What happened

Shares of Endurance International Group (NASDAQ:EIGI) were climbing today after the cloud-based provider of services like website building and email marketing for small and medium-sized businesses posted a preliminary earnings report that topped expectations.

As of 11:54 a.m. EDT, the stock was up 20.3%.

A digital image of a cloud

Image source: Getty Images.

So what

Endurance, which had pulled its guidance in its first-quarter report, seemed to outperform its own expectations for the second quarter. CEO Jeffrey Fox said, "I am very pleased with our second-quarter performance. We added approximately 97,000 net subscribers in the quarter, which compares favorably to our net loss of 13,000 subscribers in the second quarter of 2019. ... We experienced strong demand for our products and services and are very pleased to deliver growth in each of our four strategic brands."

In its preliminary results, Endurance posted revenue of $274 million, up 1% from a year ago adjusting for the impact of the SinglePlatform sale. That result was ahead of analyst estimates at $271.3 million. Adjusted EBITDA also increased from an adjusted $75.3 million a year ago to $84 million as the company benefited from a decline in business travel, lower employee healthcare costs, and lower facilities-related costs. The surge in subscriber growth also seemed to please investors as the company finished the quarter with 4.877 million, up from an adjusted 4.746 million a year ago.

Now what

Endurance also reinstated its guidance for the year, calling for approximately $1.1 billion in revenue, up slightly from an adjusted total of $1.088 billion a year ago. On the bottom line, the company expects adjusted EBITDA of $300 million, down from $310 million a year ago, adjusted for the SinglePlatform sale.

The company's shares fell sharply earlier this year, losing about 75% during the market crash in March as investors feared troubles with its client base, but after today's gains the stock is now in positive territory for the year, showing it's recouped all of those losses.

Over a longer horizon, however, Endurance stock has underperformed badly over the last several years, and with revenue growth stagnant and losses still expected on the bottom line, there seems to be little reason to invest at this point. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.