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Why Is GoDaddy (GDDY) Down 7.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for GoDaddy (GDDY - Free Report) . Shares have lost about 7.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is GoDaddy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
GoDaddy Q3 Earnings Beat, Revenues Match Estimates
GoDaddy Inc. reported third-quarter 2019 adjusted earnings of 42 cents per share, surpassing the Zacks Consensus Estimate of 22 cents. Also, the bottom line was up from 8 cents in the year-ago quarter.
The company generated revenues of $760.5 million, up 11.9% year over year or 13.3% on a constant-currency basis. The reported figure was in line with the Zacks Consensus Estimate. The revenue growth was driven by strong performance of its product segments.
Segmental Revenues
GoDaddy generates revenues from three segments — Domain, Hosting and Presence, & Business Applications.
Domain: The company generated revenues of $345.3 million (45.4% of total revenues) from this segment. The figure improved 11.6% from the year-ago quarter driven by strong liquid domain aftermarket and renewals.
Hosting and Presence: This segment generated revenues of $285 million (37.5% of revenues), increasing 8.3% on a year-over-year basis. The revenue growth can be primarily attributed to robust feature engagements, bookings and appointments within this segment. Further, well-performing GoCentral remained a major positive.
Business Applications: Revenues from this segment came in at $130.2 million (17.1% of revenues), increasing 21.9% year over year.
Other Details
The company’s customer base reached 19.1 million at the end of the third quarter. Notably, the figure was up 4.6% from the prior-year quarter. Growing website adoption in emerging markets aided the growth of its customer base. Average revenue per user was $155 in the reported quarter, up 7.1% on a year-over-year basis, attributable to solid momentum across international markets served by the company.
International revenues were $254.3 million in the third quarter, up 7.8% year over year or approximately 11.7% on a constant-currency basis.
Booking
GoDaddy uses total bookings as a performance measure, since payment is usually collected at the time of sale, and recognizes revenues ratably over the term of customer contracts. In the third quarter, total bookings of $851 million increased 14.7% year over year or 15.7% on a constant-currency basis.
Operating Results
Gross margin was 65.2%, down 140 basis points from the prior-year quarter.
Operating expenses (technology and development, marketing and advertising, & general and administrative) of $268.2 million decreased 1.4% year over year.
Balance Sheet & Cash Flow
At the end of the third quarter, total cash and cash equivalents, along with short-term investments were $990.2 million compared with $1.2 billion in second-quarter 2019. Accounts and other receivables were $29 million compared with $24.8 million in the second quarter.
Total debt was $2.4 billion and net debt was $1.4 billion at the end of the third quarter.
Net cash provided by operating activities was $200.2 million compared with $161.3 million in the second quarter.
Additionally, adjusted free cash flow was $191.3 million during the reported quarter.
Guidance
For full-year 2019, management expects revenues within $2.98-$2.99 billion, indicating year-over-year growth of approximately 12%.
Additionally, free cash flow in 2019 is projected between $730 million and $740 million, suggesting year-over-year growth of 18-19%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 41.75% due to these changes.
VGM Scores
Currently, GoDaddy has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, GoDaddy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is GoDaddy (GDDY) Down 7.4% Since Last Earnings Report?
It has been about a month since the last earnings report for GoDaddy (GDDY - Free Report) . Shares have lost about 7.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is GoDaddy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
GoDaddy Q3 Earnings Beat, Revenues Match Estimates
GoDaddy Inc. reported third-quarter 2019 adjusted earnings of 42 cents per share, surpassing the Zacks Consensus Estimate of 22 cents. Also, the bottom line was up from 8 cents in the year-ago quarter.
The company generated revenues of $760.5 million, up 11.9% year over year or 13.3% on a constant-currency basis. The reported figure was in line with the Zacks Consensus Estimate. The revenue growth was driven by strong performance of its product segments.
Segmental Revenues
GoDaddy generates revenues from three segments — Domain, Hosting and Presence, & Business Applications.
Domain: The company generated revenues of $345.3 million (45.4% of total revenues) from this segment. The figure improved 11.6% from the year-ago quarter driven by strong liquid domain aftermarket and renewals.
Hosting and Presence: This segment generated revenues of $285 million (37.5% of revenues), increasing 8.3% on a year-over-year basis. The revenue growth can be primarily attributed to robust feature engagements, bookings and appointments within this segment. Further, well-performing GoCentral remained a major positive.
Business Applications: Revenues from this segment came in at $130.2 million (17.1% of revenues), increasing 21.9% year over year.
Other Details
The company’s customer base reached 19.1 million at the end of the third quarter. Notably, the figure was up 4.6% from the prior-year quarter. Growing website adoption in emerging markets aided the growth of its customer base. Average revenue per user was $155 in the reported quarter, up 7.1% on a year-over-year basis, attributable to solid momentum across international markets served by the company.
International revenues were $254.3 million in the third quarter, up 7.8% year over year or approximately 11.7% on a constant-currency basis.
Booking
GoDaddy uses total bookings as a performance measure, since payment is usually collected at the time of sale, and recognizes revenues ratably over the term of customer contracts. In the third quarter, total bookings of $851 million increased 14.7% year over year or 15.7% on a constant-currency basis.
Operating Results
Gross margin was 65.2%, down 140 basis points from the prior-year quarter.
Operating expenses (technology and development, marketing and advertising, & general and administrative) of $268.2 million decreased 1.4% year over year.
Balance Sheet & Cash Flow
At the end of the third quarter, total cash and cash equivalents, along with short-term investments were $990.2 million compared with $1.2 billion in second-quarter 2019. Accounts and other receivables were $29 million compared with $24.8 million in the second quarter.
Total debt was $2.4 billion and net debt was $1.4 billion at the end of the third quarter.
Net cash provided by operating activities was $200.2 million compared with $161.3 million in the second quarter.
Additionally, adjusted free cash flow was $191.3 million during the reported quarter.
Guidance
For full-year 2019, management expects revenues within $2.98-$2.99 billion, indicating year-over-year growth of approximately 12%.
Additionally, free cash flow in 2019 is projected between $730 million and $740 million, suggesting year-over-year growth of 18-19%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 41.75% due to these changes.
VGM Scores
Currently, GoDaddy has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, GoDaddy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.