The decision to acquire Yodle has paid off for Web.com, as it reported a strong first quarter of the year.
The web services company now has approximately 3,423,000 total net subscribers, up 70,000 from the end of the fourth quarter of 2015. This includes nearly 53,000 subscribers from the Yodle acquisition.
Web.com Subscriptions Jump
“Web.com reported strong first quarter results that were driven by solid performance in our value added digital marketing solutions. The acquisition of Yodle during the quarter was a major milestone for the Company that significantly enhances the value our technology and services can deliver for small businesses,” said David L. Brown, chairman, chief executive officer and president of Web.com.
Following the announcement, Wells Fargo Securities revised Web.com’s 2016 revenue and earnings-per-share estimates from $575 million and $2.66 to $755 million and $2.56, respectively.
Highlights of the Web.com Q1 Report
Here’s an overview of the key findings of the Web.com Q1 Report:
- The company repurchased 617,000 shares for $11.2 million in the first quarter.
- Average revenue per user (ARPU) was $15.10 for the first quarter of 2016, compared to $13.75 for the same period last year.
- Total revenue was $144.8 million for the quarter, compared to $132.6 million for the same quarter last year.
- Trailing twelve month customer retention rate was 87.1 percent.
Commenting on the Web.com Q1 Report, Brown said, “Our increased focus and scale in the value added services market positions us well to drive improved revenue growth over time. Increasing revenue growth combined with a meaningful opportunity for margin expansion and strong free cash flow provides Web.com with the flexibility to pursue multiple avenues to generate long-term shareholder value with a near term focus on deleveraging.”
Riding High on the Yodle Acquisition
When Web.com acquired Yodle earlier this year, it said the move “improves Web.com’s growth profile by adding higher growth revenue streams.” Moreover it adds complementary vertical market products and expertise and creates an opportunity to up sell and cross sell across a 3.4 million subscriber base.
The first quarter results validate Web.com’s conviction and highlight the value Yodle’s popular offerings have created. The integration has also provided small businesses with an opportunity to enhance their online marketing and sales efforts.
Jacksonville-based Web.com provides domains, hosting, web design and management, search engine optimization, and online marketing services to small and medium businesses.
Yodle is a New York City-based company specializing in online marketing services. It assists small businesses improve their online presence using emails, paid search advertising and search engine optimization.