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Web.com
Type Public (NASDAQWWWW)
Founded United States1997
Headquarters 12808 Gran Bay Parkway, West, Jacksonville, Florida
Key people David L. Brown, Chairman, President and CEO
Industry Internet, Software
Products Websites, Website Design, Website Hosting, Internet Marketing, Lead Generation, and eCommerce
Revenue $122.5 million USD (2008)[1]
Operating income $97 million USD (2008)(GAAP)[1]
Employees 800 (2008)[2]
Website Web.com

Web.com (NASDAQWWWW) is a web services and software company founded as "Website Pros" in 1999. It offers web design and online marketing services and was also known for the NetObjects Fusion web design software bought from NetObjects, Inc. in 2001 and sold again in 2009. Services and products are targeted at small and medium-sized businesses.

The company reached GAAP profitability in 2006 and 2007 (non-GAAP: from 2004 on).[3][4] The revenue growth that the company reports (from $23 million in 2004 over $38 million in 2005, $52 million USD in 2006, $82.5 million USD in 2007, and 122.5 million USD in 2008) derives mainly from acquisitions. Website Pros made its biggest step in its strategy of mergers and acquisitions with the purchase of Web.com in 2007. This merger had high impact on revenue but also on related costs.[5]

On June 9, 2008, Website Pros changed its name to Web.com.[6][7]

Under the merged Web.com, the first annual report for 2008 indicated a non-GAAP income of $21.8 million USD, but a high GAAP loss of $97 million on a revenue of $122.5 million USD.[1]

The company saw the negative GAAP numbers "as a result of a $103 million goodwill and asset impairment charge resulting from a combination of factors including a change in the Company's market capitalization".[1]

Contents

Company history from 1999 to 2005 (IPO)

Website Pros was founded in 1999 by Darin Brannan. From the foundation until 2004, venture capital partners invested $65 million USD into the company,[8] amongst others $10 million from Insight Venture Partners in 2003[9] and $7 million from Insight and Norwest Venture Partners in 2004.[10]

As opposed to mere software vendors, the company sees its market in hiring designers to build web sites for customers ("Do-It-For-Me" Web services). A year after the foundation, the first business model – just building web sites – was extended by implementing additional functionalities like online promoting and search engine optimization.[11][12] The basic business of the company is selling their online services with a monthly fee for small businesses.

In 2001, Website Pros acquired NetObjects Fusion, a web design application, along with other applications and assets from the defunct NetObjects, Inc.[13]

Building their projects with NetObjects products, it seemed suitable to Website Pros to buy the whole technology – if only to not have a competitor laying their hands on it. License revenue from the retail version of NetObjects Fusion stayed less than a tenth of the total revenue until 2006,[14] and even less after the merger with Web.com in 2007.

In November 2005, Website Pros went public with Initial Public Offering on NASDAQ (NASDAQWSPI), raising $68 million.[15][16]

Acquisitions

With the cash infusion from the Initial Public Offering, Website Pros expanded their acquisition strategy.

From 2005 to 2007 the company purchased LEADS.com, a provider of subscription based online advertising; eBoz, a provider of web marketing;[17] 1ShoppingCart.com, which offers an e-commerce-engine;[18] Renovation Experts, a network of contractors for house renovation;[19] and Submitawebsite, Inc., a search engine optimization company.[20]

All these product lines target the small and medium-sized online enterprise market and all acquisitions were allowed to operate with their own brands. Website Pros' strategy is to strengthen the bottom line with other profitable business units and accomplish their own offerings with appropriate single buys. On the other hand the integration of so many bought companies as well as the achievement of synergy and cost effects can be a complex task.

As its largest deal to date Website Pros purchased Atlanta-based Web.com on October 1, 2007[21] for a total of $129 million, consisting of $25 million in cash and the rest in stock.[22][23] It is expected that the merged company will have "over 234,000 paying subscribers and over $117 million annualized revenue".[22] Similar to Website Pros, Web.com offered a variety of web hosting and design services, which will continue to be marketed.

As part of the merger, Web.com representatives Jeff Stibel and Gonzalo Troncoso accomplished the board of Website Pros, Vikas Rijsinghani served as the new Chief Technology Officer.[24]

Main product lines and NetObjects MatrixBuilder

More than 90% of the revenue of Web.com are generated from subscription based services with monthly fees. The basic product line is "eWorks!XL".[25] This service offers the building of web sites by Website Pros' designers. A typical customer pays between $60 and $100 USD a month.[26] Website Pros has partnered with Microsoft to offer Office Live customers a $80 USD package for design and hosting services.[27]

The basic services are extended by hosting, web directory submitting,[28] search engine optimization, online promoting, pay-per-click-campaigns[29] and visitors tracking as well as e-commerce or local lead generation.

