Attached files
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| 8-K - 8-K - Endurance International Group Holdings, Inc. | d685847d8k.htm |
 MS Tech
Conference Presentation March 5, 2014
Exhibit 99.1 |
 endurance.com
/
FORWARD LOOKING STATEMENTS AND OTHER IMPORTANT CAUTIONS
2
Statements in this presentation which are not statements of historical fact, including but
not limited to statements concerning our expected future growth opportunities, our
financial guidance for fiscal year 2014, our long term annual growth rate expectations and
our expectations regarding future interest expense, are “forward-looking
statements” (as defined in the U.S. Private Securities Litigation Reform Act of
1995). These forward-looking statements are based on our current expectations and beliefs, as well as a
number of assumptions concerning future events. These statements are subject to risks,
uncertainties, assumptions and other important factors set forth in our SEC filings,
many of which are outside our control, that could cause actual results to differ materially
from the results discussed in the forward-looking statements. Some of the key factors
that could cause actual results to differ from our expectations include: the rate of
growth of the SMB market for our solutions; our inability to maintain a high level of subscriber
satisfaction; our inability to continue to add new subscribers and increase sales to our
existing subscribers; system or Internet failures; our dependence on establishing and
maintaining strong brands; our inability to maintain or improve our competitive position
or market share; the loss of strategic relationships or alliances with third parties; our
inability to integrate recent or potential future acquisitions; the business risks of
international operations; the loss or unavailability of any of our co-located data centers; our
recognition of revenue for subscription-based services over the term of the applicable
subscriber agreement; the occurrence of security or privacy breaches; and adverse
consequences of our substantial level of indebtedness. You are cautioned to not place undue reliance on such forward-looking statements
because actual results may vary materially from those expressed or implied. All
forward-looking statements are based on information available to us on this date and we assume no
obligation to, and expressly disclaim any obligation to, update or revise any
forward-looking statements, whether 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.
|
 endurance.com
/
AGENDA
3
•
Endurance Overview
•
Q4 & Full Year 2013 Results and Future
Guidance
•
Long Term Future Growth Drivers
•
Supplemental Information
Hari Ravichandran
Founder, CEO
Tiv Ellawala
CFO |
 ENDURANCE
OVERVIEW 4 |
    endurance.com
/
5
WHAT WE DO
Cloud
Enablement
Platform
We Get Them
Found
We Get Them
Found
We Help Them
Grow
We Help Them
Grow
•
Domains
•
Email
•
Site Builders
•
Shared Hosting
•
Security
•
Site Backup
•
Mobile
•
AdWords
•
SEM / SEO Services
•
Social Media
•
BI and Analytics
•
Virtualized / Managed
Hosting
•
Email Marketing
•
Productivity Solutions
•
eCommerce
•
Professional Services |
 endurance.com
/
6
HOW WE DO IT
•
Better adoption rates
•
Better customer education
•
Most current products
•
Higher priced products
•
400,000 online partners
•
Success-based marketing
•
Better conversion
•
Better segmentation |
 endurance.com
/
GROWING SUBSCRIBERS
MULTI-CHANNEL
7 |
 endurance.com
/
GROWING SUBSCRIBERS
MULTI-BRAND
8 |
 endurance.com
