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Web.com Reports Third Quarter Financial Results

November 7, 2006

Web.com Reports Third Quarter Financial Results
ATLANTA, Nov. 7, 2006 (PRIMEZONE) -- Web.com, Inc. (Nasdaq:WWWW), the leading destination for websites and web services, today reported results for its third quarter ended September 30, 2006.

Summary of Third Quarter 2006 Results:

  • Total revenues for the quarter were $12.3 million, up from $12.1 million in the second quarter of 2006.
  • Net income for the quarter was negative $0.6 million, or $(0.04) per share, versus a negative $5.7 million, or $(0.35) per share, in the quarter ended June 2006. Third quarter net income included a tax gain of approximately $500,000.
  • Adjusted net income from continuing operations(1) was $0.1 million, up from negative $3.6 million in the second quarter of 2006.
  • Net subscribers totaled approximately 152,000 for the quarter, up over 4,000 from approximately 148,000 in the second quarter of 2006.

"Web.com accomplished another quarter of organic subscriber growth and continued to focus on our core web services business, new revenue streams and the path towards profitability," stated Jeff Stibel, President and CEO, Web.com. "This quarter's strong growth helped contribute to the company's 11% subscriber growth rate year to date. Looking ahead, we expect revenue and organic subscriber growth to continue in the fourth quarter."

"The company's improved financials quarter over quarter demonstrate its resiliency and ability to focus on the bottom line," stated Gonzalo Troncoso, Executive Vice President and Chief Financial Officer. "Our core business continues to evolve into a diversified web services model which our customers are finding to be a valuable resource as they build, market and grow their online presence."

About Web.com

Web.com, Inc. (Nasdaq:WWWW) is the leading destination for the simplest, yet most powerful solutions for websites and web services. Web.com offers do-it-yourself and professional website design, website hosting, ecommerce, web marketing and email. Since 1995, Web.com has been helping individuals and small businesses leverage the power of the Internet to build a web presence. More than 4 million websites have been built using Web.com's proprietary tools, services and patented technology. For more information on the company, please visit www.web.com or call at 1-800-WEB-HOST.

Web.com will host a conference call today to discuss its quarterly results at 9:30AM ET (6:30AM PT). A live webcast of the call can be accessed on the investors section of the company's website at www.web.com/ir. A replay of the call will be available on the site for seven days.

(1) Adjusted net income from continuing operations is a non-GAAP financial measure and is defined as net income from continuing operations excluding interest income or expense, provision for income taxes, depreciation, amortization of intangibles, and stock-based compensation.

Note Regarding Use of Non-GAAP Financial Measures

This earnings release contains non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Attached to this earnings release is a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measures.

Web.com, Inc. uses the non-GAAP measure adjusted net income (loss) from continuing operations to supplement the Consolidated Financial Statements presented in accordance with GAAP. This non-GAAP financial measure is used in addition to and in conjunction with the financial results presented in accordance with GAAP, and the presentation of this non-GAAP financial information should not be considered in isolation, or as a substitute for the GAAP conforming measures.

Management uses Net income (loss) from continuing operations for financial and operational decision making, to evaluate management performance for compensation purposes, and as a means to provide comparable period-to-period operating results. This information is generally requested by investors and analysts. Web.com, Inc. believes that providing this non-GAAP measure provides greater transparency to investors to view the business through the eyes of management. We define adjusted net income (loss) from continuing operations as net income (loss) from continuing operations excluding (i) provision for income taxes, (ii) interest income or expense, (iii) depreciation, (iv) amortization of intangibles, and (v) stock based compensation. Management uses this non-GAAP financial measure as a primary measure in monitoring and evaluating the Company's ongoing operating results and trends in its operations. The Company believes that excluding income (loss) from discontinued operations provides a more relevant measure of the Company's present web services business. The Company's income (loss) from discontinued operations relates to the Company's prior business of manufacturing personal computers, which the Company sold in fiscal 2001, and is wholly unrelated to the Company's present web services business. By excluding these discontinued operations, the Company believes management and investors are better able to compare operating results of the Company's existing business over multiple periods. Management believes the exclusion of stock based compensation provides a more consistent comparison against prior year periods, since stock based compensation was not included in net income (loss) for prior fiscal years. Management believes that measuring the performance of the business without regard to discontinued operations and interest, taxes and depreciation and amortization can make trends in operating results more readily apparent, and when considered with other information, assist management and investors in evaluating the Company's ability to generate future earnings. A substantial portion of the Company's non-cash charges relate to historical transactions and capital expenditures that the current management may or may not have influenced. When considered with other performance metrics that alternatively include or exclude these charges, the Company believes the investor, like management, has a measure that provides both individual and collective management effectiveness. The Company believes that this non-GAAP measure is beneficial to management and investors for planning, budgeting and financial modeling purposes, as well as for comparison to its historical performance from period to period and to competitors' operating results. We believe both short and long term performance is transparent by providing GAAP and non-GAAP basis measurements to investors and analysts.

