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GoDaddy Inc.’s (GDDY - Free Report) fourth-quarter 2022 earnings of 62 cents per share were in line with the Zacks Consensus Estimate. The bottom line also jumped 19.2% year over year.
GDDY generated revenues of $1.039 billion, which lagged the Zacks Consensus Estimate of $1.042 billion. Revenues were up 2% and 3.6% year over year on a reported basis and a constant-currency (CC) basis, respectively.
Revenue growth was driven by strong momentum across the Applications & Commerce business. Growing demand for GoDaddy Payments remained positive.
The company's expanding global footprints contributed well.
However, sluggishness across the Core Platform remained a major concern.
GoDaddy has two revenue pillars, namely Applications & Commerce, and Core Platform.
Applications & Commerce, comprised of Websites + Marketing, Managed WordPress, productivity applications, and payments & commerce, generated $333.4 million (accounting for 32.1% of the total revenues), up 10.9% on a year-over-year basis. Expanding OmniCommerce suit and meeting the strong demand for domain-based email attachments contributed well.
Core Platform, consisting of domains, aftermarket, hosting and security, fell 1.7% from the prior-year quarter’s level to $706.5 million (accounting for 67.9% of total revenues).
Nevertheless, growing renewals and registrations, robust GoDaddy Registry, and an expanding aftermarket remained positives.
For the reported quarter, Applications & Commerce annualized recurring revenues (ARR) were $1.3 billion, increasing 9% year over year. Also, core platform ARR climbed 1% from the prior-year quarter’s level to $2.3 billion.
In the fourth quarter, international revenues were $340.8 million, up 3% year over year or 7.8% at CC.
Total bookings of $1.05 billion increased 0.1% year over year or 2.2% on CC basis.
Average revenue per user was $197, up 9.7% year over year.
Total ARR stood at $3.57 billion, up 4% from the prior-year quarter.
GoDaddy’s gross merchandise volume and gross payments volume were $28 billion and $760 million, respectively, up 10% and 198% year over year. This was attributed to robust commerce offerings.
Operating Results
On a non-GAAP basis, normalized EBITDA for the reported quarter was $266 million, up 4.7% year over year.
Operating expenses (technology and development, marketing and advertising, customer care, and general and administrative) of $475.1 million increased 4.1% year over year. As a percentage of revenues, operating expenses expanded 90 basis points (bps) to 45.7% from the year-ago quarter.
For the reported quarter, operating income was $134.9 million, up 8.1% year over year. As a percentage of revenues, operating income expanded by 70 bps from the year-ago quarter’s level to 12.9%.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash and cash equivalents were $774 million compared with $826.2 million as of Sep 30, 2022. Accounts and other receivables were $60.1 million compared with $64 million in the prior quarter.
GoDaddy reported total debt of $3.9 billion and net debt of $3.1 billion in the previous quarter. Total debt was $3.9 billion and net debt was $3.07 billion in the previous quarter.
Net cash provided by operating activities was $208 million in the reported quarter compared with the prior quarter’s figure of $269.9 million.
Additionally, unlevered free cash flow was $238.2 million for the reported quarter.
Guidance
For first-quarter 2023, management expects revenues of $1.03-$1.05 billion, indicating growth of 4% at the mid-point from the year-ago quarter’s actuals. The Zacks Consensus Estimate for revenues is pegged at $1.05 billion.
For the first quarter, GDDY expects applications and commerce revenues to grow 8-10% year over year. The core platform revenues are anticipated to grow 1-3% from the year-ago quarter.
The normalized EBITDA margin is expected to be 24-25%.
For 2023, management expects total revenues of $4.250-$4.325 billion, suggesting growth of 5% at the mid-point from the year-ago actuals. The Zacks Consensus Estimate for 2023 revenues is pegged at $4.33 billion.
For 2023, GDDY expects revenue growth of applications and commerce, and the core platform of 8-10% and 2-4%, respectively.
The normalized EBITDA margin for the full year is projected at 26%.
Image: Bigstock
GoDaddy (GDDY) Q4 Earnings Meet Estimates, Revenues Rise Y/Y
GoDaddy Inc.’s (GDDY - Free Report) fourth-quarter 2022 earnings of 62 cents per share were in line with the Zacks Consensus Estimate. The bottom line also jumped 19.2% year over year.
