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GoDaddy (GDDY) Beats Q3 Earnings and Revenue Estimates

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GoDaddy’s (GDDY - Free Report) third-quarter 2016 adjusted earnings of 5 cents per share came in above the Zacks Consensus Estimate by a couple of cents.
 

Revenues

Revenues of $472.1 million increased 3.5% sequentially and 14.8% year over year and beat the Zacks Consensus Estimate of $470.0 million. Moreover, the reported figure came in slightly above management guidance of $468–$471 million. Balanced growth in customers and average revenue per user (ARPU) led to the improvement. On a constant currency basis, total revenues were up approximately 16.4%.

In the quarter, ARPU was $127, up 6.5% year over year.

Revenues by Segment

GoDaddy generates revenues from three segments — Domain, Hosting and Presence, and Business Applications.

Domains revenues of $236.6 million contributed 50.1% to the total revenue. Revenues were up 3% sequentially and 10.2% year over year.

Hosting and Presence revenues of $174.1 million accounted for 36.9% of total revenue. The figure represented 3.9% sequential and 4.2% year-over-year growth.

Business Applications revenues of $61.4 million, which accounted for 13.0% of total revenue, were up 4.2% sequentially and 35.5% year over year.

Booking

GoDaddy uses total bookings as a performance measure since payment is usually collected at the time of sale, and recognizes revenue ratably over the term of customer contracts. In the third quarter, total bookings of $534.3 million increased 12.3% year over year. On a constant currency basis, total bookings were up approximately 13.1%.

Margins

Gross margin was 64.2%, down 31 basis points (bps) sequentially and 81 bps year over year.

Operating expenses of $281.7 million decreased 0.9% sequentially but increased 10.0% year over year.

Net Income

The quarter’s GAAP net income was $4.8 million or earnings of 5 cents per share compared with net loss of ($2.5) million or loss of 4 cents a year ago.

Pro forma earnings were 5 cents against a loss of 4 cents in the year-ago quarter. Our pro forma calculation excludes restructuring, intangibles amortization, asset impairments and other one-time charges on a tax-adjusted basis.

Balance Sheet & Cash Flow

On Sep 30, 2016, total cash and cash equivalents and short-term investments were $565.8 million versus $481.7 million in the second quarter. Accounts and other receivables were $10.8 million versus $7.4 million in the prior quarter.

Total long-term debt, including current portion, was $1,075.3 million while net debt was $509.5 million in the third quarter.

Net cash provided by operating activities in the second quarter was $99.7 million versus $92.4 million in the prior quarter. Capital expenditure was $16.2 million versus $14.6 million in the prior quarter.

Guidance

For the fourth quarter, the company expects revenues in the range of $483–$487 million. The Zacks Consensus Estimate is pegged at $484.8 million.

For full-year 2016, GoDaddy expects revenue in the range of $1.845–$1.849 billion.

GODADDY INC-A Price, Consensus and EPS Surprise

 

Going Forward

GoDaddy, Inc. is engaged in the designing and development of cloud-based technology products for small businesses, Web design professionals and individuals. The company reported a decent third quarter with both the top and the bottom lines beating the Zacks Consensus Estimate.

Going forward, investment in products, the technology platform and customer care as well as in delivering innovative and increasingly personalized products and services globally should drive shareholder value.

Currently, GoDaddy has a Zacks Rank #2 (Buy). Other stocks worth considering in the industry include Silicon Motion Technology Corp. (SIMO - Free Report) with a Zacks Rank #1 (Strong Buy), and Ambarella and Groupon, Inc. (GRPN - Free Report) with a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Silicon Motion Technology Corp. delivered a positive earnings surprise of 12.85% in the trailing four quarters.

Groupon, Inc. delivered a positive earnings surprise of 31.07% in the trailing four quarters.

GigPeak, Inc. delivered a positive earnings surprise of 37.50%, on average, in the trailing four quarters.

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