The limitations of use of the non-GAAP measure of net income (loss) from continuing operations as compared to Net income (loss) in accordance with GAAP include the fact that the measure excludes some recurring costs such as depreciation and amortization and stock-based compensation, which are expected to continue as a significant recurring expense in the Company's business. Net income (loss) from continuing operations also does not take into account costs of doing business that can be substantial, such as income taxes and interest expense. Further, net income (loss) from continuing operations may not be comparable to similarly captioned information reported by other companies. The Company compensates for these limitations by providing specific information regarding the GAAP amounts excluded from this non-GAAP measure, by providing reconciliation to the most directly comparable GAAP financial measure and by evaluating net income (loss) from continuing operations together with net income (loss) and other financial measures calculated in accordance with GAAP.

Forward-Looking Statements

Except for the historical information contained in this press release, statements in this press release may be considered forward-looking statements. These forward-looking statements include, but are not limited to, the ability to continue positive growth trends, increase customers and revenues, sell additional products and services to existing customers, create a well-known brand for the Company's product offerings, successfully access the consumer segment of the web hosting market and enter into strategic alliances with leading companies in the industry. Forward-looking statements are also identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue", similar expressions, and variations or negatives of these words. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements are based on Web.com's current expectations, estimates, projections, beliefs and assumptions. These forward-looking statements speak only as of the date hereof and are based upon the information available to the Company at this time. Such information is subject to change, and the Company will not necessarily inform you of such changes. These statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, the Company's actual results could differ materially and adversely from those expressed in any forward-looking statement as a result of various factors. Factors which could affect these forward-looking statements, and Web.com's business, include but are not limited to: the availability of competing products and services with superior quality, functionality or price, the ability to operate within budgeted expense, the ability of the Company to improve customer satisfaction, reduce churn, and expand its customer base as planned, growing dependence on reseller and other indirect sales channels, general economic conditions, the impact of competition, quarterly fluctuations in operating results, the loss of customers with failing businesses and customer churn in general, customer acceptance of new products and services, the retention of key employees, potential liabilities from the sale of dedicated server assets, possible disruptions for customers due to our data centers being maintained by third parties, higher than expected costs of litigation and the impact of liabilities that could carry over from the Company's discontinued operations. Certain of these and other risks associated with Web.com's business are discussed in more detail in its public filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, its Quarterly Reports and Transition Report on Form 10-Q and its Current Reports on Form 8-K, and its most recent proxy statement. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not undertake to update its forward-looking statements.

   WEB.COM, INC.
   CONSOLIDATED STATEMENTS OF OPERATIONS
   (In thousands, except per share amounts)
   (Unaudited)
                                     For the              For the
                                Three months ended    Nine months ended
                               --------------------  -------------------
                               Sept. 30,   Aug. 31,  Sept. 30,  Aug. 31,
                                 2006        2005      2006       2005
                                --------   -------   --------   --------
   Revenues                     $12,348    $20,618    $36,663    $65,547
  
