Gotham City Research put out a report that disclosed, among other things, that: (1) 40%-100%+ of EIGI’s reported profits are suspect; (2) the Company’s organic growth was overstated; and (3) the Company’s revenues per Indian filings are 30%-67% lower than reported in the United States. On this news, shares of EIGI fell $4.94 per share, or more than 22%, in intraday trading on April 28, 2015.
The company purchased BuyDomains.com in November of last year. They purchased Directi for $110 million before that. Other brands include Bluehost, HostGator, iPage, Domain.com, A Small Orange and ResellerClub.
Business Insider covered the story:
This means, in plain English, that these companies’ major customers or “related entities” were, in fact, controlled by the company itself. In one example, Gotham City argues:
- Endurance CEO Hari Ravichandran and/or immediate family were and/or is a director and/or owner of related parties, Glowtouch Technologies and Innovative Business Services (“IBS”).
- The transactions are material to EIGI, as the transactions have accounted for at least 16.5% of 2012-2014 Ebitda.
- EIGI’s payments to Glowtouch account for most of Glowtouch’s revenues.
In a statement to Business Insider, Endurance said: “The claims in this ‘report’ are baseless and not rooted in reality. The reality is, since going public Endurance has beat expectations every quarter, showing consistent growth throughout the company. Endurance senior executives still own a significant stake in the company and are deeply invested in its future success. To suggest otherwise, is ridiculous.”
