wwww investor presentation may 2013

7/28/2019 WWWW Investor Presentation May 2013

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Investor PresentationMay 2013

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Updated and posted as of

May 21, 2013


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Safe Harbor Statement

This presentation includes certain "forward-looking statements" including, without limitation, statements regarding Web.comsexpectations about its future financial performance and market position, 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, growing, emerge or

words of similar meaning. These statements are based on our 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, our ability to integrate acquired businesses, our ability to maintain our sales efficiency, our ability to

maintain our existing, and develop new, strategic relationships, the number of our net subscriber additions and our monthly customer

turnover. These and other risk factors are set forth under the caption "Risk Factors" in Web.coms Form 10-K for the year endedDecember 31, 2012, 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.

Non-GAAP Measures

Some of the measures in this presentation are non-GAAP financial measures within the meaning of the SEC Regulation G. Web.com

believes presenting non-GAAP financial 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. 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 in Web.coms filings with the Securities and Exchange

Commission, which are available at www.sec.gov as well as in this presentation.


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Investment Highlights

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At center of powerful market drivers: mass adoption of internet,social, mobile, local

Large installed subscriber base with significant growth potential

Unmatched breadth and depth of proprietary products and services

Demonstrated ability to grow organically and via acquisition

Recurring revenue base with high visibility/predictabilityAttractive model with strong financial performance


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1Q 2013 Highlights

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Non-GAAPRevenue

Non-GAAP

Net Income

Adjusted EBITDA

Cash from

operations

Unlevered

Free Cash Flow

$18.2 million

Excludes $7.2 million one-time debt prepayment penalty

$36.9 million

29% Adjusted EBITDA margin

$24.5 million or $0.48 per diluted shareExceeded company guidance of $22.6 - $23.4 million

or $0.44- $0.46 per share

$128.1 millionIncrease of ~7% over prior year Non-GAAP revenueExceeded company guidance of $126.5 - $128 million

$23.1 millionExcludes $7.2 million one-time debt prepayment penalty


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1Q 2013 Highlights

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Customer Retention99%

Continued at record high levels, with monthly churn ~1%

Average Revenueper User (ARPU)

$13.89/monthIncreased from $13.77 in 4Q 2012

Net New

Subscribers

21,000

Total Subscribers 3,030,000


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SMBs Need Help

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Lots of handholding

Products & services that are easy to:

Choose bundle it

Purchase

Use

Customer service to help them throughout their

lifecycle

Solutions that deliver real customer sales

Single trusted provider

Save me timeHelp me make money


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Value Proposition

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Consultative approach

to customers to make

sure the SMBs online

marketing message is

articulated clearly

Expert teams work

together on separate

work streams

Up and running in less

than 7 days

Analytics to track traffic

and leads

Tools to track campaigns

Higher ROI vs. printmedia

Domain name to start

online presence

Online marketing and

eCommerce to acquire

customers

Social/mobile to extend

presence

Bundled and a la carte

solutions customized for

SMBs

Broad suite of solutions

caters to SMBs at all

stages

Customized and efficientprocess

Value measurement

Extracting and Articulating the SMBs Online Marketing Message


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Bundled Solutions are Our Core Offering

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l SmartCallsFacebook

Boost

eCommerce Standard

Gorilla Marketing bundle

Online Directory Advertising

Google Places

Google Maps

Website Statistics

DIY website

Email services

SSL security

Product Management

Payment Processing

Local search

Lead gen

Mobilemarketing

SEM

eWorks! XL bundle


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Broad Suite of Offerings Sold Through Multiple Channels

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Lower subscriber acquisition cost

Online marketing

Partners

Inbound calls

Higher subscriber acquisition cost

Direct response TV

Call center

Feet on the Street

DIFM Do it for me

Bundled solutions

Higher ARPU

DIY Do it yourself

Offering

Products

Sales

channels

Products

Lower ARPU

$5-37 / year

DIY Website Builder:

