the second quarter of 2019 was $278.2 million, a decrease of 3.3 percent compared to $287.8 million for the second quarter of 2018.
Net loss for the second quarter of 2019 was $26.2 million, or $(0.18) per diluted share, compared to net income of $0.6 million, or $0.00 per diluted share, for the second quarter of 2018.
Adjusted EBITDA for the second quarter of 2019 was $76.3 million, a decrease of 10.2 percent compared to $85.0 million for the second quarter of 2018.
Cash flow from operations for the second quarter of 2019 was $59.7 million, an increase of 99.7 percent compared to $29.9 million for the second quarter of 2018.
Free cash flow, defined as cash flow from operations less capital expenditures and financed equipment obligations, for the second quarter of 2019 was $47.6 million, an increase of 137.2 percent compared to $20.1 million for the second quarter of 2018.

Second Quarter Operating Highlights

Total subscribers on platform at June 30, 2019 were approximately 4.769 million, compared to approximately 4.918 million subscribers at June 30, 2018 and approximately 4.802 million subscribers at December 31, 2018. See “Total Subscribers” below.
Average revenue per subscriber, or ARPS, for the second quarter of 2019 was $19.42, compared to $19.32 for the second quarter of 2018 and $19.50 for the fourth quarter of 2018. See “Average Revenue Per Subscriber” below.

Fiscal 2019 Guidance

For the full year ending December 31, 2019, and as of the date of this release, August 1, 2019, the Company continues to expect:

2018 Actual
as Reported

Guidance
(as of August 1, 2019)

GAAP revenue

$1.145 billion

$1.120 to $1.140 billion

Adjusted EBITDA

$338 million

$300 to $320 million

Free cash flow

$129 million

$110 to $120 million

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.

First and Second Quarter 2018 Income Tax Expense Revision

As originally disclosed in third quarter of 2018, the Company revised its deferred income tax provision for the first and second quarter of 2018 to reflect a revision that favorably impacted net income (loss) for these periods. This revision did not impact the previously reported figures for Adjusted EBITDA, Cash Flow from Operations or Free Cash Flow.

Conference Call and Webcast Information

Endurance International Group’s second quarter 2019 financial results teleconference and webcast is scheduled to begin at 8:00 a.m. EDT on Thursday, August 1, 2019. 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, (gain) loss of unconsolidated entities, impairment of other long-lived assets, SEC investigations reserve, and shareholder litigation reserve. 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 financed equipment 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 financed equipment 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. In the second quarter of 2019, these adjustments had a negligible impact on our total subscriber count.

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. 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 addressing or reflecting our expectation of a transition back to revenue growth in the second half of 2019, our financial guidance for fiscal year 2019, the expected outcome of our investment and operational plans, including our focus on simplifying our business and delivering increased customer value, and our expectations of future growth and 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,” "anticipates," “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, strategies or prospects 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 financial guidance or our actual financial results may differ from expectations; the possibility that we may not be able to execute our investment or operational plans or that these plans will not result in the anticipated benefits to our business; the possibility 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; data breaches; system or Internet failures; our inability to maintain or improve our competitive position or market share; and other risks and uncertainties discussed in our filings with the SEC, including those set forth under the caption “Risk Factors” in our Annual Report on Form 10-K for the period ended December 31, 2018 filed with the SEC on February 21, 2019 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) helps millions of small businesses worldwide with products and technology to enhance their online web presence, email marketing, business solutions, and more. The Endurance family of brands includes: Constant Contact, Bluehost, HostGator and Domain.com, among others. Headquartered in Burlington, Massachusetts, Endurance employs over 3,800 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.

