Attached files
| file | filename |
|---|---|
| 8-K - 8-K - RIGHTSIDE GROUP, LTD. | name-8k_20160216.htm |
Exhibit 99.1
Rightside Announces Fourth Quarter and Full Year 2015 Financial Results
Full Year Total Revenue Increases 11% Year-over-Year
Full Year Registry Revenue Grows to $8.4 Million
KIRKLAND, Wash., February 16, 2016 -- (GLOBENEWSWIRE) -- Rightside Group, Ltd. (Nasdaq: NAME), a leading provider of domain name services that advance the way businesses and consumers define and present themselves online, today announced financial results for the fourth quarter and full year ended December 31, 2015.
“In Q4, and for the full year of 2015, Rightside achieved strong financial results as we continued to execute on our mission of advancing the way businesses and consumers define and present themselves online. We achieved record revenue in the fourth quarter closing the full year 2015 with 11% total revenue growth and Adjusted EBITDA of $4.8 million,” said Chief Executive Officer Taryn Naidu.
“Looking ahead to 2016, we are excited about our portfolio of 39 new gTLDs and the future growth opportunities as we continue to invest in market development initiatives that drive heightened awareness and growing usage for new gTLDs by consumers and businesses. We are focused on improving profitability by driving margin expansion and growth in our Registry and retail business lines and implementing cost efficiencies throughout the business,” Naidu continued.
Financial Summary
(in thousands)
|
|
|
Three months ended |
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|
Year ended |
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|
December 31, |
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|
December 31, |
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||||||||||
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
||||
|
Registrar services (1) |
|
$ |
44,721 |
|
|
$ |
42,321 |
|
|
$ |
173,954 |
|
|
$ |
160,168 |
|
|
Registry services (1) |
|
|
2,526 |
|
|
|
1,097 |
|
|
|
8,438 |
|
|
|
1,917 |
|
|
Aftermarket and other |
|
|
9,260 |
|
|
|
8,580 |
|
|
|
32,683 |
|
|
|
30,163 |
|
|
Eliminations (2) |
|
|
(842 |
) |
|
|
(265 |
) |
|
|
(2,589 |
) |
|
|
(500 |
) |
|
Total revenue |
|
$ |
55,665 |
|
|
$ |
51,733 |
|
|
$ |
212,486 |
|
|
$ |
191,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on other assets, net |
|
$ |
(721 |
) |
|
$ |
(7,800 |
) |
|
$ |
(9,403 |
) |
|
$ |
(22,103 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income tax |
|
$ |
(3,820 |
) |
|
$ |
1,778 |
|
|
$ |
(13,638 |
) |
|
$ |
(3,186 |
) |
|
Income tax expense (benefit) |
|
|
303 |
|
|
|
322 |
|
|
|
(2,314 |
) |
|
|
(1,328 |
) |
|
Net (loss) income |
|
$ |
(4,123 |
) |
|
$ |
1,456 |
|
|
$ |
(11,324 |
) |
|
$ |
(1,858 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (3) |
|
$ |
2,563 |
|
|
$ |
556 |
|
|
$ |
4,807 |
|
|
$ |
(3,092 |
) |
|
(1) |
Amounts for Registrar and Registry services revenue were previously presented on a combined basis as Domain Name Services revenue. |
|
(2) |
Amounts in the eliminations line reflect the elimination of intercompany charges between our Registrar and Registry services businesses. |
|
(3) |
This Non-GAAP financial measure is described below and reconciled to GAAP net (loss) income in the accompanying table. |
Fourth Quarter 2015 Financial Highlights
(Unless otherwise noted, all comparisons are relative to the fiscal fourth quarter 2014.)
|
§ |
Registrar services revenue increased 6% to $44.7 million compared to $42.3 million. |
|
§ |
Registry services revenue increased to $2.5 million compared to $1.1 million. |
|
§ |
Aftermarket and other revenue was $9.3 million compared to $8.6 million. |
|
§ |
Total revenue increased 8% to a record $55.7 million compared to $51.7 million. |
|
§ |
Net loss was $4.1 million, compared to net income of $1.5 million. |
|
§ |
Adjusted EBITDA was $2.6 million, compared to $0.6 million. |
|
§ |
Gain on other assets, net was $0.7 million representing fewer withdrawals of its interest in gTLD applications during the period compared to a gain of $7.8 million. |
Full Year 2015 Financial Highlights
(Unless otherwise noted, all comparisons are relative to the fiscal full year 2014.)
