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Edited Transcript of EIGI earnings conference call or presentation 7-Feb-19 1:00pm GMT

Q4 2018 Endurance International Group Holdings Inc Earnings Call

Burlington Feb 13, 2019 (Thomson StreetEvents) -- Edited Transcript of Endurance International Group Holdings Inc earnings conference call or presentation Thursday, February 7, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Angela White

Endurance International Group Holdings, Inc. - VP of IR

* Jeffrey H. Fox

Endurance International Group Holdings, Inc. - President, CEO & Director

* Marc Montagner

Endurance International Group Holdings, Inc. - CFO

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Conference Call Participants

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* Brian Lee Essex

Morgan Stanley, Research Division - Equity Analyst

* John Lewis Streppa

Jefferies LLC, Research Division - Equity Associate

* Mark Frank Grant

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Naved Ahmad Khan

SunTrust Robinson Humphrey, Inc., Research Division - Analyst

* Robert Main

* Stephen D. Ju

Crédit Suisse AG, Research Division - Director

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Endurance International Group 2018 Fourth Quarter and Full Year Results -- Financial Results Conference Call. (Operator Instructions) As a reminder, this conference may be recorded.

I would now like to introduce your host for today's conference, Angela White, VP, Investor Relations. Ma'am, you may begin.

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Angela White, Endurance International Group Holdings, Inc. - VP of IR [2]

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Thanks, Armani. Good morning, everyone. It's my pleasure to welcome you to our fourth quarter and full year 2018 earnings call.

First, we'll go through some prepared remarks, after which, we'll turn to Q&A. We prepared a presentation to accompany our comments, which is available on the Investor Relations section of our website at ir.endurance.com. While not necessary to follow along, we recommend referencing the presentation slides alongside our prepared remarks.

As is customary, let me now read the safe harbor statement. Statements made on today's call will include forward-looking statements about Endurance's future expectations, plans and prospects. All such forward-looking statements are subject to risks and uncertainties. Please refer to the cautionary language in today's earnings release and to our Form 10-Q filed with the SEC on November 2, 2018, for a discussion of the risks and uncertainties that could cause our actual results to be materially different from those contemplated in these forward-looking statements. Endurance does not assume any obligation to update any forward-looking statements.

During the call, we'll reference several non-GAAP financial measures, including adjusted EBITDA, free cash flow, net debt and bank adjusted EBITDA. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure is available in the presentation located in the Investor Relations section of our website.

With that, I'll turn the call over to Jeff Fox, our President and CEO.

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [3]

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Thanks, Angela, and good morning. Before Marc and I dive into details, I'd like to put our 2018 progress into strategic context. We are a scale multibrand platform in the large and growing SMB solutions marketplace. We have a set of valuable market-leading assets that generate significant cash flow on a base of approximately 4.8 million customers. In 2018, we focused on integrating assets we had acquired over multiple years and increased investment in our strategic brands to position the company for a return to growth.

As a team, we made a lot of progress, and I'm pleased with our financial and operating performance. Specifically, the team executed with an owner-operator mindset and with a focus on driving long-term value on our strategic brands. The team effectively managed expenses and made progress simplifying operations while delivering adjusted EBITDA above the top end of expectations we set out a year ago.

Turning to Slide 6. Full year 2018 revenue was $1.145 billion and adjusted EBITDA was $338.1 million. We ended the year with approximately 4.802 million subscribers on our platform as we turned our focus to a narrowed set of strategic brands. In 2018, we reduced our debt by over $100 million, reflecting our commitment to deleveraging our balance sheet. In the fourth quarter, revenue was $282.4 million and adjusted EBITDA was $79.3 million. Our year-over-year revenue and adjusted EBITDA declines reflect our 2018 investment plan and the continued impact to revenue, primarily from our declining nonstrategic assets.

Turning to Slide 7. Our plan in 2019 remains focused on delivering increased value to our customers, whether starting with an idea for a business or seeking to actively grow their business. We will build off of our 2018 investment in product and engineering as we continue to expand solutions and improve user experience across Constant Contact, Bluehost, HostGator and Domain.com. In 2019, we will increase our investment in analytics and test progressively into brand and channel expansion. We expect to fund this primarily through reallocation of spend from historical -- historic channels. We believe that our increasing focus on our strategic brands will drive the effectiveness of our sales and marketing spend in 2019.

