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GoDaddy (GDDY) Q3 Earnings Beat, Revenues Match Estimates

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GoDaddy Inc. ((GDDY - Free Report) reported third-quarter 2019 adjusted earnings of 42 cents per share, surpassing the Zacks Consensus Estimate of 22 cents. Also, the bottom line was up from 8 cents in the year-ago quarter.

The company generated revenues of $760.5 million, up 11.9% year over year or 13.3% on a constant-currency basis. The reported figure was in line with the Zacks Consensus Estimate. The revenue growth was driven by strong performance of its product segments.

Following better-than-expected third-quarter results, its share price was up more than 9%.

Segmental Revenues

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

Domain: The company generated revenues of $345.3 million (45.4% of total revenues) from this segment. The figure improved 11.6% from the year-ago quarter driven by strong liquid domain aftermarket and renewals.

Hosting and Presence: This segment generated revenues of $285 million (37.5% of revenues), increasing 8.3% on a year-over-year basis. The revenue growth can be primarily attributed to robust feature engagements, bookings and appointments within this segment. Further, well-performing GoCentral remained a major positive.

Business Applications: Revenues from this segment came in at $130.2 million (17.1% of revenues), increasing 21.9% year over year.

GoDaddy Inc. Price, Consensus and EPS Surprise

 

Other Details

The company’s customer base reached 19.1 million at the end of the third quarter. Notably, the figure was up 4.6% from the prior-year quarter. Growing website adoption in emerging markets aided the growth of its customer base. Average revenue per user was $155 in the reported quarter, up 7.1% on a year-over-year basis, attributable to solid momentum across international markets served by the company.

International revenues were $254.3 million in the third quarter, up 7.8% year over year or approximately 11.7% on a constant-currency basis.

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 $851 million increased 14.7% year over year or 15.7% on a constant-currency basis.

Operating Results

Gross margin was 65.2%, down 140 basis points from the prior-year quarter.

Operating expenses (technology and development, marketing and advertising, & general and administrative) of $268.2 million decreased 1.4% year over year.

Balance Sheet & Cash Flow

At the end of the third quarter, total cash and cash equivalents, along with short-term investments were $990.2 million compared with $1.2 billion in second-quarter 2019. Accounts and other receivables were $29 million compared with $24.8 million in the second quarter.

Total debt was $2.4 billion and net debt was $1.4 billion at the end of the third quarter.

Net cash provided by operating activities was $200.2 million compared with $161.3 million in the second quarter.

Additionally, adjusted free cash flow was $191.3 million during the reported quarter.

Guidance

For full-year 2019, management expects revenues within $2.98-$2.99 billion, indicating year-over-year growth of approximately 12%. The Zacks Consensus Estimate for full-year revenues is pegged at $2.99 billion.

Additionally, free cash flow in 2019 is projected between $730 million and $740 million, suggesting year-over-year growth of 18-19%.

Zacks Rank and Stocks to Consider

GoDaddy currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the broader technology sector include Stamps.com Inc. (STMP - Free Report) , AMETEK, Inc. (AME - Free Report) , and Carvana Co. (CVNA - Free Report) . While Stamps.com sports a Zacks Rank #1 (Strong Buy), AMETEK and Carvana carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Stamps.com, AMETEK and Carvana is currently projected at 15%, 10.91% and 9%, respectively.

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