/
GROWING ARPS
MULTI-PRODUCT
9
Brand Sites
Control Panel
Sales Floor
Marketplace
Catalog
Provisioning
Billing
Support
Storage
Network
Compute
Data
90%
90% of revenues from
Endurance owned
products |
 endurance.com
/
GROWING ARPS
MULTI-ENGAGEMENT
10
Engaging Subscribers At The Right Time
Life Stage
Event
Triggered
Event
With the Right Messages
Listen
Teach
Sell
In the Right Channel & Touchpoint
Website
Email
Advisor
Social
Mojo
Mobile
Observe
their
behavior
across
touchpoints
Engage
them
where
they
are
most
active
Promote
only
where
they
are
responsive
In the Right Way |
 endurance.com
/
THE ENDURANCE DIFFERENCE
11
SUPERIOR PERFORMANCE
attracts
who demand
Best in class
Cloud Enablement Technology Platform
High quality
Subscribers
who
view web presence as mission critical
High quality
Products
that
drive revenue growth
When combined, these advantages
yield SUPERIOR PERFORMANCE |
 Q4 & FULL
YEAR 2013 RESULTS & FUTURE GUIDANCE
12 |
 endurance.com
/
Q4 & 2013 BUSINESS HIGHLIGHTS
13
Exceeded Adjusted Revenue, Adjusted EBITDA & UFCF Guidance
•
Q4 2013 Adjusted Revenue of $137M, $3M ahead of guidance
•
Q4 2013 Adjusted EBITDA and UFCF of $46M and $38M,
respectively, over $3M ahead of guidance
Increased Total Subscribers on Platform and Grew ARPS
•
Increased total subscribers on platform by 62,000 for Q4 2013,
totaling to over 3.5 million
•
Grew ARPS to $13.15 for Q4 2013 while maintaining a favorable
99% MRR renewal rate
Completed IPO, Refinanced Debt and Closed Directi Acquisition
•
Completed initial public offering in Q4 and used a portion of the
proceeds to refinance our debt and reduce borrowing costs
•
Closed Directi acquisition in January 2014, substantially increasing our
footprint in emerging markets |
 endurance.com
/
FY OPERATING METRICS
Subscriber data is pro-forma for acquisitions and represents organic growth in
subscribers. 14
Total Subscribers (‘000s)
MRR Retention Rate
ARPS ($)
Added 279,000 organic subscribers in 2013 |
 endurance.com
/
FY KEY FINANCIAL METRICS
15
GAAP Revenue ($M)
UFCF ($M)
Adj. Revenue ($M)
Adj. EBITDA ($M) |
 endurance.com
/
CAPITALIZATION & DEBT
Annual
interest
expense
for
term
debt
is
based
on
the
current
first
lien
loan
balance
and
interest
rates.
Sept
30
Adjusted
EBITDA
reflects
guidance
given
during
Q3
earnings
call,
Dec
31
reflects
actual
results.
16
Sept 30, 2013
Dec 31, 2013
Revolver
$0
$0
First Lien Debt
884
1,047
Second Lien Debt
315
0
Total Senior Debt
$1,199
$1,047
Deferred Purchase Obligations
29
29
Total Debt
$1,228
$1,076
Cash
33
69
Net Debt
$1,195
$1,007
2013 Adjusted EBITDA Guidance : Actual EBITDA
204
208
Annual Interest Expense for Term Debt
$88
$53
Numbers in $M
$35M
savings |
 endurance.com
/
FUTURE GUIDANCE
17
FY 2014
~$145 -
$147M
~$55-
$57M
Q1 2014
~$180-190M
~$42-
$44M
~$230-235M
~$630-635M
Long Term Annual
Growth
Mid-teens
High-teens
High-teens
Adjusted Revenue
Adjusted EBITDA
Unlevered FCF
Figures above are estimates based on our expectations as of the date of this
presentation. |
 THE
FUTURE LONG TERM GROWTH DRIVERS
18 |
 endurance.com
/
19
OPPORTUNITIES FOR GROWTH
Growing
Subscribers
Multi-Channel
Goal:
Add
more
high
quality
subscribers
Investment:
Additional
sales
and
marketing
spend
over
prior
year
Objective:
Drive
revenue
growth
in
2015
and
beyond
Multi-Brand
Goal:
Expand
presence
in
emerging
markets
Investment:
Acquisition
of
Directi
Objective:
Continue
to
leverage
multi-brand
concept
to
capitalize
on
emerging
market
growth |
 endurance.com
/
20
OPPORTUNITIES FOR GROWTH