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

Press Contact:
Kristen Andrews
Endurance International Group
(781) 418-6716
press@endurance.com

Endurance International Group Holdings, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)


December 31, 2018

June 30, 2019
Assets


(unaudited)
Current assets:



Cash and cash equivalents
$
88,644


$
90,818

Restricted cash
1,932


1,832

Accounts receivable
12,205


12,989

Prepaid domain name registry fees
56,779


57,326

Prepaid commissions
41,458


41,704

Prepaid and refundable taxes
7,235


6,517

Prepaid expenses and other current assets
27,855


26,411

Total current assets
236,108


237,597

Property and equipment—net
92,275


88,700

Operating lease right-of-use assets
—


104,210

Goodwill
1,849,065


1,848,949

Other intangible assets—net
352,516


292,191

Deferred financing costs—net
2,656


2,221

Investments
15,000


15,000

Prepaid domain name registry fees, net of current portion
11,207


11,281

Prepaid commissions, net of current portion
42,472


45,160

Other assets
5,208


2,778

Total assets
$
2,606,507


$
2,648,087

Liabilities and stockholders’ equity



Current liabilities:



Accounts payable
$
12,449


$
14,933

Accrued expenses
79,279


64,774

Accrued taxes
2,498


2,418

Accrued interest
25,259


24,483

Deferred revenue
371,758


376,046

Operating lease liabilities—short term
—


22,483

Current portion of notes payable
31,606


31,606

Current portion of financed equipment
8,379


4,583

Deferred consideration—short term
2,425


1,408

Other current liabilities
3,147


2,319

Total current liabilities
536,800


545,053

Long-term deferred revenue
96,140


99,249

Operating lease liabilities—long term
—


90,989

Notes payable—long term, net of original issue discounts of $21,349 and $19,151 and deferred financing costs of $31,992 and $28,919, respectively
1,770,055


1,725,326

Deferred tax liability
16,457


18,785

Deferred consideration—long term
1,364


—

Other liabilities
11,237


6,460

Total liabilities
2,432,053


2,485,862

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; 143,444,515 and 145,741,251 shares issued at December 31, 2018 and June 30, 2019, respectively; 143,444,178 and 145,741,251 outstanding at December 31, 2018 and June 30, 2019, respectively
14


14

Additional paid-in capital
961,235


979,626

Accumulated other comprehensive loss
(3,211
)

(4,115
)
Accumulated deficit
(783,584
)

(813,300
)
Total stockholders’ equity
174,454


162,225

Total liabilities and stockholders’ equity
$
2,606,507


$
2,648,087

Endurance International Group Holdings, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(unaudited)
(in thousands, except share and per share amounts)


Three Months Ended June 30,

Six Months Ended June 30,

2018

2019

2018

2019
Revenue
$
287,770


$
278,204


$
579,126


$
558,887

Cost of revenue
130,746


139,587


264,652


263,441

Gross profit
157,024


138,617


314,474


295,446

Operating expense:







Sales and marketing
66,546


65,490


133,902


132,078

Engineering and development
21,959


25,348


41,876


49,042

General and administrative
30,744


31,124


69,519


62,517

Total operating expense
119,249


121,962


245,297


243,637

Income from operations
37,775


16,655


69,177


51,809

Other income (expense):







Interest income
227


314


431


605

Interest expense
(38,346
)

(37,037
)

(74,396
)

(74,251
)
Total other expense—net
(38,119
)

(36,723
)

(73,965
)

(73,646
)
Loss before income taxes and equity earnings of unconsolidated entities
(344
)

(20,068
)

(4,788
)

(21,837
)
Income tax (benefit) expense
(946
)

6,160


(2,889
)

7,879

Income (loss) before equity earnings of unconsolidated entities
602


(26,228
)

(1,899
)

(29,716
)
Equity (income) loss of unconsolidated entities, net of tax
(25
)

—


2


—

Net income (loss)
$
627


$
(26,228
)

$
(1,901
)

$
(29,716
)
Comprehensive income (loss):







Foreign currency translation adjustments
(2,425
)

348


(1,845
)

(53
)
Unrealized gain (loss) on cash flow hedge, net of tax (expense) benefit of ($45) and ($370) for the three and six months ended June 30, 2018, respectively, and ($35) and $269 for the three and six months ended June 30, 2019, respectively
144


110


1,184


(851
)
Total comprehensive loss
$
(1,654
)

