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For online stores, such as Amazon, Flipkart, and Snapdeal, affiliate marketing – where they pay a commission to sites that send them shoppers – is a long established concept. Companies like Amazon made it the norm in the US, and it’s common in India too. And both here and elsewhere, a secondary industry of websites whose business model revolves around affiliate marketing has grown and become a big business opportunity. But Snapdeal seems to be changing the rules of the game by lowering the commission it pays on one of the biggest categories in India e-commerce – mobiles.
As a result of this, many of the biggest sites in this space have decided to get together and cut off traffic to Snapdeal, industry insiders told Gadgets 360. We checked on some well-known coupon sites, such as Couponraja, CouponDunia, and saw that these sites either don’t list products from Snapdeal, or at least aren’t listing phones on Snapdeal. It’s reminiscent of the war between offline and online retailers – offline stores faced a lot of difficulty thanks to online sellers offering lower prices, which led them to form unions to ban e-commerce stores.
(Also see: Where’s my Warranty? The Growing Perils of Shopping Online in India)
We spoke to some of the companies involved – most coupon companies are affected by Snapdeal’s changes, but they’re still making money on other categories of products, and are hoping to directly change the company’s affiliate policy, so they weren’t willing to speak on the record. Even off the record, what we learned mostly came from very guarded answers, but it was enough to paint a picture. On the other side of the story, Snapdeal – and also Flipkart, and Amazon – declined to comment on affiliate partners.
The facts we were able to put together do paint a picture about this issue though. For one thing, Snapdeal has lowered its affiliate payments, and is one of the lowest payouts for mobile phones today. If affiliates refer a new customer, Snapdeal offers 3 percent of the sale as a commission; for existing customers who have bought something on the website already, the payout is 1 percent, for up to 2,500 customers a month, and after that, the commission drops to just 0.1 percent.
Cashkaro has sent press releases stating that it drives 7,000 transactions (across sites and categories) in a single day, or around 210,000 transactions in a month. Based on this, it seems likely that the larger sites would typically drive more than 2,500 sales to Snapdeal in a month, so the payout for them is just 0.1 percent.
If you drive the sale on the Snapdeal app instead, the number is a whopping 4 percent, but one of the couponing sites executives we spoke to told us on the condition of anonymity that the app funnel is more complicated, as the user may not already have the app installed, and on being taken to the app store, then the user is much more likely to cancel the whole exercise than to go through with the sale.
On the other hand, Amazon pays 4 percent on all qualifying purchases (where the customer clicks on a link, comes to the site and adds the product in the same session, and completes the purchase within 89 days) for all consumer electronics. And for Flipkart, the number is 2 percent for existing customers, and 4 percent if the purchase happens on the app, with no cap on the number of orders. For Flipkart exclusives, the number is lower – 3 percent for first time customers and 1 percent for new customers.
The figures that the big affiliates get can be a little different, as they can have their own agreements with the e-commerce stores, but the general trends are similar, one person explained to us. For example, another company’s executive told us that it get a payout of 2.8 percent from Flipkart on electronics; it’s lower than the number mentioned for affiliates on the website, but he explains that the company gets slightly better commissions on some types of products. However in the case of Snapdeal, he confirms that the payout is now just 0.1 percent even for his company. In short, Flipkart pays 20 times more than Snapdeal as a commission, and Amazon pays 40 times as much. With such a discrepancy, it starts to become clear why the coupon sites appear to have banded against Snapdeal.
“A lot of the online shopping that happens in India only takes place because of discounts,” one such company executive told us on background. “If Snapdeal is going to cut the payoff by such a huge amount, then why does it make sense to drive their business? They’re a huge part of the ecosystem, so no one is openly talking about this, but all the top companies are hurting from Snapdeal’s decision, and we have been lobbying them for months now.”
Another person we spoke to who is also in the ecosystem told Gadgets 360, “some people have tried to cut private deals, but we believe we have more of a chance if we talk to Snapdeal collectively. I can tell you that Flipkart’s revenues have shot up, but whether that will make the difference…”
However, others we spoke to say as long as Flipkart and Amazon don’t follow Snapdeal’s lead, it’s not going to become a fault-line in the industry. “India is a very viable model to pre-qualify traffic,” says Raj Ramaswamy, CEO and co-founder ShopInSync. “When there is competition [like in India] the cost of traffic gets higher. Affiliates pre-qualify traffic, so you’re only paying for conversions.”
