Q1 Fiscal 2019 Earnings Presentation - April 30, 2019
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Q1 Fiscal 2019 Earnings Presentation
April 30, 2019FORWARD LOOKING STATEMENTS AND OTHER IMPORTANT CAUTIONS
This presentation contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements concerning: our updated financial guidance and plan for fiscal year 2019; the fact that
our plan reflects revenue growth in the second half of 2019; our expectations regarding the timing of revenue and subscriber trends generally, and the impact of our investments and
initiatives on these trends; our belief that we will deliver on adjusted EBITDA and free cash flow goals for 2019; our expectation that over time, we will see a diminishing negative impact to
overall revenue and units from our non-strategic brands as our strategic brand performance improves; our investment and operational plans for 2019 and beyond, including our ability to
execute these plans and expectations that these plans will increase customer value to customers of our key strategic brands, improve the customer experience and our product offerings,
simplify our business, and deliver future value and growth in our strategic brands; our capital expenditure plans; our ability to operate our business at scale or to simplify our operations; our
plans to pay down debt; and our expected financial and operational performance in general. These forward-looking statements include, but are not limited to, plans, objectives, expectations
and intentions and other statements contained in these prepared remarks that are not historical facts, and statements identified by words such as “expects,” “anticipates,” “intends,” “plans,”
“believes,” “feels,” “seeks,” “future,” “strives,” “sees,” “estimates,” “should,” “may,” “will,” “continues,” “confident,” “positions,“ “invests,” “commits,” and variations of such words or words of
similar meaning and the use of future dates. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based
on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or
suggested by those forward-looking statements are reasonable, we can give no assurance that these plans, intentions, expectations or strategies will be attained or achieved. Furthermore,
actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without
limitation, the possibility that our updated financial guidance or actual financial results may differ from expectations, and that our transition back to revenue growth will not occur in the
timeframe we expect; 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 grow our
subscriber base, increase sales to our existing subscribers, or retain our existing subscribers; system or Internet failures; our inability to maintain or improve our competitive position or market
share; and other risks and uncertainties discussed in our filings with the SEC, including the ““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. You can obtain copies of our filings with the SEC for free at the SEC’s website (www.sec.gov). We do not assume
any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.
This presentation includes data based on our internal estimates. While we believe that our internal estimates are reasonable, no independent source has verified such estimates. The
information on, or that can be accessed through, any of our websites is not deemed to be incorporated in this presentation or to be part of this presentation.
Non-GAAP Financial Measures: this presentation contains non‐GAAP financial measures as defined by the SEC in Regulation G, including adjusted EBITDA, free cash flow, net debt, and
bank adjusted EBITDA. Definitions of these non-GAAP financial measures and reconciliations to their comparable GAAP measures are included in our 2019 first quarter earnings release and
presentation, each dated April 30, 2019, and available in the investor relations section of our website at www.endurance.com.
endurance.com / 2AGENDA
Jeffrey H. Fox • CEO Commentary
President &
Chief Executive Officer • Q1 2019 Financial and Operating Metrics
• Fiscal 2019 Guidance
Marc Montagner
Chief Financial Officer • Supplemental Information
Angela White
VP, Investor Relations
endurance.com / 3CEO Commentary
Q1 Fiscal 2019 Highlights
Operational progress and plan execution
• Investing to increase value to customers of our market-leading assets
• Simplifying operations
• Continuing to reduce debt with free cash flow
Q1 2018 Q4 2018 Q1 2019
Revenue $ 291.4 $ 282.4 $ 280.7
Adjusted EBITDA $ 86.2 $ 79.3 $ 78.5
Net Debt $ 1,863 $ 1,776 $ 1,769
Total Subscribers 5.011 4.802 4.783
Net Subscriber Additions (in ‘000) (39.9) (49.2) (19.8)
All numbers in millions, except net subscriber additions
Please refer to Non-GAAP and other Supplemental Information slides for reconciliation of adjusted EBITDA to net income (loss), and for definitions of adjusted EBITDA, total subscribers, and net debt.