$
(25,770
)

$
(2,562
)

$
(30,620
)
Basic net income (loss) per share attributable to Endurance International Group Holdings, Inc.
$
0.00


$
(0.18
)

$
(0.01
)

$
(0.21
)
Diluted net income (loss) per share attributable to Endurance International Group Holdings, Inc.
$
0.00


$
(0.18
)

$
(0.01
)

$
(0.21
)
Weighted-average common shares used in computing net income (loss) per share:







Basic
142,340,561


145,308,823


141,356,567


144,414,929

Diluted
144,702,002


145,308,823


141,356,567


144,414,929

Endurance International Group Holdings, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)


Three Months Ended June 30,

Six Months Ended June 30,

2018

2019

2018

2019
Cash flows from operating activities:







Net income (loss)
$
627


$
(26,228
)

$
(1,901
)

$
(29,716
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:







Depreciation of property and equipment
12,796


10,899


24,864


22,105

Amortization of other intangible assets
25,978


21,349


51,713


42,469

Impairment of long lived assets
—


17,892


—


17,892

Amortization of deferred financing costs
1,092


1,776


2,986


3,509

Amortization of net present value of deferred consideration
123


59


251


120

Amortization of original issue discounts
1,068


1,111


2,126


2,198

Stock-based compensation
7,390


9,354


14,382


18,370

Deferred tax expense (benefit)
(416
)

3,533


(4,484
)

2,627

Loss on sale of assets
213


110


261


136

Loss from unconsolidated entities
(25
)

—


2


—

Financing costs expensed
1,228


—


1,228


—

Loss on early extinguishment of debt
331


—


331


—

Changes in operating assets and liabilities, net of acquisitions:







Accounts receivable
1,292


590


3,740


(793
)
Prepaid expenses and other current assets
(5,857
)

4,620


(8,668
)

2,328

Prepaid and refundable taxes
(1,461
)

1,316


(1,102
)

725

Leases right-of-use asset, net
—


80


—


653

Accounts payable and accrued expenses
(12,020
)

16,377


(11,670
)

(15,135
)
Deferred revenue
(2,467
)

(3,158
)

8,193


7,241

Net cash provided by operating activities
29,892


59,680


82,252


74,729

Cash flows from investing activities:







Purchases of property and equipment
(8,127
)

(10,741
)

(13,381
)

(16,164
)
Net cash used in investing activities
(8,127
)

(10,741
)

(13,381
)

(16,164
)
Cash flows from financing activities:







Proceeds from issuance of term loan and notes, net of original issue discounts
1,580,305


—


1,580,305


—

Repayments of term loans
(1,605,207
)

(25,000
)

(1,630,693
)

(50,000
)
Payment of financing costs
(1,295
)

—


(1,295
)

—

Payment of deferred consideration
(4,196
)

(2,500
)

(4,196
)

(2,500
)
Principal payments on financed equipment
(1,679
)

(1,291
)

(3,909
)

(3,861
)
Proceeds from exercise of stock options
431


17


456


22

Net cash used in financing activities
(31,641
)

(28,774
)

(59,332
)

(56,339
)
Net effect of exchange rate on cash and cash equivalents and restricted cash
(1,405
)

470


(1,488
)

(152
)
Net increase (decrease) in cash and cash equivalents and restricted cash
(11,281
)

20,635


8,051


2,074

Cash and cash equivalents and restricted cash:







Beginning of period
88,450


72,015


69,118


90,576

End of period
$
77,169


$
92,650


$
77,169


$
92,650

Supplemental cash flow information:







Interest paid
$
30,370


$
24,094


$
72,461


$
68,353

Income taxes paid (received)
$
1,519


$
(1,142
)

$
2,122


$
724

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 June 30,

Six Months Ended June 30,

2018

2019

2018

2019
Net income (loss)
$
627


$
(26,228
)

$
(1,901
)

$
(29,716
)
Interest expense, net⁽¹⁾
38,119


36,723


73,965


73,646

Income tax (benefit) expense
(946
)