At the same time, Ramaswamy says that he doesn’t think the issue is one of profit margins. “Margin pressure is likely not behind this decision,” he says, “because there are much better ways to address that issue. There will be some strategic reasons behind this decision. But another thing to remember is that these are not blanket terms. Most people will have their own deals.” Each of the companies gets a deal that’s similar to the public terms but as Ramaswamy points out, this is something that is negotiable, and each company can potentially get a better deal from the e-commerce sites.
Looking at the international perspective though, it’s clear there is precedent for this happening around the world. In the US, Amazon has over the years significantly reduced its payouts – looking at the Internet Archive, you can see that the rate was typically around 15 percent in many categories even in 2012, but now it’s down to 4 percent for electronics, and just 1 percent for video game consoles. The highest commission is on game downloads, and Amazon Coins, both of which pay 10 percent; Amazon also cut ties with affiliates in many states in the US to avoid taxes.
One thing that became increasingly clear, when talking to the people involved, is that the model has to evolve beyond just finding the best deals, and by doing this, the companies will be able to offer something unique as well. “Discounts are a race to the bottom, and there’s no future in that, we want to offer some real value beyond just the deals,” one person says. “Benefits and discounts will peter out,” adds Ramaswamy, “and it’s the convenience that keeps you shopping online. So affiliates also have to offer more than just discounts.”
Disclosure: Gadgets 360’s e-commerce marketplace could be considered a competition for the likes of Snapdeal, Flipkart, and Amazon.
Download the Gadgets 360 app for iOS to stay up to date with the latest tech news, product reviews, and exclusive deals on the popular mobiles.
Facebook is the world’s largest sports stadium. Sort of a weird fact to throw out there, but given its access to a billion-plus daily users, it’s not a completely out of place Friday fun fact.
The social networking giant says it counts some 650 million users as sports fans and to help engage them in a deeper way, Facebook has launched a dedicated platform for real-time updates on games, popular posts from fans, statistics and commentary from experts.
Facebook Sports Stadium may also be stepping up to the podium to take even more of Twitter’s turf. The micro-blogging site has long been a destination for sport nuts to live-tweet play-by-play action. But Facebook wants a bigger slice of the pie.
It’s a move not uncommon for tech giants. China’s Sina counts some 500 million users on its Sina Sports platform and is actively pitching for broadcasts rights around the globe – the most recent being an exclusive deal with Manchester United. The likes of
But Facebook thinks it can offer something new and it’s probably right. Like it or not the likes of ESPN, SB Nation and Fox Sports, while among the biggest sports platforms globally, still operate as traditional media and can not offer – real-time interaction with friends via a platform they spend loads of time on.
It probably won’t seem out of place to see Facebook start bidding for digital broadcast rights to major sporting event sometime soon. Digital right is something that will no doubt become as lucrative, if not more, than traditional and pay-TV rights. It is, after all an Olympic year.
It also may be the start of more business verticals for the social networking giant as looks for new ways to build communities around its massive user base.
LAS VEGAS–(BUSINESS WIRE)–Conversocial, a provider of social customer service technology that is trusted by global brands in hospitality, utilities, airlines and retail, is sponsoring the first SimpliFlying Airline Marketing Innovation Lab, held at The Bellagio on October 20, 2015 in Las Vegas.
More than 50 specialist airline executives, including representatives from American Airlines, Turkish Airlines, Air New Zealand, Qatar Airways, and Singapore Airlines, will participate in the Marketing Innovation Lab where they will contribute, exchange ideas and develop an industry-wide marketing manifesto that looks to 2020.
“89% of all airlines have rated social customer service as their top business goal to drive in SimpliFlying’s latest study. Good customer service has a profound, long term impact on the airline brand. It was critical that we worked with Conversocial to add this expertise in our Lab,” said Shashank Nigam, CEO, SImpliFlying.
Conversocial works with a number of airlines, including Alaska Airlines and Air New Zealand, to improve productivity and operational efficiency by managing the flow of customer service inquiries and discussions on social media channels such as Facebook, Twitter, Google+, Instagram and YouTube.
