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GoDaddy (GDDY) Q1 Earnings In Line, Revenues Beat Estimates

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GoDaddy’s (GDDY - Free Report) first-quarter 2018 adjusted earnings of 2 cents per share were in line with the Zacks Consensus Estimate. Earnings increased 100% from the year-ago quarter.

Management remains positive about strong product and marketing roadmap for 2018. Also, the company’s mobile-optimized website builder, GoCentral, has been gaining momentum. Also, the company has been making continuous efforts to enhance its features, thereby making its products more attractive.

Following the better-than-expected earnings in the first quarter, the share price was up 1.59% in after-hours trading. Notably, on a 12-month basis, the stock has outperformed the industry it belongs to. It gained 71% compared with the industry’s growth of 40.3%.

 

 

Revenues

Revenues of $633.2 million increased 5.1% sequentially and 29.3% year over year, beating the Zacks Consensus Estimate of $622 million. Moreover, the reported figure came above management’s guidance of $620-$625 million.

At the end of the first quarter, customers were nearly 17.7 million, increasing 17.4% from the prior-year quarter. Also, average revenue per user (ARPU) was $138, up 5.8% 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 $291.7 million contributed 46.1% to the total revenues. Revenues were up 3.6% sequentially and 21.1% year over year.

Hosting and Presence revenues of $239.8 million accounted for 37.9% of the total revenues. The figure represented 4.8% sequential and 34.5% year-over-year growth.

Business Applications revenues of $101.7 million, accounting for 16.1% of the total revenues, increased 10.8% sequentially and 44.1% 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 first quarter, total bookings of $783.1 million increased 25.3% year over year.

Margins

Gross margin was 66%, down 46 basis points (bps) sequentially but up 210 bps from the prior-year quarter.

Operating expenses of $252.9 million increased 21% year over year.

Net Income

The quarter’s GAAP net income was $3.3million compared with net income of $0.6 million in the year-ago quarter.

Pro-forma earnings were 2 cents compared with 1 cent reported in the prior-year quarter.

Balance Sheet & Cash Flow

On Mar 31, 2018, total cash and cash equivalents, and short-term investments were $729.5 million compared with $595 million in the fourth quarter. Accounts and other receivables were $24 million compared with $18.4 million in the last reported quarter.

Total long-term debt, including current portion, was $2.48 billion, while net debt was $1.75 billion in the first quarter.

Net cash provided by operating activities in the first quarter was $148.4 million compared with $104.3 million in the last reported quarter.

Guidance

For the second quarter of 2018, the company expects revenues in the range of $640-$645 million. The Zacks Consensus Estimate for second-quarter revenues is pegged at $635.3 million.

For full-year 2018, GoDaddy raised its revenue guidance to $2.620-$2.640 billion, representing year-over-year growth of approximately 18%. The Zacks Consensus Estimate for full-year revenues is pegged at $2.60 billion.

 

GoDaddy Inc. Price, Consensus and EPS Surprise

 

GoDaddy Inc. Price, Consensus and EPS Surprise | GoDaddy Inc. Quote

 

Zacks Rank and Stocks to Consider

Currently, GoDaddy has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the technology sector are Littelfuse, Inc. (LFUS - Free Report) , sporting a Zacks Rank #1 (Strong Buy), while Etsy, Inc. (ETSY - Free Report) and SMC Corporation (SMCAY - Free Report) , both carrying 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 forLittelfuse, Etsy and SMC Corporation is projected at 12%, 18% and 13.7%, respectively.

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