6,160


(2,889
)

7,879

Depreciation
12,796


10,899


24,864


22,105

Amortization of other intangible assets
25,978


21,349


51,713


42,469

Stock-based compensation
7,390


9,354


14,382


18,370

Restructuring expenses
1,295


183


2,824


2,198

(Gain) loss from unconsolidated entities
(25
)

—


2


—

Impairment of other long-lived assets
—


17,892


—


17,892

Shareholder litigation reserve
(240
)

—


8,260


—

Adjusted EBITDA
$
84,994


$
76,332


$
171,220


$
154,843

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income.

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 June 30,

Six Months Ended June 30,

2018


2019


2018


2019

Cash flows from operations
$
29,892


$
59,680


$
82,252


$
74,729

Less:







Capital expenditures and financed equipment⁽¹⁾
(9,806
)

(12,032
)

(17,290
)

(20,025
)
Free cash flow
$
20,086


$
47,648


$
64,962


$
54,704

(1)

Capital expenditures during the three months ended June 30, 2018 and 2019 includes $1.7 million and $1.3 million, respectively, of principal payments under a three year agreement for equipment financing. Capital expenditures during the six months ended June 30, 2018 and 2019 includes $3.9 million and $3.9 million, respectively, of principal payments under a three year agreement for equipment financing. The remaining balance on the equipment financing is $4.6 million as of June 30, 2019.

Average Revenue Per Subscriber - Calculation and Segment Detail

We present our financial results in the following three segments.

Web presence. The web presence segment consists primarily of our web hosting brands, including Bluehost and HostGator. This segment also includes related products such as domain names, website security, website design tools and services, and e-commerce products.
Email marketing. The email marketing segment consists of Constant Contact email marketing tools and related products and the SinglePlatform digital storefront solution. This segment also generates revenue from sales of our Constant Contact-branded website builder tool.
Domain. The domain segment consists of domain-focused brands such as Domain.com, ResellerClub and LogicBoxes as well as certain web hosting brands that are under common management with our domain-focused brands. This segment sells domain names and domain management services to resellers and end users, as well as premium domain names, and also generates advertising revenue from domain name parking. It also resells domain names and domain management services to our web presence segment.

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 June 30,

Six Months Ended June 30,

2018

2019

2018

2019
Consolidated revenue
$
287,770


$
278,204


$
579,126


$
558,887

Consolidated total subscribers
4,918


4,769


4,918


4,769

Consolidated average subscribers for the period
4,965


4,776


4,985


4,786

Consolidated ARPS
$
19.32


$
19.42


$
19.36


$
19.46









Web presence revenue
$
152,715


$
144,197


$
307,732


$
290,157

Web presence subscribers
3,737


3,588


3,737


3,588

Web presence average subscribers for the period
3,774


3,600


3,793


3,614

Web presence ARPS
$
13.49


$
13.35


$
13.52


$
13.38









Email marketing revenue
$
102,154


$
102,479


$
204,601


$
205,219

Email marketing subscribers
504


492


504


492

Email marketing average subscribers for the period
511


493


512


494

Email marketing ARPS
$
66.60


$
69.28


$
66.64


$
69.21









Domain revenue
$
32,901


$
31,528


$
66,793


$
63,511

Domain subscribers
677


689


677


689

Domain average subscribers for the period
680


683


680


678

Domain ARPS
$
16.13


$
15.39


$
16.36


$
15.62

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 June 30, 2018

Web presence

Email marketing

Domain

Total
Revenue
$
152,715


$
102,154


$
32,901


$
287,770

Gross profit
$
75,702


$
71,376


$
9,946


$
157,024









Net (loss) income
$
(6,876
)

$
10,395


$
(2,892
)

$
627

Interest expense, net⁽¹⁾
18,385


17,329


2,405


38,119

Income tax (benefit) expense
(497
)

(333
)

(116
)