Our 2019 plan also includes increased investment in international operations to complement growth initiatives on our strategic brands. In our Latin America region, our team did an excellent job in Brazil and expanded into Chile and Colombia in 2018. In 2019, we plan to increase marketing and solution spend to drive additional growth in the region. In our Asia Pacific region, we added key leadership in 2018 and made progress integrating teams while improving profitability. In 2019, we will invest in our solutions and selected brands to position to grow the region. We will also use our technology team in Holland as an innovation hub as we continue to expand solutions for customers across all of our strategic brands.

Turning now to our -- to Slide 8. In 2018, we grew our email marketing segment year-over-year due in part to increases in customer contact lists along with driving higher revenue per customer through price increases. We invested in rebuilding our engineering and development capabilities, and the team did a great job improving our solution set by adding incremental functionality and third-party integrations, such as e-commerce and social media marketing. In 2019, we will refresh our brand and will expand into new channels and new markets. We will move the Constant Contact brand beyond email marketing and build on its position as a small business solution provider.

Turning now to our web presence segment. We were pleased by the progress we made in our Bluehost and HostGator brands in 2018. Revenue for the year was impacted primarily by the decline in net units on our nonstrategic assets. At Bluehost, the team worked hard to deliver a simplified experience for users of the world-class WordPress platform and to add additional solutions. In 2019, we will invest in the Bluehost brand to leverage our position as a leading WordPress hosting partner. We will continue to expand our solution set by adding additional capabilities, such as e-commerce, digital advertising and Microsoft Office 365. At HostGator, we will focus on strengthening capabilities, simplifying the business systems and increasing investment in Latin America.

In 2018, our domain team did an excellent job improving the user experience by introducing a new front of site on our Domain.com brand. Late in the year, we launched Microsoft Office 365 and are pleased with the early results. In 2019, we will add additional capabilities to our Domain.com platform, allowing SMBs to get online through the domain-first experience and add products, such as hosting, site builder and security services.

Slide 11. This year, we will continue to add capabilities across our strategic assets to increase the value we deliver to our customers. The team will continue to execute with an owner-operator mindset as we increase our capabilities in product and marketing.

Our 2019 plan calls for growth in the second half, a result of work completed in 2018 and our investments in the first half of 2019. At the same time, we are committed to continuing to reduce our debt with our excess free cash flow in 2019. We're looking forward to the new year.

And with that, I will turn the call over to Marc Montagner, our CFO.

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Marc Montagner, Endurance International Group Holdings, Inc. - CFO [4]

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Thank you, Jeff. On Slide 13, I am pleased to review our fiscal year 2018 and fourth quarter result. For the full year, GAAP revenue was $1.145 billion; adjusted EBITDA was $338.1 million; and free cash flow, defined as cash flow from operation, less capital expenditures and financed equipment, was $129.2 million after the payout of a $8 million fine to the SEC.

The GAAP cash flow from operations in 2018 was $182.6 million. CapEx was $53.3 million. Revenue was in line with our expectation for the year, and we exceeded our adjusted EBITDA expectations with disciplined cost control and a delay of some investments into 2019. Free cash flow was higher than expected due to the higher adjusted EBITDA and slightly lower-than-expected CapEx. Our year-over-year decline in adjusted EBITDA was due mostly to the impact of lower revenue and our planned increase in engineering and development expenses. This was offset by the benefit from lower data center cost, lower customer support cost and lower G&A cost.

Slide 14. For the fourth quarter of '18, GAAP revenue was $282.4 million, adjusted EBITDA was $79.3 million and free cash flow was $23.6 million. GAAP cash flow from operation in the fourth quarter was $49 million. CapEx was $25.4 million. The decline in adjusted EBITDA year-over-year in the fourth quarter was due mostly to a decrease in quarterly revenue and an increase in engineering and development investment.

Slide 15. We finished the fourth quarter and the year with 4.8 million subscriber, approximately. Total subscribers decreased by approximately 50,000 from the third quarter. In 2018, total subscriber decreased by 249,000. As we have said previously, our decision to deprioritize nonstrategic brand and to focus on marketing spend on higher-value customers has been the primary driver of the declines in subscribers throughout the year.

