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Initial Follow-up to
Endurance International Group:
A Web of Deceit
Endurance International Group
Initial Response to the Gotham Report
Gothams report
mixed lies with facts.
"It is better to be
approximately right
than precisely wrong."
Disclaimer:
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Page 2 of 6
Table of Contents
I.
II.
III.
IV.
Disclaimer
Follow-up to Endurance International Group: a Web of Deceit
Forensic Evaluation of Endurances Response
End Notes
Page 3 of 6
Limited disclosures or
Disclosures that seem transparent and reliable yet are precisely irrelevant.
We may get some things wrong about Endurance, but we remain confident that shares will approach
$0.00 per share, given the totality of our findings, both in the report and to be released in the future.
Here are Gotham City Researchs responses to specific statements made yesterday by EIGI:
Endurance
"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.
Endurance is transparent in how it
calculates all of its metrics including its
average revenue per subscriber, subscriber
counts, organic growth and monthly
revenue retention. The company has
always been clear in its financial
disclosures and reports on its financial
health and growth.
KPMG serves as Endurance's internal
auditor including auditing Sarbanes-Oxley
controls. BDO serves as the company's
external auditor.
As previously disclosed, the company's
free cash flow for operations in 2014 was
$143 million.
Gotham
Endurance did not specify what exactly is
baseless & not rooted in reality.
Our report said exactly the same (see page
13). This statement fails to support EIGIs
assertion that our report was baseless
and not rooted in reality.
Gowex AND Quindells executives owned
significant stakes in their companies as
well. This fact did not prevent fraud.
Endurances
reported
metrics
are
transparently irrelevant, confusing, and
not
consistent
with industry-wide
definitions. See our report yesterday for
further details.
Page 4 of 6
Page 5 of 6
KPMG serves as Endurance's internal auditor including auditing Sarbanes-Oxley controls. BDO
serves as the company's external auditor.
Comment: EIGI builds a wall of false integrity, suggesting it could not commit wrong-doing
because of its affiliations with other parties. EIGI is hoping the audience will conclude
therefore Gotham must be wrong.
"As previously disclosed, the company's free cash flow for operations in 2014 was $143 million.
Comment: The first clause as previously disclosed is intended as a dismissive statement, to
discourage further inquiry.
EIGI is guilty of a few errors of omission here: first, it fails to mention that free cash flow for
operations is a pro forma figure. Second, EIGI fails to mention that it no longer includes these
pro forma free cash flow measures in its audited annual financial filings, because the SEC
criticized EIGIs definition of EIGIs free cash flow in correspondence letters between the SEC
and Endurance. The errors of omission suggest EIGI has something material to hide.
Additionally, Warburg Pincus and Goldman Sachs own more than 40 percent of the company.
Comment: Endurance convincingly attempts to manipulate the reader into drawing one of the
following false inferences:
Warburg Pincus and Goldman Sachs own more than 40 percent of the company,
therefore Endurance can do no wrong.
Warburg Pincus and Goldman Sachs own more than 40 percent of the company,
therefore the claims in Gothams report are baseless and not rooted in reality.
Page 6 of 6