(946
)
Depreciation
8,391


3,406


999


12,796

Amortization of other intangible assets
11,863


13,239


876


25,978

Stock-based compensation
5,424


1,288


678


7,390

Restructuring expenses
788


420


87


1,295

(Gain) loss of unconsolidated entities
(25
)

—


—


(25
)
Impairment of other long-lived assets
—


—


—


—

Shareholder litigation reserve
(197
)

—


(43
)

(240
)
Adjusted EBITDA
$
37,256


$
45,744


$
1,994


$
84,994










Three Months Ended June 30, 2019

Web presence

Email marketing

Domain

Total
Revenue
$
144,197


$
102,479


$
31,528


$
278,204

Gross profit
$
73,217


$
73,589


$
(8,189
)

$
138,617









Net (loss) income
$
(10,262
)

$
4,164


$
(20,130
)

$
(26,228
)
Interest expense, net⁽¹⁾
17,093


19,110


520


36,723

Income tax (benefit) expense
3,193


2,269


698


6,160

Depreciation
7,767


2,229


903


10,899

Amortization of other intangible assets
9,210


11,408


731


21,349

Stock-based compensation
5,042


3,222


1,090


9,354

Restructuring expenses
155


23


5


183

(Gain) loss of unconsolidated entities
—


—


—


—

Impairment of other long-lived assets
—


—


17,892


17,892

Shareholder litigation reserve
—


—


—


—

Adjusted EBITDA
$
32,198


$
42,425


$
1,709


$
76,332


Six Months Ended June 30, 2018

Web presence

Email marketing

Domain

Total
Revenue
$
307,732


$
204,601


$
66,793


$
579,126

Gross profit
$
150,075


$
143,553


$
20,846


$
314,474









Net (loss) income
$
(12,984
)

$
15,754


$
(4,671
)

$
(1,901
)
Interest expense, net⁽¹⁾
35,371


33,738


4,856


73,965

Income tax (benefit) expense
(5,176
)

3,830


(1,543
)

(2,889
)
Depreciation
16,368


6,552


1,944


24,864

Amortization of other intangible assets
23,871


26,332


1,510


51,713

Stock-based compensation
10,497


2,696


1,189


14,382

Restructuring expenses
1,600


582


642


2,824

(Gain) loss of unconsolidated entities
2


—


—


2

Impairment of other long-lived assets
—


—


—


—

Shareholder litigation reserve
5,548


1,500


1,212


8,260

Adjusted EBITDA
$
75,097


$
90,984


$
5,139


$
171,220










Six Months Ended June 30, 2019

Web presence

Email marketing

Domain

Total
Revenue
$
290,157


$
205,219


$
63,511


$
558,887

Gross profit
$
145,458


$
147,636


$
2,352


$
295,446









Net (loss) income
$
(16,804
)

$
10,102


$
(23,014
)

$
(29,716
)
Interest expense, net⁽¹⁾
34,188


36,504


2,954


73,646

Income tax (benefit) expense
4,088


2,897


894


7,879

Depreciation
15,716


4,553


1,836


22,105

Amortization of other intangible assets
18,289


22,691


1,489


42,469

Stock-based compensation
9,935


6,305


2,130


18,370

Restructuring expenses
789


1,377


32


2,198

(Gain) loss of unconsolidated entities
—


—


—


—

Impairment of other long-lived assets
—


—


17,892


17,892

Shareholder litigation reserve
—


—


—


—

Adjusted EBITDA
$
66,201


$
84,429


$
4,213


$
154,843

(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income.