DIY Business Builder:

SSL certificates:

DIY eCommerce: Starting at $35 / month

$50-150 / year

$13-37 / month

$30 / month

$20 / month

Domains:

eWorks XL

DIFM eCommerce:

SmartCalls:

Leads by Web:

Facebook Boost

$750-1,000+ / month

$150 / month

$95 / month

$100s / month

$190/ month

Mobile $6 / month

Full Service SEO Starting at

$300/ month

Unix Hosting:

Windows Hosting: Starting at $12 / month


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Powerful Combination of Revenue and

Earnings Growth Drivers

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ARPU growth

Subscriber growth

Low subscriber churn

Significant cost synergies

Deleveraging


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Accelerating Growth in Recurring Revenue

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$107

$133

$234

$491

$-

$100

$200

$300

$400

$500

2009 2010 2011 2012

Note: Acquired Register.com in 2010 and Network Solutions in 2011

Annual Non-GAAP revenues ($mm) Pro-forma QuarterlyNon-GAAP revenues ($mm)

$119

$122

$124

$126

$128

$112

$114

$116

$118

$120

$122

$124

$126

$128

$130

1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013


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Mostly Domains & DIY services

efficiently sourced via online channel

Average 1st year order: $100 (or~ $8/month)

Excellent future cross sell-upsell

prospects

Primarily Value Added Services:

eWorks/ Gorilla Marketing/ Facebook

Boost/eCommerce Most via telesales into installed base

BUT also adding new subscribers

through Direct Response TV and Feet

on the Street

Net NewSubscribers

ARPUGrowth

Revenue Growth Drivers


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Consistent ARPU Growth

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$15.39 $15.64$16.24

$16.73$17.38

$13.15 $13.34 $13.49$13.77 $13.89

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013

MonthlyARPU

Note: ARPU Quarterly Non-GAAP subscription revenue divided by the average number of subscribers for the quarter divided by three months.


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2,959,000

2,973,000

2,991,000

3,009,000

3,030,000

2,920,000

2,940,000

2,960,000

2,980,000

3,000,000

3,020,000

3,040,000

1Q2012 2Q2012 3Q2012 4Q2012 1Q2013

Significant Subscriber Growth

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+21,000

+18,000

+18,000

+14,000

+2,000


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Low Customer Churn

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Churn Customer cancellations in the quarter divided by the sum of the number of

subscribers at the beginning of the quarter and the gross number of new subscribers added

during the quarter, divided by three months

3.6%

2.2%

1.5%

1.0% 1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2009 2010 2011 2012 1Q 2013

Annual Average Monthly Churn


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Strong and Growing Profitability

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$20.1 $24.3

$54.2

$144.5

$-

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

2009 2010 2011 2012

29%

Adjusted EBITDA($mm)

Adj.

EBITDA

Margin (%)

($mm)Non-GAAP Net Income & EPS

19% 18% 23%

$18.3 $18.4

$35.3

$79.8

$-

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0

2009 2010 2011 2012

$1.59Non-GAAP

EPS ($)$0.68 $0.68 $1.05


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Investing in Beneficial Growth

Driving Cross Sell through Inbound/Outbound Telesales Direct Response TV ads

Cost of acquisition stable; investing more $$

Branded DRTV commercials

Feet on the Street 16 markets, including 8 new offices added in 1Q 2013

Leads by Web, highest value product; targeting ~1 year payback

Web.com Tour Title Sponsorship

Exceptional visibility with high quality brand

Unique opportunity to directly access small businesses in dozens

of markets

27 Small Business Forums being hosted in 2013

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Improved Cost of Capital

October 27, 2011Interest

RateMarch 31, 2013

InterestRate

First Lien Term

Loan

$600MM 7% $660MM 4.5%

Second Lien Term

Loan

$150MM 11% -$0- -

Revolving Credit

Facility (drawn)

$21MM ~5.5% $41MM ~3.5%

Total debt balance $771MM $701MM

Effective Interest

Rate

7.6% 4.4%


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Long-Term Growth Targets

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Revenue growth Earnings growth

Low teensrevenuegrowth

Mid teens to20% earnings

growth

Long term Long term

Revenue Non-GAAPNet Income


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Appendix

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Balance Sheet

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Web.com Group, Inc.

