ENDURANCE INTERNATIONAL GROUPHOLDINGS, INC.

FORM 10-K(Annual Report)

Filed 02/29/16 for the Period Ending 12/31/15

Address 10 CORPORATE DRIVE

SUITE 300BURLINGTON, MA 01803

Telephone 781-852-3200CIK 0001237746

Symbol EIGISIC Code 7372 - Prepackaged Software

Fiscal Year 12/31

http://www.edgar-online.com© Copyright 2016, EDGAR Online, Inc. All Rights Reserved.

Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

(Mark One)x Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2015OR

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period from to

Commission File Number: 001-36131

Endurance International Group Holdings, Inc.(Exact name of registrant as specified in its charter)

Delaware 46-3044956(State or other jurisdiction of

incorporation or organization) (I.R.S. Employer

Identification No.)

10 Corporate Drive, Suite 300Burlington, Massachusetts 01803

(Address of principal executive offices) (Zip code)(781) 852-3200

(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of exchange on which registeredCommon Stock, par value $0.0001 per share The NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act:None

Indicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.Yes¨NoxIndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.Yes¨NoxIndicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthe

preceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YesxNo¨

IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyandpostedonitscorporateWebsite,ifany,everyInteractiveDataFilerequiredtobesubmittedandpostedpursuanttoRule405ofRegulationS-T(§232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitandpostsuchfiles).YesxNo¨

IndicatebycheckmarkifdisclosureofdelinquentfilerspursuanttoItem405ofRegulationS-K(§229.405ofthischapter)isnotcontainedherein,andwillnotbecontained,tothebestofregistrant’sknowledge,indefinitiveproxyorinformationstatementsincorporatedbyreferenceinPartIIIofthisForm10-KoranyamendmenttothisForm10-K.¨

Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,orasmallerreportingcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler”and“smallerreportingcompany”inRule12b-2oftheExchangeAct.(Checkone)Largeacceleratedfiler x Acceleratedfiler ¨

Non-acceleratedfiler ¨ (Donotcheckifasmallerreportingcompany) Smallerreportingcompany ¨Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).Yes¨NoxTheaggregatemarketvalueofcommonstockheldbynon-affiliatesoftheregistrantbasedontheclosingpriceoftheregistrant’scommonstockasreportedonthe

NASDAQGlobalSelectMarketonJune30,2015,was$1,250,205,625.AsofFebruary19,2016therewere137,479,304sharesoftheregistrant’scommonstock,$0.0001parvaluepershare,outstanding.

DOCUMENTS INCORPORATED BY REFERENCEPortionsoftheregistrant’sdefinitiveproxystatementforits2016AnnualMeetingofStockholders,whichtheregistrantintendstofilepursuanttoRegulation14Awiththe

SecuritiesandExchangeCommissionnotlaterthan120daysaftertheregistrant’sfiscalyearendofDecember31,2015,areincorporatedbyreferenceintoPartIIIofthisAnnualReportonForm10-K.

Table of Contents

TABLE OF CONTENTS PagePART I. Item1.Business 2Item1A.RiskFactors 13Item1B.UnresolvedStaffComments 48Item2.Properties 48Item3.LegalProceedings 49Item4.MineSafetyDisclosures 50PART II. Item5.MarketforRegistrant’sCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities 51Item6.SelectedFinancialData 53Item7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations 55Item7A.QuantitativeandQualitativeDisclosuresAboutMarketRisk 89Item8.FinancialStatementsandSupplementaryData 90Item9.ChangesinandDisagreementsWithAccountantsonAccountingandFinancialDisclosure 140Item9A.ControlsandProcedures 140Item9B.OtherInformation 144PART III. Item10.Directors,ExecutiveOfficersandCorporateGovernance 146Item11.ExecutiveCompensation 146Item12.SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatters 146Item13.CertainRelationshipsandRelatedTransactions,andDirectorIndependence 146Item14.PrincipalAccountantsFeesandServices 146PART IV. Item15.ExhibitsandFinancialStatementSchedules 147Signatures 148

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

ThisAnnualReportonForm10-Kcontainsforward-lookingstatementswithinthemeaningofSection27AoftheSecuritiesActof1933,asamended,ortheSecuritiesAct,andSection21EoftheSecuritiesExchangeActof1934,asamended,ortheExchangeAct.Allstatements,otherthanstatementsofhistoricalfact,containedinthisAnnualReportonForm10-K,includingstatementsregardingourfutureresultsofoperationsandfinancialposition,businessstrategyandplansandobjectivesofmanagementforfutureoperations,areforward-lookingstatements.Thesestatementsinvolveknownandunknownrisks,uncertaintiesandotherimportantfactorsthatmaycauseouractualresults,performanceorachievementstobemateriallydifferentfromanyfutureresults,performanceorachievementsexpressedorimpliedbytheforward-lookingstatements.Thewords“anticipate,”“may,”“believe,”“predict,”“potential,”“continue,”“could,”“should,”“contemplate,”“can”“estimate,”“intend,”“likely,”“would,”“project,”“seek,”“target,”“might,”“plan,”“strategy,”“will,”“expect”andsimilarexpressionsorvariationsareintendedtoidentifyforward-lookingstatements,althoughnotallforward-lookingstatementscontaintheseidentifyingwords.ThisAnnualReportonForm10-Kincludes,amongotherthings,forward-lookingstatementsregardingourfutureresults,growthandfinancialposition,including,withoutlimitation,statementsabout:theexpectedbenefitsofouracquisitionofConstantContact,Inc.,orConstantContact,includingourabilitytoachievecostsavingsorsynergiesfromtheacquisitionintheexpectedamountsortimeframesoratall;theexpectedtimingandamountofrestructuringchargesassociatedwiththeConstantContactacquisition;ourexpectationsforcapitalexpendituresduringthenexttwelvemonths;ourabilitytoincreaseourtotalnumberofsubscribers;ourabilitytoincreaseouraveragerevenuepersubscriber,orARPS,overthelifetimeofasubscriber;ourabilitytousenewproductgatewaysandexpandourpointsofsubscriberengagementtoreachnewsubscribersandsellsubscribersadditionalproductsandservices;ourplanstointroducenewproducts;ourplansforadditionalinvestmentinmarketinginitiatives;ourplanstocontinuetoexpandourinternationaloperationsandaddtoourportfolioofbrands,includingthroughacquisitionsandstrategicinvestments;ourplanstopursuefutureacquisitions,jointventuresandstrategicinvestmentsgenerally;theexpectedbenefitsandresultsofouracquisitionscompletedin2015;ourintendedapproachtodefendingcertainlegalproceedings;andourexpectationsrelatedtotechnologicalchange,marketingtrendsandconsumerdemand,including,withoutlimitation,expectationsforprojectedgrowthinsmallandmedium-sizedbusinesses,orSMBs,worldwideandanincreasingSMBanonlinepresenceandrelatedadditionalproductsandservicesthatwebelievewilldriveamarketforoursolutions.

Theseforward-lookingstatementsspeakonlyasofthedateofthisAnnualReportonForm10-Kandaresubjecttoanumberofrisks,uncertaintiesandassumptions.Wemaynotactuallyachievetheplans,intentionsorexpectationsdisclosedinourforward-lookingstatements,andyoushouldnotplaceunduerelianceonourforward-lookingstatements.Actualresultsoreventscoulddiffermateriallyfromtheplans,intentionsandexpectationsdisclosedintheforward-lookingstatementswemakeasaresultofanumberofimportantfactors.Theseimportantfactorsincludeour“criticalaccountingpoliciesandestimates”describedinPartII,Item7“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations—CriticalAccountingPoliciesandEstimates”andthefactorssetforthinPartI,Item1A,“RiskFactors”andelsewhereinthisAnnualReportonForm10-K.Ourforward-lookingstatementsdonotreflectthepotentialimpactofanyfutureacquisitions,mergers,dispositions,jointventuresorinvestmentswemaymake.

Exceptasrequiredbyapplicablelaw,wedonotplantopubliclyupdateorreviseanyforward-lookingstatementscontainedherein,andweexpresslydisclaimanyobligationtoupdateorreviseanyforward-lookingstatements,whetherasaresultofanynewinformation,events,circumstancesorotherwise.

AsusedinthisAnnualReportonForm10-K,theterms“Endurance,”“theCompany,”“we,”“us,”and“our”meanEnduranceInternationalGroupHoldings,Inc.anditssubsidiariesunlessthecontextindicatesotherwise.

1

Table of Contents

Part IItem 1. Business

Overview

Wearealeadingproviderofcloud-basedplatformsolutionsdesignedtohelpsmallandmedium-sizedbusinesses,orSMBs,succeedonline.Leveragingourproprietarytechnologyplatform,weserveapproximately4.7millionsubscribersgloballywithacomprehensiveandintegratedsuiteofover150productsandservicesthathelpSMBsgetonline,getfoundandgrowtheirbusinesses.Historically,ourproductsfocusedlargelyonwebhostingandotherbasicwebpresencesolutionssuchasdomains,butovertimewehaveexpandedtooffersecurity,sitebackup,SEOandSEM,GoogleAdwords,mobilesolutions,socialmediaenablement,websiteanalytics,emailmarketingandproductivityande-commercetools,amongothers.Morerecently,wehavelaunchedadditionalproductsandservices,includingwebsitebuilders,mobilesitebuilders,cloudhostingsolutions,premiumdomainsandcloudstoragesolutions,bothtosatisfyexistingsubscriberneedsandtoexpandtheproductgatewaysthroughwhichnewsubscribersinitiallyreachus.

Overour18-yearhistory,wehaverefinedourplatformandouranalyticstocollectinsightsintotheneedsandaspirationsofoursubscribers.Theseinsightsallowustoengageoursubscribersintimelyandcompellingways,drivingsignificantbusinessvalueforthem.Webelievethatourplatformdeliverscloud-basedsolutionsquickly,cost-effectively,reliablyandsecurely.Thesestrengthsandcapabilitieshelpusattractandretainsubscribers,whothendemandadditionalproductsandservicesfromusovertime.

OnOctober30,2015,weenteredintoadefinitiveagreementpursuanttowhichweagreedtoacquirealloftheoutstandingsharesofcommonstockofConstantContact,Inc.,orConstantContact,for$32.00pershareincash,foratotalpurchasepriceofapproximately$1.1billion.ConstantContactisaleadingproviderofonlinemarketingtoolsthataredesignedforsmallorganizations,includingsmallbusinesses,associationsandnon-profits.Thisacquisition,whichclosedonFebruary9,2016,combinestwoleadersinsmallbusinessonlineproductsandservices,creatingacomprehensivesuiteofonlinemarketingtoolsandend-to-endsolutionsforoursubscribers.

Market Opportunity

Smallandmediumbusinessesrepresentalargeanddiversemarket,bothintheUnitedStatesandinternationally.AccordingtotheU.S.CensusBureau,therewereapproximately28millionsmallbusinessesintheUnitedStatesin2011,ofwhich22millionwerenon-employerfirms,orcompaniesthatdonothavepaidemployees.Worldwide,therewereestimatedtobeapproximately75millionSMBsin2014.

WebelievethegrowthinglobalInternetpenetrationandtheproliferationofmobiledevicesarechangingthewayinwhichconsumersdiscoverandtransactwithbusinesses.Asaresult,SMBsareincreasinglyadoptingtechnologytooperateandgrowtheirbusinesses,butthemarketpenetrationofwebpresenceandmarketingtechnologiesamongSMBsremainslimited.StudiesindicatethatofSMBsintheUnitedStates,almost50%donothaveawebsiteandover70%ofSMBsdonotuseemailmarketing.Worldwide,manySMBs,particularlyinemergingmarkets,aremovingonlineduetowideravailabilityofInternetinfrastructureandmobileconnectivity.Webelievethatthesefactorsresultinasignificantworldwidemarketopportunityforus.

Overour18-yearhistory,wehavedevelopedadeepunderstandingofthediverseneedsofSMBsandthechallengesofservingthematscale.WebelieveSMBsare:

• Seeking to address fundamental business challenges and opportunities .SMBcustomersareshiftingtheiractivitiesonlineandembracingmobiletechnologies,socialmediaande-commerce,whichrequiresSMBstodeploytechnologytools,servecustomersandcompeteforbusinessinnewandinnovativeways.Asaresult,SMBsareseekingtotakeadvantageofnewtechnologysolutionstotransformtheirbusinessesorbuildnewbusinessesthatwerenotpreviouslypossible.

2

Table of Contents

• In need of informed guidance and support .MostSMBs,particularlythosewithfiveorfeweremployees,whichrepresentthemajorityofour

subscribers,havelimitedtechnologicalexpertiseandresources.Asaresult,SMBsrequireinformedadviceandsupportonwaystoimprovetheiroperationsandtakeadvantageofnewopportunitiesthroughtechnology.

• Facing budget constraints limiting their ability to make large capital investments in technology .SMBswanttoleveragemoderntechnology,butareseekingcost-effectivesolutionsthatdonotrequirelargeupfrontinvestments,especiallygiventheirsizeandavailableresources.

• Difficult to reach and serve effectively, given their breadth and diversity .SMBsarefragmentedintermsofsize,geography,sophisticationandtypeofindustry.Asaresult,itischallengingtoeffectivelymarketto,acquireandserveSMBsubscribersatscaleandinacost-effectivemanner.

Our Strengths

OurpassionforempoweringdiverseSMBstonavigatetherapidlychangingtechnologylandscapeandouryearsofexperienceservingthislargeandfragmentedmarkethaveledustodevelopastrong,efficientanddifferentiatedbusinessmodelwiththefollowingadvantagesandattributes:

• Attractive subscription model and retention rates .Ourrevenueisprimarilysubscription-based.Oursubscriptionsrequirepaymentinadvance,whichistypicallymadebycreditcard,andEndurancesubscribershaveanaveragetermofapproximately16months.Thissubscription-basedmodelprovidessignificantcashflowbenefitsandrevenuevisibility.Inaddition,becauseourproductsandservicesaretypicallyintegraltoanSMBhavinganonlinepresence,webenefitfromhighrevenueretentionrates.

• Integrated and comprehensive suite of products and services .WeofferanintegratedtechnologyplatformwithawiderangeofproductsandservicesdesignedtohelpSMBsubscribersgetonline,getfoundandgrowtheirbusinesses.Ourcloud-basedofferingsallowoursubscriberstoselectacustomizedsetofsolutionsfromamongabroadrangeofinternallydevelopedandthird-partyproducts,whichwedelivertosubscribersondemandthroughthecloud.

• Affordable solutions delivered in a cost-effective manner .Ourcloud-baseddeliverymodelenablesoursubscriberstoaddresstheirbusinessneedswithminimalupfrontcapitalinvestment.Wedeliveraffordablesolutionstooursubscribersbyoperatinganintegrated,cloud-basedtechnologyplatformthatpermitsustodeliverourproductsandservicesefficiently,deploynewproductsandservicesquicklyandefficiently,andaddandservenewsubscriberscost-effectively.Wehavedevelopedproprietarytechniquesthathelpusoperatewithefficientserverconfigurations,resultinginlowcapitalexpenditures.

• Intelligent subscriber engagement .Weleverageourtechnologyandproprietarydataandanalyticstoidentifysubscriberneedsandopportunitiesbasedontypeofbusiness,lengthoftimeinbusiness,geography,productsandservicespreviouslypurchasedfromusandvariousotherfactors.Theseinsightsallowustoengageoursubscribersproactivelyinatimelymannerthroughmultiplecustomerengagementchannels,suchasphone,chatandemailinteractionswithoursalesandsupportorganizations,thecontrolpanelswemakeavailabletooursubscriberstomanagetheirwebsites,ournetworkofresellersandreferralpartners,proprietarymobileapplications,suchasBusinessonTapp,andourapplicationstore,MojoMarketplace.Thisongoingmulti-channelengagementallowsustoofferandsellrelevantandusefuladditionalproductsandservicestooursubscribersatopportunetimes,drivinghigheraveragerevenuepersubscriber,orARPS,overthelifetimeofoursubscribers.

• Multi-brand approach .TheSMBmarketisbroad,diverseandfragmentedintermsofgeography,industry,sizeanddegreeoftechnologicalsophistication.Asaresult,weuseamulti-brandapproachtopreciselytargettheSMBuniverse,identifythebestwaystoreachdifferentcategoriesofsubscribersandtailorourbrandsandserviceofferingsspecificallytowardthoseaudiences.Forexample,ourBluehostbrandtargetsSMBswithgreatertechnicalexpertiseandadesiretobuildtheirownsolutions,

3

Table of Contents

whileourHostGatorbrandtargetsSMBswhovaluerelativelyhigherlevelsofsupport.Thismulti-brandapproachallowsustomanageoursubscriberacquisitioncostseffectivelyandtoprovideadiversebaseofsubscriberswithahighlyrelevantexperienceonourplatform.

• Cost-effective multi-channel customer acquisition .Weattractasignificantpercentageofournewsubscribersthroughword-of-mouthreferrals,atnocosttous.WeactivelymonitorandmanageourNetPromoterScores,orNPS,acustomersatisfactionmetricdevelopedbyBain&Company,andbelievethatourfavorableNPSscores,alongwithourlargebaseofsubscribers,helpdriveword-of-mouthreferrals.Themajorityofourprogrammarketingexpenseisassociatedwithtargetedpay-per-click,orPPC,basedonlinemarketingandwithpaymentstoourlargenetworkofreferralpartners,whodrivesubscriberstousonapaidreferralbasis.Paymentstoourreferralpartnersoccurafterasubscribersignsuponourplatformandthereforeallowustoreadilydeterminethereturnsonourmarketingspend.Inadditiontoword-ofmouthreferrals,referralchannelsandPPC,wehavealsoenteredintostrategicpartnershipsthathelpusreachadditionalsubscribers,suchastheGoogle“Let’sPutOurCitiesontheMap”initiativeintheUnitedStates,similarpartnershipswithGoogleinIndiaandSoutheastAsiaandourstrategicalliancewithWordPress.

• Multiple gateways for customer acquisition .WebelievethatSMBshavevaryingneedsandstartingpointsintheirjourneytocreateanonlinepresenceandgrowtheirbusiness.Historically,ourproductsfocusedlargelyonwebhostingandotherbasicwebpresencesolutionssuchasdomains,butovertimewehaveexpandedtooffersecurity,sitebackup,SEOandSEM,GoogleAdwords,mobilesolutions,socialmediaenablement,websiteanalytics,emailmarketingandproductivityande-commercetools,amongothers.Morerecently,wehavelaunchedadditionalproductsandservices,includingwebsitebuilders,mobilesitebuilders,cloudhostingsolutions,premiumdomainsandcloudstoragesolutions,bothtosatisfyexistingsubscriberneedsandtoexpandtheproductgatewaysthroughwhichnewsubscribersinitiallyreachus.

Our Strategy

Sinceourformationin1997,wehavefocusedonhelpingSMBsestablish,manageandgrowtheirbusinesses.Tofuelourfuturegrowth,weplantocontinuetoincreaseourscale,broadenoursubscriberfootprint,expandourrangeofproductandserviceofferingsandpursuestrategicacquisitions.

WebelieveacombinationofincreasesintotalsubscribersandgrowthinARPSoverthelifetimeofasubscriberdrivesourgrowth,andweintendtogrowbothofthesemetricsbyleveragingthestrengthsofourapproachtoservingtheSMBmarket.Additionally,giventhefragmentednatureofthemarket,webelievewecancontinuetogrowthroughbothmergersandacquisitionsandstrategicinvestmentstoexpandoursubscriberacquisitionfunnel,addmorebrands,expandoursuiteofproductsandservices,enternewgeographies,andgrowourpartnerchannels.

Increasing Total Subscribers

Weplantoincreasetotalsubscribersbycontinuingtoleverageourmulti-channel,multi-brandapproachandinvestinmultiplegatewaystoreachnewsubscribers.Throughourlaunchofadditionalproductsandservicessuchaswebsitebuilders,mobilesitebuilders,cloudhostingsolutions,premiumdomainsandcloudstoragesolutions,wehavebeenabletoexpandtheproductsetthroughwhichsubscribersinitiallyreachus,andweexpecttocontinuetointroducenewproductsandservicesthatwillserveasentrypointstoacquirenewsubscribers.

Wealsoexpecttoreachnewsubscribersbycontinuingtoexpandourgeographicfootprint,particularlyinemergingmarkets,asmoreSMBsinthesemarketscomeonlineduetowideravailabilityofInternetinfrastructureandmobileconnectivity,andbycontinuingtoaddtoourportfolioofbrands,includingthroughacquisitionsandstrategicinvestments,inordertotargetspecificsegmentsoftheSMBmarketglobally.

4

Table of Contents

Increasing Average Revenue per Subscriber Over Time

WeplantoincreaseARPSoverthelifetimeofasubscriberbyofferingsubscribersrelevantadditionalproductsandservicesatopportunetimesinthelifeoftheirbusiness.Theseadditionalproductsandservicesrangefromlower-priced,morecommonservicessuchasapplications,additionaldomainsandemail,tohigher-priced,higher-valueitemssuchasadvancedhostingservices,mobileandproductivitysolutionsandprofessionalservices.

Wealsoexpecttoexpandourpointsofsubscriberengagementtocreateadditionalopportunitiestoeducateoursubscribersaboutthevalueofoursolutionsandtoallowthemtomoreeasilyaccessourproductsandservices.

Pursuing Strategic Acquisitions and Investments

Weconsideracquisitionstobeanimportanttooltoenhancethegrowthofourcompanyandhaveacquiredandintegratedmanybusinessesandassetssinceourinception.WebelievethemarketforproductsandservicesfocusedonsolutionsforSMBsremainsfragmented,withmultipleprovidersofferingproductsorservicestargetedatmeetingthevaryingneedsofSMBs.Giventhislandscape,weseeanopportunitytoincreaseoursubscriberbaseandbroadenourproductsuitethroughconsolidationofthemarket.Overtheyears,wehaveusedacquisitionstoextendourgeographicreach,acquirenewsubscribers,expandourproductofferingsandgateways,improveourservices,achievecostsavingsandscaleouroperations.Weexpecttocontinuetopursueacquisitionsfortheseandotherstrategicpurposes.

Wealsoregularlymakestrategicinvestmentsin,andenterintojointventureswith,thirdparties.Thesearrangementsaretypicallywithsmallcompaniesfocusedondevelopingproductsthatwebelievemayserveaseffectivenewgatewaystoacquirenewsubscribersorthatmayappealtoourexistingsubscriberbase.Webelievethesearrangementsallowustotapintotheproductexpertise,entrepreneurialenergyandagilityofsmallercompaniestohelpusefficientlybringinnovativenewproductstomarket.

Constant Contact Acquisition

OnOctober30,2015,weenteredintoadefinitiveagreementpursuanttowhichweagreedtoacquirealloftheoutstandingsharesofcommonstockofConstantContactfor$32.00pershareincash,foratotalpurchasepriceofapproximately$1.1billion.TheacquisitionclosedonFebruary9,2016.

Expectedbenefitsoftheacquisitioninclude:

• Extension of Endurance’s product offerings. WewillincreaseourproductportfolioofsolutionsandintegratedproductsthroughtheadditionofConstantContact’ssuiteofonlinemarketingtoolssuchasemailmarketing,eventmanagement,socialmediaintegrationandcontactmanagementsystems.WeexpecttoofferConstantContact’semailmarketingproductsalongsideourexistingproducts,therebyexpandingourpositionasaleadingproviderofend-to-endwebpresenceandmarketingsolutionsforSMBs.

• Extension of Endurance’s core capabilities. ConstantContacthashistoricallyfocusedheavilyonproductdevelopment,andspecificallyonuserexperience,subscriberanalyticsandengagementmodels.WeexpectthatthecombinationofthisexpertisewithourhistoricfocusonmarketingnetworksanddistributionplatformswillenhanceourstandingasaleaderinonlineSMBservicesasweexpandtoamorecomprehensivesuiteofproductsandservicesforSMBs.

• Continuation of a successful partnership .TheacquisitionwillbuildonourexistingpartnershipwithConstantContact,throughwhichwealready

offertheConstantContactsuiteofproductsalongwithotherproductsandserviceswemakeavailabletooursubscriberbase.Basedontheresultsofthispartnershiptodate,webelievethatthereisconsiderabledemandwithinoursubscriberbaseforConstantContact’ssuiteofproducts.

5

Table of Contents

• Creation of significant operational and financial scale .Weexpectefficienciestocomefromleveragingourfixedcosts,sharingtalentintechnology

andproductdevelopment,thereductionofredundantcostsandthecombineduseofourmarketingchannels.Aswegrowfollowingtheacquisition,weexpecttheseefficienciestosupportlonger-termgrowthandvaluecreationforoursubscribers.

Inconnectionwithandconcurrentlywiththeacquisition,weenteredintoa$735millionfirstlienincrementaltermloanfacilityanda$165millionrevolvingcreditfacility(whichwillreplaceourexisting$125millionseniorsecuredrevolvingcreditfacility),andourwhollyownedsubsidiaryEIGInvestorsissued$350millionaggregateprincipalamountof10.875%seniornotesdue2024.Werefertotheincrementalfirstlientermloanfacilityandrevolvingcreditfacility,togetherwithourpreviouslyexistingfirstlientermloanfacility,asthe“SeniorCreditFacilities”andtothe10.875%seniornotesdue2024asthe“Notes”.See“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations—LiquidityandCapitalResources”inPartII,Item7ofthisAnnualReportonForm10-KforadditionalinformationonthefinancingtransactionsassociatedwithouracquisitionofConstantContact.

BecauseouracquisitionofConstantContactwascompletedin2016,ourfinancialresultsandkeymetricspresentedinthisForm10-Kdonotreflectthisacquisitionortherelatedfinancingtransactions.

During2015,inadditiontoenteringintothedefinitiveagreementtoacquireConstantContact,wecompletedtheacquisitionsofcertainassetsoftheVeriohostingbusinessofNTTAmerica,Inc.,orVerio,andsubstantiallyalloftheassetsofWorldWideWebHosting,LLC,orWorldWideWebHosting,andEcommerce,LLC,orEcommerce.Weexpecttheacquisitionsofthesesmallerwebhostingbusinesseswillextendourreachinthewebpresencemarketandallowustoachieveadditionaloperationalefficienciesandeconomiesofscale.WealsopurchasedourlargestdatacenterthroughtransactionswithAceDataCenters,Inc.,AceHoldings,LLCanditsowners,whichweexpectwillprovideuswithcostefficienciesandincreasedcontroloverthefacility.WerefertothesetransactionscollectivelyastheAceacquisition.

In2014,wecompletedseveralstrategicacquisitionsthatexpandedourproductportfolio,ourgatewaystoreachnewsubscribersandourreachinthewebpresencemarket,includingacquisitionsofdomainnamebusinesses,awebsitebuilder,amobilewebbuilderandasmallwebhostingcompany.Alsoin2014,weacquiredthewebpresencebusinessofDirectifromDirectiWebTechnologiesHoldings.TheDirectiacquisitionprovideduswithanestablishedinternationalpresencefocusedongrowingemergingmarketssuchasIndia,Turkey,China,RussiaandIndonesia,aswellastheabilitytoexpandourgeographicfootprintbytakingourexistingportfolioofbrandstointernationalmarkets,aswehavedoneinseveralemergingmarketstodate.Inaddition,wemadestrategicinvestmentsinAppMachineB.V.,orAppMachine,amobileappbuildercompany,andWZUKLtd.,aprovideroftechnologyandsalesmarketingservicesassociatedwithwebbuildersolutions.

Our Products and Services

WeofferanintegratedandcomprehensivesuiteofproductsandservicesthathelpSMBsgetonline,getfoundandgrowtheirbusinesses.Ourofferingscanbebroadlygroupedasfollows:

Getting SMBs Online

Throughacombinationofdo-it-yourselftoolsandmanagedprofessionalservices,weprovideSMBsaneasyandcost-effectivewaytocreateanonlinepresence.WeofferthefollowingproductsandservicestogetSMBsonlinequickly,easilyandaffordably.

• Web Hosting .Byprovidingaconsolidatedsetofcoreproducts,servicesandresourcesthatsharestorage,bandwidthandprocessingpower,ourentry-levelsharedhostingservicesenablesubscriberstocreateaninitialwebpresencequicklyandcost-effectively.

6

Table of Contents

• Website Builders .Weofferavarietyofproprietary,third-partyandopensourcewebsitebuildingtoolsthatenablesubscriberswithvaryingdegreesoftechnicalsophisticationtocreateacustomizedwebpresence.Wealsooffervariouspremiumelementsthatsubscriberscanpurchaseseparatelytoenhancetheirwebsiteandprovideamoreengaginguserexperiencefortheircustomers,includingpremiumthemes,mobileoptimization,socialnetworkingfeatures,customerinteractiontools,embeddedvideos,photogalleries,blogs,maps,pollsandcommunityforums.

• Domain Registration, Management and Resale .Asanaccrediteddomainregistrarwithover12.2milliondomainsunderourmanagementat

December31,2015,weenableoursubscriberstosearchandpurchaseavailabledomainnamesfromawidespectrumofdomainregistries.Wealsomaintainaportfolioofpremiumdomainsthatareavailableforresaletooursubscribers.

• Security .Weoffermalwareprotectionsolutionstohelpprotectoursubscribers’websitesfromviruses,maliciouscodeandotherthreats.Ourpremiumofferings,includingawebapplicationfirewall,canhelppreventattacksonsubscriberwebsitesbeforetheyaffectsubscriberdataoroperations.Forsubscribersthatcollectpersonallyidentifiableinformationorotherprivatedatafromtheircustomersandwebsitevisitors,weofferavarietyofSecureSocketLayer,orSSL,certificatesthatencryptdatacollectedonasubscriber’swebsite.Wealsoofferproductsthathelpsubscribersachievepaymentcardindustrycomplianceformaintainingsensitiveinformation.

• Site Back-Up .Weofferenhancedbackupcontrolsolutionsthatenablesubscriberstoschedule,maintain,manageandrestorebackupsoftheironlinedataandwebsitestomeettheirparticularbusinessneeds.

Getting SMBs Found

Ourmarketingsolutionsenablesubscriberstoincreasetheironlinevisibility,attractmorecustomerstotheirwebsitesandbuildcustomerloyalty.

• Mobile .Weoffersolutionsthatallowoursubscriberstohavetheirwebsitesrenderedonmobiledevicesandtargetmobilecustomersfortheirbusinesses,amongotherfeaturesandfunctionality.Wealsoofferthird-partyapplicationsthatenablemobilepaymentsandcommerce.During2014,weenteredintoapartnershipwith,andacquireda40%interestin,amobileappbuildercompany,AppMachine,whichallowsbusinessestocreateacustomappandmakeitavailableintheAppleAppStoreoronGooglePlay.In2015,usingtheAppMachinetechnology,welaunchedtheImpress.lybrand,whichallowsuserstoquicklyandeasilycreateamobile-readysitefortheirbusiness.

• Search Engine Optimization (SEO) and Search Engine Marketing (SEM) .Weofferavarietyofsearchengineoptimizationandmarketingsolutionsthatcanimproveasubscriber’sabilitytobediscoveredbypotentialcustomers.Theseserviceshelpasubscriberdistributeitsbusinessprofiletoonlinedirectoriesandmanagelinksandkeywordswithon-pagediagnostictools.WealsoofferfullymanagedPPCservicesdesignedtodirecttraffictoasubscriber’swebsite,emailorphone.

• Social Media .Weoffertoolsandservicesthatenableoursubscriberstocommunicateeffectivelywiththeircustomersandpotentialcustomersthroughsocialnetworks.OurplatformenablesoursubscriberstoeasilyintegratetheirwebsitecontentandsalesandmarketingeffortsintoFacebook,Twitterandotherformsofsocialmedia.Wealsoenableoursubscriberstotracktheresultsoftheirsocialmediacampaigns.OuracquisitionofConstantContactenhancesthiscapabilityduetotheintegrationofsocialmediacapabilities,includingsocialmediacampaignandanalyticstools,acrosstheConstantContactproductsuite.

• Analytics .Weoffercontrolpanelsanddashboardsthatenableoursubscriberstoanalyzeactivityontheirwebsitesandoptimizetheimpactoftheirwebpresencedesignandmarketingcampaignstomoreeffectivelyreachtheircustomers.

7

Table of Contents

Helping SMBs Grow

Weofferawidearrayofapplicationsandservicesthatcanhelpoursubscribersgrowtheirbusinessesovertimebyenablingthemtohavededicatedprocessingpowertodrivetheirwebsites,consistentlygetinfrontoftheircustomers,collaboratemoreefficientlywiththeiremployees,partnersandcustomers,bettermanagetheirbusinesses,andhaveadvanced,secureonlinepaymentservices.

• Advanced Web Hosting .Inadditiontoprovidingsharedhostingservices,wealsoprovideVirtualPrivateServer,orVPS,hostinganddedicatedhostingsolutions.Asasubscriber’sbusinessexpandsandthedemandsonitswebsiteincrease,thesemorecustomizableandhigherperformancesolutionsallowoursubscriberstobuildadditionalfunctionalityintotheirwebsites,offerhighbandwidthcontentanddrivemorecommerceandmarketingactivitieswhilereducingloadtimesandsitespeeds.Subscriberscanstartwithanadvancedwebhostingsolutionorupgradefromanexistingsharedhostingservice.

• Email Marketing .ConstantContact’semailmarketingproductallowssmallbusinessesandothersmallorganizationstoeasilycreate,sendandtrackprofessional-lookingemailcampaigns,allowingthemtocommunicateeffectivelywiththeircustomersandpotentialcustomersviaemail.Emailmarketingservicesavailabletosubscribersincludebuildingandsegmentingmailinglists,designingandmanagingemailnewsletters,couponsandlandingpages,schedulingandsendingemailmessages,andreportingandtrackingtheresultsofeachcampaign.

• Productivity Solutions .Weofferoursubscribersprofessional,secure,reliableemailcapabilities,includingcustommailboxesthatreflectasubscriber’sdomainname,spamfilters,emailaliasesandforwardingfunctionality.Ourcommunicationstoolsalsoallowasubscribertounifyitsemailinboxwithothercommunicationsstreams,suchassocialmediafeeds.ThroughourpartnershipwithGoogle,wealsoofferourcustomersGoogleAppsforWork,whichincludesanintegratedsuiteofemail,collaboration,andfilesharingtools.

• E-commerce Enablement .Asoursubscribersgrowtheirbusinessesandtheirdemandsone-commerceincrease,weofferproductsthatenablesecure

andencryptedpayments,shoppingcarts,paymentprocessingandrelatedservices,mobilepaymentsandotherformsofe-commercetoexpandthewaySMBsconductbusinessonline.

• Professional Services .Forsubscriberswhohaveextensivedemandsforwebdesign,contentaggregationandpresentationorhaveunique

requirementsfortheirwebpresence,weofferprofessionalserviceswithdedicatedengineeringandwebdesigntohelpthemcreatetheiridealwebpresencecompletewithintegrationwithsomeofthemoreadvancede-commerce,productivityandmarketingproductsweoffer.

• SinglePlatform. ConstantContact’sSinglePlatformproductprovideslocalbusinessestheabilitytocreateandmanagedigitalstorefrontlistingsthroughoneinterface.Thedigitalstorefront,whichmayincludemenus,photos,services,offersandfeaturedproducts,isdistributedonlineacrossover100onlinepublishers,includingmultiplewebsitesandmobileapplicationssuchasYelp,Urbanspoon,Foursquare,YellowPages,WhitePagesandTripAdvisor.SinglePlatformincreasesamerchant’sreachandhelpssmallbusinessestobefoundonlineandviamobilesitesbyconsumers.

Subscriber Support

Oursupportagentsassistoursubscribersinaproactive,consultativemanner,engagingwithanaverageofmorethan35,000subscribersperdayviaphone,emailandchat.Weleverageourproprietarydataandsubscribermanagementsoftwaretodeliverdifferentiatedsupport,whichwebelieveenablesustodeepenrelationshipswithoursubscribersandhelpthemsucceedastheygrow.Oursupportpersonnelnotonlyassistsubscriberswithtechnicalissues,butalsofocusonunderstandingthebusinessgoalsofeachsubscribertohelpidentifytherightproductsandservicestoachievethosegoals.Webelievethiscontributestosubscriberretentionandourabilityto

8

Table of Contents

sellmoreproductsandservices.Ourprimarysupportcentersarelocatedin,Arizona,Colorado,Texas,Utah,theUnitedKingdom,BrazilandIndia,andwehavethird-partysupportarrangementsinIndia,thePhilippinesandChina.

Technology Platform

Wehaveinvestedsignificantresourcestodevelopandenhanceourtechnologyplatformandcollectavastamountofproprietarydata.Weuseadata-drivenapproachtodesignbusinessprocessesthatallowustoinnovate,developanddeploysolutionsthatmeetthedemandsofSMBsandprovideasuperiorexperienceforoursubscribers.Ourtechnologyplatformleveragescommonservicesforthebenefitofourbrandsandhastheabilitytooptimizethespecificrequirementsofindividualbrands.

Integrated Platform

Wehavedevelopedanintegratedtechnologyplatformforourcloud-basedsolutionsthatcombinesopensourceandproprietarysoftwaredesignedtogrowwiththeneedsofoursubscribers.Ourinnovativesharedservicesarchitectureallowsustooperateatahighlevelofservice,withahighdegreeofcustomizationforeachsubscriber’swebpresenceandwithalargenumberofsubscribersperserver.Inaddition,wehavebuiltcustomizedsubscriberrelationshipmanagement,billingandsubscriberservicesupportsystemstoon-board,serveandtrackoursubscribersatscale,andtoenablesubscriberstomanagetheirownserviceexperience.Oursubscriberservicesupportsystemsalsohelpuspredictwhichapplicationsasubscribermayneedbasedonourexperiencewithsimilarsubscribers,enablingoursupportpersonneltohavemoreinformedsubscriberinteractions.

Data Analytics and Business Intelligence

Ourproprietarydataanalyticstechnologyenablesustodeliverourproductsandservicesinahighlypersonalizedmannerandtoimproveouroperationalefficiency.Wehaveadedicatedteamofsoftwareengineersfocusedonrefiningandfurtherdevelopingourproprietaryanalyticssystems.Ouruseofanalyticsandcontinuedinvestmentindevelopingpredictivecapabilitiesallowustodesignanddelivertherightsolutionstooursubscribersattherighttime.Webelieveouranalyticscapabilitiesandtechnologyarealsokeycontributorstoourabilitytotargetnewsubscribers,retainexistingsubscribersandselladditionalproductsandservicestoourbaseofsubscribers.

Applications

Weofferanintegratedandcomprehensivesuiteofproductsandservicesthroughproprietaryapplicationsaswellasthird-partytechnologypartnerswhohaveintegratedtheirofferingsintoourtechnologyplatform.Throughacombinationofcommonservices,integratedplatforms,applicationprograminterfacesandprocesses,wecanrapidlydevelopanddeploynewapplicationsacrossourbrands.Asignificantportionofourover150productsandserviceshavebeeninternallydeveloped.Weregularlyretireofferingsthatareunderperformingandaddofferingsthatwebelievewillbeinhighdemandbasedonourdatainsights.

Infrastructure

Weemployvarioustechniquestoenhancethestabilityofoursystemsandpreservethesecurityofinformationcontainedonthem.Weutilizemonitoringsystemsandavarietyofsoftwarecomponentstomonitorandprotectourinfrastructureagainstattemptstoattackorgainunauthorizedentrytoourinternalsystemsandsubscriberwebsites.Inaddition,wefocusonreducingthecomputationalrequirementsofourservices,whichenablesustolowerhardwarecosts.Theseeffortshelpusachieveperformancecapabilitiessuchashighlevelsofserverdensityandreduceoverallcapitalexpendituresandcoststoserveoursubscribers.WecurrentlyservemostofoursubscribersfromU.S.-baseddatacenters,oneofwhichisownedbyusandtherestofwhichareco-located.

9

Table of Contents

Engineering and Development

Ourengineeringanddevelopmentactivityisfocusedonenhancingoursystems,developingandexpandingproductandserviceofferings,andintegratingtechnologycapabilitiesfromouracquisitions.Ourengineeringanddevelopmentexpenseduring2013,2014and2015was$23.2million,$19.5millionand$26.7million,respectively.

Subscriber Profile

AsofDecember31,2015,wehadapproximately4.7millionsubscribers.OfsubscribersofmajorEndurancebrandsotherthanConstantContact,approximately80%areSMBs,andthemajorityofSMBsubscribersarebusinesseswithfiveorfeweremployees.

Theindustriesinwhichoursubscribersoperateareverydiverse,includingretail,merchandising,media,recreation,education,construction,health,beautyandwellnessandartsandentertainment,amongothers.

Geographical Information

WecurrentlymaintainofficesandconductoperationsprimarilyintheUnitedStates,Brazil,India,IsraelandtheUnitedKingdom.Wealsohavethird-partysupportarrangementsinIndia,thePhilippinesandChina.

Informationaboutthegeographiclocationofourlong-livedassetsandrevenueissetforthinNote20ofourNotestoConsolidatedFinancialStatementsinPartII,Item8,“FinancialStatementsandSupplementaryData”ofthisAnnualReportonForm10-K.

Competition

Theglobalcloud-basedservicesmarketforSMBsishighlycompetitiveandconstantlyevolving.Weexpectcompetitiontoincreasefromexistingcompetitorsaswellaspotentialnewmarketentrants.Ourcompetitorsincludeprovidersof:

• offeringsdesignedtohelpSMBsestablishaninitialwebpresence,suchasdomainnameregistrarsandsharedhostingproviders,suchasGoDaddy,

Web.comandUnitedInternet;websitebuilders,suchasSquarespaceandWix;websitecreationandmanagementcompanies,e-commerceserviceproviders,securitysolutionsprovidersandsitebackupcompanies;

• solutionsthathelpSMBsgetfoundonline,suchasSEMcompanies,SEOcompanies,localdirectorylistingcompaniesandonlineandofflinebusinessdirectories;and

• moreadvancedsolutionstargetedatgrowingSMBs,suchascompaniesofferingVPSanddedicatedhostingservices,advancede-commerceandsecurityproducts,emailmarketingsolutionsandproductivitytools.

Webelievetheprincipalcompetitivefactorsinthecloud-basedservicesmarketforSMBsare:

• sizeandscaleofsubscriberbase;

• integratedcloud-basedtechnologyplatformthatcanhelptargetandservicesubscriberseffectivelyatscale;

• depthandsophisticationofdataanalyticsandbusinessinsightstools;

• cost-effectivesubscriberacquisition;

• scope,scalability,flexibilityandcompatibilityofproductandserviceofferings;

10

Table of Contents

• qualityofsubscribersupportandsubscriberengagement;

• brandnames,reputationandsubscribersatisfaction;

• easeofimplementation,useandmaintenance;and

• reliabilityandsecurity.

Webelievethatwecompetefavorablywithrespecttoeachofthesefactors.Insomeinstances,wehavecommercialpartnershipswithprovidersintheSMBmarketwithwhomweotherwisecompete.

Seasonality

Wehavehistoricallyexperiencedincreasedsubscriberbillingsinthefirstquarterofourfiscalyearasmanysubscribersstartbusinessesatthebeginningofanewyear.Webookasignificantportionofthesebillingsasdeferredrevenueandrecognizethedeferredrevenuethroughoutthecourseoftheyearandbeyondbasedonthetermoftheapplicablesubscription.Consequently,ourquarterlysubscriberbillingsandnetnewsubscriberadditionsaretypicallyrelativelyhighinthefirstquarterofourfiscalyear,whileourGAAPrevenuefromnewsubscriberadditionsisrelativelyhigherinthefourthquarterofourfiscalyear.

Intellectual Property and Proprietary Rights

Ourintellectualpropertyandproprietaryrightsareimportanttoourbusiness.Werelyonacombinationoftrademark,patent,copyrightandtradesecretlaws,confidentialityandaccess-relatedproceduresandsafeguardsandcontractualprovisionstoprotectourproprietarytechnologies,confidentialinformation,brandsandotherintellectualproperty.

Weuseopensourcetechnologiespursuanttoapplicablelicensesasthebasisforourtechnologyplatform.Wehavealsodeveloped,acquiredorlicensedproprietarytechnologiesforuseinourbusiness.AsofDecember31,2015,wehavetwelveU.S.patentsaswellasfourpendingU.S.patentapplicationsandseveralpendingforeigncounterpartapplications,relatingtoaspectsofourtechnologyplatformandofferings,includingoursharedservicesarchitecture,predictiveanalyticsmethods,virtualizationtechnologies,subscribermigrationtechnologiesandwebpresenceimprovementtechnologies.Webelievethedurationofourpatentsisadequaterelativetotheexpectedlivesofthetechnologiestheycover.

Wehavenon-disclosure,confidentialityandlicenseagreementswithemployees,contractors,subscribersandotherthirdparties,whichlimitaccesstoanduseofourproprietaryinformation.Thoughwerelyinpartupontheselegalandcontractualprotections,aswellasvariousproceduralsafeguards,webelievethattheskillandingenuityofouremployees,thefunctionalityandfrequentenhancementstooursolutionsandourabilitytointroducenewproductsandfeaturesthatmeettheneedsofoursubscribersaremoreimportanttomaintainingourcompetitivepositioninthemarketplace.

Wehaveanongoingtrademarkandservicemarkregistrationprogrampursuanttowhichweregisterourbrandnamesandproductnames,taglinesandlogosintheUnitedStatesandothercountriestotheextentwedetermineappropriateandcost-effective.Wealsohavecommonlawrightsinsomeunregisteredtrademarksthatwereestablishedoveryearsofuse.Inaddition,wehaveatrademarkandservicemarkenforcementprogrampursuanttowhichwemonitorapplicationsfiledbythirdpartiestoregistertrademarksandservicemarksthatmaybeconfusinglysimilartoours,aswellastheuseofourmajorbrandnamesinsocialmedia,domainnamesandotherInternetsites.

Despiteoureffortstopreserveandprotectourintellectualproperty,unauthorizedthirdpartiesmayattempttocopy,reverseengineerorotherwiseobtainaccesstoourproprietaryrights,andcompetitorsmayattemptto

11

Table of Contents

developsolutionsthatcouldcompetewithusinthemarketsweserve.Unauthorizeddisclosureofourconfidentialinformationorproprietarytechnologiesbyouremployeesorthirdpartiescouldalsooccur.TheriskofunauthorizeduseofourproprietaryandintellectualpropertyrightsmayincreaseasweseektoexpandoutsideoftheUnitedStates.

Third-partyinfringementclaimsarealsopossibleinourindustry,especiallyasfunctionalityandfeaturesexpand,evolveandoverlapacrossindustries.Thirdparties,includingnon-practicingpatentholders,haveclaimed,andcouldclaiminthefuture,thatourprocesses,technologiesorwebsitesinfringepatentstheynowholdormightobtainorthatmightbeissuedinthefuture.See“RiskFactors—Wecouldincursubstantialcostsasaresultofanyclaimofinfringementofanotherparty’sintellectualpropertyrights.”

Employees

AsofDecember31,2015,wehad2,593employees,including1,671insupportandnetworkoperations,514insalesandmarketing,183inengineeringanddevelopmentand225ingeneralandadministrative.MostofouremployeesarebasedintheUnitedStates.Noneofouremployeesisrepresentedbyalaborunionorcoveredbyacollectivebargainingagreement.Wehaveneverexperiencedastrikeorsimilarworkstoppage,andweconsiderourrelationswithouremployeestobegood.

Corporate Information

Ourbusinesswasfoundedin1997asaDelawarecorporationunderthenameInnovativeMarketingTechnologiesIncorporated.InDecember2011,investmentfundsandentitiesaffiliatedwitheitherWarburgPincusorGoldman,Sachs&Co.acquiredacontrollinginterestinourcompany.Priortoourinitialpublicoffering,orIPO,inOctober2013,wewereanindirectwhollyownedsubsidiaryofWPExpeditionTopcoL.P.,aDelawarelimitedpartnershipthatwerefertoasWPExpeditionTopco.PursuanttothetermsofacorporatereorganizationthatwecompletedpriortoourIPO,WPExpeditionTopcodissolvedandinliquidationdistributedthesharesofEnduranceInternationalGroupHoldings,Inc.commonstocktoitspartnersinaccordancewiththelimitedpartnershipagreementofWPExpeditionTopco.

Ourprincipalexecutiveofficesarelocatedat10CorporateDrive,Suite300,Burlington,Massachusetts01803andourtelephonenumberatthataddressis(781)852-3200.

Information Available on the Internet

WemaintainanInternetwebsiteatwww.endurance.com,andwealsooperateanumberofotherwebsites.Theinformationon,orthatcanbeaccessedthrough,anyofourwebsitesisnotincorporatedbyreferenceintothisAnnualReportonForm10-KandshouldnotbeconsideredtobeapartofthisAnnualReportonForm10-K.OurwebsiteaddressisincludedinthisAnnualReportonForm10-Kasinactivetextualreferenceonly.OurreportsfiledorfurnishedpursuanttoSection13(a)or15(d)oftheExchangeAct,includingourAnnualReportsonForm10-K,ourQuarterlyReportsonForm10-QandourCurrentReportsonForm8-K,andamendmentstothosereports,areaccessiblethroughourwebsite,freeofcharge,assoonasreasonablypracticableafterthesereportsarefiledelectronicallywith,orotherwisefurnishedto,theSecuritiesandExchangeCommission,ortheSEC.Wealsomakeavailableonourwebsitethechartersofourauditcommittee,compensationcommitteeandnominatingandcorporategovernancecommittee,aswellasourcorporategovernanceguidelinesandourcodeofbusinessconductandethics.Inaddition,weintendtodiscloseonourwebsiteanyamendmentsto,orwaiversfrom,ourcodeofbusinessconductandethicsthatarerequiredtobedisclosedpursuanttoSECrules.

12

Table of Contents

ITEM 1A. Risk Factors

Ourbusiness,financialcondition,resultsofoperationsandfuturegrowthprospectscouldbemateriallyandadverselyaffectedbythefollowingrisksoruncertainties.Therisksanduncertaintiesdescribedbelowarethosethatwehaveidentifiedasmaterial,buttheyarenottheonlyrisksanduncertaintiesweface.Ourbusinessisalsosubjecttogeneralrisksanduncertaintiesthataffectmanyothercompanies,includingoveralleconomicandindustryconditions,aswellasotherrisksnotcurrentlyknowntousorthatwecurrentlyconsiderimmaterial.Ifanyofsuchrisksanduncertaintiesactuallyoccurs,ourbusiness,financialcondition,resultsofoperationsandgrowthprospectscoulddiffermateriallyfromtheplans,projectionsandotherforward-lookingstatementsincludedinthesectiontitled“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations”andelsewhereinthisAnnualReportandinourotherpublicfilings.

Risks Related to Our Business and Our Industry

Our quarterly and annual operating results may be adversely affected due to a variety of factors, which could make our future results difficult to predict andcould cause our operating results to fall below investor or analyst expectations.

Ourquarterlyandannualoperatingresultsmaybeadverselyaffectedduetoavarietyoffactorsthatcouldaffectourrevenueorourexpensesinanyparticularperiod.Youshouldnotrelyonquarter-to-quartercomparisonsofouroperatingresultsasanindicationoffutureperformance.Factorsthatmayadverselyaffectourquarterlyandannualoperatingresultsmayinclude:

• ourabilitytoattractnewsubscribers,andretainexistingsubscribers;

• ourabilitytoacquiresubscribersinacost-effectiveway;

• ourabilitytoincreaserevenuefromourexistingsubscribers;

• ourabilitytomaintainahighlevelofsubscribersatisfaction;

• ourinabilitytoraisethesellingpricesforoursolutionsorreductionsinthesellingpricesforoursolutions;

• competitioninthemarketforourproductsandservices,aswellascompetitionforreferralsources;

• rapidtechnologicalchange,frequentnewproductandserviceintroductions,andevolvingindustrystandards,includingwithrespecttohowour

productsandservicesaremarketedtoconsumers,inhowconsumersfind,purchaseanduseourproductsandservicesandintechnologyintendedtoblockemailmarketing;

• difficultiesinintegratingtechnologies,productsandemployeesfromcompanieswehaveacquiredormayacquireinthefutureorinmigratingacquiredsubscribersfromanacquiredcompany’splatformstoourplatform;

• systems,datacenterandInternetfailuresandserviceinterruptions;

• networksecuritybreachesorsabotageresultingintheunauthorizeduseordisclosureof,oraccessto,personallyidentifiableinformationorotherconfidentialinformation;

• lossofkeyemployees;

• ourabilitytodrivegrowththroughmergersandacquisitions,jointventures,orstrategicinvestments;

• economicconditionsnegativelyaffectingtheSMBsectorandchangesingrowthrateofSMBs;

• difficultiesandcostsarisingfromourinternationaloperationsandcontinuedinternationalexpansion;

• difficultiesindistributingnewproducts;

• shortcomingsorerrorsin,ormisinterpretationsof,ourmetricsanddatawhichcauseustofailtoanticipateoridentifytrendsinourmarket;

13

Table of Contents

• terminationsof,disputeswith,ormaterialchangestoourrelationshipswiththird-partypartners,includingreferralsources,productpartners,datacenterproviders,paymentprocessorsandlandlords;

• ashiftinsubscriberdemandtolowermarginsolutions,whichcouldincreaseourcostofrevenue;

• costsorliabilitiesassociatedwithanypastorfutureacquisitions,strategicinvestmentsorjointventuresthatwemaymakeorenterinto;

• changesinlegislationthataffectourcollectionofsalesandusetaxesorchangestoourbusinessthatsubjectustotaxationinadditionaljurisdictions;

• theamountandtimingofcapitalexpenditures,suchasinvestmentsinourhardwareandsoftwaresystems,aswellasextraordinaryexpenses,suchaslitigationorotherdispute-relatedsettlementpayments;

• changesinregulationortoregulatorybodies,suchastheInternetCorporationforAssignedNamesandNumbers,orICANN,thatcouldaffectourbusinessandourindustry,orcostsoforourfailuretocomplywithsuchregulation;and

• litigationorgovernmentalenforcementactionsagainstus,includingduetofailurestocomplywithapplicablelaworregulation.

Itispossiblethatinoneormorefuturequarters,duetoanyofthefactorslistedabove,acombinationofthosefactorsorotherreasons,ouroperatingresultsmaybebelowourexpectationsandtheexpectationsofresearchanalystsandinvestors.Inthatevent,ourstockpricecoulddeclinesubstantially.

The acquisition of Constant Contact may not achieve the intended benefits or may disrupt our current plans and operations.

WemaynotbeabletosuccessfullyintegrateourbusinesswithConstantContact’sbusinessorrealizetheanticipatedsynergiesfromtheacquisitionintheanticipatedamountsorwithintheanticipatedtimeframesorcostexpectationsoratall.ThedifficultiesandrisksassociatedwiththeintegrationofConstantContact,whichislikelytobecomplexandtime-consuming,include:

• thepotentiallossofConstantContactcustomers,ordifficultiesorhigherthananticipatedcostsinaddingnewConstantContactcustomers,duetotheactualorperceivedimpactoftheacquisitionandintegrationofConstantContactcustomers;

• possibleaggressivetargetingofexistingandpotentialConstantContactcustomersbyConstantContact’scompetitorsseekingtocapitalizeonpotentialcustomerconcernsabouttheacquisition;

• possibledifferencesinthestandards,controls,procedures,policies,corporatecultureandcompensationstructuresofourcompanyandConstant

Contact,whichmayleadtounanticipateddelays,costsorinefficiencies,employeedeparturesordifficultiesconsolidatingtheoperationsofthecompanies;

• difficultiesanddelaysinimplementingourintegrationplan,whichmayresultinusfailingtoachievetheanticipatedsynergiesfromtheacquisitioninatimelymanneroratall;

• thepotentiallossofkeyemployeesandthecostsassociatedwithoureffortstoretainkeyemployees;

• difficultiessuccessfullymanagingrelationshipswithourcombinedpartnerandvendorbase;

• thepossibilitythatwe,asasuccessorowner,mayberesponsibleforactualorcontingentliabilitiesofConstantContactthatwefailedtodiscoverduringourduediligenceinvestigationpriortoouragreementtoacquireConstantContact;

• obligationsthatwemayhavetocounterpartiesofConstantContactthatariseasaresultofthechangeincontrolofConstantContact;

• limitationsonourabilitytoutilizeConstantContact’snetoperatinglosscarry-forwardstooffsetpaymentsoffuturefederalandstateincometaxliabilities;and

14

Table of Contents

• thepotentialthatweorConstantContactmaybeadverselyaffectedbyothereconomic,political,legislative,regulatory,business,competitiveorotherfactorsaffectingourindustry.

Thus,theintegrationmaybeunpredictable,orsubjecttodelaysorchangedcircumstances,andwemayfailtorealizesomeoralloftheanticipatedbenefitsoftheConstantContactacquisition,suchas:

• costandrevenuesynergies,

• operationalefficiencies,

• theabilitytocross-sellourproductsintoConstantContact’scustomerbaseandviceversa,and

• theabilitytoadaptConstantContact’sproductstodifferentsegmentsoftheSMBmarketthroughourmulti-brandstrategy.

Theanticipatedbenefitsandsynergiesweexpectfromtheacquisitionarebasedonvariousprojectionsandassumptions,whichmaynotmaterializeasorwhenexpectedormayprovetobeinaccurate.Afailuretorealizetheexpectedcostandrevenuesynergiesoroperationalefficienciesrelatedtotheacquisitioncouldresultinhighercostsandlowercombinedrevenue,adjustedrevenue,adjustedEBITDA,unleveredfreecashfloworfreecashflowthanexpectedandhaveanadverseeffectonourfinancialresultsandprospects.Anysucheffectonourfinancialresultsmaymeanthatwearenotabletomeetourexpectationsforcombinedadjustedrevenue,adjustedEBITDA,unleveredfreecashflow,freecashfloworotherfinancialoroperationalmetrics.

OurbusinessmaybenegativelyimpactedfollowingtheConstantContactacquisitionifweareunabletoeffectivelymanageourexpandedoperations.Theimplementationofourintegrationplansfollowingtheacquisitionwillbecostly,complexandtimeconsumingandwillrequiresignificanttimeandfocusfrommanagementandmaydivertattentionfromtheday-to-dayoperationsofthecombinedbusiness.Additionally,consummationoftheConstantContactacquisitioncoulddisruptourplansandoperations,whichcoulddelaytheachievementofourstrategicobjectives.

We may not be able to continue to add new subscribers, retain existing subscribers or increase sales to existing subscribers, which could adversely affect ouroperating results.

Ourgrowthisdependentonourabilitytocontinuetoattractandacquirenewsubscriberswhileretainingexistingsubscribersandexpandingtheproductsandservicesweselltothem.Growthinthedemandforourproductsandservicesmaybeinhibited,andwemaybeunabletosustaingrowthinoursubscriberbase,foranumberofreasons,including,butnotlimitedto:

• ourfailuretodeveloporofferneworadditionalproductsandservicesinatimelymannerthatkeepspacewithnewtechnologiesandtheevolvingneedsofoursubscribers;

• ourinabilitytomarketoursolutionsinacost-effectivemannertonewsubscribersortoourexistingsubscribersandtoincreaseoursalestoexistingsubscribers,includingduetochangesinregulation,orchangesintheenforcementofexistingregulationthatwouldimpairourmarketingpractices,requireustochangeoursign-upprocessesorrequireustoincreasedisclosuredesignedtoprovidegreatertransparencyastohowwebillanddeliverourservices;

• ourinabilitytoacquireorretainnewsubscribersthroughmergersandacquisitions,jointventuresorstrategicinvestments;

• ourinabilitytooffersolutionsthatareadequatelyintegratedandcustomizabletomeettheneedsofourhighlydiverseandfragmentedsubscriberbase;

• changesinsearchenginerankingalgorithmsorinsearchtermsusedbypotentialsubscribers,eitherofwhichmayhavetheeffectofincreasingourcompetitors’searchenginerankingsorincreasingourmarketingcoststooffsetlowersearchenginerankings;

15

Table of Contents

• changesin,orafailuretomanage,technologyintendedtoblockemailmarketing;

• failureofourthird-partydevelopmentpartners,whichprovideasignificantportionofourofferings,tocontinuetosupportexistingproductsandtodevelopandsupportnewproducts;

• theinabilityofoursubscriberstodifferentiateoursolutionsfromthoseofourcompetitorsorourinabilitytoeffectivelycommunicatesuchdistinctions;

• ourinabilitytomaintainawarenessofourbrands;

• ourinabilitytomaintainaconsistentuserexperienceandtimelyandconsistentproductupgradescheduleforallofoursubscribersduetothefactthatnotallofourbrands,products,orservicesoperatefromthesamecontrolpanelorothersystems;

• ourinabilitytopenetrate,oradapttorequirementsof,internationalmarkets,includingourinabilitytoobtainormaintaintherequiredlicensestooperateincertaininternationalmarkets;

• ourinabilitytoenterintoautomaticallyrenewingcontractswithoursubscribersorincreasesubscriptionprices;

• thedecisionsbyoursubscriberstomovethehostingoftheirInternetsitesandwebinfrastructuretotheirownITsystems,intoco-locationfacilitiesortoourcompetitorsifweareunabletoeffectivelymarketthescalabilityofoursolutions;

• subscriberdissatisfactioncausingourexistingsubscriberstostopreferringprospectivesubscriberstous;and

• perceivedoractualsecurity,integrity,reliability,qualityorcompatibilityproblemswithoursolutions,includingrelatedtounscheduleddowntime,outagesornetworksecuritybreaches.

Asubstantialamountofourrevenuegrowthhistoricallyhasbeenderivedfromincreasedsalesofproductsandservicestoexistingsubscribersandfromintroductorysubscriptionsrenewingatregularrates.Ourcostsassociatedwithincreasingrevenuefromexistingsubscribersaregenerallylowerthancostsassociatedwithgeneratingrevenuefromnewsubscribers.Therefore,areductionintherateofrevenueincreasefromourexistingsubscribers,evenifoffsetbyanincreaseinrevenuefromnewsubscribers,couldreduceouroperatingmargins,andanyfailurebyustocontinuetoattractandacquirenewsubscribersorincreaseourrevenuefromexistingsubscriberscouldhaveamaterialadverseeffectonouroperatingresults.

WeexpecttoleverageourcurrentmarketingstrategyforConstantContact’sproductsandservices,butourstrategymaynotbeassuccessfulforConstantContact’sproductsandservicesasweexpect.Inparticular,ConstantContact’sstrongbrandawarenessmaybediminishedifwereduceordiscontinuetelevisionandradioadvertisinginordertopursuethemoretargetedorsuccess-basedmarketingmethodswetypicallyusefortherestofourbusiness.Ifthisoccurs,wemaynotacquirenewConstantContactcustomersattheratethatweexpectorwemayneedtoincurhigherthananticipatedmarketingexpensestoacquirenewConstantContactcustomers,whichcouldhaveamaterialadverseeffectonouroperatingresults.

The rate of growth of the SMB market for our solutions could be significantly lower than our estimates .If demand for our products and services does not meetexpectations, our ability to generate revenue and meet our financial targets could be adversely affected.

AlthoughweexpectcontinueddemandintheSMBmarketforourcloud-basedsolutionsandonlinemarketingtools,itispossiblethattherateofgrowthmaynotmeetourexpectations,orthemarketmaynotcontinuetogrowatall,eitherofwhichwouldadverselyaffectourbusiness.OurexpectationsforfuturerevenuegrowtharebasedinpartonassumptionsreflectingourindustryknowledgeandexperienceservingSMBs,aswellasourassumptionsregardingdemographicshifts,growthintheavailabilityandcapacityofInternetinfrastructureinternationallyandmacroeconomicconditions.Ifanyoftheseassumptionsprovestobeinaccurate,thenouractualrevenuegrowthcouldbesignificantlylowerthanourexpectedrevenuegrowth.

16

Table of Contents

Ourabilitytocompetesuccessfullydependsonourabilitytoofferanintegratedandcomprehensivesuiteofproductsandservicesthatenableourdiversebaseofsubscriberstoestablish,manageandgrowtheirbusinesses.Ourwebpresenceandcommerceofferingsarepredicatedontheassumptionthatanonlinepresenceis,andwillcontinuetobe,animportantfactorinoursubscribers’abilitiestoestablish,expand,manageandmonetizetheirbusinessesquickly,easilyandaffordably.Ifweareincorrectinthisassumption,forexampleduetotheintroductionofanewtechnologyorindustrystandardthatsupersedestheimportanceofanonlinepresenceorrendersourexistingorfuturesolutionsobsolete,thenourabilitytoretainexistingsubscribersandattractnewsubscriberscouldbeadverselyaffected,whichcouldharmourabilitytogeneraterevenueandmeetourfinancialtargets.

Our business and operations have experienced rapid growth and organizational change in recent years, which has placed, and will continue to place,significant demands on our management and infrastructure, especially our billing systems and operational infrastructure .We have also made significantinvestments to support our growth strategy, which may not succeed .If we fail to manage our growth effectively, we may be unable to execute our businessplan, maintain high levels of service, produce accurate financial statements and other disclosures on a timely basis or address competitive challengesadequately.

Asaresultofacquisitionsandinternalgrowth,weincreasedourrevenuefrom$520.3millionintheyearendedDecember31,2013to$629.8millionintheyearendedDecember31,2014to$741.3millionintheyearendedDecember31,2015.TheacquisitionofConstantContact,whichgeneratedapproximately$367.4millioninrevenueintheyearendedDecember31,2015,representsasignificantexpansioninthesizeandscopeofourbusiness.

Ourgrowthhasplaced,andwillcontinuetoplace,asignificantstrainonourmanagerial,engineering,networkoperationsandsecurity,salesandsupport,marketing,legal,compliance,financeandotherresources.Inparticular,ourgrowthhasplaced,andwillcontinuetoplace,asignificantstrainonourabilitytomaintaineffectiveinternalfinancialandaccountingcontrolsandprocedures.Forexample,asaresultofouracquisitions,wehaveacquiredmultiplebillingsystemsthatweareintheprocessofintegrating,andwemayacquireandintegrateadditionalbillingsystemswithfutureacquisitions.Anydelaysorotherchallengesassociatedwithbillingsystembuild-outsorintegrationscouldleadtoinaccuratedisclosure,whichcouldpreventusfromproducingaccuratefinancialstatementsonatimelybasisandharmouroperatingresults,ourabilitytooperateourbusinessandourinvestors’viewofus.Inaddition,wehaveidentifiedinthepast,andmayinthefutureidentify,errorsinoursystems,includingthebusinessintelligencesystem,whichweusetogeneratecertainoperationalandperformancemetrics.Forexample,inthethirdquarterof2015,weidentifiederrorsinourbusinessintelligencesystemthatimpactedthreeofourperformancemetrics,asdescribedin“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations”inPartII,Item7ofthisAnnualReportonForm10-K.Ouroperationalandperformancemetrics,whichwevoluntarilydisclose,historicallyhavenotbeensubjecttothesamelevelofreportingcontrolsasourfinancialstatementsandotherfinancialinformationthatwearerequiredtodisclose.Weareworkingtoimproveourcontrolsfortheseoperationalandperformancemetrics,butfurthererrorswithrespecttothesemetricscouldstilloccur.Errorsofthistypecouldresultininaccuratedisclosures,negativelyimpactourbusinessdecisionsandharminvestors’viewofus.

Inaddition,asaresultofourgrowth,theincreaseinthenumberofourtotalsubscribershasrequiredustoinvestinandimprovethesecurity,scaleandflexibilityofourinfrastructureandinformationtechnologysystems,andtheincreaseinthenumberofpaymenttransactionsthatweprocessforoursubscribershasincreasedtheamountofcustomerdatathatwestore.Anylossofdataordisruptioninourabilitytoprovideourproductofferingsduetodisruptionsto,ortheinflexibilityorlackofscaleof,ourinfrastructureorinformationtechnologysystemscouldharmourbusinessorourreputation.

Wehavealsomadesignificantinvestmentsinourgrowthstrategy,whichmaynotsucceed.Forexample,wehaveincurredsignificantexpensesrelatingtoourincreasedinvestmentsinproductmarketingandothermarketingeffortstoacquirenewsubscribersandtoselladditionalproductstoexistingsubscribers,andweintend

17

Table of Contents

tocontinueinvestinginourproductmarketingandothermarketingefforts.Wehavealsoincurredsignificantexpensesandallocatedsignificantresources,includingfinance,operational,legalandcomplianceresources,relatedtothegrowthandcontinuedexpansionofourinternationaloperations,andweexpectthatsuchexpensesandresourceallocationwillincreaseinthefuture.Ifwedonotachievethebenefitsanticipatedfromtheseinvestments,oriftheachievementofthesebenefitsisdelayed,ouroperatingresultsmaybeadverselyaffected.