endurance.com / 5Investing to Deliver Increased Value to Customers
Email Marketing Web Presence Domain
Latin America Asia Pacific Sitebuilder Innovation Team
2019 plan investments
Strategic Brand Investment
Improve Customer Value
Integrate International Operating Teams
Simplify Operations
Execute to drive growth
endurance.com / 6EMAIL MARKETING
Year over Year Q1 2018 Q1 2019 Quarter over Quarter Q4 2018 Q1 2019
Revenue $ 102.4 $ 102.7 Revenue $ 103.3 $ 102.7
Adjusted EBITDA $ 45.2 $ 42.0 Adjusted EBITDA $ 44.0 $ 42.0
Total Subscribers 0.518 0.495 Total Subscribers 0.497 0.495
Net Subscriber Additions (in ‘000) (.8) (2.2) Net Subscriber Additions (in ‘000) (2.0) (2.2)
ARPS $ 65.83 $ 69.11 ARPS $ 69.22 $ 69.11
2019 Focus
Strategic expansion of Constant Contact beyond email marketing
• SMB solutions provider
• Increase valuable solutions and service offerings
• Channel and geographic investment
All numbers in millions, except ARPS and net subscriber additions
Please refer to Non-GAAP and other Supplemental Information slides for reconciliation of adjusted EBITDA to net income (loss), and for definitions of adjusted EBITDA, total subscribers, and average revenue per subscriber (ARPS).
* As previously disclosed, total email marketing subscriber count was impacted by changes made to Constant Contact's account cancellation policy in Q2 2018, which resulted in a loss of approximately 10,500 subscribers for that quarter.
. endurance.com / 7WEB PRESENCE
Year over Year Q1 2018 Q1 2019 Quarter over Quarter Q4 2018 Q1 2019
Revenue $ 155.0 $ 146.0 Revenue $ 147.7 $ 146.0
Adjusted EBITDA $ 37.8 $ 34.0 Adjusted EBITDA $ 33.6 $ 34.0
Total Subscribers 3.811 3.612 Total Subscribers 3.639 3.612
Net Subscriber Additions (in ‘000) (38.1) (28.1) Net Subscriber Additions (in ‘000) (42.2) (28.1)
ARPS $ 13.49 $ 13.42 ARPS $ 13.45 $ 13.42
2019 Focus
• Continue to deliver increased value to customers
o Strengthen and scale core capabilities across brands
o Deliver value-added solutions
o Enhance experience across key on-ramps
• Channel testing and brand enhancement
All numbers in millions, except ARPS and net subscriber additions
Please refer to Non-GAAP and other Supplemental Information slides for reconciliation of adjusted EBITDA to net income (loss), and for definitions of adjusted EBITDA, total subscribers, and average revenue per subscriber (ARPS).
endurance.com / 8DOMAIN
Year over Year Q1 2018 Q1 2019 Quarter over Quarter Q4 2018 Q1 2019
Revenue $ 33.9 $ 32.0 Revenue $ 31.3 $ 32.0
Adjusted EBITDA $ 3.1 $ 2.5 Adjusted EBITDA $ 1.8 $ 2.5
Total Subscribers 0.682 0.676 Total Subscribers 0.666 0.676
Net Subscriber Additions (in ‘000) (1.0) 10.5 Net Subscriber Additions (in ‘000) (5.0) 10.5
ARPS $ 16.54 $ 15.88 ARPS $ 15.63 $ 15.88
2019 Focus
• Focus on transition from domain-only offers to solution offerings
• Improve lifetime value: integration with value-added products
All numbers in millions, except ARPS
Please refer to Non-GAAP and other Supplemental Information slides for reconciliation of adjusted EBITDA to net income (loss), and for definitions of adjusted EBITDA, total subscribers, and average revenue per subscriber (ARPS).
endurance.com / 9Continued Strategic and Operational Progress
2019: Positioned to Grow in 2H 2019
• Investing to grow strategic brands
• Investing to increase customer value
• Operating at scale with skill
• Executing with an owner operator mindset
• Reduce debt with free cash flow
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
Revenue $ 291.4 $ 287.8 $ 283.8 $ 282.4 $ 280.7
Adjusted EBITDA $ 86.2 $ 85.0 $ 87.5 $ 79.3 $ 78.5
Net Debt $ 1,863 $ 1,844 $ 1,802 $ 1,776 $ 1,769
Total Subscribers 5.011 4.918 4.852 4.802 4.783
Net Subscriber Additions (in ‘000) (39.9) (92.8) (66.9) (49.2) (19.8)
All numbers in millions except net subscriber additions
Please refer to Non-GAAP and other Supplemental Information slides for reconciliation of adjusted EBITDA to net income (loss), and for definitions of adjusted EBITDA, total subscribers, and net debt.