The Marketing Innovation Lab precedes the SimpliFlying Awards for Excellence in Social Media. Established in 2010, these are the longest-running awards dedicated to social media practices in the aviation industry. The award organizers are dedicated to raising the standard of social media use across the aviation industry, promoting the exchange of knowledge and recognizing the best airlines, airports and travel providers on social media.
“In 2006, Facebook and Twitter became broadly available to consumers and brands – and airlines moved fast to embrace these channels,” said Paul Johns, CMO, Conversocial. “In the last nine years we have seen these channels take a lead in how airlines can identify, reach out and engage with consumers. But now airlines and other brands are know that social media channels such as Facebook, Twitter and Instagram are not one-way broadcast media, they are two-way channels that consumers can – and do – use. Consider the 500 million tweets sent a day, or the 75 million daily Instagram users – these are conversations that have been started by consumers and are there for brands, including airlines, to participate in and to do so in service. We are committed to helping airlines be remarkable in how they use social media, so we leapt at the opportunity to be involved this open and innovative event.”
For more information about Airline Marketing Innovation Lab, please visit: http://simpliflying.com/airline-marketing-innovations-lab/
About Conversocial
Conversocial (http://www.conversocial.com/) is trusted by global brands in hospitality, utilities, airlines and consumer brands for social customer service solutions that improve productivity and operational efficiency by managing the flow of customer service inquiries and discussions on social media channels such as Facebook, Twitter, Google+, Instagram and YouTube.
Brands including Hyatt, Spring, Barclaycard, ConEdison, Co-operative Bank, Travelex and Google use Conversocial’s enterprise-class platform for a single view of the social customer via:
Conversocial is a Twitter Certified Partner and a Facebook Preferred Developer. For more information, visit https://www.facebook.com/conversocial
About SimpliFlying
SimpliFlying (http://www.simpliflying.com/) is a consulting firm that specializes in aviation marketing and innovation. It is one of the largest in the world, having worked with over 65 airlines and airports globally. Headquartered in Singapore, SimpliFlying has presences in Canada, Spain and India. http://simpliflying.com/
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The frenzied investing in China’s tech sector might be a bubble, but that bubble keeps getting bigger. From $1.3 billion in the first half of 2013, investments in Chinese internet companies rose more than five times in this year’s first half, to $6.6 billion, according to a new report by PricewaterhouseCoopers (pdf, p.27).
PricewaterhouseCoopers defines the Internet sector as e-commerce, online education, social media, internet marketing, internet services, internet finance, and online entertainment. Of those categories, e-commerce startups received the most funding, raising a total of $3.4 billion in first half of the year.
Increasingly, early-stage deals constitute more of the total value of China’s internet funding rounds. During the first and second quarters of 2015, early-stage funding rounds made up 78% and 74% of total funding, respectively, for internet companies. This indicates that investors still have plenty of appetite for risky bets on unproven companies.
China has seen its fair share of monster deals this year for companies with unproven business models. Ele.me, a food-delivery startup, raised a reported $630 million last August, after raising over $350 million in January. Didi Kuaidi, China’s competitor to Uber, continues to raise billions of dollars at a time—president Jean Liu has said that burning cash is necessary to ensure the company’s long-term survival.
Despite the impressive investments and big bets, anecdotal evidence indicates a cooling off period is imminent. Rival delivery and group buying companies Meituan and Dianping merged in October in order to curb vicious price wars, and a steady stream of on-demand service startups (car washes on demand, massages on demand) have shut their doors in recent months.
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Kiwi online marketing tool First Table smashes growth expectations in 12 months
An online start-up business that acts as a marketing platform for restaurants has exceeded expectations in the first year of operating.
First Table – which offers customers early bird dining deals at participating eateries – has signed up 120 restaurants throughout New Zealand since launching on September 20 last year.
Starting out in Queenstown, the concept has been picked up by restaurants in Auckland, Christchurch, Wellington, Bay of Plenty, Rotorua, Taupo, Hamilton, Manawatu, Nelson and Dunedin.
It’s also been well-received across the Tasman, with Sydney restaurants joining in and Australia’s Gold Coast eateries expected to follow shortly. First Table’s Australian website went live at the weekend, launching in Sydney’s Manly.
First Table is the brainchild of Queenstown tech entrepreneur Mat Weir. He had hoped to get 100 restaurants on board within the first 12 months and is blown away by how successful it’s been so far.
