Endurance International Group Holdings (
) is keenly aware of the biggest challenge that its clients face:
coming up with a coherent online marketing strategy.
The company, based in Burlington, Mass., provides cloud-based
platform solutions designed to help small and midsize businesses,
or SMBs, succeed online. Many of these businesses have little
money to spare on marketing and little expertise to do it
Endurance recently surveyed 491 very small business (VSB)
subscribers within the total Endurance subscriber base and found
that most of them struggle with even the most basic element of
effective marketing -- designing impactful logos. Fifteen percent
have no logo at all.
A poll by online marketing firm Yodle supports these findings;
it says that many small businesses still don't use modern
technology. Less than half even have a website.
Yet studies show that 90% of all consumers prefer shopping and
doing other transactions online. So these small businesses miss
out on potential customers.
Endurance CEO Hari Ravichandran says that his firm is
well-positioned to get these small businesses on board.
Its suite of 150 products and services includes Web presence
and mobile sites, email and e-commerce solutions, plus more
advanced offerings such as SEO services, scalable computing,
security, storage, backup and marketing.
The firm's subscriber base of more than 3.7 million includes
many businesses with fewer than 10 employees and often fewer than
"Most don't have an IT department, so it's a lot more
convenient and cost-effective for them to come to us and tell us
what they need," Ravichandran told IBD.
Endurance offers value not only in pricing but also in
customer service. Clients have access to an IT staff and support
department 24/7, 365 days a week.
In the case of logos, for example, Endurance offers Mojo
Marketplace tools to "help deliver professional logos and
graphics at any budget," Michael Kesselman, the company's
executive vice president of innovation and strategy, said in a
Endurance serves its customers with a family of brands that
includes Bluehost, HostGator, Domain.com, FatCow, iPage and
BigRock. The company has a presence in the Americas as well as in
Asia, and employs more than 2,600 workers.
Endurance attracts clients by first offering the essentials,
which might include a domain name, a Web presence and a few basic
The cost is minimal -- in the range of $6 or $7 a month. It's
even less when promotions are available, Ravichandran says.
Once on board, subscribers typically see a sales uptick and
begin exploring options to expand their online presence. As
business grows, Ravichandran says, so do online needs.
That's when Endurance boosts its offerings.
The company's strategy focuses on "upselling the installed
base," analyst Gregg Moskowitz of Cowen noted in a report.
That strategy should result in a jump in average revenue per
), he says. ARPS stood at $14.33 per month at the end of the
second quarter, up from $13.01 a year earlier.
Ravichandran says that ARPS could grow to $20-$25 per month in
the next three to five years.
On Thursday, Endurance reported second-quarter adjusted
revenue of $159 million, above consensus estimates as well as the
company's own guidance.
Top-line results were helped by the addition of more than
93,000 net paying subscribers. EPS came in at 25 cents excluding
The company's stock price rose 11% to 14.39 intraday on
Thursday before closing up more than 9% to 14.15. However, shares
fell back some in midday trading Friday.
Endurance had its
initial public offering
last October at an opening price of 12. It has mostly stayed away
from mergers and acquisitions in its first year as a publicly
traded company so it could focus on organic growth.
However, Ravichandran says that Endurance is again on the hunt
Analyst Moskowitz notes that Endurance has a "strong track
record of acquiring attractive brands, integrating them with
EIGI's online platform (while retaining the brand identity) and
driving meaningfully greater uptake than those companies had been
able to do independently."
He expects to see a "resumption of the M&A playbook"
during the latter half of the year.
Meanwhile, Endurance stands to benefit from an improving
economy in which small businesses feel more confident spending on
More small businesses are considering online marketing
solutions as a viable and useful option, Ravichandran says. As an
example, he points to the driver of a car service he's used for
six years who recently expanded his operations online.
"(The driver) always gave me a business card," Ravichandran
said. "Now he still gives me a business card but there's also a
link to his Facebook page on it."
Through his Facebook page, the driver can offer coupons and
special rates during slow business hours -- and reach thousands
of potential customers quickly.
In the third quarter, Endurance also plans to launch a social
networking offering that links its subscribers.
"We're trying to build something that allows subscribers to
learn from each other," Ravichandran said.
Other tech companies also are focusing on their Web presence
business, which might mean more competition for Endurance.
) recently launched a beta version of its domain registration
initiative, called Google Domains. Endurance's stock fell 6% on
the news, but analysts quickly pointed out that there was little
to worry about.
Google is not offering hosting or other adjacent services
itself, according to a report from Jefferies analysts: "We
believe Google Domains competes more directly with primarily
registrar businesses rather than primarily hosting businesses
such as EIGI."
In fact, Endurance already partners with Google through its
"Get Your Business Online" initiative in the U.S. and India.
"Over time, Google potentially could also end up including
Endurance as a web presence partner through the Google Domains
initiative, as Google is interested primarily in SMB ad dollars
and not the hosting business itself," the Jefferies report