endurance.com / 10FINANCIAL AND OPERATING METRICS
Q1 2019 Key Financial Metrics
GAAP Revenue ($M) Adjusted EBITDA ($M) Net Loss ($M)
291.4 (4)%
280.7
33.9 32.0 86.2
78.5
(9)%
102.4 102.7 3.1 2.5
45.2 42.0
155.0 146.0
37.8 34.0 (2.5) (3.5)
Q1 2018 Q1 2019 Q1 2018 Q1 2019
Q1 2018 Q1 2019
Web presence Email marketing Domain
Cash Flow from Operations Capital Expenditures (incl. Free Cash Flow (1) ($M)
($M) Financed Equipment) ($M)
(71)% 2.6% of 2.8% of
52.4 revenue revenue 44.9 (84)%
15.0 7.1
7.5 8.0
Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019
(1) Free cash flow defined as cash flow from operations, less capital expenditures and financed equipment.
Note: Individual numbers may not add to total due to rounding.
endurance.com / 12Q1 2019 Key Operating Metrics
Quarterly Total Subscribers (‘000s) Combined Quarterly ARPS ($)
5,011
4,918 4,852 4,802 4,783
$19.30 $19.32 $19.36 $19.50 $19.52
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
Note: Please refer to Non-GAAP and Supplemental Information slides for definitions and other important information about total subscribers and ARPS.
endurance.com / 13Fiscal 2019 Guidance
GUIDANCE AS OF April 30, 2019
FY2018 Actuals Prior Guidance FY2019 Guidance
GAAP REVENUE $ 1.145 billion $1.140 to $1.160 billion $1.120 to $1.140 billion
ADJUSTED EBITDA $ 338 million $310 to $330 million $300 to $320 million
FREE CASH FLOW(1) $ 129 million $115 to $125 million $110 to $120 million
(1) Free Cash Flow defined as cash flow from operations, less capex and financed equipment
endurance.com / 14Balance Sheet Key Metric
Total Debt (in $MM) 03/31/2018 06/30/2018 09/30/2018 12/31/2018 03/31/2019 Maturity Coupon
Revised Incremental Term Loan $1,580 -- -- -- -- February 2023 L+400
Repriced Term Loan -- $1,555 $1,530 $1,505 $1,480 February 2023 L+375
Unsecured Notes 350 350 350 350 350 February 2024 10.875%
Revolving Credit Facility -- -- -- -- -- February 2021/June 2023
Total Senior Debt $ 1,930 $1,905 $1,880 $1,855 $1,830
Deferred Purchase Obligations $8 $ 4 $ 4 $4 $4
Financed Equipment 13 11 10 8 7
Total Debt $1,951 $1,920 $1,894 $1,867 $1,841
Total Ending Cash $ 88 $ 77 $ 92 $ 91 $ 72
Net Debt(1) $1,863 $1,844 $1,802 $1,776 $1,769
LTM 03/31/2019 Max. allowed
LTM bank adjusted EBITDA as defined in credit agreement $329.1 million n/a
Total secured debt(2) to LTM bank adjusted EBITDA as defined in the credit agreement 4.30x 6.0x
Q1 2019 • Interest payments on senior debt of $44.2 million
• Principal term loan debt payment of $25.0 million (included $7.9 million in scheduled amortization and $17.1 million additional payment)
(1) Total net debt equals total debt less cash, cash equivalents, and restricted cash.
(2) Total secured debt as defined in the credit agreement.
Individual numbers may not add to totals shown due to rounding. endurance.com / 15Closing Comments
NON-GAAP AND OTHER SUPPLEMENTAL INFORMATION
GAAP TO NON-GAAP RECONCILIATION
REVENUE, GROSS PROFIT, AND ADJUSTED EBITDA BY SEGMENT
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 March 31, 2018 Three Months Ended March 31, 2019
Web Email
presence marketing Domain Total Web presence Email marketing Domain Total
Revenue $ 155,017 $ 102,447 $ 33,892 $ 291,356 $ 145,960 $ 102,740 $ 31,983 $ 280,683
Gross profit $ 74,373 $ 72,177 $ 10,900 $ 157,450 $ 72,241 $ 74,047 $ 10,541 $ 156,829
—
Net (loss) income $ (6,108) $ 5,359 $ (1,779) $ (2,528) $ (6,542) $ 5,938 $ (2,884) $ (3,488)
Interest expense, net(1) 16,986 16,409 2,451 35,846 17,095 17,394 2,434 36,923
Income tax (benefit) expense (4,679) 4,163 (1,427) (1,943) 895 628 196 1,719
Depreciation 7,977 3,146 945 12,068 7,949 2,324 933 11,206
Amortization of other intangible assets 12,008 13,093 634 25,735 9,079 11,283 758 21,120
Stock-based compensation 5,073 1,408 511 6,992 4,893 3,083 1,040 9,016
Restructuring expenses 812 162 555 1,529 634 1,354 27 2,015
Gain of unconsolidated entities 27 — — 27 — — — —
Shareholder litigation reserve 5,745 1,500 1,255 8,500 — — — —
Adjusted EBITDA $ 37,841 $ 45,240 $ 3,145 $ 86,226 $ 34,003 $ 42,004 $ 2,504 $ 78,511
(1) Interest expense includes impact of amortization of deferred financing costs, original issuance discounts and interest income.