In the fourth quarter, combined monthly average revenue per subscriber, or ARPS, was $19.50; in the web presence, it was $13.49 (sic) [$13.45]; in email marketing, $69.22; and in domains, $15.63. For the fiscal year, ARPS was $19.37 versus $18.82 last year. In web presence, it was $13.47; in email marketing, $67.28; and domains, $16.05.

Slide 16. As of the date of this call, our guidance for 2019 is the following: GAAP revenue of $1.140 billion to $1.160 billion; adjusted EBITDA of $310 million to $330 million; and free cash flow of $115 million to $125 million. Free cash flow guidance for 2019 includes a $7 million impact for the expected payment of the previously disclosed settlement of 2 of our shareholder class action lawsuits. We expect capital expenditures of approximately $55 million in 2019. We intend to use our excess free cash flow to pay down approximately $100 million of debt in 2019.

Slide 17. We ended the year with $1.855 billion in total senior debt. Including other deferred purchase obligation and capital leases of $12 million and total cash on the balance sheet of $91 million, total net debt at the end of the period was $1.776 billion. During the fourth quarter, we paid down approximately $25 million of our term loan debt. In the full year, we paid down over $100 million in our term loan debt and reduced our deferred consideration by $4.5 million. Interest payment over the year totaled approximately $134 million.

Our revolving credit facility remains at a 0 balance, and we maintain an available credit balance of $165 million. Our LTM bank adjusted EBITDA for the period ending December 31, 2018, was $340.2 million. Our senior debt leverage ratio was 4.19x and remains well below our maximum senior secured leverage ratio of 6x. Thank you for joining us today.

Now I turn the call back to Jeff.

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [5]

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Thanks, Marc. We have turned our focus to our 2019 integrated operating plan. We will continue to drive investment in our strategic brands and focus on the value we deliver to our customers. Thank you for joining us this morning.

Now I'll turn the call back to the operator to begin Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question will come from Brian Essex with Morgan Stanley.

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Brian Lee Essex, Morgan Stanley, Research Division - Equity Analyst [2]

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Jeff, I had a quick question on subscribers for you. I think in prior calls, you've been hesitant to kind of break out by cohort. But I was wondering if you could give us a little bit of insight on the growth profile for the core products versus the nonstrategic.

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [3]

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So I'm not sure if that's a specific enough question for me to answer. But here's the way we're looking at it, Brian. I mean, we have a very profitable platform, and we're moving money into different channel structures, brands and solutions. And so we're very focused on inflecting our revenue, and all units are not created equal. So for us, we feel like the way the team came together in 2018 and is handling the complexity and the focus, we've -- we're being very clear that our plan calls for top line year-over-year growth in the back half of the year. And we feel like our unit losses, we'll have to track, but we're a little less focused on the specific unit numbers because there's a lot of volatility in our plan between the harvest and the growth.

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Brian Lee Essex, Morgan Stanley, Research Division - Equity Analyst [4]

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Got it. Understood. And maybe for a follow-up, if I could maybe unpack a little bit the ARPS increase. In terms of primary drivers, I mean, just interested in getting a little bit of color around mix versus maybe better attach versus, I guess, apples-to-apples price increases on a like-for-like basis for specific products.

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [5]

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I think we've described what's going on at Constant Contact, right? And our plan for Constant Contact is very clear. We have a brand that will be outside of email-only during the year with a lot of testing, and we feel good about that. It actually, short term, may affect the ARPS one way or the other, maybe potentially down, right? But if you then look at the rest of our mix, I -- it depends on what brand and what set of bundles. If -- our ultimate objective is, is to increase ARPS by moving to our higher-value brands and moving to more value and more solution adoption on those brands, that is ultimately what we're trying to drive in our domain and our web presence segments. It's also the same thing we're trying to drive on the Constant Contact or email marketing segment. But in 2018, the specificity of how those numbers are going to turn around, they ought to improve in terms of ARPS because we are -- if we are churning out mostly lower-ARPS customers and replacing it mostly on brands where we have higher value and higher solution adoption strategies over the life of that customer, that makes sense. I'm bringing them all together, a lot of the brand parts, but it's -- we got caught at some level in more of a CTA to unit acquisition model, and we are transforming our business rationally into CTA to lifetime revenue, lifetime value. And we're -- and I feel like the team has really dug in and executing that better and better every day, which is why we're -- 2019 is our execute base.

