Web.Com Group (WEB) has reported 97.51 percent plunge in profit for the quarter ended Dec. 31, 2016. The company has earned $1.91 million, or $0.04 a share in the quarter, compared with $76.98 million, or $1.48 a share for the same period last year. Revenue during the quarter surged 35.34 percent to $187.20 million from $138.32 million in the previous year period. Gross margin for the quarter expanded 248 basis points over the previous year period to 69.64 percent. Total expenses were 93.52 percent of quarterly revenues, up from 86.34 percent for the same period last year. That has resulted in a contraction of 719 basis points in operating margin to 6.48 percent.
Operating income for the quarter was $12.12 million, compared with $18.90 million in the previous year period.
However, the adjusted operating income for the quarter stood at $41.94 million compared to $36.90 million in the prior year period. At the same time, adjusted operating margin contracted 427 basis points in the quarter to 22.41 percent from 26.68 percent in the last year period.
"Web.com reported a strong finish to 2016, with fourth quarter financial results that exceeded our expectations for profitability and were at the high end of our revenue goals. During the quarter, our team executed on a number of our strategic priorities. We will build on this success and momentum to realize further benefits of the Yodle integration," said David L. Brown, chairman, chief executive officer and president of Web.com.
Operating cash flow declinesWeb.Com Group has generated cash of $127.84 million from operating activities during the year, down 16.30 percent or $24.89 million, when compared with the last year. The company has spent $326.95 million cash to meet investing activities during the year as against cash outgo of $16.08 million in the last year.
Cash flow from financing activities was $200.92 million for the year as against cash outgo of $140.43 million in the last year period.
Cash and cash equivalents stood at $20.45 million as on Dec. 31, 2016, up 9.31 percent or $1.74 million from $18.71 million on Dec. 31, 2015.
Working capital remains negative
Working capital of Web.Com Group was negative $209.32 million on Dec. 31, 2016 compared with negative $167.67 million on Dec. 31, 2015. Current ratio was at 0.36 as on Dec. 31, 2016, down from 0.38 on Dec. 31, 2015.
Debt increases substantially
Web.Com Group has witnessed an increase in total debt over the last one year. It stood at $664.14 million as on Dec. 31, 2016, up 57.16 percent or $241.56 million from $422.58 million on Dec. 31, 2015. Total debt was 43.87 percent of total assets as on Dec. 31, 2016, compared with 36.51 percent on Dec. 31, 2015. Debt to equity ratio was at 2.82 as on Dec. 31, 2016, up from 1.77 as on Dec. 31, 2015.
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