endurance.com / 18GAAP 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 March 31,
2018 2019
Cash flow from operations $ 52,360 $ 15,049
Less:
Capital expenditures and financed equipment(1) (7,484) (7,993)
Free cash flow $ 44,876 $ 7,056
(1) Capital expenditures during the three months ended March 31, 2018 and 2019 includes $2.2 million and $2.6
million, respectively, of principal payments under a three year agreement for equipment financing. The
remaining balance on the equipment financing is $6.5 million as of March 31, 2019.
endurance.com / 19SUPPLEMENTAL INFORMATION
CALCULATION OF AVERAGE REVENUE PER SUBSCRIBER (ARPS)
The following table presents the calculation of average revenue per subscriber (ARPS) on a consolidated basis and by segment (all data in thousands, except ARPS data):
Three Months Ended
March 31,
2018 2019
Consolidated revenue $ 291,356 $ 280,683
Consolidated total subscribers 5,011 4,783
Consolidated average subscribers for the period 5,031 4,793
Consolidated ARPS $ 19.30 $ 19.52
Web presence revenue $ 155,017 $ 145,960
Web presence subscribers 3,811 3,612
Web presence average subscribers for the period 3,829 3,626
Web presence ARPS $ 13.49 $ 13.42
Email marketing revenue $ 102,447 $ 102,740
Email marketing subscribers 518 495
Email marketing average subscribers for the period 519 496
Email marketing ARPS $ 65.83 $ 69.11
Domain revenue $ 33,892 $ 31,983
Domain subscribers 682 676
Domain average subscribers for the period 683 671
Domain ARPS $ 16.54 $ 15.88
endurance.com / 20GAAP TO NON-GAAP RECONCILIATION
BANK ADJUSTED EBITDA
The following table presents a reconciliation of net income (loss) calculated in accordance with GAAP to bank adjusted EBITDA (all data in thousands except compliance and coverage ratio):
Q2 2018 Q3 2018 Q4 2018 Q1 2019 TTM
Net income (loss) $ 627 $ (6,335) $ 12,770 $ (3,488) $ 3,574
Interest expense $ 38,346 $ 37,527 $ 37,557 $ 37,214 $ 150,644
Income tax expense (benefit) $ (946) $ 11,715 $ (15,072) $ 1,719 $ (2,584)
Depreciation $ 12,796 $ 11,889 $ 11,454 $ 11,206 $ 47,345
Amortization of other intangible assets $ 25,978 $ 26,177 $ 25,258 $ 21,120 $ 98,533
Stock-based compensation $ 7,390 $ 7,550 $ 7,132 $ 9,016 $ 31,088
Integration and restructuring costs $ 1,295 $ 197 $ 347 $ 2,015 $ 3,854
Transaction expenses and charges $ - $ - $ - $ - $ -
(Gain) loss of unconsolidated entities $ (25) $ - $ 265 $ - $ 240
Impairment of long-lived assets $ - $ - $ - $ - $ -
(Gain) loss on assets, not ordinary course $ - $ - $ - $ - $ -
Legal advisory and related expenses $ 710 $ (832) $ 159 $ 400 $ 437
Billed revenue to GAAP revenue adjustment $ (2,431) $ (4,834) $ (8,035) $ 10,385 $ (4,915)
Domain registration cost cash to GAAP adjustment $ 1,258 $ 1,299 $ 1,255 $ (2,441) $ 1,371
Currency translation $ (17) $ (17) $ (506) $ 29 $ (511)
Adjustment for acquisitions on a pro forma basis - - - - -
Bank adjusted EBITDA $ 84,981 $ 84,336 $ 72,584 $ 87,175 $ 329,076
Current portion of notes payable $ 31,606
Current portion of financed equipment 6,502
Notes payable - long term 1,747,659
Financed equipment - long term -
Certain deferred consideration amounts -
Original issue discounts and deferred financing costs 50,737
Less:
Unsecured notes (350,000)
Cash (70,084)
Certain permitted restricted cash (100)
Net Senior Secured Indebtedness $ 1,416,320
Debt coverage compliance ratio 4.30
Required maximum coverage ratio 6.00
endurance.com / 21GAAP TO NON-GAAP RECONCILIATION
FISCAL 2019 GUIDANCE (as of April 30, 2019)
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.