|
§ |
Registrar services revenue increased 9% to $174.0 million compared to $160.2 million. |
|
§ |
Registry services revenue increased to $8.4 million compared to $1.9 million. |
|
§ |
Aftermarket and other revenue was $32.7 million compared to $30.2 million. |
|
§ |
Total revenue increased 11% to a record $212.5 million compared to $191.7 million. |
|
§ |
Net loss was $11.3 million, compared to $1.9 million. |
|
§ |
Adjusted EBITDA was $4.8 million, compared to Adjusted EBITDA of ($3.1 million). |
|
§ |
Gain on other assets, net was $9.4 million representing fewer withdrawals of its interest in gTLD applications during the period compared to a gain of $22.1 million. |
Business Highlights
|
§ |
Rightside’s 39 owned and operated gTLDs in general availability ended 2015 with over 400,000 registered domains, up 14% over Q3 2015. |
|
§ |
Rightside’s retail registrar, Name.com, grew revenue over 25% year over year with over half of that growth driven by higher margin new gTLDs. |
|
§ |
With over 16.5 million total domains under management as of December 31, 2015, including over 2.8 million domain names registered through its retail outlets, Rightside remains one of the world’s largest registrars. |
|
§ |
Strong momentum behind Rightside’s most recent launches - with the fourth quarter’s .LIVE and .STUDIO topping 25,000 combined registrations and .NEWS, which launched in the third quarter of 2015, now has over 60,000 registrations and is in the top spot in Rightside’s portfolio. |
Registrar Services Operating Metrics
|
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|
Three months ended |
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Year ended |
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December 31, |
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December 31, |
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2015 |
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2014 |
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Change |
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2015 |
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|
2014 |
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Change |
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||||||
|
End of period domains (in millions) (1) |
|
|
16.3 |
|
|
|
16.0 |
|
|
|
1.9 |
|
% |
|
16.3 |
|
|
|
16.0 |
|
|
|
1.9 |
|
% |
|
Average revenue per domain (2) |
|
$ |
11.00 |
|
|
$ |
10.66 |
|
|
|
3.2 |
|
% |
$ |
10.79 |
|
|
$ |
10.41 |
|
|
|
3.7 |
|
% |
|
Renewal rate (3) |
|
|
74.7 |
|
% |
|
72.7 |
|
% |
|
|
|
|
|
75.3 |
|
% |
|
72.9 |
|
% |
|
|
|
|
|
(1) |
A domain is defined as an individual domain name registered by a third-party customer on Rightside’s registrar platforms for which Rightside has begun to recognize revenue. |
|
(2) |
Average revenue per domain is calculated by dividing registrar services revenue for a period by the average number of domains registered on Rightside’s registrar platforms in that period. Average revenue per domain for partial year periods is annualized. |
|
(3) |
The renewal rate is defined as the percentage of domain names on Rightside’s registrar platforms that are renewed after their original term expires. |
Liquidity and Capital Resources
|
§ |
As of December 31, 2015, Rightside had cash and cash equivalents of $45.1 million, compared to $45.9 million as of September 30, 2015. |
|
§ |
At the end of the fourth quarter, the Company had letters of credit totaling $11 million outstanding with approximately $19 million of available borrowing capacity under its revolving credit facility with Silicon Valley Bank. |
Business Outlook
For the full year ending December 31, 2016, Rightside currently expects the following:
|
§ |
Total revenue of $218 million to $228 million, inclusive of $12 million to $15 million of GAAP revenue from our Registry Services Business. |
|
§ |
Total Adjusted EBITDA of $8 million to $11 million, inclusive of approximately $2 million of incremental discretionary marketing spend for the year. |
Conference Call and Webcast
Rightside will host a conference call and audio webcast with investors and analysts today, February 16, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time):
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|
§ |
Live conference call: (844) 413-1777 (domestic) or (716) 247-5761 (international) |
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|
§ |
Conference call replay available through February 21, 2016: (855) 859-2056 (domestic) or (404) 537-3406 (international) |
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§ |
Conference ID: 38641522 |
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|
§ |
Live and archived webcast: http://www.rightside.market |
About Non-GAAP Financial Measures
We define Adjusted EBITDA as net income (loss) adjusted for interest, income taxes, gain on sale of marketable securities, gain (loss) on other assets, net, depreciation and amortization, stock-based compensation, as well as the financial impact of acquisition and realignment costs. Acquisition and realignment costs include legal, accounting and other professional fees directly attributable to acquisition activity as well as employee severance and other payments in connection with corporate realignment activities. Adjusted EBITDA is a non-GAAP financial measure and its most directly comparable GAAP financial measure is GAAP net income (loss). A reconciliation of GAAP net income (loss) to Adjusted EBITDA can be found in the accompanying table. Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. Rightside compensates for these limitations by relying primarily on its GAAP results and using Adjusted EBITDA only as a supplement.