Weintendtofurtherexpandouroverallbusiness,subscriberbase,datacenterinfrastructure,headcountandoperations,bothdomesticallyandinternationallywithnoassurancethatourbusinessorrevenuewillcontinuetogrow.CreatinganorganizationwithexpandedU.S.andoverseasoperationsandmanagingageographicallydispersedworkforcewillrequiresubstantialmanagementeffort,theallocationofsignificantmanagementresourcesandsignificantadditionalinvestmentinourinfrastructure,includingourinformationtechnology,operational,financialandadministrativeinfrastructureandsystems.Wewillalsohavetocontinuetoensurethatouroperational,financial,compliance,riskandmanagementcontrolsandourreportingproceduresareineffectthroughoutourorganization,andmakeimprovementsasnecessary.Assuch,wemaybeunabletomanageourexpenseseffectivelyinthefuture,whichmayadverselyaffectourgrossmarginsoroperatingexpensesinanyparticularquarter.Ifwefailtomanageouranticipatedgrowthandorganizationalchangeinamannerthatpreservesthekeyaspectsofourcorporateculture,thequalityofoursolutionsmaysufferorfailtokeepupwithchangesintheindustryortechnologicaldevelopments,whichcouldadverselyaffectourbrandsandreputationandharmourabilitytoretainandattractsubscribers.

Our recent or potential future acquisitions, joint ventures and other strategic investments could be difficult to execute and integrate, divert the attention of keypersonnel, disrupt our business, dilute stockholder value and impair our financial results .We may not be able to complete anticipated acquisitions and maynot realize the expected benefits from our acquisitions, joint ventures or other strategic investments that we have completed or may complete in the future.

Acquisitionsareanimportantcomponentofourgrowthstrategy.Wehaveinthepastacquired,andexpectinthefuturetoacquire,businessesandassetsofothercompaniestoincreaseourgrowth,enhanceourabilitytocompeteinourcoremarketsorallowustoenternewmarkets.Wealsoregularlymakestrategicinvestmentsin,andenterintojointventureswith,thirdparties.Thesestrategicinvestmentandjointventurearrangementsaretypicallywithsmallcompaniesfocusedondevelopingproductsthatwebelievemayserveaseffectivenewgatewaystoacquirenewsubscribersorthatmayappealtoourexistingsubscriberbase.Ourabilitytoexecutetheseacquisitions,strategicinvestmentsandjointventuretransactionsdependsonanumberoffactors,includingtheavailabilityoftargetcompaniesatpricesandontermsacceptabletous,ourabilitytoobtainthenecessaryequity,debtorotherfinancing,andregulatoryconstraints.Ourinabilitytocompleteanticipatedacquisitions,strategicinvestmentsorjointventuresfortheseorotherreasonsmaynegativelyimpactourabilitytoachieveourlong-termgrowthtargets.

Inaddition,thesetransactionsinvolvenumerousrisks,anyofwhichcouldharmourbusiness,including:

• difficultiesordelaysinintegratingthetechnologies,products,operations,billingsystems,personneloroperationsofanacquiredbusinessandrealizingtheanticipatedbenefitsofthecombinedbusinesses;

• relianceonthirdpartiesfortransitionservicespriortosubscribermigrationordifficultiesinsupportingandmigratingacquiredsubscribers,ifany,toourplatform,causingpotentiallossofsuchsubscribersanddamagetoourreputation;

• disruptionofourongoingbusinessanddiversionoffinancial,management,operationsandcustomersupportresourcesfromexistingoperations;

• difficultiesinapplyingourcontrolsandriskmanagementandcompliancepoliciesandpracticestoacquiredcompanies;

• integrationandsupportofredundantsolutionsorsolutionsthatareoutsideofourcorecapabilities;

18

Table of Contents

• theincurrenceofadditionaldebtinordertofundanacquisition,orassumptionofdebtorotherliabilities,includinglitigationriskorrisksassociated

withotherunforeseenorundisclosedliabilities,oftheacquiredcompany,orexposuretosuccessorliabilityforanylegalviolationsoftheacquiredcompany;

• totheextentanacquiredcompanyhasacorporatecultureorcompensationarrangementdifferentfromours,difficultyassimilatingorintegratingthe

acquiredorganizationanditstalent,whichcouldleadtomoraleissues,increasedturnoverandlowerproductivitythananticipated,andcouldalsoadverselyaffectthecultureofourexistingorganization;

• thepricewepay,orotherresourcesthatwedevote,mayexceedthevaluewerealize,orthevaluewecouldhaverealizedifwehadallocatedthepurchasepriceorotherresourcestoanotheropportunity,orunanticipatedcostsassociatedwithpursuingacquisitions;

• potentiallossofanacquiredbusiness’strategicalliancesandkeyemployees,includingthoseemployeeswhodepartpriortotransferringtous,orwithoutotherwisedocumenting,knowledgeandinformationthatareimportanttotheefficientoperationoftheacquiredbusiness;

• potentialdeploymentbyanacquiredcompanyofitstoptalenttootherofitsbusinessunitspriortoouracquisitionifwedonotacquiretheentiretyofanacquiredcompany’sstockorassets;

• difficultiesassociatedwithgovernance,managementandcontrolmattersinmajorityorminorityinvestmentsandriskoflossofallorasubstantialportionofourinvestment;

• disruptionofourbusinessduetosellers,formeremployees,contractorsorthird-partyserviceprovidersofanacquiredcompanyorbusinessmisappropriatingourintellectualproperty,violatingnon-competitionagreements,orotherwisecausingharmtoourcompany;

• adversetaxconsequences,includingexposureofourentirebusinesstotaxationinadditionaljurisdictions,exposuretosubstantialpenalties,feesand

costsifanacquiredcompanyfailedtocomply,orisallegedbyregulatoryauthoritiestohavefailedtocomply,withrelevanttaxrulesandregulationspriortoouracquisition,orsubstantialdepreciationordeferredcompensationcharges;and

• accountingeffects,includingpotentialimpairmentchargesrelatedtolong-livedassetsandrequirementsthatwerecorddeferredrevenueatfairvalue.

Werelyheavilyontherepresentationsandwarrantiesprovidedtousbythesellersinouracquisitions,includingastheyrelatetocreation,ownershipandrightsinintellectualproperty,existenceofopensourcesoftwareandcompliancewithlawsandcontractualrequirements.Ifanyoftheserepresentationsandwarrantiesareinaccurateorbreached,wemayincurliabilityforwhichtheremaynotbeadequaterecourseagainstsuchsellers,inpartduetocontractualtimelimitationsandlimitationsofliability,orwemayneedtopursuecostlylitigationagainstthesellers.Moreover,acquisitionsfrequentlyresultintherecordingofgoodwillandotherintangibleassetswhicharesubjecttopotentialimpairmentsinthefuturethatcouldharmourfinancialresults.Wemayalsoincurexpensesrelatedtocompletingacquisitions,orinevaluatingpotentialacquisitionsortechnologies,whichmayadverselyaffectourprofitability.Inaddition,ifwefinanceacquisitionsbyissuingequitysecurities,ourexistingstockholdersmaybediluted.

Ifwefailtoproperlyconductduediligenceefforts,evaluateacquisitionsorinvestmentsoridentifyliabilitiesorchallengesassociatedwiththecompanies,businessesortechnologiesweacquire,wemaynotachievetheanticipatedbenefitsofanysuchacquisitionsandwemayincurcostsinexcessofwhatweanticipate.Thefailuretosuccessfullyevaluateandexecuteacquisitionsorinvestmentsorotherwiseadequatelyaddresstheseriskscouldmateriallyharmourbusinessandfinancialresults.

The international nature of our business and our continued international expansion expose us to business risks that could limit the effectiveness of our growthstrategy and cause our operating results to suffer.

WecurrentlymaintainofficesandconductoperationsprimarilyintheUnitedStates,Brazil,India,IsraelandtheUnitedKingdomandhavethird-partysupportarrangementsinIndia,thePhilippinesandChina.Inaddition,

19

Table of Contents

wehavelocalizedversionsofourBluehostandHostGatorsitestargetedtocustomersinseveralcountries,includingBrazil,Russia,India,China,TurkeyandMexico.Weintendtocontinuetoexpandourinternationaloperations,includingthroughmergersandacquisitions.

Anyinternationalexpansioneffortsthatweundertakemaynotbesuccessful.Inaddition,conductingoperationsininternationalmarketsorestablishinginternationallocationssubjectsustonewrisksthatwehavenotgenerallyfacedintheUnitedStates.Theserisksinclude:

• localizationofthemarketinganddeploymentofoursolutions,includingtranslationintoforeignlanguagesandadaptationforlocalpracticesandregulatoryrequirements;

• lackoffamiliaritywith,burdensof,andincreasedexpenserelatingto,complyingwithforeignlaws,legalstandards,regulatoryrequirements,tariffsandotherbarriers,someofwhichmayfavorlocalcompetitors,includinglawsrelatedtoemploymentorlabor,lawsregardingliabilityofonlineserviceprovidersforactivitiesofsubscribers,suchasdefamation,infringementorotherillegalactivities,andmorestringentlawsinforeignjurisdictionsrelatingtotheprivacyandprotectionofpersonaldata,aswellaspotentialdamagetoourreputationasaresultofourcomplianceornon-compliancewithsuchrequirements;

• difficultiesinidentifyingandmanaginglocalstaff,systemsintegrators,technologypartners,andotherthird-partyvendorsandserviceproviders;

• diversionofourmanagement’sattentionandresourcestoexplore,negotiate,orcloseacquisitionsandtointegrate,staffandmanagegeographicallyremoteoperationsandemployees;

• longerthanexpectedleadtimesfor,orthefailureof,anSMBmarketforoursolutionstodevelopinthecountriesandregionsinwhichweareopeningofficesandconductingoperations;

• ourinabilitytoeffectivelymarketoursolutionstoSMBsduetoourfailuretoadapttolocalculturalnorms,technologystandards,billingandcollectionstandardsorpricingmodels;

• differingtechnologypracticesandneedsthatwearenotabletomeet,includinganincreaseddemandfromourinternationalsubscribersthatourcloud-basedsolutionsbeeasilyaccessibleandoperationalonsmartphonesandtablets;

• difficultiesincollectingpaymentsfromsubscribersorinautomaticallyrenewingtheircontractswithus,especiallyduetothemorelimitedavailabilityandpopularityofcreditcardsincertaincountries;

• difficultiesinattractingnewsubscribers,especiallyindevelopingcountriesandregionsandthosewheretheInternetinfrastructureisstillinitsearlystages;

• greaterdifficultyinenforcingcontracts,includingourtermsofserviceandotheragreements;

• management,communicationandintegrationproblemsresultingfromculturalorlanguagedifferencesandgeographicdispersion;

• sufficiencyofqualifiedlaborpoolsandgreaterinfluenceoforganizedlaborinvariousinternationalmarkets;

• competitionfromcompanieswithinternationaloperations,includinglargeinternationalcompetitorsandentrenchedlocalcompanies;

• changesinglobalcurrencysystemsorfluctuationsinexchangeratesthatmayincreasethevolatilityoforadverselyaffectourforeign-basedrevenue;

• compliancewiththeU.S.ForeignCorruptPracticesActof1977,asamended,ortheFCPA,economicsanctionlawsandregulations,includingthoseadministeredbytheU.S.TreasuryDepartment’sOfficeofForeignAssetsControl,orOFAC,exportcontrolsincludingtheU.S.CommerceDepartment’sExportAdministrationRegulationsandotherU.S.,non-U.S.andlocallawsandregulationsregardinginternationalandmulti-nationalbusinessoperations;

20

Table of Contents

• potentiallyadversetaxconsequences,includingthecomplexitiesofforeignvalueaddedtax(orsales,useorothertax)systems,ourinadvertentfailure

tocomplywithallrelevantforeigntaxrulesandregulationsduetoourlackoffamiliaritywiththejurisdiction’staxlaws,andrestrictionsandwithholdingsontherepatriationofearnings;

• uncertainpoliticalandeconomicclimates;and

• reducedorvariedprotectionforintellectualpropertyrightsinsomecountries.

Thesefactorshavecausedourinternationalcostsofdoingbusinesstoexceedourcomparabledomesticcostsandhavecausedthetimeandexpenserequiredtocloseourinternationalacquisitionstoexceedourcomparabledomesticcosts.Anegativeimpactfromourinternationalbusinesseffortscouldadverselyaffectourbusiness,operatingresultsandfinancialconditionasawhole.

Inaddition,ourabilitytoexpandinternationallyandattractandretainnon-U.S.subscribersmaybeadverselyaffectedbyconcernsabouttheextenttowhichU.S.governmentalandlawenforcementagenciesmayobtaindataundertheForeignIntelligenceSurveillanceActandPatriotActandsimilarlawsandregulations.Suchnon-U.S.subscribersmaydecidethattheprivacyrisksofstoringdatawithaU.S.-basedcompanyoutweighthebenefitsandopttoseeksolutionsfromacompanybasedoutsideoftheUnitedStates.Inaddition,certainforeigngovernmentsarebeginningtorequirelocalstorageoftheircitizens’data.Ifwebecomesubjecttosuchrequirements,itmayrequireustoincreasethenumberofnon-U.S.datacentersorserverswemaintain,increaseourcostsoradverselyaffectourabilitytoattract,retainorcost-effectivelyservenon-U.S.subscribers.

We have experienced system, software, Internet, data center and customer support center failures and have not yet implemented a complete disaster recoveryplan, and any interruptions, delays or failures in our services could harm our reputation, cause our subscribers to seek reimbursement for services paid for andnot received, cause our subscribers to stop referring new subscribers to us, or cause our subscribers to seek to replace us as a provider of their cloud-based andonline marketing solutions.

Wemustbeabletooperateourapplicationsandsystemswithoutinterruption.Sinceourabilitytoretainandattractsubscribersdependsontheperformance,reliabilityandavailabilityofourservices,aswellasinthedeliveryofourproductsandservicestosubscribers,evenminorinterruptionsinourserviceorlossesofdatacouldharmourreputation.Ourapplications,network,systems,equipment,powersupplies,customersupportcentersanddatacentersaresubjecttovariouspointsoffailure,including:

• humanerrororaccidents;

• powerloss;

• equipmentfailure;

• Internetconnectivitydowntime;

• improperbuildingmaintenancebythelandlordsofthebuildingsinwhichourco-locateddatacentersarelocated;

• physicalorelectronicsecuritybreaches(seealso“—Securityandprivacybreachesmayharmourbusiness”);

• computerviruses;

• fire,hurricane,flood,earthquake,tornadoandothernaturaldisasters;

• waterdamage;

• terrorism;

• intentionalbadacts,suchassabotageandvandalism;

21

Table of Contents

• pandemics;and

• failurebyusorourvendorstoprovideadequateservicetoourequipment.

Wehaveexperiencedsystemfailures,delaysandperiodicinterruptionsinservice,oroutages,duetofactorsincludingpowerandnetworkequipmentfailures;storagesystemfailures;poweroutages;andnetworkconfigurationfailures.Inaddition,becauseourcloud-basedplatformiscomplex,wehaveexperiencedoutageswhennewversions,enhancementsandupdatestoapplications,softwareorsystemsarereleasedbyusorthirdparties.

Wewilllikelyexperiencefutureoutagesthatdisrupttheoperationofoursolutionsandharmourbusinessduetofactorssuchastheseorotherfactors,includingtheaccidentalorintentionalactionsofInternetusers,currentandformeremployeesandothers;coolingequipmentfailures;othercomputerfailures;orotherfactorsnotcurrentlyknowntousorthatweconsiderimmaterial.WhilewehaveexperiencedincreasesinsubscribercancellationsanddecreasesinourNPSfollowingsuchoutagesinthepast,wecannotbecertaintheseoutcomesareentirelyattributabletotheoutages,andwedonotbelievethatsuchoutageshavehadamaterialeffectonourbusiness,financialconditionorresultsofoperations.

Oursystemsarenotfullyredundant,andwehavenotyetimplementedacompletedisasterrecoveryplanorbusinesscontinuityplan.Althoughtheredundancieswedohaveinplacewillpermitustorespond,atleasttosomedegree,tofailuresofapplicationsandsystems,ourdatacentersarevulnerableintheeventoffailure.MostofoursubscribersarehostedacrosssixU.S.-baseddatacenters,oneofwhichisownedbyusandtherestofwhichareco-located.Ourowneddatacenterhostsapproximately40%ofoursubscribers(excludingConstantContactcustomers).Accordingly,anyfailureordowntimeinthesedatacenterfacilitieswouldaffectasignificantpercentageofoursubscribers.Wedonotyethaveadequatestructuresorsystemsinplacetorecoverfromadatacenter’ssevereimpairmentortotaldestruction,andrecoveryfromthetotaldestructionorsevereimpairmentofanyofthesedatacenterswouldbeextremelydifficultandmaynotbepossibleatall.Closinganyofthesedatacenterswithoutadequatenoticecouldresultinlengthy,ifnotpermanent,interruptionsintheavailabilityofoursolutionsandlossofvastamountsofsubscriberdata.

Ourdatacentersarealsosusceptibletoimpairmentresultingfromelectricalpoweroutagesduetotheamountofpowerandcoolingtheyrequiretooperate.Sincewerelyonthirdpartiestoprovideourdatacenterswithpowersufficienttomeetourneeds,wecannotcontrolwhetherourdatacenterswillhaveanadequateamountofelectricalresourcesnecessarytomeetoursubscriberrequirements.Weattempttolimitexposuretosystemdowntimeduetopoweroutagesbyusingbackupgeneratorsandpowersupplies.However,theseprotectionsmaynotlimitourexposuretopowershortagesoroutagesentirely.WealsorelyonthirdpartiestoprovideInternetconnectivitytoourdatacentersandanydiscontinuationordisruptiontoourconnectivitycouldaffectourabilitytoprovideservicestooursubscribers.

Ourcustomersupportcentersarealsovulnerableintheeventoffailurecausedbytotaldestructionorsevereimpairment.Whencallingourcustomersupportservices,mostofoursubscribersreachourcustomersupportteamslocatedinoneofoursixU.S.-basedcallcenters.Ourteamsineachcallcenteraretrainedtoprovidesupportservicesforadiscretesubsetofourbrands,andtheydonotcurrentlyhavecompletecapabilitytoroutecallsfromonecallcentertoanothercallcenter.Accordingly,ifanyoneofthesecallcentersweretobecomenon-operationalduetosevereimpairmentortotaldestruction,ourabilitytore-routecallstooperationalcallcentersortoprovidecustomersupportservicestoanysubscribersofthebrandorbrandsthatthenon-operationalcallcenterhadformerlymanagedwouldbecompromised.Asignificantportionofouremailandchat-basedcustomersupportisprovidedbyanIndia-basedsupportteam,whichisemployedbyathird-partyserviceprovider.Althoughouremailandchat-basedcustomersupportcanbere-routedtoourowncenters,adisruptionatourIndiacustomersupportcentercouldadverselyaffectourbusiness.

Anyoftheseeventscouldmateriallyincreaseourexpensesorreduceourrevenue,damageourreputation,causeoursubscriberstoseekreimbursementforservicespaidforandnotreceived,causeoursubscriberstostop

22

Table of Contents

referringnewsubscriberstous,andcauseustolosecurrentandpotentialsubscribers,whichwouldhaveamaterialadverseeffectonouroperatingresultsandfinancialcondition.Moreover,thepropertyandbusinessinterruptioninsurancewecarrymaynothavecoverageadequatetocompensateusfullyforlossesthatmayoccur.

If we are unable to maintain a high level of subscriber satisfaction, demand for our solutions could suffer.

Webelievethatourfuturerevenuegrowthdependsonourabilitytoprovidesubscriberswithqualityservicethatmeetsourstatedcommitments,meetsorexceedsoursubscribers’expectationsandisconducivetoourabilitytocontinuetosellnewsolutionstoexistingsubscribers.Wearenotalwaysabletoprovideoursubscriberswiththislevelofservice,andoursubscribersoccasionallyencounterinterruptionsinserviceandothertechnicalchallenges,includingasaresultofoutagesorhumanerror.Ifweareunabletoprovidesubscriberswithqualityservice,thismayresultinsubscriberdissatisfaction,billingdisputesandlitigation,lowerthanexpectedrenewalratesandimpairmentstooureffortstoselladditionalproductsandservicestooursubscribers,andwecouldfacedamagetoourreputation,claimsofloss,negativepublicityorsocialmediaattention,decreasedoveralldemandforoursolutionsandlossofrevenue,anyofwhichcouldhaveanegativeeffectonourbusiness,financialconditionandoperatingresults.

Inaddition,wemayfromtimetotimefailtomeettheneedsofspecificsubscribersinordertobestmeettheserviceexpectationsofouroverallsubscriberbase.Forexample,wemaysuspendasubscriber’swebsitewhenitbreachesourtermsofservice,harmsothersubscribers’websitesordisruptsserverssupportingthosewebsites,suchaswhenacybercriminalinstallsmalwareonasubscriber’swebsitewithoutthatsubscriber’sauthorizationorknowledge.Althoughsuchserviceinterruptionsarenotuncommoninacloud-basedoronlineenvironment,werisksubscriberdissatisfactionbyinterruptingonesubscriber’sservicetopreventfurtherattacksonordatabreachesforothersubscribers,andthiscoulddamageourreputationandhaveanadverseeffectonourbusiness.

We face significant competition for our solutions in the SMB market, which we expect will continue to intensify and which could require us to reduce ourselling prices .As a result of such competitive pressures, we may not be able to maintain or improve our competitive position or market share.

TheSMBmarketforcloud-basedtechnologiesandonlinemarketingtoolsishighlycompetitiveandconstantlyevolving.Weexpectcompetitiontoincreasefromexistingcompetitors,whoarealsoexpandingthevarietyofsolution-basedservicesthattheyoffertoSMBs,aswellaspotentialnewmarketentrantsandcompetitorsthatmayformstrategicallianceswithothercompetitors.Someofourcompetitorsmayhavegreaterresources,morebrandrecognitionandconsumerawareness,morediversifiedproductofferings,greaterinternationalscopeandlargersubscriberbasesthanwedo.Asaresult,wemaynotbeabletocompetesuccessfullyagainstthem.Ifthesecompaniesdecidetodevotegreaterresourcestothedevelopment,promotionandsaleoftheirproductsandservices,iftheproductsandservicesofferedbythesecompaniesaremoreattractivetoorbettermeettheevolvingneedsofSMBs,orifthesecompaniesrespondmorequicklytochangingtechnologies,greaternumbersofSMBsmaychoosetousethesecompetitorsforcreatinganonlinepresenceandasageneralplatformforrunningonlinebusinessoperations.Therearealsorelativelyfewbarrierstoentryinthismarket,especiallyforprovidersofnicheservices,whichoftenhavelowcapitalandoperatingexpensesandtheabilitytoquicklybringproductstomarketthatmeetspecificsubscriberneeds.Accordingly,asthismarketcontinuestodevelop,weexpectthenumberofcompetitorstoincrease.Thecontinuedentryofcompetitorsintothemarketsforcloud-basedtechnologiesandonlinemarketingtools,andtherapidgrowthofsomecompetitorsthathavealreadyenteredthesemarkets,maymakeitdifficultforustomaintainourmarketposition.

Inaddition,inanattempttogainmarketshare,competitorsmayofferaggressivepricediscountsoralternativepricingmodels,suchasso-called“freemium”pricinginwhichabasicofferingisprovidedforfreewithadvancedfeaturesprovidedforafee,ontheservicestheyoffer,bundleseveralservicesatreducedprices,orincreasecommissionspaidtotheirreferralsources.Thesepricingpressuresmayrequireustomatchthesediscountsandcommissionsinordertoremaincompetitive,whichwouldreduceourmarginsorcauseustofailto

23

Table of Contents

attractnewsubscribersthatdecidetopurchasethediscountedserviceofferingsofourcompetitors.Asaresultofthesefactors,itisdifficulttopredictwhetherwewillbeabletomaintainouraveragesellingprices,pricingmodelsandcommissionspaidtoourreferralsources.Ifwereduceoursellingprices,alterourpricingmodelsorincreasecommissionspaidtoourreferralsources,itmaybecomeincreasinglydifficultforustocompetesuccessfully,ourprofitabilitymaybeharmedandouroperatingresultscouldbeadverselyaffected.

We must keep up with rapid and ongoing technological change, marketing trends and shifts in consumer demand to remain competitive in a rapidly evolvingindustry.

Thecloud-basedtechnologyandonlinemarketingtoolindustriesarecharacterizedbyrapidandongoingtechnologicalchange,frequentnewproductandserviceintroductionsandevolvingindustrystandards.Ourfuturesuccesswilldependonourabilitytoadapttorapidlychangingtechnologies,toadaptoursolutionstoevolvingindustrystandardsandconsumerneedsandtoimprovetheperformanceandreliabilityofourapplicationsandservices.Wemustanticipatesubscriberneeds,commitsignificantresourcestoanticipatingthoseneedsandoffersolutionsthatmeetchangingsubscriberdemandsquicklyandeffectively.Wemayfailtoaccuratelypredictmarketdemandorsubscriberpreferences,orsubscribersmayrequirefeaturesandfunctionalitythatourcurrentapplicationsandservicesdonothaveorthatourplatformisnotabletosupport.Ifwefailtodevelopsolutionsthatsatisfysubscriberpreferencesinatimelyandcost-effectivemanner,ourabilitytoretainexistingsubscribersandattractnewsubscriberswillbeadverselyaffected,ourcompetitivepositionwillbeimpairedandwemaynotachieveouranticipatedrevenuegrowth.Inordertodevelopnewsolutionsorenhancementstoexistingsolutionsthatsatisfysubscriberpreferences,wemayberequiredtoincursignificanttechnology,development,marketingandotherexpenses,andourrevenueandoperatingresultsmaybeadverselyaffected.

Inaddition,themannerinwhichwemarkettooursubscribersandpotentialsubscribersmustkeeppacewithtechnologicalchange,marketingtrendsandshiftsinhowoursolutionsarefound,purchasedandusedbysubscribersandpotentialsubscribers.Forexample,applicationmarketplaces,mobileplatformsandnewsearchenginesandsearchmethodsarechangingthewayinwhichconsumersfind,purchaseanduseoursolutions.Ifwearenotabletotakeadvantageofsuchtechnologiesoranticipatesuchtrends,ifexistingtechnologiesorsystems,suchasthedomainnamesystemwhichdirectstrafficontheInternet,becomeobsolete,orifwefailtoanticipateandmanagetechnologiesthatpreventorharmourofferings,suchastechnologyintendedtoblockemailmarketing,wemaybeunabletocontinuetoattractnewsubscribersorselladditionalsolutionstoourexistingsubscribers.

Ourfuturesuccesswilldependonourabilitytocontinuetoidentifyandpartnerwithoracquirethirdpartieswhoofferandareabletoadapttonewtechnologiesandtodevelopcompellingandinnovativesolutionsthatcanbeintegratedwithourplatformandbroughttomarket.Ifweorourthird-partypartnersareunabletoadapttorapidlychangingtechnologiesanddevelopsolutionsthatmeetsubscriberrequirements,ourrevenueandoperatingresultsmaybeadverselyaffected.

If the delivery of Constant Contact’s customers’ emails is limited or blocked or its customers’ emails are directed to an alternate or “tabbed” section of therecipient’s inbox, customers may cancel their accounts.

InternetServiceProviders,orISPs,canblockemailsfromreachingtheintendedrecipients.WhileConstantContactcontinuallyimprovesitstechnologyandworkscloselywithISPstomaintainitsdeliverabilityrates,theimplementationofnewormorerestrictivepoliciesbyISPsmaymakeitmoredifficulttodeliverConstantContact’scustomers’emails.Inaddition,someISPshavestartedtocategorizeas“promotional”emailsthatoriginatefromemailserviceprovidersand,asaresult,directthemtoanalternateor“tabbed”sectionoftherecipient’sinbox.IfISPsmateriallylimitorhaltthedeliveryofConstantContact’scustomers’emails,orifConstantContactfailstodeliveritscustomers’emailsinamannercompatiblewithISPs’emailhandlingorauthenticationtechnologiesorotherpolicies,oriftheopenratesofitscustomers’emailsarenegativelyimpactedbytheactionsofISPstocategorizeemails,thencustomersmayquestiontheeffectivenessofConstantContact’sproductsandcanceltheiraccounts.This,inturn,couldharmourbusinessandfinancialperformance.

24

Table of Contents

Security and privacy breaches may harm our business.

Westoreandtransmitlargeamountsofsensitive,confidential,personalandproprietaryinformation,includingpaymentcardinformation.Anysecuritybreach,virus,accident,employeeerror,criminalactivityormalfeasance,fraudulentserviceplanorder,impersonationscamperpetratedagainstus,intentionalmisconductbycybercriminalsorsimilarintrusion,breachordisruptioncouldresultinunauthorizedaccessto,usageordisclosureof,orlossof,confidentialinformation,damagetoourplatform,andinterruptions,delaysorcessationofservicetooursubscribers,eachofwhichmaycausedamagetoourreputationandresultinincreasedsecuritycosts,litigation,regulatoryinvestigationsorotherliabilities.Theriskthatthesetypesofeventscouldseriouslyharmourbusinessislikelytoincreaseasweexpandthenumberoftechnologysolutionsandservicesthatweofferandexpandouroperationsinforeigncountries.

Inaddition,manystatesandcountriesinwhichwehavesubscribershaveenactedregulationsrequiringustonotifysubscribersintheeventthatcertainsubscriberinformationisaccessed,orbelievedtohavebeenaccessed,withoutauthorization,andinsomecasesalsodevelopproscriptivepoliciestoprotectagainstsuchunauthorizedaccess.Suchnotificationscanresultinprivatecausesofactionbeingfiledagainstus.Shouldweexperiencealossofprotecteddata,effortstoenhancecontrols,assurecomplianceandaddresspenaltiesimposedbysuchregulatoryregimescouldincreaseourcosts.

Organizationsgenerally,andInternet-basedorganizationsinparticular,remainvulnerabletotargetedattacksaimedatexploitingnetworkandsystemapplicationsorweaknesses.Techniquesusedtoobtainunauthorizedaccessto,ortosabotage,networksandsystemsoftenarenotrecognizeduntillaunchedagainstatarget.Cybercriminalsareincreasinglyusingpowerfulnewtacticsincludingevasiveapplications,proxies,tunneling,encryptiontechniques,vulnerabilityexploits,bufferoverflows,distributeddenialofserviceattacks,orDDoSattacks,botnetsandportscans.Forexample,weandConstantContactarefrequentlythetargetsofDDoSattacksinwhichattackersattempttoblocksubscribers’accesstoourwebsites.IfweareunabletoavertaDDoSorotherattackforanysignificantperiod,wecouldsustainsubstantialrevenuelossfromlostsalesandsubscriberdissatisfaction.Wemaynothavetheresourcesortechnicalsophisticationtoanticipateorpreventrapidlyevolvingtypesofcyber-attacks.Moreover,wemaynotbeabletoimmediatelydetectthatsuchanattackhasbeenlaunched,if,forexample,unauthorizedaccesstooursystemswasobtainedwithoutourknowledgeinpreparationforanattackcontemplatedtocommenceinthefuture.Cyberattacksmaytargetus,oursubscribers,ourpartners,banks,creditcardprocessors,deliveryservices,e-commerceingeneralorthecommunicationinfrastructureonwhichwedepend.

Oursupportagentsareoftentargetedby,andmaybevulnerableto,e-mailscams,phishing,socialmediaorsimilarattacks,aswellassocialengineeringtacticsusedtoperpetratefraud.Wehaveexperiencedandmayinthefutureexperiencesecurityattacksthatcauseoursupportagentstodivulgeconfidentialinformationaboutusoroursubscribers,ortointroduceviruses,wormsorothermalicioussoftwareprogramsontotheircomputers,allowingtheperpetratorsto,amongotherthings,gainaccesstooursystemsoroursubscribers’accounts.Oursubscribersmayalsouseweakpasswords,accidentallydisclosetheirpasswordsorstorethemonamobiledevicethatislostorstolen,orotherwisecompromisethesecurityoftheirdata,creatingtheperceptionthatoursystemsarenotsecureagainstthird-partyaccess.Inaddition,ifthirdpartieswithwhichwework,suchasvendorsordevelopers,violateapplicablelawsorourpolicies,suchviolationsmayalsoputourinformationandoursubscribers’informationatriskandcouldinturnhaveanadverseeffectonourbusinessandreputation.

Ifanactualorperceivedsecuritybreachoccurs,themarket’sperceptionofoursecuritymeasurescouldbeharmedandwecouldlosesalesandcurrentandpotentialsubscribers.Wemightalsoberequiredtoexpendsignificantcapitalandresourcestoinvestigate,protectagainstoraddresstheseproblems.Anysignificantviolationsofdataprivacycouldresultinthelossofbusiness,litigationandregulatoryinvestigationsandpenaltiesthatcoulddamageourreputationandadverselyaffectouroperatingresultsandfinancialcondition.Furthermore,ifahighprofilesecuritybreachoccurswithrespecttoanotherproviderofcloud-basedtechnologiesoronlinemarketingtools,oursubscribersandpotentialsubscribersmaylosetrustinthesecurityofthese

25

Table of Contents

businessmodelsgenerally,whichcouldharmourabilitytoretainexistingsubscribersorattractnewones.Wecannotguaranteethatourbackupsystems,regulardatabackups,securityprotocols,networkprotectionmechanismsandotherprocedurescurrentlyinplace,orthatmaybeinplaceinthefuture,willbeadequatetopreventnetworkandserviceinterruption,systemfailure,damagetooneormoreofoursystemsordatalossintheeventofasecuritybreachorattackonournetwork.

The success of Constant Contact’s email marketing product depends on the continued growth and acceptance of email as a communications tool and therelated expansion and reliability of the Internet infrastructure .If consumers do not continue to use email or alternative communications tools, such as socialmedia or text messaging, gain popularity, demand for this email marketing product may decline.

ThefuturesuccessofConstantContact’semailmarketingproductdependsonthecontinuedandwidespreadadoptionofemailasaprimarymeansofcommunication.Securityproblemssuchas“viruses,”“worms”andothermaliciousprogramsorreliabilityissuesarisingfromoutagesanddamagetotheInternetinfrastructurecouldcreatetheperceptionthatemailisnotasafeandreliablemeansofcommunication,whichcoulddiscouragebusinessesandconsumersfromusingemail.UseofemailbybusinessesandconsumersalsodependsontheabilityofISPstopreventunsolicitedbulkemail,or“spam,”fromoverwhelmingconsumers’inboxes.Inrecentyears,ISPshavedevelopednewtechnologiestofilterunwantedmessagesbeforetheyreachusers’inboxes.Inresponse,spammershaveemployedmoresophisticatedtechniquestoreachconsumers’inboxes.Althoughcompaniesintheanti-spamindustryhavestartedtoaddressthetechniquesusedbyspammers,ifsecurityproblemsbecomewidespreadorfrequentorifISPscannoteffectivelycontrolspam,theuseofemailasameansofcommunicationmaydeclineasconsumersfindalternativewaystocommunicate.Inaddition,ifalternativecommunicationstools,suchassocialmediaortextmessaging,gainwidespreadacceptance,theneedforemailmaylessen.AnydecreaseintheuseofemailwouldreducedemandforConstantContact’semailmarketingproductandharmourbusiness.

If we do not maintain a low rate of credit card chargebacks and protect against breach of the credit card information we store, we will face the prospect offinancial penalties and could lose our ability to accept credit card payments from subscribers, which would have a material adverse effect on our business,financial condition and operating results.

Amajorityofourrevenueisprocessedthroughcreditcardtransactions.Undercurrentcreditcardindustrypractices,weareliableforfraudulentanddisputedcreditcardtransactionsbecausewedonotobtainthecardholder’ssignatureatthetimeofthetransaction,eventhoughthefinancialinstitutionissuingthecreditcardmayhaveauthorizedthetransaction.Althoughwefocusonkeepingourrateofcreditcardrefundsandchargebackslow,ifourrefundsorchargebacksincrease,ourcreditcardprocessorscouldrequireustomaintainorincreasereserves,terminatetheircontractswithusordeclinetoserveascreditcardprocessorsfornewjointventuresorbrands,whichwouldhaveanadverseeffectonourfinancialcondition.

Wecouldalsoincursignificantfinesorloseourabilitytogivesubscriberstheoptionofusingcreditcardstofundtheirpaymentsorpaytheirfeestousifwefailtofollowpaymentcardindustrydatasecuritystandards,evenifthereisnocompromiseofsubscriberinformation.Althoughwebelieveweareincompliancewithpaymentcardindustrydatasecuritystandardsanddonotbelievethattherehasbeenacompromiseofsubscriberinformation,wehavenotalwaysbeeninfullcompliancewiththesestandards.Accordingly,wecouldbefined,orourservicescouldbesuspended,forsuchfailuretocomplywithpaymentcardindustrydatasecuritystandards,whichwouldcauseustonotbeabletoprocesspaymentsusingcreditcards.Ifweareunabletoacceptcreditcardpayments,ourfinancialcondition,resultsofoperationsandcashflowswouldbeadverselyaffected.

Ourfailuretolimitfraudulenttransactionsconductedonourwebsites,suchasthroughtheuseofstolencreditcardnumbers,couldalsosubjectustoliabilityorrequireustoincreasereserveswithourcreditcardprocessors.Undercreditcardassociationrules,penaltiesmaybeimposedatthediscretionoftheassociation.Anysuchpotentialpenaltieswouldbeimposedonourcreditcardprocessorbytheassociation.Underour

26

Table of Contents

contractwithourprocessor,wearerequiredtoreimburseourprocessorforsuchpenalties.Ourcurrentleveloffraudprotection,basedonourfraudulentanddisputedcreditcardtransactionhistory,iswithintheguidelinesestablishedbythecreditcardassociations.However,wefacetheriskthatwemayfailtomaintainanadequateleveloffraudprotectionorthatoneormorecreditcardassociationsmay,atanytime,assesspenaltiesagainstusorterminateourabilitytoacceptcreditcardpaymentsfromsubscribers,whichwouldhaveamaterialadverseeffectonourbusiness,financialconditionandoperatingresults.

Inaddition,wecouldbeliableifthereisabreachofthecreditcardorotherpaymentinformationwestore.Onlinecommerceandcommunicationsdependonthesecuretransmissionofconfidentialinformationoverpublicnetworks.Werelyonencryptionandauthenticationtechnologythatwehavedevelopedinternally,aswellastechnologythatwelicensefromthirdparties,toprovidesecurityandauthenticationforthetransmissionofconfidentialinformation,includingsubscribercreditcardnumbers.However,wecannotensurethatthistechnologycanpreventbreachesofthesystemsthatweusetoprotectsubscribercreditcarddata.Althoughwemaintainnetworksecurityinsurance,wecannotbecertainthatourcoveragewillbeadequateforliabilitiesactuallyincurredorthatinsurancewillcontinuetobeavailabletousonreasonableterms,oratall.Inaddition,someofourthird-partypartnersalsocollectinformationfromtransactionswithourcustomers,andwemaybesubjecttolitigationorourreputationmaybeharmedifourpartnersfailtoprotectoursubscribers’informationoriftheyuseitinamannerthatisinconsistentwithourpractices.

Databreachescanalsooccurasaresultofnon-technicalissues.Underourcontractswithourcardprocessors,ifthereisunauthorizedaccessto,ordisclosureof,creditcardinformationthatwestore,wecouldbeliabletothecreditcardissuingbanksfortheircostofissuingnewcardsandrelatedexpenses.

Our growing operations in India, use of an India-based service provider and India-based workforce may expose us to risks that could have an adverse effect onour costs of operations and harm our business.

WecurrentlyuseIndia-basedthird-partyserviceproviderstoprovidecertainoutsourcedservicestosupportourU.S.-basedoperations,includingemail-andchat-basedcustomerandtechnicalsupport,billingsupport,networkmonitoringandengineeringanddevelopmentservices.Asouroperationsgrow,weexpecttoincreaseouruseoftheseandotherIndia-basedoutsourcedserviceproviders.AlthoughtherearecostadvantagestooperatinginIndia,significantgrowthinthetechnologysectorinIndiahasincreasedcompetitiontoattractandretainskilledemployeesandhasledtoacommensurateincreaseincompensationcosts.Inthefuture,weorourthird-partyserviceprovidersmaynotbeabletohireandretainsuchpersonnelatcompensationlevelsconsistentwithourexistingcompensationandsalarystructureinIndia.Inaddition,weemployourownIndia-basedworkforce.OuruseofaworkforceinIndiaexposesustodisruptionsinthebusiness,politicalandeconomicenvironmentinthatregion.OuroperationsinIndiarequireustocomplywithlocallawsandregulatoryrequirements,whicharecomplexandburdensomeandofwhichwemaynotalwaysbeaware,andexposeustoforeigncurrencyexchangeraterisk.OurIndianoperationsmayalsosubjectustotraderestrictions,reducedorinadequateprotectionforintellectualpropertyrights,securitybreachesandotherfactorsthatmayadverselyaffectourbusiness.Negativedevelopmentsinanyoftheseareascouldincreaseourcostsofoperationsorotherwiseharmourbusiness.

We have a history of losses and may not be able to achieve or maintain profitability.

Wehavehadanetlossineachyearsinceinception.Wehadanetlossof$159.2millionforfiscalyear2013,anetlossof$42.8millionforfiscalyear2014andanetlossof$25.8millionforfiscalyear2015andwemayincurlossesinthefuture.Inconnectionwithouracquisitions,wehaverecordedlong-livedassetsatfairvalue.Werecordamortizationexpenseineachreportingperiodrelatedtothelong-livedassets,whichimpactstheamountofnetlossorincomewerecordineachreportingperiod.

Wedonotknowifwewillbeabletoachieveandmaintainprofitabilityinthenearfutureoratall.Wehavemadeandexpecttocontinuetomakesignificantexpenditurestodevelopandexpandourbusiness.Ourrecent

27

Table of Contents

growthinrevenueandnumberofsubscribersmaynotbesustainable,andourrevenuemaybeinsufficienttomaintainprofitability.Wemayincursignificantlossesinthefutureforanumberofreasons,includinginterestexpenserelatedtooursubstantialindebtedness,andtheotherrisksdescribedinthisreport,andwemayencounterunforeseenexpenses,difficulties,complicationsanddelaysandotherunknownevents.

We may need additional equity, debt or other financing in the future, which we may not be able to obtain on acceptable terms, or at all, and any additionalfinancing may result in restrictions on our operations or substantial dilution to our stockholders.

Wemayneedtoraisefundsinthefuture,forexample,todevelopnewtechnologies,expandourbusiness,respondtocompetitivepressures,acquirebusinesses,orrespondtounanticipatedsituations.Wemaytrytoraiseadditionalfundsthroughpublicorprivatefinancings,strategicrelationshipsorotherarrangements.Althoughourcreditagreementlimitsourabilitytoincuradditionalindebtedness,theserestrictionsaresubjecttoanumberofqualificationsandexceptions,andourcreditagreementmaybeamendedwiththeconsentofourlenders.

Ourabilitytoobtaindebtorequityfundingwilldependonanumberoffactors,includingmarketconditions,interestrates,ouroperatingperformanceandinvestorinterest.Additionalfundingmaynotbeavailabletousonacceptabletermsoratall.Ifadequatefundsarenotavailable,wemayberequiredtoreduceexpenditures,includingcurtailingourgrowthstrategies,foregoingacquisitionsorreducingourproductdevelopmentefforts.Ifwesucceedinraisingadditionalfundsthroughtheissuanceofequityorconvertiblesecurities,thentheissuancecouldresultinsubstantialdilutiontoexistingstockholders.Ifweraiseadditionalfundsthroughtheissuanceofdebtsecuritiesorpreferredstock,thesenewsecuritieswouldhaverights,preferencesandprivilegesseniortothoseoftheholdersofourcommonstock.Inaddition,anypreferredequityissuanceordebtfinancingthatwemayobtaininthefuturecouldhaverestrictivecovenantsrelatingtoourcapitalraisingactivitiesandotherfinancialandoperationalmatters,whichmaymakeitmoredifficultforustoobtainadditionalcapitalandtopursuebusinessopportunities,includingpotentialacquisitions.Further,totheextentthatweincuradditionalindebtednessorsuchotherobligations,therisksassociatedwithoursubstantialleveragedescribedelsewhereinthisreport,includingourpossibleinabilitytoserviceourdebt,wouldincrease.

Our business depends on establishing and maintaining strong brands .If we are not able to effectively promote our brands, or if the reputation of our brands isdamaged, our ability to expand our subscriber base will be impaired and our business and operating results will be harmed.

Wemarketoursolutionsthroughvariousbrands,includingBluehost,HostGator,iPage,Domain.com,ASmallOrange,MOJOMarketplace,BigRock,ResellerClub,and,withtheacquisitionofConstantContact,ConstantContactandSinglePlatform,amongothers.

Webelievethatestablishingandmaintainingourbrandsiscriticaltooureffortstoexpandoursubscriberbase.Ifwedonotcontinuetobuildawarenessofourbrands,wecouldbeplacedatacompetitivedisadvantagetocompanieswhosebrandsare,orbecome,morerecognizablethanours.Toattractandretainsubscribersandtopromoteandmaintainourbrandsinresponsetocompetitivepressures,wemayhavetosubstantiallyincreaseourfinancialcommitmenttocreatingandmaintainingdistinctbrandloyaltyamongsubscribersoreliminatecertainofourbrands.Ifsubscribers,aswellasourthird-partyreferralmarketing,distributionandresellerpartners,donotperceiveourexistingsolutionstobereliableandofhighquality,ifweintroducenewservicesorenterintonewbusinessventuresthatarenotfavorablyreceivedbysuchparties,orifourbrandsbecomeassociatedwithanyfraudulentordeceptiveconductonthepartofoursubscribers,thevalueofourbrandscouldbediminished,therebydecreasingtheattractivenessofoursolutionstosuchparties.Asaresult,ouroperatingresultsmaybeadverselyaffectedbydecreasedbrandrecognitionandharmtoourreputation.

28

Table of Contents

Our success depends in part on our strategic relationships and joint ventures or other alliances with third parties on whom we rely to acquire subscribers and tooffer solutions to our subscribers and from which we license intellectual property to develop our own solutions.

Inordertoexpandourbusiness,weplantocontinuetorelyonthird-partyrelationshipsandalliances,suchaswithreferrersandpromotersofourbrandsandsolutions,aswellaswithourprovidersofsolutionsandservicesthatweoffertosubscribers.Identifying,negotiating,documentingandmanagingrelationshipswiththirdpartiesincertaincasesrequiressignificanttimeandresources,anditispossiblethatwemaynotbeabletodevotethetimeandresourcesweexpecttosuchrelationships.Integratingandcustomizingthirdparties’solutionswithourplatformalsorequiresustoexpendsignificanttimeandresourcestoensurethateachrespectivesolutionworkswithourplatform,aswellaswithourotherproductsandservices.Ifanyofthethirdpartiesonwhichwerelyfailstoperformasexpected,breachesorterminatestheiragreementwithus,orbecomesengagedinadisputewithus,ourreputationcouldbeadverselyaffectedandourbusinesscouldbeharmed.

Werelyonthird-partyreferralpartnerstoacquiresubscribers.Ifourthird-partyreferralpartnersfailtopromoteourbrandsortorefernewsubscriberstous,failtocomplywithregulations,areforcedtochangetheirmarketingeffortsinresponsetoneworexistingregulationsorceasetobeviewedascrediblesourcesofinformationbyourpotentialsubscribers,wemayfacedecreaseddemandforoursolutionsandlossofrevenue.Ourthird-partyresellerpartnerspurchaseoursolutionsandresellthemtotheircustomerbases.Thesepartnershavethedirectcontractualrelationshipswithourultimatesubscribersand,therefore,weriskthelossofbothourthird-partypartnersandtheircustomersifourservicesfailtomeetexpectationsorifourpartnersfailtoperformtheirobligationsordeliverthelevelofservicetotheultimatesubscriberthatweexpect.

Ourabilitytoofferdomainnameservicestooursubscribersdependsoncertainthird-partyrelationships.Forexample,certainofoursubsidiariesareaccreditedbyICANNandvariousotherregistriesasadomainnameregistrar.Ifwefailtocomplywithdomainnameregistryrequirementsorifdomainnameregistryrequirementschange,wecouldloseouraccreditation,berequiredtoincreaseourexpenditures,complywithadditionalrequirementsoralterourserviceofferings,anyofwhichcouldhaveamaterialadverseeffectonourbusiness,financialconditionorresultsofoperations.

Wealsohaverelationshipswithproductpartnerswhosesolutions,includingsitebuilders,shoppingcartsandsecuritytools,weoffertooursubscribers.Amajorityofourofferingsareprovidedbythirdparties.Wemaybeunabletocontinueourrelationshipwithanyofthesepartnersif,forexample,theydeclinetocontinuetoworkwithusorareacquiredbythirdparties.Insuchanevent,wemaynotbeabletocontinuetoofferthesethird-partytoolstooursubscribersorwemaybeforcedtofindanalternativethatmaybeinferiortothesolutionthatwehadpreviouslyoffered,whichcouldharmourbusinessandouroperatingresults.

Wealsorelyonsoftwarelicensedfromorhostedbythirdpartiestoofferoursolutionstooursubscribers.Inaddition,wemayneedtoobtainfuturelicensesfromthirdpartiestouseintellectualpropertyassociatedwiththedevelopmentofoursolutions,whichmightnotbeavailabletousonacceptableterms,oratall.Anylossoftherighttouseanysoftwareorotherintellectualpropertyrequiredforthedevelopmentandmaintenanceofoursolutionscouldresultindelaysintheprovisionofoursolutionsuntilequivalenttechnologyiseitherdevelopedbyus,or,ifavailable,isidentified,obtainedandintegrated.Anyerrorsordefectsinthird-partysoftwarecouldresultinerrorsorafailureofoursolutionswhichcouldharmourbusinessandoperatingresults.Further,wecannotbecertainthattheowners’rightsintheirtechnologieswillnotbechallenged,invalidatedorcircumvented.

ConstantContactreliesonsomeofitspartnerstocreateintegrationswiththird-partyapplicationsandplatformsusedbyConstantContact’scustomers.Ifwefailtoencouragethesepartnerstocreatesuchintegrationsorifwedonotadequatelyfacilitatetheseintegrationsfromatechnologyperspective,demandforConstantContactproductscoulddecrease,whichcouldharmourbusinessandoperatingresults.

29

Table of Contents

We rely on a limited number of data centers to deliver most of our services .If we are unable to renew our data center agreements on favorable terms, or at all,our operating margins and profitability could be adversely affected and our business could be harmed .In addition, our recent purchase of our largest datacenter subjects us to potential costs and risks associated with real property ownership.

WecurrentlyservemostofoursubscribersfromsixdatacenterfacilitieslocatedinMassachusetts(three),Texas,UtahandCalifornia.Weownoneofourdatacentersandoccupytheremainingdatacenterspursuanttoco-locationserviceagreementswiththird-partydatacenterfacilitieswhichhavebuiltandmaintaintheco-locateddatacentersforusandotherparties.Althoughweowntheserversinthesesixdatacentersandengineerandarchitectthesystemsuponwhichourplatformruns,wedonotcontroltheoperationofthefacilitieswedonotown.

Thetermsofourexistingco-locateddatacenteragreementsvaryinlengthandexpireoveraperiodrangingfrom2016through2018.Theownersoftheseorourotherco-locateddatacentershavenoobligationtocontinuesucharrangementsbeyondtheircurrentterms,noraretheyobligatedtorenewtheiragreementswithusontermsacceptabletous,oratall.

Ourexistingco-locateddatacenteragreementsmaynotprovideuswithadequatetimetotransferoperationstoanewfacilityintheeventofearlyterminationorifwewereunabletonegotiateashort-termtransitionarrangementorrenewtheseagreementsontermsacceptabletous.Ifwewererequiredtomoveourequipmenttoanewfacilitywithoutadequatetimetoplanandprepareforsuchmigration,wewouldfacesignificantchallengesduetothetechnicalcomplexity,riskandhighcostsoftherelocation.Anysuchmigrationwouldresultinsignificantcostsforusandsignificantdowntimeforlargenumbersofoursubscribers.Thiscoulddamageourreputationandcauseustolosecurrentandpotentialsubscribers,whichwouldharmouroperatingresultsandfinancialcondition.

Ifweareabletorenewtheagreementsonourexistingco-locateddatacenterfacilities,weexpectthattheleaserateswillbehigherthanthosewepayunderourexistingagreements.Ifwefailtoincreaseourrevenuebyamountssufficienttooffsetanyincreasesinleaseratesforthesefacilities,ouroperatingresultsmaybemateriallyandadverselyaffected.

Wecurrentlyintendtocontinuetocontractwiththird-partydatacenteroperators,butwecouldbeforcedtore-evaluatethoseplansdependingontheavailabilityandcostofdatacenterfacilities,theabilitytoinfluenceandcontrolcertaindesignaspectsofthedatacenter,andeconomicconditionsaffectingthedatacenteroperator’sabilitytoaddadditionalfacilities.

Withrespecttothedatacenterfacilitythatweown,wearesubjecttorisks,andmayincursignificantcosts,relatedtoourownershipofthefacilityandthelandonwhichitislocated,includingcostsorrisksrelatedtobuildingrepairsorupgradesandcompliancewithvariousfederal,stateandlocallawsapplicabletorealpropertyowners,includingenvironmentallaws.

If our solutions and software contain serious errors or defects, then we may lose revenue and market acceptance and may incur costs to defend or settle claims.

Complextechnologyplatforms,softwareapplicationsandsystemssuchasoursoftencontainerrorsordefects,suchaserrorsincomputercodeorothersystemserrors,particularlywhenfirstintroducedorwhennewversions,enhancementsorupdatesarereleased.Becausewealsorelyonthirdpartiestodevelopmanyofoursolutions,ourproductsandservicesmaycontainadditionalerrorsordefectsasaresultoftheintegrationofthethirdparty’sproduct.Despitequalityassurancemeasures,internaltestingandbetatestingbyoursubscribers,wecannotguaranteethatourcurrentandfuturesolutionswillnotbefreeofseriousdefects,whichcouldresultinlostrevenueoradelayinmarketacceptance.

30

Table of Contents

Sinceoursubscribersuseoursolutionstomaintainanonlinepresencefortheirbusiness,errors,defectsorotherperformanceproblemscouldresultindamagetooursubscribersandtheirbusinesses.Theycouldelecttocancelornottorenewtheiragreements,delayorwithholdpaymentstous,orseeksignificantcompensationfromusforthelossestheyortheirbusinessessuffer.Althoughoursubscriberagreementstypicallycontainprovisionsdesignedtolimitourexposuretocertainclaims,existingorfuturelawsorunfavorablejudicialdecisionscouldnegateordiminishtheselimitations.Evenifnotsuccessful,aclaimbroughtagainstuscouldbetime-consumingandcostlyandcouldseriouslydamageourreputationinthemarketplace,makingitharderforustoacquireandretainsubscribers.

Because we are required to recognize revenue for our subscription-based services over the term of the applicable subscriber agreement, changes in our salesmay not be immediately reflected in our operating results .In addition, we may not have adequate reserves in the event that our historical levels of refundsincrease, which could adversely affect our liquidity and profitability.

WerecognizerevenuefromoursubscribersratablyovertherespectivetermsoftheiragreementswithusinaccordancewithU.S.generallyacceptedaccountingprinciples.Thesecontractsaregenerallyforserviceperiodsofupto36months.Accordingly,increasesinsalesduringaparticularperioddonottranslateintocorrespondingincreasesinrevenueduringthatsameperiod,andasubstantialportionoftherevenuethatwerecognizeduringaquarterisderivedfromdeferredrevenuefromouragreementswithsubscribersthatweenteredintoduringpreviousquarters.Asaresult,wemaynotgeneratenetearningsdespitesubstantialsalesactivityduringaparticularperiod,sincewearenotallowedunderapplicableaccountingrulestorecognizealloftherevenuefromthesesalesimmediately,andbecausewearerequiredtorecordasignificantportionofourrelatedoperatingexpensesduringthatperiod.Conversely,theexistenceofsubstantialdeferredrevenuemaypreventdeterioratingsalesactivityfrombecomingimmediatelyapparentinourreportedoperatingresults.

Inconnectionwithourdomainregistrationservices,asaregistrar,wearerequiredunderouragreementswithdomainregistriestoprepaythedomainregistryforthetermforwhichadomainisregistered.Werecognizethisprepaymentasanassetonourconsolidatedbalancesheetandrecorddomainrevenueandthedomainregistrationexpenseratablyoverthetermthatadomainisregistered.Thiscashpaymenttothedomainregistrymayleadtofluctuationsinourliquiditythatisnotimmediatelyreflectedinouroperatingresults.

Inaddition,ourstandardtermsofservicepermitoursubscriberstoseekrefundsfromusincertaininstances,andwemaintainreservestoprovidesuchrefunds.Theamountofsuchreservesisbasedontheamountofrefundsthatwehaveprovidedinthepast.Ifouractuallevelofrefundclaimsexceedsourestimatesandourrefundreservesarenotadequatetocoversuchclaims,ourliquidityorprofitabilitycouldbeadverselyaffected.Furthermore,ifweexperienceanunexpecteddeclineinourrevenue,wemaynotbeabletoadjustspendinginatimelymannertocompensateforsuchshortfall,andanysignificantshortfallinrevenuerelativetoplannedexpenditurescouldadverselyaffectourbusinessandoperatingresults.

We depend on the experience and expertise of our senior management team, and the loss of any member of our senior management team could have anadverse effect on our business, financial condition and operating results.

Oursuccessandfutureperformancedependsinsignificantpartuponthecontinuedserviceofourseniormanagementteam,particularlyHariRavichandran,ourfounderandchiefexecutiveofficer.Themembersofourseniormanagementteamarenotcontractuallyobligatedtoremainemployedbyus.Accordingly,andinspiteofoureffortstoretainourseniormanagementteamwithlong-termequityincentives,anymemberofourseniormanagementteamcouldterminatehisorheremploymentwithusatanytimeandgotoworkforoneofourcompetitorsaftertheexpirationofhisorhernon-competeperiod.Thereplacementofmembersofourseniormanagementteamlikelywouldinvolvesignificanttimeandexpense,andthelossofanymemberofourseniormanagementteamcouldsignificantlydelay,preventtheachievementoformakeitmoredifficultforusto

31

Table of Contents

pursueandexecuteonourbusinessobjectives,andcouldhaveanadverseeffectonourbusiness,financialconditionandoperatingresults.

Our growth will be adversely affected if we cannot continue to successfully retain, hire, train and manage our key employees.

Ourabilitytosuccessfullypursueourgrowthstrategywilldependonourabilitytoattract,retainandmotivatekeyemployeesacrossourbusiness.Inparticular,wearedependentonourplatformandsoftwareengineers,thosewhomanageoursalesandserviceemployees,and,aswegrowinternationally,thoseemployeesmanagingouroperationsoutsideoftheUnitedStates.Wefaceintensecompetitionfortheseandotheremployeesfromnumeroustechnology,softwareandmanufacturingcompanies,andwecannotensurethatwewillbeabletoattract,integrateorretainadditionalqualifiedemployeesinthefutureoratcompensationlevelsconsistentwithourexistingcompensationandsalarystructure.Inparticular,candidatesmakingemploymentdecisions,particularlyinhigh-technologyindustries,oftenconsiderthevalueofanyequitytheymayreceiveinconnectionwiththeiremployment.Asaresult,anysignificantvolatilityinthemarketpriceofourcommonstockmayadverselyaffectourabilitytoattractorretainhighlyskilledengineersandmarketingpersonnel.Inaddition,weinvestsignificanttimeandexpenseintrainingouremployees,whichincreasestheirvaluetocompetitorswhomayseektorecruitthem.

Ifweareunabletoattractnewemployeesandretainourcurrentemployees,wemaynotbeabletodevelopandmaintainourservicesatthesamelevelsasourcompetitors,andwemaythereforelosesubscribersandmarketshare.Ourfailuretoattractandretainqualifiedindividualscouldhaveanadverseeffectonourabilitytoexecuteonourbusinessobjectivesand,asaresult,ourabilitytocompetecoulddecrease,ouroperatingresultscouldsufferandourrevenuecoulddecrease.

We are subject to governmental regulation and other legal obligations, particularly related to privacy, data protection and information security, and we aresubject to consumer protection laws that regulate our marketing practices and prohibit unfair or deceptive acts and practices. Our actual or perceived failure tocomply with such obligations could harm our business. Compliance with such laws could also impair our efforts to maintain and expand our subscriber baseand provide certain of our product offerings, and thereby decrease our revenue.

TheU.S.FederalTradeCommission,orFTC,andvariousstateandlocalgovernmentsandagenciesregularlyusetheirauthorityunderlawsprohibitingunfairanddeceptivemarketingandtradepracticestoinvestigateandpenalizecompaniesforpracticesrelatedtothecollection,use,handling,disclosure,andsecurityofpersonaldataofU.S.consumers.Inaddition,inconnectionwiththemarketingandadvertisementofourproductsandservicesbyusorouraffiliates,wecouldbethetargetofclaimsrelatingtofalseordeceptiveadvertisingormarketingpractices,includingundertheauspicesoftheFTCandstateconsumerprotectionstatutes.

IntheEuropeanUnion,orEU,andinotherjurisdictionsoutsideoftheUnitedStates,wecouldbethetargetofsimilarclaimsunderconsumerprotectionlaws,regulationofcloudservices,ecommerceanddistancesellingregulation,advertisingregulation,unfaircompetitionrulesorsimilarlegislation.Onlinedigitalservicesmaybesubjecttoincreasedscrutinyinthenearfuturegiventheirrapidgrowthinrecentyears.Forexample,onDecember1,2015,theUKCompetitionandMarketsAuthority,ortheCMA,announcedthatitisconductingareviewofcompliancewithUKconsumerprotectionlawsinthecloudstoragesector.Aspartofthateffort,theCMAcontactedanumberofcloudstoragecompanies,includingourUKsubsidiary,JDIBackupLtd,orJDI,requestinginformationbeprovidedonavoluntarybasis.TheCMA’sreviewcouldresultinenforcementaction,requestsforvoluntarychangeinmarketingandbusinesspracticesand/ornewguidanceforthecloudstorageindustry,amongothers.

Ifwearefoundtohavebreachedanyconsumerprotection,ecommerceanddistanceselling,advertising,unfaircompetitionlawsorsimilarlegislationinanycountryoranylawsregulatingcloudservices,wemaybe

32

Table of Contents

subjecttoenforcementactionsthatrequireustochangeourbusinesspracticesinamannerwhichmaynegativelyimpactrevenue,aswellaslitigation,fines,penaltiesandadversepublicitythatcouldcauseoursubscriberstolosetrustinus,whichcouldhaveanadverseeffectonourreputationandbusinessinamannerthatharmsourfinancialposition.Wealsorelyonthirdpartiestoprovidemarketingandadvertisingofourproductsandservices,andwecouldbeliablefor,orfacereputationalharmasaresultof,theirmarketingpracticesif,forexample,theyfailtocomplywithapplicablestatutoryandregulatoryrequirements.

Wecollectpersonallyidentifiableinformationandotherdatafromoursubscribersandprospectivesubscribers.Weusethisinformationtoprovideservicestooursubscribers,tosupport,expandandimproveourbusinessand,subjecttoeachsubscriber’sorprospectivesubscriber’srighttodeclineoroptout,wemayusethisinformationtomarketotherproductsandservicestothem.Wemayalsosharesubscribers’personallyidentifiableinformationwithcertainthirdpartiesasauthorizedbythesubscriberorasdescribedintheapplicableprivacypolicy.

TheU.S.federalandvariousstateandforeigngovernmentshaveadoptedorproposedguidelinesorrulesforthecollection,distribution,useandstorageofpersonalinformationofindividuals,andtheFTCandmanystateattorneysgeneralareapplyingfederalandstateconsumerprotectionlawstoimposestandardsfortheonlinecollection,useanddisseminationofdata.However,theseobligationsmaybeinterpretedandappliedinamannerthatisinconsistentfromonejurisdictiontoanotherandmayconflictwithotherrequirementsorourpractices.Anyfailureorperceivedfailurebyustocomplywithprivacyorsecuritylaws,policies,legalobligationsorindustrystandardsoranysecurityincidentthatresultsintheunauthorizedreleaseortransferofpersonallyidentifiableinformationorothersubscriberdatamayresultingovernmentalenforcementactions,litigation,finesandpenaltiesand/oradversepublicityandcouldcauseoursubscriberstolosetrustinus,whichcouldhaveanadverseeffectonourreputationandbusiness.

Inaddition,severalforeigncountriesandgovernmentalbodies,includingthecountriesoftheEUandCanada,havelawsandregulationsdealingwiththecollectionanduseofpersonaldataobtainedfromtheirresidents,whichareoftenmorerestrictivethanthoseintheUnitedStates.Lawsandregulationsinthesejurisdictionsapplybroadlytothecollection,use,storage,disclosureandsecurityofpersonalinformationthatidentifiesormaybeusedtoidentifyanindividual,suchasnames,contactinformation,and,insomejurisdictions,certainuniqueidentifiers.

ThedataprivacyregimeintheEUincludescertaindirectiveswhich,amongotherthings,requireEUmemberstatestoregulatetheprocessingandmovementofpersonaldata,marketingandtheuseofcookies.EachEUmemberstatehastransposedtherequirementsofthesedirectivesintoitsownnationaldataprivacyregime,andthereforethelawsdifferfromjurisdictiontojurisdiction.

Futurelawsorregulations,ormodificationstoexistinglawsorregulations,couldimpairourabilitytocollectand/oruseuserinformationthatweusetoprovidetargetedadvertisingtoourusers,therebyimpairingourabilitytomaintainandgrowoursubscriberbaseandincreaserevenue.Futurerestrictionsonthecollection,use,sharingordisclosureofoursubscribers’dataoradditionalrequirementsforobtainingtheconsentofsubscribersfortheuseanddisclosureofsuchinformationcouldrequireustomodifyoursolutionsandfeatures,possiblyinamaterialmanner,andcouldlimitourabilitytodevelopnewservicesandfeatures.

Forexample,withintheEU,legislatorsagreeduponthetextofanewEU-wideGeneralDataProtectionRegulation,orGDPR,inDecember2015thatisexpectedtocomeintoeffectinearly2018andwillreplacethedataprotectionlawsofeachEUmemberstate.TheGDPRwillimplementmorestringentoperationalrequirementsforprocessorsandcontrollersofpersonaldata,including,forexample,expandeddisclosuresabouthowpersonalinformationistobeused,limitationsonretentionofinformation,increasedrequirementstoeraseanindividual’sinformationuponrequest,mandatorydatabreachnotificationrequirementsandhigherstandardsfordatacontrollerstodemonstratethattheyhaveobtainedvalidconsentforcertaindataprocessingactivities.Italsosignificantlyincreasespenaltiesfornon-compliance.Ifourprivacyordatasecuritymeasuresfailtocomplywithapplicablecurrentorfuturelawsandregulations,wemaybesubjecttolitigation,regulatoryinvestigations,

33

Table of Contents

enforcementnoticesrequiringustochangethewayweusepersonaldataorourmarketingpractices,finesorotherliabilities,aswellasnegativepublicityandapotentiallossofbusiness.Moreover,iffuturelawsandregulationslimitoursubscribers’orprospectivesubscribers’abilitytouseandsharepersonaldataorourabilitytostore,processandsharepersonaldata,demandforoursolutionscoulddecrease,ourcostscouldincrease,andourbusiness,resultsofoperationsandfinancialconditioncouldbeharmed.

Inrecentyears,U.S.andEuropeanlawmakersandregulatorshaveexpressedconcernovertheuseofthird-partycookies,webbeaconsandsimilartechnologyforonlinebehavioraladvertising.IntheEU,informedconsentisrequiredfortheplacementofacookieonauser’sdevice.Anyfailurebyustocomplywithapplicablerequirementsmayresultingovernmentalenforcementactions,litigation,finesandpenaltiesoradversepublicitywhichcouldhaveanadverseeffectonourreputationandbusiness.Regulationofcookiesandwebbeaconsmayleadtobroaderrestrictionsonourresearchactivities,includingeffortstounderstandusers’Internetusage.Suchregulationsmayhaveachillingeffectonbusinesses,suchasours,thatcollectanduseonlineusageinformationinordertoattractandretaincustomersandmayincreasethecostofmaintainingabusinessthatcollectsorusesonlineusageinformation,increaseregulatoryscrutinyandincreasethepotentialforcivilliabilityunderconsumerprotectionlaws.Inresponsetomarketplaceconcernsabouttheusageofthird-partycookiesandwebbeaconstotrackuserbehaviors,providersofmajorbrowsershaveincludedfeaturesthatallowuserstolimitthecollectionofcertaindataingeneralorfromspecifiedwebsites,andsomeregulatoryauthoritieshavebeenadvocatingthedevelopmentofbrowsersthatblockcookiesbydefault.Thesedevelopmentscouldimpairourabilitytocollectuserinformationthathelpsusprovidemoretargetedadvertisingtoourusers.Ifsuchtechnologyiswidelyadopted,itcouldadverselyaffectourbusiness,givenouruseofcookiesandsimilartechnologiestotargetourmarketing.

