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GoDaddy (GDDY - Free Report) third-quarter 2023 earnings of 89 cents per share beat the Zacks Consensus Estimate of 71 cents. The bottom line increased 41.3% year over year.
GDDY generated revenues of $1.07 billion, beating the Zacks Consensus Estimate by 6%. Revenues were up 3.5% and 3.8% year over year on a reported basis and a constant-currency (cc) basis, respectively.
Revenue growth can be attributed to strong momentum across the Applications & Commerce segment, global expansion, and integrations like Google's Business Messages, M365 email and successful omni-commerce offerings.
GoDaddy has two revenue pillars, namely, Applications & Commerce and Core Platform.
Applications & Commerce, comprising Websites + Marketing, Managed WordPress, productivity applications and payments & commerce, generated $363.3 million (contributing 34% to total revenues), up 11.4% on a year-over-year basis. The figure beat the consensus mark of $358 million.
Core Platform, consisting of domains, aftermarket, hosting and security, fell 0.1% from the prior-year quarter’s level to $706.4 million (contributing 66% to total revenues). The figure missed the consensus mark of $707 million.
In the reported quarter, Applications & Commerce annualized recurring revenues (ARR) were $1.4 billion, up 11% year over year. Also, core platform ARR totaled $2.3 billion, flat year over year.
In the third quarter, international revenues were $345.5 million, up 3.9% year over year or 4.5% at cc.
Total bookings of $1.13 billion increased 4.8% year over year or 4.3% at cc. The figure beat the consensus mark of $1.12 billion.
Average revenues per user were $200, up 2% year over year. The figure came in line with Zacks Consensus Estimate.
Total ARR was $3.68 billion, up 4% from the prior-year quarter’s levels.
Operating Results
On a non-GAAP basis, normalized EBITDA in the third quarter was $296 million, up 12.7% year over year.
Operating expenses (technology and development, marketing and advertising, customer care and general and administrative) of $455.3 million declined 4.2% year over year. As a percentage of revenues, operating expenses contracted 350 basis points (bps) to 0.43% from the year-ago quarter.
For the reported quarter, operating income was $167.1 million, down 28.8% year over year. As a percentage of revenues, operating income contracted 310 bps from the year-ago quarter’s levels to 15.62%.
Balance Sheet & Cash Flow
As of Sep 30, 2023, cash and cash equivalents were $329.2 million compared with $582.6 million as of Jun 30, 2022. Accounts and other receivables were $75.3 million compared with $67.2 million in the prior quarter.
GoDaddy had a total debt of $3.9 billion and a net debt of $3.6 billion in the current quarter. Total debt was $3.8 billion. Net debt was $3.2 billion in the previous quarter.
Net cash provided by operating activities was $281.6 million in the reported quarter compared with the prior quarter’s figure of $198 million.
Additionally, unlevered free cash flow was $320.1 million in the reported quarter.
GoDaddy repurchased $1.3 billion in shares year to date through October 2023, resulting in a cumulative reduction of the share count by 20%.
Guidance
For fourth-quarter 2023, management expects revenues of $1.095-$1.15 billion, indicating growth of 6% at the mid-point from the year-ago quarter’s actuals. The Zacks Consensus Estimate for revenues is pegged at $1.11 billion.
For the fourth quarter, GDDY expects applications and commerce revenues to grow 13% year over year. Core platform revenues are anticipated to rise 2-3%.
The normalized EBITDA margin is expected to be 29%.
For 2023, management expects total revenues of $4.250-$4.270 billion. The Zacks Consensus estimate for the same is pegged at $4.25 billion.
The normalized EBITDA margin for the full year is expected to exceed the previous guidance of 26% by a small margin.
For 2023, management expects unlevered free cash flow above $1.2 billion, representing growth of 9% year over year.
Image: Bigstock
GoDaddy (GDDY) Q3 Earnings Beat Estimates, Revenues Rise Y/Y
GoDaddy (GDDY - Free Report) third-quarter 2023 earnings of 89 cents per share beat the Zacks Consensus Estimate of 71 cents. The bottom line increased 41.3% year over year.
GDDY generated revenues of $1.07 billion, beating the Zacks Consensus Estimate by 6%. Revenues were up 3.5% and 3.8% year over year on a reported basis and a constant-currency (cc) basis, respectively.
