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GoDaddy Inc.’s (GDDY - Free Report) third-quarter 2022 earnings of 63 cents per share surpassed the Zacks Consensus Estimate by 8.6%. The bottom line also jumped 12.5% sequentially and 8.6% year over year.
GDDY generated revenues of $1.03 billion, which came slightly below the Zacks Consensus Estimate of $1.04 billion. Revenues were up 7.2% year over year or 8.8% on a constant-currency (CC) basis. The metric also increased 1.7% sequentially.
Revenue growth was driven by strong momentum across applications & commerce and the core platform. Growing demand for GoDaddy Payments remained positive.
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.
GoDaddy has two revenue pillars, namely Applications & Commerce and Core Platform.
Applications & Commerce comprising Websites + Marketing, Managed WordPress, productivity applications, payments & commerce generated $326 million (accounting for 32% of total revenues), up 12.6% on a year-over-year basis.
Core Platform consisting of domains, aftermarket, hosting and security rose 4.9% from the prior-year quarter’s level to $707.2 million (accounting for 68% of total revenues).
Applications & Commerce revenues missed the Zacks Consensus Estimate of $330.4 million, while Core Platform revenues were above the consensus mark of $707.1 million.
In the third quarter, international revenues were $332.6 million, up 4% year over year or 8.9% at cc. The same missed the Zacks Consensus Estimate of $348.2 million.
Total bookings of $1.09 billion missed the Zacks Consensus Estimate of $1.11 billion. The same increased 4.7% year over year or 6.7% on CC basis.
For the reported quarter, applications and commerce annualized recurring revenues (ARR) were $1.3 billion, increasing 10% year over year. Also, core platform ARR climbed 2% from the prior-year quarter’s level to $2.3 billion.
GoDaddy’s commerce offerings with gross merchandise volume were up 10% year over year to $29 billion.
Operating Results
On a non-GAAP basis, normalized EBITDA for the reported quarter was $262.7 million, up 15.4% year over year. Normalized EBITDA for Application and Commerce rose 17.9% to $135.6 million, while normalized EBITDA for Core Platform was $202.1 million, increasing 16.2% from the same-quarter level last year.
Operating expenses (technology and development, marketing and advertising, customer care as well as general and administrative) of $475.5 million increased 5.3% year over year. As a percentage of revenues, operating expenses contracted 80 basis points (bps) to 46%.
For the reported quarter, operating income was $129.7 million. As a percentage of revenues, operating income contracted 110 bps from the year-ago quarter’s level to 12.6%.
Balance Sheet & Cash Flow
As of Sep 30, 2022, cash and cash equivalents were $826.2 million compared with $770.4 million on Jun 30, 2022. Accounts and other receivables were $64 million compared with $60.5 million in the prior quarter.
Total debt was $3.90 billion and net debt was $3.07 billion in the reported quarter. GoDaddy reported total debt of $3.91 billion and net debt of $3.14 billion in the previous quarter.
Net cash provided by operating activities was $269.9 million in the reported quarter compared with the prior quarter’s figure of $250.9 million.
Additionally, unlevered free cash flow was $296.6 million for the reported quarter.
Guidance
For fourth-quarter 2022, management expects revenues in the range of $1.03-$1.05 billion, indicating growth of 2% at the midpoint from the year-ago quarter’s actuals. The Zacks Consensus Estimate for revenues is pegged at $1.06 billion.
For the fourth quarter, GDDY expects applications & commerce revenues to grow in the band of 10-12% year over year and the core platform revenues to remain flat.
Normalized EBITDA is expected in the range of $250-$260 million, implying 24-25% growth from the year-ago comparable period’s actuals.
For 2022, management expects total revenues in the range of $4.08-$4.10 billion, suggesting growth of 7% at the mid-point from the year-ago reading. The Zacks Consensus Estimate for 2022 revenues is pegged at $4.11 billion.
For 2022, GDDY expects revenue growth of applications & commerce, and the 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 $1.09-$1.10 billion, indicating 14% growth from the year-ago reported figure.
Management expects to repurchase shares worth of more than $1 billion.
US Foods is set to report third-quarter 2022 results on Nov 10. The Zacks Consensus Estimate for USFD’s earnings is pegged at 59 cents per share, suggesting an increase of 22.9% from the prior-year period’s reported figure. USFD has lost 17.4% in the year-to-date period. Its long-term earnings growth rate is currently projected at 20%.
The Trade Desk is scheduled to release third-quarter 2022 results on Nov 9. The Zacks Consensus Estimate for TTD’s earnings is pegged at 24 cents per share, suggesting an increase of 33.3% from the prior-year quarter’s reported figure. TTD has lost 46.3% in the year-to-date period. TTD’s long-term earnings growth rate is currently projected at 24%.
Tencent Music is scheduled to release third-quarter 2022 results on Nov 15. The Zacks Consensus Estimate for TME’s earnings is pegged at 11 cents per share, suggesting an increase of 22.2% from the prior-year quarter’s reported figure. TME has lost 44.7% in the year-to-date period. TME’s long-term earnings growth rate is currently projected at 17.9%.