Furthermore,theU.S.ControllingtheAssaultofNonSolicitedPornographyandMarketingActof2003,orCANSPAMAct,establishescertainrequirementsforcommercialemailmessagesandspecifiespenaltiesforthetransmissionofcommercialemailmessagesthatareintendedtodeceivetherecipientastosourceorcontent.TheCANSPAMAct,amongotherthings,obligatesthesenderofcommercialemailstoproviderecipientswiththeabilitytooptoutofreceivingfutureemailsfromthesender.Inaddition,somestateshavepassedlawsregulatingcommercialemailpracticesthataresignificantlymorepunitiveanddifficulttocomplywiththantheCANSPAMAct,particularlyUtahandMichigan,whichhaveenacteddo-not-emailregistrieslistingminorswhodonotwishtoreceiveunsolicitedcommercialemailthatmarketscertaincoveredcontent,suchasadultorotherharmfulproducts.Someportionsofthesestatelawsmaynotbepre-emptedbytheCANSPAMAct.Theabilityofoursubscribers’customerstooptoutofreceivingcommercialemailsmayminimizetheeffectivenessofourproducts,particularlyConstantContact’semailmarketingproduct.Moreover,non-compliancewiththeCANSPAMActcarriessignificantfinancialpenalties.IfwewerefoundtobeinviolationoftheCANSPAMAct,applicablestatelawsnotpre-emptedbytheCANSPAMAct,orsimilarforeignlawsregulatingthedistributionofcommercialemail,whetherasaresultofviolationsbyoursubscribersorifweweredeemedtobedirectlysubjecttoandinviolationoftheserequirements,wecouldberequiredtopaypenalties,whichwouldadverselyaffectourfinancialperformanceandsignificantlyharmourbusiness,andourreputationwouldsuffer.Wealsomayberequiredtochangeoneormoreaspectsofthewayweoperateourbusiness,whichcouldimpairourabilitytoattractandretainsubscribersorcouldincreaseouroperatingcosts.

Werelyonthirdpartiestocarryoutanumberofservicesforus,includingprocessingpersonaldataonourbehalf,andwhileweenterintocontractualarrangementstoensurethattheyonlyprocesssuchdataaccordingtoourinstructionsandhavesufficientsecuritymeasuresinplace,anysecuritybreachornon-compliancewithourcontractualtermsorbreachofapplicablelawbysuchthirdpartiescouldresultingovernmentalenforcementactions,litigation,finesandpenaltiesoradversepublicityandcouldcauseoursubscriberstolosetrustinus,whichcouldhaveanadverseimpactonourreputationandbusiness.

Newlaws,regulationsorstandardsornewinterpretationsofexistinglaws,regulationsorstandards,includingthoseintheareasofdatasecurity,dataprivacy,consumerprotectionandregulationofISPs,couldrequireustoincuradditionalcostsandrestrictourbusinessoperations.Inaddition,thereisariskthatwecouldbeheldsubjecttolegislationincountrieswherewereasonablythoughtthelawsdidnotapplytous.Failurebyus

34

Table of Contents

tocomplywithapplicablerequirementsmayresultingovernmentalenforcementactions,litigation,finesandpenaltiesoradversepublicity,whichcouldhaveanadverseeffectonourreputationandbusiness.

Failure to adequately protect and enforce our intellectual property rights could substantially harm our business and operating results.

Wehavedevotedsubstantialresourcestothedevelopmentofourintellectualproperty,proprietarytechnologiesandrelatedprocesses.Inordertoprotectourintellectualproperty,proprietarytechnologiesandprocesses,werelyuponacombinationoftrademark,patentandtradesecretlaw,aswellasconfidentialityproceduresandcontractualrestrictions.Theseaffordonlylimitedprotection,maynotpreventdisclosureofconfidentialinformation,maynotprovideanadequateremedyintheeventofmisappropriationorunauthorizeddisclosure,andmaynotnoworinthefutureprovideuswithacompetitiveadvantage.Despiteoureffortstoprotectourintellectualpropertyrights,unauthorizedparties,includingemployees,subscribersandthirdparties,maymakeunauthorizedorinfringinguseofourproducts,services,softwareandotherfunctionality,inwholeorinpart,orobtainanduseinformationthatweconsiderproprietary.

Policingourproprietaryrightsandprotectingourbrandsanddomainnamesisdifficultandcostlyandmaynotalwaysbeeffective.Inaddition,wemayneedtoenforceourrightsunderthelawsofcountriesthatdonotprotectproprietaryrightstoasgreatanextentasdothelawsoftheUnitedStatesandanychangesin,orunexpectedinterpretationsof,theintellectualpropertylawsinanycountryinwhichweoperatemaycompromiseourabilitytoenforceourintellectualpropertyrights.Totheextentweexpandourinternationalactivities,ourexposuretounauthorizedcopyinganduseofourtrademarks,productsandproprietaryinformationmayincrease.

Wehaveregistered,orappliedtoregister,thetrademarksassociatedwithseveralofourleadingbrandsintheUnitedStatesandincertainothercountries.Competitorsmayhaveadopted,andinthefuturemayadopt,serviceorproductnamessimilartoours,whichcouldimpedeourabilitytobuildourbrands’identitiesandpossiblyleadtoconfusion.Inaddition,therecouldbepotentialtradenameortrademarkinfringementclaimsbroughtbyownersofotherregisteredtrademarksortrademarksthatincorporatevariationsofthetermsordesignsofoneofourtrademarks.

LitigationorproceedingsbeforetheU.S.PatentandTrademarkOfficeorothergovernmentalauthoritiesandadministrativebodiesintheUnitedStatesandabroadmaybenecessarytoenforceourintellectualpropertyrightsortodefendagainstclaimsofinfringementorinvalidity.Suchlitigationorproceedingscouldbecostly,time-consuminganddistractingtoourmanagement,resultinadiversionofresources,theimpairmentorlossofportionsofourintellectualproperty,andhaveamaterialadverseeffectonourbusinessandoperatingresults.Therecanbenoassurancethatoureffortstoenforceorprotectourproprietaryrightswillbeadequateorthatourcompetitorswillnotindependentlydevelopsimilartechnology.Inaddition,thelegalstandardsrelatingtothevalidity,enforceabilityandscopeofprotectionofintellectualpropertyrightsontheInternetareuncertainandstillevolving.Ourfailuretomeaningfullyestablishandprotectourintellectualpropertycouldresultinsubstantialcostsanddiversionofresourcesandcouldsubstantiallyharmourbusinessandoperatingresults.

We could incur substantial costs as a result of any claim of infringement of another party’s intellectual property rights.

Inrecentyears,therehasbeensignificantlitigationintheUnitedStatesandabroadinvolvingpatentsandotherintellectualpropertyrights.CompaniesprovidingInternet-basedproductsandservicesareincreasinglybringingandbecomingsubjecttosuitsalleginginfringementofproprietaryrights,particularlypatentrights,andtotheextentwefaceincreasingcompetitionandbecomeincreasinglyvisibleasapublicly-tradedcompany,orifwebecomemoresuccessful,thepossibilityofintellectualpropertyinfringementclaimsmayincrease.Inaddition,ourexposuretorisksassociatedwiththeuseofintellectualpropertymayincreaseasaresultofacquisitionsthatwemakeorouruseofsoftwarelicensedfromorhostedbythirdparties,aswehavelessvisibilityintothedevelopmentprocesswithrespecttosuchtechnologyorthecaretakentosafeguardagainst

35

Table of Contents

infringementrisks.Thirdpartiesmaymakeinfringementandsimilarorrelatedclaimsafterwehaveacquiredorlicensedtechnologythathadnotbeenassertedpriortoouracquisitionorlicense.

Manycompaniesaredevotingsignificantresourcestoobtainingpatentsthatcouldaffectmanyaspectsofourbusiness.Sincewedonothaveasignificantpatentportfolio,thismaypreventusfromdeterringpatentinfringementclaims,andourcompetitorsandothersmaynowandinthefuturehavesignificantlylargerandmorematurepatentportfoliosthanwehave.

WehavefiledseveralpatentapplicationsintheUnitedStatesandforeigncounterpartfilingsforsomeofthoseapplications.Althoughsomeoftheseapplicationshaveissuedtoregistration,wecannotassureyouthatpatentswillissuefromeverypatentapplication,orthatwewillprosecuteeveryapplicationtoregistration,thatpatentsthatissuefromourapplicationswillgiveustheprotectionthatweseek,orthatanysuchpatentswillnotbechallenged,invalidatedorcircumvented.Anypatentsthatmayissueinthefuturefromourpendingorfuturepatentapplicationsmaynotprovidesufficientlybroadprotectionandmaynotbeenforceableinactionsagainstallegedinfringers.

Theriskofpatentlitigationhasbeenamplifiedbytheincreaseincertainthirdparties,so-called“non-practicingentities,”whosesolebusinessistoassertpatentclaimsandagainstwhichourownintellectualpropertyportfoliomayprovidelittledeterrentvalue.Wecouldincursubstantialcostsinprosecutingordefendinganyintellectualpropertylitigationandwehaveincurredsuchcostsinthepast.Ifwesuetoenforceourrightsoraresuedbyathirdpartythatclaimsthatoursolutionsinfringeitsrights,thelitigationcouldbeexpensiveandcoulddivertourmanagement’stimeandattention.Evenathreatoflitigationcouldresultinsubstantialexpenseandtime.

Furthermore,becauseofthesubstantialamountofdiscoveryrequiredinconnectionwithintellectualpropertylitigation,thereisariskthatsomeofourconfidentialinformationcouldbecompromisedbydisclosure.Inaddition,duringthecourseofanysuchlitigation,therecouldbepublicannouncementsoftheresultsofhearings,motionsorotherinterimproceedingsordevelopments.Ifsecuritiesanalystsorinvestorsperceivetheseresultstobenegative,itcouldhaveasubstantialadverseeffectonthepriceofourcommonstock.

Anyintellectualpropertylitigationtowhichwemightbecomeaparty,orforwhichwearerequiredtoprovideindemnification,mayrequireustodooneormoreofthefollowing:

• ceasesellingorusingsolutionsthatincorporatetheintellectualpropertythatoursolutionsallegedlyinfringe;

• makesubstantialpaymentsforlegalfees,settlementpaymentsorothercostsordamages;

• obtainalicenseorenterintoaroyaltyagreement,whichmaynotbeavailableonreasonabletermsoratall,tosellorusetherelevanttechnology;or

• redesigntheallegedlyinfringingsolutionstoavoidinfringement,whichcouldbecostly,time-consumingorimpossible.

Ifwearerequiredtomakesubstantialpaymentsorundertakeanyoftheotheractionsnotedaboveasaresultofanyintellectualpropertyinfringementclaimsagainstus,ourbusinessoroperatingresultscouldbeharmed.

Inaddition,someofouragreementswithpartnersandothersrequireustoindemnifythosepartiesforthird-partyintellectualpropertyinfringementclaims,whichwouldincreasethecosttousresultingfromanadverserulingonanysuchclaim.

Our use of “open source” software could adversely affect our ability to sell our services and subject us to possible litigation.

Weuseopensourcesoftware,suchasMySQLandApache,inprovidingasubstantialportionofoursolutions,andwemayincorporateadditionalopensourcesoftwareinthefuture.Suchopensourcesoftwareis

36

Table of Contents

generallylicensedbyitsauthorsorotherthirdpartiesunderopensourcelicenses.Ifwefailtocomplywiththeselicenses,wemaybesubjecttocertainconditions,includingrequirementsthatweofferoursolutionsthatincorporatetheopensourcesoftwarefornocost;thatwemakeavailablesourcecodeformodificationsorderivativeworkswecreatebasedupon,incorporatingorusingtheopensourcesoftware;and/orthatwelicensesuchmodificationsorderivativeworksunderthetermsoftheparticularopensourcelicense.Inaddition,ifathird-partysoftwareproviderhasincorporatedopensourcesoftwareintosoftwarethatwelicensefromsuchprovider,wecouldberequiredtodiscloseanyofoursourcecodethatincorporatesorisamodificationofsuchlicensedsoftware.Ifanauthororotherthirdpartythatdistributessuchopensourcesoftwareweretoallegethatwehadnotcompliedwiththeconditionsofoneormoreoftheselicenses,wecouldberequiredtoincursignificantlegalexpensesdefendingsuchallegationsandcouldbesubjecttosignificantdamages,enjoinedfromthesaleofoursolutionsthatcontainedtheopensourcesoftware,andrequiredtocomplywiththeforegoingconditions,whichcoulddisruptthedistributionandsaleofsomeofoursolutions.Inaddition,therehavebeenclaimschallengingtheownershipofopensourcesoftwareagainstcompaniesthatincorporateopensourcesoftwareintotheirproducts.Asaresult,wecouldbesubjecttosuitsbypartiesclaimingownershipofwhatwebelievetobeopensourcesoftware.Suchlitigationcouldbecostlyforustodefend,haveanegativeeffectonouroperatingresultsandfinancialconditionorrequireustodevoteadditionalresearchanddevelopmentresourcestochangeourproducts.

We could face liability, or our reputation might be harmed, as a result of the activities of our subscribers, the content of their websites or the data they store onour servers.

Ourroleasaproviderofcloud-basedsolutions,includingwebsitehostingservicesanddomainregistrationservices,maysubjectustopotentialliabilityfortheactivitiesofoursubscribersonorinconnectionwiththeirwebsitesordomainnamesorforthedatatheystoreonourservers.Althoughoursubscribertermsofuseprohibitillegaluseofourservicesbyoursubscribersandpermitustotakedownwebsitesortakeotherappropriateactionsforillegaluse,subscribersmaynonethelessengageinprohibitedactivitiesoruploadorstorecontentwithusinviolationofapplicablelaworthesubscriber’sownpolicies,whichcouldsubjectustoliability.

SeveralU.S.federalstatutesmayapplytouswithrespecttovarioussubscriberactivities:

• TheDigitalMillenniumCopyrightActof1998,orDMCA,providesrecourseforownersofcopyrightedmaterialwhobelievethattheirrightsunderU.S.copyrightlawhavebeeninfringedontheInternet.UndertheDMCA,basedonourcurrentbusinessactivityasanonlineserviceproviderthatdoesnotmonitor,ownorcontrolwebsitecontentpostedbyoursubscribers,wegenerallyarenotliableforinfringingcontentpostedbyoursubscribersorotherthirdparties,providedthatwefollowtheproceduresforhandlingcopyrightinfringementclaimssetforthintheDMCA.Generally,ifwereceiveapropernoticefrom,oronbehalfof,acopyrightowneralleginginfringementofcopyrightedmateriallocatedonwebsiteswehost,andwefailtoexpeditiouslyremoveordisableaccesstotheallegedlyinfringingmaterialorotherwisefailtomeettherequirementsofthesafeharborprovidedbytheDMCA,thecopyrightownermayseektoimposeliabilityonus.TechnicalmistakesincomplyingwiththedetailedDMCAtake-downprocedurescouldsubjectustoliabilityforcopyrightinfringement.

• TheCommunicationsDecencyActof1996,orCDA,generallyprotectsinteractivecomputerserviceproviderssuchasus,fromliabilityforcertainonlineactivitiesoftheircustomers,suchasthepublicationofdefamatoryorotherobjectionablecontent.Asaninteractivecomputerservicesprovider,wedonotmonitorhostedwebsitesorprescreenthecontentplacedbyoursubscribersontheirsites.Accordingly,undertheCDA,wearegenerallynotresponsibleforthesubscriber-createdcontenthostedonourservers.However,theCDAdoesnotapplyinforeignjurisdictionsandwemaynonethelessbebroughtintodisputesbetweenoursubscribersandthirdpartieswhichwouldrequireustodevotemanagementtimeandresourcestoresolvesuchmattersandanypublicityfromsuchmatterscouldalsohaveanadverseeffectonourreputationandthereforeourbusiness.

• InadditiontotheCDA,theSecuringtheProtectionofourEnduringandEstablishedConstitutionalHeritageAct,ortheSPEECHAct,providesastatutoryexceptiontotheenforcementbyaU.S.courtof

37

Table of Contents

aforeignjudgmentthatislessprotectiveoffreespeechthantheUnitedStates.Generally,theexceptionappliesifthelawappliedintheforeigncourtdidnotprovideatleastasmuchprotectionforfreedomofspeechandpressaswouldbeprovidedbytheFirstAmendmentoftheU.S.ConstitutionorbytheconstitutionandlawofthestateinwhichtheU.S.courtislocated,orifnofindingofaviolationwouldbesupportedundertheFirstAmendmentoftheU.S.ConstitutionorundertheconstitutionandlawofthestateinwhichtheU.S.courtislocated.AlthoughtheSPEECHActmayprotectusfromtheenforcementofforeignjudgmentsintheUnitedStates,itdoesnotaffecttheenforceabilityofthejudgmentintheforeigncountrythatissuedthejudgment.Givenourinternationalpresence,wemaytherefore,nonetheless,havetodefendagainstorcomplywithanyforeignjudgmentsmadeagainstus,whichcouldtakeupsubstantialmanagementtimeandresourcesanddamageourreputation.

AlthoughthesestatutesandcaselawintheUnitedStateshavegenerallyshieldedusfromliabilityforsubscriberactivitiestodate,courtrulingsinpendingorfuturelitigation,orfuturelegislativeorregulatoryactions,maynarrowthescopeofprotectionaffordedusundertheselaws.SeveralcourtdecisionsarguablyhavealreadynarrowedthescopeoftheimmunityprovidedtointeractivecomputerservicesintheU.S.undertheCDA.Inaddition,lawsgoverningtheseactivitiesareunsettledinmanyinternationaljurisdictions,ormayprovedifficultorimpossibleforustocomplywithinsomeinternationaljurisdictions.Also,notwithstandingtheexculpatorylanguageofthesebodiesoflaw,wemaybeembroiledincomplaintsandlawsuitswhich,evenifultimatelyresolvedinourfavor,addcosttoourdoingbusinessandmaydivertmanagement’stimeandattention.Finally,otherexistingbodiesoflaw,includingthecriminallawsofvariousstates,maybedeemedtoapplyornewstatutesorregulationsmaybeadoptedinthefuture,anyofwhichcouldexposeustofurtherliabilityandincreaseourcostsofdoingbusiness.

ConstantContact’ssubscriberscouldalsouseConstantContact’sproductsorwebsitetotransmitnegativemessagesorwebsitelinkstoharmfulapplications,reproduceanddistributecopyrightedmaterialorthetrademarksofotherswithoutpermission,orreportinaccurateorfraudulentdataorinformation.AnysuchuseofConstantContact’sproductscoulddamageourreputationandwecouldfaceclaimsfordamages,copyrightortrademarkinfringement,defamation,negligenceorfraud.Moreover,ConstantContact’scustomers’promotionoftheirproductsandservicesthroughConstantContact’sproductsmaynotcomplywithfederal,stateandforeignlaws.WecannotpredictwhetherConstantContact’sroleinfacilitatingtheseactivitieswouldexposeustoliabilityundertheselaws.EvenifclaimsassertedagainstConstantContactdonotresultinliability,wemayincursubstantialcostsininvestigatinganddefendingsuchclaims.IfConstantContactisfoundliableforitscustomers’activities,wecouldberequiredtopayfinesorpenalties,redesignbusinessmethodsorotherwiseexpendresourcestoremedyanydamagescausedbysuchactionsandtoavoidfutureliability.

We may face liability for, or become involved in, disputes in connection with ownership or control of subscriber accounts, websites or domain names or inconnection with domain names we own.

Asaproviderofcloud-basedsolutions,includingasaregistrarofdomainnamesandrelatedservices,wefromtimetotimebecomeawareofdisputesoverownershiporcontrolofsubscriberaccounts,websitesordomainnames.Forexample,disputesmayariseasaresultofasubscriberengagingawebmasterorotherthirdpartytohelpsetupawebhostingaccount,registerorrenewadomainname,buildawebsite,uploadcontent,orsetupemailorotherservices.

Wecouldfacepotentialclaimsoftortlawliabilityforourfailuretorenewasubscriber’sdomain,andwehavefacedsuchliabilityinthepast.Wecouldalsofacepotentialtortlawliabilityforourroleinthewrongfultransferofcontrolorownershipofaccounts,websitesordomainnames.Thesafeguardsandprocedureswehaveadoptedmaynotbesuccessfulininsulatingusagainstliabilityfromsuchclaimsinthefuture.Inaddition,wefacepotentialliabilityforotherformsofaccount,websiteordomainname“hijacking,”includingmisappropriationbythirdpartiesofsubscriberaccounts,websitesordomainnamesandattemptsbythirdpartiestooperateaccounts,websitesordomainnamesortoextortthesubscriberwhoseaccounts,websitesordomainnamesweremisappropriated.Furthermore,ourriskofincurringliabilityforasecuritybreachonorinconnection

38

Table of Contents

withasubscriberaccount,websiteordomainnamewouldincreaseifthesecuritybreachweretooccurfollowingoursaletoasubscriberofanSSLcertificatethatprovedineffectualinpreventingit.Finally,weareexposedtopotentialliabilityasaresultofourdomainprivacyservice,whereintheidentityandcontactdetailsforthedomainnameregistrantaremasked.AlthoughourtermsofservicereservetherighttoprovidetheunderlyingWHOISinformationand/ortocancelprivacyservicesondomainnamesgivingrisetodomainnamedisputes,includingwhenwereceivereasonableevidenceofanactionableharm,thesafeguardswehaveinplacemaynotbesufficienttoavoidliability,whichcouldincreaseourcostsofdoingbusiness.

Occasionallyasubscribermayregisteradomainnamethatisidenticalorsimilartoanotherparty’strademarkorthenameofalivingperson.DisputesinvolvingregistrationorcontrolofdomainnamesareoftenresolvedthroughtheUniformDomainNameDisputeResolutionPolicy,orUDRP,ICANN’sadministrativeprocessfordomainnamedisputeresolution,orthroughlitigationundertheAnticybersquattingConsumerProtectionAct,orACPA,orundergeneraltheoriesoftrademarkinfringementordilution.TheUDRPgenerallydoesnotimposeliabilityonregistrars,andtheACPAprovidesthatregistrarsmaynotbeheldliableforregisteringormaintainingadomainnameabsentashowingofbadfaith,intenttoprofitorrecklessdisregardofacourtorderbytheregistrar.However,wemayfaceliabilityifwefailtocomplyinatimelymannerwithproceduralrequirementsundertheserules.Inaddition,theseprocessestypicallyrequireatleastlimitedinvolvementbyusand,therefore,increaseourcostsofdoingbusiness.Moreover,astheownerofdomainnameportfolioscontainingdomainsthatweareprovidingforresale,wemayfaceliabilityifoneormoredomainnamesinourportfoliosisallegedtoviolateanotherparty’strademark.Whilewescreenthedomainsweacquiretomitigatetheriskofthird-partyclaimsoftrademarkinfringement,wemaynonethelessinadvertentlyregisteroracquiredomainsthatinfringeorallegedlyinfringethird-partyrights.Moreover,advertisementsdisplayedonwebsitesassociatedwithdomainsregisteredbyusmaycontainallegedlyinfringingcontentplacedbythirdparties.Asaresult,ourinvolvementindomainnamedisputesmayincreaseinthefuture.

We are subject to export controls and economic sanctions laws that could impair our ability to compete in international markets and subject us to liability if weare not in full compliance with applicable laws.

OurbusinessactivitiesaresubjecttovariousrestrictionsunderU.S.exportcontrolsandtradeandeconomicsanctionslaws,includingtheU.S.CommerceDepartment’sExportAdministrationRegulationsandeconomicandtradesanctionsregulationsmaintainedbyOFAC.Failuretocomplywiththeselawsandregulationscouldsubjectustocivilorcriminalpenalties,governmentinvestigations,andreputationalharm.Inaddition,ifourthird-partyresellersfailtocomplywiththeselawsandregulationsintheirdealings,wecouldfacepotentialliabilityorpenaltiesforviolations.Furthermore,U.S.exportcontrollawsandeconomicsanctionslawsprohibitcertaintransactionswithU.S.embargoedorsanctionedcountries,governments,personsandentities.

Althoughwetakeprecautionsandhaveimplemented,andcontinuetoseektoenhance,compliancemeasurestopreventtransactionswithU.S.sanctiontargets,fromtimetotimewehaveidentified,andweexpecttocontinuetoidentify,instancesofnon-compliancewiththeselaws,rulesandregulationsandtransactionswhichwearerequiredtoblockandreporttoOFAC.Inaddition,asaresultofouracquisitionactivities,wehaveacquired,anditislikelythatwewillcontinuetoacquire,companiesforwhichwecouldfacepotentialliabilityorpenaltiesforviolationsiftheyhavenotimplementedsufficientcompliancemeasurestopreventtransactionswithU.S.sanctiontargets.Untilweareabletofullyintegrateourcomplianceprocessesintotheoperationsofsuchacquiredcompanies,weareatanincreasedriskoftransactingbusinesswithU.S.sanctiontargets.Ourfailuretocomplywiththeselaws,rulesandregulationscouldresultinnegativeconsequencestous,includinggovernmentinvestigations,penaltiesandreputationalharm.

Changesinoursolutionsorchangesinexportandimportregulationsmaycreatedelaysintheintroductionandsaleofoursolutionsininternationalmarkets,preventoursubscriberswithinternationaloperationsfromdeployingoursolutionsor,insomecases,preventtheexportorimportofoursolutionstocertaincountries,governmentsorpersonsaltogether.Anychangeinexportorimportregulations,shiftintheenforcementorscopeofexistingregulations,orchangeinthecountries,governments,personsortechnologiestargetedbysuch

39

Table of Contents

regulations,couldresultindecreaseduseofoursolutionsordecreasedabilitytoexportorselloursolutionstoexistingorpotentialsubscriberswithinternationaloperations.Anydecreaseduseofoursolutionsorlimitationonourabilitytoexportorselloursolutionscouldadverselyaffectourbusiness,financialconditionandoperatingresults.

Due to the global nature of our business, we could be adversely affected by violations of anti-bribery laws.

Theglobalnatureofourbusinessrequiresustocomplywithlawsandregulationsthatprohibitbriberyandcorruptionanywhereintheworld.TheFCPA,theU.K.BriberyAct2010,ortheBriberyAct,andsimilaranti-briberylawsinotherjurisdictionswherewedobusinessgenerallyprohibitcompaniesandtheirintermediariesfrommakingimproperpaymentstogovernmentofficialsandotherpersonsforthepurposeofobtainingorretainingbusinessoranimproperbusinessadvantage.Inaddition,theFCPArequirespubliccompaniestomaintainrecordsthataccuratelyandfairlyrepresenttheirtransactionsandhaveanadequatesystemofinternalaccountingcontrols.Wecurrentlyoperate,andplantoexpandouroperations,inareasoftheworldthathaveareputationforheightenedrisksofcorruptionand,incertaincircumstances,compliancewithanti-briberylawsmayconflictwithlocalcustomsandpractices.Weoperateinseveralcountriesandsellourproductstosubscribersaroundtheworld,whichrequiresouremployeesandbusinesspartnersactingonourbehalftocomplywithalllaws,includinganti-corruptionlaws.Inaddition,changesinlawscouldresultinincreasedregulatoryrequirementsandcompliancecostswhichcouldadverselyaffectourbusiness,financialconditionandresultsofoperations.Wecannotassurethatouremployees,businesspartnersorotheragentswillnotengageinprohibitedconductandexposeustotheriskofliabilityundertheFCPA,theBriberyAct,orotheranti-briberylaws.IfwearefoundtobeinviolationoftheFCPA,theBriberyActorotheranti-briberylaws,wecouldsuffercriminalandcivilpenalties,othersanctions,andreputationaldamage,whichcouldhaveamaterialadverseeffectonourbusiness.

Adverse economic conditions in the United States and international economies could harm our operating results.

Unfavorablegeneraleconomicconditions,suchasarecessionoreconomicslowdownintheUnitedStatesorinoneormoreofourothermajormarkets,couldadverselyaffecttheaffordabilityof,anddemandfor,oursolutions.Thenationalandglobaleconomicdownturninrecentyearsaffectedmanysectorsoftheeconomyandresultedin,amongotherthings,declinesinoveralleconomicgrowth,consumerandcorporateconfidenceandspending;increasesinunemploymentrates;anduncertaintyabouteconomicstability.Changingmacroeconomicconditionsmayaffectourbusinessinanumberofways,makingitdifficulttoaccuratelyforecastandplanourfuturebusinessactivities.Inparticular,SMBspendingpatternsaredifficulttopredictandaresensitivetothegeneraleconomicclimate,theeconomicoutlookspecifictotheSMBindustry,theSMB’slevelofprofitabilityanddebtandoverallconsumerconfidence.Oursolutionsmaybeconsidereddiscretionarybymanyofourcurrentandpotentialsubscribersandmaybedependentuponlevelsofconsumerspending.Asaresult,resellersandconsumersconsideringwhethertopurchaseoursolutionsmaybeinfluencedbymacroeconomicfactorsthataffectSMBandconsumerspending.

Totheextentconditionsintheeconomydeteriorate,ourbusinesscouldbeharmedassubscribersmayreduceorpostponespendingandchoosetodiscontinueoursolutions,decreasetheirservicelevel,delaysubscribingforoursolutionsorstoppurchasingoursolutionsalltogether.Inaddition,oureffortstoattractnewsubscribersmaybeadverselyaffected.Weakeningeconomicconditionsmayalsoadverselyaffectthirdpartieswithwhichwehaveenteredintorelationshipsanduponwhichwedependinordertogrowourbusiness,whichcoulddetractfromthequalityortimelinessoftheproductsorservicessuchpartiesprovidetousandcouldadverselyaffectourreputationandrelationshipswithoursubscribers.

Inuncertainandadverseeconomicconditions,decreasedconsumerspendingislikelytoresultinavarietyofnegativeeffectssuchasreductioninrevenue,increasedcosts,lowergrossmarginpercentagesandrecognitionofimpairmentsofassets,includinggoodwillandotherintangibleassets.Uncertaintyandadverseeconomic

40

Table of Contents

conditionsmayalsoleadtoadecreasedabilitytocollectpaymentforoursolutionsandservicesdueprimarilytoadeclineintheabilityofoursubscriberstouseoraccesscredit,includingthroughcreditcardsandPayPal,whichishowmostofoursubscriberspayforourservices.Wealsoexpecttocontinuetoexperiencevolatilityinforeignexchangerates,whichcouldadverselyaffecttheamountofexpensesweincurandtherevenuewerecordinfutureperiods.Ifanyoftheaboverisksarerealized,wemayexperienceamaterialadverseeffectonourbusiness,financialconditionandoperatingresults.

Impairment of goodwill and other intangible assets would result in a decrease in earnings.

Currentaccountingrulesprovidethatgoodwillandotherintangibleassetswithindefiniteusefullivesmaynotbeamortized,butinsteadmustbetestedforimpairmentatleastannually.Theserulesalsorequirethatintangibleassetswithdefiniteusefullivesbeamortizedovertheirrespectiveestimatedusefullivestotheirestimatedresidualvalues,andreviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountofsuchassetsmaynotberecoverable.Wehavesubstantialgoodwillandotherintangibleassets,andwewouldberequiredtorecordasignificantchargetoearningsinourfinancialstatementsduringtheperiodinwhichanyimpairmentofourgoodwillorintangibleassetsisdetermined.Anyimpairmentchargesorchangestotheestimatedamortizationperiodscouldhaveamaterialadverseeffectonourfinancialresults.

Risks Related to Our Substantial Indebtedness

Our substantial level of indebtedness could materially and adversely affect our financial condition.

Wenowhave,andexpecttocontinuetohave,significantindebtednessthatcouldresultinamaterialandadverseeffectonourbusiness.AsofDecember31,2015,wehadapproximately$1,093.4millionofaggregateindebtedness.AsofFebruary9,2016,aftergivingeffecttotheacquisitionofConstantContact,wehadapproximately$2,082.6millionofaggregateindebtedness,netoforiginalissuediscount.UnderourfirstlientermloanfacilityandourincrementalfirstlientermloanfacilityenteredintoinconnectionwiththeacquisitionofConstantContact,wearerequiredtorepayapproximately$2.6millionand$3.7million,respectively,ofprincipalattheendofeachquarterandaccruedinterestuponthematurityofeachinterestaccrualperiod,whichtotaled$52.2millionfortheyearendedDecember31,2015andwecurrentlyestimatewillbe$15.8millionand$11.1million,respectively,perfiscalquarterfor2016.TheinterestaccrualperiodsunderourSeniorCreditFacilitiesaretypicallythreemonthsinduration.Theactualamountsofourdebtservicingpaymentsvarybasedontheamountsofindebtednessoutstanding,whetherweborrowonaLIBORorbaseratebasis,theapplicableinterestaccrualperiodsandtheapplicableinterestrates,whichvarybasedonprescribedformulas.

Wemaybeabletoincursubstantialadditionaldebtinthefuture.ThetermsoftheSeniorCreditFacilitiesandtheindenturegoverningtheNotespermitustoincuradditionaldebtsubjecttocertainconditions.Thishighlevelofdebtcouldhaveimportantconsequences,including:

• makingitmoredifficultforustomakepaymentsonourindebtedness;

• increasingourvulnerabilitytogeneraladversefinancial,business,economicandindustryconditions,aswellasotherfactorsthatarebeyondourcontrol;

• requiringustodedicateasubstantialportionofourcashflowfromoperationstopaymentsonourindebtedness,therebyreducingtheavailabilityofourcashflowtofundworkingcapital,capitalexpenditures,acquisitions,researchanddevelopmenteffortsandothergeneralcorporatepurposes;

• limitingourflexibilityinplanningfor,orreactingto,changesinourbusinessandtheindustryinwhichweoperateandplacingusatadisadvantagecomparedtoourcompetitorsthatarelesshighlyleveraged;

• restrictingourabilitytopaydividendsonourcapitalstockorredeem,repurchaseorretireourcapitalstockorindebtedness;

• limitingourabilitytoborrowadditionalfunds;

41

Table of Contents

• exposingustotheriskofincreasedinterestratesascertainofourborrowingsare,andmayinthefuturebe,atvariableinterestrates;

• requiringustosellassetsorincuradditionalindebtednessifwearenotabletogeneratesufficientcashflowfromoperationstofundourliquidityneeds;

• requiringustorefinancealloraportionofourindebtednessatorbeforematurity;and

• makingitmoredifficultforustofundotherliquidityneeds.

Theoccurrenceofanyoneoftheseeventsorourfailuretogeneratesufficientcashflowfromoperationscouldhaveamaterialadverseeffectonourbusiness,financialcondition,resultsofoperationsandabilitytosatisfyourobligationsunderourindebtedness.

The terms of our Senior Credit Facilities and the indenture governing our outstanding Notes impose restrictions on our business, reducing our operationalflexibility and creating default risks .Failure to comply with these restrictions, or other events, could result in default under the relevant agreements that couldtrigger an acceleration of our indebtedness that we may not be able to repay.

OurSeniorCreditFacilitiesandtheNotesrequirecompliancewithasetoffinancialandnon-financialcovenants.Thesecovenantscontainnumerousrestrictionsonourabilitytoamongotherthings:

• incuradditionaldebt;

• makerestrictedpayments(includinganydividendsorotherdistributionsinrespectofourcapitalstockandanyinvestments);

• sellortransferassets;

• enterintoaffiliatetransactions;

• createliens;

• consolidate,merge,sellorotherwisedisposeofallorsubstantiallyallofourassets;and

• takeotheractions.

Asaresult,wemayberestrictedfromengaginginbusinessactivitiesthatmayotherwiseimproveourbusinessorfromfinancingfutureoperationsorcapitalneeds.Failuretocomplywiththecovenants,ifnotcuredorwaived,couldresultinaneventofdefaultthatcouldtriggeraccelerationofourindebtedness,whichwouldrequireustorepayallamountsowingundertheSeniorCreditFacilitiesandtheNotesandcouldhaveamaterialadverseimpactonourbusiness.OurSeniorCreditFacilitiesandtheindenturegoverningtheNotesalsocontainprovisionsthattriggerrepaymentobligations,includinginsomecasesuponachangeofcontrol,aswellasvariousrepresentationsandwarrantieswhich,ifbreached,couldleadtoeventsofdefault.WecannotbecertainthatourfutureoperatingresultswillbesufficienttoensurecompliancewiththecovenantsinourSeniorCreditFacilitiesortheindenturegoverningtheNotesortoremedyanydefaultsunderourSeniorCreditFacilitiesortheNotes.Inaddition,intheeventofanyeventofdefaultandrelatedacceleration,wemaynothaveorbeabletoobtainsufficientfundstomakeanyacceleratedpayments.

EIG Investors, the borrower under our Senior Credit Facilities and the Issuer of the Notes, is a holding company, and may not be able to generate sufficientcash to service all of its indebtedness.

EIGInvestorsCorp,orEIGInvestors,theborrowerunderourSeniorCreditFacilitiesandtheissueroftheNotes,hasnodirectoperationsandnosignificantassetsotherthanthestockofitssubsidiaries.Becauseitconductsitsoperationsthroughitsoperatingsubsidiaries,EIGInvestorsdependsonthoseentitiestogeneratethefundsnecessarytomeetitsfinancialobligations,includingitsrequiredobligationsunderourSeniorCreditFacilitiesandtheNotes.TheabilityofoursubsidiariestomaketransfersandotherdistributionstoEIGInvestors

42

Table of Contents

willbesubjectto,amongotherthings,thetermsofanydebtinstrumentsofthosesubsidiariesthenineffect,applicablelaw,prevailingeconomicandcompetitiveconditionsandcertainfinancial,businessandotherfactorsbeyondourcontrol.IftransfersorotherdistributionsfromoursubsidiariestoEIGInvestorswereeliminated,delayed,reducedorotherwiseimpaired,itsabilitytomakepaymentsonitsobligationswouldbesubstantiallyimpaired.

Furthermore,ifEIGInvestors’cashflowsandcapitalresourcesareinsufficienttofunditsdebtserviceobligations,wemaybeforcedtoreduceordelayinvestmentsandcapitalexpenditures,seekadditionalcapital,restructureorrefinanceEIGInvestors’orourindebtedness,orsellassets.Wemaynotbeabletoaccomplishanyofthesealternativesonatimelybasisoronsatisfactoryterms,ifatall,whichwouldlimitEIGInvestors’abilitytomeetitsscheduleddebtserviceobligations(includinginrespectoftheSeniorCreditFacilitiesortheNotes).OurabilitytorestructureorrefinancedebtwilldependontheconditionofthecapitalmarketsandthefinancialconditionofEIGInvestorsandusatthetime.AnyrefinancingofEIGInvestors’debtcouldbeathigherinterestratesandmayrequireEIGInvestorstocomplywithmoreonerouscovenants,whichcouldfurtherrestrictourbusinessoperations.TheSeniorCreditFacilitiesandtheindenturegoverningtheNotesofferedherebywillrestrictourabilitytousetheproceedsfromassetsales.Wemaynotbeabletoconsummatethoseassetsalestoraisecapitalorsellassetsatpricesthatwebelievearefair,andanyproceedsthatwereceivemaynotbeadequatetomeetanydebtserviceobligationsthendue.Inaddition,anyfailuretomakepaymentsofinterestandprincipalonEIGInvestors’outstandingindebtednessonatimelybasiswouldlikelyresultinareductionofitscreditrating,whichcouldharmourabilitytoincuradditionalindebtedness.

EIG Investors may not be able to repurchase the Notes upon a change of control or pursuant to an asset sale offer, which would cause a default under theindenture governing the Notes and the Senior Credit Facilities.

Upontheoccurrenceofspecifickindsofchangeofcontrolevents,EIGInvestorswillberequiredundertheindenturegoverningtheNotestooffertorepurchasealloutstandingNotesat101%oftheirprincipalamountplusaccruedandunpaidinterest,ifany,unlesstheNoteshavebeenpreviouslycalledforredemption.ThesourceoffundsforanysuchpurchaseoftheNoteswillbeEIGInvestors’availablecashorcashgeneratedfromitssubsidiaries’operationsorothersources,includingborrowings,salesofassetsorsalesofequity.EIGInvestorsmaynotbeabletorepurchasetheNotesuponachangeofcontrolbecauseitmaynothavesufficientfinancialresourcestopurchasealloftheNotesthataretendereduponachangeofcontrol.Further,EIGInvestorsmaybecontractuallyrestrictedunderthetermsoftheSeniorCreditFacilitiesfromrepurchasingalloftheNotestenderedbyholdersuponachangeofcontrol.Accordingly,EIGInvestorsmaynotbeabletosatisfyitsobligationstopurchasetheNotesunlessitisabletorefinanceorobtainwaiversundertheSeniorCreditFacilities.EIGInvestors’failuretorepurchasetheNotesuponachangeofcontrolwouldcauseadefaultundertheindenturegoverningtheNotesandacrossdefaultundertheSeniorCreditFacilities.TheSeniorCreditFacilitiesalsoprovidethatachangeofcontrolisadefaultthatpermitslenderstoacceleratethematurityofborrowingsthereunder.AnyofEIGInvestors’futuredebtagreementsmaycontainsimilarprovisions.

Inaddition,incertaincircumstancesspecifiedintheindenturegoverningtheNotes,EIGInvestorswillberequiredtocommenceanassetsaleoffer,asdefinedundertheindenturegoverningtheNotes,pursuanttowhichitwillbeobligatedtooffertopurchasetheapplicableNotesatapriceequalto100%oftheirprincipalamountplusaccruedandunpaidinterest.EIGInvestors’otherdebtmaycontainrestrictionsthatwouldlimitorprohibitEIGInvestorsfromcompletinganysuchassetsaleoffer.EIGInvestors’failuretopurchaseanysuchNoteswhenrequiredundertheindenturewouldbeaneventofdefault.

Risks Related to Ownership of Our Common Stock

Our stock price has been and may in the future be volatile, which could cause holders of our common stock to incur substantial losses.

Thetradingpriceofourcommonstockhasbeenandmayinthefuturebesubjecttosubstantialpricevolatility.Asaresultofthisvolatility,ourstockholderscouldincursubstantiallosses.Themarketpriceofour

43

Table of Contents

commonstockmayfluctuatesignificantlyinresponsetonumerousfactors,manyofwhicharebeyondourcontrol,includingthefactorslistedbelowandotherfactorsdescribedinthis“RiskFactors”section:

• lowtradingvolume,whichcouldcauseevenasmallnumberofpurchasesorsalesofourstocktohaveanimpactonthetradingpriceofourcommonstock;

• priceandvolumefluctuationsintheoverallstockmarketfromtimetotime;

• significantvolatilityinthemarketpriceandtradingvolumeofcomparablecompanies;

• actualoranticipatedchangesinourearningsoranyfinancialprojectionswemayprovidetothepublic,orfluctuationsinouroperatingresultsorintheexpectationsofsecuritiesanalysts;

• ratingschangesbydebtratingsagencies;

• shortsales,hedgingandotherderivativetransactionsinvolvingourcapitalstock;

• announcementsoftechnologicalinnovations,newproducts,strategicalliances,orsignificantagreementsbyusorbyourcompetitors;

• litigationorregulatoryproceedingsinvolvingus;

• investors’generalperceptionofus;

• changesingeneraleconomic,industryandmarketconditionsandtrends;and

• recruitmentordepartureofkeypersonnel.

Inthepast,followingperiodsofvolatilityinthemarketpriceofacompany’ssecurities,securitiesclassactionlitigationhasoftenbeenbroughtagainstthatcompany.InMay2015,aclassactionsecuritieslawsuitwasfiledagainstus,andinthefuturewemaybethetargetofsecuritieslitigation.Securitieslitigationcouldresultinsubstantialcostsanddivertmanagement’sattentionandresourcesfromourbusiness.

If securities or industry analysts do not publish, or cease publishing, research or reports about us, our business or our market, or if they publish negativeevaluations of our stock, the price of our stock and trading volume could decline.

Thetradingmarketforourcommonstockwillbeinfluencedbytheresearchandreportsthatindustryorsecuritiesanalystsorotherpartiesmaypublishaboutus,ourbusiness,ourmarketorourcompetitors.Wedonothaveanycontrolovertheseparties.Ifoneormoreoftheanalystscoveringourbusinessdowngradetheirevaluationsofourstock,thepriceofourstockcoulddecline.Ifoneormoreoftheseanalystsceasetocoverourstock,wecouldlosevisibilityinthemarketforourstock,whichinturncouldcauseourstockpricetodecline.

Future sales of shares of our common stock could cause the market price of our common stock to drop significantly, even if our business is doing well.

Asubstantialportionofourissuedandoutstandingcommonstockcanbetradedwithoutrestrictionatanytime,andtheremainingsharesofourissuedandoutstandingcommonstockcanbesoldsubjecttovolumelimitationsandotherrequirementsapplicabletoaffiliatesalesunderthefederalsecuritieslaws.Assuch,salesofasubstantialnumberofsharesofourcommonstockinthepublicmarketcouldoccuratanytime.Thesesales,ortheperceptioninthemarketthattheholdersofalargenumberofsharesintendtosellshares,couldreducethemarketpriceofourcommonstock.Inaddition,wehaveregistered18,000,000sharesofcommonstockthathavebeenissuedorreservedforfutureissuanceunderour2013StockIncentivePlan,whichwerefertoasour2013Plan.Oftheseshares,asofDecember31,2015,atotalof12,754,559sharesofourcommonstockaresubjecttooutstandingoptions,restrictedstockunitsandrestrictedstockawards,ofwhich3,502,499sharesareexercisableorhavevested.Theexerciseoftheseoptionsorthevestingofrestrictedstockunitsandsharesofrestrictedstockandthesubsequentsaleofthecommonstockunderlyingsuchoptionsoruponthevestingofsuchrestrictedstock

44

Table of Contents

unitsandrestrictedstockawardscouldcauseadeclineinourstockprice.Thesesalesalsomightmakeitdifficultforustosellequitysecuritiesinthefutureatatimeandatapricethatwedeemappropriate.Wecannotpredictthesizeoffutureissuancesortheeffect,ifany,thatanyfutureissuancesmayhaveonthemarketpriceforourcommonstock.

Inaddition,holdersofanaggregateof71,896,177sharesofourcommonstockhaverights,subjecttosomeconditions,torequireustofileregistrationstatementscoveringtheirsharesortoincludetheirsharesinregistrationstatementsthatwemayfileforourselvesorotherstockholders.Onceweregistertheseshares,theycanbefreelysoldinthepublicmarketuponissuance,subjecttoanyapplicablevestingrequirements.

Insiders have substantial control over us, which could limit your ability to influence the outcome of key transactions, including a change of control.

AsofDecember31,2015,ourdirectors,executiveofficersandtheiraffiliatesbeneficiallyown,intheaggregate,56.7%ofourissuedandoutstandingcommonstock.Specifically,investmentfundsandentitiesaffiliatedwithWarburgPincusown,intheaggregate,34.9%ofourissuedandoutstandingcommonstock,andinvestmentfundsandentitiesaffiliatedwithGoldmanSachsown,intheaggregate,approximately11.2%ofourissuedandoutstandingcommonstock.Asaresult,thesestockholders,iftheyacttogether,couldhavesignificantinfluenceovertheoutcomeofmatterssubmittedtoourstockholdersforapproval.Ourstockholdersagreementcontainsagreementsamongthepartieswithrespecttocertainmatters,includingtheelectionofdirectors,andcertainrestrictionsonourabilitytoeffectspecifiedcorporatetransactions.Ifthesestockholdersweretoacttogether,theycouldhavesignificantinfluenceoverthemanagementandaffairsofourcompany.Thisconcentrationofownershipmayhavetheeffectofdelayingorpreventingachangeincontrolofourcompanyandmightaffectthemarketpriceofourcommonstock.Inparticular,thesignificantownershipinterestofinvestmentfundsandentitiesaffiliatedwithWarburgPincusandGoldmanSachsinourcommonstockcouldadverselyaffectinvestors’perceptionsofourcorporategovernancepractices.

Anti-takeover provisions in our restated certificate of incorporation, our amended and restated bylaws and our stockholders agreement, as well as provisions ofDelaware law, might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading priceof our common stock.

Ourrestatedcertificateofincorporation,ouramendedandrestatedbylaws,ourstockholdersagreementandDelawarelawcontainprovisionsthatmaydiscourage,delayorpreventamerger,acquisitionorotherchangeincontrolthatstockholdersmayconsiderfavorable,includingtransactionsinwhichyoumightotherwisereceiveapremiumforyoursharesofourcommonstock.Theseprovisionsmayalsopreventorfrustrateattemptsbyourstockholderstoreplaceorremoveourmanagement.Ourcorporategovernancedocumentsincludeprovisions:

• authorizingblankcheckpreferredstock,whichcouldbeissuedwithoutstockholderapprovalandwithvoting,liquidation,dividendandotherrightssuperiortoourcommonstock;

• limitingtheliabilityof,andprovidingindemnificationto,ourdirectorsandofficers;

• limitingtheabilityofourstockholderstocallandbringbusinessbeforespecialmeetings;providedthatforsolongasinvestmentfundsandentities

affiliatedwithWarburgPincusorGoldmanSachs,collectively,ownamajorityofourissuedandoutstandingcapitalstock,specialmeetingsofourstockholdersmaybecalledbytheaffirmativevoteoftheholdersofamajorityofourissuedandoutstandingvotingstock;

• providingthatanyactionrequiredorpermittedtobetakenbyourstockholdersmustbetakenatadulycalledannualorspecialmeetingofsuchstockholdersandmaynotbetakenbyanyconsentinwritingbysuchstockholders;providedthatforsolongasinvestmentfundsandentitiesaffiliatedwitheitherWarburgPincusorGoldmanSachs,collectively,ownamajorityofourissuedandoutstandingcapitalstock,ameetingandvoteofstockholdersmaybedispensedwith,andtheactionmaybetakenwithout

45

Table of Contents

priornoticeandwithoutsuchmeetingandvoteifawrittenconsentissignedbytheholdersofissuedandoutstandingstockhavingnotlessthantheminimumnumberofvotesthatwouldbenecessarytoauthorizeortakesuchactionatthemeetingofstockholders;

• requiringadvancenoticeofstockholderproposalsforbusinesstobeconductedatmeetingsofourstockholdersandfornominationsofcandidatesfor

electiontoourboardofdirectors;providedthatnoadvancenoticeshallberequiredfornominationsofcandidatesforelectiontoourboardofdirectorspursuanttoourstockholdersagreement;

• controllingtheproceduresfortheconductandschedulingofboardofdirectorsandstockholdermeetings;

• providingourboardofdirectorswiththeexpresspowertopostponepreviouslyscheduledannualmeetingsandtocancelpreviouslyscheduledspecialmeetings;

• establishingaclassifiedboardofdirectorssothatnotallmembersofourboardareelectedatonetime;

• establishingDelawareastheexclusivejurisdictionforspecifiedtypesofstockholderlitigationinvolvingusorourdirectors;

• providingthatforsolongasinvestmentfundsandentitiesaffiliatedwithWarburgPincushavetherighttodesignateatleastthreedirectorsforelectiontoourboardofdirectors,certainactionsrequiredorpermittedtobetakenbyourstockholders,includingamendmentstoourrestatedcertificateofincorporationoramendedandrestatedbylawsandcertainspecifiedcorporatetransactions,maybeeffectedonlywiththeaffirmativevoteof75%ofourboardofdirectors,inadditiontoanyothervoterequiredbyapplicablelaw;

• providingthatforsolongasinvestmentfundsandentitiesaffiliatedwithWarburgPincushavetherighttodesignateatleastonedirectorforelectiontoourboardofdirectorsandforsolongasinvestmentfundsandentitiesaffiliatedwithGoldmanSachshavetherighttodesignateonedirectorforelectiontoourboardofdirectors,ineachcase,aquorumofourboardofdirectorswillnotexistwithoutatleastonedirectordesigneeofeachofWarburgPincusandGoldmanSachspresentatsuchmeeting;providedthatifameetingofourboardofdirectorsfailstoachieveaquorumduetotheabsenceofadirectordesigneeofWarburgPincusorGoldmanSachs,asapplicable,thepresenceofadirectordesigneeofWarburgPincusorGoldmanSachs,asapplicable,willnotberequiredinorderforaquorumtoexistatthenextmeetingofourboardofdirectors;

• limitingthedeterminationofthenumberofdirectorsonourboardofdirectorsandthefillingofvacanciesornewlycreatedseatsontheboardtoourboardofdirectorstheninoffice;providedthatforsolongasinvestmentfundsandentitiesaffiliatedwitheitherWarburgPincusorGoldmanSachshavetherighttodesignateatleastonedirectorforelectiontoourboardofdirectors,anyvacancieswillbefilledinaccordancewiththedesignationprovisionssetforthinourstockholdersagreement;and

• providingthatdirectorsmayberemovedbystockholdersonlyforcausebytheaffirmativevoteoftheholdersofatleast75%ofthevotesthatallourstockholderswouldbeentitledtocastinanannualelectionofdirectors;providedthatanydirectordesignatedbyinvestmentfundsandentitiesaffiliatedwitheitherWarburgPincusorGoldmanSachsmayberemovedwithorwithoutcauseonlybyWarburgPincusorGoldmanSachs,respectively,andforsolongasinvestmentfundsandentitiesaffiliatedwitheitherWarburgPincusorGoldmanSachs,collectively,holdatleastamajorityofourissuedandoutstandingcapitalstock,ourdirectors,otherthanadirectordesignatedbyinvestmentfundsandentitiesaffiliatedwitheitherWarburgPincusorGoldmanSachs,respectively,mayberemovedwithorwithoutcausebytheaffirmativevoteoftheholdersofamajorityofourissuedandoutstandingcapitalstock.

AsaDelawarecorporation,wearealsosubjecttoprovisionsofDelawarelaw,includingSection203oftheDelawareGeneralCorporationLaw,whichpreventssomestockholdersholdingmorethan15%ofourissuedand

46

Table of Contents

outstandingcommonstockfromengagingincertainbusinesscombinationswithoutapprovaloftheholdersofsubstantiallyallofourissuedandoutstandingcommonstock.SincetheinvestmentfundsandentitiesaffiliatedwithWarburgPincusandGoldmanSachsbecameholdersofmorethan15%ofourissuedandoutstandingcommonstockinatransactionthatwasapprovedbyourboardofdirectors,therestrictionsofSection203oftheDelawareGeneralCorporationlawwouldnotapplytoabusinesscombinationtransactionwithanyinvestmentfundsorentitiesaffiliatedwitheitherWarburgPincusorGoldmanSachs.Inaddition,ourrestatedcertificateofincorporationexpresslyexemptsinvestmentfundsandentitiesaffiliatedwitheitherWarburgPincusorGoldmanSachsfromtheapplicabilityofSection203oftheDelawareGeneralCorporationLaw.AnyprovisionofourrestatedcertificateofincorporationoramendedandrestatedbylawsorDelawarelawthathastheeffectofdelayingordeterringachangeincontrolcouldlimittheopportunityforourstockholderstoreceiveapremiumfortheirsharesofourcommonstockandcouldalsoaffectthepricethatsomeinvestorsarewillingtopayforourcommonstock.

Theexistenceoftheforegoingprovisionsandanti-takeovermeasurescouldlimitthepricethatinvestorsmightbewillingtopayinthefutureforsharesofourcommonstock.Theycouldalsodeterpotentialacquirersofourcompany,therebyreducingthelikelihoodthatyoucouldreceiveapremiumforyourcommonstockinanacquisition.

We have incurred and expect to continue to incur increased costs as a result of operating as a public company, and our management is required to devotesubstantial time to compliance with our public company responsibilities and corporate governance practices. We also need to ensure that we have adequateinternal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis. Failure to maintainproper and effective internal controls could impair our ability to produce accurate and timely financial statements, which could harm our operating results, ourability to operate our business, and our investors’ view of us.

Asapubliccompany,wehaveincurredandexpecttocontinuetoincursignificantlegal,accountingandotherexpensesthatwedidnotincurasaprivatecompany.TheSarbanes-OxleyActof2002,theDodd-FrankWallStreetReformandConsumerProtectionAct,thelistingrequirementsofTheNASDAQGlobalSelectMarketandotherapplicablesecuritiesrulesandregulationsimposevariousrequirementsonpubliccompanies.Ourmanagementandotherpersonnelneedtodevoteasubstantialamountoftimetocomplywiththeserequirements.Moreover,theserulesandregulationshaveincreasedourlegalandfinancialcompliancecostsandhavemadesomeactivitiesmoretime-consumingandcostly.Theserulesandregulationshavemadeitmoredifficultandmoreexpensiveforustoobtaindirectorandofficerliabilityinsurance,whichcouldmakeitmoredifficultforustoattractandretainqualifiedmembersofourboardofdirectors.

Oneaspectofcomplyingwiththeserulesandregulationsasapubliccompanyisthatwearerequiredtoensurethatwehaveadequatefinancialandaccountingcontrolsandproceduresinplace.Ourinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples.Thisisacostlyandtime-consumingeffortthatneedstobere-evaluatedperiodically.

Section404oftheSarbanes-OxleyActof2002,orSection404,requiresthatweevaluate,testanddocumentourinternalcontrolsand,asapartofthatevaluation,documentationandtesting,identifyareasforfurtherattentionandimprovement.InordertocomplywithSection404,wewillneedtocontinuetodedicateinternalresources,andpotentiallyrecruitadditionalfinanceandaccountingpersonnelorengageoutsideconsultants,toassessanddocumenttheadequacyofinternalcontroloverfinancialreporting,continuestepstoimprovecontrolprocessesasappropriate,validatethroughtestingthatcontrolsarefunctioningasdocumentedandimplementandmaintainacontinuousreportingandimprovementprocessforinternalcontroloverfinancialreporting.Implementingandmaintaininganyappropriatechangestoourinternalcontrolsmaydistractourofficersandemployees,entailsubstantialcoststomodifyourexistingprocessesandtakesignificanttimetocomplete.Thesechangesmaynot,however,beeffectiveinmaintainingtheadequacyofourinternalcontrols.

47

Table of Contents

Thus,despiteourefforts,thereisariskthatinthefuturewewillnotbeabletoconcludethatourinternalcontroloverfinancialreportingiseffectiveasrequiredbySection404.Anyfailuretomaintaintheadequacyofourinternalcontrols,consequentinabilitytoproduceaccuratefinancialstatementsonatimelybasis,oridentificationandfailuretoremediateoneormorematerialweaknessescouldresultinanadversereactioninthefinancialmarketsduetoalossofconfidenceinthereliabilityofourfinancialstatementsandmakeitmoredifficultforustomarketandselloursolutionstonewandexistingsubscribers.

Certain of our stockholders have the right to engage or invest in the same or similar businesses as us.

InvestmentfundsandentitiesaffiliatedwitheitherWarburgPincusorGoldmanSachs,together,holdacontrollinginterestinourcompany.WarburgPincus,GoldmanSachsandtheirrespectiveaffiliateshaveotherinvestmentsandbusinessactivitiesinadditiontotheirownershipofourcompany.WarburgPincus,GoldmanSachsandtheirrespectiveaffiliateshavetheright,andhavenodutytoabstainfromexercisingtheright,toengageorinvestinthesameorsimilarbusinessesasus.Tothefullestextentpermittedbylaw,wehave,onbehalfofourselves,oursubsidiariesandourandtheirrespectivestockholders,renouncedanyinterestorexpectancyin,orinbeingofferedanopportunitytoparticipatein,anybusinessopportunitythatmaybepresentedtoWarburgPincus,GoldmanSachsoranyoftheirrespectiveaffiliates,partners,principals,directors,officers,members,managers,employeesorotherrepresentatives,andnosuchpersonhasanydutytocommunicateoroffersuchbusinessopportunitytousoranyofoursubsidiariesorshallbeliabletousoranyofoursubsidiariesoranyofouroritsstockholdersforbreachofanyduty,asadirectororofficerorotherwise,byreasonofthefactthatsuchpersonpursuesoracquiressuchbusinessopportunity,directssuchbusinessopportunitytoanotherpersonorfailstopresentsuchbusinessopportunity,orinformationregardingsuchbusinessopportunity,tousoroursubsidiaries,unless,inthecaseofanysuchpersonwhoisadirectororofficerofours,suchbusinessopportunityisexpresslyofferedtosuchdirectororofficerinwritingsolelyinhisorhercapacityasadirectororofficerofours.

We may not pay any dividends on our common stock for the foreseeable future.

Wedonotcurrentlyanticipatethatwewillpayanycashdividendstoholdersofourcommonstockintheforeseeablefuture.Instead,weexpecttoretainanyearningstomaintainandexpandourexistingoperations,includingthroughmergersandacquisitions,andtoinvestinthegrowthofourbusiness.Inaddition,ourabilitytopaycashdividendsiscurrentlylimitedbythetermsofourcreditagreementandtheindenturegoverningtheNotes,andanyfuturecreditagreementmaycontaintermsprohibitingorlimitingtheamountofdividendsthatmaybedeclaredorpaidonourcommonstock.Accordingly,investorsmustrelyonsalesoftheircommonstockafterpriceappreciation,whichmayneveroccur,torealizeanyreturnontheirinvestment.

ITEM 1B. Unresolved Staff Comments

None.

ITEM 2. Properties

AsofDecember31,2015,weprovidedoursolutionsthroughvariousofficesanddatacenters,including:

• approximately77,000squarefeetofleasedofficespacelocatedinBurlington,Massachusetts,whichservesasourcorporateheadquarters,underaleasethatexpiresinMarch2026;

• approximately278,000squarefeetofadditionalleasedofficespaceintheUnitedStateslocatedprimarilyinArizona,Texas,UtahandWashington;

• approximately158,000squarefeetofleasedofficespaceoutsideoftheUnitedStateslocatedprimarilyinBrazil,China,India,IsraelandtheUnitedKingdom;

48

Table of Contents

• approximately57,000squarefeetofofficeanddatacenterspaceweowninUtah,and

• leasedandco-locateddatacenterspacelocatedprimarilyinMassachusettsandTexas,withapproximately2,750kilowattsofpowerundercontract.

Webelievethatourfacilitiesareadequateforourcurrentneedsandthatsuitableadditionalorsubstitutespacewillbeavailableasneededtoaccommodateplannedexpansionofouroperations.

ITEM 3. Legal Proceedings

Fromtimetotimeweareinvolvedinlegalproceedingsorsubjecttoclaimsarisingintheordinarycourseofourbusiness.Wearenotpresentlyinvolvedinanysuchlegalproceedingorsubjecttoanysuchclaimthat,intheopinionofourmanagement,wouldhaveamaterialadverseeffectonourbusiness,operatingresultsorfinancialcondition.However,theresultsofsuchlegalproceedingsorclaimscannotbepredictedwithcertainty,andregardlessoftheoutcome,canhaveanadverseimpactonusbecauseofdefenseandsettlementcosts,diversionofmanagementresourcesandotherfactors.Neithertheultimateoutcomeofthematterslistedbelownoranestimateofanyprobablelossesoranyreasonablypossiblelossescanbeassessedatthistime.

Endurance

WereceivedasubpoenadatedDecember10,2015fromtheBostonRegionalOfficeoftheSEC,requiringtheproductionofcertaindocuments,including,amongotherthings,documentsrelatedtoourfinancialreporting,includingoperatingandnon-GAAPmetrics,refund,salesandmarketingpracticesandtransactionswithrelatedparties.WearefullycooperatingwiththeSEC’sinvestigation,whichisstillinitspreliminarystages.Wecanmakenoassurancesastothetimeorresourcesthatwillneedtobedevotedtothisinvestigationoritsfinaloutcome,ortheimpact,ifany,ofthisinvestigationoranyrelatedlegalorregulatoryproceedingsonourbusiness,financialcondition,resultsofoperationsandcashflows.

OnMay4,2015,ChristopherMachado,apurportedholderofourcommonstock,filedacivilactionintheUnitedStatesDistrictCourtfortheDistrictofMassachusettsagainstusandourchiefexecutiveofficerandourformerchieffinancialofficer,Machadov.EnduranceInternationalGroupHoldings,Inc.,etal.,CivilActionNo.1:15-cv-11775-GAO.TheplaintifffiledanamendedcomplaintonDecember8,2015,allegingclaimsforviolationsofSection10(b)and20(a)oftheExchangeAct,onbehalfofapurportedclassofpurchasersofoursecuritiesbetweenFebruary25,2014andNovember2,2015.Thoseclaimschallengedasfalseormisleadingcertainofourdisclosuresaboutthenumberofcustomerspayingover$500peryearforEnduranceproductsandservices,theaveragenumberofproductssoldpersubscriber,andourmonthlyrecurringrevenuerate.Theplaintiffseeks,onbehalfofhimselfandthepurportedclass,compensatorydamagesandhiscostsandexpensesoflitigation.Theplaintiffhasrecentlybeengivenleavetofileasecondamendedcomplaint,whichwillsupersedethecurrentcomplaint.ThatfilingisdueonMarch18,2016.Weandtheindividualdefendantsintendtodenyanyliabilityorwrongdoingandtovigorouslydefendallclaimsasserted.Wecannot,however,makeanyassurancesastotheoutcomeofthisproceeding.

Constant Contact

OnDecember10,2015,ConstantContactreceivedasubpoenafromtheBostonRegionalOfficeoftheSEC,requiringtheproductionofdocumentspertainingtoConstantContact’ssales,marketing,andcustomerretentionpractices,andperiodicpublicdisclosureoffinancialandoperatingmetrics.WearefullycooperatingwiththeSEC’sinvestigation.Wecanmakenoassurancesastothetimeorresourcesthatwillneedtobedevotedtothisinvestigationoritsfinaloutcome,ortheimpact,ifany,ofthisinvestigationoranyrelatedlegalorregulatoryproceedingsonourbusiness,financialcondition,resultsofoperationsandcashflows.

OnAugust7,2015,apurportedclassactionlawsuit,WilliamMcGeev.ConstantContact,Inc.,etal,wasfiledintheUnitedStatesDistrictCourtfortheDistrictofMassachusettsagainstConstantContactandtwoofitsformerofficers.ThelawsuitassertsclaimsunderSections10(b)and20(a)oftheExchangeAct,andispremised

49

Table of Contents

onallegedlyfalseand/ormisleadingstatements,andnon-disclosureofmaterialfacts,regardingConstantContact’sbusiness,operations,prospectsandperformanceduringtheproposedclassperiodofOctober23,2014toJuly23,2015.Thislitigationisinitsveryearlystages.Weandtheindividualdefendantsintendtovigorouslydefendallclaimsasserted.Wecannot,however,makeanyassurancesastotheoutcomeofthisproceeding.

InSeptember2012,RPostHoldings,Inc.,RPostCommunicationsLimitedandRMailLimited,orcollectively,RPost,filedacomplaintintheUnitedStatesDistrictCourtfortheEasternDistrictofTexasthatnamedConstantContactasadefendantinalawsuit.ThecomplaintallegedthatcertainelementsofConstantContact’semailmarketingtechnologyinfringefivepatentsheldbyRPost.RPostseeksanawardfordamagesinanunspecifiedamountandinjunctiverelief.InFebruary2013,RPostamendeditscomplainttonamefiveofConstantContact’smarketingpartnersasdefendants.UnderConstantContact’scontractualagreementswiththesemarketingpartners,itisobligatedtoindemnifythemforclaimsrelatedtopatentinfringement.ConstantContactfiledamotiontoseverandstaytheclaimsagainstitspartnersandmultiplemotionstodismisstheclaimsagainstit.InJanuary2014,thecasewasstayedpendingtheresolutionofcertainstatecourtandbankruptcyactionsinvolvingRPost,towhichConstantContactisnotaparty.ThestaywasextendedbyagreementofthepartiesinDecember2014.Thislitigationisinitsveryearlystages.Webelievewehavemeritoriousdefensestoanyclaimofinfringementandintendtodefendagainstthelawsuitvigorously.

Legal Proceedings Related to the Constant Contact acquisition

OnDecember11,2015,aputativeclassactionlawsuitrelatingtotheConstantContactacquisition,captionedIrfanChawdry,IndividuallyandOnBehalfofAllOthersSimilarlySituatedv.GailGoodman,etal.CaseNo.11797,ortheChawdryComplaint,andonDecember21,2015,aputativeclassactionlawsuitrelatingtotheacquisitioncaptionedDavidV.Myers,IndividuallyandOnBehalfofAllOthersSimilarlySituatedv.GailGoodman,etal.CaseNo.11828,ortheMyersComplaint(togetherwiththeChawdryComplaint,theComplaints)filedintheCourtofChanceryoftheStateofDelawarenamingConstantContact,eachofConstantContact’sdirectors,EnduranceandPaintbrushAcquisitionCorporationasdefendants.TheComplaintsgenerallyallege,amongotherthings,thatinconnectionwiththeacquisitionthedirectorsofConstantContactbreachedtheirfiduciarydutiesowedtothestockholdersofConstantContactbyagreeingtosellConstantContactforpurportedlyinadequateconsideration,engaginginaflawedsalesprocess,omittingmaterialinformationnecessaryforstockholderstomakeaninformedvote,andagreeingtoanumberofpurportedlypreclusivedealprotectiondevices.TheComplaintsseek,amongotherthings,torescindtheacquisition,aswellasawardofplaintiffs’attorneys’feesandcostsintheaction.ThedefendantshavenotyetansweredorotherwiserespondedtoeitheroftheseComplaints.ThedefendantsbelievetheclaimsassertedintheComplaintsarewithoutmeritandintendtodefendagainsttheselawsuitsvigorously.

ITEM 4. Mine Safety Disclosures

Notapplicable.