GDDY generated revenues of $1.039 billion, which lagged the Zacks Consensus Estimate of $1.042 billion. Revenues were up 2% and 3.6% year over year on a reported basis and a constant-currency (CC) basis, respectively.
Revenue growth was driven by strong momentum across the Applications & Commerce business. Growing demand for GoDaddy Payments remained positive.
The company's expanding global footprints contributed well.
However, sluggishness across the Core Platform remained a major concern.
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, comprised of Websites + Marketing, Managed WordPress, productivity applications, and payments & commerce, generated $333.4 million (accounting for 32.1% of the total revenues), up 10.9% on a year-over-year basis. Expanding OmniCommerce suit and meeting the strong demand for domain-based email attachments contributed well.
Core Platform, consisting of domains, aftermarket, hosting and security, fell 1.7% from the prior-year quarter’s level to $706.5 million (accounting for 67.9% of total revenues).
Nevertheless, growing renewals and registrations, robust GoDaddy Registry, and an expanding aftermarket remained positives.
For the reported quarter, Applications & Commerce annualized recurring revenues (ARR) were $1.3 billion, increasing 9% year over year. Also, core platform ARR climbed 1% from the prior-year quarter’s level to $2.3 billion.
In the fourth quarter, international revenues were $340.8 million, up 3% year over year or 7.8% at CC.
Total bookings of $1.05 billion increased 0.1% year over year or 2.2% on CC basis.
Average revenue per user was $197, up 9.7% year over year.
Total ARR stood at $3.57 billion, up 4% from the prior-year quarter.
GoDaddy’s gross merchandise volume and gross payments volume were $28 billion and $760 million, respectively, up 10% and 198% year over year. This was attributed to robust commerce offerings.
Operating Results
On a non-GAAP basis, normalized EBITDA for the reported quarter was $266 million, up 4.7% year over year.
Operating expenses (technology and development, marketing and advertising, customer care, and general and administrative) of $475.1 million increased 4.1% year over year. As a percentage of revenues, operating expenses expanded 90 basis points (bps) to 45.7% from the year-ago quarter.
For the reported quarter, operating income was $134.9 million, up 8.1% year over year. As a percentage of revenues, operating income expanded by 70 bps from the year-ago quarter’s level to 12.9%.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash and cash equivalents were $774 million compared with $826.2 million as of Sep 30, 2022. Accounts and other receivables were $60.1 million compared with $64 million in the prior quarter.
GoDaddy reported total debt of $3.9 billion and net debt of $3.1 billion in the previous quarter. Total debt was $3.9 billion and net debt was $3.07 billion in the previous quarter.
Net cash provided by operating activities was $208 million in the reported quarter compared with the prior quarter’s figure of $269.9 million.
Additionally, unlevered free cash flow was $238.2 million for the reported quarter.
Guidance
For first-quarter 2023, management expects revenues of $1.03-$1.05 billion, indicating growth of 4% at the mid-point from the year-ago quarter’s actuals. The Zacks Consensus Estimate for revenues is pegged at $1.05 billion.
For the first quarter, GDDY expects applications and commerce revenues to grow 8-10% year over year. The core platform revenues are anticipated to grow 1-3% from the year-ago quarter.
The normalized EBITDA margin is expected to be 24-25%.
For 2023, management expects total revenues of $4.250-$4.325 billion, suggesting growth of 5% at the mid-point from the year-ago actuals. The Zacks Consensus Estimate for 2023 revenues is pegged at $4.33 billion.
For 2023, GDDY expects revenue growth of applications and commerce, and the core platform of 8-10% and 2-4%, respectively.
The normalized EBITDA margin for the full year is projected at 26%.
For 2023, management expects unlevered free cash flow above $1.2 billion.
Management expects to repurchase shares worth $1 billion.
Zacks Rank & Stocks to Consider
Currently, GoDaddy has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer & Technology sector are Agilent Technologies (A - Free Report) , Arista Networks (ANET - Free Report) and Garmin (GRMN - Free Report) , all of which carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agilent has gained 8.4% in the past year. A’s long-term earnings growth rate is projected at 10%.
Arista Networks has gained 6.1% in the past year. The long-term earnings growth rate for ANET is projected at 17.5%.
Garmin has lost 24.6% in the past year. The long-term earnings growth rate for GRMN is projected at 5.6%.