The Web.com services are sold through partner channels and directly over the web site. Some add-on services like lead generation can be booked separately over the business units mentioned in the list of the acquisitions.

From the 2001 acquisition, NetObjects Fusion stayed the only packaged software that the company offered. The latest version before the sale of NetObjects was release 11 from 2008. License revenue from sales of NetObjects Fusion reached nearly $2.5 million USD in 2008[30].

In May 2009 Web.com sold the NetObjects Fusion product line for "approximately $4.0 million" to a group around the former Web.com manager Steve Raubenstine, which re-established the company NetObjects. A smaller part of the amount was transferred instantly, while $3.0 million remained payable from future revenue of NetObjects Fusion sales until 2013.[31]

The NetObjects technology has yet another importance for Web.com. The production process of the web sites is based on a product called NetObjects MatrixBuilder, once belonging to the assets of NetObjects, Inc.[32][33][34]

NetObjects MatrixBuilder is an environment that allows company staff to design customer web sites in a style- and browser-based process. Designers and end-customers can integrate additional online services like e-commerce.[35][36]

History of the name "Web.com"

Web.com is a name that was held by several different companies since the 1990s.

Initially the domain name Web.com was used by Redondo Beach, California, based "Web Service Company", which is a laundry service provider.[37][38]

Since 1998, Web Internet, LLC, founded in December 1997 and also with headquarters in Redondo Beach, California, used the domain web.com as a web directory,[39] followed by offering hosting, mail and other web services.[40][41]

Web hosting company Interland acquired Web Internet, LLC, in December, 2005, for $4.8 million and out of branding purposes, changed its own name to Web.com in 2006.[42][43]

In 2007, the new Web.com was acquired by Website Pros. For Website Pros, the process of changing its name seemed to be more complicated than thought. Initially announced on June 9, 2008, the company reported that as of August, 2008, the name change has not "finalized" and the company is "officially incorporated in Delaware as Website Pros, Inc.".[44] On October 30, 2008, the change of name to Web.com could be reported as "effective".[45]

References

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  2. ^ "WWWW: Profile for Web.com, Group, INC.". Yahoo!. http://finance.yahoo.com/q/pr?s=WWWW. Retrieved 2008-11-05. 
  3. ^ "Website Pros Annual Report 2006, pg. 25". Website Pros. http://files.shareholder.com/downloads/WSPI/88056325x0x109780/A645B4AF-A31C-4F64-89CC-71D71F7CA7B2/Website%20Pros%20Annual%20Report.pdf. Retrieved 2007-07-29. 
  4. ^ "SEC Info - Website Pros Inc - 8-K - For 2/7/07 - EX-99.1". Securities and Exchange Commission, Washington, D.C.. http://www.secinfo.com/d14D5a.uM16.d.htm. Retrieved 2007-07-29. 
  5. ^ "Merger costs drag down earnings for Website Pros". Jacksonville Business Journal. http://www.bizjournals.com/jacksonville/stories/2008/02/11/daily16.html. Retrieved 2008-02-16. 
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  7. ^ "Website Pros, Inc. (WWWW) Chairman and President to Ring the NASDAQ Stock Market Closing Bell". Website Pros. http://ir.websitepros.com/releasedetail.cfm?ReleaseID=315048. Retrieved 2008-06-10. 
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  10. ^ "Website Pros Increases Series A Funding Round to $17 Million from Insight Venture Partners and Norwest Venture Partners". Website Pros. http://ir.websitepros.com/releasedetail.cfm?ReleaseID=175110. Retrieved 2007-07-25. 
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  18. ^ "Website Pros Acquires 1ShoppingCart.com". Website Pros. http://ir.websitepros.com/releasedetail.cfm?ReleaseID=213107. Retrieved 2007-07-26. 
  19. ^ "Website Pros Acquires Renovation Experts.com". Website Pros. http://ir.websitepros.com/releasedetail.cfm?ReleaseID=213109. Retrieved 2007-07-26. 
  20. ^ "Website Pros To Acquire Submitawebsite.com". Website Pros. http://ir.websitepros.com/releasedetail.cfm?ReleaseID=234377. Retrieved 2007-07-26. 
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  43. ^ "Interland Will Change Its Name to Web.com". Netcraft. Netcraft Ltd.. December 29, 2005. http://news.netcraft.com/archives/2005/12/29/interland_will_change_its_name_to_webcom.html. Retrieved 2008-07-07. 
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  45. ^ "Amendments to Articles of Inc. or Bylaws; Change in Fiscal Year, Other Events". Yahoo!Finance. Yahoo!. http://biz.yahoo.com/e/081030/wwww8-k.html. Retrieved 2008-11-02. 

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