   Operating costs and expenses:
    Network operating costs,
     exclusive of depreciation
     shown below (b)              2,174      5,642      6,827     17,218
    Sales and marketing,
     exclusive of depreciation
     shown below (a)              3,600      4,469     10,085     14,537
    Technical support, exclusive
     of depreciation shown
     below (a)                    1,701      2,612      5,184      9,271
    General and administrative,
     exclusive of depreciation
     shown below (a)              4,457      7,980     19,064     23,358
    Bad debt expense                314        321        833      1,321
    Depreciation and
     amortization (b)             1,014      4,370      4,373     15,362
    Restructuring costs              --        950         66      2,616
    Impairment of investment in
     and advances to WebSource
     Media                           --         --      3,488         --
    Gain on sale of accounts        205        705        205     (1,210)
    Other expense (income), net      (2)        (4)        (5)       (28)
                                --------   -------   --------   --------
    Total operating costs
     and expenses                13,463     27,045     50,120     82,445
                                --------   -------   --------   --------
   Operating loss                (1,115)    (6,427)   (13,457)   (16,898)
   Interest income (expense),
    net                             227        181        736        395
                                --------   -------   --------   --------
   Loss from continuing
    operations before income
    taxes                          (888)    (6,246)   (12,721)   (16,503)
   Income tax benefit               411        850      1,274        850
                                --------   -------   --------   --------
   Loss from continuing
    operations                     (477)    (5,396)   (11,447)   (15,653)
   Loss from discontinued
    operations, net of tax         (117)      (778)      (362)    (1,040)
                                --------   -------   --------   --------
   Net loss                     $  (594)   $(6,174)  $(11,809)  $(16,693)
                                =======    =======   ========   ========
   Net loss per share, basic
    and diluted:
     Continuing operations      $ (0.03)   $ (0.34)  $  (0.69)  $  (0.98)
     Discontinued operations      (0.01)     (0.05)     (0.02)     (0.06)
                                -------    -------   --------   --------
                                $ (0.04)   $ (0.39)  $  (0.71)  $  (1.04)
                                =======    =======   ========   ========
   Number of shares used in
    per share calculation:
     Basic and diluted           16,570     16,103     16,493     16,024
  
   (a) Includes stock-based
        compensation as follows:
       Network operating costs  $      7   $    --   $     19   $     --
       Sales and marketing            64        --        118         --
       Technical support               9        --         26         --
       General and
        administrative               113        --      5,526        162
                                --------   -------   --------   --------
     Total stock-based
      compensation              $    193   $    --   $  5,689   $    162
                                ========   =======   ========   ========
   (b) Amortization of
        intangible assets       --------   -------   --------   --------
       Network operating costs  $    126   $   126   $    379   $    379
                                ========   =======   ========   ========
  
   WEB.COM, INC.
   CONSOLIDATED BALANCE SHEETS
   (In thousands)
   (Unaudited)
                                                        As of
                                             ---------------------------
                                             September 30,   December 31,
                                                 2006            2005
                                             ------------    -----------
   Assets
    Current assets
     Cash and cash equivalents                  $  16,294      $  17,370
     Trade receivables, net of allowance
      for doubtful accounts                         1,526          1,812
     Other receivables                                615          1,180
     Other current assets                           1,473          2,026
     Restricted investments                           164            276
                                                ---------      ---------
    Total current assets                           20,072         22,664
  
     Restricted investments                         7,914          9,015
     Securities, held-to-maturity                      --             53
     Property, plant and equipment, net             4,301          6,303
     Goodwill                                         986            921
     Intangibles, net                               5,566          6,568
     Other assets                                   3,149          5,600
                                                ---------      ---------
   Total assets                                 $  41,988      $  51,124
                                                =========      =========
   Liabilities and shareholders' equity
    Current liabilities
     Accounts payable                           $   1,847      $     934
     Accrued expenses                               5,836          6,232
     Accrued restructuring charges                  2,584          4,416
     Current portion of long-term
      debt and capital lease obligations            1,737          1,693
     Deferred revenue                               4,665          4,637
                                                ---------      ---------
    Total current liabilities                      16,669         17,912
  
     Long-term debt and capital lease
      obligations                                   2,443          3,850
     Deferred revenue, long-term                      226            206
     Other liabilities                                149            934
                                                ---------      ---------
   Total liabilities                               19,487         22,902
                                                ---------      ---------
  
  
   Shareholders' equity
    Common stock, $.01 par value, authorized
     26 and 21 million shares, issued and
     outstanding 16.7 and 16.6 million shares,
     respectively                                     167            166
    Additional capital                            331,580        325,493
    Warrants                                        2,128          2,128
    Note receivable from shareholder                 (735)          (735)
    Accumulated deficit                          (310,639)      (298,830)
                                                ---------      ---------
   Total shareholders' equity                      22,501         28,222
                                                ---------      ---------
   Total liabilities and shareholders' equity   $  41,988      $  51,124
                                                =========      =========
  
   The accompanying notes are an integral part of these consolidated
   financial statements.
  