Twelve Months Ending
($ in millions)
December 31, 2019
Estimated net income $ (17)$ (10)
Estimated interest expense (net) 146 148
Estimated income tax expense (benefit) 4 6
Estimated depreciation 44 48
Estimated amortization of acquired intangible assets 83 85
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 — —
Adjusted EBITDA guidance $ 300 $ 320
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.
Twelve Months Ending
($ in millions)
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
endurance.com / 22SUPPLEMENTAL INFORMATION
GAAP LINE ITEM DETAIL
The following tables provide the details of depreciation, amortization, stock-based compensation, restructuring expenses, transaction expenses and charges, and shareholder litigation reserve included in the
Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) and the line items in which these amounts are reported.
$ in thousands Three months ended
March 31, 2018 March 31, 2019
Depreciation
Cost of Revenue $ 11,126 $ 10,050
Sales & Marketing 609 472
Engineering & Development (134) 378
General & Administrative 467 306
Total Depreciation $ 12,068 $ 11,206
Amortization
Cost of Revenue $ 25,735 $ 21,120
Sales & Marketing — —
Engineering & Development — —
General & Administrative — —
Total Amortization $ 25,735 $ 21,120
Stock-Based Compensation
Cost of Revenue $ 1,543 $915
Sales & Marketing 1,096 1,754
Engineering & Development 1,145 1,333
General & Administrative 3,207 5,104
Total Stock-Based Compensation $ 6,992 $ 9,016
Restructuring Expenses
Cost of Revenue $ 548 $ 1,267
Sales & Marketing 13 220
Engineering & Development 308 414
General & Administrative 660 114
Total Restructuring Expenses $ 1,529 $ 2,015
Transaction Expenses and Charges — —
Impairment of Other Long-Lived Assets
Cost of Revenue
SEC /Shareholder Litigation Reserve $ 8,500 —
General & Administrative $ 8,500 —
Individual numbers may not add to the totals shown due to rounding.
endurance.com / 23SUPPLEMENTAL INFORMATION
NON-GAAP & KEY OPERATING MEASURES
In addition to our financial information presented in accordance with GAAP, we use adjusted EBITDA, free cash flow, net debt, and bank adjusted EBITDA, which are non-GAAP financial
measures, to evaluate the operating and financial performance of our business, identify trends affecting our business, develop projections, make strategic business decisions, evaluate our
capital structure, and monitor our liquidity and compliance with the financial covenant in our credit agreement. 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 from 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 reconciliations of our 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).
Net Debt is a non-GAAP financial measure that we calculate as total debt (which is the sum of short and long term notes payable, deferred consideration and capital lease obligations) less
cash, cash equivalents, and restricted cash. We use net debt to evaluate our capital structure.
endurance.com / 24SUPPLEMENTAL INFORMATION
NON-GAAP & KEY OPERATING MEASURES
Bank Adjusted EBITDA is a non-GAAP financial measure defined in our credit agreement as net income (loss) adjusted to exclude interest expense, income tax expense (benefit),
depreciation and amortization. Bank Adjusted EBITDA also adjusts net income (loss) by excluding certain non-cash foreign exchange gains (losses), certain gains (losses) from sale of
assets, stock-based compensation, unusual and non-recurring expenses (including acquisition related costs, gains or losses on early extinguishment of debt, and loss on impairment of
tangible or intangible assets). It also adjusts net income (loss) for revenue on a billed basis, changes in deferred domain costs, share of loss (profit) of unconsolidated entities, and
certain integration related costs. Finally, it adjusts net income (loss) for pro forma adjusted EBITDA on a twelve-month lookback period for acquisitions made in any given quarter. We
use bank adjusted EBITDA to monitor our liquidity and compliance with the financial covenant in our credit agreement.
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 first quarter of 2019, these adjustments
had a net negative impact of approximately 2,000 subscribers 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.
endurance.com / 25You can also read