Consolidated Balance Sheets

(in thousands, except per share data)

March 31,

2013December 31,

2012

(unaudited) (audited)

Assets

Current assets:

Cash and cash equivalents $ 13,587 $ 15,181

Accounts receivable, net of allowance of $2,281 and$2,337, respectively 16,754 15,007

Prepaid expenses 10,776 6,697

Deferred expenses 59,311 59,255

Deferred taxes 13,781 18,092

Other current assets 4,984 5,116

Total current assets 119,193 119,348

Property and equipment, net 40,786 40,079

Deferred expenses 62,632 63,147

Goodwill 628,176 628,176

Intangible assets, net 452,417 469,703

Other assets 5,581 6,817

Total assets $ 1,308,785 $ 1,327,270

Liabilities and stockholders' equity

Current liabilities:

Accounts payable $ 7,389 $ 6,385

Accrued expenses 12,990 11,562

Accrued compensation and benefits 4,280 15,413

Accrued restructuring costs and other reserves 746 1,477

Deferred revenue 201,174 191,149

Current portion of debt 42,217 4,681

Other liabilities 2,691 2,556

Total current liabilities 271,487 233,223


Long-term debt 657,529 688,140

Deferred tax liabilities 74,032 64,126

Other long-term liabilities 5,258 4,352

Total liabilities 1,191,883 1,165,657

Stockholders' equity:

Common stock, $0.001 par value per share: 150,000,000

shares authorized, 49,692,899 and 49,175,642 shares issuedand outstanding at March 31, 2013 and December 31, 2012,

respectively 50 49

Additional paid-in capital 455,804 454,022

Accumulated other comprehensive income 14 5

Accumulated deficit (338,966) (292,463)

Total stockholders' equity 116,902 161,613

Total liabilities and stockholders' equity $ 1,308,785 $ 1,327,270


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Cash Flow Statement

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Web.com Group, Inc.

Consolidated Statement of Cash Flows

(in thousands, except for per share amounts)

(unaudited)

Three months ended March 31,

2013 2012

Cash flows from operating activities

Net loss $ (46,503 ) $ (29,779 )

Adjustments to reconcile net loss to net cash provided by

operating activities:

Loss from debt extinguishment 12,286

Depreciation and amortization 20,040 19,679

Stock based compensation 6,365 2,680

Deferred income taxes 14,217 (6,824 )

Amortization of debt issuance costs and other 577 3,725

Changes in operating assets and liabilities:

Accounts receivable, net (1,747 ) (2,156 )

Prepaid expenses and other assets (5,098 ) (3,294 )

Deferred expenses 460 (1,039 )

Accounts payable 2,045 2,958

Accrued expenses and other liabilities 2,469 (972 )

Accrued compensation and benefits (11,133 ) (8,136 )

Accrued restructuring (731 ) (1,624 )


Net cash provided by operating activities 11,033 14,823

Cash flows from investing activities

Capital expenditures (4,496 ) (2,679 )

Net cash used in investing activities (4,496 ) (2,679 )

Cash flows from financing activities

Stock issuance costs (2 ) (86 )

Common stock repurchased (5,666 ) (3,199 )

Payments of long-term debt (669,576 ) (11,500 )

Proceeds from exercise of stock options 1,085 1,602

Proceeds from long-term debt issued 668,350

Debt issuance costs (2,322 )

Net cash used in financing activities (8,131 ) (13,183 )

Net decrease in cash and cash equivalents (1,594 ) (1,039 )