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Brian Lee Essex, Morgan Stanley, Research Division - Equity Analyst [6]

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Right. No, that's helpful. I was just trying to get a feel for, is growth entirely reliant on price increases, but it sounds like there is an element of mix shift and product development as well involved with that.

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [7]

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Yes. And it's not reliant materially on implementing price increases. There is some natural price increase that goes with the duration of a base in both -- in all of our businesses.

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Operator [8]

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Our next question comes from Mark Grant with Goldman Sachs.

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Mark Frank Grant, Goldman Sachs Group Inc., Research Division - Equity Analyst [9]

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A quick one, Jeff, on Constant Contact. You mentioned expanding to add more functionality for small businesses. I was wondering if you could give a bit more color around the specifics of that plan. Do you see specific kinds of functionality or new products that you'd plan to add? And how well positioned do you think Constant Contact is to compete in those new adjacencies? And then related to that, do you think that's going to have a greater impact on bringing new users into the ecosystem? Or is that more of an effort to drive higher ARPU?

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [10]

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So to keep it simple and not be in the forecasting business, we spent 2018 rebuilding some of our engineering team there. I think if you actually look at our Q4 '17 engineering number, you can see that we hit a low just because there was an investment strategy that had to be implemented. But -- and so as we rebuilt our engineering team, we felt like we make -- made real progress in terms of adding to the functionality of the core platform with no specific price increase for -- so that our base gets more value for the dollars they're paying us right now. And so we feel like we've made good progress and have more we can do to increase the ability of our base to know more about their customers and to do more through automation and integration off of our platform with either e-commerce or social. So those are things we added in 2018 which will continue to be improved, frankly, forever. And so we feel like that the roughly 0.5 million customers we have at Constant Contact are getting good value using the platform that they have. That's a high-return activity for our customers. And so at a strategy level, we feel like it's really important for us to always be investing in bringing new capabilities to a customer that has put our platform somewhere in their customer contact or marketing automation environment. So that's the macro. It's -- and that's when I use the phrase, invest to increase the value customers get. We feel like if you bought something from us, we need to take seriously that continued investment value for the dollars you're spending. And then ultimately, when our customers grow, we should be able to grow with them through additional -- through their natural growth, which we do in Constant Contact. As our customers list sizes grow, then we get some natural growth in what we get paid. It's a very good business model for both us and our customers in my view. We will then step back and think -- and then when you think strategically, we've said, since I've been here, that we intend to start to open up some freemium funnels around our core email marketing, which is a paid service because it's a high-ROI application. And so freemium funnels and continuing to test in some international markets are part of our test and invest agenda in 2019, not only on Constant Contact, but on Bluehost, HostGator and Domain.com. Okay?

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Operator [11]

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And our next question comes from Naved Khan with SunTrust.

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Naved Ahmad Khan, SunTrust Robinson Humphrey, Inc., Research Division - Analyst [12]

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A couple of questions. Jeff, in your commentary, you talked about potentially expanding some of the sort of brand spend. Can you talk about the timing? I think you said something about using analytics to make sure you spend your dollars correctly, but can you just give a sense of timing as to how this would progress through the year? And then on the Office 365, do you have a sense of the -- of what the opportunity is within your base to sort of cross-sell this kind of solution?

