JACKSONVILLE, Fla., Aug. 4, 2008 (PRIME NEWSWIRE) -- Web.com (Nasdaq:WWWW), a leading provider of online marketing for small businesses, today announced results for the second quarter ended June 30, 2008.
Summary of Second Quarter 2008 Results:
* Total revenue for the second quarter of 2008 was $32.0 million,
an increase of 84% compared to $17.4 million for the second
quarter of 2007.
* Operating income, calculated in accordance with U.S. generally
accepted accounting principles (GAAP), for the second quarter of
2008 was $1.4 million, an increase from GAAP operating income
of $0.5 million for the second quarter of 2007.
* GAAP net income for the second quarter of 2008 was $2.2 million,
an increase from GAAP net income of $0.6 million for the second
quarter of 2007. GAAP net income per diluted share was $0.07 per
share for the second quarter of 2008 an increase from GAAP net
income per diluted share of $0.03 per share for the second quarter
of 2007. GAAP net income for the second quarter of 2008 included
a $0.6 million net tax benefit, or $0.02 per diluted share,
resulting from a $1.3 million reduction in the Company's deferred
tax asset valuation reserve.
* Non-GAAP operating income for the second quarter of 2008 was a
record $5.2 million, representing a non-GAAP operating margin of
16% and an increase of 167% compared to $2.0 million for the
second quarter of 2007.
* Non-GAAP net income for the second quarter of 2008 was a
record $5.4 million, an increase of 121% compared to $2.4 million
for the second quarter of 2007.
* Non-GAAP net income per diluted share for the second quarter of
2008 was $0.18, an increase of 50% compared to $0.12 for the
second quarter of 2007.
"Despite challenging economic conditions, Web.com was able to hit the top of its quarterly revenue and earnings guidance. The operating leverage potential of our business model is evidenced by record gross and operating margins, which is driving the company's strong and growing earnings and cash flow," stated David Brown, Chairman and CEO of Web.com. "From a short-term perspective, we believe it is prudent to expect the macro-economic environment to impact our small business customers. From a long-term perspective, we are very optimistic about our market position and opportunity as we execute against our strategies to build the premier online marketing solutions provider to small and medium-sized businesses."
Other Highlights:
* Web.com's total net subscribers were approximately 271,000 at
the end of the second quarter, up from approximately 270,000
at the end of the previous quarter.
* Customer churn was at a record low 3.9%, compared to 4.1% in the
previous quarter on a combined basis.
Conference Call Information
Management will host a conference call to discuss Web.com's results and other matters related to the Company's business, including guidance related to future results, today August 4, 2008, at 5:00 p.m. (Eastern Time). To access this call, dial 888-668-1645 (domestic) or 913-312-0392 (international). A replay of this conference call will be available for a limited time at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 6601479. A webcast of this conference call will also be available for a limited time on the "Investor Relations" page of the Company's website, www.web.com.
All per share numbers for non-GAAP net income per share are expressed on a weighted-average diluted per share basis. Non-GAAP net income exclude stock-based compensation expense, amortization expense related to acquisitions, the deferred revenue adjustment due to purchase accounting, income tax expense, and includes an estimated cash tax rate to be paid during 2008. Non-GAAP operating income excludes stock-based compensation expense, amortization expense related to acquisitions and the deferred revenue adjustment related to purchase accounting. A reconciliation of GAAP financial measures to non-GAAP financial measures results has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Use of Non-GAAP Financial Measures."
About Web.com
Web.com (Nasdaq:WWWW) is a leading provider of online marketing for small businesses. Web.com offers a full range of online services, including Internet marketing and advertising, local search, search engine marketing, search engine optimization, lead generation, home contractor specific leads, website design and publishing, and shopping cart solutions, meeting the needs of small businesses anywhere along their lifecycle. Web.com is currently incorporated in Delaware as Website Pros, Inc. and is doing business as Web.com. For more information on the company, please visit http://www.web.com or call 1-800-GETSITE.
Use of Non-GAAP Financial Measures
Some of the measures in this press release are non-GAAP financial measures within the meaning of the SEC Regulation G. Web.com believes presenting non-GAAP net income attributable to common stockholders, non-GAAP net income per share attributable to common stockholders and non-GAAP operating income is useful to investors, because it describes the operating performance of the company and helps investors gauge the company's ability to generate cash flow, excluding some recurring charges that are included in the most directly comparable measures calculated and presented in accordance with GAAP. Company management uses these non-GAAP measures as important indicators of the company's past performance and in planning and forecasting performance in future periods. The non-GAAP financial information Web.com presents may not be comparable to similarly-titled financial measures used by other companies, and investors should not consider non-GAAP financial measures in isolation from, or in substitution for, financial information presented in compliance with GAAP. You are encouraged to review the reconciliation of non-GAAP financial measures to GAAP financial measures included elsewhere in this press release.
Relative to each of the non-GAAP measures the company presents above, management further sets forth its rationale as follows:
* Non-GAAP Operating Income. The Company excludes from non-GAAP
operating income amortization of intangibles, fair value
adjustment to deferred revenue and stock based compensation
charges. Management believes that excluding these non-cash
charges assists investors in evaluating period-over-period
changes in the Company's operating income without the impact of
items that are not a result of the Company's day-to-day business
and operations.
* Non-GAAP Net Income and Non-GAAP Net Income Per Share. The
Company excludes from non-GAAP net income and non-GAAP net
income per share amortization of intangibles, income tax
expense, fair value adjustment to deferred revenue and stock
based compensation, and includes cash income tax expense,
because management believes that excluding such measures
helps investors better understand the Company's operating
activities.
In respect of the foregoing, Web.com provides the following supplemental information to provide additional context for the use and consideration of the non-GAAP financial measures used elsewhere in this press release:
* Stock-based compensation. These expenses consist of expenses
for employee stock options and employee stock purchases under
SFAS 123(R). The Company excludes stock-based compensation
expenses from our non-GAAP measures primarily because they
are non-cash expenses. Prior to the adoption of SFAS 123(R)
in fiscal 2006, the Company did not include expenses related
to employee stock options and employee stock purchases directly
in its financial statements, but elected, as permitted by
SFAS 123, to disclose such expenses in the footnotes to its
financial statements. As the Company applies SFAS 123(R), it
believes that it is useful to its investors to understand the
impact of the application of SFAS 123(R) to its operational
performance, liquidity and its ability to invest in research
and development and fund acquisitions and capital expenditures.
While stock-based compensation expense calculated in accordance
with SFAS 123(R) constitutes an ongoing and recurring expense,
such expense is excluded from non-GAAP results because it is not
an expense that typically requires or will require cash settlement
by the Company and because such expense is not used by management
to assess the core profitability of the Company's business
operations. The Company further believes these measures are
useful to investors in that they allow for greater transparency
to certain line items in our financial statements. In addition,
excluding this item from various non-GAAP measures facilitates
comparisons to the Company's competitors' operating results.
* Amortization of intangibles. The Company incurs amortization
of acquired intangibles under SFAS 141. Acquired intangibles
primarily consist of customer relationships, non-compete
agreements, trade names, and developed technology. The Company
expects to amortize for accounting purposes the fair value of
the acquired intangibles based on the pattern in which
the economic benefits of the intangible assets will be
consumed as revenue is generated.