Revenue growth can be attributed to strong momentum across the Applications & Commerce segment, global expansion, and integrations like Google's Business Messages, M365 email and successful omni-commerce offerings.
GoDaddy Inc. Price, Consensus and EPS Surprise
GoDaddy Inc. price-consensus-eps-surprise-chart | GoDaddy Inc. Quote
Quarter in Detail
GoDaddy has two revenue pillars, namely, Applications & Commerce and Core Platform.
Applications & Commerce, comprising Websites + Marketing, Managed WordPress, productivity applications and payments & commerce, generated $363.3 million (contributing 34% to total revenues), up 11.4% on a year-over-year basis. The figure beat the consensus mark of $358 million.
Core Platform, consisting of domains, aftermarket, hosting and security, fell 0.1% from the prior-year quarter’s level to $706.4 million (contributing 66% to total revenues). The figure missed the consensus mark of $707 million.
In the reported quarter, Applications & Commerce annualized recurring revenues (ARR) were $1.4 billion, up 11% year over year. Also, core platform ARR totaled $2.3 billion, flat year over year.
In the third quarter, international revenues were $345.5 million, up 3.9% year over year or 4.5% at cc.
Total bookings of $1.13 billion increased 4.8% year over year or 4.3% at cc. The figure beat the consensus mark of $1.12 billion.
Average revenues per user were $200, up 2% year over year. The figure came in line with Zacks Consensus Estimate.
Total ARR was $3.68 billion, up 4% from the prior-year quarter’s levels.
Operating Results
On a non-GAAP basis, normalized EBITDA in the third quarter was $296 million, up 12.7% year over year.
Operating expenses (technology and development, marketing and advertising, customer care and general and administrative) of $455.3 million declined 4.2% year over year. As a percentage of revenues, operating expenses contracted 350 basis points (bps) to 0.43% from the year-ago quarter.
For the reported quarter, operating income was $167.1 million, down 28.8% year over year. As a percentage of revenues, operating income contracted 310 bps from the year-ago quarter’s levels to 15.62%.
Balance Sheet & Cash Flow
As of Sep 30, 2023, cash and cash equivalents were $329.2 million compared with $582.6 million as of Jun 30, 2022. Accounts and other receivables were $75.3 million compared with $67.2 million in the prior quarter.
GoDaddy had a total debt of $3.9 billion and a net debt of $3.6 billion in the current quarter. Total debt was $3.8 billion. Net debt was $3.2 billion in the previous quarter.
Net cash provided by operating activities was $281.6 million in the reported quarter compared with the prior quarter’s figure of $198 million.
Additionally, unlevered free cash flow was $320.1 million in the reported quarter.
GoDaddy repurchased $1.3 billion in shares year to date through October 2023, resulting in a cumulative reduction of the share count by 20%.
Guidance
For fourth-quarter 2023, management expects revenues of $1.095-$1.15 billion, indicating growth of 6% at the mid-point from the year-ago quarter’s actuals. The Zacks Consensus Estimate for revenues is pegged at $1.11 billion.
For the fourth quarter, GDDY expects applications and commerce revenues to grow 13% year over year. Core platform revenues are anticipated to rise 2-3%.
The normalized EBITDA margin is expected to be 29%.
For 2023, management expects total revenues of $4.250-$4.270 billion. The Zacks Consensus estimate for the same is pegged at $4.25 billion.
The normalized EBITDA margin for the full year is expected to exceed the previous guidance of 26% by a small margin.
For 2023, management expects unlevered free cash flow above $1.2 billion, representing growth of 9% year over year.
Zacks Rank & Other Stocks to Consider
GoDaddy sports a Zacks Rank #1 (Strong Buy).
Ballard Power System (BLDP - Free Report) , NetEase (NTES - Free Report) and Upstart (UPST - Free Report) are some other top-ranked stocks that investors can consider in the broader sector. While NTES sports a Zacks Rank #1, BLDP and UPST carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ballard Power System shares have declined 26.3% year to date. BLDP is set to report its third-quarter 2023 results on Nov 7.
NetEase shares have gained 51.1% year to date. NTES is set to report its third-quarter 2023 results on Nov 16.
Upstart shares have returned 107.5% year to date. UPST is set to report its third-quarter 2023 results on Nov 7.