Website Pros Shows Why Web.com Was Worth The Acquisition (WSPI)

Website Pros (NASDAQ:WSPI) posted quarterly results.  The company posted $17.8 million in revenues, $0.15 EPS non-GAAP, and $0.02 EPS on GAAP basis.  First Call had estimates at $17.77 million revenues and $0.13 non-GAAP EPS.

This was a tough quarter to analyze because of the ongoing integration issues in the recent Web.com (formerly Interland).  We noted this as part of the 24/7 Wall St. "Small Cap Internet Takeover List" with the first of two parts of companies under $1 Billion tied to the web that could be takeover candidates under the proper set of circumstances.

If you want to see how potentially powerful this buyout of Web.com (even if it was two-years too late) can be, look no further: On a stand-alone basis, Website Pros’ total net subscribers were approximately 82,000 at the end of the third quarter, up from approximately 80,700 at the end of the second quarter.  But including the customer adds from Web.com, the combined net subscribers was almost 255,000 at the end of the third quarter. 

Churn was mixed with 5.2% rate, down from 6.2% in Q3 2006 and up from 4.8% in the prior quarter.  With the much larger number of customer since the Web.com, it is the opinion of 24/7 Wall St. that the churn rate will rise.  Even with a higher churn rate the opportunities for the company to grow rapidly just went into overdrive.

Web.com, according to the company, continued revenue and subscriber growth driven by both direct marketing and partnerships.  Interestingly enough, the company said it will continue to identify growth prospects from both inside and outside the combined company.

Jon C. Ogg
November 6, 2007

Jon Ogg produces the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers.