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GoDaddy's (GDDY) Q3 Earnings Miss Estimates, Revenues Beat

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GoDaddy Inc.’s (GDDY - Free Report) third-quarter 2018 adjusted earnings of 8 cents per share missed the Zacks Consensus Estimate by 18 cents. Earnings decreased 27.3% sequentially but increased 14.3% from the year-ago quarter.

Higher acquisition and international expansion-related expenses incurred by the company impacted profits.

However, the company generated revenues of $680 million, which increased 4.3% sequentially and 16.7% year over year, beating the Zacks Consensus Estimate of $674 million. Moreover, the reported figure exceeded management’s guided range of $670-$675 million.

Management remains positive about its strong product and marketing roadmap for 2019. 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.

On a year-to-date basis, the stock has outperformed the industry it belongs to. It has gained 32.2% against the industry’s decline of 2.3% in the said period.

 

 

Top-Line Details

At the end of the third quarter, customers were nearly 18.3 million, increasing 6.7% from the prior-year quarter. Also, average revenue per user (ARPU) was $145, up 8.6% 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 $309.5 million contributed 45.5% to the total revenues. Revenues were up 1.5% sequentially and 14% year over year.

Hosting and Presence revenues of $263.2 million accounted for 38.7% of the total revenues. The figure represented 7.6% sequential and 16.5% year-over-year growth.

Business Applications revenues of $106.8 million, accounting for 25.9% of the total revenues, increased 4.5% sequentially and 25.9% 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 third quarter, total bookings of $741.8 million increased 11% year over year.

Operating Results

Gross margin was 66.6%, up 60 basis points (bps) sequentially and 100 bps from the prior-year quarter.

Operating expenses of $353.8 million increased 12.1% year over year.

Balance Sheet & Cash Flow

On Sep 30, 2018, total cash and cash equivalents, coupled with short-term investments were $852.2 million compared with $828.5 million in the second quarter. Accounts and other receivables were $22.5 million compared with $23.6 million in the last reported quarter.

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

Net cash provided by operating activities in the third quarter was $154 million compared with $128.9 million in the last reported quarter.

Guidance

For full-year 2018, GoDaddy raised its revenue guidance to $2.655-$2.660 billion, representing year-over-year growth of approximately 19%. The Zacks Consensus Estimate for full-year revenues is pegged at $2.65 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 #4 (Sell). Some better-ranked stocks in the broader technology sector are boohoo group plc (BHOOY - Free Report) , QuinStreet, Inc. (QNST - Free Report) and AMETEK, Inc. (AME - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for boohoo group, QuinStreet and AMETEK is currently pegged at 25%, 25% and 10.97%, respectively.

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