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GoDaddy (GDDY) Down 5.3% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for GoDaddy (GDDY - Free Report) . Shares have lost about 5.3% 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 its most recent earnings report in order to get a better handle on the important drivers.
GoDaddy Q4 Earnings Miss Mark, Revenues Rise Y/Y
GoDaddy first-quarter 2022 earnings of 41 cents per share missed the Zacks Consensus Estimate by 2.4%. The bottom line also decreased 21.2% sequentially. Nevertheless, it jumped significantly from 6 cents reported in the year-ago quarter.
GDDY generated revenues of $1 billion, up 11.3% year over year or 11.5% on constant-currency (CC) basis. The reported figure also surpassed the Zacks Consensus Estimate by 1.5%. However, the metric decreased 1.6% sequentially.
Revenue growth was driven by strong momentum across applications & commerce and the core platform. Growing demand for GoDaddy Payments remained a positive. GoDaddy witnessed 70% adoption within the commerce tier of Websites + Marketing and 25% within Managed WordPress.
Quarter in Detail
GoDaddy has two revenue pillars, namely Applications & Commerce and Core Platform.
Applications & Commerce comprising Websites + Marketing, Managed WordPress, productivity applications, payments & commerce generated $303.1 million (accounting for 30% of total revenues), up 15.7% on a year-over-year basis.
Core Platform consisting of domains, aftermarket, hosting and security rose 9.5% from the prior-year quarter’s level to $699.6 million (accounting for 60% of total revenues).
In the first quarter, international revenues were $329.8 million, up 8.8% year over year or 9.5% at cc.
Total bookings of $1.16 billion for the reported quarter increased 6.2% year over year or 7.2% on CC basis.
For the reported quarter, applications and commerce annualized recurring revenues (ARR) were $1.2 billion, increasing 14% year over year. Also, core platform ARR climbed 5% from the prior-year quarter’s level to $2.2 billion.
GoDaddy’s commerce offerings with gross merchandise volume were up more than 20% year over year to $24 billion.
Operating Results
On a non-GAAP basis, normalized EBITDA for the reported quarter was $225.9 million, up 17.5% year over year. Normalized EBITDA for Application and Commerce rose 18.7% to $119.8 million while normalized EBITDA for Core Platform was $178.4 million, increasing 19.3% from the same-quarter level last year.
Operating expenses (technology and development, marketing and advertising, customer care as well as general and administrative) of $474.7 million decreased 3.7% year over year. As a percentage of revenues, operating expenses contracted 740 basis points (bps).
For the reported quarter, operating income was $109.6 million. As a percentage of revenues, operating income expanded 670 bps from the year-ago quarter’s level to 10.9%.
Balance Sheet & Cash Flow
As of Mar 31, 2022, cash and cash equivalents were $742.7 million compared with $1.26 billion on Dec 31, 2021. Accounts and other receivables were $59.7 million compared with $63.6 million in the prior quarter.
Total debt was $3.91 billion and net debt was $3.17 billion in the reported quarter. GoDaddy reported total debt of $3.92 billion and net debt of $2.67 billion in the previous quarter.
Net cash provided by operating activities was $250.9 million compared with $172.2 million in the fourth quarter of 2021.
Additionally, unlevered free cash flow was $286.8 million for the reported quarter.
Guidance
For second-quarter 2022, management expects revenues in the range of $1.01-$1.02 billion, indicating growth of 9% at the midpoint from the year-ago quarter’s actuals.
GDDY also expects revenue growth of applications & commerce and core platform in the band of 14-16% and 5-7%, respectively.
Normalized EBITDA is expected in the range of $232-$237 million, implying 18% growth at the mid-point from the year-ago comparable period’s actuals.
For 2022, management expects total revenues in the range of $4.14-$4.16 billion, suggesting growth of 9% at the mid-point from the year-ago reading.
For 2022, GDDY also expects revenue growth of applications & commerce and core platform in the band of 14-16% and 5-7%, respectively.
Normalized EBITDA for the full year is expected to be in the band of 23-24%.
For 2022, management also expects unlevered free cash flow to be $1.1 billion, indicating 15% growth from the year-ago reported figure.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 5.11% due to these changes.