Growing ARPS
Multi-Product
Goal:
Enhance
flexibility
to
grow
with
SMBs
Investment:
Capital
spending
investments
behind
cloud
infrastructure
platform
Objective:
Create
environment
where
customers
can
seamlessly
scale
up
or
down
depending
on
product
needs
Multi-Engagement
Goal:
Address
customer
appetite
for
increasingly
sophisticated
product
suite
Investment:
Sales/support
and
capital
spend
Objective:
Expand
sales
floor
to
better
market
high
touch
products
and
services |
 endurance.com
/
endurance.com
/
SUPPLEMENTAL INFORMATION
21 |
 endurance.com
/
SUMMARY BALANCE SHEET
22
($M)
December 31,
2012
December 31,
2013
Cash & Cash Equivalents
23.2
66.8
Restricted Cash
0.9
2.0
Other Current Assets
44.0
50.0
Current Assets
68.1
118.8
Property & Equipment –
Net
34.6
49.7
Goodwill & Other Intangible Assets –
Net
1,417.4
1,390.4
Other Assets
18.0
22.0
Total Assets
1,538.1
1,580.9
($M)
December
31, 2012
December 31,
2013
Accounts Payable & Accrued Expenses
39.3
43.4
Deferred Revenue
187.4
249.5
Other Liabilities
33.9
36.0
Revolver
15.0
-
Term Debt
1,115.0
1,047.4
Deferred Consideration
77.4
28.6
Total Liabilities
1,468.0
1,404.9
Redeemable Non-Controlling Interest
-
20.7
Shareholders’
Equity
70.1
155.3
Total Liabilities, Redeemable Non-Controlling
Interest & Shareholder’s Equity
1,538.1
1,580.9 |
 endurance.com
/
NON –
GAAP RECONCILIATION
STATEMENT
23
Three months
Ended 12/31
Full Year
2012
2013
2012
2013
Revenue
$117
$136
$292
$520
Purchase accounting adjustment
7
1
64
7
Pre-acquisition revenue from acquired properties
1
0
118
1
Adjusted revenue
$125
$137
$474
$528
Total subscribers
3,223
3,502
3,223
3,502
ARPS
$13.14
$13.15
$12.92
$13.09
Adjusted revenue attributable to 2012 acquisitions
51
54
201
210
Adjusted revenue excluding revenue attributable to 2012 acquisitions
$74
$83
$273
$318
Total subscribers excluding subscribers attributable to 2012 acquisitions
2,224
2,372
2,224
2,372
ARPS excluding 2012 acquisitions
$11.19
$11.75
$10.58
$11.54
Net loss
$(73)
$(68)
$(139)
$(160)
Stock-based compensation
1
10
2
11
(Gain) loss on sale of property and equipment
0
0
0
0
Loss of unconsolidated entities
0
2
0
2
Dividend -
related payments
10
0
10
0
Amortization of intangible assets
31
27
88
106
Amortization of deferred financing costs
40
3
43
3
Changes in deferred revenue (inclusive of impact of purchase accounting)
11
7
104
51
Loan prepayment penalty
11
6
11
6
Transaction expenses and charges
1
28
12
39
Integration and restructuring expenses
0
5
0
46
Tax-affected impact of adjustments
(40)
(1)
(103)
(6)
Adjusted net income
$(8)
$19
$28
$98
Depreciation
3
6
7
19
Income tax expense (benefit)
0
(2)
27
2
Interest
expense,
net
(net
of
impact
of
amortization
of
deferred
financing
costs)
38
23
72
89
Adjusted EBITDA
$33
$46
$134
$208
Change in operating assets and liabilities, net of acquisitions
11
0
(4)
(7)
Capital expenditures
(16)
(8)
(28)
(34)
Income tax (excluding deferred tax)
(0)
(0)
(0)
(1)
Unlevered free cash flow
$28
$38
$102
$166
Net cash interest paid (net of change in accrued loan interest)
(20)
(19)
(53)
(83)
Free Cash Flow
$8
$19
$49
$83 |
 endurance.com
/
NON-GAAP FINANCIAL MEASURES
Adjusted
net
income,
adjusted
EBITDA,
unlevered
free
cash
flow,
free
cash
flow,
adjusted
revenue,
average
revenue
per
subscriber
and
net
debt
are
non-GAAP
financial
measures
and
should
not
be
considered
as
alternatives
to
net
income,
cash
flow
from
operations,
revenue
or
any
other
measure
of
financial
performance
calculated
and
presented
in
accordance
with
GAAP.
