Web.com’s $2 Billion Sale; What It Says About The Value of SMB Platforms

Web.com, a behemouth that has watched companies like MailChimp, Squarespace and Weebly grab the buzz in SMB platforms, is being tentatively sold to Siris Capital, a buy out firm, for $2 Billion — a 30 percent premium over its recent stock price. Counter-offers are being invited through August 5.

Web.com launched in 1997 to provide off-the-shelf, templated websites to SMBs. The Tampa-based company gained more of a reputation as an aggressive marketing company than a cutting-edge tech leader.

In recent years, it has faced the rise of freemium website companies like Squarespace and Wix, and responded by broadening its offerings to reflect the rise of integrated, cloud-based platforms. Its acquisitions include Acquisio in November (SEO), Yodle in mid-2016 (CRM and Presence Management) and Network Solutions Inc. (Domains) in mid-2011.

Web’s subscriber count, based on units sold for all of its products, is listed at 3.49 million — a figure that has been relatively stable. Its Average Revenue Per User (ARPU) is around $18.38 a month – down from $18.66 in 2Q 2016, but up from $15 a month a few years before.

Its ARPU compares with Endurance International Group’s $19.30, which provides a different mix of services (email marketing, domains and hosting services) and GoDaddy’s $11.58, which is based on domains, reputation management and restaurant software.

The deal follows in the steps of Square’s $365 Million purchase of Weebly in April. Other competitors for SMB platform services include such players as DexYP’s Thryv, Hibu, InfusionSoft, Gatehouse’s UpCurve, 1&1, Vistaprint and Zoho.