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [13]

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So that's an easy one. We believe that we have a really good opportunity, and we expect some real dollars in our plan and hence the debate between actual units and ARPS. But we definitely have -- we now have 2 of our 4 strategic brands actively working Office 365. I think there's a learning and adoption curve, and so I really look at that as some back half of the year additional revenue with some long-term momentum. It's clearly of value for certain customers, and so it's very brand-aligned in terms of the way we're thinking. As it relates to the brand spend, we're specifically just doing some refresh work. The company has a -- historically, Constant Contact was more brand-centric, but they were bought 3 years ago. Am I getting my dates right? It was about 3 years ago. And so we feel like as we're really doubling down and investing more heavily in that solution set and in expanding the capabilities beyond just email marketing, we are doing some brand refresh work, and we will be thoughtful about the economics of that as a specific component of our spend as we test and learn this year. And we also are doing brand refresh thinking on our other 3 largest strategic brands: Domain.com, HostGator and Bluehost. But again, those were assets where the history of the company was more direct acquisition spend versus brand. But as search volume and our strategic scale are now clearly delineated, we will need to begin to make some brand investment in all 3 of those assets properly. And again, we will do it in proportion to the success we're seeing in terms of attracting customers and driving value to those customers. So it's just part of the plan. It's not a big, new announcement.

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Naved Ahmad Khan, SunTrust Robinson Humphrey, Inc., Research Division - Analyst [14]

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Okay. And then maybe one last kind of big picture question. Can you just comment on the competitive dynamics in all of your markets, the U.S. and abroad? And maybe as it relates -- so as it relates to the health of small and micro business, has anything changed in recent months versus the prior year or couple of years?

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [15]

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I couldn't hear what you said, the second part of the question.

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Naved Ahmad Khan, SunTrust Robinson Humphrey, Inc., Research Division - Analyst [16]

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Yes, just -- can you just give us a sense of the competitive landscape and if anything has changed at the macro level in terms of health of the small and micro business?

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [17]

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So the competitive landscape is just as competitive and dynamic as it was this time last year. I think that we're seeing the rewards for growth in the stock market, and so we see folks leaning into investing to grow. When I look across the sales and marketing and engineering budgets of several of our competitors, to the extent I have that information, we see folks putting money into attracting customers and then taking them on a journey. That's part of what we're doing as well. I think we're -- I've said since day 1, we're a scale operating platform. We do have a little bit of dilution from multiple brands, but we feel like we're more than armed for the battle of getting our share of what we think are growing markets as we phase in our investments and adjust our approach over time. We think 2019 is a big year to make movement, and so we're becoming more competitive. But the market is absolutely competitive, and we think that's a positive. We would rather see a market that's got a lot -- that's drawing a lot of investment effort because that says we're all seeing the same growth opportunity. As it relates to your second question, we've not seen anything material as it relates to a change in the SMB environment. We -- if anything, they're under more pressure to find more answers more effectively and more efficiently, and that's a big part of what we're trying to reposition our big 4 assets to compete for, which is to be a simpler, easier-to-do business with supplier.

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Operator [18]

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(Operator Instructions) Our next question comes from Brent Thill with Jefferies.

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John Lewis Streppa, Jefferies LLC, Research Division - Equity Associate [19]

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Can you hear me?

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [20]

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Yes.

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John Lewis Streppa, Jefferies LLC, Research Division - Equity Associate [21]

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This is John in for Brent Thill. Just 2 questions. One, you talked a lot about doing more solution sales. Could you talk a little bit more specifically about, I don't know, how you might involve bundles or additional new products? And the second question for Marc is, you mentioned some delay of some investments into '19. Is there any specifics you can share on that?

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Marc Montagner, Endurance International Group Holdings, Inc. - CFO [22]

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Yes, let me take the last question first, a delay of some investment. Obviously, we plan to invest more in engineering and development, and it just takes time to hire the coding engineer. So we've done tremendous progress, invested a lot, but we haven't filled every single rack, and we will do that in 2019. And on the IT side, same thing. We were beefing up our security team, cybersecurity team, and we haven't filled up all the racks, but this is coming in the first quarter.

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Angela White, Endurance International Group Holdings, Inc. - VP of IR [23]

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Hello? Sorry.

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [24]

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Yes.

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Marc Montagner, Endurance International Group Holdings, Inc. - CFO [25]

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The solution set. Jeff, do you want...