We
believe
these
non-GAAP
financial
measures
are
helpful
to
investors
because
we
believe
they
reflect
the
operating
performance
of
our
business
and
help
management
and
investors
gauge
our
ability
to
generate
cash
flow,
excluding
some
recurring
and
non-recurring
expenses
that
are
included
in
the
most
directly
comparable
measures
calculated
and
presented
in
accordance
with
GAAP.
We
have
included
one
non-GAAP
financial
measure
in
our
Q4
2013
earnings
release,
free
cash
flow
(FCF),
that
we
have
not
previously
provided.
We
believe
that
reporting
FCF
will
be
helpful
to
investors
because
we
believe
FCF
helps
investors
to
gauge
our
ability
to
generate
cash
flow
after
taking
into
consideration
cash
interest
associated
with
our
indebtedness.
In
addition,
in
connection
with
adding
this
financial
measure,
we
have
revised
the
definitions
of
adjusted
net
income
and
adjusted
EBITDA
previously
reported
in
our
final
prospectus
filed
with
the
SEC
on
October
25,
2013
pursuant
to
Rule
424(b)
under
the
Securities
Act
in
connection
with
our
initial
public
offering
and
our
Form
10-Q
for
the
period
ended
September
30,
2013
filed
with
the
SEC
on
December
6,
2013,
since
we
believe
that
including
these
revisions
is
appropriate
in
order
to
reconcile
cash
flows
from
(used
in)
operating
activities
to
FCF.
We
believe
that
our
revisions
to
the
amounts
previously
reported
for
adjusted
net
income
and
adjusted
EBITDA
are
not
material.
Please
see
our
Q4
2013
earnings
release
for
additional
information.
Adjusted
Net
Income
-
Adjusted
net
income
is
a
non-GAAP
financial
measure
that
we
calculate
as
consolidated
net
income
(loss)
plus
(i)
changes
in
deferred
revenue
inclusive
of
purchase
accounting
adjustments
related
to
acquisitions,
amortization,
stock-based
compensation
expense,
loss
of
unconsolidated
entities,
net
loss
on
sale
of
property
and
equipment,
expenses
related
to
integration
of
acquisitions
and
restructurings,
any
dividend-
related
payments
accounted
for
as
compensation
expense,
transaction
expenses
and
charges
including
costs
associated
with
certain
litigation
matters
and
preparation
for
our
initial
public
offering,
less
(ii)
earnings
of
unconsolidated
entities
and
net
gain
on
sale
of
property
and
equipment
and
(iii)
the
estimated
tax
effects
of
the
foregoing
adjustments.
Due
to
our
history
of
acquisitions
and
financings,
we
have
incurred
accounting
charges
and
expenses
that
obscure
the
operating
performance
of
our
business.
We
believe
that
adjusting
for
these
items
and
the
use
of
adjusted
net
income
is
useful
to
investors
in
evaluating
the
performance
of
our
company.
Adjusted
EBITDA
-
Adjusted
EBITDA
is
a
non-GAAP
financial
measure
that
we
calculate
as
adjusted
net
income
plus
interest
expense,
depreciation,
and
change
in
income
tax
expense
(benefit).
We
manage
our
business
based
on
the
cash
collected
from
our
subscribers
and
the
cash
required
to
acquire
and
service
those
subscribers.
We
believe
highlighting
cash
collected
and
cash
spent
in
a
given
period
is
valuable
insight
for
an
investor
to
gauge
the
overall
health
of
our
business.
Under
GAAP,
although
subscription
fees
are
paid
in
advance,
we
recognize
the
associated
revenue
over
the
subscription
term,
which
does
not
fully
reflect
short-term
trends
in
our
operating
results.
24 |
 endurance.com
/
NON-GAAP FINANCIAL MEASURES
(CONT.) Unlevered
Free
Cash
Flow
-
Unlevered
free
cash
flow,
or
UFCF,
is
a
non-GAAP
financial
measure
that
we
calculate
as
adjusted
EBITDA
plus
change
in
operating
assets
and
liabilities
(other
than
deferred
revenue)
net
of
acquisitions
less
capital
expenditures
and
income
taxes
excluding
deferred
tax.
