Why Web.com Group Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Web.com popped more than 10% during intraday trading Wednesday after the Internet services and small business marketing specialist turned in better-than-expected third-quarter results.

So what: Adjusted quarterly sales rose 9% year over year to $134.8 million, which translated to a non-GAAP net income of $0.55 per share. For reference, analysts were looking for earnings of just $0.53 per share on sales of $134.22 million. 

As a result, Web.com also raised the bottom end of its full-year 2013 revenue guidance and now expects sales in the range of $531 million to $534 million. In addition, it revised projections for its full-year 2013 adjusted net income to $2.11 to $2.12 per share, up from the previous range of $2.02 to $2.07 per share.

Now what: Web.com CEO David Brown weighed in, "We are delivering the acceleration in revenue and average revenue per user growth that we targeted through our strategy of cross-selling our value-added services into our three million plus subscriber base, while consistently adding net subscribers and maintaining best-in-class customer retention rates." 

The quarter was definitely a strong one for Web.com, though it's worth noting the company is still unprofitable on a GAAP basis. Still, considering shares currently trade for just 11 times next year's earnings estimates, patient long-term investors could be rewarded if Web.com can maintain its momentum and achieve sustained profitability down the road.

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The article Why Web.com Group Shares Popped originally appeared on Fool.com.

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