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [26]

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I mean, I'll just give you a couple of examples. I mean, we've -- on both Bluehost and Constant Contact, we see -- as an example, we do a lot of business. Obviously, Bluehost is a top tier provider of hosting on the WordPress platform, and we've launched a couple of services bundles there that are really good value if you want help, and we're seeing those do nicely. And again, we priced those to make sure that customers get really good value, and it is a good price point for us as well. It's a fair economic exchange. We've done exactly the same thing, short term, on Constant Contact. We've -- and -- but our plan on Constant Contact nearer term involves more automation and using what we've learned with some of the services offerings to embed more capabilities into the base product and the ability for the customer to get, if you will, more recommendation value out of the -- our analytics embedded in the platform of Constant Contact. So those are examples of us putting things together so that the customer gets more success, where we will charge a bundle price or unbundle it, depending on what package they're on. Obviously, Office 365 -- launching Office 365, which is a proven valuable solution, we were -- frankly, we were behind on that. I'm very thank -- I very much want to thank the team for making that a good user experience on the platforms we've launched it on. And those are things we're -- I don't love to call out stuff where we were behind and playing catch up. Okay?

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Operator [27]

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And our next question comes from Stephen Ju with Crédit Suisse.

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Stephen D. Ju, Crédit Suisse AG, Research Division - Director [28]

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Jeff, so I guess, I'm wondering if you can talk a little bit more about your push into the LatAm and APAC regions. They're obviously very big regions with lots of different countries. So I'm just wondering if it's going to be targeted on a certain country first. And I think in particular for APAC, I think you guys have had a presence, I think, in India before. So I'm just wondering what's new or different in terms of what your plans might be.

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [29]

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Yes. So LatAm's easy. The primarily brand that we've gone to market with is HostGator. And frankly, we have a really good team there. They've really done a nice job thinking through how that brand plays, starting in Brazil, but they've now expanded obviously to Chile and Colombia and a few other markets. And so for us, LatAm is a region that we see competitors in, and we just -- we happen to have a good team that, frankly, was and we hope will continue to do a great job taking a brand that started off in the U.S. and making it -- giving it a larger total addressable market. Latin America is a place where we will also, through that team, bring additional solutions in 2019. Example would be, I don't know exactly -- I don't have in front of me the exact ways that they're going to leverage some of our builder technology, but I know that they've got aspirations to use our builder stack as well in their offerings. Asia-Pac. We bought a business several years ago, and I think what we did in 2018 was we started to refresh the strategy. We're a sizable player in India and we're a sizable player through a platform we have called ResellerClub, which we put on the slide. So we already have a very good presence in India. And what we're really doing is refreshing our global brand strategies and trying to make sure that as we go beyond India, that we solidify the right brand and solution strategies. And so we have been refreshing the leadership team there. But our India team serves 2 purposes. We actually do some work supporting our U.S. operations there and the team's really come together and doing a great job as an operating part of our platform. And then from a growth perspective, I feel like Asia-Pac, there are several countries in Asia where we feel like, as we get our brand strategies and solutions lined up here in early 2019, we'll make an investment for some additional growth in those markets. Again, that's not a big announcement. But I am trying to remind people that our total addressable market is bigger than we've really been investing to compete in on our core solutions and brands. We were a bit more business unit-oriented until the transformation we've started to go through.

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Operator [30]

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And our next question comes from Robert Main with DCM.

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Robert Main, [31]

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Just curious on the capital structure, given that your bonds are now callable, curious what your thoughts are there. And also what your first lien target leverage is. And if you're at that level, would you consider just using the free cash flow to pay down the bonds instead of the term loan, given it's more expensive capital?

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Marc Montagner, Endurance International Group Holdings, Inc. - CFO [32]

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Yes, Robert, thanks for the question. I think our goal for 2019 is to pay down another $100 million debt out of our excess free cash flow. We would be opportunistic about which senior debt to go after, the high yield or the term loan. But you have to realize that using excess free cash flow, there are restriction under the term loan, and we're very limited in our ability to buy back the high-yield debt out of excess free cash flow.

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Operator [33]

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Thank you. This concludes today's Q&A session. I would now like to turn the call back over to Jeff Fox, President and CEO, for closing remarks.

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Jeffrey H. Fox, Endurance International Group Holdings, Inc. - President, CEO & Director [34]

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We appreciate your interest in our company. Thanks for the great questions. And we look forward to meeting you guys someday. Thanks, in person.

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Operator [35]

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Ladies and gentlemen. Thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone, have a great day.