We
believe
the
most
useful
indicator
of
our
operating
performance
is
the
cash
generating
potential
of
our
company
prior
to
any
accounting
charges
related
to
our
acquisitions.
We
have
substantial
indebtedness
primarily
as
a
result
of
the
December
2011
acquisition
of
a
controlling
interest
in
our
company
by
investment
funds
and
entities
affiliated
with
Warburg
Pincus
and
Goldman
Sachs
and
a
substantial
dividend
payment
in
November
2012.
We
also
believe
that
because
our
business
has
meaningful
data
center
and
related
infrastructure
requirements,
the
level
of
capital
expenditures
required
to
run
our
business
is
an
important
factor
for
investors.
We
believe
UFCF
is
a
useful
measure
that
captures
the
effects
of
these
issues.
Free
Cash
Flow
-
Free
cash
flow,
or
FCF,
is
a
non-GAAP
financial
measure
that
we
calculate
as
unlevered
free
cash
flow
less
interest
expense.
We
believe
that
this
presentation
of
free
cash
flow
provides
investors
with
an
additional
indicator
of
our
ability
to
generate
positive
cash
flows
after
meeting
our
obligations
with
regards
to
payment
of
interest
on
our
outstanding
indebtedness.
Adjusted
Revenue
-
Adjusted
revenue
is
a
non-GAAP
financial
measure
that
we
calculate
as
GAAP
revenue
adjusted
to
exclude
the
impact
of
any
fair
value
adjustments
to
deferred
revenue
resulting
from
acquisitions
and
to
include
the
revenue
generated
from
subscribers
we
added
through
business
acquisitions
as
if
those
acquired
subscribers
had
been
our
subscribers
since
the
beginning
of
the
period
presented.
We
believe
that
excluding
fair
value
adjustments
to
deferred
revenue
is
useful
to
investors
because
it
shows
our
revenue
prior
to
purchase
accounting
adjustments
related
to
our
acquisitions,
and
that
including
revenue
from
acquired
subscribers
in
this
manner
provides
a
helpful
comparison
of
the
organic
revenue
generated
from
our
subscribers
from
period
to
period.
Average
Revenue
per
Subscriber
-
Average
revenue
per
subscriber,
or
ARPS,
is
a
non-GAAP
financial
measure
that
we
calculate
as
the
amount
of
adjusted
revenue
we
recognize
from
subscribers
in
a
period
divided
by
the
average
of
the
number
of
total
subscribers
at
the
beginning
of
the
period
and
at
the
end
of
the
period.
We
believe
ARPS
is
an
indicator
of
our
ability
to
optimize
our
mix
of
products
and
services
and
pricing,
and
sell
products
and
services
to
new
and
existing
subscribers.
Net
Debt
-
Net
debt
is
a
non-GAAP
financial
measure
that
we
calculate
as
total
debt
(which
is
defined
as
the
sum
of
the
current
portion
of
notes
payable,
notes
payable
–
long
term,
deferred
consideration
–
short
term
and
deferred
consideration
as
presented
on
our
balance
sheet)
plus
deferred
consideration
for
the
purchase
price
of
acquisitions,
less
cash
and
cash
equivalents.
We
use
net
debt
to
evaluate
our
capital
structure.
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,
may
be
different
from
non-GAAP
financial
measures
used
by
other
companies
and
exclude
expenses
that
may
have
a
material
impact
on
our
reported
financial
results.
Further,
interest
expense,
which
is
excluded
from
some
of
our
non-GAAP
measures,
has
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
or
as
a
substitute
for
the
directly
comparable
financial
measures
prepared
in
accordance
with
GAAP.
We
urge
you
to
review
the
reconciliations
of
our
non-GAAP
financial
measures
to
the
comparable
GAAP
financial
measures
included
with
this
presentation,
and
not
to
rely
on
any
single
financial
measure
to
evaluate
our
business.
25 |