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.
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%.
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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.
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%.
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Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in? If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.
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