EIG’s Acquisition of Verio and Site5 Nets 86,000 New Subscribers

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This article originally appeared at The WHIR

Endurance International Group (EIG) has acquired assets of web hosts Verio and Site5 for approximately $36 million, adding around 86,000 subscribers and bringing EIG’s total subscribers to 4.4 million.

The acquisitions were revealed in EIG’s second-quarter results and earnings call. The Verio acquisition closed in late May for around $13 million, and the Site5 brand closed in late June for around $23 million, according to EIG founder, president and CEO Hari Ravichandran.

“We expect to manage these businesses at break‐even to marginally profitable for the rest of the year as we migrate their subscriber bases to our back end platform,” Ravichandran said in the earnings call. “Once on platform, we expect to reach favorable economics and adjusted EBITDA contribution consistent with our previous framework for realizing synergies from acquisitions.”

In the latter half of 2014, EIG made several acquisitions including web host Arvixe that added 150,000 domains and 70,000 hosting accounts, as well as BuyDomains and Webzai.

EIG and other large players, such as GoDaddy and UK2, have been acquiring more and more web hosting properties, driving consolidation of mass-market web hosting. Many customers of hosts acquired by EIG and others have reported changes to their quality of service, and frustrations with their new platform. However, in a sector where margins are small, consolidation and the associated economies of scale help web hosts turn profit.

EIG finished the second quarter with $182.4 million in GAAP revenue, an increase of 20 percent over Q2 2014.

“We are pleased with our second quarter performance, delivering results solidly within our expectations,” Ravichandran said. “We continue to anchor our approach to our two-pronged strategy of growing subscribers and average revenue per subscriber, whether through acquired means or our own gateway products such as hosting, web builders, mobile, content management and related products. Given the opportunity ahead of us, we will continue to work toward building a long-standing business through enhancing our gateway products and brands, and will be experimenting with new marketing programs through the rest of this year, with the firm belief that longer-term, our targets for revenue and profitability will benefit from these efforts.”

This first ran at http://www.thewhir.com/web-hosting-news/eigs-acquisition-of-verio-and-site5-nets-86000-new-subscribers