About Rightside
Rightside® inspires and delivers new possibilities for consumers and businesses to define and present themselves online. The company, with its affiliates, is a leading provider of domain name services, offering one of the industry's most comprehensive platforms for the discovery, registration, usage, and monetization of domain names. In addition to being a new gTLD registry operator, Rightside is home to some of the most admired brands in the industry, including eNom and Name.com. Headquartered in Kirkland, WA, Rightside has offices in North America, Europe, and Australia. For more information please visit www.rightside.co.
Cautionary Information Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended, including, among others, Rightside’s expected total revenue, Adjusted EBITDA, and registry services revenue. Statements containing words such as may, believe, anticipate, expect, intend, plan, project, and estimate or similar expressions constitute forward-looking statements. Statements regarding Rightside’s future performance are based on current expectations, estimates and projections about our industry, financial condition, operating performance and results of operations, including certain assumptions related thereto. Actual results may differ materially from the results predicted, and reported results should not be considered an indication of future performance. Forward-looking statements involve risks and uncertainties including, among others: Rightside’s ability to successfully operate new gTLD registries and provide back-end infrastructure services to new and existing registries; Rightside’s ability to successfully market and sell its gTLDs; and the difficulty in predicting and developing consumer demand for new gTLDs. More information about potential risk factors that could affect Rightside’s operating and financial results are contained in Rightside’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 filed with the Securities and Exchange Commission on November 10, 2015. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. Rightside does not intend to revise or update the information set forth in this press release, except as required by law, and may not provide this type of information in the future.
Statements of Operations
(in thousands, except per share data)
(unaudited)
|
|
|
Three months ended |
|
|
Year ended |
|
||||||||||
|
|
|
December 31, |
|
|
December 31, |
|
||||||||||
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
||||
|
Revenue |
|
$ |
55,665 |
|
|
$ |
51,733 |
|
|
$ |
212,486 |
|
|
$ |
191,748 |
|
|
Cost of revenue (excluding depreciation and amortization) |
|
|
41,582 |
|
|
|
40,203 |
|
|
|
162,452 |
|
|
|
149,710 |
|
|
Sales and marketing |
|
|
2,949 |
|
|
|
2,294 |
|
|
|
10,567 |
|
|
|
9,461 |
|
|
Technology and development |
|
|
5,325 |
|
|
|
5,044 |
|
|
|
21,062 |
|
|
|
20,476 |
|
|
General and administrative |
|
|
4,996 |
|
|
|
5,010 |
|
|
|
20,078 |
|
|
|
21,157 |
|
|
Depreciation and amortization |
|
|
4,111 |
|
|
|
3,881 |
|
|
|
16,428 |
|
|
|
15,441 |
|
|
Gain on other assets, net |
|
|
(721 |
) |
|
|
(7,800 |
) |
|
|
(9,403 |
) |
|
|
(22,103 |
) |
|
Interest expense |
|
|
1,227 |
|
|
|
1,287 |
|
|
|
4,922 |
|
|
|
1,988 |
|
|
Other expense (income), net |
|
|
16 |
|
|
|
36 |
|
|
|
18 |
|
|
|
(1,196 |
) |
|
(Loss) income before income tax |
|
|
(3,820 |
) |
|
|
1,778 |
|
|
|
(13,638 |
) |
|
|
(3,186 |
) |
|
Income tax expense (benefit) |
|
|
303 |
|
|
|
322 |
|
|
|
(2,314 |
) |
|
|
(1,328 |
) |
|
Net (loss) income |
|
$ |
(4,123 |
) |
|
$ |
1,456 |
|
|
$ |
(11,324 |
) |
|
$ |
