A month has gone by since the last earnings report for GoDaddy (GDDY Quick QuoteGDDY - Free Report) . Shares have lost about 2.1% in that time frame, outperforming 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 Q2 Earnings Beat Mark

GoDaddy's second-quarter 2022 earnings of 56 cents per share surpassed the Zacks Consensus Estimate by 19.1%. The bottom line also jumped 36.6% sequentially and 107.4% year over year.

GDDY generated revenues of $1.016 million, which came slightly below the Zacks Consensus Estimate of $1.02 billion. Revenues were up 9% year over year or 10.1% on a constant-currency (CC) basis. The metric also increased 1.3% sequentially.

Revenue growth was driven by strong momentum across applications & commerce and the core platform. Growing demand for GoDaddy Payments remained positive. GoDaddy witnessed 80% adoption within the commerce tier of Websites + Marketing and 30% within Managed WordPress.

Expansion of presence & commerce suite and GoDaddy registry, strong demand for domain-based email attach, continuous renewals and registrations, and strength in domain registration, aftermarket and security businesses remained tailwinds.

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 $317.2 million (accounting for 31% of total revenues), up 14.8% on a year-over-year basis.

Core Platform consisting of domains, aftermarket, hosting and security rose 6.6% from the prior-year quarter’s level to $698.3 million (accounting for 69% of total revenues).

Applications & Commerce revenues missed the Zacks Consensus Estimate of $317.7 million, while Core Platform revenues surpassed the consensus mark of $697.2 million.

In the second quarter, international revenues were $330.8 million, up 4.3% year over year or 7.4% at cc. The same missed the Zacks Consensus Estimate of $340.9 million.

Total bookings of $1.12 billion missed the Zacks Consensus Estimate of $1.15 billion. The same increased 6.1% year over year or 7.7% on CC basis.

For the reported quarter, applications and commerce annualized recurring revenues (ARR) were $1.2 billion, increasing 12% year over year. Also, core platform ARR climbed 5% from the prior-year quarter’s level to $2.3 billion.

GoDaddy’s commerce offerings with gross merchandise volume were up 12% year over year to $28 billion.

Operating Results

On a non-GAAP basis, normalized EBITDA for the reported quarter was $258.4 million, up 30.3% year over year. Normalized EBITDA for Application and Commerce rose 21.7% to $131.8 million, while normalized EBITDA for Core Platform was $198.4 million, increasing 25.4% from the same-quarter level last year. 

Operating expenses (technology and development, marketing and advertising, customer care as well as general and administrative) of $472.4 million increased 2.4% year over year. As a percentage of revenues, operating expenses contracted 300 basis points (bps).

For the reported quarter, operating income was $124.6 million. As a percentage of revenues, operating income expanded 280 bps from the year-ago quarter’s level to 12.3%.

Balance Sheet & Cash Flow

As of Jun 30, 2022, cash and cash equivalents were $770.4 million compared with $742.7 million on Mar 31, 2022. Accounts and other receivables were $60.5 million compared with $59.7 million in the prior quarter.

Total debt was $3.91 billion and net debt was $3.13 billion in the reported quarter. GoDaddy reported total debt of $3.91 billion and net debt of $3.17 billion in the previous quarter.

Net cash provided by operating activities was $250.9 million in the reported quarter, in line with the prior quarter’s figure.

Additionally, unlevered free cash flow was $274.3 million for the reported quarter.

Guidance

For third-quarter 2022, management expects revenues in the range of $1.030-$1.045 billion, indicating growth of 8% at the midpoint from the year-ago quarter’s actuals.

For the September quarter, GDDY expects revenue growth of applications & commerce, and core platform in the band of 13-15% and 4-6%, respectively.

Normalized EBITDA is expected in the range of $250-$260 million, implying 12% growth at the mid-point from the year-ago comparable period’s actuals.

For 2022, management expects total revenues in the range of $4.10-$4.13 billion, suggesting growth of 8% at the mid-point from the year-ago reading.

For 2022, GDDY expects revenue growth of applications & commerce, and core platform in the band of 13-15% and 4-6%, respectively.

Normalized EBITDA margin for the full year is expected in the band of 24-25%.

For 2022, management 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?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted 7.39% due to these changes.

VGM Scores

Currently, GoDaddy has a great Growth Score of A, a grade with the same score on the momentum front. However, 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 A. 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.