50

Table of Contents

Part II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market for Our Common Stock and Related Stockholder Matters

OurcommonstockislistedonTheNASDAQGlobalSelectMarketunderthesymbol“EIGI”.ThefollowingtableshowsthehighandlowsalespricepershareofourcommonstockasreportedontheNASDAQGlobalSelectMarketfortheperiodsindicated:

High Low Year Ended December 31, 2014 FirstQuarter $16.33 $10.98SecondQuarter $16.09 $11.67ThirdQuarter $17.00 $12.17FourthQuarter $19.09 $14.02Year Ended December 31, 2015 FirstQuarter $20.45 $15.92SecondQuarter $23.49 $15.82ThirdQuarter $22.37 $12.11FourthQuarter $15.48 $10.29

Stockholders

AsofFebruary19,2016therewereapproximately57holdersofrecordofourcommonstock.Theactualnumberofstockholdersisgreaterthanthisnumberofrecordholdersandincludesstockholderswhoarebeneficialowners,butwhosesharesareheldinstreetnamebybrokersandothernominees.

Dividend Policy

Wecurrentlyintendtoretainfutureearnings,ifany,tofinancetheoperationandexpansionofourbusinessanddonotanticipatepayinganycashdividendsintheforeseeablefuture.Anyfuturedeterminationtodeclaredividendswillbesubjecttothediscretionofourboardofdirectorsandapplicablelawandwilldependonvariousfactors,includingourresultsofoperations,financialcondition,prospectsandanyotherfactorsdeemedrelevantbyourboardofdirectors.OurcreditagreementandtheindenturegoverningtheNoteslimitsourabilitytopaycashdividendsonourcommonstock,andthetermsofanyfutureloanagreementintowhichwemayenteroranyadditionaldebtsecuritieswemayissuearelikelytocontainsimilarrestrictionsonthepaymentofdividends.

Securities Authorized for Issuance Under Equity Compensation Plan

TheinformationconcerningourequitycompensationplanisincorporatedbyreferencefromtheinformationinourProxyStatementforour2016AnnualMeetingofStockholders,whichwewillfilewiththeSECwithin120daysoftheendofthefiscalyeartowhichthisAnnualReportonForm10-Krelates.

51

Table of Contents

Stock Performance Graph

Thefollowingperformancegraphandrelatedinformationshallnotbedeemedtobe“solicitingmaterial”or“filed”forpurposesofSection18oftheExchangeActnorshallsuchinformationbeincorporatedbyreferenceintoanyfilingofEnduranceInternationalGroupHoldings,Inc.undertheExchangeActortheSecuritiesAct,excepttotheextentthatwespecificallyincorporateitbyreferenceinsuchfiling.

ThegraphsetforthbelowcomparesthecumulativetotalreturnonourcommonstocktothecumulativetotalreturnoftheNASDAQCompositeIndexandtheRDGInternetCompositefromOctober25,2013(thefirstdatethatsharesofourcommonstockwerepubliclytraded)throughDecember31,2015.Thecomparisonassumes$100wasinvestedafterthemarketclosedonOctober25,2013inourcommonstock,andeachoftheforegoingindices,anditassumesthereinvestmentofdividends,ifany.

Thecomparisonsshowninthegraphbelowarebaseduponhistoricaldata.Wecautionthatthestockpriceperformanceshowninthegraphbelowisnotnecessarilyindicativeof,norisitintendedtoforecast,thepotentialfutureperformanceofourcommonstock.

10/25/13 12/31/13 3/31/14 6/30/14 9/30/14 12/31/14 3/31/15 6/30/15 9/30/2015 12/31/15Endurance International Group Holdings, Inc. $100.00 $126.04 $115.64 $135.91 $144.62 $163.82 $169.42 $183.64 $ 118.76 $ 97.16 NASDAQ Composite Index $100.00 $111.08 $112.01 $117.49 $119.85 $126.27 $130.54 $133.26 $ 123.28 $133.90 RDG Internet Composite Index $100.00 $118.06 $112.86 $116.34 $120.15 $115.51 $122.96 $127.23 $ 131.07 $158.34

52

Table of Contents

ITEM 6. Selected Consolidated Financial Data

TheconsolidatedstatementsofoperationsdatafortheyearsendedDecember31,2013,2014and2015,andtheconsolidatedbalancesheetdataasofDecember31,2014and2015,arederivedfromourauditedconsolidatedfinancialstatementsappearingelsewhereinthisAnnualReportonForm10-K.See“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations—ImpactofSponsorAcquisition”inPartII,Item7ofthisAnnualReportonForm10-K.TheconsolidatedstatementofoperationsdatafortheperiodfromJanuary1,2011throughDecember21,2011,theperiodfromDecember22,2011throughDecember31,2011andtheyearendedDecember31,2012,andtheconsolidatedbalancesheetdataasofDecember31,2011,2012and2013,arederivedfromourauditedconsolidatedfinancialstatementsthatarenotincludedinthisAnnualReportonForm10-K.Ourhistoricalresultsarenotnecessarilyindicativeoftheresultstobeexpectedinanyfutureperiod.Youshouldreadthefollowingselectedconsolidatedfinancialdatainconjunctionwith“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations”andourconsolidatedfinancialstatementsandtherelatednotesappearingelsewhereinthisAnnualReportonForm10-K. Predecessor(1) Successor(1)

Period from January 1 through

December 21, 2011

Period from December 22

through December 31,

2011

Year Ended December 31,

2012

Year Ended December 31,

2013

Year Ended December 31,

2014

Year Ended December 31,

2015 (in thousands, except share and per share data) Consolidated Statements of Operations Data: Revenue $ 187,340 $ 2,967 $ 292,156 $ 520,296 $ 629,845 $ 741,315Costofrevenue(2) 133,399 3,901 237,179 350,103 381,488 425,035

Grossprofit 53,941 (934) 54,977 170,193 248,357 316,280Operatingexpense:

Salesandmarketing 54,932 1,482 83,110 117,689 146,797 145,419Engineeringanddevelopment 5,538 101 13,803 23,205 19,549 26,707Generalandadministrative 16,938 3,755 48,411 92,347 69,533 90,968

Totaloperatingexpense(3) 77,408 5,338 145,324 233,241 235,879 263,094Income(loss)fromoperations (23,467) (6,272) (90,347) (63,048) 12,478 53,186Totalotherexpense,net (50,291) (855) (126,131) (98,327) (57,083) (52,974)

Income(loss)beforeincometaxesandequityearningsofunconsolidatedentities (73,758) (7,127) (216,478) (161,375) (44,605) 212

Incometaxexpense(benefit) 126 (2,746) (77,203) (3,596) 6,186 11,342

Lossbeforeequityearningsofunconsolidatedentities (73,884) (4,381) (139,275) (157,779) (50,791) (11,130)Equitylossofunconsolidatedentities,netoftax — — 23 2,067 61 14,640

Netloss $ (73,884) $ (4,381) $ (139,298) $ (159,846) $ (50,852) $ (25,770)Netlossattributabletonon-controllinginterest — — — (659) (8,017) —

NetlossattributabletoEnduranceInternationalGroupHoldings,Inc. $ (73,884) $ (4,381) $ (139,298) $ (159,187) $ (42,835) $ (25,770)

NetlosspershareattributabletoEnduranceInternationalGroupHoldings,Inc.basicanddiluted $ (0.05) $ (1.44) $ (1.55) $ (0.34) $ (0.20)

WeightedaveragesharesusedtocomputenetlosspershareattributabletoEnduranceInternationalGroupHoldings,Inc.basicanddiluted 96,370,14 96,562,674 102,698,773 127,512,346 131,340,557

53

Table of Contents

(1) OnDecember22,2011,investmentfundsandentitiesaffiliatedwithWarburgPincusandGoldman,Sachs&Co.acquiredacontrollinginterestinourcompany,whichwe

refertoastheSponsorAcquisition.Ourcompanyisreferredtoasthe“predecessor”forallperiodspriortotheSponsorAcquisitionandisreferredtoasthe“successor”forallperiodsaftertheSponsorAcquisition.

(2) Includesstock-basedcompensationexpenseof$26,000,$126,000,$0.5millionand$2.0million,fortheyearsendedDecember31,2012,2013,2014and2015,respectively.Werecordednostock-basedcompensationexpensetocostofrevenuein2011.Alsoincludesamortizationexpenseof$50.4millionforthepredecessorperiodof2011,$1.7millionforthesuccessorperiodof2011and$88.1million,$105.9million,$102.7millionand$91.1millionfortheyearsendedDecember2012,2013,2014and2015,respectively.

(3) Includesstock-basedcompensationexpenseof$1.0millionforthepredecessorperiodof2011and,$2.3million,$10.6million,$15.5millionand$27.9millionfortheyearsendedDecember31,2012,2013,2014and2015,respectively.

As of December 31, 2011 2012 2013 2014 2015 (in thousands) Consolidated Balance Sheet Data: Cashandcashequivalents $ 16,953 $ 23,245 $ 66,815 $ 32,379 $ 33,030Propertyandequipment,net 12,216 34,604 49,715 56,837 75,762Workingcapital (70,763) (203,853) (160,511) (274,726) (370,335)Totalassets 1,166,213 1,538,136 1,580,938 1,746,043 1,803,490Currentandlong-termdebt 350,000 1,130,000 1,047,375 1,086,875 1,093,375Currentandlong-termcapitalleaseobligations — — — 8,095 13,081Redeemableconvertiblepreferredstock 149,604 — — — —Totalstockholders’equity 652,540 70,155 155,262 174,496 179,674

54

Table of Contents

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

YoushouldreadthefollowingdiscussionofourfinancialconditionandresultsofoperationstogetherwithourconsolidatedfinancialstatementsandtherelatednotesandotherfinancialinformationincludedelsewhereinthisAnnualReportonForm10-K.Thisdiscussioncontainsforward-lookingstatementsthatinvolvesignificantrisksanduncertainties.Asaresultofmanyfactors,suchasthosesetforthinPartI,Item1A.“RiskFactors”ofthisAnnualReportonForm10-K,ouractualresultsmaydiffermateriallyfromthoseanticipatedintheseforward-lookingstatements.

Overview

Wearealeadingproviderofcloud-basedplatformsolutionsdesignedtohelpsmallandmedium-sizedbusinesses,orSMBs,succeedonline.Leveragingourproprietarytechnologyplatform,weserveapproximately4.7millionsubscribersgloballywithacomprehensiveandintegratedsuiteofover150productsandservicesthathelpSMBsgetonline,getfoundandgrowtheirbusinesses.Historically,ourproductsfocusedlargelyonwebhostingandotherbasicwebpresencesolutionssuchasdomains,butovertimewehaveexpandedtooffersecurity,sitebackup,SEOandSEM,GoogleAdwords,mobilesolutions,socialmediaenablement,websiteanalytics,emailmarketingandproductivityande-commercetools,amongothers.Morerecently,wehavelaunchedadditionalproductsandservices,includingwebsitebuilders,mobilesitebuilders,cloudhostingsolutions,premiumdomainsandcloudstoragesolutions,bothtosatisfyexistingsubscriberneedsandtoexpandtheproductgatewaysthroughwhichnewsubscribersinitiallyreachus.

Overour18-yearhistory,wehaverefinedourplatformandouranalyticstocollectinsightsintotheneedsandaspirationsofoursubscribers.Theseinsightsallowustoengageoursubscribersintimelyandcompellingways,drivingsignificantbusinessvalueforthem.Webelievethatourplatformdeliverscloud-basedsolutionsquickly,cost-effectively,reliablyandsecurely.Thesestrengthsandcapabilitieshelpusattractandretainsubscribers,whothendemandadditionalproductsandservicesfromusovertime.

Ourrevenuehasgrownfrom$520.3millionforfiscalyear2013to$629.8millionforfiscalyear2014andto$741.3millionforfiscalyear2015.Thisgrowthinourrevenuewasdrivenbyacquisitionsandbyincreasingproductofferingsandsubscribers.OurnetlossattributabletoEnduranceInternationalGroupHoldings,Inc.was$159.2millionforfiscalyear2013,whichdroppedto$42.8millionforfiscalyear2014,anddroppedfurtherto$25.8millionforfiscalyear2015.Thedecreasesinournetlossareprimarilyattributabletothegrowthinourrevenue,andtoalesserextent,one-timecostsincurredforourinitialpublicofferinginfiscalyear2013.

Recent Developments

ConstantContactAcquisition

OnOctober30,2015,weenteredintoadefinitiveagreementpursuanttowhichweagreedtoacquirealloftheoutstandingsharesofcommonstockofConstantContactfor$32.00pershareincash,foratotalpurchasepriceofapproximately$1.1billion.ConstantContactisaleadingproviderofonlinemarketingtoolsthataredesignedforsmallorganizations,includingsmallbusinesses,associationsandnon-profits.TheacquisitionclosedonFebruary9,2016.

Expectedbenefitsoftheacquisitioninclude:

• Extension of Endurance’s product offerings. WewillincreaseourproductportfolioofsolutionsandintegratedproductsthroughtheadditionofConstantContact’ssuiteofonlinemarketingtoolssuchasemailmarketing,eventmanagement,socialmediaintegrationandcontactmanagementsystems.WeexpecttoofferConstantContact’semailmarketingproductsalongsideourexistingproducts,therebyexpandingourpositionasaleadingproviderofend-to-endwebpresenceandmarketingsolutionsforSMBs.

55

Table of Contents

• Extension of Endurance’s core capabilities. ConstantContacthashistoricallyfocusedheavilyonproductdevelopment,andspecificallyonuserexperience,subscriberanalyticsandengagementmodels.WeexpectthatthecombinationofthisexpertisewithourhistoricfocusonmarketingnetworksanddistributionplatformswillenhanceourstandingasaleaderinonlineSMBservicesasweexpandtoamorecomprehensivesuiteofproductsandservicesforSMBs.

• Continuation of a successful partnership. TheacquisitionwillbuildonourexistingpartnershipwithConstantContact,throughwhichwealready

offertheConstantContactsuiteofproductsalongwithotherproductsandserviceswemakeavailabletooursubscriberbase.Basedontheresultsofthispartnershiptodate,webelievethatthereisconsiderabledemandwithinoursubscriberbaseforConstantContact’ssuiteofproducts.

• Creation of significant operational and financial scale. Weexpectefficienciestocomefromleveragingourfixedcosts,sharingtalentintechnology

andproductdevelopment,thereductionofredundantcostsandthecombineduseofourmarketingchannels.Aswegrowfollowingtheacquisition,weexpecttheseefficienciestosupportlonger-termgrowthandvaluecreationforoursubscribers.

Inconnectionwithandconcurrentlywiththeacquisition,weenteredintoa$735millionincrementalfirstlientermloanfacilityanda$165millionrevolvingcreditfacility(whichreplacedourexisting$125millionrevolvingcreditfacility)andissued$350millionof10.875%seniornotesdue2024.See“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations—LiquidityandCapitalResources”inPartII,Item7ofthisAnnualReportonForm10-KforadditionalinformationonthefinancingtransactionsassociatedwithouracquisitionofConstantContact.

WZUKLtd.Acquisition

OnJanuary6,2016,weexercisedanoptiontoincreaseourstakeinWZUKLtd.,aprovideroftechnologyandsalesmarketingservicesassociatedwithwebbuildersolutions,from49%to57.5%,inexchangeforapaymentofapproximately$2.1milliontotheothershareholdersofWZUKLtd.Subjecttocertainperformancemilestonesbeingmet,wehaveanoptiontopurchase,andtheothershareholdersofWZUKLtd.haveanoptiontoselltouswithinthreeyears,theremainingsharesofWZUKLtd.ataper-sharepricetobedeterminedbasedonamultipleofrevenue.ThenetlossforWZUKLtd.fortheyearendedDecember31,2015was$28.4million,ofwhichourportion,recordedinourstatementofoperations,was$13.9million.OuradjustedEBITDAfortheyearendedDecember31,2015doesnotincludeourproportionateshareofWZUKLtd.’snetloss.AsaresultofourincreasedownershipinWZUKLtd.,wewillconsolidateWZUKLtd.inourfuturefinancialstatementsstartinginthefirstquarterof2016andouradjustedEBITDAwillreflecttheWZUKLtd.netincome(loss).

KeyMetrics

Wedidnotreportmonthlyrecurringrevenue,orMRR,retentionratefiguresinourQuarterlyReportonForm10-QforthethreeandninemonthsendedSeptember30,2014and2015becausewehadidentifiederrorsinourbusinessintelligencesystemthatimpactedMRRandtwoofourotherpreviouslyreportedperformancemetrics,thenumberofproductspersubscriber,orPPS,andthenumberofsubscriberspayingus$500ormoreperyear,or500+Subscribers.Weundertooktorecalculaterevisednumbersforthesemetricsusinganupgradedversionofthebusinessintelligencesystemthatwebelievehascorrectedtheseerrors.TheseerrorsonlyaffectedthesethreeperformancemetricsanddidnotimpactourGAAPfinancialresults,ouradjustedEBITDA,freecashfloworunleveredfreecashflowmetrics,ARPS,ortotalsubscriberfigures.

InJanuary2016,wecompletedourreviewandrecalculationofMRRforallpastperiodsbeginningwiththethreeandninemonthsendedSeptember30,2013anddeterminedthatourpreviouslyreportedMRRfiguresforthoseperiodswillremainat99%.Inaddition,wedeterminedthatMRRforthethreeandninemonthsendedSeptember30,2014and2015was99%.

56

Table of Contents

InFebruary2016,wecompletedourreviewandrecalculationofPPSand500+Subscribersforallpastperiodsbeginningwiththefourthquarterof2013.PreviouslyreportedandrevisedfiguresforPPSand500+Subscribersareshowninthechartsbelow;however,forbothmetrics,thepreviouslyreportedandrevisedfiguresarenotdirectlycomparableduetomultipleinconsistenciesanderrorsinthecalculationsusedtoarriveatthepreviouslyreportedfigures.

(1) BasedondataforourHostGator,BlueHost,iPage,Fatcow,Homestead,ASmallOrangeandDomain.combrandsandthesmallerbrandsthatshareabilling

platformwiththosebrands,whichtogetheraccountedforapproximately80%ofourrevenueforthetwelvemonthsendedDecember31,2015.Previouslydisclosedandrevisedfiguresarenotdirectlycomparableduetoinconsistencieswhichhavebeencorrectedintherevisedfigures.

WedefinePPSasthenumberofproductspurchasedacrossourplatformdividedbyoursubscribersattheendoftheperiod,whetherthoseproductsaresoldinbundlesorindividually,and500+Subscribersasthenumberofsubscriberspayingustheannualizedequivalentof$500ormoreasofthemeasurementdate.ThePPSand500+SubscribersfigurescoverourHostGator,Bluehost,iPage,Fatcow,Homestead,ASmallOrangeandDomain.combrandsandthesmallerbrandsthatshareabillingplatformwiththosebrands,whichtogetheraccountedforapproximately80%ofourrevenuefortheyearendedDecember31,2015.TherevisedPPSand500+Subscriberfiguresreflectcorrectionstoadjustfortheerrorsidentifiedinourbusinessintelligencesystem.Inaddition,therevisedfiguresonlycountsubscriberswhomeetourdefinitionoftotalsubscribersforthecoveredbrands,andreflectaconsistentmethodologyacrossthesebrands.

ThesignificantincreaseinPPSinthefourthquarterof2014isattributabletoanadjustmenttothenumberofourtotalsubscriberstoeliminateinactivecustomersthatwerefirstidentifiedasinactiveinthatquarter.Theimpactofthatadjustmentonourtotalsubscribercountinthatquarterwasoffsetbyourinclusion,beginninginthefourthquarterof2014,ofcustomersofsubscription-basedproductsotherthanourhostedwebpresencesolutions,whichatthattimeconsistedmostlyofsubscriberstoourJDIBackupcloudstorageandbackupproducts.BecauseJDIBackupwasnotamongthebrandscoveredbythePPScalculation,theeliminationoftheinactivecustomersimpactedtherevisedPPSfigures.

57

Table of Contents

DuetothesignificantsizeoftheConstantContactacquisitionandthedifferenceinsubscriberprofilebetweenEnduranceandConstantContact,wewillnolongerreportPPSor500+Subscribersgoingforward.

Non-GAAP Financial Measures and Key Metrics

InadditiontoourfinancialinformationpresentedinaccordancewithGAAP,weusecertain“non-GAAPfinancialmeasures”describedbelowtoevaluatetheoperatingandfinancialperformanceofourbusiness,identifytrendsaffectingourbusiness,developprojectionsandmakestrategicbusinessdecisions.Generally,anon-GAAPfinancialmeasureisanumericalmeasureofacompany’soperatingperformanceorfinancialpositionthatincludesorexcludesamountsthatareincludedorexcludedfromthemostdirectlycomparablemeasurecalculatedandpresentedinaccordancewithGAAP.Wemonitorthenon-GAAPfinancialmeasuresdescribedbelow,andwebelievetheyarehelpfultoinvestors,becausewebelievetheyreflecttheoperatingperformanceofourbusiness,excludingsomerecurringandnon-recurringexpensesthatareincludedinthemostdirectlycomparablemeasurescalculatedandpresentedinaccordancewithGAAP.

Ournon-GAAPfinancialmeasuresmaynotprovideinformationthatisdirectlycomparabletothatprovidedbyothercompaniesinourindustry,asothercompaniesinourindustrymaycalculatenon-GAAPfinancialresultsdifferently,particularlyrelatedtoadjustmentsforintegrationandrestructuringexpenses.Inaddition,therearelimitationsinusingnon-GAAPfinancialmeasuresbecausetheyarenotpreparedinaccordancewithGAAP,maybedifferentfromnon-GAAPfinancialmeasuresusedbyothercompaniesandexcludeexpensesthatmayhaveamaterialimpactonourreportedfinancialresults.Furthermore,interestexpense,whichisexcludedfromsomeofournon-GAAPmeasures,hasbeenandwillcontinuetobefortheforeseeablefutureasignificantrecurringexpenseinourbusiness.Thepresentationofnon-GAAPfinancialinformationisnotmeanttobeconsideredinisolationorasasubstituteforthedirectlycomparablefinancialmeasurespreparedinaccordancewithGAAP.Weurgeyoutoreviewthereconciliationsofournon-GAAPfinancialmeasurestothecomparableGAAPfinancialmeasuresincludedbelow,andnottorelyonanysinglefinancialmeasuretoevaluateourbusiness.

Key Metrics

Weuseanumberofmetrics,includingthefollowingkeymetrics,toevaluatetheoperatingandfinancialperformanceofourbusiness,identifytrendsaffectingourbusiness,developprojectionsandmakestrategicbusinessdecisions:

• totalsubscribers;

• averagerevenuepersubscriber;

• monthlyrecurringrevenueretentionrate;and

• adjustedEBITDA.

Historically,wealsopresentedadjustednetincome,butstartinginthesecondquarterof2015,wenolongerpresentthismeasure.

Thefollowingtablesummarizesthesenon-GAAPfinancialmeasuresandkeymetricsfortheperiodspresented(inthousands,exceptaveragerevenuepersubscriberandmonthlyrecurringrevenueretentionrate):

Year Ended December 31, 2013 2014 2015 Financial and other metrics: Totalsubscribers 3,502 4,087 4,669

Averagesubscribers 3,363 3,753 4,358Averagerevenuepersubscriber $ 13.09 $ 14.48 $ 14.29Monthlyrecurringrevenueretentionrate 99% 99% 99%AdjustedEBITDA $207,931 $235,618 $267,452

58

Table of Contents

Total Subscribers

Wedefinetotalsubscribersasthosethat,asoftheendofaperiod,areidentifiedassubscribingdirectlytoourproductsonapaidbasis,excludingaccountsthataccessoursolutionsviaresellersorthatpurchaseonlydomainnamesfromus.

Historically,incalculatingtotalsubscribers,weincludedthenumberofend-of-periodsubscribersweaddedthroughbusinessacquisitionsasifthosesubscribershadsubscribedwithussincethebeginningoftheperiodpresented.Sincethefirstquarterof2014,wehaveincludedsubscribersweaddedthroughbusinessacquisitionsfromtheclosingdateoftherelevantacquisition.Additionally,inthefourthquarterof2014,wemodifiedourdefinitionoftotalsubscriberstobetterreflectourexpandingproductmixbyincludingpaidsubscriberstoallofoursubscription-basedproducts(otherthanaccountsthataccessoursolutionsviaresellersorthatpurchaseonlydomainnamesfromus,ratherthanlimitingthedefinitiontopaidsubscriberstoourhostedwebpresencesolutions.Subscribersofmorethanonebrandarecountedasseparatesubscribers.Totalsubscribersforaperiodreflectsadjustmentstoaddorsubtractsubscribersasweintegrateacquisitionsand/orareotherwiseabletoidentifysubscribersthatmeet,ordonotmeet,thedefinitionoftotalsubscribers.

Ourtotalsubscriberbaseincreasedfrom3.5millionasofDecember31,2013to4.1millionasofDecember31,2014andto4.7millionasofDecember31,2015.Theincreaseinoursubscriberbaseduring2014wasdrivenprimarilybyword-of-mouthreferrals,ourreferralandresellernetwork,on-boardingsubscribersfromacquisitionsandtheinclusion,commencingwiththefourthquarterof2014,ofsubscriberstoallofoursubscription-basedproducts(otherthanaccountsthataccessoursolutionsviaresellersorthatpurchaseonlydomainnamesfromus)ratherthanjustsubscriberstoourhostedwebpresencesolutions.Oftheapproximately582,000increaseinourtotalsubscriberbasefromDecember31,2014toDecember31,2015,approximately158,000,or27%oftheincrease,consistedofpre-acquisitionsubscriberbasesofcompaniesweacquiredduring2015,andapproximately90,000,or15%oftheincrease,consistedoftheadjustmentsdescribedabove.Thebalanceoftheincreasewasdueprimarilytogrowthinourbusinessandmarketingefforts.

Average Revenue per Subscriber

ARPSisanon-GAAPfinancialmeasurethatwecalculateastheamountofrevenuewerecognizeinaperiod,includingmarketingdevelopmentfundsandotherrevenuenotreceivedfromsubscribers,dividedbytheaverageofthenumberoftotalsubscribersatthebeginningoftheperiodandattheendoftheperiod,whichwerefertoasaveragesubscribersfortheperiod.Historically,weadjustedtheamountofrevenuetoincludetherevenuegeneratedfromsubscribersweaddedthroughbusinessacquisitionsasifthoseacquiredsubscribershadbeenoursubscriberssincethebeginningoftheperiodpresented.Sincethefirstquarterof2014,wehaveincludedtherevenueweaddthroughbusinessacquisitionsfromthedateoftherelevantacquisition.WebelieveARPSisanindicatorofourabilitytooptimizeourmixofproductsandservicesandpricingandsellproductsandservicestonewandexistingsubscribers.Asweon-boardnewsubscribers,wetypicallyon-boardthematintroductoryprices,whichnegativelyimpactsARPS.Furthermore,ARPScanbeimpactedbyouracquisitionssincetheacquiredsubscribersmayhavehigherorlowerthanaverageARPS.

IncalculatingARPS,weincreaserevenueforthe“purchaseaccountingadjustment”foracquisitions,whichrepresentsthereductionofpost-acquisitionrevenuesfromthewrite-downofdeferredrevenuetofairvalueasoftheacquisitiondate.Post-acquisition,deferredrevenuesarerecognizedatthereducedamount,untilsuchtimethatthesubscriptionisrenewed.Theimpactgenerallynormalizeswithinayearfollowingtheacquisition.

ARPSdoesnotrepresentanexactmeasureoftheaverageamountasubscriberspendswithuseachmonth,sinceourcalculationofARPSisimpactedbyrevenuesgeneratedbynon-subscribers.Wehavethreeprincipalsourcesofnon-subscriberrevenue:revenueattributabletocustomerswhopurchaseonlyadomainnamefromusanddonotpurchaseanyotherproducts,ordomain-onlycustomers,domainmonetizationrevenue,andmarketingdevelopmentfunds.

59

Table of Contents

DomainmonetizationrevenueconsistsprincipallyofrevenuefromourBuyDomainsbrand,whichprovidespremiumdomainnameproductsandservices,and,toalesserextent,revenuefromadvertisementsplacedonunuseddomains(oftenreferredtoas“parked”pages)ownedbyusorourcustomers.Historically,thecontributionofdomainmonetizationactivitiestoourrevenueandadjustedrevenuehasbeeninsignificant,buthasbeenincreasingbeginningin2014primarilyduetoouracquisitionofBuyDomainsinSeptember2014.Ourdomainmonetizationrevenue(andadjustedrevenue)was$3.0million,$19.2millionand$39.6millionfortheyearsendedDecember31,2013,2014and2015,respectively,anditsexclusionfromourARPScalculationwouldhaveresultedinARPSbeing$0.07,$0.43and$0.76lowerforthoseperiods,respectively.

Marketingdevelopmentfundsareamountsthatcertainofourpartnerspayustoassistinandincentivizeourmarketingoftheirproducts.Ourmarketingdevelopmentfundrevenue(andadjustedrevenue)was$7.5million,$9.1millionand$13.0millionfortheyearsendedDecember31,2013,2014and2015,respectively,anditsexclusionfromourARPScalculationwouldhaveresultedinARPSbeing$0.19,$0.20and$0.25lowerforthoseperiods,respectively.

Althoughweareabletomeasurethetotalamountofourrevenuefromdomains,wearenotabletofurtherbreakdowndomainrevenueintorevenuefromdomain-onlycustomersversusrevenuefromcustomerswhopurchasedomainsfromusinadditiontootherproducts.Totaladjustedrevenuefromdomainswas$67.1million,$111.9millionand$127.4millionfortheyearsendedDecember31,2013,2014and2015,respectively.

ThefollowingtablesreflectthereconciliationofadjustedrevenuefromdomainstorevenuefromdomainsinaccordancewithGAAP:

Year Ended December 31, 2013 2014 2015 (in thousands) Revenue $66,397 $ 91,300 $125,190Purchaseaccountingadjustment 747 20,561 2,198

Domainadjustedrevenue $67,144 $111,861 $127,388

Aportionofourrevenueisgeneratedfromcustomersthatresellourservices.Werefertothesecustomersas“resellers.”Weconsidertheseresellers(ratherthantheendusercustomersoftheseresellers)tobesubscribersunderourtotalsubscribersdefinition,becausewedonothaveabillingrelationshipwiththeendusersandcannotdeterminethenumberofendusersacquiringourservicesthroughareseller.Additionally,amajorityofourresellerrevenuesareforthepurchaseofdomainsandareincludedinthefiguresforadjustedrevenuefromdomainsshownabove.Totaladjustedrevenuefromresellers,excludingtheportionthatrelatestodomains,fortheyearsendedDecember31,2013,2014and2015was$19.3,$23.9and$25.5million,respectively.

ThefollowingtablesreflectthereconciliationofadjustedrevenuefromresellerstorevenuefromresellersinaccordancewithGAAP:

Year Ended December 31, 2013 2014 2015 (in thousands) Revenue $19,270 $23,525 $25,441Purchaseaccountingadjustment — 350 17

Domainadjustedrevenue $19,270 $23,875 $25,458

FortheyearsendedDecember31,2013and2014,ARPSincreasedfrom$13.09to$14.48,respectively.ThisincreaseinARPSwasdrivenprimarilybyincreasingdemandforoursolutionsandtheacquisitionofDirectiin2014.

60

Table of Contents

FortheyearsendedDecember31,2014and2015,ARPSdecreasedfrom$14.48to$14.29,respectively.ThisdecreaseinARPSwasdrivenprimarilybysubscriberscomingtoourplatformthroughnewgatewayproducts,someofwhicharelowerpricedthanourtraditionalwebpresenceofferings,andbynewsubscribersjoiningusatlowintroductorypricesfortheirfirstyearwithus.Thisdecreasewaspartiallyoffsetbyincreasedrevenuefromnon-subscriberbasedrevenuesuchasdomainmonetizationandmarketingdevelopmentfunds.

ThefollowingtablereflectsthereconciliationofARPStorevenuecalculatedinaccordancewithGAAP.

Year Ended December 31, 2013 2014 2015 (in thousands, except ARPS data) Revenue $ 520,296 $ 629,845 $ 741,315Purchaseaccountingadjustment 7,311 22,100 5,724Pre-acquisitionrevenuefromacquiredproperties 512 — —

Adjustedrevenue $ 528,119 $ 651,945 $ 747,039

Totalsubscribers 3,502 4,087 4,669Averagesubscribersfortheperiod 3,363 3,753 4,358ARPS $ 13.09 $ 14.48 $ 14.29

Monthly Recurring Revenue Retention Rate

Webelievethatourabilitytoretainrevenuefromoursubscribersisanindicatorofthelong-termvalueofoursubscriberrelationshipsandthestabilityofourrevenuebase.Toassessourperformanceinthisarea,wemeasureourMRRretentionratewhichreflectsbothsubscriberchurnandadditionalrevenuefromexistingsubscribersduetorenewals,upsellsandpricechanges.WecalculateMRRretentionrateattheendofaperiodbytakingtheretainedrecurringvalueofsubscriptionrevenueofallactivesubscribersofourmajorbrandsattheendofthepriorperiodanddividingitintotheretainedrecurringvalueofsubscriptionrevenueforthosesamesubscribersattheendoftheperiodpresented.ThebrandsincludedinthiscalculationareourHostGator,Bluehost,iPage,Fatcow,Homestead,ASmallOrangeandDomain.combrandsandthesmallerbrandsthatshareabillingplatformwiththosebrands,whichtogetheraccountedforapproximately80%ofourrevenuefortheyearendedDecember31,2015.AnumberofourrecentlyacquiredandinternationalbrandsarenotincludedinMRR,includinginparticularourDirectibrandsandourJDIBackupcloudstoragebrands,becausethesebrandshavenotyetbeenintegratedintoourbusinessintelligencesystemandwearenotabletoproduceadequatelyreliableMRRdataforthem.MRRforaperiodispresentedasarollingaverageofMRRforthemostrecentfourquarters.WebelieveMRRretentionrateisanindicatorofourabilitytoretainexistingsubscribers,upsellproductsandservicestothemandmaintainsubscribersatisfaction.MRRcanbeimpactedbyfactorssuchassubscriberchurn,newsubscriberadditions,increasesinpricingandproductuptake.

OurMRRretentionratewas99%forallperiodspresented.

Adjusted EBITDA

AdjustedEBITDAisanon-GAAPfinancialmeasurethatwecalculateasnetincome(loss)plus(i)changesindeferredrevenue,depreciation,amortization,stock-basedcompensationexpense,lossofunconsolidatedentities,netlossonsaleofassets,expensesrelatedtointegrationofacquisitionsandrestructurings,transactionexpensesandcharges,includingpreparationforourIPOandanydividend-relatedpaymentsaccountedforascompensationexpense,certainlegaladvisoryexpenses,interestexpenseandincometaxexpense,less(ii)earningsofunconsolidatedentities,netgainonsaleofassetsandtheimpactofpurchaseaccountingrelatedtoreducedfairvalueofdeferreddomainregistrationcosts.WeviewadjustedEBITDAasaperformancemeasure.Duetoourhistoryofacquisitionsandfinancings,wehaveincurredandwillcontinuetoincurchargesforintegration,restructuringandtransactionexpensesthatprimarilyrelatetotheprocessofacquiringanotherbusinessandintegratingthatbusinessintooursupportand/ortechnicalplatforms.Webelievethatadjustingfor

61

Table of Contents

theseitemsisusefultoinvestorsinevaluatingthepost-integrationperformanceofourcompany.Wemanageourbusinessbasedonthecashcollectedfromoursubscribersandthecashrequiredtoacquireandservicethosesubscribers.Webelievehighlightingcashcollectedandcashspentinagivenperiodprovidesinsighttoaninvestortogaugetheoverallperformanceofourbusiness.UnderGAAP,althoughsubscriptionfeesarepaidinadvance,werecognizetheassociatedrevenueoverthesubscriptionterm,whichdoesnotfullyreflectshort-termtrendsinouroperatingresults.Inordertocapturethesetrendsandreportourperformanceconsistentlywithhowwemanageourbusiness,weincludethechangeindeferredrevenuefortheperiodinourcalculationofadjustedEBITDAforthatperiod.

ThefollowingtablereflectsthereconciliationofadjustedEBITDAtonetlosscalculatedinaccordancewithGAAPfortheperiodspresented. Year Ended December 31, 2013 2014 2015 (in thousands) Netloss $ (159,846) $ (50,852) $ (25,770)Stock-basedcompensation 10,763 16,043 29,925(Gain)lossonsaleofassets 309 (168) (155)Lossofunconsolidatedentities(1) 2,067 61 9,200Amortizationofotherintangibleassets 105,915 102,723 91,057Amortizationofdeferredfinancingcosts 2,768 83 82Changesindeferredrevenue(2) 51,047 67,654 34,241Impactofreducedfairvalueofdeferreddomainregistrationcosts — (18,782) (2,005)Transactionexpensesandcharges(3) 45,036 4,787 9,582Integrationandrestructuringexpenses 45,594 19,927 16,262Legaladvisoryexpenses(4) — — 1,349Depreciation 18,615 30,956 34,010Incometaxexpense (3,596) 6,186 11,342Interestexpense,net(excludingimpactofamortizationofdeferredfinancingcosts) 89,259 57,000 58,332

Adjusted EBITDA $ 207,931 $ 235,618 $ 267,452

(1) ThelossofunconsolidatedentitiesisreportedonanetbasisfortheyearendedDecember31,2015.TheyearendedDecember31,2015includesour

proportionateshareofnetlossesfromunconsolidatedentitiesof$14.6million,partiallyoffsetbythe$5.4milliongainfortheredemptionofourequityinterestinWorldWideWebHosting(Site5).

(2) Changesindeferredrevenuewerehigherin2014,primarilyduetothepurchaseaccountingadjustmentrelatedtotheacquisitionofDirecti.(3) Includesloanprepaymentpenaltyof$6.3millionfortheyearendedDecember31,2014,whichisincludedininterestexpenseintheconsolidatedstatements

ofoperationsandcomprehensiveloss.(4) ConsistsoflegalandrelatedadvisoryexpensesassociatedwithmattersthatarethesubjectofaclassactionlawsuitfiledagainstusinMay2015andtheSEC

subpoenareceivedbyusinDecember2015.

62

Table of Contents

ThefollowingtableprovidesareconciliationofnetinterestexpenseincludedintheadjustedEBITDAtableabovetothenetinterestexpenseinourconsolidatedstatementsofoperationsandcomprehensiveloss. Year Ended December 31, 2013 2014 2015 (in thousands) Interestexpense,net(excludingimpactofdeferredfinancingcosts) $89,259 $57,000 $58,332Amortizationofdeferredfinancingcosts 2,768 83 82Transactionexpense—loanprepaymentpenalty 6,300 — —Otherincome — — (5,440)

Totalotherexpense,netinconsolidatedstatementsofoperationsandcomprehensiveloss $98,327 $57,083 $52,974

Netlossdecreasedfrom$159.8millionfortheyearendedDecember31,2013to$50.8millionfortheyearendedDecember31,2014primarilyasaresultofourrevenuegrowth,includingrevenuegrowthassociatedwithacquisitions.Additionally,weincurredlowercostsforacquisition,integrationandrestructuringexpenses,anddidnotincurtheIPOcostsincurredinthe2013period.Netlossdecreasedfrom$50.8millionfortheyearendedDecember31,2014to$25.8millionfortheyearendedDecember31,2015primarilyasaresultofourrevenuegrowth,includingrevenuegrowthassociatedwithacquisitions.

AdjustedEBITDAincreasedfrom$207.9millionfortheyearendedDecember31,2013to$235.6millionfortheyearendedDecember31,2014.TheseincreasesinadjustedEBITDAwereprimarilyaresultofourrevenuegrowth,includingrevenuegrowthassociatedwithacquisitions,increasesinthenumberofsubscribersonourplatformandachievinggreaterscalebenefits.During2014thisgrowthwasimpactedbyourincreasedinvestmentsinmarketingandbytheadditionalcostsweincurredrelatedtobeingapubliccompany.

AdjustedEBITDAincreasedfrom$235.6millionfortheyearendedDecember31,2014to$267.5millionfortheyearendedDecember31,2015.ThisincreaseinadjustedEBITDAwasprimarilyaresultofourrevenuegrowth,includingrevenuegrowthassociatedwithacquisitionsandareductioninmarketingexpensesaswereducedmarketingspendforcertainproducts,includingcloudstorageproducts,asoursubscriberbasebecamemorefamiliarwiththeseproducts.Theimpactofthesefactorswaspartiallyoffsetbyincreasedinvestmentinourdatacenterandsubscribersupportinfrastructureandincreasesinengineeringanddevelopmentexpenseandgeneralandadministrativeexpense.

Components of Operating Results

Revenue

Wegeneraterevenueprimarilyfromsellingsubscriptionsforourcloud-basedproductsandservices.Thesubscriptionsweofferaresimilaracrossallofourbrandsandareprovidedundercontractspursuanttowhichwehaveongoingobligationstosupportthesubscriber.Thesecontractsaregenerallyforserviceperiodsofupto36monthsandtypicallyrequirepaymentinadvanceatthetimeofinitiatingthesubscriptionfortheentiresubscriptionperiod.Typically,wealsohavearrangementsinplacetoautorenewasubscriptionattheendofthesubscriptionperiod.Duetofactorssuchasintroductorypricing,ourrenewalfeesmaybehigherthanourinitialsubscription.Wesellmoresubscriptionswith12monthtermsthanwithanyothertermlength.Wealsoearnrevenuefromthesaleofdomainnameregistrations,premiumdomainsandnon-termbasedproductsandservices,suchascertainonlinesecurityproductsandprofessionaltechnicalservicesaswellasthroughreferralfeesandcommissions.Weexpectourrevenuetoincreaseinfutureperiodsasweexpandoursubscriberbase,includingthroughacquisitions,andtherolloutofnewsubscriberacquisitionchannelssuchaswebbuildersandmobileapplications.

63

Table of Contents

Cost of Revenue

Costofrevenueincludescostsofoperatingoursubscribersupportorganization,feeswepaytoregisterdomainnamesforoursubscribers,costsofoperatingourdatacenterinfrastructure,suchastechnicalpersonnelcostsassociatedwithmonitoringandmaintainingournetworkoperations,feeswepaytothird-partyproductandserviceproviders,andmerchantfeeswepayaspartofourbillingprocesses.Wealsoallocatetocostofrevenuethedepreciationandamortizationrelatedtotheseactivitiesandtheintangibleassetswehaveacquired,aswellasaportionofouroverheadcostsattributabletoouremployeesengagedinsubscribersupportactivities.Inaddition,costofrevenueincludesstock-basedcompensationexpenseforemployeesengagedinsupportandnetworkoperations.Weexpectcostofrevenuetoincreaseinabsolutedollarsinfutureperiodsasweexpandoursubscriberbase,increaseourlevelsofsubscribersupport,expandourdomainnamebusinessandadddatacentercapacity.Costofrevenuemayincreaseordecreaseasapercentageofrevenueinagivenperiod,dependingonourabilitytomanageourinfrastructurecosts,inparticularwithrespecttodatacentersandsupport,theamountofthird-partyproductandservicesthatwesellandasaresultofouramortizationexpenserelatedtoacquisitions.

Gross Profit

Grossprofitisthedifferencebetweenrevenueandcostofrevenue.Grossprofithasfluctuatedfromperiodtoperiodinlargepartasaresultofrevenueandcostofrevenueadjustmentsfrompurchaseaccountingimpactsrelatedtoacquisitions,aswellasrevenueandcostofrevenueimpactsfromgrowthinourbusiness.Withrespecttorevenue,theapplicationofpurchaseaccountingrequiresustorecordpurchaseaccountingadjustmentsforacquireddeferredrevenue,whichreducestherevenuerecordedfromacquisitionsforaperiodoftimeaftertheacquisition.Theimpactgenerallynormalizeswithinayearfollowingtheacquisition.Withrespecttocostofrevenue,theapplicationofpurchaseaccountingrequiresustodeferdomainregistrationcosts,whichreducescostofrevenue,andrecordlong-livedassetsatfairvalue,whichincreasescostofrevenuethroughanincreaseinamortizationexpenseovertheestimatedusefullifeofthelong-livedassets.Inaddition,ourrevenueandourcostofrevenuehaveincreasedinrecentyearsasoursubscriberbasehasexpanded.Foranewsubscriberthatwebringontoourplatform,wetypicallyrecognizerevenueoverthetermofthesubscription,eventhoughwecollectthesubscriptionfeeattheinitialbilling.Asaresult,ourgrossprofitmaybeaffectedbythepriceswechargeforoursubscriptions,aswellasbythenumberofnewsubscribersandthetermsoftheirsubscriptions.Weexpectourgrossprofittoincreaseinabsolutedollarsinfutureperiodswhileourgrossprofitmarginmayincreaseordecrease.

Operating Expense

Weclassifyouroperatingexpenseintothreecategories:salesandmarketing,engineeringanddevelopment,andgeneralandadministrative.AlthoughouroperatingexpenseswillincreaseasaresultoftheConstantContactacquisition,weareplanningapproximately$55.0millionofannualrunratecostreductionsforthecombinedbusiness,whichweexpectwillbeimplementedbytheendof2016,withamajorityofthosecostreductionsimpactingoperatingexpenses.Inconnectionwiththesecostreductionplans,weexpecttoincurapproximately$18.0millionto$22.0millionofrestructuringcharges,consistingofseveranceandfacilityexitrelatedcharges.Asignificantmajorityoftherestructuringchargewillbeincurredinfiscalyear2016.

Sales and Marketing

Salesandmarketingexpenseprimarilyconsistsofcostsassociatedwithbountypaymentstoournetworkofonlinepartners,SEMandSEO,generalawarenessandbrandbuildingactivities,aswellasthecostofemployeesengagedinsalesandmarketingactivities.Salesandmarketingexpensealsoincludescostsassociatedwithsalesofproductsaswellasstock-basedcompensationexpenseforemployeesengagedinsalesandmarketingactivities.Salesandmarketingexpenseasapercentageofrevenuemayincreaseordecreaseinagivenperiod,dependingonthecostofattractingnewsubscriberstooursolutions,changesinhowweinvestindifferentsubscriberacquisitionchannels,changesinhowweapproachsearchenginemarketingandsearchengine

64

Table of Contents

optimizationandtheextentofgeneralawarenessandbrandbuildingactivitieswemayundertake,aswellastheefficiencyofoursalesandsupportpersonnelandourabilitytosellmoreproductsandservicestooursubscribersanddrivefavorablereturnsoninvestedmarketingdollars.

Engineering and Development

Engineeringanddevelopmentexpenseincludesthecostofemployeesengagedinenhancingourtechnologyplatformandoursystems,developingandexpandingproductandserviceofferings,andintegratingtechnologycapabilitiesfromouracquisitions.Engineeringanddevelopmentexpenseincludesstock-basedcompensationexpenseforemployeesengagedinengineeringanddevelopmentactivities.Ourengineeringanddevelopmentexpensedoesnotincludecostsofleasingandoperatingourdatacenterinfrastructure,suchastechnicalpersonnelcostsassociatedwithmonitoringandmaintainingournetworkoperationsandfeeswepaytothird-partyproductandserviceproviders,whichareincludedincostofrevenue.

General and Administrative

Generalandadministrativeexpenseincludesthecostofemployeesengagedincorporatefunctions,suchasfinance,humanresources,legalaffairsandgeneralmanagement.Generalandadministrativeexpensealsoincludesallfacilityandrelatedoverheadcostsnotallocatedtocostofrevenue,aswellasinsurancepremiumsandprofessionalservicefees.WeincurredadditionalexpensesinpreparingforourIPOduring2013andwillcontinuetoincurexpensesassociatedwithbeingapubliclytradedcompanyandduetoourexpansionintointernationalterritories,includingincreasedlegal,corporateinsurance,taxandaccountingexpenses,andtheadditionalcostsofmaintainingcompliancewithSection404oftheSarbanes-OxleyActandotherregulations.Generalandadministrativeexpenseincludesstock-basedcompensationexpenseforemployeesengagedingeneralandadministrativeactivities.

Other Income (Expense)

Otherincome(expense)consistsprimarilyofcostsrelatedto,andinterestpaidon,ourindebtedness.Weincludethecashcostofinterestpaymentsandloanfinancingfees,theamortizationofdeferredfinancingcostsandtheamortizationofthenetpresentvalueadjustmentwhichwemayapplytosomedeferredconsiderationpaymentsrelatedtoouracquisitionsinourcalculationofinterestexpense.Interestincomeconsistsprimarilyofinterestincomeearnedonourcashandcashequivalentsbalances.Ourinterestexpensemayincreaseinfutureperiodsifwecontinuetofinanceacquisitionsthroughtheissuanceofdebt.WeexpectourinterestexpensetoincreaseinfutureperiodsasaresultofthefinancingtransactionsweenteredintoinconnectionwithouracquisitionofConstantContact.Otherincome(expense)alsoincludesgainsorlossesrecognizedoninvestmentsinunconsolidatedentities.

Income Tax Expense (Benefit)

Weestimateourincometaxesinaccordancewiththeassetandliabilitymethod,underwhichdeferredtaxassetsandliabilitiesarerecognizedbasedontemporarydifferencesbetweentheassetsandliabilitiesinourconsolidatedfinancialstatementsandthefinancialstatementsthatarepreparedinaccordancewithtaxregulationsforthepurposeoffilingourincometaxreturns,usingstatutorytaxrates.Thismethodologyrequiresustorecordavaluationallowanceagainstnetdeferredtaxassetsif,basedupontheavailableevidence,itismorelikelythannotthatsomeorallofthedeferredtaxassetswillnotberealized.

Critical Accounting Policies and Estimates

WeprepareourconsolidatedfinancialstatementsinaccordancewithU.S.GAAP.Thepreparationofourconsolidatedfinancialstatementsrequiresustomakeestimates,judgmentsandassumptionsthataffectthereportedamountsofassetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateofthe

65

Table of Contents

consolidatedfinancialstatementsandthereportedamountsofrevenueandexpenseduringthereportedperiods.Webaseourestimates,judgmentsandassumptionsonhistoricalexperienceandonvariousotherassumptionsthatwebelievetobereasonableunderthecircumstances,theresultsofwhichformthebasisformakingjudgmentsaboutthecarryingvaluesofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Ouractualresultsmaydifferfromtheestimates,judgmentsandassumptionsmadebyourmanagement.Totheextentthattherearedifferencesbetweenourestimates,judgmentsandassumptionsandouractualresults,ourfuturefinancialstatementpresentation,financialcondition,resultsofoperationsandcashflowsmaybeaffected.

Webelievethatthefollowingsignificantaccountingpolicies,whicharemorefullydescribedinthenotestoourconsolidatedfinancialstatementsincludedelsewhereinthisAnnualReportonForm10-K,involveagreaterdegreeofjudgmentandcomplexity.Accordingly,thesearethepolicieswebelievearethemostcriticaltoaidinfullyunderstandingandevaluatingourfinancialconditionandresultsofoperations.Webelievethatourcriticalaccountingpoliciesandestimatesaretheassumptionsandestimatesassociatedwiththefollowing:

• revenuerecognition,

• goodwill,

• long-livedassets,

• derivativeinstruments,

• depreciationandamortization,

• incometaxes,and

• stock-basedcompensationarrangements.

Revenue Recognition

Wegeneraterevenueprimarilyfromsellingsubscriptionstoourcloud-basedproductsandservices.Thesubscriptionsweofferaresimilaracrossallofourbrandsandareprovidedundercontractspursuanttowhichwehaveongoingobligationstosupportthesubscriber.Thesecontractsaregenerallyforserviceperiodsofupto36monthsandtypicallyrequirepaymentinadvance.Werecognizetheassociatedrevenueratablyovertheserviceperiod,whethertheassociatedrevenueisderivedfromadirectsubscriberorthroughareseller.Deferredrevenuerepresentstheliabilitytosubscribersforadvancebillingsforservicesnotyetprovidedandthefairvalueoftheassumedliabilityoutstandingforsubscriberrelationshipspurchasedinanacquisition.

Weselldomainnameregistrationsthatprovideasubscriberwiththeexclusiveuseofadomainname.Thesedomainsareobtainedeitherbyoneofourregistrarsonthesubscriber’sbehalf,orbyusfromthird-partyregistrarsonthesubscriber’sbehalf.Domainregistrationfeesarenon-refundable.

Revenuefromthesaleofadomainnameregistrationbyoneofourregistrarsisrecognizedratablyoverthesubscriber’sserviceperiodaswehavetheobligationtoprovidesupportoverthedomainterm.Revenuefromthesaleofadomainnameregistrationpurchasedbyusfromathird-partyregistrarisrecognizedwhenthesubscriberisbilledonagrossbasisaswehavenoremainingobligationsoncethesaletothesubscriberoccurs,andwehavefulldiscretiononthesalespriceandbearallcreditrisk.

Revenuefromthesaleofpremiumdomainsisrecognizedwhenpersuasiveevidenceofanarrangementtosellsuchdomainsexists,deliveryofanauthorizationkeytoaccessthedomainnamehasoccurred,thefeeforthesaleofthepremiumdomainisfixedordeterminable,andcollectionofthefeeforthesaleofthepremiumdomainisdeemedprobable.

66

Table of Contents

Wealsoearnrevenuefromthesaleofnon-termbasedproductsandservices,suchasonlinesecurityproductsandprofessionaltechnicalservices,referralfeesandcommissions.Werecognizesuchrevenuewhentheproductispurchased,theserviceisprovidedorthereferralfeeorcommissionisearned.

Asubstantialamountofourrevenueisgeneratedfromtransactionsthataremultiple-elementservicearrangementsthatmayincludehostingplans,domainnameregistrations,andothercloud-basedproductsandservices.

WefollowtheprovisionsoftheFinancialAccountingStandardsBoard,orFASB,AccountingStandardsUpdateNo.2009-13,orASU2009-13,RevenueRecognition(Topic605),Multiple-DeliverableRevenueArrangements—aconsensusoftheFASBEmergingIssuesTaskForceandallocaterevenuetoeachdeliverableinamultiple-elementservicearrangementbasedonitsrespectiverelativesellingprice.

UnderASU2009-13,totreatdeliverablesinamultiple-elementservicearrangementasseparateunitsofaccounting,thedeliverablesmusthavestandalonevalueupondelivery.Ifthedeliverableshavestandalonevalueupondelivery,weaccountforeachdeliverableseparately.Hostingservices,domainnameregistrations,cloud-basedproductsandserviceshavestandalonevalueandareoftensoldseparately.

Whenmultipledeliverablesincludedinamultiple-elementservicearrangementareseparatedintodifferentunitsofaccounting,thetotaltransactionamountisallocatedtotheidentifiedseparateunitsbasedonarelativesellingpricehierarchy.Wedeterminetherelativesellingpriceforadeliverablebasedonvendorspecificobjectiveevidence,orVSOE,offairvalue,ifavailable,orbestestimateofsellingprice,orBESP,ifVSOEisnotavailable.Wehavedeterminedthatthird-partyevidenceofsellingprice,orTPE,isnotapracticalalternativeduetodifferencesinourmulti-brandofferingscomparedtocompetitorsandtheavailabilityofrelevantthird-partypricinginformation.WehavenotestablishedVSOEforourofferingsduetolackofpricingconsistency,theintroductionofnewproducts,servicesandotherfactors.Accordingly,wegenerallyallocaterevenuetothedeliverablesinthearrangementbasedontheBESP.WedetermineBESPbyconsideringourrelativesellingprices,competitivepricesinthemarketplaceandmanagementjudgment;thesesellingprices,however,mayvarydependingupontheparticularfactsandcircumstancesrelatedtoeachdeliverable.Weanalyzethesellingpricesusedinourallocationoftransactionamount,ataminimum,onaquarterlybasis.Sellingpriceswillbeanalyzedonamorefrequentbasisifasignificantchangeinourbusinessnecessitatesamoretimelyanalysis.

Wemaintainareserveforrefundsandchargebacksrelatedtorevenuethathasbeenrecognizedandisexpectedtoberefunded.Wehadarefundandchargebackreserveof$0.6millionand$0.5millionasofDecember31,2014and2015,respectively.TheportionofdeferredrevenuethatisexpectedtoberefundedatDecember31,2014and2015was$2.2millionand$1.8million,respectively.Basedonrefundhistory,approximately80%ofallrefundshappeninthesamefiscalmonththatthecustomercontractstartsorrenews,andapproximately92%ofallrefundshappenwithin45daysofthecontractstartorrenewaldate.

Goodwill

Goodwillrelatestoamountsthataroseinconnectionwithourvariousacquisitionsandrepresentsthedifferencebetweenthepurchasepriceandthefairvalueoftheidentifiableintangibleandtangiblenetassetswhenaccountedforusingthepurchasemethodofaccounting.Goodwillisnotamortized,butissubjecttoperiodicreviewforimpairment.Eventsthatwouldindicateimpairmentandtriggeraninterimimpairmentassessmentinclude,butarenotlimitedto,currenteconomicandmarketconditions,adeclineintheequityvalueofthebusiness,asignificantadversechangeincertainagreementsthatwouldmateriallyaffectreportedoperatingresults,businessclimateoroperationalperformanceofthebusinessandanadverseactionorassessmentbyaregulator.

InaccordancewithAccountingStandardsUpdateNo.2011-08,orASU2011-08,Intangibles—GoodwillandOther(Topic350)TestingGoodwillforImpairment,wearerequiredtoreviewgoodwillbyreportingunitfor

67

Table of Contents

impairmentatleastannuallyormoreoftenifthereareindicatorsofimpairmentpresent.UnderU.S.GAAP,areportingunitiseithertheequivalentof,oronelevelbelow,anoperatingsegment.Wehavedeterminedthatweoperateinonesegmentandourentirebusinessrepresentsonereportingunit.Changesinoperationsmaycauseustoevaluateourconclusiononoperatingsegmentsandreportingunits.Historically,wehaveperformedourannualimpairmentanalysisduringthefourthquarterofeachyear.TheprovisionsofASU2011-08requireustoperformatwo-stepimpairmenttestforgoodwill.Inthefirststep,wecomparethefairvalueofeachreportingunittowhichgoodwillhasbeenallocatedtoitscarryingvalue.Ifthefairvalueofthereportingunitexceedsthecarryingvalueofthenetassetsassignedtothatreportingunit,goodwillisconsiderednotimpairedandwearenotrequiredtoperformfurthertesting.Ifthecarryingvalueofthenetassetsassignedtothereportingunitexceedsthefairvalueofthereportingunit,thenwemustperformthesecondstepoftheimpairmenttesttodeterminetheimpliedfairvalueofthereportingunit’sgoodwill.Ifthecarryingvalueofareportingunit’sgoodwillexceedsitsimpliedfairvalue,thenwerecordanimpairmentlossequaltothedifference.Wehaveassessedfairvaluebasedoncurrentmarketcapitalization.AsofDecember31,2014and2015,thefairvalueofourreportingunitexceededthecarryingvalueofthereportingunit’snetassetsand,therefore,noimpairmentexistedasofthesedates.

AsofDecember31,2015,wehadgoodwillof$1,207.3million.WedidnotrecognizeanyimpairmentsofgoodwillintheyearsendedDecember31,2013,2014or2015.

Long-Lived Assets

Ourlong-livedassetsconsistprimarilyofintangibleassets,includingacquiredsubscriberrelationships,tradenames,intellectualproperty,developedtechnology,domainnamesavailableforsaleandin-processresearchanddevelopment,orIPR&D.Wealsohavelong-livedtangibleassets,primarilyconsistingofpropertyandequipment.Themajorityofourintangibleassetshavebeenrecordedinconnectionwithouracquisitions,includingtheSponsorAcquisitiondescribedbelow.Werecordintangibleassetsatfairvalueatthetimeoftheiracquisition.Weamortizeintangibleassetsovertheirestimatedusefullives.

Ourdeterminationoftheestimatedusefullivesoftheindividualcategoriesofintangibleassetsisbasedonthenatureoftheapplicableintangibleassetandtheexpectedfuturecashflowtobederivedfromtheintangibleasset.Weamortizeintangibleassetswithfinitelivesinaccordancewiththeirestimatedprojectedcashflows.

Weevaluatelong-livedintangibleandtangibleassetswhenevereventsorchangesincircumstancesindicatethatthecarryingamountofanassetmaynotberecoverable.Ifindicatorsofimpairmentarepresentandundiscountedfuturecashflowislessthanthecarryingamount,thenwedeterminethefairvalueoftheassetsandcompareittothecarryingvalue.Ifthefairvalueislessthanthecarryingvalue,thenwereducethecarryingvaluetotheestimatedfairvalueandrecordanimpairmentlossintheperioditisidentified.Wedidnotrecognizeanyimpairmentsoflong-livedintangibleandtangibleassetsintheyearsendedDecember31,2013,2014or2015.

Indefinitelifeintangiblesincludedomainnamesthatareavailableforsalewhicharerecordedatcosttoacquire.Theseassetsarenotbeingamortizedandarebeingtestedforimpairmentannuallyandwhenevereventsorchangesincircumstanceindicatethattheircarryingvaluemaynotberecoverable.Whenadomainnameissold,werecordthecostofthedomainincostofrevenue.

AcquiredIPR&D,representsthefairvalueassignedtoresearchanddevelopmentthatweacquirethathasnotbeencompletedatthedateofacquisition.TheacquiredIPR&Discapitalizedasanintangibleassetandreviewedonaquarterlybasistodeterminefutureuse.AnyimpairmentlossoftheacquiredIPR&Dischargedtoexpenseintheperiodtheimpairmentisidentified.Uponcommercialization,theacquiredfairvalueoftheIPR&Dwillbeamortizedoveritsusefullife.NosuchimpairmentlosseshavebeenidentifiedduringtheyearsendedDecember31,2013,2014or2015.

68

Table of Contents

Derivative Instruments

AccountingStandardsCodification815,orASC815,DerivativesandHedging,providesthedisclosurerequirementsforderivativesandhedgingactivitieswiththeintenttoprovideusersoffinancialstatementswithanenhancedunderstandingof:(a)howandwhyanentityusesderivativeinstruments,(b)howtheentityaccountsforderivativeinstrumentsandrelatedhedgeditems,and(c)howderivativeinstrumentsandrelatedhedgeditemsaffectanentity’sfinancialposition,financialperformance,andcashflows.Further,qualitativedisclosuresarerequiredthatexplainourobjectivesandstrategiesforusingderivatives,aswellasquantitativedisclosuresaboutthefairvalueofandgainsandlossesonderivativeinstruments,anddisclosuresaboutcredit-risk-relatedcontingentfeaturesinderivativeinstruments.

AsrequiredbyASC815,werecordallderivativesonthebalancesheetatfairvalue.Theaccountingforchangesinthefairvalueofderivativesdependsontheintendeduseofthederivative,whetherwehaveelectedtodesignateaderivativeinahedgingrelationshipandapplyhedgeaccountingandwhetherthehedgingrelationshiphassatisfiedthecriterianecessarytoapplyhedgeaccounting.Derivativesdesignatedandqualifyingasahedgeoftheexposuretochangesinthefairvalueofanasset,liability,orfirmcommitmentattributabletoaparticularrisk,suchasinterestraterisk,areconsideredfairvaluehedges.Derivativesdesignatedandqualifyingasahedgeoftheexposuretovariabilityinexpectedfuturecashflows,orothertypesofforecastedtransactions,areconsideredcashflowhedges.Derivativesmayalsobedesignatedashedgesoftheforeigncurrencyexposureofanetinvestmentinaforeignoperation.Hedgeaccountinggenerallyprovidesforthematchingofthetimingofgainorlossrecognitiononthehedginginstrumentwiththerecognitionofthechangesinthefairvalueofthehedgedassetorliabilitythatareattributabletothehedgedriskinafairvaluehedgeortheearningseffectofthehedgedforecastedtransactionsinacashflowhedge.Wemayenterintoderivativecontractsthatareintendedtoeconomicallyhedgecertainofitsrisk,eventhoughhedgeaccountingdoesnotapplyorweelectnottoapplyhedgeaccounting.

InaccordancewiththeFASB’sfairvaluemeasurementguidanceinAccountingStandardsUpdateNo.2011-04,orASU2011-04,FairValueMeasurement(Topic820),wemadeanaccountingpolicyelectiontomeasurethecreditriskofourderivativefinancialinstrumentsthataresubjecttomasternettingagreementsonanetbasisbycounterpartyportfolio.

Depreciation and Amortization

Wepurchaseorbuildtheserversweplaceinourdatacenters,whichweoccupypursuanttovariousleaseorco-locationarrangements.Wealsopurchasethecomputerequipmentthatisusedbyoursupportandsalesteamsandemployeesinouroffices.Wecapitalizethebuild-outofourfacilitiesasleaseholdimprovements.Costofrevenueincludesdepreciationondatacenterequipmentandsupportinfrastructure.Wealsoincludedepreciationingeneralandadministrativeexpense,whichincludesdepreciationonofficeequipmentandleaseholdimprovements.

Amortizationexpenseconsistsofexpenserelatedtotheamortizationofintangiblelong-livedassets.Inconnectionwithouracquisitions,weallocatefairvaluetoacquiredlong-livedintangibleassets,whichincludesubscriberrelationships,tradenamesanddevelopedtechnology.Weuseestimatesandvaluationtechniquestodeterminetheestimatedusefullivesofourintangibleassetsandamortizethemtocostofrevenue.

Income Taxes

WeprovideforincometaxesinaccordancewithAccountingStandardsCodification740,orASC740,AccountingforIncomeTaxes.Werecognizedeferredtaxassetsandliabilitiesforthefuturetaxconsequencesattributabletodifferencesbetweenthefinancialstatementcarryingamountsofexistingassetsandliabilitiesandtheirrespectivetaxbasesandoperatinglossandtaxcreditcarry-forwards.Wemeasuredeferredtaxassetsand

69

Table of Contents

liabilitiesusingenactedtaxratesthatweexpecttoapplytotaxableincomeintheyearsinwhichweexpectthosetemporarydifferencestoberecoveredorsettled.Werecognizetheeffectofchangesintaxratesondeferredtaxassetsandliabilitiesintheperiodthatincludestheenactmentdate.

ASC740clarifiestheaccountingforincometaxes,byprescribingaminimumrecognitionthresholdthatataxpositionisrequiredtomeetbeforebeingrecognizedinthefinancialstatements.Werecognizetheeffectofincometaxpositionsonlyifthosepositionsaremorelikelythannottobesustained.Wemeasurerecognizedincometaxpositionsatthelargestamountthatismorelikelythannottoberealized.Wereflectchangesinrecognitionormeasurementintheperiodinwhichthechangeinjudgmentoccurs.TherewerenounrecognizedtaxbenefitsintheyearsendedDecember31,2013,2014or2015.

Werecordinterestrelatedtounrecognizedtaxbenefitsininterestexpenseandpenaltiesinoperatingexpense.WedidnotrecognizeanyinterestorpenaltiesrelatedtounrecognizedtaxbenefitsduringtheyearsendedDecember31,2013,2014or2015.

In2013and2014,asignificantamountofourGAAPforeignlossesweregeneratedbyoursubsidiariesorganizedintheUnitedKingdomandtheUnitedArabEmirates,ortheU.A.E.In2013and2014,theforeignratedifferentialpredominantlyrelatestothesejurisdictions.Ourforeignratedifferentialin2014hasanegativeimpactonourexpectedbenefitsincethemajorityoftheforeignlossesaregeneratedinjurisdictionswherethestatutorytaxrateislowerthantheU.S.statutoryrate–specificallytheUnitedKingdom,whichhasastatutorytaxrateof20%andrepresents$22.5millionofourforeignlosses,andtheU.A.E.,whichhasastatutorytaxrateof0%andrepresents$6.2millionofourforeignlosses.

In2015,asignificantamountofourGAAPforeignlossesweregeneratedbyoursubsidiariesintheU.A.E.andIsrael.Theforeignratedifferentialin2015predominantlyrelatedtothesejurisdictions.Ourforeignratedifferentialin2015hadanegativeimpactonourexpectedtaxexpensesincethemajorityoftheforeignlossesaregeneratedinjurisdictionswherethestatutorytaxrateislowerthantheU.S.statutoryrate–specificallytheU.A.E.,whichhasastatutorytaxrateof0%andrepresents$2.4millionofourforeignlosses,andIsrael,whichhasastatutorytaxrateof26.5%andrepresents$2.5millionofourforeignlosses.

WedescribeouraccountingtreatmentoftaxesmorefullyinNote14ofthenotestotheconsolidatedfinancialstatementsinthisAnnualReportonForm10-K.

Stock-Based Compensation Arrangements

AccountingStandardsCodification718,orASC718,Compensation—StockCompensation,requiresemployeestock-basedpaymentstobeaccountedforunderthefairvaluemethod.Underthismethod,wearerequiredtorecordcompensationcostbasedontheestimatedfairvalueforstock-basedawardsgrantedovertherequisiteserviceperiodsfortheindividualawards,whichgenerallyequalsthevestingperiods.Weusethestraight-lineamortizationmethodforrecognizingstock-basedcompensationexpense.

WeestimatethefairvalueofemployeestockoptionsonthedateofgrantusingtheBlack-Scholesoption-pricingmodel,whichrequirestheuseofhighlysubjectiveestimatesandassumptions.ForrestrictedstockawardsgrantedbyusweestimatethefairvalueofeachrestrictedstockawardbasedontheclosingtradingpriceofourcommonstockasreportedontheNASDAQGlobalSelectMarketonthedateofgrant.TherewasnopublicmarketforourcommonstockpriortoOctober25,2013,thedateourcommonstockbegantradingontheNASDAQGlobalSelectMarket,andasaresult,thetradinghistoryofourcommonstockwaslimitedthroughDecember31,2015.Therefore,wedeterminedthevolatilityforoptionsgrantedbyusbasedonananalysisofreporteddataforapeergroupofcompaniesthatissuedoptionswithsubstantiallysimilarterms.Theexpectedvolatilityofoptionsgrantedbyushasbeendeterminedusinganaverageofthehistoricalvolatilitymeasuresofthispeergroupofcompanies.Theexpectedlifeassumptionisbasedonthe“simplifiedmethod”forestimatingexpectedtermaswedonothavesufficienthistoricaloptionexercisestosupportareasonableestimateoftheexpectedterm.Therisk-freeinterestrateisbasedonatreasuryinstrumentwhosetermisconsistentwiththe

70

Table of Contents

expectedlifeofthestockoptions.Weuseanexpecteddividendrateofzeroaswecurrentlyhavenohistoryorexpectationofpayingdividendsonourcommonstock.Inaddition,wehaveestimatedexpectedforfeituresofoptions.Ifouractualforfeitureratevariesfromourestimate,additionaladjustmentstocompensationexpensemayberequiredinfutureperiods.

GiventheabsenceofanactivetradingmarketforourcommonstockpriortothecompletionofourIPO,thefairvalueoftheequityinterestsunderlyingourstock-basedawardswasdeterminedbymanagement.Indoingso,valuationanalyseswerepreparedinaccordancewiththeguidelinesoutlinedintheAmericanInstituteofCertifiedPublicAccountantsPracticeAid,ValuationofPrivately-Held-CompanyEquitySecuritiesIssuedasCompensation,andwereusedbyourmanagementtoassistindeterminingthefairvalueoftheequityinterestsunderlyingourstock-basedawards.Eachequityinterestwasgrantedwitha“thresholdamount”meaningthattherecipientofanequitysecurityonlyparticipatedtotheextentthattheentityappreciatedinvaluefromandafterthedateofgrantoftheequityinterest(withthevalueoftheentityasofthegrantdatebeingthe“thresholdamount”).Theassumptionsusedinthevaluationmodelswerebasedonfutureexpectationscombinedwithmanagement’sjudgment.Intheabsenceofapublictradingmarket,ourmanagementexercisedsignificantjudgmentandconsiderednumerousobjectiveandsubjectivefactorstodeterminethefairvalueofthestock-basedawardsasofthedateofeachaward.Thesefactorsincluded:

• contemporaneousorretrospectivevaluationsforourcompanyandoursecurities;

• therights,preferences,andprivilegesofthestock-basedawardsrelativetoeachotheraswellastotheexistingshareholders;

• lackofmarketabilityofourequitysecurities;

• historicaloperatingandfinancialperformance;

• ourstageofdevelopment;

• currentbusinessconditionsandprojections;

• hiringofkeypersonnelandtheexperienceofourmanagementteam;

• risksinherenttothedevelopmentofourproductsandservicesanddeliveryofoursolutions;

• trendsanddevelopmentsinourindustry;

• thethresholdamountforthestock-basedawardsandthevaluesatwhichthestock-basedawardswouldvest;

• themarketperformanceofcomparablepubliclytradedcompanies;

• likelihoodofachievingaliquidityevent,suchasaninitialpublicofferingoramergeroracquisitionofourcompanygivenprevailingmarketconditions;and

• U.S.andglobaleconomicandcapitalmarketconditions.

Impact of Sponsor Acquisition

OnDecember22,2011,investmentfundsandentitiesaffiliatedwithWarburgPincusandGoldman,Sachs&Co.acquiredacontrollinginterestinourcompany,whichwerefertoastheSponsorAcquisition.Asaresult,ourconsolidatedfinancialstatementspresentouroperatingresultsandcashflowsseparatelyforperiodspriortoandaftertheSponsorAcquisition.Ourcompanyisreferredtoasthe“predecessor”forallperiodspriortotheSponsorAcquisitionandisreferredtoasthe“successor”forallperiodsaftertheSponsorAcquisition.Thetablesbelowsummarizeouroperatingresultsforallperiodspresentedinourconsolidatedfinancialstatements.

Theapplicationofpurchaseaccountingrequiredustorecordallacquiredassetsandliabilities,includingdeferredrevenue,deferredcostsandlong-livedassets,atfairvalue,whichinsomecaseswasdifferentthantheirbookvalues.Thetotalimpactofthepurchaseaccountingtreatmentonourlossfromoperationsresultingfrom

71

Table of Contents

theSponsorAcquisitionfortheyearsendedDecember31,2013,2014and2015was$26.7million,$25.9millionand$35.4million,respectively.Theseimpactsconsistedofthefollowingcomponents:

• Impact on Revenue. Weassessedthefairvalueofacquireddeferredrevenuetobe$57.5million,representingadecreaseof$73.2millionfromits$130.7millionbookvalue.Theeffectofrecordingdeferredrevenuetofairvaluewastoreducerevenueinsuccessorperiods.TheimpacttorevenuefortheyearsendedDecember31,2013and2014was$5.8millionand$0.5million,respectively.TheimpacttorevenuefortheyearendedDecember31,2015andfutureperiodsisdeminimis.

• Impact on Cost of Revenue. Inconjunctionwithrecordingdeferredrevenueatfairvalue,werecordedrelateddeferreddomainregistrationcostsatfairvalue,resultingina$13.6milliondecreaseindeferredcostsinsuccessorperiods.TheimpactoncostofrevenuefromdeferringdomainregistrationcostsfortheyearsendedDecember31,2013,2014and2015was$1.0million,$0.2millionand$0.1million,respectively.Inourassessmentoffairvalueofacquiredlong-livedassets,werecordedthefairvalueofourdevelopedtechnologyat$167.0million,representinganincreaseof$160.1millionfromabookvalueof$6.9million.Thisincreaseisbeingamortizedonastraight-linebasisovertenyears.Inaddition,werecordedthefairvalueofoursubscriberrelationshipsandtradenamesat$221.4million,representinganincreaseof$104.2millionfromabookvalueof$117.2million.Thisincreaseisbeingamortizedovertento15years.Theeffectofrecordinglong-livedassetsatfairvaluewasanincreaseinamortizationexpensetoberecognizedinsuccessorperiods.TheimpactoncostofrevenuefromamortizingthechangestoacquiredlonglivedassetsfortheyearsendedDecember31,2013,2014and2015was$21.8million,$25.7millionand$35.6million,respectively.

ThefollowingtablesetsforththeimpactoftheapplicationofpurchaseaccountingfromtheSponsorAcquisitionasdescribedabove: Year Ended December 31, 2013 2014 2015 (in thousands) RevenuethatwouldhavebeenrecognizedfromDecember21,2011bookvalueofdeferredrevenue $(16,000) $ (2,917) $ —Revenuerecognizedbasedonfairvalueofacquireddeferredrevenue 10,160 2,461 —

Totalimpacttorevenue $ (5,840) $ (456) $ —

Impactofreducedfairvalueofdeferreddomainregistrationcosts (978) (241) (144)Amortizationimpact:

AmortizationthatwouldhavebeenrecognizedfromDecember21,2011bookvalueoflong-livedassets (32,705) (20,899) (4,764)Amortizationonfairvalueofacquiredlong-livedassetsrecorded 54,541 46,634 40,354

Totalamortizationimpact 21,836 25,735 35,590

Totalimpacttocostofrevenue 20,858 25,494 35,446

Totalimpacttolossfromoperations $(26,698) $(25,950) $(35,446)

72

Table of Contents

Results of Operations

Thefollowingtablessetforthourresultsofoperationsfortheperiodspresented.Theperiod-to-periodcomparisonoffinancialresultsisnotnecessarilyindicativeoffutureresults. Year Ended December 31, 2013 2014 2015 (in thousands) Revenue $ 520,296 $ 629,845 $ 741,315Costofrevenue 350,103 381,488 425,035

Grossprofit 170,193 248,357 316,280

Operatingexpense: Salesandmarketing 117,689 146,797 145,419Engineeringanddevelopment 23,205 19,549 26,707Generalandadministrative 92,347 69,533 90,968

Totaloperatingexpense 233,241 235,879 263,094

Income(loss)fromoperations (63,048) 12,478 53,186

Otherincome(expense) (98,327) (57,083) (52,974)

Income(loss)beforeincometaxesandequityearningsofunconsolidatedentities (161,375) (44,605) 212Incometaxexpense(benefit) (3,596) 6,186 11,342

Lossbeforeequityearningsofunconsolidatedentities (157,779) (50,791) (11,130)

Equitylossofunconsolidatedentities,netoftax 2,067 61 14,640

Netloss $ (159,846) $ (50,852) $ (25,770)

Netlossattributabletonon-controllinginterest (659) (8,017) —

NetlossattributabletoEnduranceInternationalGroupHoldings,Inc. $ (159,187) $ (42,835) $ (25,770)

Comparison of the Years Ended December 31, 2014 and 2015

Revenue

Year Ended December 31, Change 2014 2015 Amount % (dollars in thousands) Revenue $629,845 $741,315 $111,470 18%

Revenueincreasedby$111.5million,or18%,from$629.8millionfortheyearendedDecember31,2014to$741.3millionfortheyearendedDecember31,2015.Ofthisincrease,$49.4millionisattributabletorevenues,includinggrowthandsynergies,fromtheacquisitionsofbusinessesthatwerenotpartofourbusinessforallormostoftheyearendedDecember31,2014.Theremainingbalanceoftheincrease,or$62.1million,isattributableprimarilytothegrowthofourbusiness,andtoalesserextent,otherfactors,includingprincipallythe$14.8millionimpactofthepurchaseaccountingadjustmentfortheDirectiacquisition.

Ourrevenuesaregeneratedprimarilyfromourproductsandservicesdeliveredonasubscriptionbasis,whichincludewebhosting,domains,websitebuilders,searchenginemarketingandothersimilarservices.Wealsogeneratenon-subscriptionrevenuesthroughdomainmonetizationandmarketingdevelopmentfunds.Non-subscriptionrevenuesincreasedfrom$28.3million,or4%oftotalrevenuefortheyearendedDecember31,2014to$52.6million,or7%ofrevenuefortheyearendedDecember31,2015.Theincreasenon-subscriptionrevenuesisprimarilyduetotheacquisitionsofDirectiandBuyDomains.

73

Table of Contents

Cost of Revenue Year Ended December 31, 2014 2015 Change

Amount % of

Revenue Amount % of

Revenue Amount % (dollars in thousands) Costofrevenue $381,488 61% $425,035 57% $43,547 11%

Costofrevenueincreasedby$43.5million,or11%,from$381.5millionfortheyearendedDecember31,2014to$425.0millionfortheyearendedDecember31,2015.Ofthisincrease,domainregistrationcostsincreasedby$32.5million,partiallyduetothepurchaseaccountingimpactofDirectifortheyearendedDecember31,2014andinclusionofdomainregistrationcostsrelatedtobusinessesthatweacquiredthatwerenotpartofourbusinessformostoftheyearendedDecember31,2014.Inaddition,supportexpensesincreasedby$10.8millionduetoacquisitionssubsequenttoDecember31,2014andinvestmentinnewandexistingbrands,datacenterexpensesincreasedby$6.1millionduetoacquisitions,subscribergrowthandpriceincreasesundercertainofourdatacentercontracts,depreciationexpenseincreasedby$2.0million,stock-basedcompensationexpenseincreasedby$1.4millionandmerchantfeesincreasedby$2.4million.Theseincreaseswerepartiallyoffsetbyan$11.7milliondecreaseinamortizationexpense.

Ourcostofrevenuecontainsasignificantportionofnon-cashexpenses,inparticularamortizationexpensefortheintangibleassetswehaveacquiredthroughouracquisitionsandtheSponsorAcquisition.Thefollowingtablesetsforththesignificantnon-cashcomponentsofcostofrevenue.

Year Ended December 31, 2014 2015 (in thousands) Amortizationexpense $ 102,723 $ 91,057Depreciationexpense 29,007 31,170Stock-basedcompensationexpense 547 1,975

Gross Profit Year Ended December 31, 2014 2015 Change

Amount % of

Revenue Amount % of

Revenue Amount % (dollars in thousands) Grossprofit $248,357 39% $316,280 43% $67,923 27%

Grossprofitincreasedby$67.9million,or27%,from$248.4millionfortheyearendedDecember31,2014to$316.3millionfortheyearendedDecember31,2015.Approximately$56.2millionoftheincreasewasprimarilyattributabletoincreasesinoursubscriberbase,includingacquiredsubscribers.Additionally,$11.7millionwasattributabletoanetdecreaseinamortizationexpense.Ourgrossprofitasapercentageofrevenueincreasedbyfourpercentagepointsfrom39%fortheyearendedDecember31,2014to43%fortheyearendedDecember31,2015.Thisincreasewasprimarilyattributabletoloweramortizationofintangibleassets,whichdecreasedto12%ofrevenuefortheyearendedDecember31,2015ascomparedto16%fortheyearendedDecember31,2014.

74

Table of Contents

Thefollowingtablesetsforthgrossprofitandthesignificantnon-cashcomponentsofcostofrevenueasapercentageofrevenue:

Year Ended December 31, 2014 2015 (dollars in thousands) Revenue $629,845 $741,315Grossprofit 248,357 316,280Grossprofit%ofrevenue 39% 43%Amortizationexpense%ofrevenue 16% 12%Depreciationexpense%ofrevenue 5% 4%Stock-basedcompensationexpense%ofrevenue * *

* Lessthan1%.

Operating Expense Year Ended December 31, 2014 2015 Change

Amount % of

Revenue Amount % of

Revenue Amount % (dollars in thousands) Salesandmarketing $146,797 23% $145,419 20% $ (1,378) (1)%Engineeringanddevelopment 19,549 3% 26,707 4% 7,158 37%Generalandadministrative 69,533 11% 90,968 12% 21,435 31%

Total $235,879 37% $263,094 35% $27,215 12%

Sales and Marketing. Salesandmarketingexpensedecreasedby$1.4million,or1%,from$146.8millionfortheyearendedDecember31,2014to$145.4millionfortheyearendedDecember31,2015.Thedecreaseinsalesandmarketingexpensewasprimarilyattributabletolowerintroductoryproductmarketingspendforcertainproducts,includingcloudstorageproducts,asoursubscriberbasebecamemorefamiliarwiththeseproducts.Weexpecttoincreasemarketingexpenseintheneartermbyinvestinginnewmarketingprograms.

Engineering and Development. Engineeringanddevelopmentexpenseincreasedby$7.2million,or37%,from$19.5millionfortheyearendedDecember31,2014to$26.7millionfortheyearendedDecember31,2015.Ofthisincrease,$5.2millionwasduetoanincreaseinpayrollandbenefitstosupportthegrowthinourbusiness,$1.1millionwasduetoanincreaseinstock-basedcompensationexpense,$1.2millionwasduetoconsultingcostsincurredinconnectionwithourrestructuringactivitiesand$0.5millionwasduetoanincreaseindepreciationexpense,partiallyoffsetbya$0.8millionreductioninintegrationandrestructuringcosts.

General and Administrative. Generalandadministrativeexpenseincreasedby$21.4million,or31%,from$69.5millionfortheyearendedDecember31,2014to$90.9millionfortheyearendedDecember31,2015.Theyear-over-yearincreaseconsistedofa$3.9millionincreaseinpersonnelandfacilitiesrelatedcoststosupportthegrowthofourbusiness,a$9.7millionincreaseinstock-basedcompensation,ofwhich$5.9millionisrelatedtothegrantofaperformance-basedrestrictedstockawardtoourchiefexecutiveofficer.Inaddition,theincreaseingeneralandadministrativeexpenseincludes$1.3millionofadditionallegaladvisoryexpense,a$5.5millionincreaseintransactionexpensesprimarilyduetotheacquisitionofConstantContact,$0.7millionoffollow-onofferingexpensesincurredonbehalfofthesellingstockholdersduringtheMarch2015follow-onofferinganda$0.3millionincreaseindepreciationexpense.

75

Table of Contents

Other Income (Expense), Net

Year Ended December 31, Change

2014 2015 Amount % (dollars in thousands) Otherexpense,net $ (57,083) $ (52,974) $ 4,109 7%

Otherexpense,netdecreasedby$4.1million,or7%,from$57.1millionfortheyearendedDecember31,2014to$53.0millionfortheyearendedDecember31,2015.Thisdecreaseisprimarilyduetoa$5.4milliongainasaresultoftheredemptionofourequityinterestinWorldWideWebHostinganda$0.1milliondecreaseininterestexpenserelatedtocapitalleaseobligations.Thedecreasewaspartiallyoffsetbya$0.5millionincreaseininterestexpenserelatedtoamountsdrawndownonourrevolvingcreditfacilityduringtheyearendedDecember31,2015ascomparedwiththeyearendedDecember31,2014and$1.1millionofaccretionofpresentvalueforthedeferredconsiderationrelatedtotheWebzai,BuyDomainsandAceacquisitions.

Income Tax Expense (Benefit)

Year Ended December 31, Change

2014 2015 Amount % (dollars in thousands) Incometaxexpense $6,186 $11,342 $ 5,156 83%

Incometaxexpenseincreasedby$5.2million,or83%,from$6.2millionfortheyearendedDecember31,2014to$11.3millionfortheyearendedDecember31,2015.Theincreaseconsistedofanetincreaseinourdeferredtaxexpenseof$3.5millionandanetincreaseinourcurrentfederal,stateandforeignincometaxexpenseof$1.7million.ThenetincreaseinourdeferredtaxexpensefromDecember31,2014toDecember31,2015wasprimarilyattributabletoa$9.9millionincreaseinfederal,stateandforeigndeferredtaxexpense,partiallyoffsetbya$6.4milliondecreaseinprovisionsforthevaluationallowance.IntheyearendedDecember31,2015,wehadnondeductibleexpensesprimarilyrelatedtostock-basedcompensation,transactioncosts,otherforeignpermanentdifferencesandanontaxablegainontheredemptionofourequityinterestinWorldWideWebHosting.

Comparison of the Years Ended December 31, 2013 and 2014

Revenue

Year Ended December 31, Change 2013 2014 Amount % (dollars in thousands) Revenue $520,296 $629,845 $109,549 21%

Revenueincreasedby$109.5million,or21%,from$520.3millionfortheyearendedDecember31,2013to$629.8millionfortheyearendedDecember31,2014.Ofthisincrease,$31.3millionwasrelatedtorevenuesfromouracquisitionofDirectiand$78.2millionwasprimarilyduetoanincreaseinsubscribersincludingacquiredsubscribersonourplatformasweexpandedlead-inproductssuchasback-upandstorageandfocusedourmarketingonattractingnewsubscribers,andsellingmoreofourproductssuchasourwebpresencebundle,domains,siteback-up,securityandSEO/SEMsolutions.Inaddition,increasesinpricespaidbyoursubscribersatrenewalsorafterexpirationofpromotionalperiodscontributedtotheincreaseinrevenues.Consistentwithourplans,aswecompletedtheintegrationofthe2012acquisitionsofHostGatorandHomesteadontoourintegratedtechnologyplatform,wewereabletoincreaseourmarketingspendtodriveadditionalsubscribersignupsandalsoenhancethepromotionofourproductsandservicesthroughimprovedbusinessinsightandanalyticsofferedthroughtheintegratedtechnologyplatform.

76

Table of Contents

Cost of Revenue Year Ended December 31, 2013 2014 Change

Amount % of

Revenue Amount % of

Revenue Amount % (dollars in thousands) Costofrevenue $350,103 67% $381,488 61% $31,385 9%

Costofrevenueincreasedby$31.4million,or9%,from$350.1millionfortheyearendedDecember31,2013to$381.5millionfortheyearendedDecember31,2014.Ofthisincreaseof$31.4million,$28.5millionwasattributabletotheacquisitionofDirecti,includinganamortizationchargeof$6.0millionandadepreciationchargeof$0.7million.Inaddition,depreciationexpenseincreasedby$11.1millionto$28.3millionexcludingthedepreciationchargeattributabletoDirectiwhiledomainregistrationcostsincreasedby$5.7millionandcostsattributabletothird-partyproductsandservicesincreasedby$6.3million.Stock-basedcompensationexpenseincreasedbyapproximately$0.4millionfrom$0.1millionfortheyearendedDecember31,2013to$0.5millionfortheyearendedDecember31,2014.Inaddition,werecorded$1.8millionoffacilitiescostsassociatedwithclosingourofficeinEnglewood,Coloradoanda$0.5millionseverancecharge.Theseincreaseswerepartiallyoffsetbyadecreaseindatacenterexpensesof$7.7millionandsupportexpensesof$6.0million,ineachcaseresultingfromthemigrationofHostGatorandHomesteadsubscribersontoourplatform,aswellasa$9.2milliondecreaseinamortizationexpensefrom$105.9millionto$96.7million,excludingtheamortizationchargeof$6.0millionattributabletoDirecti.

Ourcostofrevenuecontainsasignificantportionofnon-cashexpenses,inparticularamortizationexpensefortheintangibleassetswehaveacquiredthroughouracquisitionsandtheSponsorAcquisition.Thefollowingtablesetsforththesignificantnon-cashcomponentsofcostofrevenue.

Year Ended December 31, 2013 2014 (in thousands) Amortizationexpense $ 105,915 $ 102,723Depreciationexpense 17,216 29,007Stock-basedcompensationexpense 126 547

Gross Profit Year Ended December 31, 2013 2014 Change

Amount % of

Revenue Amount % of

Revenue Amount % (dollars in thousands) Grossprofit $170,193 33% $248,357 39% $78,164 46%

Grossprofitincreasedby$78.2million,or46%,from$170.2millionfortheyearendedDecember31,2013to$248.4millionfortheyearendedDecember31,2014.Ourgrossprofitasapercentageofrevenueincreasedbysixpercentagepointsfrom33%fortheyearendedDecember31,2013to39%fortheyearendedDecember31,2014.Approximately$77.3millionoftheincrease,wasattributabletoincreasesinoursubscriberbase,includingacquiredsubscribers,oursaleofadditionalproductsandservices,increasesinpricespaidbyoursubscribersatrenewalsorafterexpirationofpromotionalperiodsandouracquisitionofDirectiinJanuary2014.Additionally,$3.2millionwasattributabletoanetdecreaseinamortizationexpense.Theincreaseinourgrossprofitwaspartiallyoffsetby$1.8millionoffacilitiescostsassociatedwithclosingourofficeinEnglewood,Coloradoand$0.5millionofseverancechargesincurredduringtheyearendedDecember31,2014.

77

Table of Contents

Thefollowingtablesetsforthgrossprofitandthesignificantnon-cashcomponentsofcostofrevenueasapercentageofrevenue:

Year Ended December 31, 2013 2014 (dollars in thousands) Revenue $520,296 $629,845Grossprofit 170,193 248,357Grossprofit%ofrevenue 33% 39%Amortizationexpense%ofrevenue 20% 16%Depreciationexpense%ofrevenue 3% 5%Stock-basedcompensationexpense%ofrevenue * *

* Lessthan1%.

Operating Expense Year Ended December 31, 2013 2014 Change

Amount % of

Revenue Amount % of

Revenue Amount % (dollars in thousands) Salesandmarketing $117,689 23% $146,797 23% $ 29,108 25%Engineeringanddevelopment 23,205 4% 19,549 3% (3,656) (16)%Generalandadministrative 92,347 18% 69,533 11% (22,814) (25)%

Total $233,241 45% $235,879 37% $ 2,638 1%

Sales and Marketing. Salesandmarketingexpenseincreasedby$29.1million,or25%,from$117.7millionfortheyearendedDecember31,2013to$146.8millionfortheyearendedDecember31,2014.Inadditiontoinvestinginmarketingexpensefortheacquisitionofnewsubscribers,wehaveincreasedourinvestmentinproductmarketing.Theincreaseinsalesandmarketingspendisprimarilyattributabletoanincreaseof$26.8millioninproductmarketingspend,$1.2millioninstock-basedcompensationexpense,and$0.5millionindepreciationexpense.Inaddition,netpayrollandcommissionexpenseincreasedby$0.3millionfortheyearendedDecember31,2014aswechangedourcommissionstructure,andwealsoincurred$0.3millionofseverancechargesasaresultofourimplementationofplanstoconsolidatedsalesandmarketingoperations.

Engineering and Development. Engineeringanddevelopmentexpensedecreasedby$3.7million,or16%,from$23.2millionfortheyearendedDecember31,2013to$19.5millionfortheyearendedDecember31,2014.Ofthisdecrease,$5.8millionwasduetoareductioninintegrationandrestructuringcostsaswecompletedourintegrationof2012acquisitionsattheendof2013,and$3.2millionwasduetocapitalizingcertainsoftwaredevelopmentcostsinconnectionwithourinvestmentinimprovementstoourinfrastructureandtechnologyplatform.Thiswaspartiallyoffsetby$2.5millionofadditionalexpenserelatedtoourexpansionofourinternationalfootprint,a$1.2millionincreaseinpayrollandbenefitsanda$0.6millionincreaseinstock-basedcompensationexpensefrom$0.3millionfortheyearendedDecember31,2013to$0.9millionfortheyearendedDecember31,2014.Inaddition,werecorded$1.0millionofseverancechargesfortheyearendedDecember31,2014asaresultofourimplementationofplanstoconsolidateourengineeringanddevelopmentoperations.

General and Administrative. Generalandadministrativeexpensedecreasedby$22.8million,or25%,from$92.3millionfortheyearendedDecember31,2013to$69.5millionfortheyearendedDecember31,2014.Theyearoveryeardecreaseconsistedofa$9.1milliondecreaseintransactionexpensesandadecreaseof$23.6

78

Table of Contents

millionrelatedtobonuspaymentsmadein2013inconnectionwithourIPO,partiallyoffsetbyanincreaseinstock-basedcompensationof$3.1millionfrom$9.9millionfortheyearendedDecember31,2013to$13.0millionfortheyearendedDecember31,2014,anincreaseof$6.0milliontosupportthegrowthofourbusinessandanincreaseof$0.8millioninseveranceandrelatedfacilitiescostsassociatedwiththeclosureofourRedwoodCity,Californiaoffices.

Net Interest Expense

Year Ended December 31, Change

2013 2014 Amount % (dollars in thousands) Netinterestexpense $(98,327) $ (57,083) $41,244 42%

Netinterestexpensedecreasedby$41.2million,or42%,from$98.3millionfortheyearendedDecember31,2013to$57.1millionfortheyearendedDecember31,2014.Ofthisdecrease,$33.6millionisduetolowerinterestexpenseresultingfromourdebtrefinancingactivitiesinNovember2013,whichloweredouraggregatenotespayableandoureffectiveinterestrate.Wealsoincurred$6.3millionofdebtprepaymentfeesin2013thatwedidnothavein2014.Thedecreaseisalsoduetoa$1.7millionreductionintheaccretionofpresentvalueforthedeferredconsiderationanddeferredbonuspaymentsrelatedtotheHostGatoracquisition,paidinJanuary2014,whichwasoffsetbyaccretionof$0.2millionforthepresentvalueforthedeferredconsiderationin2014relatedtotheWebzaiandBuyDomainsacquisitions,anda$0.3millionreductioninotherinterestexpense.Thesedecreaseswerepartiallyoffsetby$0.5millionrelatedtocapitalizedleaseobligationswhichwereenteredintoduringtheyearendedDecember31,2014.

Income Tax Expense (Benefit)

Year Ended December 31, Change

2013 2014 Amount % (dollars in thousands) Incometaxexpense(benefit) $(3,596) $6,186 $ 9,782 272%

TheexpenseforincometaxesfortheyearendedDecember31,2014decreasedby$9.8million,or272%,froma$3.6millionbenefitfortheyearendedDecember31,2013toa$6.2millionexpensefortheyearendedDecember31,2014.Thedecreaseconsistedofanetincreaseinourstateandforeignincometaxexpenseof$1.4millionandanetincreaseinourdeferredtaxexpenseof$8.4million.ThedecreaseinourdeferredtaxbenefitfromDecember31,2013toDecember31,2014wasprimarilyattributabletothedifferentbookandtaxtreatmentforgoodwillandintangibleassetsrecordedduetoacquisitions.Weexpecttocontinuetoincurdeferredtaxexpensesinthenearterm.IntheyearendedDecember31,2014,wehadnondeductibleexpensesprimarilyrelatedtostock-basedcompensation,transactioncostsandotherforeignpermanentdifferences.

Liquidity and Capital Resources

Sources of Liquidity

Wehavefundedouroperationssinceinceptionprimarilywithcashflowgeneratedbyoperations,borrowingsunderourcreditfacilitiesandpublicofferingsofoursecurities.Betweentheendof2011andourIPO,weraisedadditionaldebtthroughaseriesofrefinancings.Historically,wehaveuseddebtprimarilytofinanceouracquisitionrelatedactivities.During2014and2015,weusedborrowingsunderourrevolvingcreditfacilitytohelpmeetourfundingrequirementsforouracquisitionsandminorityinvestments.Weexpecttocontinuetouseourrevolvingcreditfacilityforsimilarinvestingandfinancingactivities.InOctober2013,weclosedourIPOandreceivednetproceedsof$232.1million,afterdeductingunderwritingdiscountsand

79

Table of Contents

commissionsandofferingexpensespayablebyus.OnNovember25,2013,weincreasedourrevolvingcreditfacilityto$125.0millionandenteredintoanewfirstlientermloanfacilityof$1,050.0million.Theproceedsofthenewfirstlientermloanfacility,togetherwithaportionofthenetproceedsfromourIPO,wereusedtorefinanceourexistingfirstandsecondlientermloanfacilities,whichreducedouroverallindebtednessby$148.8millionto$1,050.0million.InNovember2014,weraisedfundsfromthesaleof3,000,000sharesofourcommonstockinourfollowonoffering,andreceivednetproceedsof$41.1million,afterdeductingunderwritingdiscountsandcommissionsandofferingrelatedexpensespayablebyus.Weusedaportionofthenetproceedstoreducetheoutstandingbalanceofourrevolvingcreditfacilityand$15.2milliontofundourinvestmentina40%ownershipinterestinAppMachine.

During2015,wepaid5.00%interestonourfirstlientermloan,whichisbasedonadjustedLIBORplus400basispoints,subjecttoaLIBORfloorof1.00%,andbetween7.75%and8.50%interestonourrevolvingcreditfacilityborrowings.AsofDecember31,2015,theLIBOR-basedinterestratesonourfirstlientermloanfacilityandrevolvingcreditfacilitywere5.00%and7.75%.During2015,wewererequiredtomakequarterlyprincipalrepaymentsof$2.6millionunderourfirstlientermloanfacility.

AsofDecember31,2015,wehadcashandcashequivalentstotaling$33.0millionandnegativeworkingcapitalof$370.3million,whichincludedthe$10.5millioncurrentportionofthefirstlientermloanfacility,and$67.0milliondrawnunderour$125.0millionrevolvingcreditfacility.Inaddition,wehadapproximately$1,015.9millionoflongtermindebtednessoutstandingunderourfirstlientermloanfacility,whichmaturesonNovember9,2019.Wealsohad$365.6millionofshort-termandlong-termdeferredrevenue,whichisnotexpectedtobepayableincash.

Constant Contact Acquisition

InconnectionwithouracquisitionofConstantContactonFebruary9,2016,weenteredintoa$735millionincrementalfirstlientermloanfacilityandanew$165millionrevolvingcreditfacility,andourwhollyownedsubsidiaryEIGInvestorsissued$350millionaggregateprincipalamountof10.875%seniornotesdue2024.Werefertotheincrementalfirstlientermloanfacilityandnewrevolvingcreditfacility,togetherwithourpreviouslyexistingfirstlientermloanfacility,asthe“SeniorCreditFacilities,”andtothe10.875%seniornotesdue2024asthe“Notes”.

IncrementalFirstLienTermLoanFacility

OnFebruary9,2016,weenteredintoanincrementalfirstlientermloanamendmenttoourexistingcreditagreement.Pursuanttothisamendment,weobtainedaseven-year$735millionincrementalfirstlientermloanfacility,whichisinadditiontoourexistingfirstlientermloanfacility.Thefullamountofthisincrementalfirstlientermloanfacilitywasdrawnimmediatelyfollowingtheeffectivenessoftheamendment.

Thisincrementalfirstlientermloanfacilitywillmatureinsevenyears,wasissuedatapriceof97%ofpar(subjecttothepaymentofanadditionalupfrontfeeof1.0%onFebruary28,2016undercertaincircumstances),bearsinterestatarateofLIBORplus5.0%perannum,subjecttoaLIBORfloorof1.0%perannum,andhasscheduledamortizationof0.50%perquarter.

Asaresultofthe“most-favorednation”pricingprovisioninourexistingcreditagreement,theinterestrateonourexistingfirstlientermloanfacilityhasincreasedtoLIBORplus5.23%perannum(andwillfurtherstepuptoLIBORplus5.48%perannumonFebruary28,2016undercertaincircumstances),subjecttoaLIBORfloorof1.0%perannum.Inaddition,weareobligatedtousecommerciallyreasonableeffortstomakevoluntaryprepaymentsonourexistingfirstlientermloanfacilitytoeffectivelydoubletheamountofeachscheduledamortizationpaymentunderthatfacility(whichis0.25%perquarteroftheprincipaloutstandingasofNovember25,2013).

80

Table of Contents

RevolvingCreditFacility

AlsoonFebruary9,2016,weenteredintoarevolvingfacilityamendmenttoourexistingcreditagreement.Pursuanttothisamendment,weobtainedafive-year$165millionrevolvingcreditfacility,whichreplacedourexisting$125millionrevolvingcreditfacility.LoansunderthefacilitywillbearinterestatarateofLIBORplus4.0%perannum(subjecttoaleverage-basedstep-down),withoutaLIBORfloor.Thisrevolvingcreditfacilityhasa“springing”maturitydateofAugust10,2019unlesstheexistingfirstlientermloanfacilityhasbeenrepaidinfullorotherwiseextendedtoatleast91daysafterthematurityoftherevolvingcreditfacility.

LoansundertheSeniorCreditFacilitiesarealsosubjecttoabaserateoption,withinterestratespreadsof1.0%perannumlessthanthoseapplicabletoLIBOR-basedloans.

TheSeniorCreditFacilitieshavebeenfullyandunconditionallyguaranteed,onaseniorunsecuredbasis,byusandcertainofoursubsidiaries(includingConstantContactanditssubsidiaries).

10.875%SeniorNotesdue2024

OnFebruary9,2016,EIGInvestorsissued$350millionaggregateprincipalamountofNotes.TheNoteswillmatureinFebruary2024,wereissuedatapriceof98.065%ofparandwillbearinterestattherateof10.875%perannum.TheNoteshavebeenfullyandunconditionallyguaranteed,onaseniorunsecuredbasis,byusandoursubsidiariesthatguaranteetheSeniorCreditFacilities(includingConstantContactanditssubsidiaries).

InconnectionwiththeissuanceoftheNotes,weagreedtoassisttheinitialpurchasersoftheNotesinmarketingtheNotes.Inaddition,weenteredintoaregistrationrightsagreementwiththeinitialpurchasersoftheNotes,whichprovidestheholdersoftheNotescertainrightsrelatingtoregistrationoftheNotesundertheSecuritiesAct.

Pursuanttotheregistrationrightsagreement,wewill,amongotherobligations,usecommerciallyreasonableeffortstofileanexchangeofferregistrationstatementwithrespecttoaregisteredoffer,ortheExchangeOffer,toexchangetheNotesforsubstantiallyidenticalnotesandconsummatetheExchangeOfferwithin365daysaftertheissuanceoftheNotes.Wewillalso,usecommerciallyreasonableeffortstocausetobecomeeffectiveashelfregistrationstatementtocoverresalesoftheNotesbythebeneficialownersthereofwhosatisfycertainconditionsrelatingtotheprovisionofinformationinconnectionwiththeshelfregistrationstatement.Aregistrationdefaultwilloccurif,amongotherthings,(1)wefailtoconsummatetheExchangeOfferorhavetheshelfregistrationstatementbecomeeffectiveonorbeforethedatethatis365daysaftertheissuedateor(2)theshelfregistrationstatementbecomeseffectivebutthereafterceasestobeeffectiveorusableinconnectionwiththeresaleofNotes(subjecttocertainexceptions)duringtheperiodsspecifiedintheregistrationrightsagreement.IfaregistrationdefaultoccurswithrespecttotheNotes,theannualinterestrateoftheNoteswillbeincreasedby0.25%perannumandwillincreaseagainby0.25%perannum90daysthereafteruntilallregistrationdefaultshavebeencured,uptoamaximumamountofadditionalinterestof0.50%perannum.WewillalsousecommerciallyreasonableeffortstocausetobecomeeffectivearegistrationstatementprovidingfortheregistrationofcertainsecondarytransactionsintheNotesbyGoldman,Sachs&Co.anditsaffiliates.

Debt Covenants

SeniorCreditFacilities

TheSeniorCreditFacilitiesrequirethatwecomplywithafinancialcovenanttomaintainamaximumratioofnetfirstliendebttoEBITDA(asdefinedinourexistingcreditagreement).

TheSeniorCreditFacilitiescontaincovenantsthatlimitourabilityto,amongotherthings,incuradditionaldebtorissuecertainpreferredshares;paydividendsonormakeotherdistributionsinrespectofcapitalstock;

81

Table of Contents

makeotherrestrictedpayments;makecertaininvestments;sellortransfercertainassets;createliensoncertainassetstosecuredebt;consolidate,merge,sellorotherwisedisposeofallorsubstantiallyallofourassets;andenterintocertaintransactionswithaffiliates.Additionally,theSeniorCreditFacilitiesrequireustocomplywithcertainnegativecovenantsandspecifycertaineventsofdefaultthatcouldresultinamountsbecomingpayable,inwholeorinpart,priortotheirmaturitydates.WewereincompliancewithallcovenantsatDecember31,2015.

WiththeexceptionofcertainequityinterestsandotherexcludedassetsunderthetermsoftheSeniorCreditFacilities,substantiallyallofourassetsarepledgedascollateralfortheobligationsundertheSeniorCreditFacilities.

Notes

TheindenturewithrespecttotheNotescontainscovenantsthatlimitourabilityto,amongotherthings,incuradditionaldebtorissuecertainpreferredshares;paydividendsonormakeotherdistributionsinrespectofcapitalstock;makeotherrestrictedpayments;makecertaininvestments;sellortransfercertainassets;createliensoncertainassetstosecuredebt;consolidate,merge,sellorotherwisedisposeofallorsubstantiallyallofourassets;andenterintocertaintransactionswithaffiliates.UponachangeofcontrolasdefinedintheIndenture,weorEIGInvestorsmustoffertorepurchasetheNotesat101%oftheaggregateprincipalamountthereof,plusaccruedandunpaidinterest,ifany,upto,butnotincluding,therepurchasedate.Thesecovenantsaresubjecttoanumberofimportantlimitationsandexceptions.

Theindenturealsoprovidesforeventsofdefault,which,ifanyofthemoccurs,maypermitor,incertaincircumstances,requiretheprincipal,premium,ifany,interestandanyothermonetaryobligationsonallthethenoutstandingNotestobedueandpayableimmediately.

Cash and Cash Equivalents

AsofDecember31,2015,ourcashandcashequivalentswereprimarilyheldforworkingcapitalpurposesandforrequiredprincipalandinterestpaymentsunderourindebtedness.Amajorityofourcashandcashequivalentswasheldinoperatingaccounts.Ourcashandcashequivalentsincreasedby$0.6millionfrom$32.4millionatDecember31,2014to$33.0millionatDecember31,2015.WeusedcashonhandatDecember31,2014,alongwithcashflowsfromoperationsandanetdrawagainstourrevolvingcreditfacilityof$17.0milliontofundouracquisitionandminorityinvestmentactivitydescribedunderfinancingandinvestingactivitiesbelow.Ourfuturecapitalrequirementswilldependonmanyfactorsincluding,butnotlimitedtoacquisitions,ourgrowthrate,expansionofsalesandmarketingactivities,theintroductionofnewandenhancedproductsandservices,marketacceptanceofoursolutionsandourgrossprofitsandoperatingexpenses.Webelievethatourcurrentcashandcashequivalentsandoperatingcashflowswillbesufficienttomeetouranticipatedworkingcapitalandcapitalexpenditurerequirements,aswellasourrequiredprincipalandinterestpaymentsunderourindebtedness,foratleastthenext12months.

Thefollowingtableshowsourpurchasesofpropertyandequipment,principalpaymentsoncapitalleaseobligations,depreciation,amortizationandcashflowsfromoperatingactivities,investingactivitiesandfinancingactivitiesforthestatedperiods:

Years ended December 31, 2013 2014 2015 (in thousands) Purchasesofpropertyandequipment $ (33,523) $ (23,904) $ (31,243)Principalpaymentsoncapitalleaseobligations — (3,608) (4,822)Depreciation 18,615 30,956 34,010Amortization 110,273 102,989 92,403Cashflowsprovidedbyoperatingactivities 32,616 142,893 177,228Cashflowsusedininvestingactivities (73,087) (151,315) (133,801)Cashflowsprovidedby(usedin)financingactivities 84,288 (25,936) (41,632)

82

Table of Contents

Capital Expenditures

OurcapitalexpendituresonthepurchaseofpropertyandequipmentfortheyearsendedDecember31,2014and2015were$23.9millionand$31.2million,respectively.ThehigherpropertyandequipmentexpendituresintheyearendedDecember31,2015consistedprimarilyofaninvestmentindatacenterinfrastructure.Inaddition,ourcapitalexpendituresduringtheyearsendedDecember31,2014and2015includes$3.6millionand$4.8million,respectively,ofprincipalpaymentsundercapitalleasesforsoftware.Theremainingbalancepayableonthecapitalleasesis$13.1millionasofDecember31,2015.Forthenexttwelvemonths,weexpectourcapitalexpenditurestobegenerallyconsistentwiththecombinedlevelofcapitalexpendituresofEnduranceandConstantContactduring2015.

Depreciation

OurdepreciationexpensefortheyearsendedDecember31,2014and2015increasedfrom$31.0millionto$34.0million,respectively.Thisincreasewasprimarilyduetoexpansioninourbusinessbyon-boardingacquisitionsaswellasinvestmentsindatacenterinfrastructureandleaseholdimprovements.TheleaseholdimprovementswereassociatedwithoperatingleasesasweexpandedandrevampedourpresenceinMassachusetts.

Amortization

Ouramortizationexpense,whichincludesamortizationofotherintangibleassets,amortizationofdeferredfinancingcostsandamortizationofnetpresentvalueofdeferredconsideration,decreasedby$10.6millionfrom$103.0millionfortheyearendedDecember31,2014to$92.4millionfortheyearendedDecember31,2015.Ofthisdecreaseinamortizationexpense,$16.1millionwasprimarilyduetoloweramortizationexpenserelatedtoacquisitionsthatoccurredpriortoDecember31,2014,partiallyoffsetby$4.4millionofamortizationexpenserelatedtointangibleassetsofbusinessesthathavebeenacquiredsinceJanuary1,2015.Inaddition,partiallyoffsettingthedecreasewasa$1.1millionincreaseattributabletohigheramortizationexpenseofnetpresentvalueofdeferredconsiderationasaresultofourWebzai,BuyDomainsandAceacquisitionsinAugust2014,September2014andSeptember2015,respectively.

Operating Activities

Cashprovidedbyoperatingactivitiesconsistsprimarilyofnetlossadjustedforcertainnon-cashitemsincludingdepreciation,amortization,stock-basedcompensationexpenseandchangesindeferredtaxes,andtheeffectofchangesinworkingcapital,inparticularindeferredrevenue.Asweaddsubscriberstoourplatform,wetypicallycollectsubscriptionfeesatthetimeofinitialbillingandrecognizerevenueoverthetermsofthesubscriptions.Accordingly,wegenerateoperatingcashflowsaswecollectcashfromoursubscribersinadvanceofdeliveringtherelatedproductsandservices,andwemaintainasignificantdeferredrevenuebalance.Asweaddsubscribersandselladditionalproductsandservices,ourdeferredrevenuebalanceincreases.Ouroperatingcashflowsarenetoftransactionexpensesandcharges,includingIPOexpensesduringfiscalyear2013.

Netcashprovidedbyoperatingactivitieswas$177.2millionfortheyearendedDecember31,2015comparedwith$142.9millionfortheyearendedDecember31,2014.NetcashprovidedbyoperatingactivitiesfortheyearendedDecember31,2015consistedofnetlossof$25.8million,non-cashchargesof$173.7millionandanetchangeof$29.3millioninouroperatingassetsandliabilities.Thenetchangeinouroperatingassetsandliabilitiesincludedanincreaseindeferredrevenueof$34.2million,whichwas$33.5millionlessthaninthesameperiodin2014andalsoincludedanincreaseinprepaiddomainnameregistryfeesof$8.1million.

Netcashprovidedbyoperatingactivitieswas$142.9millionfortheyearendedDecember31,2014comparedwith$32.6millionfortheyearendedDecember31,2013.TheincreaseintheyearendedDecember31,2014consistedofanetlossof$50.9million,offsetbynon-cashchargesof$153.9million,acash

83

Table of Contents

dividendof$0.2millionfromaminorityinvestmentandanetchangeof$39.7millioninouroperatingassetsandliabilities.Thenetchangeinouroperatingassetsandliabilitiesincludedanincreaseindeferredrevenueof$67.7million,whichwas$16.7milliongreaterthaninthesameperiodin2013andalsoincludedanincreaseinprepaiddomainnameregistryfeesof$30.5millionwhichwas$24.7milliongreaterthaninthesameperiodin2013.Inaddition,wereducedourinterestpaymentsby$43.4million.

Netcashprovidedbyoperatingactivitieswas$32.6millionintheyearendedDecember31,2013whichconsistedofanetlossof$159.8million,offsetbynon-cashchargesof$147.6million,andanetchangeof$44.8millioninouroperatingassetsandliabilities.Thenetchangeinouroperatingassetsandliabilitiesincludedanincreaseindeferredrevenueof$51.0million.

Investing Activities

Cashflowsusedininvestingactivitiesconsistprimarilyofpurchaseofpropertyandequipment,acquisitionconsiderationpayments,andchangesinrestrictedcashbalances.

DuringtheyearendedDecember31,2015weused$97.8millionofcash,netofcashacquired,forthepurchaseconsiderationofouracquisitionsofVerio,WorldWideWebHosting,AceandEcommerce.Inaddition,weused$8.5milliontomakeanadditionalinvestmentinourjointventurewithWZUKLtd.Wealsoused$31.1millionofcashtopurchasepropertyandequipment,netofproceedsfromdisposalsof$0.1million,andpurchasedintangibleassetsof$0.1million.Thesewerepartiallyoffsetbyanetreturnof$0.1millionofrestrictedcashheldbyapaymentprocessorand$0.2millionofproceedsfromsaleofassets.Inaddition,duringtheyearendedDecember31,2015wereceiveda$3.5millionrepaymentonanotereceivablerelatedtoourequityownershipinWorldWideWebHosting.

DuringtheyearendedDecember31,2014weused$93.7millionincash,netofcashacquired,forthepurchaseconsiderationforouracquisitionsofthewebpresencebusinessofDirecti,Webzai,theBuyDomainsassets,theassetsofArvixe,LLCandourpurchaseofadomainnamebusiness.Inaddition,weused$15.0milliontoacquireaminorityinterestinAutomattic,Inc.,$15.2milliontoacquirea40%minorityinterestinAppMachine,and$3.9milliontoinvestinajointventurewithWZUKLtd.andacquirea49%interestinthatcompany.Wealsoused$23.9millionofcashtopurchasepropertyandequipmentand$0.2milliontopurchasecertainintangibleassetsandreceivedproceedsfromdisposalsof$0.2million.Thesewerepartiallyoffsetbyanetreturnof$0.4millionofrestrictedcashheldbyapaymentprocessor.

ThemajorityofthecashusedduringtheyearendedDecember31,2013wastopurchase$33.5millionofpropertyandequipment,inparticularforthemigrationofHostGatorsubscriberstoourplatformand$31.0milliontoobtainacontrollinginterestinJDIBackup,Ltd.Wealsoused$2.4million,netofcashacquired,forinitialconsiderationforanacquisitioninBrazil,$5.0millionforapaymenttoDirectiWebTechnologiesHoldingsinAugust2013,uponouragreementtoacquiretheDirectiwebpresencebusiness,$0.8milliontopurchaseintangibleassetsanda$0.2millionforanetdepositofrestrictedcashheldbyapaymentprocessor.

Financing Activities

Cashflowfromfinancingactivitiesconsistsprimarilyofthenetchangeinouroverallindebtedness,paymentofassociatedfinancingcosts,paymentofdeferredconsiderationforouracquisitionsandtheissuanceorrepurchaseofequity.

DuringtheyearendedDecember31,2015,cashflowsusedinfinancingactivitieswas$41.6million,whichincludedapaymentof$30.5millionunderouragreementtoincreaseourinvestmentinJDIBackupLtd.from67%to100%.Wealsopaid$15.0millionofdeferredconsiderationduringtheyearendedDecember31,2015,$10.5millionofprincipalpaymentsunderourfirstlientermloanfacilityand$4.8millionofprincipalpaymentsrelatedtocapitalleaseobligations.Theseitemswerepartiallyoffsetby$2.2millionofproceedswereceivedfromtheexerciseofstockoptions.DuringtheyearendedDecember31,2015,weborrowedinaggregate$147.0millionagainstourrevolvingcreditfacilityandrepaidinaggregate$130.0million.

84

Table of Contents

DuringtheyearendedDecember31,2014,cashflowsusedinfinancingactivitieswas$25.9million,whichincludes$98.3millionofdeferredconsiderationpaidduringtheperiod,themajorityofwhichwasforourDirecti,HostGatoranddomainnamebusinessacquisitions,offsetbynetborrowingsagainstourrevolvingcreditfacilityof$50.0million,principalpaymentsof$10.5millionunderourfirstlientermloanfacility,a$4.2millionpaymenttoincreaseourinvestmentinJDIBackupLtd.and$3.6millionofprincipalpaymentsrelatedtocapitalleaseobligations.DuringtheyearendedDecember31,2014,weborrowedinaggregate$150.0millionagainstourrevolvingcreditfacilityandrepaidinaggregate$100.0millionoftheamountborrowed.Wereceivedgrossproceedsfromourfollow-onofferingof$43.5millionlesscapitalizedissuancecostsof$2.2million.Inaddition,wemadepaymentsof$0.7millionrelatedtoissuancecostsfromourIPOwhichwereunpaidasofDecember31,2013andwereceived$0.1millionofproceedsfromtheexerciseofstockoptionsduringtheyearendedDecember31,2014.DuringtheyearendedDecember31,2014,weenteredintoathree-yearcapitalleaseagreementfor$11.7millionforsoftwarelicenseswhichrequiredprincipalpaymentsofapproximately$0.9millioneachquarterin2014.

DuringtheyearendedDecember31,2013,cashflowprovidedbyfinancingactivitiesnetofrepaymentswas$84.3million.WereceivedgrossproceedsfromourIPOof$252.6millionlesscapitalizedissuancecostspaidof$17.5million.Anadditional$0.7millionofcapitalizedissuancecostswasunpaidasofDecember31,2013.InAugustof2013weincreasedourfirstlientermloanby$90.0million,borrowedinaggregate$57.0millionagainstourrevolvingcreditfacilityandrepaidinaggregate$72.0millionunderthatfacilityaswellas$6.2millionunderourfirstlientermloanfacility.InNovember2013,werepaidoursecondlientermloanof$315.0millioninfullandincreasedourfirstlientermloanby$166.2million,resultinginanoverallreductioninourbankdebtby$148.8millionto$1,050.0million.AttheendofDecember2013,wemadeaquarterlyprincipalpaymentof$2.6million.Inaddition,wepaid$55.6millionofdeferredconsiderationobligationsoutstandingatDecember31,2012,themajorityofwhichwasforourHostGatoracquisition.

OnJanuary6,2016,wepaid$2.1milliontoincreaseourstakeinWZUKLtdfrom49%to57.5%,andonFebruary9,2016,weclosedtheConstantContactacquisitionandconcurrentlyenteredintothefinancingtransactionsdescribedaboveunder“ConstantContactAcquisition.”

Net Operating Loss Carry-Forwards

AsofDecember31,2015,wehadnetoperatingloss,orNOL,carry-forwardsavailabletooffsetfutureU.S.federaltaxableincomeofapproximately$97.8millionandfuturestatetaxableincomeofapproximately$111.2million.TheseNOLcarry-forwardsexpireonvariousdatesthrough2034.Approximately$1.6millionoftheU.S.federalNOLcarry-forwardsand$0.7millionofthestateNOLcarry-forwardarefromexcessstock-basedcompensation,forwhichthebenefitwillberecordedtoadditional-paidincapitalwhenrecognized.Inaddition,asofDecember31,2015,wehadNOLcarry-forwardsinforeignjurisdictionsavailabletooffsetfutureforeigntaxableincomebyapproximately$27.4million.Wehavelosscarry-forwardsinIndiatotaling$2.9millionthatexpirein2021.Wealsohavelosscarry-forwardsintheUnitedKingdom,IsraelandSingaporeof$23.4million,$0.9million,and$0.2million,respectively,whichhaveanindefinitecarry-forwardperiod.

UtilizationoftheNOLcarry-forwardscanbesubjecttoanannuallimitationduetotheownershippercentagechangelimitationsunderSection382oftheInternalRevenueCodeorSection382limitation.Ownershipchangescanlimittheamountofnetoperatinglossandothertaxattributesthatacompanycanuseeachyeartooffsetfuturetaxableincomeandtaxespayable.Inconnectionwithachangeincontrolin2011weweresubjecttoSection382annuallimitationsof$77.1millionagainstthebalanceofNOLcarry-forwardsgeneratedpriortothechangeincontrolin2011.ThroughDecember31,2014weaccumulatedtheunusedamountofSection382limitationsinexcessoftheamountofNOLcarry-forwardsthatwereoriginallysubjecttolimitation.Therefore,theseunusedNOLcarry-forwardsareavailableforfutureusetooffsettaxableincome.Wecompletedananalysisofchangesinourownershipfrom2011,throughourIPO,toDecember31,2013andconcludedthattherewasnotaSection382ownershipchangeduringthisperiodandthereforeanyNOLsgeneratedthroughDecember31,2013willnotbesubjecttoanynewSection382annuallimitationsonNOL

85

Table of Contents

carry-forwards.OnNovember20,2014,wecompletedafollow-onofferingof13,000,000sharesofcommonstock.Theunderwritersalsoexercisedtheiroverallotmentoptiontopurchaseanadditional1,950,000sharesofcommonstockfromthesellingstockholders.WeperformedananalysisoftheimpactofthisofferinganddeterminedthatnoSection382changeinownershiphasoccurred.Asaresult,allunusedNOLcarry-forwardsatDecember31,2014wereavailableforfutureusetooffsettaxableincome.

OnMarch11,2015,theCompanyclosedafollow-onofferingofitscommonstock,inwhichsellingstockholderssold12,000,000sharesofcommonstockatapublicofferingpriceof$19.00pershare.Theunderwriteralsoexerciseditsoverallotmentoptiontopurchaseanadditional1,800,000sharesofcommonstockfromthesellingstockholders.TheCompanyiscurrentlycompletingananalysisofitsownershipchangesfromMarch2015throughDecember31,2015,butdoesnotbelievetheoutcomeofthisanalysiswillresultinanadditionalownershipchangebasedontheinformationavailableatthistime.

Backlog and Deferred Revenue

Wedefineourbacklogasthetotalcommittedvalueofourcontractswhichhavenotbeenrecognizedasrevenueattheendofaperiod.Sincewerequireprepaymentsforallourproductsandservices,ourbacklogisequaltoourdeferredrevenuebalance.OurbacklogasofDecember31,2014and2015was$325.4millionand$365.6million,respectively.Becauserevenueforanyperiodisafunctionofrevenuerecognizedfromdeferredrevenueundercontractsinexistenceatthebeginningofaperiod,aswellascontractrenewalsandnewcustomercontractsduringtheperiod,backlogatthebeginningofanyperiodisnotnecessarilyindicativeoffutureperformance.Ourpresentationofbacklogmaydifferfromothercompaniesinourindustry.

Contractual Obligations and Commitments

Ourprincipalcommitmentsconsistofobligationsunderouroutstandingdebtfacilities,whichin2015includedaquarterlyprincipalrepaymentagainstourfirstlientermloanfacilityof$2.6millionperquarter,interestpaymentsonourtermloanfacilities,whicharetypicallythree-monthLIBORloans,non-cancelableleasesforourofficespace,deferredpaymentobligationsrelatedtoacquisitions,andpurchaseobligationsundermaterialcontracts.ThefollowingtablesummarizesthesecontractualobligationsasofDecember31,2015: Payments due by period

Total Less

than 1 year 1-3 years 3-5 years More

than 5 years (in thousands) Long-termdebtobligations:

Principalpaymentsontermloanfacility $1,026,375 $ 10,500 $ 21,000 $ 994,875 $ —Interestpaymentsontermloanfacility(1) 198,513 51,973 102,064 44,476 —Revolvingcreditfacility 67,000 67,000 — — —

Capitalleaseobligations 13,804 6,334 7,470 — —Operatingleaseobligations 71,954 9,247 18,980 17,555 26,172Deferredconsideration(2) 52,301 51,488 813 — —Purchasecommitments 23,734 13,778 9,123 833 —

Total $1,453,681 $ 210,320 $159,450 $1,057,739 $ 26,172

(1) TermloanfacilityinterestrateisbasedonadjustedLIBORplus400basispointsforthefirstlientermloanfacility,subjecttoaLIBORfloorof1.00%.Asof

December31,2015,theinterestratesonourfirstlientermloanfacilityandrevolvingcreditfacilitywere5.00%and7.75%.ThefirstlientermloanfacilitymaturesonNovember9,2019andourrevolvingcreditfacilityhadamaturitydateofDecember22,2016priortoitsreplacementwithanewrevolvingcreditfacilityinconnectionwiththeConstantContactacquisition.

86

Table of Contents

(2) Consistsofdeferredpaymentobligationsrelatedtoacquisitions.

BecausethistablereflectsobligationsasofDecember31,2015,itdoesnotreflecttheConstantContactfinancingtransactionsdescribedabove.

UnderthetermsoftheinvestmentagreementforAppMachine,weareobligatedtopurchasetheremaining60%ofAppMachineinthreetranchesof20%withinspecifiedperiodsifAppMachineachievesaspecifiedminimumrevenuethresholdwithinadesignatedtimeframe.TheconsiderationforeachofthethreetranchesiscalculatedastheproductofAppMachine’srevenue,asdefinedintheinvestmentagreement,forthetrailingtwelve-monthperiodpriortotheapplicabledeterminationdatetimesaspecifiedmultiplebaseduponyearoveryearrevenuegrowth,multipliedby20%.

Recently Issued Accounting Pronouncements

InMay2014,theFASBissuedASUNo.2014-09,RevenuefromContractswithCustomers(Topic606),orASU2014-09,whichsupersedesnearlyallexistingrevenuerecognitionguidanceunderU.S.GAAP.ThecoreprincipleofASU2014-09istorecognizerevenueswhenpromisedgoodsorservicesaretransferredtocustomersinanamountthatreflectstheconsiderationtowhichtheentityexpectstobeentitledforthosegoodsorservices.ASU2014-09definesafivestepprocesstoachievethiscoreprincipleand,indoingso,morejudgmentsandestimatesmayberequiredwithintherevenuerecognitionprocessthanarerequiredunderexistingU.S.GAAP.InJuly2015,theFASBapprovedaone-yeardeferraloftheeffectivedatetoJanuary1,2018,withearlyadoptiontobepermittedasoftheoriginaleffectivedateofJanuary1,2017.Oncethisstandardbecomeseffective,companiesmayuseeitherofthefollowingtransitionmethods:(i)afullretrospectiveapproachreflectingtheapplicationofthestandardineachreportingperiodwiththeoptiontoelectcertainpracticalexpedients,or(ii)aretrospectiveapproachwiththecumulativeeffectofinitiallyadoptingASU2014-09recognizedatthedateofadoption(whichincludesadditionalfootnotedisclosures).WearecurrentlyevaluatingtheimpactofourpendingadoptionofASU2014-09onourconsolidatedfinancialstatementsandhavenotyetdeterminedthemethodbywhichwewilladoptthestandard.

InFebruary2015,theFASBissuedASUNo.2015-02,AmendmentstotheConsolidationAnalysis,orASU2015-02.Thisnewguidanceprovidesarevisedconsolidationmodelthatreportingentitiesusetoevaluatepartnershipsandsimilarentities,evaluateserviceprovidersanddecisionmakersastheyrelatetoavariableinterestentity,referredtoasaVIE,andexaminehowrelatedpartyinterestsinaVIEcanaffecttheconsolidationofthatVIE.ASU2015-02iseffectiveforannualreportingperiodsbeginningafterDecember15,2015withearlyadoptionpermitted.WebelievetheadoptionofASU2015-02doesnothaveanimpactonourconsolidatedfinancialstatements.

InApril2015,theFASBissuedASUNo.2015-03,Interest—ImputationofInterest,SimplifyingthePresentationofDebtIssuanceCosts,orASU2015-03.Thisnewguidancechangesthebalancesheetpresentationfordeferredfinancingcostsfrombeingpresentedasanassettobeingadeductionfromtherelatedrecognizedliability.ASU2015-03iseffectiveforannualreportingperiodsbeginningafterDecember15,2016.WebelievetheadoptionofASU2015-03doesnothaveamaterialimpactonourconsolidatedfinancialstatements.

InApril2015,theFASBissuedASUNo.2015-05,IntangiblesGoodwillandOther—InternalUseSoftware(Subtopic350-40):Customer’sAccountingforFeesPaidinaCloudComputingArrangement.Thisnewguidancewillhelpentitiesevaluatetheaccountingforfeespaidbyacustomerinacloudcomputingarrangementbyprovidingguidanceastowhetheranarrangementincludesthesaleorlicenseofsoftware.ASU2015-05iseffectiveforannualreportingperiodsbeginningafterDecember15,2015.WebelievetheadoptionofASU2015-05doesnothaveanimpactonourconsolidatedfinancialstatements.

InSeptember2015,theFASBissuedASUNo.2015-16,BusinessCombinations(Topic805):SimplifyingtheAccountingforMeasurement-PeriodAdjustments.Thisnewguidancerequiresanacquirertorecognize

87

Table of Contents

adjustmentstoprovisionalamountsthatareidentifiedduringthemeasurementperiodinthereportingperiodinwhichtheadjustmentamountsaredetermined.Theacquirerneedstorecord,inthesameperiod’sfinancialstatements,theeffectonearningsofchangesindepreciation,amortizationorotherincomeeffects,ifany,asaresultoftheprovisionalamounts,calculatedasiftheaccountinghadbeencompletedasoftheacquisitiondate.ASU2015-16iseffectiveforannualreportingperiodsbeginningafterDecember15,2015.WebelievetheadoptionofASU2015-16doesnothaveamaterialeffectonouraccountingprocesses,howevertheASUwillaffectourdisclosuresaswearerequiredtodisclosetheadjustmentsmadeduringthemeasurementperiodandtheireffectontheperiod’searnings.

InNovember2015,theFASBissuedASUNo.2015-17,IncomeTaxes:BalanceSheetClassificationofDeferredTaxes,orASU2015-17.Thisnewguidancerequiresthatdeferredtaxliabilitiesandassetsbeclassifiedasnoncurrentinthebalancesheet,inordertosimplifythepresentationofdeferredincometaxes.ASU2015-17iseffectiveforannualreportingperiodsbeginningafterDecember15,2016.WebelievetheadoptionofASU2015-17doesnothaveamaterialimpactonourconsolidatedfinancialstatements.

InFebruary2016,theFASBissuedAccountingStandardsUpdateNo.2016-02,Leases.Thenewstandardestablishesaright-of-use(ROU)modelthatrequiresalesseetorecordaROUassetandaleaseliabilityonthebalancesheetforallleaseswithtermslongerthan12months.Leaseswillbeclassifiedaseitherfinanceoroperating,withclassificationaffectingthepatternofexpenserecognitionintheincomestatement.ThenewstandardiseffectiveforfiscalyearsbeginningafterDecember15,2018,includinginterimperiodswithinthosefiscalyears.Amodifiedretrospectivetransitionapproachisrequiredforlesseesforcapitalandoperatingleasesexistingat,orenteredintoafter,thebeginningoftheearliestcomparativeperiodpresentedinthefinancialstatements,withcertainpracticalexpedientsavailable.Wearecurrentlyevaluatingtheimpactofourpendingadoptionofthenewstandardonourconsolidatedfinancialstatements.

Off-Balance Sheet Arrangements

Wedonothaveanyspecialpurposeentitiesoroff-balancesheetarrangements.

88

Table of Contents

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

WehaveoperationsbothwithintheUnitedStatesandinternationally,andweareexposedtomarketriskintheordinarycourseofourbusiness.Theserisksincludeprimarilyforeignexchangerisk,interestrateandinflation.

Foreign Currency Exchange Risk

AsignificantmajorityofoursubscriptionagreementsandourexpensesaredenominatedinUSdollars.Wedo,however,havesalesinanumberofforeigncurrenciesaswellasbusinessoperationsinBrazilandIndiaandaresubjecttotheimpactsofcurrencyfluctuationsinthosemarkets.Theimpactofthesecurrencyfluctuationsisinsignificantrelativetotheoverallfinancialresultsofourcompany.

Interest Rate Sensitivity

Wehadcashandcashequivalentsof$33.0millionatDecember31,2015,themajorityofwhichwasheldinoperatingaccountsforworkingcapitalpurposesandothergeneralcorporatepurposeswhichincludespaymentofprincipalandinterestunderourindebtedness.AsofDecember31,2015,wehadapproximately$1,026.4millionofindebtednessoutstandingunderourfirstlientermloanfacilityandarevolvingcreditfacilityof$125.0million,ofwhich$67.0millionwasavailable.

Thefirstlientermloanfacilitybearsinterestatarateperannumequaltoanapplicablecreditspreadplus,atouroption,(a)adjustedLIBORor(b)analternatebaseratedeterminedbyreferencetothegreaterof(i)theprimerate,(ii)thefederalfundseffectiverateplus0.50%and(iii)one-monthadjustedLIBORplus1.00%.Thetermloanissubjecttoafloorof1.00%perannumwithanapplicablecreditspreadforinterestbasedonadjustedLIBORof4.00%

Underourcreditfacility,ourrevolvingcreditloansthatbearinterestattheLIBORreferenceratearesubjecttoafloorof1.50%perannumwiththeapplicablecreditspreadforinterestbasedonadjustedLIBORof6.25%.

Wearealsorequiredtopayacommitmentfeeof0.50%perannumtothelendersbasedontheaveragedailyunusedamountoftherevolvingcommitments.

Basedonouraggregateindebtednessoutstandingunderourfirstlientermloanfacilityof$1,026.4millionasofDecember31,2015,a100basispointincreaseintheadjustedLIBORrateabovetheLIBORfloorwouldresultina$10.4millionincreaseinouraggregateinterestpaymentsovera12-monthperiod,anda100basispointdecreaseatthecurrentLIBORratewouldnotresultinadecreaseinourinterestpayments.

Weenteredintoathree-yearinterestratecaponDecember9,2015aspartofourriskmanagementstrategy.Thisinterestratecaplimitsourexposuretointerestrateincreaseson$500.0millionofourfirstlientermloan.IftheLIBORinterestratesforthisloanincreasemorethan140basispointsabovetheratesatDecember31,2015,ourinterestratecapwouldbegintoprotectusoninterestchargesfor$500.0millionofoutstandingdebt.

TheforegoingdiscussiondoesnotreflecttheimpactofthefinancingtransactionsassociatedwiththeConstantContactacquisition,whichclosedonFebruary9,2016.See“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations—LiquidityandCapitalResources”inPartII,Item7ofthisAnnualReportonForm10-Kforadditionalinformationonthesetransactions.

Inflation Risk

Wedonotbelievethatinflationhasamaterialeffectonourbusiness,financialconditionorresultsofoperations.Ifourcostsweretobecomesubjecttosignificantinflationarypressures,wemaynotbeabletofullyoffsetsuchhighercoststhroughpriceincreases.Ourinabilitytodosocouldharmourbusiness,financialconditionandresultsofoperations.

89

Table of Contents

Item 8. Financial Statements and Supplementary Data

ENDURANCE INTERNATIONAL GROUP HOLDINGS, INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PageReportofIndependentRegisteredPublicAccountingFirm 91ConsolidatedBalanceSheets 92ConsolidatedStatementsofOperationsandComprehensiveLoss 93ConsolidatedStatementsofChangesinStockholders’Equity 94ConsolidatedStatementsofCashFlows 95NotestoConsolidatedFinancialStatements 97

90

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

BoardofDirectorsandStockholdersEnduranceInternationalGroupHoldings,Inc.Burlington,Massachusetts

WehaveauditedtheaccompanyingconsolidatedbalancesheetsofEnduranceInternationalGroupHoldings,Inc.asofDecember31,2014and2015andtherelatedconsolidatedstatementsofoperationsandcomprehensiveloss,changesinstockholders’equityandcashflowsforeachofthethreeyearsintheperiodendedDecember31,2015.TheseconsolidatedfinancialstatementsaretheresponsibilityoftheCompany’smanagement.Ourresponsibilityistoexpressanopinionontheseconsolidatedfinancialstatementsbasedonouraudits.

WeconductedourauditsinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.Anauditalsoincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresintheconsolidatedfinancialstatements,assessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditsprovideareasonablebasisforouropinion.

Inouropinion,theconsolidatedfinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,thefinancialpositionofEnduranceInternationalGroupHoldings,Inc.asofDecember31,2014and2015,andtheresultsofitsoperationsanditscashflowsforeachofthethreeyearsintheperiodendedDecember31,2015inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.

Wehavealsoaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates),EnduranceInternationalGroupHoldings,Inc.’sinternalcontroloverfinancialreportingasofDecember31,2015,basedoncriteriaestablishedinInternalControl—IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(COSO)andourreportdatedFebruary29,2016expressedanunqualifiedopinionthereon.

/s/BDOUSA,LLP

Boston,Massachusetts

February29,2016

91

Table of Contents

Endurance International Group Holdings, Inc.Consolidated Balance Sheets

(in thousands, except share and per share amounts)

December 31,2014

December 31,2015

Assets Currentassets:

Cashandcashequivalents $ 32,379 $ 33,030Restrictedcash 1,325 1,048Accountsreceivable 10,201 12,040Deferredtaxasset—shortterm 13,961 —Prepaiddomainnameregistryfees 49,605 55,793Prepaidexpensesandothercurrentassets 13,173 15,675

Totalcurrentassets 120,644 117,586Propertyandequipment—net 56,837 75,762Goodwill 1,105,023 1,207,255Otherintangibleassets—net 410,338 359,786Deferredfinancingcosts 400 990Investments 40,447 27,905Prepaiddomainnameregistryfees,netofcurrentportion 7,957 9,884Otherassets 4,397 4,322

Totalassets $ 1,746,043 $ 1,803,490

Liabilities, redeemable non-controlling interest and stockholders’ equity Currentliabilities:

Accountspayable $ 8,960 $ 12,280Accruedexpenses 38,275 50,869Deferredrevenue 259,567 285,945Currentportionofnotespayable 60,500 77,500Currentportionofcapitalleaseobligations 3,793 5,866Deferredconsideration—shortterm 13,917 51,488Othercurrentliabilities 10,358 3,973

Totalcurrentliabilities 395,370 487,921Long-termdeferredrevenue 65,850 79,682Notespayable—longterm 1,026,375 1,015,875Capitalleaseobligations—longterm 4,302 7,215Deferredtaxliability—longterm 35,579 28,786Deferredconsideration—longterm 10,722 813Otherliabilities 2,806 3,524

Totalliabilities $ 1,541,004 $ 1,623,816

Redeemablenon-controllinginterest 30,543 —Commitmentsandcontingencies Stockholders’equity:

PreferredStock—parvalue$0.0001;5,000,000sharesauthorized;nosharesissuedoroutstanding — —CommonStock—parvalue$0.0001;500,000,000sharesauthorized;130,959,113and132,024,558sharesissuedatDecember31,2014andDecember31,2015,respectively;130,914,333and131,938,485outstandingatDecember31,2014andDecember31,2015,respectively 14 14

Additionalpaid-incapital 816,591 848,740Accumulatedothercomprehensiveloss (517) (1,718)Accumulateddeficit (641,592) (667,362)

Totalstockholders’equity 174,496 179,674

Totalliabilities,redeemablenon-controllinginterestandstockholders’equity $ 1,746,043 $ 1,803,490

Seeaccompanyingnotestoconsolidatedfinancialstatements.

92

Table of Contents

Endurance International Group Holdings, Inc.Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

Year Ended December 31,

2013

Year Ended December 31,

2014

Year Ended December 31,

2015 Revenue $ 520,296 $ 629,845 $ 741,315Costofrevenue 350,103 381,488 425,035

Grossprofit 170,193 248,357 316,280

Operatingexpense: Salesandmarketing 117,689 146,797 145,419Engineeringanddevelopment 23,205 19,549 26,707Generalandadministrative 92,347 69,533 90,968

Totaloperatingexpense 233,241 235,879 263,094

Income(loss)fromoperations (63,048) 12,478 53,186

Otherincome(expense): Otherincome — — 5,440Interestincome 122 331 414Interestexpense (98,449) (57,414) (58,828)

Totalotherexpense—net (98,327) (57,083) (52,974)

Income(loss)beforeincometaxesandequityearningsofunconsolidatedentities (161,375) (44,605) 212Incometaxexpense(benefit) (3,596) 6,186 11,342

Lossbeforeequityearningsofunconsolidatedentities (157,779) $ (50,791) $ (11,130)

Equitylossofunconsolidatedentities,netoftax 2,067 61 14,640

Netloss $ (159,846) $ (50,852) $ (25,770)

Netlossattributabletonon-controllinginterest (659) (8,017) —

NetlossattributabletoEnduranceInternationalGroupHoldings,Inc. $ (159,187) $ (42,835) $ (25,770)

Comprehensiveloss: Foreigncurrencytranslationadjustments (55) (462) (1,281)Unrealizedgainoncashflowhedge,netoftaxesof$0,$0and$46fortheyearsendedDecember31,2013,2014and2015 — — 80

Totalcomprehensiveloss $ (159,242) $ (43,297) $ (26,971)

NetlosspershareattributabletoEnduranceInternationalGroupHoldings,Inc.—basicanddiluted $ (1.55) $ (0.34) $ (0.20)

Weighted-averagenumberofcommonsharesusedincomputingnetlosspershareattributabletoEnduranceInternationalGroupHoldings,Inc.—basicanddiluted 102,698,773 127,512,346 131,340,557

Seeaccompanyingnotestoconsolidatedfinancialstatements.

93

Table of Contents

Endurance International Group Holdings, Inc.Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share amounts) Common Stock

AdditionalPaid-in Capital

Accumulated Other

ComprehensiveLoss

AccumulatedDeficit

Total Stock-

holders’ Equity Number Amount

Balance—December 31, 2012 96,745,992 $ 10 $ 509,715 $ — $ (439,570) $ 70,155Issuanceofcommonstockinconnectionwithinitialpublicoffering,netofissuancecostsof$18,219,271 21,051,000 2 234,391 — — 234,393

Fractionalsharepayment (47) — (1) — — (1)Vestingofrestrictedshares 6,971,595 1 (1) — — —CommonstockreturnedtotheCompany (1,996) — — — — —Retirementoftreasurystock — — (24) — — (24)Non-controllinginterestaccretion — — (123) — — (123)Othercomprehensiveloss — — — (55) — (55)Netloss — — (659) — (159,187) (159,846)Stock-basedcompensation — — 10,763 — — 10,763

Balance—December 31, 2013 124,766,544 $ 13 $ 754,061 $ (55) $ (598,757) $ 155,262

Vestingofrestrictedshares 866,820 1 (1) — — —Exerciseofstockoptions 11,390 — 137 — — 137Sharesissuedinconnectionwithacquisitions 2,269,579 — 27,235 — — 27,235Sharesissuedinfollow-onoffering,netofissuancecostsof$2,405,176 3,000,000 — 41,095 — — 41,095

Non-controllinginterestaccretion — — (13,962) — — (13,962)Othercomprehensiveloss — — — (462) — (462)Netloss — — (8,017) — (42,835) (50,852)Stock-basedcompensation — — 16,043 — — 16,043

Balance—December 31, 2014 130,914,333 $ 14 $ 816,591 $ (517) $ (641,592) $ 174,496

Vestingofrestrictedshares 838,809 — — — — —Exerciseofstockoptions 185,343 — 2,224 — — 2,224Othercomprehensiveloss — — — (1,201) — (1,201)Netloss — — — — (25,770) (25,770)Stock-basedcompensation — — 29,925 — — 29,925

Balance—December 31, 2015 131,938,485 $ 14 $ 848,740 $ (1,718) $ (667,362) $ 179,674

Seeaccompanyingnotestoconsolidatedfinancialstatements.

94

Table of Contents

Endurance International Group Holdings, Inc.Consolidated Statements of Cash Flows

(in thousands)

Year Ended December 31,

2013

Year Ended December 31,

2014

Year Ended December 31,

2015 Cashflowsfromoperatingactivities:

Netloss $ (159,846) $ (50,852) $ (25,770)Adjustmentstoreconcilenetlosstonetcashprovidedbyoperatingactivities:

Depreciationofpropertyandequipment 18,615 30,956 34,010Amortizationofotherintangibleassetsfromacquisitions 105,915 102,723 91,057Amortizationofdeferredfinancingcosts 2,768 83 82Amortizationofnetpresentvalueofdeferredconsideration 1,590 183 1,264Stock-basedcompensation 10,763 16,043 29,925Deferredtaxexpense(benefit) (4,777) 3,640 7,120(Gain)lossonsaleofassets 309 (168) (155)Gainfromunconsolidatedentities — — (5,440)Lossofunconsolidatedentities 2,067 61 14,640Dividendfromminorityinterest — 167 —(Gain)lossfromchangeindeferredconsideration (466) 384 1,174Financingcostsexpensed 10,833 — —Changesinoperatingassetsandliabilities:

Accountsreceivable (1,075) (691) (1,659)Prepaidexpensesandothercurrentassets (7,147) (25,675) (13,187)Accountspayableandaccruedexpenses 2,020 (1,615) 9,926Deferredrevenue 51,047 67,654 34,241

Netcashprovidedbyoperatingactivities 32,616 142,893 177,228

Cashflowsfrominvestingactivities: Businessesacquiredinpurchasetransaction,netofcashacquired (38,659) (93,698) (97,795)Purchasesofpropertyandequipment (33,523) (23,904) (31,243)Cashpaidforminorityinvestment — (34,140) (8,475)Proceedsfromsaleofpropertyandequipment 54 94 93Proceedsnotereceivable — — 3,454Proceedsfromsaleofassets 23 100 191Purchasesofintangibleassets (751) (200) (76)Net(deposits)andwithdrawalsofprincipalbalancesinrestrictedcashaccounts (231) 433 50

Netcashusedininvestingactivities (73,087) (151,315) (133,801)

95

Table of Contents

Endurance International Group Holdings, Inc.Consolidated Statements of Cash Flows

(in thousands)

Year Ended December 31,

2013

Year Ended December 31,

2014

Year Ended December 31,

2015 Cashflowsfromfinancingactivities:

Proceedsfromissuanceoftermloan 1,145,000 — —Repaymentoftermloan (1,212,625) (10,500) (10,500)Proceedsfromborrowingofrevolver 57,000 150,000 147,000Repaymentofrevolver (72,000) (100,000) (130,000)Paymentoffinancingcosts (12,552) (53) —Paymentofdeferredconsideration (55,635) (98,318) (14,991)Paymentofredeemablenon-controllinginterestliability — (4,190) (30,543)Principalpaymentsoncapitalleaseobligations — (3,608) (4,822)Proceedsfromexerciseofstockoptions — 137 2,224Proceedsfromissuanceofcommonstock 252,612 43,500 —Issuancecostsofcommonstock (17,512) (2,904) —

Netcashprovidedby(usedin)financingactivities 84,288 (25,936) (41,632)

Neteffectofexchangerateoncashandcashequivalents (247) (78) (1,144)

Netincrease(decrease)incashandcashequivalents 43,570 (34,436) 651Cashandcashequivalents:

Beginningofperiod 23,245 66,815 32,379

Endofperiod $ 66,815 $ 32,379 $ 33,030

Supplementalcashflowinformation: Interestpaid $ 100,856 $ 57,418 $ 57,338Incometaxespaid $ 1,502 $ 2,615 $ 4,510Supplementaldisclosureofnon-cashfinancingactivities: SharesissuedinconnectionwiththeacquisitionofDirecti $ — $ 27,235 $ —Assetsacquiredundercapitallease $ — $ 11,704 $ 9,795

Seeaccompanyingnotestoconsolidatedfinancialstatements.

96

Table of Contents

Endurance International Group Holdings, Inc.Notes to Consolidated Financial Statements

1. Nature of Business

Formation and Nature of Business

EnduranceInternationalGroupHoldings,Inc.,(“Holdings”)isaDelawarecorporationwhichtogetherwithitswhollyownedsubsidiarycompany,EIGInvestorsCorp.(“EIGInvestors”),itsprimaryoperatingsubsidiarycompany,TheEnduranceInternationalGroup,Inc.(“EIG”),andothersubsidiarycompaniesofEIG,collectivelyformthe“Company”.TheCompanyisaleadingproviderofcloud-basedplatformsolutionsdesignedtohelpsmall-andmedium-sizedbusinessessucceedonline.

EIGandEIGInvestorswereincorporatedinApril1997andMay2007,respectively,andHoldingswasoriginallyformedasalimitedliabilitycompanyinOctober2011inconnectionwiththeacquisitionbyinvestmentfundsandentitiesaffiliatedwithWarburgPincusandGoldman,Sachs&Co.onDecember22,2011ofacontrollinginterestinEIGInvestors,EIGandEIG’ssubsidiarycompanies.OnNovember7,2012,HoldingsreorganizedasaDelawarelimitedpartnershipandonJune25,2013,HoldingsconvertedintoaDelawareC-corporationandchangeditsnametoEnduranceInternationalGroupHoldings,Inc.

Stock Split and Restated Certificate of Incorporation

OnOctober23,2013,immediatelyaftergivingeffecttoa105,187.363-for-onestocksplit,theCompanyhad105,187,363sharesofcommonstockissuedandoutstanding.AftergivingeffecttotheCompany’srestatedcertificateofincorporationfiledonOctober23,2013,theCompany’sauthorizedcapitalstockconsistsof500,000,000sharesofcommonstock,parvalue$0.0001pershare,and5,000,000sharesofpreferredstock,parvalue$0.0001pershare.

Corporate Reorganization

PursuanttothetermsofacorporatereorganizationthatwascompletedfollowingthestocksplitandpriortothecompletionoftheCompany’sinitialpublicoffering,asdescribedbelow,theformerdirectownerofHoldings,alimitedpartnership,wasdissolvedandinliquidationdistributedthesharesoftheCompany’scommonstocktoitslimitedpartners.Thedistributionofcommonstocktothelimitedpartnerswasdeterminedbythevalueeachpartnerwouldhavereceivedunderthedistributionprovisionsofthelimitedpartnershipagreement,valuedbyreferencetotheinitialpublicofferingprice.

AllsharedataintheconsolidatedfinancialstatementsretroactivelyreflectsthesharesoftheCompany’scommonstockaftergivingeffecttothe105,187.363-for-onestocksplitandthefilingoftherestatedcertificateofincorporation.

Initial Public Offering

OnOctober30,2013,theCompanyclosedaninitialpublicoffering(“IPO”)ofitscommonstock,whichresultedinthesaleof21,051,000sharesofitscommonstockatapublicofferingpriceof$12.00pershare.TheofferingresultedingrossproceedstotheCompanyof$252.6millionandnetproceedstotheCompanyof$232.1millionafterdeductingunderwritingdiscounts,commissionsandofferingexpensespayablebytheCompany.Offeringexpensesincludebothcapitalizedandnon-capitalizedexpenses.

Follow-on Offerings

OnNovember26,2014,theCompanyclosedafollow-onofferingofitscommonstock,inwhichtheCompanysold3,000,000sharesofitscommonstockatapublicofferingpriceof$14.50pershareandsellingstockholders

97

Table of Contents

sold10,000,000sharesofcommonstock.Theunderwritersalsoexercisedtheiroverallotmentoptiontopurchaseanadditional1,950,000sharesofcommonstockfromthesellingstockholders.TheCompanydidnotreceiveanyproceedsfromthesaleofsharesbythesellingstockholders.Thefollow-onofferingresultedingrossproceedstotheCompanyof$43.5millionandnetproceedstotheCompanyof$41.1millionafterdeductingunderwritingdiscountsandcommissionsof$1.7millionandotherestimatedofferingexpensesofapproximately$0.7millionpayablebytheCompany.TheCompanyincurredanadditional$0.3millionofofferingexpensesonbehalfofthesellingstockholders,whichwasincludedingeneralandadministrativeexpenseintheconsolidatedstatementofoperationsandcomprehensivelossfortheyearendedDecember31,2014.

OnMarch11,2015,theCompanyclosedafollow-onofferingofitscommonstock,inwhichsellingstockholderssold12,000,000sharesofcommonstockatapublicofferingpriceof$19.00pershare.Theunderwriteralsoexerciseditsoverallotmentoptiontopurchaseanadditional1,800,000sharesofcommonstockfromthesellingstockholders.TheCompanydidnotreceiveanyproceedsfromthesaleofsharesbythesellingstockholders.TheCompanyincurred$0.7millionofofferingexpensesonbehalfofthesellingstockholders,whichwasincludedingeneralandadministrativeexpenseintheconsolidatedstatementofoperationsandcomprehensivelossfortheyearendedDecember31,2015.

2. Summary of Significant Accounting Policies

Basis of Preparation

Theaccompanyingconsolidatedfinancialstatements,whichincludetheaccountsoftheCompanyanditssubsidiaries,havebeenpreparedusingaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica(“U.S.GAAP”).Allintercompanytransactionshavebeeneliminatedonconsolidation.TheCompanyhasreviewedthecriteriaoftheFinancialAccountingStandardsBoard(“FASB”)AccountingStandardsCodification(“ASC”)280-10,SegmentReporting,anddeterminedthattheCompanyiscomprisedofonlyonesegmentforreportingpurposes.

Use of Estimates

U.S.GAAPrequiresmanagementtomakecertainestimates,judgmentsandassumptionsthataffectthereportedamountsofassets,liabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateoftheconsolidatedfinancialstatementsandthereportedamountsofrevenueandexpensesduringthereportingperiod.Theseestimates,judgmentsandassumptionsusedinpreparingtheaccompanyingconsolidatedfinancialstatementsarebasedontherelevantfactsandcircumstancesasofthedateoftheconsolidatedfinancialstatements.AlthoughtheCompanyregularlyassessestheseestimates,judgmentsandassumptionsusedinpreparingtheconsolidatedfinancialstatements,actualresultscoulddifferfromthoseestimates.Changesinestimatesarerecordedintheperiodinwhichtheybecomeknown.ThemoresignificantestimatesreflectedintheseconsolidatedfinancialstatementsincludeestimatesoffairvalueofassetsacquiredandliabilitiesassumedunderpurchaseaccountingrelatedtotheCompany’sacquisitionsandwhenevaluatinggoodwillandlong-livedassetsforpotentialimpairment,theestimatedusefullivesofintangibleanddepreciableassets,revenuerecognitionformultiple-elementarrangements,stock-basedcompensation,contingentconsideration,derivativeinstruments,certainaccruals,reservesanddeferredtaxes.

Cash Equivalents

Cashandcashequivalentsincludeallhighlyliquidinvestmentswithremainingmaturitiesofthreemonthsorlessatthedateofpurchase.

Restricted Cash

Restrictedcashiscomposedofcertificatesofdepositsandcashheldbymerchantbanksandpaymentprocessors,whichprovidecollateralagainstanycharge-backs,fees,orotheritemsthatmaybechargedbacktotheCompanybycreditcardcompaniesandothermerchants.

98

Table of Contents

Accounts Receivable

Accountsreceivableisprimarilycomposedofcashduefromcreditcardcompaniesforunsettledtransactionschargedtosubscribers’creditcards.Astheseamountsreflectauthenticatedtransactionsthatarefullycollectible,theCompanydoesnotmaintainanallowancefordoubtfulaccounts.TheCompanyalsoaccruesforearnedreferralfeesandcommissions,whicharegovernedbyreselleroraffiliateagreements,whentheamountisreasonablyestimable.

Prepaid Domain Name Registry Fees

PrepaiddomainnameregistryfeesrepresentamountsthatarepaidinfullatthetimeadomainisregisteredbyoneoftheCompany’sregistrarsonbehalfofacustomer.Theregistryfeesarerecognizedonastraight-linebasisoverthetermofthedomainregistrationperiod.

Fair Value of Financial Instruments

ThecarryingamountsoftheCompany’sfinancialinstruments,whichincludecashequivalents,accountsreceivable,accountspayableandcertainaccruedexpenses,approximatetheirfairvaluesduetotheirshortmaturities.ThecarryingamountoftheCompany’scontingentconsiderationisrecordedatfairvalue.ThefairvalueoftheCompany’snotespayableisbasedontheborrowingratescurrentlyavailabletotheCompanyfordebtwithsimilartermsandaveragematuritiesandapproximatetheircarryingvalue.

Derivative Instruments and Hedging Activities

FASBASC815,DerivativesandHedging(“ASC815”),providesthedisclosurerequirementsforderivativesandhedgingactivitieswiththeintenttoprovideusersoffinancialstatementswithanenhancedunderstandingof:(a)howandwhyanentityusesderivativeinstruments,(b)howtheentityaccountsforderivativeinstrumentsandrelatedhedgeditems,and(c)howderivativeinstrumentsandrelatedhedgeditemsaffectanentity’sfinancialposition,financialperformance,andcashflows.Further,qualitativedisclosuresarerequiredthatexplaintheCompany’sobjectivesandstrategiesforusingderivatives,aswellasquantitativedisclosuresaboutthefairvalueofandgainsandlossesonderivativeinstruments,anddisclosuresaboutcredit-risk-relatedcontingentfeaturesinderivativeinstruments.

AsrequiredbyASC815,theCompanyrecordsallderivativesonthebalancesheetatfairvalue.Theaccountingforchangesinthefairvalueofderivativesdependsontheintendeduseofthederivative,whethertheCompanyhaselectedtodesignateaderivativeinahedgingrelationshipandapplyhedgeaccountingandwhetherthehedgingrelationshiphassatisfiedthecriterianecessarytoapplyhedgeaccounting.Derivativesdesignatedandqualifyingasahedgeoftheexposuretochangesinthefairvalueofanasset,liability,orfirmcommitmentattributabletoaparticularrisk,suchasinterestraterisk,areconsideredfairvaluehedges.Derivativesdesignatedandqualifyingasahedgeoftheexposuretovariabilityinexpectedfuturecashflows,orothertypesofforecastedtransactions,areconsideredcashflowhedges.Derivativesmayalsobedesignatedashedgesoftheforeigncurrencyexposureofanetinvestmentinaforeignoperation.Hedgeaccountinggenerallyprovidesforthematchingofthetimingofgainorlossrecognitiononthehedginginstrumentwiththerecognitionofthechangesinthefairvalueofthehedgedassetorliabilitythatareattributabletothehedgedriskinafairvaluehedgeortheearningseffectofthehedgedforecastedtransactionsinacashflowhedge.TheCompanymayenterintoderivativecontractsthatareintendedtoeconomicallyhedgecertainofitsrisk,eventhoughhedgeaccountingdoesnotapplyortheCompanyelectsnottoapplyhedgeaccounting.

InaccordancewiththeFASB’sfairvaluemeasurementguidanceinASU2011-04,FairValueMeasurement(Topic820):AmendmentstoAchieveCommonFairValueMeasurementandDisclosureRequirements,theCompanymadeanaccountingpolicyelectiontomeasurethecreditriskofitsderivativefinancialinstrumentsthataresubjecttomasternettingagreementsonanetbasisbycounterpartyportfolio.

99

Table of Contents

Concentrations of Credit and Other Risks

FinancialinstrumentswhichpotentiallysubjecttheCompanytoconcentrationsofcreditriskconsistprincipallyofcashandcashequivalentsandaccountsreceivable.Cashandcashequivalentsaremaintainedataccreditedfinancialinstitutions,andPayPalbalancesareattimeswithoutandinexcessoffederallyinsuredlimits.TheCompanyhasneverexperiencedanylossesrelatedtothesebalancesanddoesnotbelievethatitissubjecttounusualcreditriskbeyondthenormalcreditriskassociatedwithcommercialbankingrelationships.

FortheyearsendedDecember31,2013,2014and2015,nosubscriberrepresented10%ormoreoftheCompany’stotalrevenue.

Property and Equipment

Propertyandequipmentisrecordedatcostorfairvalueifacquiredinanacquisition.TheCompanyalsocapitalizesthedirectcostsofconstructingadditionalcomputerequipmentforinternaluse,aswellasupgradestoexistingcomputerequipmentwhichextendtheusefullife,capacityoroperatingefficiencyoftheequipment.Capitalizedcostsincludethecostofmaterials,shippingandtaxes.Materialsusedforrepairsandmaintenanceofcomputerequipmentareexpensedandrecordedasacostofrevenue.Materialsonhandandconstruction-in-processarerecordedaspropertyandequipment.Assetsrecordedundercapitalleasearedepreciatedovertheleaseterm.Depreciationiscomputedusingthestraight-linemethodovertheestimatedusefullivesoftherelatedassetsasfollows:

Building Thirty-fiveyearsSoftware TwotothreeyearsComputersandofficeequipment ThreeyearsFurnitureandfixtures FiveyearsLeaseholdimprovements Shorterofusefullifeorremainingtermofthelease

Software Development Costs

TheCompanyaccountsforsoftwaredevelopmentcostsforinternalusesoftwareundertheprovisionsofASC350-40,“Internal-UseSoftware”.Accordingly,certaincoststodevelopinternal-usecomputersoftwarearecapitalized,providedthesecostsareexpectedtoberecoverable.DuringtheyearsendedDecember31,2013,2014and2015,theCompanycapitalizedinternal-usesoftwaredevelopmentcostsof$1.2million,$5.4millionand$5.5million,respectively.

Investments

TheCompanyhasminorityinvestmentsinseveralprivately-heldcompanies.Investmentsinprivately-heldcompanies,inwhichtheCompanyhasavotinginterestbetween20%and50%andexercisessignificantinfluenceareaccountedforusingtheequitymethodofaccounting.Underthismethod,theinvestmentbalance,originallyrecordedatcost,isadjustedtorecognizetheCompany’sshareofnetearningsorlossesoftheinvesteecompanyastheyoccur,limitedtotheextentoftheCompany’sinvestmentin,advancestoandcommitmentsfortheinvestee.TheCompany’sshareofnetearningsorlossesoftheinvesteearereflectedinequitylossesofunconsolidatedentities,netoftax,intheCompany’saccompanyingconsolidatedstatementsofoperations.InvestmentsinwhichtheCompanyhasavotinginterestoflessthan20%andoverwhichitdoesnothavesignificantinfluenceareaccountedforunderthecostmethodofaccounting.

TheCompanyassessestheneedtorecordimpairmentlossesonitsinvestmentsandrecordssuchlosseswhentheimpairmentofaninvestmentisdeterminedtobeotherthantemporaryinnature.OnOctober31,2013theCompanyreducedits50%votinginterestinoneoftheminorityinvestmentsto40%andrecordeda$2.6millionimpairmentcharge(seeNote8).

100

Table of Contents

Goodwill

GoodwillrelatestoamountsthataroseinconnectionwiththeCompany’svariousbusinesscombinationsandrepresentsthedifferencebetweenthepurchasepriceandthefairvalueoftheidentifiableintangibleandtangiblenetassetswhenaccountedforusingthepurchasemethodofaccounting.Goodwillisnotamortized,butissubjecttoperiodicreviewforimpairment.Eventsthatwouldindicateimpairmentandtriggeraninterimimpairmentassessmentinclude,butarenotlimitedto,currenteconomicandmarketconditions,includingadeclineintheequityvalueofthebusiness,asignificantadversechangeincertainagreementsthatwouldmateriallyaffectreportedoperatingresults,businessclimateoroperationalperformanceofthebusinessandanadverseactionorassessmentbyaregulator.Additionally,thereorganizationorchangeinthenumberofreportingunitscouldresultinthereassignmentofGoodwillbetweenreportingunitsandmaytriggeranimpairmentassessment.

InaccordancewithASC350,Intangibles—GoodwillandOther,orASC350,theCompanyisrequiredtoreviewgoodwillbyreportingunitforimpairmentatleastannuallyormoreoftenifthereareindicatorsofimpairmentpresent.UnderU.S.GAAP,areportingunitiseithertheequivalentof,oronelevelbelow,anoperatingsegment.TheCompanyhasdetermineditoperatesinonesegmentanditsentirebusinessrepresentsonereportingunit.Historically,theCompanyhasperformeditsannualimpairmentanalysisduringthefourthquarterofeachyear.TheprovisionsofASC350requirethatatwo-stepimpairmenttestbeperformedforgoodwill.Inthefirststep,theCompanycomparesthefairvalueofitsreportingunittowhichgoodwillhasbeenallocatedtoitscarryingvalue.Ifthefairvalueofthereportingunitexceedsthecarryingvalueofthenetassetsassignedtothatreportingunit,goodwillisconsiderednotimpairedandtheCompanyisnotrequiredtoperformfurthertesting.Ifthecarryingvalueofthenetassetsassignedtothereportingunitexceedsthefairvalueofthereportingunit,thentheCompanymustperformthesecondstepoftheimpairmenttestinordertodeterminetheimpliedfairvalueofthereportingunit’sgoodwill.Ifthecarryingvalueofareportingunit’sgoodwillexceedsitsimpliedfairvalue,thentheCompanywouldrecordanimpairmentlossequaltothedifference.

TheCompanyassessesfairvaluebasedoncurrentmarketcapitalization.AsofDecember31,2014and,2015,thefairvalueoftheCompany’sreportingunitexceededthecarryingvalueofthereportingunit’snetassets.Therefore,noimpairmentexistedasofthosedates.

Determiningthefairvalueofareportingunit,ifapplicable,requirestheCompanytomakejudgmentsandinvolvestheuseofsignificantestimatesandassumptions.Theseestimatesandassumptionsrelateto,amongotherthings,revenuegrowthratesandoperatingmarginsusedtocalculateprojectedfuturecashflows,risk-adjusteddiscountrates,futureeconomicandmarketconditionsanddeterminationofappropriatemarketcomparables.TheCompanybasesitsfairvalueestimatesonassumptionsitbelievestobereasonablebutthatareunpredictableandinherentlyuncertain.Actualfutureresultsmaydifferfromthoseestimates.

TheCompanyhadgoodwillof$1,105.0millionand$1,207.3millionasofDecember31,2014and2015,respectively,andnoimpairmentchargeshavebeenrecorded.

Long-Lived Assets

TheCompany’slong-livedassetsconsistprimarilyofintangibleassets,includingacquiredsubscriberrelationships,tradenames,intellectualproperty,developedtechnology,domainnamesavailableforsaleandin-processresearchanddevelopment(“IPR&D”).TheCompanyalsohaslong-livedtangibleassets,primarilyconsistingofpropertyandequipment.ThemajorityoftheCompany’sintangibleassetsarerecordedinconnectionwithitsvariousacquisitions.TheCompany’sintangibleassetsarerecordedatfairvalueatthetimeoftheiracquisition.TheCompanyamortizesintangibleassetsovertheirestimatedusefullives.

Determinationoftheestimatedusefullivesoftheindividualcategoriesofintangibleassetsisbasedonthenatureoftheapplicableintangibleassetandtheexpectedfuturecashflowstobederivedfromtheintangibleasset.Amortizationofintangibleassetswithfinitelivesisrecognizedinaccordancewiththeirestimatedprojectedcashflows.

101

Table of Contents

TheCompanyevaluateslong-livedintangibleandtangibleassetswhenevereventsorchangesincircumstancesindicatethatthecarryingamountofanassetmaynotberecoverable.Ifindicatorsofimpairmentarepresentandundiscountedfuturecashflowsarelessthanthecarryingamount,thefairvalueoftheassetsisdeterminedandcomparedtothecarryingvalue.Ifthefairvalueislessthanthecarryingvalue,thenthecarryingvalueoftheassetisreducedtotheestimatedfairvalueandanimpairmentlossischargedtoexpenseintheperiodtheimpairmentisidentified.NosuchimpairmentlosseshavebeenidentifiedfortheyearsendedDecember31,2013,2014and2015.

Indefinitelifeintangibleassetsincludedomainnamesthatareavailableforsalewhicharerecordedatcosttoacquire.Theseassetsarenotbeingamortizedandarebeingtestedforimpairmentannuallyandwhenevereventsorchangesincircumstanceindicatethattheircarryingvaluemaynotberecoverable.Whenadomainnameissold,theCompanyrecordsthecostofthedomainincostofrevenue.

Acquired In-Process Research and Development (IPR&D)

AcquiredIPR&DrepresentsthefairvalueassignedtoresearchanddevelopmentassetsthattheCompanyacquiresthathavenotbeencompletedatthedateofacquisition.TheacquiredIPR&Discapitalizedasanintangibleassetandreviewedonaquarterlybasistodeterminefutureuse.AnyimpairmentlossoftheacquiredIPR&Dischargedtoexpenseintheperiodtheimpairmentisidentified.NosuchimpairmentlosseshavebeenidentifiedfortheyearsendedDecember31,2013,2014and2015.Uponcommercialization,theacquiredfairvalueoftheIPR&Dwillbeamortizedoveritsestimatedusefullife.

During2014theCompanycapitalized$4.6millionofIPR&DinconnectionwithitsacquisitionofWebZai,Ltd.(“Webzai”).DuringtheyearendedDecember31,2015$3.2millionwasreclassifiedtodevelopedtechnologyasofDecember31,2015andisbeingamortizedovertheestimatedusefullifeof4.0years.During2014,theCompanydidnotcapitalizeanyIPR&DinconnectionwithitsacquisitionsofthewebpresencebusinessofDirecti(“Directi”),thedomainnamebusiness,theassetsoftheBuyDomainsbusinessofNameMedia,Inc.(“BuyDomains”)andtheassetsofArvixeLLC(“Arvixe”).During2015,theCompanydidnotcapitalizeanyIPR&DinconnectionwithitsacquisitionsoftheassetsoftheU.S.retailportionoftheVeriobusinessofNTTAmerica,Inc.(“Verio”),theassetsofWorldWideWebHosting,LLC(“WWWH”),theassetsofAceDataCenters,Inc.(“AceDC”)andtheownershipinterestsinAceHoldings,LLC(“AceHoldings”),(theseacquiredassetsandownershipinterests,collectively,“Ace”)andtheassetsofEcommerce,LLC,(“Ecommerce”).

Deferred Financing Costs

DeferredfinancingcostscomprisefeesandcostsincurredbytheCompanyinconnectionwithobtainingnotespayable.Deferredfinancingcostsareamortizedoverthetermoftherelateddebtagreement.

Revenue Recognition

TheCompanygeneratesrevenueprimarilyfromsellingsubscriptionsforcloud-basedproductsandservices.ThesubscriptionsaresimilaracrossalloftheCompany’sbrandsandareprovidedundercontractspursuanttowhichtheCompanyhasongoingobligationstosupportthesubscriber.Thesecontractsaregenerallyforserviceperiodsofupto36monthsandtypicallyrequirepaymentinadvance.TheCompanyrecognizestheassociatedrevenueratablyovertheserviceperiod, whethertheassociatedrevenueisderivedfromadirectsubscriberorthroughareseller.Deferredrevenuerepresentstheliabilitytosubscribersforadvancebillingsforservicesnotyetprovidedandthefairvalueoftheassumedliabilityoutstandingforsubscriberrelationshipspurchasedinanacquisition.

TheCompanysellsdomainnameregistrationsthatprovideasubscriberwiththeexclusiveuseofadomainname.ThesedomainsareprimarilyobtainedbyoneoftheCompany’sregistrarsonthesubscriber’sbehalf,ortoalesserextentbytheCompanyfromthird-partyregistrarsonthesubscriber’sbehalf.Domainregistrationfeesarenon-refundable.

102

Table of Contents

RevenuefromthesaleofadomainnameregistrationbyaregistrarwithintheCompanyisrecognizedratablyoverthesubscriber’sserviceperiodastheCompanyhastheobligationtoprovidesupportoverthedomainterm.RevenuefromthesaleofadomainnameregistrationpurchasedbytheCompanyfromathird-partyregistrarisrecognizedwhenthesubscriberisbilledonagrossbasisastherearenoremainingCompanyobligationsoncethesaletothesubscriberoccurs,andtheCompanyhasfulldiscretiononthesalespriceandbearsallcreditrisk.

Revenuefromthesaleofpremiumdomainsisrecognizedwhenpersuasiveevidenceofanarrangementtosellsuchdomainsexists,deliveryofanauthorizationkeytoaccessthedomainnamehasoccurred,thefeeforthesaleofthepremiumdomainisfixedordeterminable,andcollectionofthefeeforthesaleofthepremiumdomainisdeemedprobable.

Revenuefromthesaleofnon-termbasedapplicationsandservices,suchascertainonlinesecurityproductsandprofessionaltechnicalservices,referralfeesandcommissions,isrecognizedwhentheproductispurchased,theserviceisprovidedorthereferralfeeorcommissionisearned,respectively.

AsubstantialamountoftheCompany’srevenueisgeneratedfromtransactionsthataremultiple-elementservicearrangementsthatmayincludehostingplans,domainnameregistrations,andothercloud-basedproductsandservices.

TheCompanyfollowstheprovisionsoftheFASB,AccountingStandardsUpdate(“ASU”)No.2009-13(“ASU2009-13”),RevenueRecognition(Topic605),Multiple-DeliverableRevenueArrangements—aconsensusoftheFASBEmergingIssuesTaskForceandallocatesrevenuetoeachdeliverableinamultiple-elementservicearrangementbasedonitsrespectiverelativesellingprice.

UnderASU2009-13,totreatdeliverablesinamultiple-elementservicearrangementasseparateunitsofaccounting,thedeliverablesmusthavestandalonevalueupondelivery.Ifthedeliverableshavestandalonevalueupondelivery,theCompanyaccountsforeachdeliverableseparately.Hostingservices,domainnameregistrations,cloud-basedproductsandserviceshavestandalonevalueandareoftensoldseparately.

Whenmultipledeliverablesincludedinamultiple-elementservicearrangementareseparatedintodifferentunitsofaccounting,thetotaltransactionamountisallocatedtotheidentifiedseparateunitsbasedonarelativesellingpricehierarchy.TheCompanydeterminestherelativesellingpriceforadeliverablebasedonvendorspecificobjectiveevidence(“VSOE”)offairvalue,ifavailable,orbestestimateofsellingprice(“BESP”),ifVSOEisnotavailable.TheCompanyhasdeterminedthatthird-partyevidenceofsellingprice(“TPE”)isnotapracticalalternativeduetodifferencesinitsmulti-brandofferingscomparedtocompetitorsandthelackofavailabilityofrelevantthird-partypricinginformation.TheCompanyhasnotestablishedVSOEforitsofferingsduetolackofpricingconsistency,theintroductionofnewproducts,servicesandotherfactors.Accordingly,theCompanygenerallyallocatesrevenuetothedeliverablesinthearrangementbasedontheBESP.TheCompanydeterminesBESPbyconsideringitsrelativesellingprices,competitivepricesinthemarketplaceandmanagementjudgment;thesesellingprices,however,mayvarydependingupontheparticularfactsandcircumstancesrelatedtoeachdeliverable.TheCompanyanalyzesthesellingpricesusedinitsallocationoftransactionamount,ataminimum,onaquarterlybasis.Sellingpricesareanalyzedonamorefrequentbasisifasignificantchangeinourbusinessnecessitatesamoretimelyanalysis.

TheCompanymaintainsareserveforrefundsandchargebacksrelatedtorevenuethathasbeenrecognizedandisexpectedtoberefunded.TheCompanyhadarefundandchargebackreserveof$0.6millionand$0.5millionasofDecember31,2014and2015,respectively.TheportionofdeferredrevenuethatisexpectedtoberefundedatDecember31,2014and2015was$2.2millionand$1.8million,respectively.Basedonrefundhistory,asignificantmajorityofrefundshappeninthesamefiscalmonththatthecustomercontractstartsorrenews.Approximately80%ofallrefundshappeninthesamefiscalmonththatthecontractstartsorrenews,andapproximately92%ofallrefundshappenwithin45daysofthecontractstartorrenewaldate.

103

Table of Contents

Direct Costs of Revenue

TheCompany’sdirectcostsofrevenueincludeonlythosecostsdirectlyincurredinconnectionwiththeprovisionofitscloud-basedproductsandservices.Thedirectcostsofregisteringdomainnameswithregistriesarespreadoverthetermsofthearrangementandthecostofresellingdomainsofotherthird-partyregistrarsareexpensedasincurred.Costofrevenueincludesdepreciationondatacenterequipmentandsupportinfrastructureandamortizationexpenserelatedtotheamortizationoflong-livedintangibleassets.

Engineering and Development Costs

EngineeringanddevelopmentcostsincurredinthedevelopmentandmaintenanceoftheCompany’stechnologyinfrastructureareexpensedasincurred.

Sales and Marketing Costs

TheCompanyengagesinsalesandmarketingthroughvariousonlinemarketingchannels,whichincludeaffiliateandsearchmarketingaswellasonlinepartnerships.TheCompanyexpensessalesandmarketingcostsasincurred.FortheyearsendedDecember31,2013,2014and2015,theCompany’ssalesandmarketingcostswere$117.7million,$146.8millionand$145.4million,respectively.

Foreign Currency

TheCompanyhassalesinanumberofforeigncurrencies.In2013,theCompanycommencedoperationsinforeignlocationswhichreportinthelocalcurrency.TheassetsandliabilitiesoftheCompany’sforeignlocationsaretranslatedintoU.S.dollarsatcurrentexchangeratesasofthebalancesheetdate,andrevenuesandexpensesaretranslatedataveragemonthlyexchangerates.Theresultingtranslationadjustmentsarerecordedasaseparatecomponentofstockholders’equityandhavenotbeenmaterial.Foreigncurrencytransactiongainsandlossesrelatetothesettlementofassetsorliabilitiesinanothercurrency.

Foreigncurrencytransactionlosseswere$1.2million,$0.8millionand$1.9millionduringtheyearsendedDecember31,2013,2014and2015,respectively.TheseamountsarerecordedingeneralandadministrativeexpenseintheCompany’sconsolidatedstatementsofoperationsandcomprehensiveloss.

Income Taxes

IncometaxesareaccountedforinaccordancewithASC740,AccountingforIncomeTaxes,orASC740.Deferredtaxassetsandliabilitiesarerecognizedfortheestimatedfuturetaxconsequencesattributabletodifferencesbetweenthefinancialstatementcarryingamountsofexistingassetsandliabilitiesandtheirrespectivetaxbasesandoperatinglossandtaxcreditcarry-forwards.Deferredtaxassetsandliabilitiesaremeasuredusingenactedtaxratesexpectedtoapplytotaxableincomeintheyearsinwhichthosetemporarydifferencesareexpectedtoberecoveredorsettled.Theeffectondeferredtaxassetsandliabilitiesofachangeintaxratesisrecognizedinincomeintheperiodthatincludestheenactmentdate.

ASC740clarifiestheaccountingforincometaxesbyprescribingaminimumrecognitionthresholdthatataxpositionisrequiredtomeetbeforebeingrecognizedinthefinancialstatements.TheCompanyrecognizestheeffectofincometaxpositionsonlyifthosepositionsaremorelikelythannottobesustained.Recognizedincometaxpositionsaremeasuredatthelargestamountthatismorelikelythannottoberealized.Changesinrecognitionormeasurementarereflectedintheperiodinwhichthechangeinjudgmentoccurs.TherewerenounrecognizedtaxbenefitsintheyearsendedDecember31,2013,2014and2015.

TheCompanyrecordsinterestrelatedtounrecognizedtaxbenefitsininterestexpenseandpenaltiesinoperatingexpenses.DuringtheyearsendedDecember31,2013,2014and2015,theCompanydidnotrecognizeanyinterestandpenaltiesrelatedtounrecognizedtaxbenefits.

104

Table of Contents

Stock-Based Compensation

TheCompanymayissuerestrictedstockunits,restrictedstockawardsandstockoptionswhichvestuponthesatisfactionofaperformanceconditionand/oraservicecondition.TheCompanyfollowstheprovisionsofASC718,Compensation—StockCompensation,orASC718,whichrequiresemployeestock-basedpaymentstobeaccountedforunderthefairvaluemethod.Underthismethod,theCompanyisrequiredtorecordcompensationcostbasedontheestimatedfairvalueforstock-basedawardsgrantedovertherequisiteserviceperiodsfortheindividualawards,whichgenerallyequalsthevestingperiods;netofestimatedforfeitures.TheCompanyusesthestraight-lineamortizationmethodforrecognizingstock-basedcompensationexpense.Inaddition,forstock-basedawardswherevestingisdependentuponachievingcertainperformancegoals,theCompanyestimatesthelikelihoodofachievingtheperformancegoalsagainstestablishedperformancetargets.

TheCompanyestimatesthefairvalueofemployeestockoptionsonthedateofgrantusingtheBlack-Scholesoption-pricingmodel,whichrequirestheuseofhighlysubjectiveestimatesandassumptions.Forrestrictedstockawardsgranted,theCompanyestimatesthefairvalueofeachrestrictedstockawardbasedontheclosingtradingpriceofitscommonstockonthedateofgrant.

Net Loss per Share

TheCompanyconsideredASC260-10,EarningsperShare,orASC260-10,whichrequiresthepresentationofbothbasicanddilutedearningspershareintheconsolidatedstatementsofoperationsandcomprehensiveloss.TheCompany’sbasicnetlosspershareiscomputedbydividingnetlossbytheweightedaveragenumberofsharesofcommonstockoutstandingfortheperiod,and,iftherearedilutivesecurities,dilutedincomepershareiscomputedbyincludingcommonstockequivalentswhichincludessharesissuableupontheexerciseofstockoptions,netofsharesassumedtohavebeenpurchasedwiththeproceeds,usingthetreasurystockmethod.

TheCompany’spotentiallydilutivesharesofcommonstockareexcludedfromthedilutedweighted-averagenumberofsharesofcommonstockoutstandingastheirinclusioninthecomputationwouldbeanti-dilutiveduetonetlosses.FortheyearsendedDecember31,2013,2014and2015,allnon-vestedsharesgrantedpriortotheCompany’sIPOinOctober2013,stockoptions,restrictedstockawardsandrestrictedstockunitswereexcludedfromthecalculationofdilutedearningspershareastheirinclusionwouldhavebeenanti-dilutiveasaresultofthenetlossesfortheseperiods. For the Year Ended December 31, 2013 2014 2015

(in thousands, except share amounts

and per share data) Computation of basic and diluted net loss per share: NetlossattributabletoEnduranceInternationalGroupHoldings,Inc. $ (159,187) $ (42,835) $ (25,770)

NetlosspershareattributabletoEnduranceInternationalGroupHoldings,Inc.: Basicanddiluted $ (1.55) $ (0.34) $ (0.20)

WeightedaveragenumberofcommonsharesusedincomputingnetlosspershareattributabletoEnduranceInternationalGroupHoldings,Inc.:

Basicanddiluted 102,698,773 127,512,346 131,340,557

105

Table of Contents

Guarantees

TheCompanyhasthefollowingguaranteesandindemnifications:

Inconnectionwithitsacquisitionsofcompaniesandassetsfromthirdparties,theCompanymayprovideindemnificationorguaranteestothesellersintheeventofdamagesforbreachesorotherclaimscoveredbysuchagreements.

Inconnectionwithvariousvendorcontracts,includingthosebywhichaproductorserviceofathirdpartyisofferedtosubscribersoftheCompany,standardguarantyofsubsidiaryobligationsandindemnificationobligationsexist.

AspermittedunderDelawareandotherapplicablelaw,theCompany’scharterandby-lawsandthoseofitssubsidiarycompaniesprovidethattheCompanyshallindemnifyitsofficersanddirectorsforcertainliabilities,includingthoseincurredbyreasonofthefactthattheofficerordirectoris,was,orhasagreedtoserveasanofficerordirectoroftheCompany.ThemaximumpotentialamountoffuturepaymentstheCompanycouldberequiredtomakeundertheseindemnificationprovisionsisunlimited.

TheCompanyleasesofficespaceandequipmentundervariousoperatingleases.TheCompanyhasstandardindemnificationarrangementsundertheseleasesthatrequiretheCompanytoindemnifythelessoragainstlosses,liabilitiesandclaimsincurredinconnectionwiththepremisesorequipmentcoveredbytheCompany’sleaseagreements,theCompany’suseofthepremises,propertydamageorpersonalinjuryandbreachoftheagreement.

ThroughDecember31,2015,theCompanyhadnotexperiencedanylossesrelatedtotheseindemnificationobligationsandnoclaimswithrespecttheretowereoutstanding.TheCompanydoesnotexpectsignificantclaimsrelatedtotheseindemnificationobligationsandconsequentlyconcludedthatthefairvalueoftheseobligationsisnegligibleandnorelatedliabilitieswereestablished.

Recent Accounting Pronouncements

InMay2014,theFASBissuedASUNo.2014-09,RevenuefromContractswithCustomers(Topic606),orASU2014-09,whichsupersedesnearlyallexistingrevenuerecognitionguidanceunderU.S.GAAP.ThecoreprincipleofASU2014-09istorecognizerevenueswhenpromisedgoodsorservicesaretransferredtocustomersinanamountthatreflectstheconsiderationtowhichtheentityexpectstobeentitledforthosegoodsorservices.ASU2014-09definesafivestepprocesstoachievethiscoreprincipleand,indoingso,morejudgmentsandestimatesmayberequiredwithintherevenuerecognitionprocessthanarerequiredunderexistingU.S.GAAP.InJuly2015,theFASBapprovedaone-yeardeferraloftheeffectivedatetoJanuary1,2018,withearlyadoptiontobepermittedasoftheoriginaleffectivedateofJanuary1,2017.Oncethisstandardbecomeseffective,companiesmayuseeitherofthefollowingtransitionmethods:(i)afullretrospectiveapproachreflectingtheapplicationofthestandardineachreportingperiodwiththeoptiontoelectcertainpracticalexpedients,or(ii)aretrospectiveapproachwiththecumulativeeffectofinitiallyadoptingASU2014-09recognizedatthedateofadoption(whichincludesadditionalfootnotedisclosures).TheCompanyiscurrentlyevaluatingtheimpactofitspendingadoptionofASU2014-09onitsconsolidatedfinancialstatementsandhasnotyetdeterminedthemethodbywhichitwilladoptthestandard.

InFebruary2015,theFASBissuedASUNo.2015-02,AmendmentstotheConsolidationAnalysis,orASU2015-02.Thisnewguidanceprovidesarevisedconsolidationmodelthatreportingentitiesusetoevaluatepartnershipsandsimilarentities,evaluateserviceprovidersanddecisionmakersastheyrelatetoavariableinterestentity,referredtoasaVIE,andexaminehowrelatedpartyinterestsinaVIEcanaffecttheconsolidationofthatVIE.ASU2015-02iseffectiveforannualreportingperiodsbeginningafterDecember15,2015withearlyadoptionpermitted.TheCompanybelievestheadoptionofASU2015-02doesnothaveamaterialimpactonitsconsolidatedfinancialstatements.

InApril2015,theFASBissuedASUNo.2015-03,Interest—ImputationofInterest,SimplifyingthePresentationofDebtIssuanceCosts,orASU2015-03.Thisnewguidancechangesthebalancesheetpresentation

106

Table of Contents

fordeferredfinancingcostsfrombeingpresentedasanassettobeingadeductionfromtherelatedrecognizedliability.ASU2015-03iseffectiveforannualreportingperiodsbeginningafterDecember15,2016.TheCompanyisevaluatingthepotentialimpactofASU2015-03anddoesnotbelieveitwillhaveamaterialimpactonitsconsolidatedfinancialstatements.

InApril2015,theFASBissuedASUNo.2015-05,IntangiblesGoodwillandOther—InternalUseSoftware(Subtopic350-40):Customer’sAccountingforFeesPaidinaCloudComputingArrangement.Thisnewguidancewillhelpentitiesevaluatetheaccountingforfeespaidbyacustomerinacloudcomputingarrangementbyprovidingguidanceastowhetheranarrangementincludesthesaleorlicenseofsoftware.ASU2015-05iseffectiveforannualreportingperiodsbeginningafterDecember15,2015.TheCompanybelievestheadoptionofASU2015-05doesnothaveamaterialimpactonitsconsolidatedfinancialstatements.

InSeptember2015,theFASBissuedASUNo.2015-16,BusinessCombinations(Topic805):SimplifyingtheAccountingforMeasurement-PeriodAdjustments.Thisnewguidancerequiresanacquirertorecognizeadjustmentstoprovisionalamountsthatareidentifiedduringthemeasurementperiodinthereportingperiodinwhichtheadjustmentamountsaredetermined.Theacquirerneedstorecord,inthesameperiod’sfinancialstatements,theeffectonearningsofchangesindepreciation,amortizationorotherincomeeffects,ifany,asaresultoftheprovisionalamounts,calculatedasiftheaccountinghadbeencompletedasoftheacquisitiondate.ASU2015-16iseffectiveforannualreportingperiodsbeginningafterDecember15,2015.TheCompanybelievetheadoptionofASU2015-16doesnothaveamaterialeffectonitsaccountingprocesses,howevertheASUwillaffectitsdisclosuresastheCompanyisrequiredtodisclosetheadjustmentsmadeduringthemeasurementperiodandtheireffectontheperiod’searnings.

InNovember2015,theFASBissuedASUNo.2015-17,IncomeTaxes:BalanceSheetClassificationofDeferredTaxes,orASU2015-17.Thisnewguidancerequiresthatdeferredtaxliabilitiesandassetsbeclassifiedasnoncurrentinthebalancesheet,inordertosimplifythepresentationofdeferredincometaxes.ASU2015-17iseffectiveforannualreportingperiodsbeginningafterDecember15,2016.TheCompanybelievestheadoptionofASU2015-17willnothaveamaterialimpactonitsconsolidatedfinancialstatements.

InFebruary2016,theFASBissuedAccountingStandardsUpdateNo.2016-02,Leases.Thenewstandardestablishesaright-of-use(ROU)modelthatrequiresalesseetorecordaROUassetandaleaseliabilityonthebalancesheetforallleaseswithtermslongerthan12months.Leaseswillbeclassifiedaseitherfinanceoroperating,withclassificationaffectingthepatternofexpenserecognitionintheincomestatement.ThenewstandardiseffectiveforfiscalyearsbeginningafterDecember15,2018,includinginterimperiodswithinthosefiscalyears.Amodifiedretrospectivetransitionapproachisrequiredforlesseesforcapitalandoperatingleasesexistingat,orenteredintoafter,thebeginningoftheearliestcomparativeperiodpresentedinthefinancialstatements,withcertainpracticalexpedientsavailable.TheCompanyiscurrentlyevaluatingtheimpactofitspendingadoptionofthenewstandardonitsconsolidatedfinancialstatements.

3. Acquisitions

TheCompanyaccountsfortheacquisitionsofbusinessesusingthepurchasemethodofaccounting.TheCompanyallocatesthepurchasepricetothetangibleandidentifiableintangibleassetsandliabilitiesassumedbasedontheirestimatedfairvalues.Purchasedidentifiableintangibleassetstypicallyincludesubscriberrelationships,tradenames,domainnamesheldforsale,developedtechnologyandIPR&D.ThemethodologiesusedtodeterminethefairvalueassignedtosubscriberrelationshipsanddomainnamesheldforsalearetypicallybasedontheexcessearningsmethodthatconsidersthereturnreceivedfromtheintangibleassetandincludescertainexpensesandalsoconsidersanattritionratebasedontheCompany’sinternalsubscriberanalysisandanestimateoftheaveragelifeofthesubscribers.Thefairvalueassignedtotradenamesistypicallybasedontheincomeapproachusingarelieffromroyaltymethodologythatassumesthatthefairvalueofatradenamecanbemeasuredbyestimatingthecostoflicensingandpayingaroyaltyfeeforthetradenamethattheownerofthetradenameavoids.Thefairvalueassignedtodevelopedtechnologytypicallyusesthecostapproach.ThefairvalueassignedtoIPR&Disbasedonthecostapproach.Ifapplicable,theCompanyestimatesthefairvalueof

107

Table of Contents

contingentconsiderationpaymentsindeterminingthepurchaseprice.Thecontingentconsiderationisthenadjustedtofairvalueinsubsequentperiodsasanincreaseordecreaseincurrentearningsingeneralandadministrativeexpenseintheconsolidatedstatementsofoperations.

Acquisitions—2013

DuringtheyearendedDecember31,2013,theCompanymadethreesmallacquisitions.Underthetermsofthepurchaseagreements,theCompanyacquiredalloftheoutstandingsharesofeachentityforanaggregatepurchasepriceof$5.4millionincashplusdeferredconsiderationpayableof$5.5million.TheCompanyhadestimatedthefairvalueofthecontingentdeferredconsiderationofoneacquisitiontobe$2.7million.AfullandfinalpaymentwassubsequentlymadepriortoDecember31,2013for$2.0million.Thebalanceoftheestimatedearn-outpaymentof$0.7millionwaswritten-downandrecordedasanincreaseinearningsingeneralandadministrativeexpenseintheconsolidatedstatementsofoperationsfortheyearendedDecember31,2013.Thedeferredconsiderationof$2.8millionforoneoftheotheracquisitionsispayablethreeyearsaftertheacquisitiondateandwasrecordedasalong-termliabilityatDecember31,2014andisrecordedasashort-termliabilityatDecember31,2015.Thepurchasepriceoftheseacquisitionswasallocatedtolong-livedintangibleassetsof$5.4millionandgoodwillof$7.3million.

DuringtheyearendedDecember31,2013,theCompanymadeaninitialinvestmentof$8.8milliontoacquirea17.5%interestinaprivately-heldcompanybasedintheUnitedKingdom,JDIBackupLtd.Theagreementprovidedfortheacquisitionofadditionalequityinterestsfromtheshareholdersofthenon-controllinginterest(“NCI”).Inparticular,itprovidedforacalloptionallowingtheCompanytoacquireanadditionalequityinterestduringpre-specifiedcallperiodsandaputoption(onlyifthecalloptionisexercised),forthethennon-controllinginterestshareholders(“NCIshareholders”)toputtheremainingequityinteresttotheCompanywithinpre-specifiedputperiods,providedthatthecalloptionhadbeenexercisedduringtheappropriatecallperiods.Inthefourthquarterof2013,theCompanyexercisedthecalloptioninfullforanadditional$22.2millionincashtoacquireacontrollinginterestinJDIBackup.

Undertheputoption,theNCIshareholderscanputtheirsharestotheCompanyatapricecalculatedatthetimeoftheexerciseoftheputoption,subjecttoaminimumof$24.0million.AstheNCIissubjecttoaputoptionthatisoutsidethecontroloftheCompany,itisdeemedredeemablenon-controllinginterestandnotrecordedinpermanentequity,andisbeingpresentedasmezzanineredeemablenon-controllinginterestontheconsolidatedbalancesheet,andissubjecttotheSECguidanceunderASC480-10-S99,AccountingforRedeemableEquitySecurities.

Upontheexerciseofthecalloption,theCompanyestimatedthefairvalueoftheassetsandliabilitiesinaccordancewiththeguidanceforbusinesscombinations,andestimatedthatthevalueoftheredeemablenon-controllinginterestonDecember11,2013was$20.6million.Thedifferencebetweentheinitialfairvalueoftheredeemablenon-controllinginterestandthevalueexpectedtobepaiduponexerciseoftheputoptionisbeingaccretedovertheperiodcommencingDecember11,2013,anduptotheendofthefirstputoptionperiod,whichcommencesontheeighteen-monthanniversaryoftheacquisitiondate.DuringtheyearendedDecember31,2014,theCompanypaid$4.2milliontoincreaseitsinvestmentinJDIBackupandenteredintoanamendmenttotheputoptionwiththeNCIshareholders,whichproportionatelyreducedthevalueexpectedtobepaiduponexercise.Adjustmentstothecarryingamountoftheredeemablenon-controllinginterestarechargedtoadditionalpaid-incapital.Theestimatedvalueoftheredeemablenon-controllinginterestasofDecember31,2014was$30.5millionandwas$0atDecember31,2015astherewasnolongeranon-controllinginterest.SeeNote13tothefinancialstatementsforadditionalinformation.

Theestimatedpurchasepriceof$31.0millionandminorityinterestof$20.6millionwasallocatedprimarilytogoodwillof$38.0million,long-livedintangibleassetsof$28.5millionandpropertyandequipmentof$0.3million,whichwereoffsetby$9.3millionofdeferredrevenue,otherliabilitiesof$2.6million,deferredtaxliabilitiesof$1.9millionandnegativenetworkingcapitalof$1.4million.Goodwillallocatedtotheacquisitionisnottaxdeductible.

108

Table of Contents

Acquisitions—2014

Directi

OnJanuary23,2014,theCompanyacquiredthewebpresencebusinessofDirectifromDirectiWebTechnologiesHoldings,Inc.(“DirectiHoldings”).Directiprovideswebpresencesolutionstosmallandmedium-sizedbusinessesinvariouscountries,includingIndia,theUnitedStates,Turkey,China,RussiaandIndonesia.TheacquisitionprovidestheCompanywithanestablishedinternationalpresencefocusedongrowingemergingmarketsaswellastheabilitytoexpanditsgeographicfootprintbytakingitsexistingportfolioofbrandstointernationalmarkets.

Thefinalpurchasepriceof$109.8millionconsistedofcashpaymentsof$82.6millioninaggregateandtheissuanceof2,269,579unregisteredsharesoftheCompany’scommonstocktoDirectiHoldingsequivalentto$27.2millionor$12.00pershare.2,123,039sharesoftheCompany’scommonstockwereissuedatclosingand146,540sharesoftheCompany’scommonstockwereissuedinMay2014.Cashpaymentsconsistedofa$5.0millionadvancepaidinAugust2013,$20.5millionpaidattheclosingand$57.1millionindeferredconsiderationthatwaspaidduringtheyearendedDecember31,2014.

Thepurchasepriceof$109.8millionhasbeenallocatedtogoodwillof$91.2million,long-livedintangibleassetsconsistingofsubscriberrelationships,developedtechnology,tradenamesandleaseholdinterestsof$7.7million,$6.4million,$7.4millionand$0.3million,respectively,propertyandequipmentof$2.7million,otherassetsof$4.7millionandworkingcapitalof$0.2million,offsetbydeferredrevenueof$3.0million,otherpayablesof$5.4millionanddeferredtaxliabilitiesof$2.4million.Themajorityofthepurchasepricewasallocatedtogoodwill,whichisnotdeductiblefortaxpurposes.ThegoodwillreflectsthevalueofanestablishedinternationalbusinessandinfrastructurethatenablestheCompanytoincreaseitsmarketpenetrationinemergingmarkets.Theintangibleassetsarebeingamortizedinaccordancewiththeirestimatedprojectedcashflows.Subscriberrelationships,developedtechnology,tradenamesandleaseholdinterestsarebeingamortizedover17years,7years,5yearsand4years,respectively.

Domain Name Business

Inaddition,inconnectionwiththeacquisitionofDirecti,theCompanywasinitiallyobligatedtomakeadditionalaggregatepaymentsofuptoapproximately$62.0millionsubjecttospecifiedterms,conditionsandoperationalcontingencies.Ofthis$62.0million,theCompanyhascommittedatotalof$36.2millionconsistingofcashpaymentsof$27.2millionandfutureearn-outpaymentsof$9.0milliontopurchaseadomainnamebusinessfromacompanyassociatedwiththefoundersofDirectiHoldingspursuanttoagreementsenteredintoduringtheyearendedDecember31,2014.Theestimatedaggregatepurchasepricewas$36.2million,whichwasallocatedonapreliminarybasistolong-livedintangibleassetsof$26.6millionandgoodwillof$9.6million,allofwhichisdeductiblefortaxpurposes.Theintangibleassetsarebeingamortizedinaccordancewiththeirestimatedprojectedcashflows,usingtheacceleratedmethod.ThegoodwillreflectsthevalueofanestablisheddomainportfoliobusinessthatenablestheCompanytomonetizethatdomainportfolio.

DuringtheyearendedDecember31,2014thefairvalueoftheearn-outdecreasedby$47,000.TheCompanyrecordedthisdecreaseinfairvalueingeneralandadministrativeexpense.

Webzai

OnAugust12,2014,theCompanyacquiredWebzai,whichprovidestheCompanywithasimpletousewebsitebuilderandmobilewebsitebuilderproduct,foranaggregatepurchasepriceof$9.5million,ofwhich$7.0millionwaspaidincashattheclosing.TheCompanyisalsoobligatedtopayadditionalconsiderationof$3.0milliononthesecondanniversaryoftheacquisitionifcertaintechnologicalmilestonesareachieved.Thenetpresentvalueoftheadditionalconsiderationis$2.8millionandisincludedintheaggregatepurchasepriceandrecordedasdeferredconsiderationintheCompany’sconsolidatedbalancesheetasofDecember31,2015.Theremaining$0.2millionisbeingaccretedasinterestexpense.

109

Table of Contents

Thepurchasepriceof$9.5millionhasbeenallocatedtolong-livedintangibleassetsconsistingofdevelopedtechnologyandIPR&Dof$4.6millionand$4.6million,respectively,goodwillof$3.0million,deferredtaxliabilityof$2.6millionandnegativeworkingcapitalof$0.1million.Goodwillrelatedtotheacquisitionisnotdeductiblefortaxpurposes.

BuyDomains

OnSeptember18,2014,theCompanycompletedtheacquisitionofsubstantiallyalloftheassetsoftheBuyDomainsbusinessofNameMedia,Inc.BuyDomainsisaproviderofpremiumdomainproducts.TheCompanyexpectsthisacquisitionwillallowittobetterserveitssubscriberdemandforhigherpricedpremiumdomains.

Theaggregatepurchasepricewas$44.9million,ofwhich$41.1millionwaspaidincashattheclosing.TheCompanyisalsoobligatedtopayadditionalconsiderationof$4.5milliononthesecondanniversaryoftheacquisition.Thenetpresentvalueoftheadditionalconsiderationis$4.3millionandisincludedintheaggregatepurchasepriceandrecordedasdeferredconsiderationintheCompany’sconsolidatedbalancesheetasofDecember31,2015.Theremaining$0.3millionwillbeaccretedasinterestexpense.

Thepurchasepriceof$44.9millionhasbeenallocatedtointangibleassetsconsistingofdevelopedtechnology,tradenamesanddomainsavailableforsaleof$7.6million,$1.9millionand$26.9million,respectively,goodwillof$4.2million,prepaidexpensesandothercurrentassetsof$4.0millionandpropertyandequipmentof$0.3million.Goodwillrelatedtotheacquisitionisdeductiblefortaxpurposes.

Arvixe

OnOctober31,2014,theCompanycompletedtheacquisitionofsubstantiallyalloftheassetsofArvixe,whichisawebpresenceprovider.TheCompanyexpectsthisacquisitionwillallowittoleverageitsreachandsizetogeneratebettereconomiesofscale.

Theaggregatepurchasepricewas$22.0million,ofwhich$17.6millionwaspaidincashattheclosing.TheCompanyisalsoobligatedtopayadditionalconsiderationof$4.4milliononthetwelve-monthanniversaryoftheacquisition.

Thepurchasepriceof$22.0millionhasbeenallocatedtointangibleassetsconsistingofdevelopedtechnology,tradenamesandsubscriberrelationshipsof$0.1million,$1.2millionand$8.4million,respectivelyandgoodwillof$15.4million,offsetbydeferredrevenueof$3.1million.Goodwillrelatedtotheacquisitionisdeductiblefortaxpurposes.

Acquisitions—2015

Verio

OnMay26,2015,theCompanyacquiredtheassetsoftheU.S.retailportionoftheVeriobusinessofNTTAmerica,Inc.,whichisaproviderofshared,virtualprivateserver(“VPS”)anddedicatedhostingservices.TheCompanyexpectsthisacquisitiontoleverageitsreachandgeneratebettereconomiesofscale.

Theaggregatepurchasepricewas$13.0million,ofwhich$10.5millionwaspaidincashattheclosing.TheCompanyisobligatedtopaytheremainingcashconsiderationof$2.5milliononthefirstanniversaryoftheacquisition,lessamountsusedtosatisfyanyobligationdeterminedtobeowedtotheCompanyforanyindemnitypursuanttotheassetpurchaseagreement.

Thepurchasepriceof$13.0millionhasbeenallocatedonapreliminarybasistointangibleassetsconsistingofsubscriberrelationshipsandtradenamesof$13.1millionand$0.1million,respectively,andgoodwillof$1.2million,offsetbydeferredrevenueof$1.4million.Goodwillrelatedtotheacquisitionisdeductiblefortaxpurposes.

110

Table of Contents

World Wide Web Hosting

OnJune25,2015,theCompanyacquiredsubstantiallyalloftheassetsofWWWH,whichisaproviderofwebpresencesolutionsdoingbusinessunderthebrandnameSite5.TheCompanypreviouslyhadanequityinterestinWWWH,whichwasoriginallyacquiredwhentheCompanyacquiredHostgator.comLLConJuly13,2012.TheCompanyexpectsthisacquisitionwillallowittoleverageitsreachandgeneratebettereconomiesofscale.