VGM Scores
At this time, GoDaddy has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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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GoDaddy (GDDY) Down 5.3% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for GoDaddy (GDDY - Free Report) . Shares have lost about 5.3% 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 its most recent earnings report in order to get a better handle on the important drivers.
GoDaddy Q4 Earnings Miss Mark, Revenues Rise Y/Y
GoDaddy first-quarter 2022 earnings of 41 cents per share missed the Zacks Consensus Estimate by 2.4%. The bottom line also decreased 21.2% sequentially. Nevertheless, it jumped significantly from 6 cents reported in the year-ago quarter.
GDDY generated revenues of $1 billion, up 11.3% year over year or 11.5% on constant-currency (CC) basis. The reported figure also surpassed the Zacks Consensus Estimate by 1.5%. However, the metric decreased 1.6% sequentially.
Revenue growth was driven by strong momentum across applications & commerce and the core platform. Growing demand for GoDaddy Payments remained a positive. GoDaddy witnessed 70% adoption within the commerce tier of Websites + Marketing and 25% within Managed WordPress.
Quarter in Detail
GoDaddy has two revenue pillars, namely Applications & Commerce and Core Platform.
Applications & Commerce comprising Websites + Marketing, Managed WordPress, productivity applications, payments & commerce generated $303.1 million (accounting for 30% of total revenues), up 15.7% on a year-over-year basis.
Core Platform consisting of domains, aftermarket, hosting and security rose 9.5% from the prior-year quarter’s level to $699.6 million (accounting for 60% of total revenues).
In the first quarter, international revenues were $329.8 million, up 8.8% year over year or 9.5% at cc.
Total bookings of $1.16 billion for the reported quarter increased 6.2% year over year or 7.2% on CC basis.
For the reported quarter, applications and commerce annualized recurring revenues (ARR) were $1.2 billion, increasing 14% year over year. Also, core platform ARR climbed 5% from the prior-year quarter’s level to $2.2 billion.
GoDaddy’s commerce offerings with gross merchandise volume were up more than 20% year over year to $24 billion.
Operating Results
On a non-GAAP basis, normalized EBITDA for the reported quarter was $225.9 million, up 17.5% year over year. Normalized EBITDA for Application and Commerce rose 18.7% to $119.8 million while normalized EBITDA for Core Platform was $178.4 million, increasing 19.3% from the same-quarter level last year.
Operating expenses (technology and development, marketing and advertising, customer care as well as general and administrative) of $474.7 million decreased 3.7% year over year. As a percentage of revenues, operating expenses contracted 740 basis points (bps).
For the reported quarter, operating income was $109.6 million. As a percentage of revenues, operating income expanded 670 bps from the year-ago quarter’s level to 10.9%.
Balance Sheet & Cash Flow
As of Mar 31, 2022, cash and cash equivalents were $742.7 million compared with $1.26 billion on Dec 31, 2021. Accounts and other receivables were $59.7 million compared with $63.6 million in the prior quarter.
Total debt was $3.91 billion and net debt was $3.17 billion in the reported quarter. GoDaddy reported total debt of $3.92 billion and net debt of $2.67 billion in the previous quarter.
Net cash provided by operating activities was $250.9 million compared with $172.2 million in the fourth quarter of 2021.
Additionally, unlevered free cash flow was $286.8 million for the reported quarter.
Guidance
For second-quarter 2022, management expects revenues in the range of $1.01-$1.02 billion, indicating growth of 9% at the midpoint from the year-ago quarter’s actuals.
GDDY also expects revenue growth of applications & commerce and core platform in the band of 14-16% and 5-7%, respectively.
Normalized EBITDA is expected in the range of $232-$237 million, implying 18% growth at the mid-point from the year-ago comparable period’s actuals.
For 2022, management expects total revenues in the range of $4.14-$4.16 billion, suggesting growth of 9% at the mid-point from the year-ago reading.
For 2022, GDDY also expects revenue growth of applications & commerce and core platform in the band of 14-16% and 5-7%, respectively.
Normalized EBITDA for the full year is expected to be in the band of 23-24%.
For 2022, management also expects unlevered free cash flow to be $1.1 billion, indicating 15% growth from the year-ago reported figure.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 5.11% due to these changes.
VGM Scores
At this time, GoDaddy has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.