“The vision is for First Table to be a key marketing platform used by restaurants across the world,” Weir explains.
“Restaurants are able to leverage quiet times of the night to their marketing benefit. Diners are using First Table to try out new restaurants. Restaurants are ensuring that their First Table diners are treated to an amazing experience and the customers are then coming back at later times and happily paying full price.”
Diners search firsttable.co.nz for participating restaurants in their town or city of choice. To secure the booking, they pay the website $10 and then dine at the restaurant for 50% less than the actual dinner menu price. The deal covers up to four diners and does not include discount on drinks.
The idea for First Table was sparked when Weir noticed a rise in restaurants offering early bird specials.
“I saw an opportunity to offer those specials on a scale that only the web can offer, and in a way that provides marketing benefits to restaurants and incentives, savings and new experiences to customers.”
Since starting out, 85,000 people have visited the website and 10,000 people have signed up.
Weir has also employed one business development manager in Auckland, one in Wellington, two in Sydney and one account manager in Queenstown. He is also looking at raising capital overseas and taking the venture to the United States.
Takapuna restaurant The Commons has embraced First Table and is thrilled with the results, functions manager Deahla Stockman says.
“First Table has helped to open our doors to customers that might not have thought there was classic European food available in the North Shore. Through the deals provided by First Table, guests feel more relaxed to explore our menu and try dishes they wouldn’t normally eat. From this, we have seen an influx in repeat diners who want to bring their friends and family in to discover the same quality experience they had at The Commons. We are excited to see guests enjoying the quality experience we strive to provide and look forward to continuing our association with First Table.”
Popular Queenstown restaurant The Jervois Steakhouse jumped at the chance to sign up to First Table in February and hasn’t looked back, general manager Hayden Davison says.
“It has definitely been a great marketing tool for us. It’s a brilliant way for our local market to try us for a nice dinner out without breaking the bank,” Davison says.
“Early dining is always a quiet time of night in Queenstown so it’s great being able to create some real atmosphere in the restaurant at an early stage of the evening. It’s also a great opportunity for our staff to show the First Table diners what we do here and add a personal touch to their experience. We get a lot of return customers as a result.”
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Standage reminds us how historical social networks have much in common with modern social media. The Catholic Church’s dilemmas in responding to Martin Luther’s attacks are similar to those of today’s large institutions in responding to criticism on the Internet, for example, and seventeenth-century complaints about the distractions of coffeehouses mirror modern concerns about social media. Invoking figures from Thomas Paine to Vinton Cerf, co-inventor of the Internet, Standage explores themes that have long been debated, from the tension between freedom of expression and censorship to social media’s role in spurring innovation and fomenting revolution. Writing on the Wall draws on history to cast provocative new light on today’s social media and encourages debate and discussion about how we’ll communicate in the future.
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JACKSONVILLE, Fla., April 30, 2015 (GLOBE NEWSWIRE) — Web.com Group, Inc. (Nasdaq:WWWW), a leading provider of Internet services and online marketing solutions for small businesses, today announced results for the first quarter ended March 31, 2015.
“Web.com began 2015 with first quarter results that exceeded expectations from both a financial and operational perspective. We are beginning to see the positive impact of the changes we have made in recent quarters, and we believe we are well positioned to deliver sequential revenue growth throughout 2015,” said David L. Brown, chairman, chief executive officer and president of Web.com.
Brown added, “From an operational perspective, we generated improvements that have resulted in better product retention rates for our DIY products. We also continue to expand our distribution channels for our DIFM solutions, a highly differentiated suite of technologies and services that help small businesses generate real business value from their online presence. We are focused on building upon our success in the first quarter in order to deliver improved growth, profitability and shareholder value over the long-term.”
Summary of First Quarter 2015 Financial Results:
First Quarter and Recent Business Highlights:
Conference Call Information
Management will host a conference call today, April 30, 2015, at 5:00 p.m. ET, to discuss Web.com’s first quarter financial results and current business outlook. There will be an accompanying slide presentation which will be available on the Investor Relations page of Web.com’s website (http://ir.web.com), along with a live webcast and replay of the call. To access the call, dial 877-407-0789 (domestic) or 201-689-8562 (international). A replay of this conference call will be available until May 7, 2015, at 877-870-5176 (domestic) or 858-384-5517 (international). The replay conference ID is 13605403.
