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GoDaddy (GDDY) Beats Earnings & Revenue Estimates in Q2

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GoDaddy Inc.’s (GDDY - Free Report) second-quarter 2018 adjusted earnings of 11 cents per share surpassed the Zacks Consensus Estimate by 3 cents. Earnings increased sequentially but decreased 15.4% from the year-ago quarter.

Revenues of $651.6 million increased 2.9% sequentially and 16.8% year over year, beating the Zacks Consensus Estimate of $643 million. Moreover, the reported figure exceeded management’s guided range of $640-$645 million.

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

Following the weaker-than-expected web hosting sales in the second quarter, the share price was down 4.64% in after-hours trading.

However, on a year-to-date basis, the stock has outperformed the industry it belongs to. It has gained 52.5% compared with the industry’s growth of 22% in the said period.


Top-Line Details

At the end of the second quarter, customers were nearly 18 million, increasing 6.5% from the prior-year quarter. Also, average revenue per user (ARPU) was $142, up 10.2% from the prior-year quarter.

Strong customer growth and expanding ARPU led to the improvement.

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

Domain revenues of $304.8 million contributed 46.8% to the total revenues. Revenues were up 4.5% sequentially and 15.8% year over year.

Hosting and Presence revenues of $244.6 million accounted for 37.5% of the total revenues. The figure represented 2% sequential and 13.8% year-over-year growth.

Business Applications revenues of $102.2 million, accounting for 15.7% of the total revenues, increased 0.5% sequentially and 28.4% from the year-ago quarter.


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 second quarter, total bookings of $754.2 million increased 13% year over year.

Operating Results

Gross margin was 66%, up 4 basis points (bps) sequentially and 125 bps from the prior-year quarter.

Operating expenses of $329.8 million increased 10% year over year.

The quarter’s GAAP net income was $18.1million compared with$20.8 million in the year-ago quarter.

Balance Sheet & Cash Flow

On Jun 30, 2018, total cash and cash equivalents, and short-term investments were $828.5 million compared with $729.5 million in the first quarter. Accounts and other receivables were $23.6 million compared with $24 million in the last reported quarter.

Long-term debt was $16.7 million in the second quarter.

Net cash provided by operating activities in the second quarter was $128.9 million compared with $148.4 million in the last reported quarter.


For the third quarter of 2018, the company expects revenues in the range of $670-$675 million. The Zacks Consensus Estimate for third-quarter revenues is pegged at $666.5 million.

For full-year 2018, GoDaddy raised its revenue guidance to $2.645-$2.655 billion, representing year-over-year growth of approximately 19%. The Zacks Consensus Estimate for full-year revenues is pegged at $2.63 billion.

GoDaddy Inc. Price, Consensus and EPS Surprise


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

Zacks Rank and Other Stocks to Consider

Currently, GoDaddy has a Zacks Rank #2 (Buy). Other top-ranked stocks in the same industry include Groupon (GRPN - Free Report) , IAC/InterActiveCorp (IAC - Free Report) and GrubHub Inc. (GRUB - Free Report) . While Groupon and IAC/InterActiveCorp sport a Zacks Rank #1 (Strong Buy), GrubHubholds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Groupon, IAC/InterActiveCorp and GrubHubis currently projected to be 3%, 7.5% and 24%, respectively.

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