(1,858 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share attributable to common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.22 |
) |
|
$ |
0.08 |
|
|
$ |
(0.60 |
) |
|
$ |
(0.10 |
) |
|
Diluted |
|
|
(0.22 |
) |
|
|
0.08 |
|
|
|
(0.60 |
) |
|
|
(0.10 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
19,039 |
|
|
|
18,535 |
|
|
|
18,867 |
|
|
|
18,452 |
|
|
Diluted |
|
|
19,039 |
|
|
|
18,549 |
|
|
|
18,867 |
|
|
|
18,452 |
|
Balance Sheets
(in thousands)
(unaudited)
|
|
|
December 31, |
|
|
December 31, |
|
||
|
|
|
2015 |
|
|
2014 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
45,095 |
|
|
$ |
49,743 |
|
|
Accounts receivable, net |
|
|
11,306 |
|
|
|
14,256 |
|
|
Prepaid expenses and other current assets |
|
|
7,934 |
|
|
|
6,898 |
|
|
Deferred registration costs |
|
|
75,435 |
|
|
|
73,289 |
|
|
Total current assets |
|
|
139,770 |
|
|
|
144,186 |
|
|
Deferred registration costs, less current portion |
|
|
15,700 |
|
|
|
14,502 |
|
|
Property and equipment, net |
|
|
13,298 |
|
|
|
11,527 |
|
|
Intangible assets, net |
|
|
54,328 |
|
|
|
37,116 |
|
|
Goodwill |
|
|
103,042 |
|
|
|
103,042 |
|
|
gTLD deposits |
|
|
8,139 |
|
|
|
21,180 |
|
|
Other assets |
|
|
3,027 |
|
|
|
3,298 |
|
|
Total assets |
|
$ |
337,304 |
|
|
$ |
334,851 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
7,262 |
|
|
$ |
7,190 |
|
|
Accrued expenses and other current liabilities |
|
|
24,591 |
|
|
|
22,313 |
|
|
Debt |
|
|
1,500 |
|
|
|
1,500 |
|
|
Capital lease obligation |
|
|
1,193 |
|
|
|
— |
|
|
Deferred revenue |
|
|
98,294 |
|
|
|
92,683 |
|
|
Total current liabilities |
|
|
132,840 |
|
|
|
123,686 |
|
|
Deferred revenue, less current portion |
|
|
20,487 |
|
|
|
19,195 |
|
|
Debt, less current portion |
|
|
23,277 |
|
|
|
23,605 |
|
|
Capital lease obligation, less current portion |
|
|
811 |
|
|
|
— |
|
|
Deferred tax liabilities, net |
|
|
15,477 |
|
|
|
18,403 |
|
|
Other liabilities |
|
|
1,125 |
|
|
|
1,117 |
|
|
Total liabilities |
|
|
194,017 |
|
|
|
186,006 |
|
|
Total stockholders' equity |
|
|
143,287 |
|
|
|
148,845 |
|
|
Total liabilities and stockholders' equity |
|
$ |
337,304 |
|
|
$ |
334,851 |
|
Reconciliation of Net (Loss) Income to Adjusted EBITDA
(in thousands)
(unaudited)
|
|
|
Three months ended |
|
|
Year ended |
|
||||||||||
|
|
|
December 31, |
|
|
December 31, |
|
||||||||||
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
||||
|
Net (loss) income |
|
$ |
(4,123 |
) |
|
$ |
1,456 |
|
|
$ |
(11,324 |
) |
|
$ |
(1,858 |
) |
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
303 |
|
|
|
322 |
|
|
|
(2,314 |
) |
|
|
(1,328 |
) |
|
Gain on sale of marketable securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,362 |
) |
|
Gain on other assets, net (1) |
|
|
(721 |
) |
|
|
(7,800 |
) |
|
|
(9,403 |
) |
|
|
(22,103 |
) |
|
Interest expense |
|
|
1,227 |
|
|
|
1,287 |
|
|
|
4,922 |
|
|
|
1,988 |
|
|
Depreciation and amortization |
|
|
4,111 |
|
|
|
3,881 |
|
|
|
16,428 |
|
|
|
15,441 |
|
|
Stock-based compensation expense |
|
|
1,653 |
|
|
|
1,410 |
|
|
|
6,296 |
|
|
|
5,836 |
|
|
Acquisition and realignment costs (2) |
|
|
113 |
|
|
|
— |
|
|
|
202 |
|
|
|
294 |
|
|
Adjusted EBITDA |
|
$ |
2,563 |
|
|
$ |
556 |
|
|
$ |
4,807 |
|
|
$ |
(3,092 |
) |
|
(1) |
Net loss (gains) on withdrawals of interest in gTLD applications, included in gain on other assets, net. |
|
(2) |
Acquisition and realignment costs included employee severance and other payments attributable to acquisition or corporate realignment activities. Management does not consider these costs to be indicative of the Company’s core operating results. |
Investor Contacts
The Blueshirt Group
Allise Furlani, 212-331-8433
Brinlea Johnson, 212-331-8424
IR@rightside.rocks