About Web.com
facebook.com/web.com.
Note to Editors: Web.com is a registered trademark of Web.com Group, Inc.
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 measures is useful to investors, because it describes the operating performance of the company, excluding some recurring charges that are included in the most directly comparable measures calculated and presented in accordance with GAAP. Web.com’s 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 Web.com presents, management further sets forth its rationale as follows:
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:
Forward-Looking Statements
This press release includes certain “forward-looking statements” including, without limitation, statements regarding the size of the market opportunity in offerings to small businesses, that are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this presentation that are not historical facts. These statements are sometimes identified by words such as “believe,” “opportunities,” or words of similar meaning. As a result of the ultimate outcome of such risks and uncertainties, Web.com’s actual results could differ materially from those anticipated in these forward-looking statements. These statements are based on Web.com’s current beliefs or expectations, and there are a number of important factors that could cause the actual results or outcomes to differ materially from those indicated by these forward-looking statements, including, without limitation, risks related to the successful offering of the products and services of Web.com; and other risks that may impact Web.com’s business. Other risk factors are set forth under the caption, “Risk Factors,” in Web.com’s Annual Report on Form 10-K for the year ended December 31, 2014 as filed with the Securities and Exchange Commission, which is available on a website maintained by the Securities and Exchange Commission at www.sec.gov. Web.com expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein as a result of new information, future events or otherwise.
Web.com Group, Inc. | ||
Consolidated Statements of Comprehensive Income | ||
(in thousands, except for per share data) | ||
(unaudited) | ||
Three months ended March 31, | ||
2015 | 2014 | |
Revenue | $ 132,600 | $ 133,843 |
Cost of Revenue | 48,702 | 46,586 |
Gross profit | 83,898 | 87,257 |
Operating expenses: | ||
Sales and marketing | 35,679 | 37,533 |
Technology and development | 5,802 | 7,198 |
General and administrative | 17,211 | 13,742 |
Restructuring expense | 313 | — |
Depreciation and amortization | 13,744 | 19,239 |
Total operating expenses | 72,749 | 77,712 |
Income from operations | 11,149 | 9,545 |
Interest expense, net | (5,249) | (7,492) |
Income tax expense | (3,561) | (1,563) |
Net income | $ 2,339 | $ 490 |
Other comprehensive (loss) income: | ||
Foreign currency translation adjustments | ||
Foreign currency translation adjustments | (708) | — |
Unrealized gain (loss) on investments, net of tax | 5 | (2) |
Total comprehensive income | $ 1,636 | $ 488 |
Basic earnings per share: | ||
Net income per common share | $ 0.05 | $ 0.01 |
Diluted earnings per share: | ||
Net income per common share | $ 0.04 | $ 0.01 |
Web.com Group, Inc. | ||
Consolidated Balance Sheets | ||
(in thousands, except share amounts) | ||
March 31, 2015 | December 31, 2014 | |
(unaudited) | ||
Assets | ||
Current assets: | ||
Cash and cash equivalents | $ 16,726 | $ 22,485 |
Accounts receivable, net of allowance of $1,802 and $1,705, respectively | 17,157 | 16,932 |
Prepaid expenses | 11,061 | 10,550 |
Deferred expenses | 65,902 | 62,818 |
Deferred taxes | 23,210 | 23,750 |
Other current assets | 4,897 | 5,012 |
Total current assets | 138,953 | 141,547 |
Property and equipment, net | 43,639 | 44,000 |
Deferred expenses | 52,098 | 50,901 |
Goodwill | 639,188 | 639,564 |
Intangible assets, net | 347,567 | 357,819 |
Other assets | 4,741 | 4,575 |
