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GoDaddy (GDDY) Surpasses Q1 Earnings and Revenue Estimates

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GoDaddy Inc. ((GDDY - Free Report) reported first-quarter 2020 adjusted earnings of 24 cents per share, beating the Zacks Consensus Estimate of 19 cents. Also, the bottom line was up 242.9% from the year-ago quarter.

The company generated revenues of $792 million, up 11.5% year over year or 12.3% on a constant-currency (cc) basis. The reported figure surpassed the Zacks Consensus Estimate by 0.2%.

The revenue growth was driven by strong performance of its product segments on a year-over-year basis.

International revenues were $262.4 million in the first quarter, up 7.1% year over year or 9.1% on a cc basis.

GoDaddy Inc Price, Consensus and EPS Surprise

 

Segmental Revenues

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

Domains: The company generated revenues of $355.9 million (accounting for 45% of total revenues) from this segment. The figure improved 11.4% from the year-ago quarter on higher average selling price.

Hosting and Presence: This segment generated revenues of $297.2 million (38% of revenues), increasing 10.5% on a year-over-year basis. The revenue growth can be primarily attributed to higher subscriptions to Websites and Marketing, along with managed WordPress offerings.

Business Applications: Revenues from this segment came in at $138.9 million (17% of revenues), increasing 14.3% year over year.

Operating Metrics

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 $951.1 million increased 9.3% year over year or 10.1% on a cc basis.

Operating Results

Gross margin was 65%, down 170 basis points from the prior-year quarter.

Operating expenses (technology and development, marketing and advertising, & general and administrative) of $313.1 million increased 1.9% year over year.

Balance Sheet & Cash Flow

At the end of the first quarter, total cash and cash equivalents, along with short-term investments were $851.4 million compared with $1.09 billion in fourth-quarter 2019. Accounts and other receivables were $31.6 million compared with $30.2 million in the fourth quarter.

Long-term debt was $18.4 billion at the end of the first quarter, flat sequentially.

Net cash provided by operating activities was $233.3 million compared with $162.2 million in the fourth quarter. Capital expenditure was $13.5 million at first quarter-end.

Additionally, adjusted free cash flow was $234.5 million during the reported quarter.

Guidance

For the second quarter, management expects revenues to be $790 million, indicating year-over-year growth of 7%. The Zacks Consensus Estimate for revenues is pegged at $784.94 million for the quarter.

Segment wise, revenue growth is expected to be in high single digits in Domains, mid single digits in Hosting and presence, and mid teens in Business Applications.

Zacks Rank and Stocks to Consider

GoDaddy currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Akamai Technologies, Inc. (AKAM - Free Report) , Inuvo, Inc. (INUV - Free Report) and Shopify Inc. (SHOP - 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 for Akamai, Inuvo, and Shopify is currently projected at 12.3%, 30% and 25.8%, respectively.

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