GoDaddy’s (GDDY - Free Report) fourth-quarter 2017 adjusted earnings of 11 cents per share were above the Zacks Consensus Estimate by 2 cents. Earnings increased 10% from the year-ago quarter.
Management remains positive about strong product and marketing roadmap for 2018. The company’s mobile-optimized website builder, GoCentral, has been gaining momentum. The company has been making continuous efforts to enhance its features. It recently added online appointment scheduling, payments via Square, blogging capabilities and integration with Google My Business, among many other features.
Notably, on a 12-months basis, the stock has underperformed the industry it belongs to. It gained 56.3% compared with the industry’s growth of 60%.
Revenues
Revenues of $602 million increased 3.4% sequentially and 23.9% year over year, beating the Zacks Consensus Estimate of $593.0 million. Moreover, the reported figure came above management’s guidance of $591-$596 million.
At the end of the fourth quarter, customers were nearly 17.3 million, increasing 17.6% year over year. Also, average revenue per user (ARPU) was $139, up 7.4% from the prior-year quarter.
Strong growth in customers, contribution from HEG acquisition and expanding ARPU led to the improvement.
Segmental Revenues
GoDaddy generates revenues from three segments — Domain, Hosting and Presence, and Business Applications.
Domain revenues of $281.6 million contributed 46.8% to total revenues. Revenues were up 3.7% sequentially and 16.1% year over year.
Hosting and Presence revenues of $228.8 million accounted for 38% of total revenues. The figure represented 1.3% sequential and 29.5% year-over-year growth.
Business Applications revenues of $91.8 million, which accounted for 15.2% of total revenues, increased 8.3% sequentially and 37.6% from the year-ago quarter.
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 fourth quarter, total bookings of $657.9 million increased 25.4% year over year.
Margins
Gross margin was 66.5%, up 86 basis points (bps) sequentially and 188 bps from the prior-year quarter.
Operating expenses of $377.2 million increased 28% year over year.
Net Income
The quarter’s GAAP net income was $94.8 million against net loss of $0.8 million in the year-ago quarter.
Pro forma earnings were 11 cents compared with 10 cents reported in the prior-year quarter.
Balance Sheet & Cash Flow
On Dec 31, 2017, total cash and cash equivalents and short-term investments were $595 million compared with $553.3 million in the third quarter. Accounts and other receivables were $18.4 million compared with $17.3 million in the prior quarter.
Total long-term debt, including current portion, was $2.48 billion, while net debt was $1.89 billion in the fourth quarter.
Net cash provided by operating activities in the fourth quarter was $104.3 million compared with $131.4 million in the prior quarter.
Guidance
For the first quarter of 2018, the company expects revenues in the range of $620-$625 million. The Zacks Consensus Estimate for first-quarter revenues is pegged at $600.8 million.
For full-year 2018, GoDaddy raised its revenue guidance within $2.58-$2.61 billion, representing year-over-year growth of approximately 16%. The Zacks Consensus Estimate for full-year revenues is pegged at $2.54 billion.
Zacks Rank and Stocks to Consider
GoDaddy has a Zacks Rank #3 (Hold). A few better-ranked stocks in the technology sector are PetMed Express (PETS - Free Report) , Teradyne (TER - Free Report) and Mercadolibre (MELI - Free Report) . While PetMed and Teradyne sport a Zacks Rank #1 (Strong Buy), Mercadolibre carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings per share growth rate for PetMed, Teradyne and Mercadolibre is projected to be 10%, 12% and 25%, respectively.
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GoDaddy’s (GDDY - Free Report) fourth-quarter 2017 adjusted earnings of 11 cents per share were above the Zacks Consensus Estimate by 2 cents. Earnings increased 10% from the year-ago quarter.
Management remains positive about strong product and marketing roadmap for 2018. The company’s mobile-optimized website builder, GoCentral, has been gaining momentum. The company has been making continuous efforts to enhance its features. It recently added online appointment scheduling, payments via Square, blogging capabilities and integration with Google My Business, among many other features.
Notably, on a 12-months basis, the stock has underperformed the industry it belongs to. It gained 56.3% compared with the industry’s growth of 60%.
Revenues
Revenues of $602 million increased 3.4% sequentially and 23.9% year over year, beating the Zacks Consensus Estimate of $593.0 million. Moreover, the reported figure came above management’s guidance of $591-$596 million.
At the end of the fourth quarter, customers were nearly 17.3 million, increasing 17.6% year over year. Also, average revenue per user (ARPU) was $139, up 7.4% from the prior-year quarter.
Strong growth in customers, contribution from HEG acquisition and expanding ARPU led to the improvement.
Segmental Revenues
GoDaddy generates revenues from three segments — Domain, Hosting and Presence, and Business Applications.
Domain revenues of $281.6 million contributed 46.8% to total revenues. Revenues were up 3.7% sequentially and 16.1% year over year.
Hosting and Presence revenues of $228.8 million accounted for 38% of total revenues. The figure represented 1.3% sequential and 29.5% year-over-year growth.
Business Applications revenues of $91.8 million, which accounted for 15.2% of total revenues, increased 8.3% sequentially and 37.6% from the year-ago quarter.
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 fourth quarter, total bookings of $657.9 million increased 25.4% year over year.
Margins
Gross margin was 66.5%, up 86 basis points (bps) sequentially and 188 bps from the prior-year quarter.
Operating expenses of $377.2 million increased 28% year over year.
Net Income
The quarter’s GAAP net income was $94.8 million against net loss of $0.8 million in the year-ago quarter.
Pro forma earnings were 11 cents compared with 10 cents reported in the prior-year quarter.
Balance Sheet & Cash Flow
On Dec 31, 2017, total cash and cash equivalents and short-term investments were $595 million compared with $553.3 million in the third quarter. Accounts and other receivables were $18.4 million compared with $17.3 million in the prior quarter.
Total long-term debt, including current portion, was $2.48 billion, while net debt was $1.89 billion in the fourth quarter.
Net cash provided by operating activities in the fourth quarter was $104.3 million compared with $131.4 million in the prior quarter.
Guidance
For the first quarter of 2018, the company expects revenues in the range of $620-$625 million. The Zacks Consensus Estimate for first-quarter revenues is pegged at $600.8 million.
For full-year 2018, GoDaddy raised its revenue guidance within $2.58-$2.61 billion, representing year-over-year growth of approximately 16%. The Zacks Consensus Estimate for full-year revenues is pegged at $2.54 billion.
Zacks Rank and Stocks to Consider
GoDaddy has a Zacks Rank #3 (Hold). A few better-ranked stocks in the technology sector are PetMed Express (PETS - Free Report) , Teradyne (TER - Free Report) and Mercadolibre (MELI - Free Report) . While PetMed and Teradyne sport a Zacks Rank #1 (Strong Buy), Mercadolibre carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings per share growth rate for PetMed, Teradyne and Mercadolibre is projected to be 10%, 12% and 25%, respectively.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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