The following table represents the impact of the income statement revision to the second quarter of 2018 due to the revised deferred income tax provision (in thousands, except per share data):


Three Months Ended June 30, 2018

Six Months Ended June 30, 2018

Originally Filed
Adjustment
Revised

Originally Filed
Adjustment
Revised
Loss before income taxes and equity earnings of unconsolidated subsidiaries
$
(344
)
$
—

$
(344
)

$
(4,788
)
$
—

$
(4,788
)
Income tax expense (benefit)
1,650

(2,596
)
(946
)

4,267

(7,156
)
(2,889
)
(Loss) income before equity earnings of unconsolidated subsidiaries
(1,994
)
2,596

602


(9,055
)
7,156

(1,899
)
Equity (income) loss of unconsolidated subsidiaries
(25
)
—

(25
)

2

—

2

Net income (loss)
$
(1,969
)
$
2,596

$
627


$
(9,057
)
$
7,156

$
(1,901
)
Comprehensive income (loss)







Foreign currency translation
(2,425
)
—

(2,425
)

(1,845
)
—

(1,845
)
Unrealized (gain) loss on cash flow hedge, net of tax
144

—

144


1,184

—

1,184

Total comprehensive loss
$
(4,250
)
$
2,596

$
(1,654
)

$
(9,718
)
$
7,156

$
(2,562
)
Basic net income (loss) per share
$
(0.01
)
$
0.01

$
—


$
(0.06
)
$
0.05

$
(0.01
)
Diluted net income (loss) per share
$
(0.01
)
$
0.01

$
—


$
(0.06
)
$
0.05

$
(0.01
)
Weighted-average common shares used in computing net income (loss) per share







Basic
142,340,561

—

142,340,561


141,356,567

—

141,356,567

Diluted
142,340,561

2,361,441

144,702,002


141,356,567

—

141,356,567

The following table represents the impact of the revised deferred income tax provision on the impacted balance sheet accounts as of the date shown (in thousands):


June 30, 2018

Originally Filed
Adjustment
Revised
Deferred tax liability
$
29,897

$
(7,156
)
$
22,741

Total liabilities
2,490,106

(7,156
)
2,482,950

Accumulated deficit
(797,175
)
7,156

(790,019
)
Total stockholders' equity
147,759

7,156

154,915

Total liabilities and stockholders' equity
2,637,865

—

2,637,865

The following table represents the impact of the revised deferred income tax provision on the impacted lines of the statement of cash flows for the periods shown (in thousands):


Three Months Ended June 30, 2018

Six Months Ended June 30, 2018

Originally Filed
Adjustment
Revised

Originally Filed
Adjustment
Revised
Net income (loss)
$
(1,969
)
$
2,596

$
627


$
(9,057
)
$
7,156

$
(1,901
)
Deferred tax expense
2,180

(2,596
)
(416
)

2,672

(7,156
)
(4,484
)
Net cash provided by operating activities
29,892

—

29,892


82,252

—

82,252

GAAP to Non-GAAP Reconciliation of Fiscal Year 2019 Guidance (as of August 1, 2019) - Adjusted EBITDA

The following table reflects the reconciliation of fiscal year 2019 estimated net loss calculated in accordance with GAAP to fiscal year 2019 guidance for adjusted EBITDA. All figures shown are approximate.

($ in millions)
Twelve Months Ending December 31, 2019
Estimated net loss
$
(39
)
$
(32
)
Estimated interest expense (net)

146


148

Estimated income tax expense (benefit)

6


8

Estimated depreciation

44


48

Estimated amortization of acquired intangible assets

85


87

Estimated stock-based compensation

36


38

Estimated restructuring expenses

4


5

Estimated transaction expenses and charges

—


—

Estimated (gain) loss of unconsolidated entities

—


—

Estimated impairment of other long-lived assets

18


18

Adjusted EBITDA guidance
$
300

$
320

GAAP to Non-GAAP Reconciliation of Fiscal Year 2019 Guidance (as of August 1, 2019) - Free Cash Flow

The following table reflects the reconciliation of fiscal year 2019 estimated cash flow from operations calculated in accordance with GAAP to fiscal year 2019 guidance for free cash flow. All figures shown are approximate.

($ in millions)
Twelve Months Ending December 31, 2019
Estimated cash flow from operations
$
160

$
175

Estimated capital expenditures and financed equipment obligations

(50
)

(55
)
Free cash flow guidance
$
110

$
120

Company Name:	Endurance International Group Holdings Inc.
Stock Symbol:	EIGI
Market:	NASDAQ
Website:	endurance.com

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