Cash and cash equivalents, beginning of period 15,181 13,364

Cash and cash equivalents, end of period $ 13,587 $ 12,325

Supplemental cash flow information

Interest paid $ 15,635 $ 14,755

Income tax (received) paid $ (31 ) $ 58


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Reconciliation of GAAP to Non-GAAP Results

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Web.com Group, Inc.Reconciliation of GAAP to Non-GAAP Results

(in thousands, except for per share data)

(unaudited)


2013 2012

Reconciliation of GAAP revenue to non-GAAP revenue

GAAP revenue $ 115,546 $ 91,514

Fair value adjustment to deferred revenue 12,547 27,823Non-GAAP revenue $ 128,093 $ 119,337


Reconciliation of GAAP gross profit to non-GAAP gross profit 2013 2012

GAAP gross profit $ 72,906 $ 52,906

Fair value adjustment to deferred revenue 12,547 27,823

Fair value adjustment to deferred expense 454 676

Stock based compensation 528 305

Non-GAAP gross profit $ 86,435 $ 81,710


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2013 2012

Reconciliation of GAAP net loss to non-GAAP net income

GAAP net loss $ (46,503 ) $ (29,779 )

Amortization of intangibles 17,286 17,692

(Gain) loss on sale of assets (6 ) 402

Stock based compensation 6,365 2,680

Income tax expense (benefit) 14,536 (6,539 )

Restructuring charges 912

Corporate development 334

Amortization of deferred financing fees 583 3,323

Cash income tax expense (286 ) (285 )



Loss on debt extinguishment 19,526

Non-GAAP net income $ 24,502 $ 17,239


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2013 2012

Reconciliation of GAAP diluted net loss per share to

non-GAAP diluted net income per share

Diluted shares:

Basic weighted average common shares 48,085 46,140

Diluted stock options 2,134 2,279

Diluted restricted stock 681 1,096

Total diluted weighted average common shares 50,900 49,515

Diluted GAAP net loss per share $ (0.97) $ (0.65)

Diluted equity 0.06 0.04

Amortization of intangibles 0.33 0.37

(Gain) loss on sale of assets 0.01

Stock based compensation 0.13 0.05

Income tax expense (benefit) 0.29 (0.13)

Restructuring charges 0.02

Corporate development 0.01

Amortization of deferred financing fees 0.01 0.07Cash income tax expense (0.01 (0.01

Fair value adjustment to deferred revenue 0.25 0.56

Fair value adjustment to deferred expense 0.01 0.01

Loss on debt extinguishment 0.38

Diluted Non-GAAP net income per share $ 0.48 $ 0.35


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2013 2012

Reconciliation of GAAP operating loss to adjusted

EBITDA

GAAP operating loss $ (2,490) $ (18,542)

Depreciation and amortization 20,040 19,679

(Gain) loss on sale of assets (6) 402Stock based compensation 6,365 2,680


Corporate development 334



Adjusted EBITDA $ 36,910 $ 33,964


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2013 2012

Reconciliation of GAAP operating margin to adjusted

EBITDA margin

GAAP operating margin (2)% (20)%

Depreciation and amortization 16 16

(Gain) loss on sale of assets

Stock based compensation 5 2


Corporate development

Fair value adjustment to deferred revenue 10 28

Fair value adjustment to deferred expense 1

Adjusted EBITDA margin 29% 28%


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2013 2012

Revenue

Subscription $ 113,280 $ 88,850

Professional services and other 2,266 2,664

Total $ 115,546 $ 91,514

Stock based compensationCost of revenue $ 528 $ 305

Sales and marketing 1,498 616

Research and development 833 481

General and administration 3,506 1,278

Total $ 6,365 $ 2,680


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Reconciliation of Operating Cash Flow to Unlevered Free Cash Flow 2013 2012

Operating cash flow $ 11,033 $ 14,823

Less: Capital expenditures (4,496) (2,679)

Plus: Interest/prepayment penalties 16,607 14,453

Unlevered free cash flow $ 23,144 $ 26,597

wwww investor presentation may 2013

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