  
   WEB.COM, INC.
   Adjusted Net Income (Loss)
   from Continuing Operations
   (In thousands)
   (Unaudited)
                                     For the               For the
                               Three months ended     Nine months ended
                               -------------------   -------------------
                               Sept. 30,  Aug. 31,   Sept. 30,  Aug. 31,
                                 2006       2005       2006       2005
                               --------   --------   --------   --------
   Net loss                    $   (594)  $ (6,174)  $(11,809)  $(16,693)
  
   Depreciation and
    amortization                  1,014      4,370      4,373     15,362
   Amortization of stock-based
    compensation                    193         --      5,689        162
   Interest expense (income)       (227)      (181)      (736)      (395)
   Income tax benefit              (411)      (850)    (1,274)      (850)
   Discontinued operations          117        778        362      1,040
                               --------   --------   --------   --------
   Adjusted Net Income (Loss)
    from Continuing Operations  $    91   $ (2,057)  $ (3,395)  $ (1,374)
                               ========   ========   ========   ========
  
   WEB.COM
   CONSOLIDATED STATEMENTS OF CASH FLOWS
   (In thousands)
   (Unaudited)
                                          For the nine months ended
                                          --------------------------
                                          September 30,    August 31,
                                               2006           2005
                                             --------       --------
   CASH FLOWS FROM
    OPERATING ACTIVITIES
  
   Net loss                                  $(11,809)      $(16,693)
   Adjustments to reconcile net loss
    to net cash used in operating
    activities from continuing operations:
     Loss from discontinued operations            362          1,039
     Depreciation and amortization              4,373         15,363
     Bad debt expense                             833          1,321
     Gain on sale of assets                        (5)           (28)
     Loss (Gain) on sale of accounts              205         (1,210)
     Impairment of investment in and
      advances to WebSource Media               3,488             --
     Stock-based compensation                   5,689            162
     Changes in operating assets and
      liabilities net of effect of
      acquisition:
       Receivables                                 18           (347)
       Other current assets                       553            (30)
       Accounts payable, accrued expenses
        and deferred revenue                   (1,877)        (1,414)
                                             --------       --------
   Cash provided by (used in) operating
    activities of continuing operations         1,830         (1,837)
                                             --------       --------
  
   CASH FLOWS FROM
    INVESTING ACTIVITIES
  
   Expenditures for property, plant,
    and equipment                              (1,364)        (8,565)
   Payment for purchase of WebSource Media     (3,261)            --
   Release of funds from escrow account         2,247             --
   Net proceeds from sale of accounts              --          2,517
   Payment of fees on sale of
    dedicated accounts                             --           (338)
   Purchase of held-to-maturity
    investment securities                          --            (50)
   Proceeds from sale of held-to-maturity
    investment securities                          53             --
   Purchases of auction rate securities            --         (6,000)
   Proceeds from auction rate securities           --         19,025
   Net change in restricted investments         1,213            819
   Other                                          (65)            --
                                             --------       --------
   Cash (used in) provided by investing
    activities of continuing operations        (1,177)         7,408
                                             --------       --------
   CASH FLOWS FROM
    FINANCING ACTIVITIES
  
   Repayments of debt and capital
    lease obligations                          (1,363)        (1,435)
   Proceeds from exercises of
    stock options                                 400            609
                                             --------       --------
   Cash used in financing activities
    of continuing operations                     (963)          (826)
                                             --------       --------
   Net cash (used in) provided by
    continuing operations                        (310)         4,745
                                             --------       --------
   Net cash used in discontinued
    operations
      Operating cash flows                       (766)          (986)
      Investing cash flows                         --             --
      Financing cash flows                         --             --
                                             --------       --------
   Total cash flows used in
    discontinued operations                      (766)          (986)
                                             --------       --------
  
   Net increase (decrease) in cash
    and cash equivalents                       (1,076)         3,759
   Cash and cash equivalents at
    beginning of period                        17,370         13,132
                                             --------       --------
   Cash and cash equivalents at
    end of period                            $ 16,294       $ 16,891
                                             ========       ========
  
   The accompanying notes are an integral part of these consolidated
   financial statements.
  

CONTACT: Web.com
Peter Delgrosso
404-260-2500
investor@corp.web.com