Theaggregatepurchasepricewas$34.9million,$23.0millionofwhichispayableincashand$11.9millionofwhichistheimpliedvalueoftheproratainterestintheacquiredassetsthattheCompanyobtainedupontheseller’sredemptionofits40%equityinterestinWWWH.TheCompanyrecognizeda$5.4milliongainasaresultofthisredemption,whichisrecordedasotherincomeintheCompany’sconsolidatedstatementofoperationsandcomprehensiveloss.Ofthe$23.0millionpayableincash,$18.4millionwaspaidattheclosingandtheCompanyisobligatedtopaytheremainingcashconsiderationof$4.6milliononthefirstanniversaryoftheacquisition,lessamountsusedtosatisfyanyobligationdeterminedtobeowedtotheCompanyforanyindemnitypursuanttotheassetpurchaseagreement.

Thepurchasepriceof$34.9millionhasbeenallocatedonapreliminarybasistointangibleassetsconsistingofsubscriberrelationshipsandtradenamesof$11.0millionand$1.9million,respectively,goodwillof$23.3million,andprepaidexpensesandothercurrentassetsof$1.2million,offsetbydeferredrevenueof$2.5million.Goodwillrelatedtotheacquisitionisdeductiblefortaxpurposes.

Ace Data Center and Ace Holdings

OnSeptember21,2015,theCompanyenteredintoapurchaseagreementwithAceDCtoacquiresubstantiallyalloftheassetsofAceDCandwithAceHoldingsanditsownerstoacquirealloftheownershipinterestsinAceHoldings.AceDCisthemanagerofadatacenterthatprovidescolocation,infrastructureandcarrier-neutralconnectivityservices.ThisdatacenteristheCompany’slargestdatacenter.AceHoldingsownstherealproperty,improvementsandbuildingatandonwhichthedatacenterislocated,includingcertainnon-systemsequipmentandpersonalproperty.TheCompanyexpectsthisacquisitionwillprovidecostefficienciesandincreasedcontroloveritslargestdatacenter.

Theaggregatepurchasepricewas$74.0million,ofwhich$44.4millionwaspaidincashattheclosing.Underthetermsofthepurchaseagreement,withinapproximately75daysoftheclosingdateoftheacquisition,thepurchaseconsiderationwassubjecttoaworkingcapitaladjustmentandataxgrossupadjustment,whichresultedinanadditional$0.7millionpaymentfromtheCompanyonDecember2,2015.TheCompanyisobligatedtopaytheremainingcashconsiderationof$31.5milliononthefirstanniversaryoftheacquisition,lessamountsusedtosatisfyanyobligationdeterminedtobeowedtotheCompanyforanyindemnitypursuanttotheassetpurchaseagreement.Thenetpresentvalueoftheremainingcashconsiderationis$28.9million,whichwastheamountusedtocalculatethe$74.0millionaggregatepurchasepriceabove.Anaggregateamountof$0.7millionfortheaccretionofthepresentvalueoftheremainingcashconsiderationisincludedininterestexpensefortheyearendedDecember31,2015,resultinginthenetpresentvalueoftheremainingcashconsiderationatDecember31,2015of$29.6million.

Thepurchasepriceof$74.0millionhasbeenallocatedonapreliminarybasistopropertyandequipment,includingrealproperty,of$12.1million,goodwillof$62.2million,prepaidexpensesandothercurrentassetsof$0.2millionanddevelopedtechnologyof$0.1million,offsetbyotherliabilitiesof$0.6million.ThegoodwillreflectsthevalueofestimatedcostefficienciesgainedfortheCompanybyowningitsowndatacenter.Goodwillrelatedtotheacquisitionisdeductiblefortaxpurposes.

111

Table of Contents

Ecommerce

OnNovember2,2015,theCompanyacquiredtheassetsofEcommerce,whichisaproviderofshared,VPSandcloudhostingservices,domainregistrationservicesandadd-onproducts.TheCompanyexpectsthisacquisitiontoleverageitsreachandgeneratebettereconomiesofscale.

Theaggregatepurchasepricewas$28.0million,ofwhich$23.8millionwaspaidincashattheclosing.TheCompanyisobligatedtopaytheremainingcashconsiderationof$4.2milliononthefirstanniversaryoftheacquisition,lessamountsusedtosatisfyanyobligationdeterminedtobeowedtotheCompanyforanyindemnitypursuanttotheassetpurchaseagreement.

Thepurchasepriceof$28.0millionhasbeenallocatedonapreliminarybasistointangibleassetsconsistingofsubscriberrelationships,intellectualpropertyandtradenamesof$9.4million,$4.4millionand$0.1million,respectively,andgoodwillof$16.7million,offsetbydeferredrevenueof$2.6million.Goodwillrelatedtotheacquisitionisdeductiblefortaxpurposes.

FortheyearendedDecember31,2015,$15.4millionofrevenueattributableto2015acquisitionswasincludedintheCompany’sconsolidatedstatementofoperationsandcomprehensiveloss.

TheCompanyhasomittedearningsinformationrelatedtoitsacquisitionsasitdoesnotseparatelytrackearningsfromeachofitsacquisitionsinamannerthatwouldprovidemeaningfuldisclosure.TheCompanyconsidersittobeimpracticabletocompilesuchinformationonanacquisition-by-acquisitionbasissinceactivitiesofintegrationanduseofsharedcostsandservicesacrosstheCompany’sbusinessarenotallocatedtoeachacquisitionandarenotmanagedtoprovideseparateidentifiableearningsfromthedatesofacquisition.

FortheintangibleassetsacquiredinconnectionwithallacquisitionscompletedduringtheyearendedDecember31,2015,subscriberrelationships,trademarks,intellectualpropertyanddevelopedtechnologyhaveweightedaverageusefullivesof4.7years,3.0years,6.3yearsand2.7years,respectively.

Pro Forma Disclosure

TheCompanyhasomittedproformadisclosuresrelatedtoitsacquisitionscompletedduring2015astheproformaeffectofincludingtheresultsoftheseacquisitionssincethebeginningof2014wouldnotbemateriallydifferentthantheactualresultsreported.

Summary of Deferred Consideration Related to Acquisitions

Componentsofdeferredconsiderationshort-termandlong-termasofDecember31,2014,consistedofthefollowing:

Short- term

Long- term

(in thousands) Mojoness,Inc.(Acquiredin2012) $ 490 $ 1,370Typepad(Acquiredin2013) — 2,800Domainnamebusiness(Acquiredin2014) 9,027 —Webzai(Acquired2014) — 2,617BuyDomains(Acquiredin2014) — 3,935Arvixe(Acquiredin2014) 4,400 —

Total $13,917 $10,722

112

Table of Contents

Componentsofdeferredconsiderationshort-termandlong-termasofDecember31,2015,consistedofthefollowing:

Short- term

Long-term

(in thousands) Mojoness,Inc.(Acquiredin2012) $ 657 $ 813Typepad(Acquiredin2013) 2,800 —Webzai(Acquired2014) 2,848 —BuyDomains(Acquiredin2014) 4,283 —Verio(Acquiredin2015) 2,474 —WWWH(Acquiredin2015) 4,600 —Ace(Acquiredin2015) 29,626 —Ecommerce(Acquiredin2015) 4,200 —

Total $51,488 $ 813

4. Fair Value Measurements

Thefollowingvaluationhierarchyisusedfordisclosureoftheinputstovaluationusedtomeasurefairvalue.Thishierarchyprioritizestheinputsintothreebroadlevelsasfollows:

• Level1inputsarequotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities.

• Level2inputsarequotedpricesforsimilarassetsorliabilitiesinactivemarketsorinputsthatareobservablefortheassetorliability,eitherdirectlyorindirectlythroughmarketcorroboration,forsubstantiallythefulltermofthefinancialinstrument.

• Level3inputsareunobservableinputsbasedontheCompany’sownassumptionsusedtomeasureassetsandliabilitiesatfairvalue.

Afinancialassetorliability’sclassificationwithinthehierarchyisdeterminedbasedonthelowestlevelinputthatissignificanttothefairvaluemeasurement.

AsofDecember31,2014and2015,theCompany’sfinancialassetsorliabilitiesrequiredtobemeasuredonarecurringbasisareaccruedearn-outconsiderationpayableinconnectionwiththe2012acquisitionofcertainassetsofMojoness,Inc.,orMojo,andthe2014acquisitionsofadomainnamebusinessandthe2015interestratecap.TheCompanyhasclassifieditsinterestratecapwithinLevel2ofthefairvaluehierarchy.TheCompanyhasclassifieditsliabilitiesforcontingentearn-outconsiderationrelatedtotheseacquisitionswithinLevel3ofthefairvaluehierarchybecausethefairvalueisdeterminedusingsignificantunobservableinputs,whichincludedprobabilityweightedcashflows.TheCompanyrecordeda$0.7millionchangeinfairvalueoftheearn-outconsiderationrelatedtoMojoandoneoftheother2012acquisitionsasofDecember31,2013intheCompany’sgeneralandadministrativeexpenseintheconsolidatedstatementofoperationsandcomprehensiveincome.DuringtheyearendedDecember31,2014,theCompanypaid$0.2millionrelatedtotheearn-outprovisionsfortheMojoacquisitionandrecorded$23.0millionrelatedtothe2014domainnamebusinessacquisitionofwhich$14.0millionwaspaidduringtheyearendedDecember31,2014.TheCompanyrecordeda$0.4millionchangeinfairvalueoftheearn-outconsiderationrelatedtoMojoandthe2014domainnamebusinessduringtheyearendedDecember31,2014.DuringtheyearendedDecember31,2015,theCompanypaid$0.5millionrelatedtotheearn-outprovisionsfortheMojoacquisitionandpaid$10.1millionrelatedtotheearn-outprovisionsofthe2014domainnamebusinessacquisition.TheCompanyrecordeda$1.2millionchangeinfairvalueoftheearn-outconsiderationrelatedtotheearn-outprovisionsoftheMojoand2014domainnamebusinessacquisitionsduringtheyearendedDecember31,2015.Theearn-outconsiderationinthetablebelowisincludedintotaldeferredconsiderationintheCompany’sconsolidatedbalancesheets.

113

Table of Contents

Basis of Fair Value Measurements

Balance

Quoted Prices in Active Markets for Identical Items

(Level 1)

Significant Other

ObservableInputs

(Level 2)

Significant Unobservable

Inputs (Level 3)

(in thousands) Balance at December 31, 2014: Financialliabilities: Contingentearn-outconsideration $10,887 — — $ 10,887

Totalfinancialliabilities $10,887 — — $ 10,887

Balance at December 31, 2015: Financialassets: Interestratecap(includedinotherassets) $ 3,130 — $ 3,130 $ —

Totalfinancialassets $ 3,130 — $ 3,130 $ —

Financialliabilities: Contingentearn-outconsideration $ 1,469 — — $ 1,469

Totalfinancialliabilities $ 1,469 — — $ 1,469

ThefollowingtablesummarizesthechangesinthefinancialliabilitiesmeasuredonarecurringbasisusingLevel3inputsasofDecember31,2014and2015:

Amount (in thousands)FinancialliabilitiesmeasuredusingLevel3inputsatJanuary1,2014 $ 1,655Accrualofcontingentearn-outrelatedto2014acquisition 22,987Paymentofcontingentearn-outrelatedto22012and2014acquisitions (14,158)Changeinfairvalueofcontingentearn-outs 403

FinancialliabilitiesmeasuredusingLevel3inputsatDecember31,2014 $ 10,887Paymentofcontingentearn-outsrelatedto2012and2014acquisitions (10,592)Changeinfairvalueofcontingentearn-outs 1,174

FinancialliabilitiesmeasuredusingLevel3inputsatDecember31,2015 $ 1,469

5. Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

TheCompanyisexposedtocertainriskarisingfrombothitsbusinessoperationsandeconomicconditions.TheCompanyprincipallymanagesitsexposurestoawidevarietyofbusinessandoperationalrisksthroughmanagementofitscorebusinessactivities.TheCompanymanageseconomicrisks,includinginterestrate,liquidity,andcreditriskprimarilybymanagingtheamount,sources,anddurationofitsdebtfundingandtheuseofderivativefinancialinstruments.Specifically,theCompanyentersintoderivativefinancialinstrumentstomanageexposuresthatarisefrombusinessactivitiesthatresultinthereceiptorpaymentoffutureknownanduncertaincashamounts,thevalueofwhicharedeterminedbyinterestrates.TheCompany’sderivativefinancialinstrumentsareusedtomanagedifferencesintheamount,timing,anddurationoftheCompany’sknownorexpectedcashreceiptsanditsknownorexpectedcashpaymentsprincipallyrelatedtotheCompany’sinvestmentsandborrowings.

114

Table of Contents

Cash Flow Hedges of Interest Rate Risk

TheCompanyenteredintoathree-yearinterestratecaponDecember9,2015aspartofitsriskmanagementstrategy.Theobjectiveofthisinterestratecap,designatedascashflowhedges,involvesthereceiptofvariableamountsfromacounterpartyifinterestratesriseabovethestrikerateonthecontractinexchangeforanupfrontpremium.Therefore,thisderivativelimitstheCompany’sexposureiftheraterises,butalsoallowstheCompanytobenefitwhentheratefalls.

TheeffectiveportionofchangesinthefairvalueofderivativesthatqualifyascashflowhedgesisrecordedinAccumulatedOtherComprehensiveIncome(“AOCI”),andissubsequentlyreclassifiedintoearningsintheperiodthatthehedgedforecastedtransactionaffectsearnings.AmountsreportedinaccumulatedothercomprehensiveincomerelatedtoderivativeswillbereclassifiedtointerestexpenseasinterestpaymentsaremadeontheCompany’svariable-ratedebt.Anyineffectiveportionofthechangeinfairvalueofthederivativesisrecognizeddirectlyinearnings.TherewasnoineffectivenessrecordedinearningsfortheyearendedDecember31,2015.

AsofDecember31,2015,theCompanyhadoneinterestratecapwith$500.0millionnotionaloutstandingthatwasdesignatedasacashflowhedgeofinterestraterisk.ThefairvalueoftheinterestratecontractsontheconsolidatedbalancesheetasofDecember31,2015was$3.1million,andtherehasbeennoeffectontheCompany’sconsolidatedstatementofoperations.TheCompanyrecognized$0.1millionofgaininAOCI,ofwhichtheCompanyestimatesthat$7,894willbereclassifiedasanincreasetointerestexpenseinthenexttwelvemonths.

6. Property and Equipment

Componentsofpropertyandequipmentconsistedofthefollowing:

As of December 31, 2014 2015 (in thousands) Land $ — $ 713Building — 5,091Software 22,550 40,336Computersandofficeequipment 76,274 97,332Furnitureandfixtures 4,045 5,914Leaseholdimprovements 7,015 7,126Constructioninprocess 2,378 6,137

Propertyandequipment—atcost 112,262 162,649Lessaccumulateddepreciation (55,425) (86,887)

Propertyandequipment—net $ 56,837 $ 75,762

DepreciationexpenserelatedtopropertyandequipmentfortheyearsendedDecember31,2013,2014and2015,was$18.6million,$31.0million,and$34.0million,respectively.

DuringtheyearsendedDecember31,2014and2015,theCompanyenteredintoagreementstoleasesoftwarelicensesforuseoncertaindatacenterserverequipmentfortermsrangingfromthirty-sixmonthstothirty-ninemonths.

115

Table of Contents

AsofDecember31,2014and2015,theCompany’ssoftwareshownintheabovetableincludedthesoftwareassetsunderacapitalleaseasfollows:

As of December 31, 2014 2015 (in thousands) Software $11,704 $21,499Lessaccumulateddepreciation (3,901) (8,412)

Assetsundercapitallease—net $ 7,803 $13,087

AtDecember31,2015,theexpectedfutureminimumleasepaymentsunderthecapitalleasediscussedabovewereapproximatelyasfollows:

Amount (in thousands)2016 $ 6,3342017 6,8952018 575

Totalminimumleasepayments 13,804Lessamountrepresentinginterest (723)

Presentvalueofminimumleasepayments(capitalleaseobligation) 13,081Currentportion 5,866

Long-termportion $ 7,215

7. Goodwill and Other Intangible Assets

ThefollowingtablesummarizesthechangesintheCompany’sgoodwillbalancesasofDecember31,2014and2015:

Amount (in thousands)GoodwillbalanceatJanuary1,2014 $ 984,207Goodwilladjustmentsrelatedto2013acquisition (2,107)Goodwillrelatedto2014acquisitions 123,452Foreigntranslationimpact (529)

GoodwillbalanceatDecember31,2014 $ 1,105,023Goodwillrelatedto2015acquisitions 103,444Foreigntranslationimpact (1,212)

GoodwillbalanceatDecember31,2015 $ 1,207,255

DuringtheyearendedDecember31,2014,theCompanycompletedthepurchaseaccountingrelatedtoa2013acquisitionandallocatedanadditional$2.1milliontolong-livedintangibleassets,whichhadbeenincludedingoodwillonapreliminarybasis.

InaccordancewithASC350,theCompanyreviewsgoodwillandotherindefinite-livedintangibleassetsforindicatorsofimpairmentonanannualbasisandbetweentestsifaneventoccursorcircumstanceschangethatwouldmorelikelythannotreducethefairvalueofgoodwillbelowitscarryingamount.TheCompanycompleteditsannualimpairmenttestofgoodwillandotherindefinite-livedintangibleassetsasofDecember31,anddeterminedthattherewerenoindicatorsofimpairmentasofDecember31,2014and2015.

116

Table of Contents

AtDecember31,2014,otherintangibleassetsconsistedofthefollowing:

Gross Carrying Amount

AccumulatedAmortization

Net Carrying Amount

Weighted Average

Useful Life (dollars in thousands) Developedtechnology $202,654 $ 57,557 $145,097 7yearsSubscriberrelationships 364,724 204,950 159,774 5yearsTrade-names 79,754 31,869 47,885 6yearsIntellectualproperty 29,520 2,976 26,544 13yearsDomainnamesavailableforsale 27,019 732 26,287 IndefiniteLeaseholdinterests 314 197 117 1yearIn-processresearchanddevelopment 4,634 — 4,634 —

TotalDecember31,2014 $708,619 $ 298,281 $410,338

AtDecember31,2015,otherintangibleassetsconsistedofthefollowing:

Gross Carrying Amount

AccumulatedAmortization

Net Carrying Amount

Weighted Average

Useful Life (dollars in thousands) Developedtechnology $205,925 $ 80,795 $125,130 7yearsSubscriberrelationships 397,791 256,461 141,330 5yearsTrade-names 81,792 42,080 39,712 6yearsIntellectualproperty 34,020 6,596 27,424 13yearsDomainnamesavailableforsale 27,859 3,107 24,752 IndefiniteLeaseholdinterests 314 314 — 1yearsIn-processresearchanddevelopment 1,438 — 1,438 —

TotalDecember31,2015 $749,139 $ 389,353 $359,786

Theestimatedusefullivesoftheindividualcategoriesofotherintangibleassetsarebasedonthenatureoftheapplicableintangibleassetandtheexpectedfuturecashflowstobederivedfromtheintangibleasset.Amortizationofintangibleassetswithfinitelivesisrecognizedovertheperiodoftimetheassetsareexpectedtocontributetofuturecashflows.TheCompanyamortizesfinite-livedintangibleassetsovertheperiodinwhichtheeconomicbenefitsareexpectedtoberealizedbasedupontheirestimatedprojectedcashflows.

TheCompany’samortizationexpenseisincludedincostofrevenueintheaggregateamountsof$105.9million,$102.7millionand$91.1million,fortheyearsendedDecember31,2013,2014and2015,respectively.

AtDecember31,2015,theexpectedfutureamortizationoftheotherintangibleassets,excludingindefinitelifeandin-processresearchanddevelopmentintangibles,wasapproximatelyasfollows:

Year Ending December 31, Amount (in thousands)2016 $ 75,0002017 62,0002018 51,0002019 40,0002020 34,000Thereafter 72,000

Total $ 334,000

117

Table of Contents

8. Investments

AsofDecember31,2014and2015,theCompany’scarryingvalueofinvestmentsinprivately-heldcompanieswas$40.4millionand$27.9million,respectively.

InJanuary2012,theCompanymadeaninitialinvestmentof$0.3milliontoacquirea25%interestinBlueZoneLabs,LLC(“BlueZone”),aproviderof“do-it-yourself”toolsandmanagedsearchengineoptimizationservices.

TheCompanyalsohasanagreementwithBlueZonetopurchaseproductsandservices.DuringtheyearsendedDecember31,2014and2015,theCompanypurchased$0.9millionand$1.1million,respectively,ofproductsandservicesfromBlueZone,whichisincludedintheCompany’sconsolidatedstatementsofoperationsandcomprehensiveloss.AsofDecember31,2014and2015,$0.1millionand$0.1million,respectively,relatingtoourinvestmentinBlueZonewasincludedinaccountspayableandaccruedexpenseintheCompany’sconsolidatedbalancesheet.

InJuly2012,theCompanyassumeda50%interestinWWWH,aproviderofwebpresencesolutions,withafairvalueof$10.0million.OnOctober31,2013,theCompanysold20%ofitsownershipinterest,or10%ofthecapitalstockofWWWH,reducingitsequityinterestto40%,recordedanadditional$1.5millionnotereceivablefromthebuyerfortotalnotesreceivablefromthebuyerof$3.5million,anddecreaseditsinvestmentinWWWHby$1.5million.TheCompanyevaluateditsremaining40%ownershipinterestinWWWHandrecognizeda$2.6millionimpairmentontheremaininginvestment,whichisrecordedinequity(income)lossofunconsolidatedentities,netoftax,intheCompany’sconsolidatedstatementsofoperationsandcomprehensivelossfortheyearendedDecember31,2013.

OnJune25,2015,theCompanyacquiredsubstantiallyalloftheassetsofWWWH.InconnectionwiththeassetpurchaseagreementdatedJune25,2015,thesellerredeemedfromtheCompanyits40%equityinterestinexchangeforaproratainterestintheacquiredassets,whichhadanestimatedimpliedvalueof$11.9million.TheCompanyrecognizeda$5.4milliongainasaresultoftheredemptionofitsequityinterest,whichwasrecordedasotherincomefortheyearendedDecember31,2015intheCompany’sconsolidatedstatementsofoperationsandcomprehensiveloss.Inaddition,theCompanyreceiveda$3.5millionrepaymentoftotalnotesreceivablethatwereduetotheCompanyfromthesellerofWWWHpriortotheacquisition.Formoredetail,seeNote3totheconsolidatedfinancialstatements.

InJune2013,theCompanymadeaninitialinvestmentof$8.8milliontoacquirea17.5%interestinJDIBackupLtd.,whichprovidesonlinedesktopbackupservices.TheagreementalsoprovidedforacalloptionfortheacquisitionofadditionalequityinterestswhichtheCompanyexercisedonDecember11,2013toincreaseitsinvestmentinJDIBackupLtd.to60%for$22.2million,whichwaspaidincash.OnJuly7,2014,theCompanypaidanadditional$4.2milliontoincreaseitsinvestmentinJDIBackupLtd.to67%.OnJanuary13,2015,theCompanyenteredintoanagreementtoincreaseitsinvestmentinJDIBackupLtd.to100%for$30.5million,whichwaspayableinthreeinstallments.FormoredetailseeNotes3and13totheconsolidatedfinancialstatements.

InMay2014,theCompanymadeastrategicinvestmentof$15.0millioninAutomattic,Inc.(“Automattic”),whichprovidescontentmanagementsystemsassociatedwithWordPress.Theinvestmentrepresentslessthan5%oftheoutstandingsharesofAutomatticandbetteralignstheCompanywithanimportantpartner.

InAugust,2014,theCompanymadeanaggregateinvestmentof$3.9millionforajointventurewitha49%ownershipinterestinWZUKLtd.,whichisaprovideroftechnologyandsalesmarketingservicesassociatedwithwebbuildersolutions.TheagreementprovidesfortheacquisitionofadditionalequityinterestsinWZUKLtd.attheoptionoftheCompany.

118

Table of Contents

OnJanuary6,2016,theCompanyexercisedanoptiontoincreaseitsstakeinWZUKLtd.,aprovideroftechnologyandsalesmarketingservicesassociatedwithwebbuildersolutions,from49%to57.5%.FormoredetailseeNote20totheconsolidatedfinancialstatements.

TheCompanyhasalicenseagreementwithWZUKLtd.tolicensecertaintechnologytoWZUKLtd.toenableittouse,develop,market,distribute,hostandsupportwebsitebuilderapplications.Underthetermsofthelicenseagreement,theCompanyreceivesaroyaltypaymentintheamountof4.5%ofallbillingsinthepreviousmonth,netofanyrefunds,chargebacksandanyothercreditsapplied.DuringtheyearsendedDecember31,2014and2015,theCompanyrecognized$0.0millionand$0.4million,respectively,ofroyaltyrevenueunderthetermsofthelicenseagreement.

DuringtheyearsendedDecember31,2014and2015,theCompany’sproportionateshareofnetlossfromitsinvestmentinWZUKLtd.was$0.2millionand$13.9million,respectively.OnJuly2,2015,theCompanyandthemajorityinvestormadeadditionalequitycontributionstoWZUKLtd.TheCompany’sshareoftheincrementalinvestmentswasapproximately$7.4million.OnDecember21,2015,theCompanyandthemajorityinvestormadeadditionalequitycontributionstoWZUKLtd.TheCompany’sshareoftheincrementalinvestmentwas$1.1million.

ThesignificanceofthenetlossofWZUKLtd.,incomparisontotheCompany’snetlossrequiresthedisclosureofsummarizedfinancialinformationfromthestatementofoperationsandcomprehensivelossforWZUKLtd.ThefollowingtablepresentsasummaryofthestatementofoperationsandcomprehensivelossforWZUKLtd.fortheyearsendedDecember31,2014and2015:

For the years ended December 31, 2014 2015 (in thousands) Revenue $ 1 $ 4,053Grossprofit(loss) $ (96) $ 1,095Operatingloss $ (694) $ (28,439)Netloss $ (694) $ (28,439)

AsofDecember31,2014and2015,WZUKLtd.hadtotalassetsof$5.6millionand$2.1million,respectively,andtotalliabilitiesof$6.3millionand$6.7million,respectively.

InDecember2014,theCompanyalsomadeanaggregateinvestmentof$15.2milliontoacquirea40%ownershipinterestinAppMachineBV(“AppMachine”),whichisadeveloperofsoftwarethatallowsuserstobuildmobileapplicationsforsmartdevicessuchasphonesandtablets.UnderthetermsoftheinvestmentagreementforAppMachinetheCompanyisobligatedtopurchasetheremaining60%ofAppMachineinthreetranchesof20%withinspecifiedperiodsifAppMachineachievesaspecifiedminimumrevenuethresholdwithinadesignatedtimeframe.TheconsiderationforeachofthethreetranchesiscalculatedastheproductofAppMachine’srevenue,asdefinedintheinvestmentagreement,forthetrailingtwelve-monthperiodpriortotheapplicabledeterminationdatetimesaspecifiedmultiplebaseduponyearoveryearrevenuegrowthmultipliedby20%.AsofDecember31,2015thereisnotaliabilityrecordedrelatedtothepurchaseobligation.

InvestmentsinwhichtheCompany’sinterestislessthan20%andwhicharenotclassifiedasavailable-for-salesecuritiesarecarriedatthelowerofcostornetrealizablevalueunlessitisdeterminedthattheCompanyexercisessignificantinfluenceovertheinvesteecompany,inwhichcasetheequitymethodofaccountingisused.ForthoseinvestmentsinwhichtheCompany’svotinginterestisbetween20%and50%,theequitymethodofaccountingisused.Underthismethod,theinvestmentbalance,originallyrecordedatcost,isadjustedtorecognizetheCompany’sshareofnetearningsorlossesoftheinvesteecompany,astheyoccur,limitedtotheextentoftheCompany’sinvestmentin,advancestoandcommitmentsfortheinvestee.Theseadjustmentsarereflectedinequity(income)lossofunconsolidatedentities,netoftaxintheCompany’sconsolidatedstatements

119

Table of Contents

ofoperationsandcomprehensiveloss.TheCompanyrecognizednetincomeof$0.5million,netlossof$0.1millionandnetlossof$14.6millionfortheyearsendedDecember31,2013,2014and2015,respectively,relatedtoitsinvestments.

Fromtimetotime,theCompanymaymakenewandfollow-oninvestmentsandmayreceivedistributionsfrominvesteecompanies.AsofDecember31,2015,theCompanywasnotobligatedtofundanyfollow-oninvestmentsintheseinvesteecompanies,otherthanAppMachineasdescribedabove.

AsofDecember31,2014,theCompanydidnothaveanequitymethodinvestmentinwhichtheCompany’sproportionateshareexceeded10%oftheCompany’sconsolidatedassetsorincomefromcontinuingoperations.AsofDecember31,2015,theCompany’sproportionateshareofthenetlossesofWZUKLtd.exceeded20%oftheCompany’sincomefromcontinuingoperations.

9. Notes Payable

AtDecember31,2014and2015notespayableconsistedofafirstlientermloanfacilitywithaprincipalamountoutstandingof$1,036.9millionand$1,026.4million,respectively,whichboreinterestataLIBOR-basedrateof5.00%.ThecurrentportionofthefirstlientermloanasofDecember31,2014and2015was$10.5millioninbothperiods.Inaddition,asofDecember31,2014,notespayableincludedabankrevolverloan(“Revolverloan”)of$50.0million,whichboreinterestataLIBOR-basedrateof7.75%.AsofDecember31,2015,notespayableincludedaRevolverloanof$67.0million,consistingofaloanof$59.0millionwhichboreinterestataLIBOR-basedrateof7.75%andaloanof$8.0million,whichboreinterestatanalternatebaserateof8.50%.TheamountsoutstandingundertheRevolverloanasofDecember31,2014andDecember31,2015of$50.0millionand$67.0millionrespectively,wereclassifiedascurrentnotespayableontheconsolidatedbalancesheets.

November 9, 2012—November 24, 2013

OnNovember9,2012,theCompanyenteredintotheNovemberFinancingAmendment(“November2012FinancingAmendment”)foranewfirstlientermloanintheoriginalprincipalamountof$800.0million(“November2012FirstLien”),aRevolverloanfacilityinaggregateprincipalamountnottoexceed$85.0millionandanewSecondLiencreditagreement(“November2012SecondLien”),foranoriginalprincipalamountof$315.0million.InAugust2013,theCompanyamendeditsNovember2012FirstLienforanadditional$90.0millionofincrementalfirstlientermloan(“August2013FirstLien”)beforerefinancingitsdebtinNovember2013,asdescribedbelow.

TheCompanyconcludedthattheNovember2012FinancingAmendmentwasadebtextinguishmentinaccordancewithASC470-50,whichrequiresthetermloansberecordedatfairvalue.AtthetimeoftheNovember2012FinancingAmendment,theApril2012TermLoan,asmodifiedbytheJulyFinancingAmendment,andtheSecondLienfacilityhadbalanceswhichequaledtheirfairvalueof$668.3millionand$140.0million,respectively,andassuchallexpensespaidtoandonbehalfofthelenderwereexpensed.Third-partyfinancingrelatedcostsof$1.5millionwereincurredandrecordedasdeferredfinancingcostswithanamortizationperiodbasedontheremainingtermsoftheloans.TheCompanyconcludedthattheAugust2013FirstLienwasadebtmodificationinaccordancewithASC470-50,andassuchallthird-partycostsincurredtomodifythedebtwereexpensedandadditionalfinancingcostsof$1.3millionwereincurredandrecordedasdeferredfinancingcostswithanamortizationperiodbasedontheremainingtermoftheloan.

TheCompanyaccruedinterestontheLIBORbasedNovember2012FirstLienandNovember2012SecondLienof7.75%and10.25%,respectively.Inaddition,theCompanyaccruedinterestonLIBORandreference-basedRevolverloansof7.75%and8.50%,respectively.

DuringtheninemonthsendedSeptember30,2013,theCompanymademandatoryrepaymentsonthetermloanfacilitiesinanaggregateamountof$6.2million.FortheyearendedDecember31,2013,amortizationof

120

Table of Contents

$0.3millionwasincludedininterestexpenseintheconsolidatedstatementsofoperationsandcomprehensivelossrelatedtodeferredfinancingcostsfromtheNovember2012FinancingAmendmentandtheAugust2013FirstLien.

InconnectionwiththeAugust2013FirstLien,theinterestratesforthetermloanandtheNovember2012RevolverremainedthesameasundertheNovember2012FirstLien.

Debt Refinancing—November 25, 2013

InNovember2013,followingitsIPO,theCompanyrepaidinfullitsNovember2012SecondLienof$315.0millionandincreasedthefirstlientermloanfacility(“November2013FirstLien”)by$166.2millionto$1,050.0million,therebyreducingitsoverallindebtednessby$148.8million.TheCompanyalsoincreaseditsRevolvercapacityby$40.0millionto$125.0million,noneofwhichwasdrawndownatthetimeoftheincrease.ThemandatoryrepaymentofprincipalontheNovember2013FirstLienwasincreasedtoapproximately$2.6millionattheendofeachquarter.DuringtheyearsendedDecember31,2013,2014and2015,theCompanymadeaggregatemandatoryrepaymentsontheNovember2013FirstLienof$2.6million,$10.5millionand$10.5million,respectively.AsofDecember31,2014and2015theCompanyhad$50.0millionand$67.0million,respectively,outstandingundertheRevolverloan.TherewasnochangetothematuritydatesofthefirstlienfacilityandRevolverloan,whichmatureonNovember9,2019andDecember22,2016,respectively.TheCompanyusestheRevolverloantoassistwithcashpaymentsforacquisitionsandminorityinvestments.

TheCompanyconcludedthattheNovember2013FirstLienwasadebtextinguishmentinaccordancewithASC470-50,whichrequiresthetermloansberecordedatfairvalue.TheNovember2013FirstLienmodifiedtheAugust2013FirstLienandwasrecordedatfacevaluewhichequaledfairvalue,andassuch,allexpensespaidtoandonbehalfofthelenderwereexpensed.Third-partyfinancingrelatedcostsof$0.4millionwereincurredandrecordedasdeferredfinancingcostswithanamortizationperiodbasedontheremainingtermoftheloan.

Theloansautomaticallybearinterestatthebank’sreferencerateunlesstheCompanygivesnoticetooptforLIBOR-basedinterestrateloans.EffectiveNovember25,2013,theinterestrateforaLIBORbasedinterestloanwasreducedto4.00%plusthegreateroftheLIBORrateor1.00%.Theinterestrateforareferencerateloanwasreducedto3.00%perannumplusthegreateroftheprimerate,thefederalfundseffectiverateplus0.50%,anAdjustedLIBORrateor2.00%.TherewasnochangetotheinterestratesforaRevolverloan.TheinterestrateforanAlternateBaseRate(“ABR”)Revolverloanis5.25%perannumplusthegreateroftheprimerate,thefederalfundseffectiverateplus0.50%,anadjustedLIBORrateor2.25%.TheinterestrateforaLIBORbasedRevolverloanis6.25%perannumplusthegreateroftheLIBORrateor1.50%.Thereisalsoanon-refundablefee,equalto0.50%ofthedailyunusedprincipalamountoftheRevolverpayableinarrearsonthelastdayofeachfiscalquarter.

InterestispayableonmaturityoftheelectedinterestperiodforaLIBOR-basedinterestloan,whichcanbeone,two,threeorsixmonths.InterestispayableattheendofeachfiscalquarterforareferencerateloantermloanoranABRRevolverloan.

AtDecember31,2014and2015,notespayableconsistedofthefollowing:

For the Year Ended December 31, 2014 2015 (in thousands) LIBORFirstLientermloan $ 1,036,875 $ 1,026,375LIBORRevolverloan 50,000 67,000

$ 1,086,875 $ 1,093,375

121

Table of Contents

ThematurityofthenotespayableatDecember31,2015isasfollows:

Revolver First Lien Term Loan Total

(in thousands) 2016 $67,000 $ 10,500 $ 77,5002017 — 10,500 10,5002018 — 10,500 10,5002019 — 994,875 994,875

Total $ 67,000 $ 1,026,375 $ 1,093,375

Interest

TheCompanyrecorded$98.5million,$57.4millionand$58.8millionininterestexpensefortheyearsendedDecember31,2013,2014and2015,respectively.

ThefollowingtableprovidesasummaryofloaninterestratesincurredandinterestexpensefortheyearsendedDecember31,2013,2014and2015: For the Year Ended December 31, 2013 2014 2015 (dollars in thousands) Interestrate—LIBOR 5.00%-10.25% 5.00%-7.75% 5.00%-7.75%Interestrate—reference 8.50% 8.50% 8.50%Non-refundablefee—unusedfacility 0.50% 0.50% 0.50%Interestexpenseandservicefees $ 85,327 $ 56,247 $ 56,760Amortizationofdeferredfinancingfees $ 260 $ 83 $ 82Amortizationofnetpresentvalueofdeferredconsideration $ 1,590 $ 183 $ 1,264Interestrecordedonextinguishmentoftermloans $ 10,833 $ — $ —Accretionofpresentvalueofdeferredbonuspayments $ 111 $ 1 $ —Interestexpenseforcapitalleaseobligations $ — $ 503 $ 434Interestexpensefordeferredconsiderationpromissorynote $ 267 $ 280 $ 280Otherinterestexpense $ 61 $ 117 $ 8

Totalinterestexpense $ 98,449 $ 57,414 $ 58,828

Debt Covenants

TheNovember2013FirstLientermloanfacilityrequiresthattheCompanycomplywithafinancialcovenanttomaintainamaximumratioofnetfirstliendebttoEBITDA(asdefinedintheexistingcreditagreement).

TheNovember2013FirstLientermloanfacilitycontainscovenantsthatlimittheCompany’sabilityto,amongotherthings,incuradditionaldebtorissuecertainpreferredshares;paydividendsonormakeotherdistributionsinrespectofcapitalstock;makeotherrestrictedpayments;makecertaininvestments;sellortransfercertainassets;createliensoncertainassetstosecuredebt;consolidate,merge,sellorotherwisedisposeofallorsubstantiallyallofitsassets;andenterintocertaintransactionswithaffiliates.Additionally,theNovember2013FirstLientermloanspecifiescertaineventsofdefaultthatcouldresultinamountsbecomingpayable,inwholeorinpart,priortotheirmaturitydates.TheCompanywasincompliancewithallcovenantsatDecember31,2015.

WiththeexceptionofcertainequityinterestsandotherexcludedassetsunderthetermsoftheNovember2013FirstLientermloan,substantiallyalloftheCompany’sassetsarepledgedascollateralfortheobligationsundertheNovember2013FirstLientermloan.

122

Table of Contents

10. Stockholders’ Equity

Preferred Stock

TheCompanyhas5,000,000sharesofauthorizedpreferredstock,parvalue$0.0001.TherewerenopreferredsharesissuedoroutstandingasofDecember31,2014and2015.

Common Stock

TheCompanyhas500,000,000sharesofauthorizedcommonstock,parvalue$0.0001.

Voting Rights

Allholdersofcommonstockareentitledtoonevotepershare.

11. Stock-Based Compensation

TheCompanyfollowstheprovisionsofASC718,Compensation—StockCompensation(“ASC718”),whichrequiresemployeestock-basedpaymentstobeaccountedforunderthefairvaluemethod.Underthismethod,theCompanyisrequiredtorecordcompensationcostbasedontheestimatedfairvalueforstock-basedawardsgrantedovertherequisiteserviceperiodsfortheindividualawards,whichgenerallyequalsthevestingperiods.TheCompanyusesthestraight-lineamortizationmethodforrecognizingstock-basedcompensationexpense.

TheCompanyestimatesthefairvalueofemployeestockoptionsonthedateofgrantusingtheBlack-Scholesoption-pricingmodel,whichrequirestheuseofhighlysubjectiveestimatesandassumptions.Forrestrictedstockawardsgranted,theCompanyestimatesthefairvalueofeachrestrictedstockawardbasedontheclosingtradingpriceofitscommonstockonthedateofgrant.

2012 Restricted Stock Awards

UnlessotherwisedeterminedbytheCompany’sboardofdirectors,stock-basedawardsgrantedpriortotheIPOgenerallyvestoverafour-yearperiodorhadvestingthatwasdependentontheachievementofspecifiedperformancetargets.Thefairvalueofthesestock-basedawardswasdeterminedasofthegrantdateofeachawardusinganoption-pricingmodelandassumingnopre-vestingforfeitureoftheawards.

GiventheabsenceofanactivetradingmarketfortheCompany’scommonstockpriortothecompletionofitsIPO,thefairvalueoftheequityinterestsunderlyingstock-basedawardswasdeterminedbytheCompany’smanagement.Indoingso,valuationanalyseswerepreparedinaccordancewiththeguidelinesoutlinedintheAmericanInstituteofCertifiedPublicAccountantsPracticeAid,ValuationofPrivately-Held-CompanyEquitySecuritiesIssuedasCompensation,andwereusedbytheCompany’smanagementtoassistindeterminingthefairvalueoftheequityinterestsunderlyingitsstock-basedawards.Eachequityinterestwasgrantedwitha“thresholdamount”meaningthattherecipientofanequitysecurityonlyparticipatedtotheextentthattheCompanyappreciatedinvaluefromandafterthedateofgrantoftheequityinterest(withthevalueoftheentityasofthegrantdatebeingthe“thresholdamount”).Theassumptionsusedinthevaluationmodelswerebasedonfutureexpectationscombinedwithmanagement’sjudgment.Intheabsenceofapublictradingmarket,theCompany’smanagementexercisedsignificantjudgmentandconsiderednumerousobjectiveandsubjectivefactorstodeterminethefairvalueofthestock-basedawardsasofthedateofeachaward.Thesefactorsincluded:

• contemporaneousorretrospectivevaluationsfortheCompanyanditssecurities;

• therights,preferences,andprivilegesofthestock-basedawardsrelativetoeachotheraswellastotheexistingshareholders;

• lackofmarketabilityoftheCompany’sequitysecurities;

123

Table of Contents

• historicaloperatingandfinancialperformance;

• theCompany’sstageofdevelopment;

• currentbusinessconditionsandprojections;

• hiringofkeypersonnelandtheexperienceoftheCompany’smanagementteam;

• risksinherenttothedevelopmentoftheCompany’sproductsandservicesanddeliveryofitssolutions;

• trendsanddevelopmentsintheCompany’sindustry;

• thethresholdamountforthestock-basedawardsandthevaluesatwhichthestock-basedawardswouldvest;

• themarketperformanceofcomparablepubliclytradedcompanies;

• likelihoodofachievingaliquidityevent,suchasanIPOoramergeroracquisitionoftheCompanygivenprevailingmarketconditions;and

• U.S.andglobaleconomicandcapitalmarketconditions.

TheCompanycompleteditsIPOinOctober2013,anddeterminedthattheperformancetargetsassociatedwiththeperformance-basedstockawardsweremetinfullandconsequentlytheperformance-basedstockawardswouldbefullyvested.However,effectivepriortothefirstdayofpublictradingoftheCompany’scommonstock,theCompanyacceleratedthevestingof2,167,870sharesofcommonstockissuedinrespectofthetime-basedstockawardsandmodifiedthevestingof3,574,637sharesissuedinrespectoftheperformance-basedstockawardssothat2,580,271sharesofcommonstockwerefullyvestedand994,366sharesofcommonstockwillfollowthesamevestingscheduleasthetime-basedstockawardsthatweregrantedonthesamedateassuchperformance-basedstockawards.

TheCompanyrecognizedstock-basedcompensationexpenseofapproximately$1.4millionforthesharesofcommonstockissuedinrespectoftheperformance-basedstockawardsthatvestedatclosingofitsIPOand$2.4millionfortheaccelerationofvestingforaportionofthesharesofcommonstockissuedinrespectofpreviouslyunvestedtime-basedstockawards.

Totalstock-basedcompensationexpenserecognizedforthetime-basedvestingstockawardswas$6.5millionfortheyearendedDecember31,2013.Totalstock-basedcompensationexpenserecognizedfortheperformance-basedstockawardswas$1.4millionfortheyearendedDecember31,2013,sincetheperformancetargetsnecessaryfortheperformance-basedstockawardsweremetpriortotheirexpiration.TheCompanywillrecognizearecoveryofexpenseiftheactualforfeiturerateforthetime-basedstockawardsishigherthanestimated.

Thefollowingtablespresentasummaryofthe2012restrictedstockawardsactivityfortheyearendedDecember31,2015forrestrictedstockawardsthatweregrantedpriortotheCompany’sIPO:

2012 Restricted Stock AwardsNon-VestedatDecember31,2014 759,122Forfeitures (104,422)Vested (608,055)

Non-VestedatDecember31,2015 46,645

124

Table of Contents

InconnectionwiththeIPOtheCompanygrantedrestrictedstockunitsunderthepriorequityplan.ThefollowingtableprovidesasummaryoftherestrictedstockunitsthatweregrantedinconnectionwiththeIPOunderthisplanandthenon-vestedbalanceasofDecember31,2015:

Restricted Stock Units

Weighted Average

Grant DateFair Value

Non-vestedatDecember31,2014 155,094 $ 12.00Vestedandunissued (132,936) $ 12.00

Non-vestedatDecember31,2015 22,158 $ 12.00

2013 Stock Incentive Plan

The2013StockIncentivePlan(the“2013Plan”)oftheCompanybecameeffectiveupontheclosingofourIPO.The2013PlanoftheCompanyprovidesforthegrantofoptions,stockappreciationrights,restrictedstock,restrictedstockunitsandotherstock-basedawardstoemployees,officers,directors,consultantsandadvisorsoftheCompany.Underthe2013Plan,theCompanymayissueupto18,000,000sharesoftheCompany’scommonstock.AtDecember31,2015,5,119,592shareswereavailableforgrantunderthe2013Plan.

Forstockoptionsissuedunderthe2013Plan,thefairvalueofeachoptionisestimatedonthedateofgrant,andanestimatedforfeiturerateisusedwhencalculatingstock-basedcompensationexpensefortheperiod.UnlessotherwiseapprovedbytheCompany’sboardofdirectors,stockoptionstypicallyvestoverfouryearsandtheCompanyrecognizescompensationexpenseonastraight-linebasisovertherequisiteserviceperiodoftheaward.TheCompanyusestheBlack-Scholesoptionpricingmodeltoestimatethefairvalueofstockoptionawardsanddeterminetherelatedcompensationexpense.Theweighted-averageassumptionsusedtocomputestock-basedcompensationexpenseforawardsgrantedunderthe2013StockIncentivePlanduringtheyearsendedDecember31,2013,2014and2015areasfollows:

2013 2014 2015 Risk-freeinterestrate 1.9% 2.1% 1.8%Expectedvolatility 60% 58.3% 56.1%Expectedlife(inyears) 6.25 6.25 6.25Expecteddividendyield — — —

Therisk-freeinterestrateassumptionwasbasedontheU.S.Treasuryzero-couponbondswithmaturitiessimilartothoseoftheexpectedtermoftheawardbeingvalued.TheCompanybasesitsestimateofexpectedvolatilityusingvolatilitydatafromcomparablepubliccompaniesinsimilarindustriesandmarketsbecausethereiscurrentlylimitedpublichistoryfortheCompany’scommonstock,andtherefore,alackofmarket-basedcompany-specifichistoricalandimpliedvolatilityinformation.Theweighted-averageexpectedlifeforemployeeoptionsreflectstheapplicationofthesimplifiedmethod,whichrepresentstheaverageofthecontractualtermoftheoptionsandtheweighted-averagevestingperiodforalloptiontranches.ThesimplifiedmethodhasbeenusedsincetheCompanydoesnothavesufficienthistoricalexercisedatatoprovideareasonablebasisuponwhichtoestimateexpectedtermduetoalimitedhistoryofstockoptiongrants.TheassumeddividendyieldwasbasedontheCompany’sexpectationofnotpayingdividendsintheforeseeablefuture.Inaddition,theCompanyhasestimatedexpectedforfeituresofstockoptionsbasedonmanagement’sjudgmentduetothelimitedhistoricalexperienceofforfeitures.Theforfeitureratewasnotmaterialtothecalculationofstock-basedcompensationexpense.

125

Table of Contents

ThefollowingtableprovidesasummaryoftheCompany’sstockoptionsasofDecember31,2015andthestockoptionactivityforallstockoptionsgrantedunderthe2013PlanduringtheyearendedDecember31,2015(dollarsinthousandsexceptexerciseprice):

Stock

Options

Weighted-Average Exercise

Price

Weighted- Average

Remaining Contractual Term

(In years)

AggregateIntrinsic Value(3)

OutstandingatDecember31,2014 5,407,959 $ 12.07 Granted 2,438,105 $ 17.97 Exercised (185,343) $ 12.00 Canceled (709,863) $ 15.08

OutstandingatDecember31,2015 6,950,858 $ 13.83 8.2 $ —

ExercisableatDecember31,2015 2,768,853 $ 12.10 7.8 $ —

ExpectedtovestafterDecember31,2015(1) 4,126,179 $ 14.95 8.4 $ —

ExercisableasofDecember31,2015andexpectedtovestthereafter(2) 6,895,032 $ 13.80 8.2 $ —

(1) ThisrepresentsthenumberofunvestedoptionsoutstandingasofDecember31,2015thatareexpectedtovestinthefuture,whichhavebeenreducedusing

anestimatedforfeiturerate.(2) ThisrepresentsthenumberofvestedoptionsasofDecember31,2015plusthenumberofunvestedoptionsoutstandingasofDecember31,2015thatare

expectedtovestinthefuture,whichhavebeenreducedusinganestimatedforfeiturerate.(3) TheaggregateintrinsicvaluewascalculatedbasedonthepositivedifferencebetweentheestimatedfairvalueoftheCompany’scommonstockon

December31,2015of$10.93pershare,orthedateofexercise,asappropriate,andtheexercisepriceoftheunderlyingoptions.

UnlessotherwisedeterminedbytheCompany’sboardofdirectors,restrictedstockawardsgrantedunderthe2013Plangenerallyvestannuallyoverafour-yearperiod.Performance-basedrestrictedstockawardsareearnedbasedontheachievementofperformancecriteriaestablishedbytheCompany’sCompensationCommitteeandBoardofDirectors.Theperformancecriteriaareweightedandhavethreshold,targetandmaximumperformancegoals.ThefollowingtableprovidesasummaryoftheCompany’srestrictedstockawardactivityforthe2013PlanduringtheyearendedDecember31,2015:

Restricted Stock Awards

Weighted Average

Grant DateFair Value

Non-vestedatDecember31,2014 695,312 $ 12.40Granted 4,582,728 $ 15.56Vested (230,754) $ 12.92Canceled (197,996) $ 15.39

Non-vestedatDecember31,2015 4,849,290 $ 15.24

Theperformance-basedawardgrantedtotheCompany’schiefexecutiveofficerduringtheyearendedDecember31,2015providesanopportunityfortheparticipanttoearnafullyvestedrighttoupto3,693,754sharesoftheCompany’scommonstock(collectively,the“AwardShares”)overathree-yearperiodbeginningJuly1,2015andendingonJune30,2018(the“PerformancePeriod”).AwardsharesmaybeearnedbasedontheCompanyachievingpre-established,threshold,targetandmaximumperformancemetrics.

126

Table of Contents

AwardSharesmaybeearnedduringeachcalendarquarterduringthePerformancePeriod(each,a“PerformanceQuarter”)iftheCompanyachievesathreshold,targetormaximumleveloftheperformancemetricforthePerformanceQuarter.IftheperformancemetricislessthanthethresholdlevelforaPerformanceQuarter,noAwardShareswillbeearnedduringthePerformanceQuarter.AwardSharesthatwerenotearnedduringaPerformanceQuartermaybeearnedlaterduringthethencurrenttwelve-monthperiodfromJuly1sttoJune30thduringthePerformancePeriod(each,a“PerformanceYear”)atathreshold,targetormaximumleveloftheperformancemetricforthePerformanceYear.NoAwardShareswereearnedforthePerformanceQuarterendingSeptember30,2015becausethethresholdlevelfortheperformancemetricwasnotmet.Approximately195,881AwardShareswereearnedforthePerformanceQuarterendingDecember31,2015becausethetargetlevelfortheperformancemetricwasmet.

Thisperformance-basedawardisevaluatedquarterlytodeterminetheprobabilityofitsvestinganddeterminetheamountofstock-basedcompensationtoberecognized.DuringtheyearendedDecember31,2015theCompanyrecognized$5.9millionofstock-basedcompensationexpenserelatedtotheperformance-basedaward.

UnlessotherwisedeterminedbytheCompany’sboardofdirectors,restrictedstockunitsgrantedunderthe2013Plangenerallyvestmonthlyoverafour-yearperiod.ThefollowingtableprovidesasummaryoftheCompany’srestrictedstockunitactivityforthe2013PlanduringtheyearendedDecember31,2015:

Restricted Stock Units

Weighted Average

Grant DateFair Value

Non-vestedatDecember31,2014 341,161 $ 12.00Vestedandunissued (120,396) $ 12.00

Non-vestedatDecember31,2015 220,765 $ 12.00

All Plans

Thefollowingtablepresentstotalstock-basedcompensationexpenserecordedintheconsolidatedstatementofoperationsandcomprehensivelossforall2012restrictedstockawardsandunitsissuedpriortotheCompany’sIPOinOctober2013andallawardsgrantedunderthe2013PlaninconnectionwithorsubsequenttotheIPO:

For the Year Ended December 31, 2013 2014 2015 (in thousands) Costofrevenue $ 126 $ 547 $ 1,975Salesandmarketing 459 1,585 3,285Engineeringanddevelopment 267 883 1,988Generalandadministrative 9,911 13,028 22,677

Totaloperatingexpense $10,763 $16,043 $29,925

AsofDecember31,2015theCompanyhasapproximately$30.1millionofunrecognizedstock-basedcompensationexpenserelatedtooptionawardsthatwillberecognizedover2.5yearsandapproximately$47.4millionofunrecognizedstock-basedcompensationexpenserelatedtorestrictedstockawardstoberecognizedthatwillalsoberecognizedover2.5years.

127

Table of Contents

12. Accumulated Other Comprehensive Income (Loss)

Thecomponentsofaccumulatedothercomprehensiveloss,netoftaxwereasfollows:

Foreign Currency

Translation Adjustments

Unrealized Gains(Losses) on Cash Flow

Hedges Total (in thousands) Balance at December 31, 2013 $ (55) $ — $ (55)Othercomprehensiveincome(loss) (462) — (462)

Balance at December 31, 2014 (517) — (517)

Othercomprehensiveincome(loss) (1,281) 80 (1,201)

Balance at December 31, 2015 $ (1,798) 80 $(1,718)

13. Redeemable Non-Controlling Interest

Inconnectionwitha2013equityinvestmentinJDIBackupLtd.,wheretheCompanyacquiredacontrollinginterest,theagreementprovidedforaputoptionforthethennon-controllinginterest(“NCI”)shareholderstoputtheremainingequityinteresttotheCompanywithinpre-specifiedputperiods.AstheNCIwassubjecttoaputoptionthatwasoutsidethecontroloftheCompany,itwasdeemedaredeemablenon-controllinginterestandnotrecordedinpermanentequity,andwaspresentedasmezzanineredeemablenon-controllinginterestontheconsolidatedbalancesheet,andwassubjecttotheguidanceoftheSecuritiesandExchangeCommission(“SEC”)underASC480-10-S99,AccountingforRedeemableEquitySecurities.

Thedifferencebetweenthe$20.8millioninitialfairvalueoftheredeemablenon-controllinginterestandthevaluethatwasexpectedtobepaiduponexerciseoftheputoptionwasbeingaccretedovertheperiodcommencingDecember11,2013anduptotheendofthefirstputoptionperiod,whichcommencedonthe18-monthanniversaryoftheacquisitiondate.Adjustmentstothecarryingamountoftheredeemablenon-controllinginterestwerechargedtoadditionalpaid-incapital.

Non-controllinginterestarisingfromtheapplicationoftheconsolidationruleswasclassifiedwithintotalstockholders’equitywithanyadjustmentschargedtonetlossattributabletonon-controllinginterestinaconsolidatedsubsidiaryintheconsolidatedstatementofoperationsandcomprehensiveloss.

DuringtheyearendedDecember31,2014,theCompanypaid$4.2milliontoincreaseitsinvestmentinJDIBackupLtd.andenteredintoanamendmenttotheputoptionwiththeNCIshareholders.DuringtheyearendedDecember31,2014,duetotheCompany’sassessmentofthefinancialperformanceandforecastedprofitabilityofJDIBackupLtd.,theCompanychangeditsestimateoftheexpectedexerciseamountoftheputoption.Thechangeinestimateresultedinthefairvalueoftheputoptionincreasingto$30.5millionasofDecember31,2014.

OnJanuary13,2015,theCompanyenteredintoanagreementtoacquiretheremaininginterestsownedbytheNCIshareholdersfor$30.5million,whichwasoriginallypayableinthreeequalinstallmentsonJanuary13,2015,June15,2015andSeptember15,2015.DuringtheyearendedDecember31,2015,theCompanyenteredintoamendmentstochangethedatesofthesecondinstallmentfromJune15,2015toApril10,2015andthedateofthethirdinstallmentfromSeptember15,2015toJuly2,2015.TheCompanywillcontinuetoconsolidateJDIBackupLtd.forfinancialreportingpurposes,however,becausetheCompanynowowns100%ofJDIBackupLtd.,commencingonJanuary13,2015,theCompanynolongerrecordsanon-controllinginterestintheconsolidatedstatementofoperationsandcomprehensiveloss.

128

Table of Contents

14. Income Taxes

TheCompanyaccountsforincometaxesinaccordancewithauthoritativeguidance,whichrequirestheuseoftheassetandliabilitymethod.Underthismethod,deferredincometaxassetsandliabilitiesaredeterminedbaseduponthedifferencebetweentheconsolidatedfinancialstatementcarryingamountsandthetaxbasisofassetsandliabilitiesandaremeasuredusingtheenactedtaxrateexpectedtoapplyintheyearsinwhichthedifferencesareexpectedtobereversed.

Thedomesticandforeigncomponentsofincome(loss)beforeincometaxesfortheperiodspresented:

Year Ended December 31, 2013 2014 2015 (in thousands) UnitedStates $(158,481) $ (17,002) $ 1,258Foreign (2,894) (27,603) (1,046)

Totalincome(loss)beforeincometaxes $(161,375) $ (44,605) $ 212

Thecomponentsoftheprovision(benefit)forincometaxesconsistedofthefollowing:

Year Ended December 31, 2013 2014 2015 (in thousands) Current: U.S.federal $ — $ 781 $ 1,827State 267 183 696Foreign 914 1,582 1,699

Totalcurrentprovision 1,181 2,546 4,222

Deferred: U.S.federal (50,007) (581) (1,103)State (8,852) (3,983) 1,952Foreign (1,590) (5,310) (818)Changeinvaluationallowance 55,672 13,514 7,089

Totaldeferredprovision (4,777) 3,640 7,120

Totalexpense(benefit) $ (3,596) $ 6,186 $11,342

During2013,theCompany’snetdeferredtaxliabilitywaseliminatedduemainlytoareductioninadeferredliabilityrelatedtodefinite-livedintangiblesandforcurrentperiodlossesresultinginanincreasetooffsettingdeferredtaxassets.OnDecember22,2011,theCompanywasacquiredbyHoldings.TheCompanyrecordeditsintangibleassetsatfairvalueasaresultoftheacquisition.ForU.S.GAAPpurposesthedefinite-livedintangibleassetshaveacceleratedamortization,whilefortaxpurposestheintangibleassetsmaintainedtheirhistoricalbasisandlives.Assuch,adeferredtaxliabilitywasestablishedthroughpurchaseaccounting.Thereversalofthe2012deferredtaxliabilityin2013resultedinadeferredtaxbenefitin2013.TheCompanyestablishedavaluationallowanceonsubstantiallyalloftheirdeferredtaxassetsduringtheyearendedDecember31,2013.ThebenefithadbeenreducedaftertheestablishmentofthevaluationallowancebythedeferredtaxexpenseassociatedwiththetaxamortizationofassetsthathaveanindefinitelifeforU.S.GAAPpurposes.ThestateincometaxisprimarilydrivenbystateswhotaxtheCompanybasedonagrossmargintax.TheCompanyalsohassubsidiariesinBrazilandIndiathataregeneratingtaxableincomeandaredrivingthecurrentforeigntax.

129

Table of Contents

Thefollowingtablepresentsareconciliationofthestatutoryfederalrate,andtheCompany’seffectivetaxrate,fortheperiodspresented:

Year Ended December 31, 2013 2014 2015 U.S.federaltaxesatstatutoryrate 34.0% 34.0% 34.0%Stateincometaxes,netoffederalbenefit 3.2 5.9 685.0Nondeductiblestock-basedcompensation (0.7) (2.5) 827.3Nondeductibletransactioncosts (1.1) (1.0) 856.5Nontaxablegainonredemptionofequityinterest — — (674.9)Otherforeignpermanentdifferences — (2.5) 187.8Credits — 0.6 —Foreignratedifferential (0.2) (11.7) 299.7Changeinvaluationallowance—U.S. (34.0) (23.2) 3,398.6Changeinvaluationallowance—foreign (0.5) (7.0) (130.8)Ratechange 0.4 (1.1) 216.5Prioryeartrue-upstock-basedcompensation—U.S. — (2.0) (132.8)Other 1.1 (3.4) (217.5)

Total 2.2% (13.9)% 5,349.4%

Theprovision(benefit)forincometaxesshownontheconsolidatedstatementsofoperationsdiffersfromamountsthatwouldresultfromapplyingthestatutorytaxratestoincomebeforetaxesprimarilybecauseofstateincometaxes,theimpactofchangesinstateapportionment,jurisdictionmixofearnings,nondeductibleexpenses,aswellastheapplicationofvaluationallowancesagainstU.S.andforeignassets.

ThesignificantcomponentsoftheCompany’sdeferredincometaxassetsandliabilitiesareasfollows:

As of December 31, 2014 2015 Deferredincometaxassets: Netoperatinglosscarryforward $ 70,070 $ 43,698Creditcarryforward 724 2,190Other 910 6,612Deferredcompensation 571 497Deferredrevenue 18,385 21,327Otherreserves 4,200 4,895Stock-basedcompensation 5,360 13,221

Totaldeferredincometaxassets 100,220 92,440

Deferredincometaxliabilities: Purchasedintangibleassets (32,315) (11,098)Goodwill (17,404) (26,062)Propertyandequipment (2,852) (8,361)

Totaldeferredincometaxliabilities (52,571) (45,521)Valuationallowance (69,271) (75,705)

Netdeferredincometaxliabilities $ (21,622) $ (28,786)

TheCompanyconductsbusinessgloballyand,asaresult,itssubsidiariesfileincometaxreturnsinU.S.federalandstatejurisdictionsandvariousforeignjurisdictions.Inthenormalcourseofbusiness,theCompanymaybesubjecttoexaminationbytaxingauthoritiesthroughouttheworld,includingsuchmajorjurisdictionsasBrazil,India,theUnitedKingdomandtheUnitedStates.

130

Table of Contents

TheCompanyfilesincometaxreturnsintheUnitedStatesforfederalincometaxesandinvariousstatejurisdictions.TheCompanyalsofilesinseveralforeignjurisdictions.Inthenormalcourseofbusiness,theCompanyissubjecttoexaminationbytaxauthoritiesthroughouttheworld.SincetheCompanyisinalosscarry-forwardposition,theCompanyisgenerallysubjecttoU.S.federalandstateincometaxexaminationsbytaxauthoritiesforallyearsforwhichalosscarry-forwardisutilized.TheCompanyiscurrentlyunderauditinIndiaforfiscalyearendedMarch31,2015andIsraelforthefiscalyearsendedDecember31,2012,2013and2014.

ThestatuteoflimitationsintheCompany’sothertaxjurisdictionsremainsopenforvariousperiodsbetween2011andthepresent.However,carryforwardattributesfromprioryearsmaystillbeadjusteduponexaminationbytaxauthoritiesiftheyareusedinanopenperiod.

TheCompanyrecognizes,initsconsolidatedfinancialstatements,theeffectofataxpositionwhenitismorelikelythannot,basedonthetechnicalmerits,thatthepositionwillbesustaineduponexamination.TheCompanyhasnounrecognizedtaxpositionsatDecember31,2014andDecember31,2015thatwouldaffectitseffectivetaxrate.TheCompanydoesnotexpectasignificantchangeintheliabilityforunrecognizedtaxbenefitsinthenext12months.

TheCompanyregularlyassessesitsabilitytorealizeitsdeferredtaxassets.Assessingtherealizationofdeferredtaxassetsrequiressignificantmanagementjudgment.Indeterminingwhetheritsdeferredtaxassetsaremorelikelythannotrealizable,theCompanyevaluatedallavailablepositiveandnegativeevidence,andweightedtheevidencebasedonitsobjectivity.EvidencetheCompanyconsideredincluded:

• NetOperatingLosses(“NOL”)incurredfromtheCompany’sinceptiontoDecember31,2015;

• Expirationofvariousfederalandstatetaxattributes;

• Reversalsofexistingtemporarydifferences;

• Compositionandcumulativeamountsofexistingtemporarydifferences;and

• Forecastedprofitbeforetax.

FortheyearendedDecember31,2015,theCompanyisinapre-taxbookincomeposition.FortheyearendedDecember31,2015,theCompanywasinacumulativepre-taxbooklosspositionfortheprecedingthreeyears.TheCompanyhasgeneratedsignificantNOLssinceinception,andassuch,ithasnoU.S.losscarrybackcapacity.Inaddition,theCompanyhasahistoryofexpiringstateNOLs.TheCompanyscheduledoutthefuturereversalsofexistingdeferredtaxassetsandliabilitiesandconcludedthatthesereversalsdidnotgeneratesufficientfuturetaxableincometooffsettheexistingnetoperatinglosses.Afterconsiderationoftheavailableevidence,bothpositiveandnegative,theCompanyhasrecordedavaluationallowanceof$75.7millionasofDecember31,2015.ThisprovisionforincometaxesresultsfromacombinationoftheactivitiesoftheCompany’sdomesticandforeignsubsidiaries.

FortheyearsendedDecember31,2013,2014and2015,theCompanyhasrecognizedataxexpense(benefit)of$(3.6)million,$6.2millionand$11.3million,respectively,intheconsolidatedstatementsofoperationsandcomprehensiveloss.TheincometaxexpensefortheyearendedDecember31,2015isprimarilyattributabletoaprovisionforfederalandstatecurrentincometaxesof$2.5million,foreigncurrenttaxexpenseof$1.7million,federalandstatedeferredtaxexpenseof$0.8millionandattributabletoa$7.1millionincreaseinthevaluationallowance,partiallyoffsetbyaforeigndeferredbenefitof$0.8millionrelatedtothereductionsofdeferredliabilitiescreatedinpurchaseaccounting.

TheincometaxexpensefortheyearendedDecember31,2014wasprimarilyattributabletoaprovisionforforeigntaxesof$1.8million,U.S.alternativeminimumtaxesof$0.5millionand$0.2millionofstatetaxes.Theremainingbalanceof$3.6millionfortheyearendedDecember31,2014wasprimarilyattributabletoanincreaseinU.S.deferredtaxliabilitiesduetothedifferencesintheaccountingtreatmentofgoodwillunderU.S.

131

Table of Contents

GAAPandthetaxaccountingtreatmentforgoodwillof$5.8millionofU.S.federalandstatedeferredtaxes,partiallyoffsetbyaforeigndeferredbenefitof$2.2millionrelatedtothereductionsofdeferredliabilitiescreatedinpurchaseaccounting.

AsofDecember31,2015,theCompanyhadNOLcarry-forwardsavailabletooffsetfutureU.S.federaltaxableincomeofapproximately$97.8millionandfuturestatetaxableincomeofapproximately$111.2million.TheseNOLcarry-forwardsexpireonvariousdatesthrough2034.Approximately$1.6millionoftheU.S.federalNOLcarry-forwardsand$0.7millionofthestateNOLcarry-forwardsarefromexcessstock-basedcompensation,forwhichthebenefitwillberecordedtoadditionalpaid-incapitalwhenrecognized.AsofDecember31,2015,theCompanyhadNOLcarry-forwardsinforeignjurisdictionsavailabletooffsetfutureforeigntaxableincomebyapproximately$27.4million.TheCompanyhaslosscarry-forwardsinIndiatotaling$2.9millionthatexpirein2021.TheCompanyalsohaslosscarry-forwardsintheUnitedKingdom,IsraelandSingaporeof$23.4million,$0.9million,and$0.2million,respectively,whichhaveanindefinitecarry-forwardperiod.

UtilizationoftheNOLcarry-forwardsmaybesubjecttoanannuallimitationduetotheownershippercentagechangelimitationsunderSection382oftheInternalRevenueCode(“Section382limitation”).Ownershipchangescanlimittheamountofnetoperatinglossandothertaxattributesthatacompanycanuseeachyeartooffsetfuturetaxableincomeandtaxespayable.Inconnectionwithachangeincontrolin2011theCompanywassubjecttoSection382annuallimitationsof$77.1millionagainstthebalanceofNOLcarry-forwardsgeneratedpriortothechangeincontrolin2011.ThroughDecember31,2013theCompanyaccumulatedtheunusedamountofSection382limitationsinexcessoftheamountofNOLcarry-forwardsthatwereoriginallysubjecttolimitation.Therefore,theseunusedNOLcarry-forwardsareavailableforfutureusetooffsettaxableincome.TheCompanyhascompletedananalysisofchangesinitsownershipfrom2011,throughitsIPO,toDecember31,2013.TheCompanyconcludedthattherewasnotaSection382ownershipchangeduringthisperiodandthereforeanyNOLsgeneratedthroughDecember31,2013,arenotsubjecttoanynewSection382annuallimitationsonNOLcarry-forwards.OnNovember20,2014,theCompanycompletedafollow-onofferingof13,000,000sharesofcommonstock.Theunderwritersalsoexercisedtheiroverallotmentoptiontopurchaseanadditional1,950,000sharesofcommonstockfromthesellingstockholders.TheCompanyperformedananalysisoftheimpactofthisofferinganddeterminedthatnoSection382changeinownershiphadoccurred.