Total assets | $ 1,226,186 | $ 1,238,406 |
Liabilities and stockholders’ equity | ||
Current liabilities: | ||
Accounts payable | $ 7,157 | $ 9,940 |
Accrued expenses | 15,932 | 14,937 |
Accrued compensation and benefits | 5,756 | 5,997 |
Deferred revenue | 223,699 | 217,394 |
Current portion of debt | 7,440 | 6,197 |
Other liabilities | 5,332 | 5,069 |
Total current liabilities | 265,316 | 259,534 |
Deferred revenue | 189,747 | 185,338 |
Long-term debt | 485,092 | 501,085 |
Deferred tax liabilities | 114,228 | 111,503 |
Other long-term liabilities | 7,128 | 6,856 |
Total liabilities | 1,061,511 | 1,064,316 |
Stockholders’ equity: | ||
Common stock, $0.001 par value per share: 150,000,000 shares authorized, 51,686,088 and 52,108,719 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively | 52 | 52 |
Additional paid-in capital | 554,095 | 552,991 |
Treasury stock at cost, 1,088,447 shares as of March 31, 2015, and 395,395 shares as of December 31, 2014 | (19,131) | (6,975) |
Accumulated other comprehensive loss | (2,095) | (1,393) |
Accumulated deficit | (368,246) | (370,585) |
Total stockholders’ equity | 164,675 | 174,090 |
Total liabilities and stockholders’ equity | $ 1,226,186 | $ 1,238,406 |
Web.com Group, Inc. | ||
Reconciliations of GAAP to Non-GAAP Results | ||
(in thousands, except for per share data) | ||
(unaudited) | ||
Three months ended March 31, | ||
2015 | 2014 | |
Reconciliation of GAAP revenue to non-GAAP revenue | ||
GAAP revenue | $ 132,600 | $ 133,843 |
Fair value adjustment to deferred revenue | 5,093 | 7,391 |
Non-GAAP revenue | $ 137,693 | $ 141,234 |
Reconciliation of GAAP net income to non-GAAP net income | ||
GAAP net income | $ 2,339 | $ 490 |
Amortization of intangibles | 9,816 | 16,184 |
Stock based compensation | 5,047 | 4,504 |
Income tax expense | 3,561 | 1,563 |
Restructuring expense | 313 | — |
Corporate development | 597 | 40 |
Amortization of debt discounts and fees | 2,798 | 2,718 |
Cash income tax expense | (267) | (132) |
Fair value adjustment to deferred revenue | 5,093 | 7,391 |
Fair value adjustment to deferred expense | 191 | 301 |
Non-GAAP net income | $ 29,488 | $ 33,059 |
Reconciliation of GAAP basic net income per share to non-GAAP basic net income per share | ||
Basic GAAP net income per share | $ 0.05 | $ 0.01 |
Amortization of intangibles | 0.19 | 0.32 |
Stock based compensation | 0.10 | 0.09 |
Income tax expense | 0.07 | 0.03 |
Restructuring expense | 0.01 | — |
Corporate development | 0.01 | — |
Amortization of debt discounts and fees | 0.06 | 0.05 |
Cash income tax expense | (0.01) | — |
Fair value adjustment to deferred revenue | 0.10 | 0.15 |
Fair value adjustment to deferred expense | — | 0.01 |
Basic Non-GAAP net income per share | $ 0.58 | $ 0.66 |
Reconciliation of GAAP diluted net income per share to non-GAAP diluted net income per share | ||
Diluted shares: | ||
Basic weighted average common shares | 50,872 | 50,334 |
Diluted stock options | 1,354 | 3,546 |
Diluted restricted stock | 266 | 703 |
Total diluted weighted average common shares | 52,492 | 54,583 |
Diluted GAAP net income per share | $ 0.04 | $ 0.01 |
Amortization of intangibles | 0.19 | 0.29 |
Stock based compensation | 0.10 | 0.08 |
Income tax expense | 0.07 | 0.03 |
Restructuring expense | 0.01 | — |
Corporate development | 0.01 | — |
Amortization of debt discounts and fees | 0.05 | 0.05 |
Cash income tax expense | (0.01) | — |
Fair value adjustment to deferred revenue | 0.10 | 0.14 |
Fair value adjustment to deferred expense | — | 0.01 |
Diluted Non-GAAP net income per share | $ 0.56 | $ 0.61 |
Reconciliation of GAAP operating income to non-GAAP operating income | ||
GAAP operating income | $ 11,149 | $ 9,545 |
Amortization of intangibles | 9,816 | 16,184 |
Stock based compensation | 5,047 | 4,504 |
Restructuring expense | 313 | — |
Corporate development | 597 | 40 |
Fair value adjustment to deferred revenue | 5,093 | 7,391 |
Fair value adjustment to deferred expense | 191 | 301 |
Non-GAAP operating income | $ 32,206 | $ 37,965 |
Reconciliation of GAAP operating margin to non-GAAP operating margin | ||
GAAP operating margin | 8% | 7% |
Amortization of intangibles | 7 | 11 |
Stock based compensation | 4 | 3 |
Restructuring expense | — | — |
Corporate development | — | — |
Fair value adjustment to deferred revenue | 4 | 6 |
Fair value adjustment to deferred expense | — | — |
Non-GAAP operating margin | 23% | 27% |
Reconciliation of GAAP operating income to adjusted EBITDA | ||
GAAP operating income | $ 11,149 | $ 9,545 |
Depreciation and amortization | 13,744 | 19,239 |
Stock based compensation | 5,047 | 4,504 |
Restructuring expense | 313 | — |
Corporate development | 597 | 40 |
Fair value adjustment to deferred revenue | 5,093 | 7,391 |
Fair value adjustment to deferred expense | 191 | 301 |
Adjusted EBITDA | $ 36,134 | $ 41,020 |
Reconciliation of GAAP operating margin to adjusted EBITDA margin | ||
GAAP operating margin | 8% | 7% |
Depreciation and amortization | 10 | 13 |
Stock based compensation | 4 | 3 |
Restructuring expense | — | — |
Corporate development | — | — |
Fair value adjustment to deferred revenue | 4 | 6 |
Fair value adjustment to deferred expense | — | — |
Adjusted EBITDA margin | 26% | 29% |
Reconciliation of net cash provided by operating activities to free cash flow | ||
Net cash provided by operating activities | $ 31,923 | $ 18,606 |
Capital expenditures | (3,604) | (2,921) |
Free cash flow | $ 28,319 | $ 15,685 |
Revenue | ||
Subscription | $ 130,461 | $ 131,784 |
Professional services and other | 2,139 | 2,059 |
Total | $ 132,600 | $ 133,843 |
Stock based compensation | ||
Cost of revenue | $ 509 | $ 488 |
Sales and marketing | 1,235 | 1,148 |
Technology and development | 763 | 737 |
General and administrative | 2,540 | 2,131 |
Total | $ 5,047 | $ 4,504 |
Web.com Group, Inc. | ||
Consolidated Statements of Cash Flows | ||
(in thousands) | ||
(unaudited) | ||
Three months ended March 31, | ||
2015 | 2014 | |
Cash flows from operating activities | ||
Net income | $ 2,339 | $ 490 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 13,744 | 19,239 |
Stock based compensation | 5,047 | 4,504 |
Deferred income taxes | 3,280 | 1,411 |
Amortization of debt issuance costs and other | 2,796 | 2,719 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (255) | (3,173) |
Prepaid expenses and other assets | (615) | (4,085) |
Deferred expenses | (4,281) | (941) |
Accounts payable | (2,882) | (3,706) |
Accrued expenses and other liabilities | 2,015 | (795) |
Accrued compensation and benefits | (66) | (8,243) |
Accrued restructuring costs and other reserves | — | (1,139) |
Deferred revenue | 10,801 | 12,325 |
Net cash provided by operating activities | 31,923 | 18,606 |
Cash flows from investing activities | ||
Business acquisitions, net of cash acquired | (475) | (7,437) |
Capital expenditures | (3,604) | (2,921) |
Net cash used in investing activities | (4,079) | (10,358) |
Cash flows from financing activities | ||
Stock issuance costs | (24) | (24) |
Common stock repurchased | (2,261) | (4,956) |
Payments of long-term debt | (17,500) | (15,000) |
Proceeds from exercise of stock options | 1,971 | 4,154 |
Proceeds from borrowings on revolving credit facility | — | 9,000 |
Common stock purchases under stock repurchase plan | (15,786) | — |
Net cash used in financing activities | (33,600) | (6,826) |
Effect of exchange rate changes on cash | (3) | — |
Net (decrease) increase in cash and cash equivalents | (5,759) | 1,422 |
Cash and cash equivalents, beginning of period | 22,485 | 13,806 |
Cash and cash equivalents, end of period | $ 16,726 | $ 15,228 |
Supplemental cash flow information | ||
Interest paid | $ 3,108 | $ 5,526 |
Income tax paid | $ 478 | $ 191 |
CONTACT: Investors:
Brian Denyeau
646-277-1251
Brian.Denyeau@icrinc.com
Media:
John Herbkersman
904-251-6297
jherbkersman@web.com