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GoDaddy (GDDY) Q3 Earnings Beat Estimates, Revenues Rise Y/Y
GoDaddy Inc.’s (GDDY - Free Report) third-quarter 2022 earnings of 63 cents per share surpassed the Zacks Consensus Estimate by 8.6%. The bottom line also jumped 12.5% sequentially and 8.6% year over year.
GDDY generated revenues of $1.03 billion, which came slightly below the Zacks Consensus Estimate of $1.04 billion. Revenues were up 7.2% year over year or 8.8% on a constant-currency (CC) basis. The metric also increased 1.7% sequentially.
Revenue growth was driven by strong momentum across applications & commerce and the core platform. Growing demand for GoDaddy Payments remained positive.
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.
GoDaddy Inc. Price, Consensus and EPS Surprise
GoDaddy Inc. price-consensus-eps-surprise-chart | GoDaddy Inc. Quote
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 $326 million (accounting for 32% of total revenues), up 12.6% on a year-over-year basis.
Core Platform consisting of domains, aftermarket, hosting and security rose 4.9% from the prior-year quarter’s level to $707.2 million (accounting for 68% of total revenues).
Applications & Commerce revenues missed the Zacks Consensus Estimate of $330.4 million, while Core Platform revenues were above the consensus mark of $707.1 million.
In the third quarter, international revenues were $332.6 million, up 4% year over year or 8.9% at cc. The same missed the Zacks Consensus Estimate of $348.2 million.
Total bookings of $1.09 billion missed the Zacks Consensus Estimate of $1.11 billion. The same increased 4.7% year over year or 6.7% on CC basis.
For the reported quarter, applications and commerce annualized recurring revenues (ARR) were $1.3 billion, increasing 10% year over year. Also, core platform ARR climbed 2% from the prior-year quarter’s level to $2.3 billion.
GoDaddy’s commerce offerings with gross merchandise volume were up 10% year over year to $29 billion.
Operating Results
On a non-GAAP basis, normalized EBITDA for the reported quarter was $262.7 million, up 15.4% year over year. Normalized EBITDA for Application and Commerce rose 17.9% to $135.6 million, while normalized EBITDA for Core Platform was $202.1 million, increasing 16.2% from the same-quarter level last year.
Operating expenses (technology and development, marketing and advertising, customer care as well as general and administrative) of $475.5 million increased 5.3% year over year. As a percentage of revenues, operating expenses contracted 80 basis points (bps) to 46%.
For the reported quarter, operating income was $129.7 million. As a percentage of revenues, operating income contracted 110 bps from the year-ago quarter’s level to 12.6%.
Balance Sheet & Cash Flow
As of Sep 30, 2022, cash and cash equivalents were $826.2 million compared with $770.4 million on Jun 30, 2022. Accounts and other receivables were $64 million compared with $60.5 million in the prior quarter.
Total debt was $3.90 billion and net debt was $3.07 billion in the reported quarter. GoDaddy reported total debt of $3.91 billion and net debt of $3.14 billion in the previous quarter.
Net cash provided by operating activities was $269.9 million in the reported quarter compared with the prior quarter’s figure of $250.9 million.
Additionally, unlevered free cash flow was $296.6 million for the reported quarter.
Guidance
For fourth-quarter 2022, management expects revenues in the range of $1.03-$1.05 billion, indicating growth of 2% at the midpoint from the year-ago quarter’s actuals. The Zacks Consensus Estimate for revenues is pegged at $1.06 billion.
For the fourth quarter, GDDY expects applications & commerce revenues to grow in the band of 10-12% year over year and the core platform revenues to remain flat.
Normalized EBITDA is expected in the range of $250-$260 million, implying 24-25% growth from the year-ago comparable period’s actuals.
For 2022, management expects total revenues in the range of $4.08-$4.10 billion, suggesting growth of 7% at the mid-point from the year-ago reading. The Zacks Consensus Estimate for 2022 revenues is pegged at $4.11 billion.
For 2022, GDDY expects revenue growth of applications & commerce, and the 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 $1.09-$1.10 billion, indicating 14% growth from the year-ago reported figure.
Management expects to repurchase shares worth of more than $1 billion.
Zacks Rank & Stocks to Consider
Currently, GoDaddy has a Zacks Rank #3 (Hold). Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks likeUS Foods (USFD - Free Report) , The Trade Desk (TTD - Free Report) and Tencent Music Entertainment Group (TME - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
US Foods is set to report third-quarter 2022 results on Nov 10. The Zacks Consensus Estimate for USFD’s earnings is pegged at 59 cents per share, suggesting an increase of 22.9% from the prior-year period’s reported figure. USFD has lost 17.4% in the year-to-date period. Its long-term earnings growth rate is currently projected at 20%.
The Trade Desk is scheduled to release third-quarter 2022 results on Nov 9. The Zacks Consensus Estimate for TTD’s earnings is pegged at 24 cents per share, suggesting an increase of 33.3% from the prior-year quarter’s reported figure. TTD has lost 46.3% in the year-to-date period. TTD’s long-term earnings growth rate is currently projected at 24%.
Tencent Music is scheduled to release third-quarter 2022 results on Nov 15. The Zacks Consensus Estimate for TME’s earnings is pegged at 11 cents per share, suggesting an increase of 22.2% from the prior-year quarter’s reported figure. TME has lost 44.7% in the year-to-date period. TME’s long-term earnings growth rate is currently projected at 17.9%.