OnMarch11,2015,theCompanyclosedafollow-onofferingofitscommonstock,inwhichsellingstockholderssold12,000,000sharesofcommonstockatapublicofferingpriceof$19.00pershare.Theunderwriteralsoexerciseditsoverallotmentoptiontopurchaseanadditional1,800,000sharesofcommonstockfromthesellingstockholders.TheCompanyiscurrentlycompletingananalysisofitsownershipchangesfromMarch2015throughDecember31,2015,butdoesnotbelievetheoutcomeofthisanalysiswillresultinanadditionalownershipchangebasedontheinformationavailableatthistime.

Asaresult,allunusedNOLcarry-forwardsatDecember31,2015areavailableforfutureusetooffsettaxableincome.

Permanent Reinvestment of Foreign Earnings

TheCompanyconsiderstheoperatingearningsofitsnon-UnitedStatessubsidiariestobeindefinitelyinvestedoutsidetheUnitedStatesunderASC740-30basedonestimatesthatfutureanddomesticcashgenerationwillbesufficienttomeetfuturedomesticcashneeds.TheCompanyhasthreecumulativelyprofitableforeignjurisdictions,Brazil,IndiaandU.A.E.,whichhavegeneratedapproximately$7.3millionofprofitsoutsideoftheUnitedStates.IftheCompanyweretorepatriatethesecumulativeprofits,therewouldbesufficientUnitedStatesnetoperatinglossestooffsetthetaximpactoftherepatriation.IftheCompanydecidestorepatriateforeignearnings,theCompanywouldhavetoadjusttheincometaxprovisionintheperioditdeterminesthattheearningswillnolongerbeindefinitelyvestedoutsidetheUnitedStates.In2015,theCompanyprovidedtaxesforroyaltyfeespaidtoitsU.A.E.subsidiaryasSubpartFincomesubjecttotaxationundertheU.S.InternalRevenueCode.

132

Table of Contents

ExceptforSubpartFincome,theCompanyhasnotprovidedtaxesfortheremaining$7.3millionofundistributedearningsofitsforeignsubsidiariesbecauseweplantokeeptheseamountspermanentlyreinvestedoverseasexceptforinstanceswherewecanremitsuchearningstotheU.S.withoutanassociatednettaxcost.IftheCompanydecidestorepatriatetheforeignearnings,itwouldneedtoadjustitsincometaxprovisionintheperioditdeterminesthattheearningswillnolongerbeindefinitelyinvestedoutsidetheUnitedStates.Duetothetimingandcircumstancesofrepatriationofsuchearnings,ifany,itisnotpracticabletodeterminetheunrecognizeddeferredtaxliabilityrelatingtosuchamounts.

15. Severance and Other Exit Costs

Inconnectionwithacquisitions,theCompanymayevaluateitsdatacenter,salesandmarketing,supportandengineeringoperationsandthegeneralandadministrativefunctioninanefforttoeliminateredundantcosts.Asaresult,theCompanymayincurchargesforemployeeseverance,exitingfacilitiesandrestructuringdatacentercommitmentsandotherrelatedcosts.

DuringtheyearendedDecember31,2014,theCompanyimplementedplanstofurtherintegrateandconsolidateitsdatacenter,supportandengineeringoperations,resultinginseveranceandfacilityexitcosts.Theseverancechargeswereassociatedwitheliminatingapproximately90positionsacrossprimarilysupport,engineeringoperationsandsalesandmarketing.TheCompanyincurredseverancecostsof$2.3millionintheyearendedDecember31,2014relatedtotheserestructuringactivities.Theemployee-relatedchargesassociatedwiththeserestructuringswerecompletedduringtheyearendedDecember31,2014.AsofDecember31,2015,theCompanydidnothaveanyremainingaccruedemployee-severancerelatedtotheseseverancecosts.

TheCompanyhadincurredfacilitycostsassociatedwithclosingofficesinRedwoodCity,CaliforniaandEnglewood,Colorado.Atthetimeofclosingtheseoffices,theCompanyhadremainingleaseobligationsofapproximately$3.0millionforthesevacatedfacilitiesthroughMarch31,2018.TheCompanyrecordedafacilitieschargeforthesefutureleasepayments,lessexpectedsubleaseincome,of$2.1millionduringtheyearendedDecember31,2014.DuringtheyearendedDecember31,2015,theCompanyrecordedanadjustmentof$0.6millionasaresultofenteringanagreementforanearlybuyoutoftheleaseagreementfortheEnglewood,Coloradofacility.

ThefollowingtableprovidesasummaryoftheactivityfortheyearendedDecember31,2015relatedtotheCompany’sfacilitiesexitcostsaccrual:

Facilities (in thousands)BalanceatDecember31,2014 $ 1,855Cashpaid (911)Subleaseincome 104Adjustments (569)

BalanceatDecember31,2015 $ 479

DuringtheyearendedDecember31,2015,theCompanyimplementedplanstoenhanceoperationalefficienciesacrossthebusiness,resultinginseverancecosts(the“2015RestructuringPlan”).Theseverancechargeswereassociatedwitheliminatingapproximately67positionsacrossthebusiness.TheCompanyincurredseverancecostsof$2.1millionduringtheyearendedDecember31,2015relatedtotheserestructuringactivities.TheCompanycompletedemployee-relatedchargesassociatedwiththeserestructuringsduringtheyearendedDecember31,2015.TheCompanyhaspaid$0.9millionofseverancecostsduringtheyearendedDecember31,2015andaccruedaseveranceliabilityof$1.2millionasofDecember31,2015.TheCompanyexpectspaymentstobecompletedduringtheyearendedDecember31,2016relatedtothe2015RestructuringPlan.

133

Table of Contents

ThefollowingtableprovidesasummaryoftheactivityfortheyearendedDecember31,2015relatedtotheCompany’s2015RestructuringPlanseveranceaccrual:

2015 Plan

Employee Severance (in thousands) BalanceatDecember31,2014 $ —Severancecharges 2,058Cashpaid (857)

BalanceatDecember31,2015 $ 1,201

Thefollowingtablepresentsseverancechargesrecordedintheconsolidatedstatementofoperationsandcomprehensivelossfortheperiodspresented:

For the Year Ended

December 31, 2014 2015 (in thousands) Costofrevenue $ 517 $ 524Salesandmarketing 301 555Engineeringanddevelopment 960 636Generalandadministrative 542 343

Totalseverancecharges $ 2,320 $ 2,058

16. Commitments and Contingencies

Operating Leases

TheCompanyhasoperatingleasecommitmentsforcertainfacilitiesandequipmentthatexpireonvariousdatesthrough2026.ThefollowingtableoutlinesfutureminimumannualrentalpaymentsundertheseleasesatDecember31,2015:

Year Ending December 31, Amount (in thousands)2016 $ 9,2472017 10,3792018 8,6012019 8,8922020 8,663Thereafter 26,172

Totalminimumleasepayments $ 71,954

Totalnetrentexpenseincurredundernon-cancellableoperatingleasesfortheyearsendedDecember31,2013,2014and2015,were$8.9million,$9.8millionand$8.2million,respectively.TotalsubleaseincomefortheyearendedDecember31,2015was$0.2million.

Contingencies

Fromtimetotime,theCompanyisinvolvedinlegalproceedingsorsubjecttoclaimsarisingintheordinarycourseofitsbusiness.TheCompanyisnotpresentlyapartytoanylegalproceedingsthatintheopinionofmanagement,ifdeterminedadverselytotheCompany,wouldhaveamaterialadverseeffectonitsbusiness,financialcondition,operatingresultsorcashflow.Regardlessoftheoutcome,litigationcanhaveanadverseimpactontheCompanybecauseofdefenseandsettlementcosts,diversionofmanagementresourcesandotherfactors.

134

Table of Contents

OnMay4,2015,ChristopherMachado,apurportedholderoftheCompany’sstock,filedacivilactionintheUnitedStatesDistrictCourtfortheDistrictofMassachusettsagainsttheCompanyanditschiefexecutiveofficerandformerchieffinancialofficer,Machadov.EnduranceInternationalGroupHoldings,Inc.,etal,CivilActionNo.1:15-cv-11775-GAO.TheplaintifffiledanamendedcomplaintonDecember8,2015andtheplaintiffhasrecentlybeengivenleavetofileasecondamendedthecomplaint,whichwillsupersedethecurrentcomplaint.

TheCompanyreceivedasubpoenadatedDecember10,2015fromtheBostonRegionalOfficeoftheSEC,requiringtheproductionofcertaindocuments,including,amongotherthings,documentsrelatedtoourfinancialreporting,includingoperatingandnon-GAAPmetrics,refund,salesandmarketingpracticesandtransactionswithrelatedparties.TheCompanyisfullycooperatingwiththeSEC’sinvestigation,whichisstillinitspreliminarystages.TheCompanycanmakenoassurancesastothetimeorresourcesthatwillneedtobedevotedtothisinvestigationorthefinaloutcome,ortheimpact,ifany,ofthisinvestigationonitsbusiness,financialcondition,resultsofoperationsandcashflows.

Constant Contact

OnOctober30,2015,theCompanyenteredintoadefinitiveagreementpursuanttowhichitagreedtoacquirealloftheoutstandingsharesofcommonstockofConstantContact.TheacquisitionclosedonFebruary9,2016.ConstantContactcontingenciesarenotedbelow.

OnDecember10,2015,ConstantContactreceivedasubpoenafromtheBostonRegionalOfficeoftheSEC,requiringtheproductionofdocumentspertainingtoConstantContact’ssales,marketing,andcustomerretentionpractices,andperiodicpublicdisclosureoffinancialandoperatingmetrics.TheCompanyisfullycooperatingwiththeSEC’sinvestigation.TheCompanycanmakenoassurancesastothetimeorresourcesthatwillneedtobedevotedtothisinvestigationoritsfinaloutcome,ortheimpact,ifany,ofthisinvestigationoranyrelatedlegalorregulatoryproceedingsontheCompany’sbusiness,financialcondition,resultsofoperationsandcashflows.

OnAugust7,2015,apurportedclassactionlawsuit,WilliamMcGeev.ConstantContact,Inc.,etal,wasfiledintheUnitedStatesDistrictCourtfortheDistrictofMassachusettsagainstConstantContactandtwoofitsformerofficers.ThelawsuitassertsclaimsunderSections10(b)and20(a)oftheExchangeAct,andispremisedonallegedlyfalseand/ormisleadingstatements,andnon-disclosureofmaterialfacts,regardingConstantContact’sbusiness,operations,prospectsandperformanceduringtheproposedclassperiodofOctober23,2014toJuly23,2015.Thislitigationisinitsveryearlystages.TheCompanyandtheindividualdefendantsintendtovigorouslydefendallclaimsasserted.TheCompanycannot,however,makeanyassurancesastotheoutcomeofthisproceeding.

InSeptember2012,RPostHoldings,Inc.,RPostCommunicationsLimitedandRMailLimited,orcollectively,RPost,filedacomplaintintheUnitedStatesDistrictCourtfortheEasternDistrictofTexasthatnamedConstantContactasadefendantinalawsuit.ThecomplaintallegedthatcertainelementsofConstantContact’semailmarketingtechnologyinfringefivepatentsheldbyRPost.RPostseeksanawardfordamagesinanunspecifiedamountandinjunctiverelief.InFebruary2013,RPostamendeditscomplainttonamefiveofConstantContact’smarketingpartnersasdefendants.UnderConstantContact’scontractualagreementswiththesemarketingpartners,itisobligatedtoindemnifythemforclaimsrelatedtopatentinfringement.ConstantContactfiledamotiontoseverandstaytheclaimsagainstitspartnersandmultiplemotionstodismisstheclaimsagainstit.InJanuary2014,thecasewasstayedpendingtheresolutionofcertainstatecourtandbankruptcyactionsinvolvingRPost,towhichConstantContactisnotaparty.ThestaywasextendedbyagreementofthepartiesinDecember2014.Thislitigationisinitsveryearlystages.TheCompanybelievesithasmeritoriousdefensestoanyclaimofinfringementandintendstodefendagainstthelawsuitvigorously.

OnDecember11,2015,aputativeclassactionlawsuitrelatingtotheConstantContactacquisition,captionedIrfanChawdry,IndividuallyandOnBehalfofAllOthersSimilarlySituatedv.GailGoodman,etal.

135

Table of Contents

CaseNo.11797,ortheChawdryComplaint,andonDecember21,2015,aputativeclassactionlawsuitrelatingtotheacquisitioncaptionedDavidV.Myers,IndividuallyandOnBehalfofAllOthersSimilarlySituatedv.GailGoodman,etal.CaseNo.11828,ortheMyersComplaint(togetherwiththeChawdryComplaint,theComplaints)filedintheCourtofChanceryoftheStateofDelawarenamingConstantContact,eachofConstantContact’sdirectors,EnduranceandPaintbrushAcquisitionCorporationasdefendants.TheComplaintsgenerallyallege,amongotherthings,thatinconnectionwiththeacquisitionthedirectorsofConstantContactbreachedtheirfiduciarydutiesowedtothestockholdersofConstantContactbyagreeingtosellConstantContactforpurportedlyinadequateconsideration,engaginginaflawedsalesprocess,omittingmaterialinformationnecessaryforstockholderstomakeaninformedvote,andagreeingtoanumberofpurportedlypreclusivedealprotectiondevices.TheComplaintsseek,amongotherthings,torescindtheacquisition,aswellasawardofplaintiffs’attorneys’feesandcostsintheaction.ThedefendantshavenotyetansweredorotherwiserespondedtoeitheroftheseComplaints.ThedefendantsbelievetheclaimsassertedintheComplaintsarewithoutmeritandintendtodefendagainsttheselawsuitsvigorously.

17. Employee Benefit Plans

TheCompanyhasadefinedcontributionplanestablishedunderSection401(k)oftheInternalRevenueCode(the“401(k)Plan”),whichcoverssubstantiallyallemployees.Employeesareeligibletoparticipateinthe401(k)Planbeginningonthefirstdayofthemonthfollowingcommencementoftheiremployment.The401(k)Planincludesasalarydeferralarrangementpursuanttowhichparticipantsmayelecttoreducetheircurrentcompensationbyuptothestatutorilyprescribedlimit,equalto$18,000in2015,andhavetheamountofthereductioncontributedtothe401(k)Plan.BeginningJanuary1,2013,theCompanymatched100%ofeachparticipant’sannualcontributiontothe401(k)planupto3%oftheparticipant’ssalaryandthen50%ofeachparticipant’scontributionupto2%ofeachparticipant’ssalary.Thematchimmediatelyvests100%.MatchingcontributionsbytheCompanytothe401(k)Planrelatedtothe2013,2014and2015planyearswereapproximately$1.2million,$2.2millionand$2.5million,respectively.

Inconnectionwithanacquisitionin2011,theCompanyassumedadefinedcontributionplanestablishedunderSection401(k)oftheInternalRevenueCode(the“Dotster401(k)Plan”),inwhichemployeeswereeligibletoparticipateuponthedateofhire.UndertheDotster401(k)Plan,theCompanymatched100%ofeachparticipant’sannualcontributiontotheDotster401(k)Planupto3%ofeachparticipant’ssalaryandthen50%ofeachparticipant’sannualcontributiontotheDotster401(k)Planupto2%ofeachparticipant’ssalary.Thematchimmediatelyvested100%.AmatchingcontributionbytheCompanyrelatedtothe2013planyearintheamountof$0.4millionwasmadetotheDotster401(k)Plan.TheDotster401(k)planmergedwiththeCompany’s401(k)planduringtheyearendedDecember31,2014.

InconnectionwiththeHostGatoracquisitionin2012,theCompanyassumedadefinedcontributionplanestablishedunderSection401(k)oftheInternalRevenueCode(the“HostGator401(k)Plan”),inwhichemployeeswereeligibletoparticipateonthedateofhire.UndertheHostGator401(k)Plan,theCompanymatched25%ofeachparticipant’sannualcontributionupto4%ofeachparticipant’ssalary,vesting100%afterthreeyearsofservice.AmatchingcontributionbytheCompanyrelatedtothe2013planyearintheamountof$0.1millionwasmadetotheHostGator401(k)Plan.TheHostGator401(k)planmergedwiththeCompany’s401(k)planduringtheyearendedDecember31,2014.

18. Related Party Transactions

TheCompanyhasvariousagreementsinplacewithrelatedparties.BelowaredetailsofrelatedpartytransactionsthatoccurredduringtheyearsendedDecember31,2013,2014and2015.

Tregaron:

TheCompanyhascontractswithTregaronIndiaHoldings,LLCanditsaffiliates,includingDiyaSystems(Mangalore)PrivateLimited,GlowtouchTechnologiesPvt.Ltd.andTouchwebDesigns,LLC,(collectively,

136

Table of Contents

“Tregaron”),foroutsourcedservices,includingemail-andchat-basedcustomerandtechnicalsupport,networkmonitoring,engineeringanddevelopmentsupportandwebdesignandwebbuildingservices.TheseentitiesareowneddirectlyorindirectlybyfamilymembersoftheCompany’schiefexecutiveofficer,whoisalsoadirectorandstockholderoftheCompany.

During2013theCompanyexpandedtheservicesprovidedbyTregaronundertheagreementstoincludesupportofanewlyformedentityinIndiarelatedtoouracquisitionofHostGatorIndia.TheCompanyinadvertentlyexcludedthesupportofthisIndianentityfromitsrelatedpartydisclosuresfor2013.TheamountpreviouslyreportedasexpensefortheTregaronservicesfortheyearendedDecember31,2013was$7.3million,whichisrevisedinprovidingpriorperiodcomparativeamountsinthefootnotestotheconsolidatedfinancialstatementsfortheyearendedDecember31,2015to$8.6million.

Inaddition,theCompanyhasrevisedamountsreportedintherelatedpartydisclosuresforthequarterlyperiodsduring2014.ThefullyearamountsforTregaronfor2014werecorrectlyreported.ThefollowingtableincludestherevisedamountsofrelatedpartytransactionsrecordedintheconsolidatedstatementsofoperationsandcomprehensivelossfortheyearsendedDecember31,2013,2014and2015relatingtoservicesprovidedbyTregaronanditsaffiliatesundertheseagreements: For the Year Ended December 31, 2013 2013 2014 2014 As Reported As Revised As Reported As Revised 2015 (in thousands) Costofrevenue $ 5,200 $ 5,900 $ 7,400 $ 7,300 $10,200Salesandmarketing 300 300 600 500 700Engineeringanddevelopment 900 1,600 1,700 1,700 1,100Generalandadministrative 900 800 700 900 300

Totalrelatedpartytransactionexpense $ 7,300 $ 8,600 $ 10,400 $ 10,400 $12,300

Theamountsreflectedintheconsolidatedstatementofoperationsandcomprehensiveloss,consolidatedbalancesheetandconsolidatedstatementofcashflowsfortheTregaronservicesforallperiodsduring2013,2014and2015werecorrectlyreflectedanddonotrequirerevision.

AsofDecember31,2014,and2015approximately$1.4millionand$1.9million,respectively,wasincludedinaccountspayableandaccruedexpenserelatingtoservicesprovidedbyTregaron.

Innovative Business Services, LLC:

TheCompanyalsohasagreementswithInnovativeBusinessServices,LLC,(“IBS”),whichprovidesmulti-layeredthird-partysecurityapplicationsthataresoldbytheCompany.IBSisindirectlymajorityownedbytheCompany’schiefexecutiveofficerandadirectoroftheCompany,eachofwhomarealsostockholdersoftheCompany.DuringtheyearendedDecember31,2014,theCompany’sprincipalagreementwiththisentitywasamendedwhichresultedintheaccountingtreatmentofexpensesbeingrecordedagainstrevenue.

During2013theCompanyexpandedtheservicesprovidedbyIBSundertheagreementsacrossallofitsentities.TheCompanyinadvertentlyexcludedtheexpensesrelatedtotheexpandedrelationshipwithIBSfromrelatedpartydisclosuresfor2013and2014.FortheyearendedDecember31,2013,theCompanypreviouslyreportedcostofservicesrelatedtotheIBSservicesof$3.0million,whichisrevisedto$3.9millioninprovidingpriorperiodcomparativeamountsinthefootnotetotheconsolidatedfinancialstatementsfortheyearendedDecember31,2015.

137

Table of Contents

Inaddition,theCompanyhasrevisedamountsreportedincertainquarterlyperiodsandtheannualperiodduring2014.ThefollowingtableincludestherevisedamountsofrelatedpartytransactionsrecordedintheconsolidatedstatementsofoperationsandcomprehensivelossfortheyearsendedDecember31,2013,2014and2015relatingtoservicesprovidedbyIBSundertheseagreements: For the Year Ended December 31, 2013 2013 2014 2014 As Reported As Revised As Reported As Revised 2015 (in thousands) Revenue $ — $ (100) $ — $ (400) $(1,300)Revenue(contra) — — 600 600 7,000

Totalrelatedpartytransactionimpacttorevenue $ — $ (100) $ 600 $ 200 $ 5,700

Costofrevenue 3,000 4,000 4,800 4,600 600

Totalrelatedpartytransactionexpense,net $ 3,000 $ 3,900 $ 5,400 $ 4,800 $ 6,300

FortheyearendedDecember31,2014,theCompanypreviouslyreportednetexpensesrelatedtotheIBSservicesof$5.4million,whichisrevisedto$4.8million,inprovidingpriorperiodcomparativeamountsinthefootnotestotheconsolidatedfinancialstatementsfortheyearendedDecember31,2015.

Theamountsreflectedintheconsolidatedstatementofoperationsandcomprehensiveloss,consolidatedbalancesheetandconsolidatedstatementofcashflowsfortheIBSservicesforallperiodsduring2013and2014werecorrectlyreflectedanddonotrequirerevision.

AsofDecember31,2014and2015,approximately$0.2millionand$0.2million,respectively,wasincludedinprepaidexpensesandothercurrentassetsrelatingtotheCompany’sagreementswithIBS.

AsofDecember31,2014and2015,approximately$0.9millionand$1.1million,respectivelywasincludedinaccountspayableandaccruedexpenserelatingtotheCompany’sagreementswithIBS.

AsofDecember31,2014and2015,approximately$0.1millionand$0.3million,respectively,wasincludedinaccountsreceivablerelatingtotheCompany’sagreementswithIBS.

TheCompanyenteredintoathree-yearinterestratecaponDecember9,2015withasubsidiaryofGoldmanSachs.GoldmanSachsisasignificantshareholderoftheCompany.FormoredetailrefertoNote5intheconsolidatedfinancialstatements.

19. Subsequent Events

WithrespecttotheconsolidatedfinancialstatementsasofandfortheyearendedDecember31,2015,theCompanyperformedanevaluationofsubsequenteventsthroughthedateofthisfiling.

OnJanuary6,2016,theCompanyexercisedanoptiontoincreaseitsstakeinWZUKLtd.,aprovideroftechnologyandsalesmarketingservicesassociatedwithwebbuildersolutions,from49%to57.5%,inexchangeforapaymentofapproximately$2.1milliontotheothershareholdersofWZUKLtd.Aftercertainperformancemilestonesaremet,theCompanyhasanoptiontopurchase,andtheothershareholdersofWZUKLtd.haveanoptiontoselltotheCompanywithinthreeyears,theremainingsharesofWZUKLtd.ataper-sharepricetobedeterminedbasedonamultipleofrevenue.

OnOctober30,2015,theCompanyenteredintoadefinitiveagreementpursuanttowhichitagreedtoacquirealloftheoutstandingsharesofcommonstockofConstantContactfor$32.00pershareincash,foratotalpurchasepriceofapproximately$1.1billion.ConstantContactisaleadingproviderofonlinemarketingtoolsthataredesignedforsmallorganizations,includingsmallbusinesses,associationsandnon-profits.TheacquisitionclosedonFebruary9,2016.

138

Table of Contents

Thepurchasepriceof$1.1billionisbeingallocatedonapreliminarybasistointangibleassetsconsistingofsubscriberrelationships,developedtechnologyandtradenamesof$267.0million,$88.0millionand$36.0million,respectively,goodwillof$556.6million,propertyandequipmentof$32.0million,workingcapitalof$172.0millionandotherassetsof$0.3million,offsetbydeferredrevenueof$39.8million.

Inconnectionwithandconcurrentlywiththeacquisition,theCompanyenteredintoa$735.0millionincrementalfirstlientermloanfacilityanda$165.0millionrevolvingcreditfacility(whichreplaceditsexisting$125.0millionrevolvingcreditfacility)andissued$350.0millionof10.875%seniornotesdue2024.

ThefollowingunauditedinformationisasiftheConstantContactacquisitionwasasofJanuary1,2014.Theunauditedproformaresultsarenotnecessarilyindicativeoftheactualresultsthatwouldhaveoccurredhadthetransactionactuallytakenplaceatthebeginningoftheperiodindicated.UnauditedproformarevenuefortheyearsendedDecember31,2014and2015is$960.9millionand$1,105.3million,respectively.UnauditedproformanetlossfortheyearsendedDecember31,2014and2015is$135.0millionand$113.0million,respectively.TheunauditedproformanetlossincludesadjustmentsforadditionalinterestexpenserelatedtothedebtincurredinconnectionwiththeacquisitionofConstantContact.

20. Geographic and Other Information

Revenue,classifiedbythemajorgeographicareasinwhichourcustomersarelocated,wasasfollows:

Year Ended December 31, 2013 2014 2015 (in thousands) UnitedStates $ 359,889 $ 409,765 $ 465,446International 160,407 220,080 275,869

Total $ 520,296 $ 629,845 $ 741,315

Thefollowingtablepresentstheamountoftangiblelong-livedassetsbygeographicarea:

2014 2015 (in thousands) UnitedStates $55,191 $72,025International 1,646 3,737

Total $56,837 $75,762

TheCompany’srevenuesaregeneratedprimarilyfromproductsandservicesdeliveredonasubscriptionbasis,whichincludewebhosting,domains,websitebuilders,searchenginemarketingandothersimilarservices.TheCompanyalsogeneratesnon-subscriptionrevenuesthroughdomainmonetizationandmarketingdevelopmentfunds.Non-subscriptionrevenuesincreasedfrom$28.3million,or4%oftotalrevenuefortheyearendedDecember31,2014to$52.6million,or7%ofrevenuefortheyearendedDecember31,2015.Theincreaseinnon-subscriptionrevenuesisprimarilyduetotheacquisitionsofDirectiandBuyDomains.

139

Table of Contents

21. Quarterly Financial Data (unaudited)

ThefollowingtablepresentstheCompany’sunauditedquarterlyfinancialdata: For the three months ended

March 31,

2014 June 30,

2014 Sept. 30,

2014 Dec. 31,

2014 March 31,

2015 June 30,

2015 Sept. 30,

2015 Dec. 31,

2015 (in thousands, except per share data) Revenue $ 145,750 $ 151,992 $ 160,167 $ 171,936 $ 177,318 $ 182,431 $ 188,523 $ 193,043Grossprofit $ 56,559 $ 59,381 $ 62,751 $ 69,666 $ 76,344 $ 77,494 $ 77,750 $ 84,692Income(loss)fromoperations $ (5,499) $ (1,085) $ 5,254 $ 13,808 $ 17,199 $ 12,548 $ 9,113 $ 14,326Netincome(loss)attributabletoEnduranceInternationalGroupHoldings,Inc. $ (19,285) $ (13,448) $ (7,898) $ (2,204) $ 884 $ (2,071) $ (15,351) $ (9,232)

Basicanddilutednetincome(loss)pershareattributabletoEnduranceInternationalGroupHoldings,Inc. $ (0.15) $ (0.11) $ (0.06) $ (0.02) $ 0.01 $ (0.02) $ (0.12) $ (0.07)

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Notapplicable.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

AsofDecember31,2015,ourmanagement,withtheparticipationofourchiefexecutiveofficerandchieffinancialofficer,evaluatedtheeffectivenessofourdisclosurecontrolsandprocedures.Theterm“disclosurecontrolsandprocedures,”asdefinedinRules13a-15(e)and15d-15(e)undertheExchangeAct,meanscontrolsandotherproceduresofacompanythataredesignedtoensurethatinformationrequiredtobedisclosedbyacompanyinthereportsthatitfilesorsubmitsundertheExchangeActisrecorded,processed,summarizedandreported,withinthetimeperiodsspecifiedintheSEC’srulesandforms.Disclosurecontrolsandproceduresinclude,withoutlimitation,controlsandproceduresdesignedtoensurethatinformationrequiredtobedisclosedbyacompanyinthereportsthatitfilesorsubmitsundertheExchangeActisaccumulatedandcommunicatedtothecompany’smanagement,includingitsprincipalexecutiveandprincipalfinancialofficers,asappropriatetoallowtimelydecisionsregardingrequireddisclosure.Managementrecognizesthatanycontrolsandprocedures,nomatterhowwelldesignedandoperated,canprovideonlyreasonableassuranceofachievingtheirobjectivesandmanagementnecessarilyappliesitsjudgmentinevaluatingthecost-benefitrelationshipofpossiblecontrolsandprocedures.BaseduponthatevaluationofourdisclosurecontrolsandproceduresasofDecember31,2015,ourchiefexecutiveofficerandchieffinancialofficerconcludedthat,asofsuchdate,ourdisclosurecontrolsandprocedureswereeffectiveatthereasonableassurancelevel.

Management’s Annual Report on Internal Control Over Financial Reporting

Ourmanagementisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting.InternalcontroloverfinancialreportingisdefinedinRules13a-15(f)and15d-15(f)undertheExchangeAct,asaprocessdesignedby,orunderthesupervisionofourchiefexecutiveandchieffinancialofficersandeffectedbyourboardofdirectors,managementandotherpersonneltoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciplesandincludesthosepoliciesandproceduresthat:

• pertaintothemaintenanceofrecordsthatinreasonabledetailaccuratelyandfairlyreflectthetransactionsanddispositionofourassets;

140

Table of Contents

• providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerally

acceptedaccountingprinciples,andthatourreceiptsandexpendituresarebeingmadeonlyinaccordancewithauthorizationofourmanagementanddirectors;and

• providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,useordispositionofourassetsthatcouldhaveamaterialeffectonthefinancialstatements.

Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotherisksthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepolicesorproceduresmaydeteriorate.

OurauditedconsolidatedfinancialstatementsincludetheresultsofVerio,whichweacquiredonMay26,2015,WorldWideWebHosting,whichweacquiredonJune25,2015andEcommerce,whichweacquiredonNovember2,2015.ThescopeofourassessmentoftheeffectivenessofourinternalcontroloverfinancialreportingasofDecember31,2015,doesnotincludetheinternalcontrolsofVerio,WorldWideWebHostingandEcommerceasmanagementdeterminedthatitwouldnotbepracticaltoconductasufficientlycomprehensiveassessmentoftheinternalcontrolsofVerio,WorldWideWebHostingandEcommercebasedonthedatesoftheacquisitionsandmanagement’sothertimecommitments.GuidanceissuedbytheSecuritiesandExchangeCommissionpermitscompaniestoexcludeacquisitionsfromtheirassessmentofinternalcontroloverfinancialreportingforthefirstfiscalyearinwhichtheacquisitionoccurred.Verio,WorldWideWebHostingandEcommercerepresentedapproximately2%ofourtotalrevenuesfortheyearendedDecember31,2015.

Underthesupervisionandwiththeparticipationofourmanagement,ourchiefexecutiveofficerandchieffinancialofficer,weconductedanassessmentoftheeffectivenessofourinternalcontroloverfinancialreportingasofDecember31,2015.Inmakingthisassessment,weusedcriteriasetforthinthe2013frameworkestablishedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(COSO)inInternalControl-IntegratedFramework.Basedonourassessment,management(includingourChiefExecutiveOfficerandChiefFinancialOfficer)hasconcludedthatasofDecember31,2015,ourinternalcontroloverfinancialreportingwaseffective.

TheeffectivenessofourinternalcontroloverfinancialreportingasofDecember31,2015hasbeenauditedbyBDOUSALLP,anindependentregisteredpublicaccountingfirm,asstatedinthefollowingreport:

141

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

BoardofDirectorsandStockholdersEnduranceInternationalGroupHoldings,Inc.Burlington,Massachusetts

WehaveauditedEnduranceInternationalGroupHoldings,Inc.’sinternalcontroloverfinancialreportingasofDecember31,2015basedoncriteriaestablishedinInternalControl–IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(theCOSOcriteria).EnduranceInternationalGroupHoldings,Inc.’smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreportingandforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreporting,includedintheaccompanyingManagementReportonInternalControlOverFinancialReportingappearingunderItem9A.OurresponsibilityistoexpressanopinionontheCompany’sinternalcontroloverfinancialreportingbasedonouraudit.

WeconductedourauditinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditincludedobtaininganunderstandingofinternalcontroloverfinancialreporting,assessingtheriskthatamaterialweaknessexists,andtestingandevaluatingthedesignandoperatingeffectivenessofinternalcontrolbasedontheassessedrisk.Ourauditalsoincludedperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourauditprovidesareasonablebasisforouropinion.

Acompany’sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Acompany’sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(2)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatreceiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthecompany;and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthecompany’sassetsthatcouldhaveamaterialeffectonthefinancialstatements.

Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.

AsindicatedintheaccompanyingItem9A,Management’sReportonInternalControlOverFinancialReporting,management’sassessmentofandconclusionontheeffectivenessofinternalcontroloverfinancialreportingdidnotincludetheinternalcontrolsofVerio,whichwasacquiredonMay26,2015,WorldWideWebHosting,whichwasacquiredonJune25,2015andEcommercewhichwasacquiredonNovember2,2015,andwhichareincludedintheconsolidatedbalancesheetofEnduranceInternationalGroupHoldings,Inc.asofDecember31,2015,andtherelatedconsolidatedstatementofoperationsandcomprehensiveloss,stockholders’equity,andcashflowsfortheyearthenended.Verio,WorldWideWebHostingandEcommerceconstituted2%ofrevenuesfortheyearendedDecember31,2015.ManagementdidnotassesstheeffectivenessofinternalcontroloverfinancialreportingofVerio,WorldWideWebHostingandEcommercebecauseofthetimingoftheacquisitionswhichwerecompletedduring2015.OurauditofinternalcontroloverfinancialreportingofEnduranceInternationalGroupHoldings,Inc.alsodidnotincludeanevaluationoftheinternalcontroloverfinancialreportingofVerio,WorldWideWebHostingandEcommerce.

142

Table of Contents

Inouropinion,EnduranceInternationalGroupHoldingsInc.maintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofDecember31,2015,basedontheCOSOcriteria.

Wehavealsoaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates),theconsolidatedbalancesheetsofEnduranceInternationalGroupHoldings,Inc.asofDecember31,2014and2015,andtherelatedconsolidatedstatementsofoperationsandcomprehensiveloss,changesinstockholders’equityandcashflowsforeachofthethreeyearsintheperiodendedDecember31,2015andourreportdatedFebruary29,2016expressedanunqualifiedopinionthereon.

/s/BDOUSA,LLP

Boston,Massachusetts

February29,2016

143

Table of Contents

Changes in Internal Control over Financial Reporting

Nochangeinourinternalcontroloverfinancialreporting(asdefinedinRules13a-15(f)and15d-15(f)undertheExchangeAct)occurredduringthefiscalquarterendedDecember31,2015thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,ourinternalcontroloverfinancialreporting.

Item 9B. Other Information

PursuanttoSection219oftheIranThreatReductionandSyriaHumanRightsActof2012,orITRA,whichaddedSection13(r)totheExchangeAct,wearerequiredtodiscloseinourannualorquarterlyreports,asapplicable,whetherweoranyofouraffiliatesknowinglyengagedincertainactivities,transactionsordealingsrelatingtoIranorwithindividualsorentitiesthataresubjecttosanctionsunderU.S.law.Disclosureisgenerallyrequiredevenwheretheactivities,transactionsordealingswereconductedincompliancewithapplicablelaw.

OnDecember2,2015,weterminatedasubscriberaccount,ortheSubscriberAccount,thatwebelievetobeassociatedwithIssamShammoutandSkyBlueBirdAviation,orShammout,identifiedbytheOfficeofForeignAssetsControl,orOFAC,asaSpeciallyDesignatedNational,orSDN,onMay21,2015,pursuantto31C.F.R.Part594.TheSubscriberAccountwasinadvertentlymigratedtoourserversfollowingouracquisitionoftheassetsofArvixe,onOctober31,2014.PursuanttothetermsoftheassetpurchaseagreementbetweentheCompanyandArvixe,anycustomeraccountsprohibitedbyOFACwereexpresslyexcludedfromtheacquisition.Accordingly,wedonotbelievewetooklegalownershipoftheSubscriberAccount,andnorevenuewascollectedinconnectionwiththeSubscriberAccountsincethedateonwhichShammoutwasaddedtotheSDNlist.Nonetheless,uponidentifyingthattheSubscriberAccounthadbeenmigratedtoourservers,wepromptlysuspendedallservicesandterminatedtheSubscriberAccount.WereportedtheSubscriberAccounttoOFACaspotentiallythepropertyofaSDNsubjecttoblockingpursuanttoExecutiveOrder13224.Todate,wehavenotreceivedanycorrespondencefromOFACregardingthismatter.

Inaddition,WarburgPincusLLC,orWPLLC,affiliatesofwhich(i)beneficiallyownmorethan10%ofouroutstandingcommonstockand/oraremembersofourboardofdirectorsand(ii)beneficiallyownmorethan10%oftheequityinterestsof,andhavetherighttodesignatemembersoftheboardofdirectorsof,SantanderAssetManagementInvestmentHoldingsLimited,orSAMIH,hasinformedusthat,duringthereportingperiod,SantanderUKplc,orSantanderUK,andSantanderISAManagersLimited,orSIML,eachofwhichareaffiliatesofSAMIHandWPLLC,engagedinactivitiessubjecttodisclosurepursuanttoSection219ofITRAandSection13(r)oftheExchangeAct.Asaresult,wearerequiredtoprovidedisclosureassetforthbelowpursuanttoSection219ofITRAandSection13(r)oftheExchangeAct.WPLLChasinformedusthatSAMIHhasprovidedWPLLCwiththeinformationbelowrelevanttoSection219ofITRAandSection13(r)oftheExchangeAct.

Atthetimeoftheeventsdescribedbelow,SAMIHanditsnon-U.S.affiliates,includingSantanderUKandSIML,mayhavebeendeemedtobeundercommoncontrolwithus,butthisstatementisnotmeanttobeanadmissionthatcommoncontrolexistedorexists.WehavenocontroloverorinvolvementintheactivitiesofSAMIHoritsnon-U.S.affiliates,includingSantanderUKandSIML,oranyofitssubsidiariesorpredecessorcompanies,andwewerenotinvolvedinthepreparationof,norhaveweindependentlyverified,theinformationprovidedbySAMIHtoWPLLC.Thedisclosurebelowdoesnotrelatetoanyactivitiesconductedbyusanddoesnotinvolveusorourmanagement.ThedisclosurerelatessolelytoactivitiesconductedbySAMIHanditsnon-U.S.affiliates,includingSantanderUKandSIML.Wearenotrepresentingtotheaccuracyorcompletenessofthedisclosurebelow,andweundertakenoobligationtocorrectorupdatethisinformation.

WeunderstandthatSAMIH’saffiliatesintendtodiscloseintheirnextannualorquarterlyreportthatSantanderUKholdsfrozensavingsaccountsandonecurrentaccountfortwocustomersresidentintheUnitedKingdomwhoarecurrentlydesignatedbytheUnitedStatesforterrorism.Theaccountsheldbyeachcustomerwereblockedafterthecustomer’sdesignationandhaveremainedblockedanddormantthroughout2015.RevenuegeneratedbySantanderUKontheseaccountsisnegligible.

144

Table of Contents

WealsounderstandthatSAMIH’saffiliatesintendtodiscloseintheirnextannualorquarterlyreportthatanIraniannational,residentintheUnitedKingdom,whoiscurrentlydesignatedbytheUnitedStatesundertheIranFinancialSanctionsRegulationsandtheWeaponsofMassDestructionProliferatorsSanctionsRegulations,ortheNPWMDsanctionsprogram,holdsamortgagewithSantanderUKthatwasissuedpriortoanysuchdesignation.NofurtherdrawdownhasbeenmadeorwouldbeallowedunderthismortgagealthoughSantanderUKcontinuestoreceiverepaymentinstallments.In2015,totalrevenueinconnectionwiththemortgagewasapproximately£3,876whilenetprofitswerenegligiblerelativetotheoverallprofitsofSantanderUK.SantanderUKdoesnotintendtoenterintoanynewrelationshipswiththiscustomer,andanydisbursementswillonlybemadeinaccordancewithapplicablesanctions.ThesameIraniannationalalsoholdstwoinvestmentaccountswithSIML.Thefundswithinbothaccountsareinvestedinthesameportfoliofund.Theaccountshaveremainedfrozenduring2015.Theinvestmentreturnsarebeingautomaticallyreinvested,andnodisbursementshavebeenmadetothecustomer.TotalrevenueforSantandergroupinconnectionwiththeinvestmentaccountswasapproximately£188whilenetprofitsin2015werenegligiblerelativetotheoverallprofitsofBancoSantander,S.A.

WealsounderstandthatSAMIH’saffiliatesintendtodiscloseintheirnextannualorquarterlyreportthat,duringthethirdquarterof2015,twoadditionalSantanderUKcustomersweredesignatedbytheUnitedStatesforterrorism.First,aUnitedKingdomnationaldesignatedbytheUnitedStatesundertheSpeciallyDesignatedGlobalTerrorist,orSDGT,sanctionsprogramwhoisontheUnitedStatesSDNlistholdsabankaccountwhichgeneratedrevenueofapproximately£180duringthethirdandfourthquarterof2015.Theaccountisblocked.Netprofitsinthethirdandfourthquarterof2015werenegligiblerelativetotheoverallprofitsofBancoSantander,S.A.Second,aUnitedKingdomnational,alsodesignatedbytheUnitedStatesundertheSDGTsanctionsprogramandwhoisalsoontheUnitedStatesSDNlist,heldabankaccount.Notransactionsweremadeinthethirdandfourthquarterof2015andtheaccountisblockedandinarrears.

WealsounderstandthatSAMIH’saffiliatesintendtodiscloseintheirnextannualorquarterlyreportthat,duringthefourthquarterof2015,SantanderUKidentifiedoneadditionalcustomerwhowasdesignatedbytheUnitedStatesforterrorism.AUnitedKingdomnationaldesignatedbytheUnitedStatesundertheSDGTsanctionsprogramandwhoisontheUnitedStatesSDNlistheldabankaccountwhichgeneratednegligiblerevenueduringthefourthquarterof2015.Theaccountwasclosedduringthefourthquarterof2015.Netprofitsinthefourthquarterof2015werenegligiblerelativetotheoverallprofitsofBancoSantander,S.A.

145

Table of Contents

PART IIIItem 10. Directors, Executive Officers, and Corporate Governance

Theinformationrequiredbythisitemisincorporatedbyreferencefromtheinformationdisclosedundertheheading“ManagementandCorporateGovernance”andunderthesubheading“Section16(a)BeneficialOwnershipReportingCompliance”inourdefinitiveproxystatementforthe2016AnnualMeetingofStockholders,whichweintendtofilewiththeSECwithin120daysoftheendofthefiscalyeartowhichthisreportrelates.

WehaveadoptedaCodeofBusinessConductandEthicsthatappliestoourprincipalexecutiveofficer,principalfinancialofficer,principalaccountingofficerorcontroller,orpersonsperformingsimilarfunctions.ThetextofourCodeofBusinessConductandEthicsispostedintheCorporateGovernancesectionofourwebsite,www.endurance.com.Weintendtodiscloseonourwebsiteanyamendmentsto,orwaiversfrom,ourCodeofBusinessConductandEthicsthatarerequiredtobedisclosedpursuanttothedisclosurerequirementsofItem5.05ofForm8-K.

Item 11. Executive Compensation

Theinformationrequiredbythisitemisincorporatedbyreferencetotheinformationdisclosedundertheheading“ExecutiveCompensation”andunderthesubheading“CompensationCommitteeInterlocksandInsiderParticipation”inourdefinitiveproxystatementforthe2016AnnualMeetingofStockholders,whichweintendtofilewiththeSECwithin120daysoftheendofthefiscalyeartowhichthisreportrelates.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Theinformationrequiredbythisitemisincorporatedbyreferencetotheinformationdisclosedundertheheading“PrincipalStockholders”andunderthesubheading“EquityCompensationPlanInformation”inourdefinitiveproxystatementforthe2016AnnualMeetingofStockholders,whichweintendtofilewiththeSECwithin120daysoftheendofthefiscalyeartowhichthisreportrelates.

Item 13. Certain Relationships and Related Transactions and Director Independence

Theinformationrequiredbythisitemisincorporatedbyreferencetotheinformationdisclosedundertheheading“RelatedPersonTransactions”andunderthesubheading“DirectorIndependence”inourdefinitiveproxystatementforthe2016AnnualMeetingofStockholders,whichweintendtofilewiththeSECwithin120daysoftheendofthefiscalyeartowhichthisreportrelates.

Item 14. Principal Accountant Fees and Services

Theinformationrequiredbythisitemisincorporatedbyreferencetotheinformationdisclosedundertheproposal“RatificationofAppointmentofIndependentRegisteredPublicAccountingFirm”inourdefinitiveproxystatementforthe2016AnnualMeetingofStockholders,whichweintendtofilewiththeSECwithin120daysoftheendofthefiscalyeartowhichthisreportrelates.

146

Table of Contents

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(1) Financial Statements

Foralistoftheconsolidatedfinancialstatementsincludedherein,whichareincorporatedintothisItembyreference,seeIndextoConsolidatedFinancialStatementsonpage90ofthisAnnualReportonForm10-K.

(2) Financial Statement Schedules

Scheduleshavebeenomittedsincetheyareeithernotrequiredornotapplicableortheinformationisotherwiseincludedherein.

(3) Exhibits

TheexhibitsfiledaspartofthisAnnualReportonForm10-KarelistedintheExhibitIndeximmediatelyprecedingsuchexhibits,whichExhibitIndexisincorporatedhereinbyreference.

147

Table of Contents

SIGNATURES

PursuanttotherequirementsofSection13or15(d)oftheSecuritiesExchangeActof1934,theregistranthasdulycausedthisreporttobesignedonitsbehalfbytheundersigned,thereuntodulyauthorized.

ENDURANCEINTERNATIONALGROUPHOLDINGS,INC.

Date:February29,2016 By: /s/HariRavichandran HariRavichandran ChiefExecutiveOfficer

PursuanttotherequirementsoftheSecuritiesExchangeActof1934,thisreporthasbeensignedbelowbythefollowingpersonsonbehalfoftheregistrantandinthecapacitiesandonthedatesindicated.

Signature Title Date

/s/HariRavichandranHariRavichandran

ChiefExecutiveOfficerandDirector(PrincipalExecutiveOfficer)

February29,2016

/s/MarcMontagnerMarcMontagner

ChiefFinancialOfficer(PrincipalFinancialOfficer)

February29,2016

/s/TimothyMathewsTimothyMathews

ChiefAccountingOfficer(PrincipalAccountingOfficer)

February29,2016

/s/JamesC.NearyJamesC.Neary

ChairmanoftheBoard

February29,2016

/s/DaleCrandallDaleCrandall

Director

February29,2016

/s/JosephP.DiSabatoJosephP.DiSabato

Director

February29,2016

/s/TomasGornyTomasGorny

Director

February29,2016

/s/MichaelHayfordMichaelHayford

Director

February29,2016

/s/PeterJ.PerronePeterJ.Perrone

Director

February29,2016

/s/ChandlerJ.ReedyChandlerJ.Reedy

Director

February29,2016

/s/JustinL.SadrianJustinL.Sadrian

Director

February29,2016

148

Table of Contents

EXHIBIT INDEXExhibitNumber DescriptionofExhibit IncorporatedbyReference

FiledHerewith

FurnishedHerewith

Form FileNumber DateofFiling ExhibitNumber

2.1*

AgreementandPlanofMerger,datedOctober30,2015,byandamongConstantContact,Inc.,EnduranceInternationalGroupHoldings,Inc.,andPaintbrushAcquisitionCorporation

8-K

001-36131

November2,2015

2.1

3.1

RestatedCertificateofIncorporationoftheRegistrant

S-1/A

333-191061

October23,2013

3.3

3.2

AmendedandRestatedBylawsoftheRegistrant

S-1/A

333-191061

October23,2013

3.5

4.1

SpecimencertificateevidencingsharesofcommonstockoftheRegistrant

S-1/A

333-191061

October8,2013

4.1

4.2

SecondAmendedandRestatedRegistrationRightsAgreementbyandamongtheRegistrantandtheotherpartiesthereto

10-Q

001-36131

November7,2014

4.2

4.3

StockholdersAgreementbyandamongtheRegistrantandcertainholdersoftheRegistrant’scommonstock

10-Q

001-36131

November7,2014

4.3

10.1# 2013StockIncentivePlan S-1/A 333-191061 October11,2013 10.1

10.2#

FormofStockOptionAgreementunderthe2013StockIncentivePlan

S-1/A

333-191061

October8,2013

10.2

10.3#

FormofRestrictedStockAgreementunderthe2013StockIncentivePlan

S-1/A

333-191061

October8,2013

10.3

149

Table of Contents

ExhibitNumber DescriptionofExhibit IncorporatedbyReference

FiledHerewith

FurnishedHerewith

Form FileNumber DateofFiling ExhibitNumber

10.4#

FormofDirectorStockOptionAgreementunderthe2013StockIncentivePlan

S-1/A

333-191061

October8,2013

10.29

10.5#

FormofRestrictedStockAgreementandAcknowledgment

S-1/A

333-191061

October8,2013

10.25

10.6#

FormofModificationtoRestrictedStockAgreementandAcknowledgment

10-K

001-36131

February28,2014

10.6

10.7#

StockOptionAgreementbetweentheRegistrantandHariRavichandran,datedOctober25,2013

10-K

001-36131

February28,2014

10.7

10.8#

RestrictedStockUnitAgreementbetweentheRegistrantandHariRavichandran,datedOctober25,2013,asamendedbyAmendmentNo.1,datedasofDecember12,2013

10-K

001-36131

February28,2014

10.8

10.9#

RestrictedStockUnitAgreementbetweentheRegistrantandHariRavichandran,datedOctober25,2013,asamendedbyAmendmentNo.1,datedasofDecember12,2013

10-K

001-36131

February28,2014

10.9

10.10#

Performance-BasedRestrictedStockAgreementbetweentheRegistrantandHariRavichandran,datedSeptember18,2015

8-K

001-36131

September21,2015

10.1

10.11#

LetterAgreementbetweentheRegistrantandTivankaEllawala,datedDecember31,2015

X

150

Table of Contents

ExhibitNumber DescriptionofExhibit IncorporatedbyReference

FiledHerewith

FurnishedHerewith

Form FileNumber DateofFiling ExhibitNumber

10.12# 2015ManagementIncentivePlanoftheRegistrant 10-K 001-36131 February27,2015 10.10

10.13#

OfferLetter,datedasofApril11,2011,byandbetweenTheEnduranceInternationalGroup,Inc.andRonaldLaSalvia

S-1

333-191061

September9,2013

10.21

10.14# BonusArrangementforRonaldLaSalvia 10-Q 001-36131 May9,2014 10.2

10.15#

OfferLetter,datedasofApril30,2011,byandbetweenTheEnduranceInternationalGroup,Inc.andJohnMone

S-1

333-191061

September9,2013

10.22

10.16#

EmploymentAgreement,datedasofOctober10,2012,byandamongEIGInvestorsCorp.,TivankaEllawalaand,solelywithrespecttoSection6thereof,WPExpeditionTopcoLLC

S-1

333-191061

September9,2013

10.23

10.17#

EmploymentAgreement,datedasofSeptember30,2013,betweenHariRavichandranandtheRegistrant,asamendedbyAmendmentNo.1,datedasofOctober11,2013

S-1/A

333-191061

October11,2013

10.24

10.18#

AmendmentNo.2toRavichandranEmploymentAgreement,datedasofSeptember18,2015,byandbetweentheRegistrantandHariRavichandran

8-K

001-36131

September21,2015

10.2

151

Table of Contents

ExhibitNumber DescriptionofExhibit IncorporatedbyReference

FiledHerewith

FurnishedHerewith

Form FileNumber DateofFiling ExhibitNumber

10.19#

EmploymentAgreement,datedasofAugust3,2015,byandbetweenEnduranceInternationalGroupHoldings,Inc.andMarcMontagner

8-K

001-36131

August4,2015

10.1

10.20#

FormofIndemnificationAgreemententeredintobetweentheRegistrantandeachdirectorandexecutiveofficer

S-1/A

333-191061

October8,2013

10.19

10.21

GrossLease,datedMay17,2012,byandbetweenTheEnduranceInternationalGroup,Inc.andMEPTBurlington,LLC,asamendedonJune13,2013

S-1

333-191061

September9,2013

10.5

10.22

SecondAmendmenttoLease,datedasofMarch28,2014,byandbetweenBurlingtonCentreOwnerLLCandTheEnduranceInternationalGroup,Inc.

10-Q

001-36131

May9,2014

10.5

10.23

ThirdAmendmenttoLease,datedasofSeptember24,2014,byandbetweenBurlingtonCentreOwnerLLCandTheEnduranceInternationalGroup,Inc.

10-Q

001-36131

November7,2014

10.1

10.24

FourthAmendmenttoLease,datedasofNovember14,2014,byandbetweenBurlingtonCentreOwnerLLCandTheEnduranceInternationalGroup,Inc.

10-K

001-36131

February27,2015

10.10

152

Table of Contents

ExhibitNumber DescriptionofExhibit IncorporatedbyReference

FiledHerewith

FurnishedHerewith

Form FileNumber DateofFiling ExhibitNumber

10.25+

Collocation/InterconnectionLicense,datedasofMay29,2007,byandbetweenTheEnduranceInternationalGroup,Inc.andMarkleyBoston,LLC,asamendedonJune1,2007,August31,2008,December4,2008,April30,2009,February2011andFebruary2,2012

S-1

333-191061

September9,2013

10.7

10.26+

Collocation/InterconnectionLicense,datedasofFebruary2,2012,byandbetweenTheEnduranceInternationalGroup,Inc.andOneSummerCollocation,LLC,asamendedJanuary4,2013

S-1

333-191061

September9,2013

10.11

10.27+

MasterServicesAgreement,datedasofApril30,2009,byandbetweenTheEnduranceInternationalGroup,Inc.andSwitchandDataManagementCompanyLLC

S-1

333-191061

September9,2013

10.8

10.28+

MasterServiceAgreement(UnitedStates),datedasofNovember28,2011,byandbetweenTheEnduranceInternationalGroup,Inc.andEquinixOperatingCo.,Inc.,asamendedbyReplacementOrder110712andReplacementOrder112014,eacheffectiveasofDecember2,2014

10-K

001-36131

February27,2015

10.10

153

Table of Contents

ExhibitNumber DescriptionofExhibit IncorporatedbyReference

FiledHerewith

FurnishedHerewith

Form FileNumber DateofFiling ExhibitNumber

10.29+

MasterServiceAgreement,datedasofJune20,2013,byandbetweenHostGator.comLLCandCyrusOneLLC

S-1

333-191061

September9,2013

10.26

10.30

RefinancingAmendment,datedasofNovember25,2013,byandamongtherefinancinglenderspartythereto,therevolvinglenderspartythereto,theRegistrant,EIGInvestorsCorp.,andCreditSuisseAG,asAdministrativeAgent

10-K

001-36131

February28,2014

10.23

10.31

ThirdAmendedandRestatedCreditAgreement,datedasofNovember25,2013,byandamongtheRegistrant,EIGInvestorsCorp.,asBorrower,thelenderspartythereto,andCreditSuisseAG,asAdministrativeAgent

10-K

001-36131

February28,2014

10.24

10.32

AmendedandRestatedCollateralAgreement,datedasofNovember25,2013,byandamongtheRegistrant,EIGInvestorsCorp.,theothergrantorspartythereto,andCreditSuisseAG,asAdministrativeAgent

10-K

001-36131

February28,2014

10.25

10.33

AmendedandRestatedMasterGuaranteeAgreement,datedasofNovember25,2013,byandamongtheRegistrant,EIGInvestorsCorp.,theotherguarantorspartythereto,andCreditSuisseAG,asAdministrativeAgent

10-K

001-36131

February28,2014

10.26

154

Table of Contents

ExhibitNumber DescriptionofExhibit IncorporatedbyReference

FiledHerewith

FurnishedHerewith

Form FileNumber DateofFiling ExhibitNumber

21.1 SubsidiariesoftheRegistrant X

23.1 ConsentofBDOUSA,LLP X

31.1

CertificationofPrincipalExecutiveOfficerPursuanttoRule13a-14(a)/15d-14(a)oftheSecuritiesExchangeActof1934,asamended

X

31.2

CertificationofPrincipalFinancialOfficerPursuanttoRule13a-14(a)/15d-14(a)oftheSecuritiesExchangeActof1934,asamended

X

32.1

CertificationofPrincipalExecutiveOfficerPursuantto18U.S.C.§1350,asadoptedpursuanttoSection906oftheSarbanes-OxleyActof2002

X

32.2

CertificationofPrincipalFinancialOfficerPursuantto18U.S.C.§1350,asadoptedpursuanttoSection906oftheSarbanes-OxleyActof2002

X

101.INS XBRLInstanceDocument X

101.SCH XBRLTaxonomyExtensionSchemaDocument X

101.CAL

XBRLTaxonomyExtensionCalculationLinkbaseDocument

X

155

Table of Contents

ExhibitNumber DescriptionofExhibit IncorporatedbyReference

FiledHerewith

FurnishedHerewith

Form FileNumber DateofFiling ExhibitNumber

101.DEF

XBRLTaxonomyExtensionDefinitionLinkbaseDocument

X

101.LAB

XBRLTaxonomyExtensionLabelLinkbaseDocument

X

101.PRE

XBRLTaxonomyExtensionPresentationLinkbaseDocument

X

* ScheduleshavebeenomittedpursuanttoItem601(b)(2)ofRegulationS-K.EnduranceagreestofurnishsupplementallytotheSecuritiesandExchange

Commissionacopyofanyomittedscheduleorexhibituponrequest.# Managementcontractoranycompensatoryplan,contractoragreement.+ Confidentialtreatmentrequestedastoportionsoftheexhibit.ConfidentialmaterialsomittedandfiledseparatelywiththeSecuritiesandExchange

Commission.

156

Exhibit 10.11

December31,2015

TivankaEllawala##############Bellevue,WA98005

DearTiv:

EffectiveSeptember15,2015,youtransitionedfromtheroleofChiefFinancialOfficerofEnduranceInternationalGroup,Inc.(“EIG”orthe“Company”)toheadofe-commercefortheCompany.InconnectionwiththistransitionandinconsiderationforyourcontinuedemploymentwithEIG,youandtheCompanyherebyagreethateffectiveasofthedatehereof(the“EffectiveDate”):

(i)TheunvestedportionoftherestrictedstockawardgrantedtoyouonJanuary8,2013,whichunvestedportionconsistsof83,435sharesofCompanycommonstockasofthedatehereof,isherebycancelledandyoushallhavenofurtherrightswithrespecttheretoaftertheEffectiveDate;

(ii)TheunvestedportionofthenonstatutorystockoptiongrantedtoyouonOctober25,2013(the“2013NSO”),whichunvestedportionconsistsofoptionswithrespectto72,571sharesofCompanycommonstockasofthedatehereof,isherebycancelledandyoushallhavenofurtherrightswithrespecttheretoaftertheEffectiveDate.Theportionofthe2013NSOthatisvestedasofthedatehereof,comprisedofoptionswithrespectto91,032sharesofCompanycommon,stockshallremainoutstandingandbeexercisablepursuanttothetermsoftheapplicablestockoptionagreementandtheCompany’sstockincentiveplan;

(iii)TheunvestedportionoftheincentivestockoptiongrantedtoyouonOctober25,2013(the“2013ISO”),whichunvestedportionconsistsofoptionswithrespectto29,068sharesofCompanycommonstockasofthedatehereof,isherebycancelledandyoushallhavenofurtherrightswithrespecttheretoaftertheEffectiveDate.Theportionofthe2013ISOthatisvestedasofthedatehereof,comprisedofoptionswithrespectto29,068sharesofCompanycommonstock,shallremainoutstandingandbeexercisablepursuanttothetermsoftheapplicablestockoptionagreementandtheCompany’sstockincentiveplan;and

(iv)TheunvestedportionoftherestrictedstockawardgrantedtoyouonOctober25,2013,whichunvestedportionconsistsof19,567sharesofCompanycommonstockasofthedatehereof,shallcontinuetovestandremainoutstandingpursuanttothetermsoftheapplicablerestrictedstockagreementandtheCompany’sstockincentiveplan.

10CorporateDrive,Suite300,Burlington,MA01803t:781-852-3200f:781-272-2915www.enduranceinternational.com

Page2of2Pleasesignbelowtoagreetoandacknowledgeyourconsenttotheforegoing.

Sincerely,/s/HariRavichandranHariRavichandran,ChiefExecutiveOfficer

AcknowledgedandAgreed:

/s/TivankaEllawalaTivankaEllawala

Date:12/28/2015

10CorporateDrive,Suite300,Burlington,MA01803t:781-852-3200f:781-272-2918www.enduranceinternational.com

Exhibit 21.1

Subsidiaries of the Registrant

Name

Jurisdiction ofIncorporationor Organization

Names Under WhichSubsidiaryDoes Business

EIGInvestorsCorp. DE TheEnduranceInternationalGroup,Inc.

DE

AccountSupportApolloHostingArvixeBizLandBlueDominoBuyDomainsCloudbyIXDomainPrivacyServiceFBORegistrantDomainHostDot5HostingDotsterEasyCGIeHostEntryHostFatCowFreeYellowGlobatHostExcellenceHostCentricHostClearHostYourSiteHyperMartIMOutdoorsIPageIPowerIXWebHostingJustHostNetfirmsNetWorks/WebhostingNexxPowWebPureHostRe.VuReadyHostingSEOGearsSpertlySprlySpryStartLogicSuperGreenHostingThisDomainForSaleWorldwide3392225132TypepadUSANetHostingVerio

Name

Jurisdiction ofIncorporationor Organization

Names Under WhichSubsidiaryDoes Business

ViaVerioVirtualAveVPSLinkWebHost4LifeWebstrikeSolutionsXeranYourwebhosting

BluehostInc.

UT

DomainPrivacyServiceFBORegistrantHostClearJustHostSuperGreenHostingHostmonsterUnifiedLayer

HostGator.comLLC

FL

AptHostBlueFurNodelSite5WebHostingSupport

JDIBackupLimitedEnglandandWales

EnduranceInternationalGroup—West,Inc.

DE

1ASPHostDomainDLXDomainRegistrationsDominoDotsterEmailBrainFortuneCityHomesteadTechnologiesHotGamesMatchingPointHostingMyBlogSiteNameWinner

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EnduranceInternationalGroupHoldings,Inc.Burlington,Massachusetts

WeherebyconsenttotheincorporationbyreferenceintheRegistrationStatementsonFormS-8(No.333-191894andNo.333-209680)ofEnduranceInternationalGroupHoldings,Inc.ofourreportsdatedFebruary29,2016relatingtotheconsolidatedfinancialstatementsofEnduranceInternationalGroupHoldings,Inc.andtheeffectivenessofEnduranceInternationalGroupHolding,Inc.’sinternalcontroloverfinancialreporting,appearinginthisAnnualReportonForm10-KofEnduranceInternationalGroupHoldings,Inc.fortheyearendedDecember31,2015.

/s/BDOUSA,LLP

BDOUSA,LLPBoston,Massachusetts

February29,2016

Exhibit 31.1

CERTIFICATION

I,HariRavichandran,certifythat:

1.IhavereviewedthisAnnualReportonForm10-KofEnduranceInternationalGroupHoldings,Inc.;

2.Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatementsmade,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;

3.Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancialcondition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;

4.Theregistrant’sothercertifyingofficerandIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchangeActRules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))fortheregistrantandhave:

a) Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,toensure

thatmaterialinformationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,particularlyduringtheperiodinwhichthisreportisbeingprepared;

b) Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderoursupervision,

toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples;

c) Evaluatedtheeffectivenessoftheregistrant’sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessofthedisclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and

d) Disclosedinthisreportanychangeintheregistrant’sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant’smostrecentfiscal

quarter(theregistrant’sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theregistrant’sinternalcontroloverfinancialreporting;and

5.Theregistrant’sothercertifyingofficerandIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,totheregistrant’sauditorsandtheauditcommitteeoftheregistrant’sboardofdirectors(orpersonsperformingtheequivalentfunctions):

a) Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelytoadverselyaffecttheregistrant’sabilitytorecord,process,summarizeandreportfinancialinformation;and

b) Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant’sinternalcontroloverfinancialreporting.

Date:February29,2016 By: /s/HariRavichandran

HariRavichandran

ChiefExecutiveOfficer(PrincipalExecutiveOfficer)

Exhibit 31.2

CERTIFICATION

I,MarcMontagner,certifythat:

1.IhavereviewedthisAnnualReportonForm10-KofEnduranceInternationalGroupHoldings,Inc.;

2.Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatementsmade,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;

3.Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancialcondition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;

4.Theregistrant’sothercertifyingofficerandIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchangeActRules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))fortheregistrantandhave:

a) Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,toensure

thatmaterialinformationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,particularlyduringtheperiodinwhichthisreportisbeingprepared;

b) Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderoursupervision,

toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples;

c) Evaluatedtheeffectivenessoftheregistrant’sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessofthedisclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and

d) Disclosedinthisreportanychangeintheregistrant’sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant’smostrecentfiscal

quarter(theregistrant’sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theregistrant’sinternalcontroloverfinancialreporting;and

5.Theregistrant’sothercertifyingofficerandIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,totheregistrant’sauditorsandtheauditcommitteeoftheregistrant’sboardofdirectors(orpersonsperformingtheequivalentfunctions):

a) Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelytoadverselyaffecttheregistrant’sabilitytorecord,process,summarizeandreportfinancialinformation;and

b) Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant’sinternalcontroloverfinancialreporting.

Date:February29,2016 By: /s/MarcMontagner

MarcMontagner

ChiefFinancialOfficer(PrincipalFinancialOfficer)

Exhibit 32.1

CERTIFICATIONPURSUANTTO18U.S.C.SECTION1350,

ASADOPTEDPURSUANTTOSECTION906OFTHESARBANES-OXLEYACTOF2002

InconnectionwiththeAnnualReportonForm10-KofEnduranceInternationalGroupHoldings,Inc.fortheperiodendedDecember31,2015asfiledwiththeSecuritiesandExchangeCommissiononthedatehereof(the“Report”),theundersigned,HariRavichandran,ChiefExecutiveOfficerofEnduranceInternationalGroupHoldings,Inc.,herebycertifies,pursuantto18U.S.C.Section1350,asadoptedpursuanttoSection906oftheSarbanes-OxleyActof2002,that,tothebestofhisknowledgeonthedatehereof:

(1) theReportfullycomplieswiththerequirementsofSection13(a)or15(d)oftheSecuritiesExchangeActof1934;and

(2) theinformationcontainedintheReportfairlypresents,inallmaterialrespects,thefinancialconditionandresultsofoperationsofEnduranceInternationalGroupHoldings,Inc.

Date:February29,2016 By: /s/HariRavichandran

HariRavichandran

ChiefExecutiveOfficer(PrincipalExecutiveOfficer)

Exhibit 32.2

CERTIFICATIONPURSUANTTO18U.S.C.SECTION1350,

ASADOPTEDPURSUANTTOSECTION906OFTHESARBANES-OXLEYACTOF2002

InconnectionwiththeAnnualReportonForm10-KofEnduranceInternationalGroupHoldings,Inc.fortheperiodendedDecember31,2015asfiledwiththeSecuritiesandExchangeCommissiononthedatehereof(the“Report”),theundersigned,MarcMontagner,ChiefFinancialOfficerofEnduranceInternationalGroupHoldings,Inc.,herebycertifies,pursuantto18U.S.C.Section1350,asadoptedpursuanttoSection906oftheSarbanes-OxleyActof2002,that,tothebestofhisknowledgeonthedatehereof:

(1) theReportfullycomplieswiththerequirementsofSection13(a)or15(d)oftheSecuritiesExchangeActof1934;and

(2) theinformationcontainedintheReportfairlypresents,inallmaterialrespects,thefinancialconditionandresultsofoperationsofEnduranceInternationalGroupHoldings,Inc.

Date:February29,2016 By: /s/MarcMontagner

MarcMontagner

ChiefFinancialOfficer(PrincipalFinancialOfficer)