GoDaddy 's GDDY fourth-quarter 2016 adjusted earnings of 10 cents per share surpassed the Zacks Consensus Estimate by a couple of cents.
Following the weaker-than-expected first-quarter guidance, share price fell more than 4% in after-hours trading.
Over the past one year, shares of GoDaddy outperformed the Zacks categorized Internet Services Delivery industry. While the industry gained 19.71%, the stock returned 32.15%.
Revenues of $486 million increased 2.9% sequentially and 14.2% year over year and beat the Zacks Consensus Estimate of $485 million. Moreover, the reported figure came in at the high end of the management guidance of $483-$487 million. Balanced growth in customers and average revenue per user (ARPU) led to the improvement. On a constant currency basis, total revenues were up approximately 15.3%.
In the quarter, ARPU was $130, up 6.8% year over year.
Revenues by Segment
GoDaddy generates revenues from three segments - Domain, Hosting and Presence, and Business Applications.
Domain revenues of $242.5 million contributed 49.9% to the total revenue. Revenues were up 2.5% sequentially and 11.2% year over year.
Hosting and Presence revenues of $176.7 million accounted for 36.4% of total revenue. The figure represented 1.5% sequential and 13.6% year-over-year growth.
Business Applications revenues of $66.7 million, which accounted for 13.7% of total revenue, were up 8.6% sequentially and 28.8% year over year.
GoDaddy uses total bookings as a performance measure since payment is usually collected at the time of sale, and recognizes revenue ratably over the term of customer contracts. In the fourth quarter, total bookings of $524.8 million increased 13.1% year over year. On a constant currency basis, total bookings were up approximately 14.1%.
Gross margin was 64.6%, up 42 basis points (bps) sequentially but down 133 bps year over year.
Operating expenses of $295.9 million increased 5% sequentially and 10.3% year over year.
The quarter's GAAP net income was ($1.9) million or loss of 2 cents per share compared with net income of $0.1 million a year ago.
Pro forma earnings were 10 cents against a 0 cent reported in the year-ago quarter. Our pro forma calculation excludes restructuring, intangibles amortization, asset impairments and other one-time charges on a tax-adjusted basis.
Balance Sheet & Cash Flow
On Dec 31, 2016, total cash and cash equivalents and short-term investments were $572.7 million compared with $565.8 million in the third quarter. Accounts and other receivables were $8 million compared with $10.8 million in the prior quarter.
Total long-term debt, including current portion, was $1,039.7 million while net debt was $499.8 million in the fourth quarter.
Net cash provided by operating activities in the third quarter was $89.1 million compared with $99.7 million in the prior quarter. Capital expenditure was $18.7 million compared with $16.2 million in the prior quarter.
For the first quarter, the company expects revenues in the range of $485-$490 million, below the Street consensus estimate of $494 million. Also, the Zacks Consensus Estimate is pegged at $494.0 million.
For full-year 2017, GoDaddy expects revenue in the range of $2.18-$2.22 billion, representing a year-over-year growth of approximately 19%. The Zacks Consensus Estimate is pegged at $2.09 billion.
GoDaddy, Inc. is engaged in the designing and development of cloud-based technology products for small businesses, Web design professionals and individuals. The company reported a decent fourth quarter with both the top and the bottom lines beating the Zacks Consensus Estimate.
During the quarter, the company also agreed to acquire Host Europe Group ("HEG"), a European web hosting provider. The deal is valued at €1.69 billion (US$1.79 billion), including €605 million to be paid to the selling shareholders and €1.08 billion in assumed net debt. The transaction is expected to close in the second quarter of 2017. The deal will complement GoDaddy's business as HEG has a similar customer base comprising small ventures and web professionals. This will give GoDaddy a better understanding of the needs of customers.
Going forward, investment in products, the technology platform, international expansion and customer care as well as in delivering innovative and increasingly personalized products and services globally should drive shareholder value.
GoDaddy Inc. Price, Consensus and EPS Surprise
Currently, GoDaddy has a Zacks Rank #2 (Buy). Stocks worth considering in the industry include Texas Instruments TXN , carrying a Zacks Rank #1 (Strong Buy) and FactSet Research Systems FDS and Intersil Corporation ISIL , both carrying a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .
Texas Instruments delivered a positive earnings surprise of 7.09%, on average, in the trailing four quarters.
FactSet Research Systems Inc. delivered a positive earnings surprise of 1.89%, on average, in the trailing four quarters.
Intersil Corporation delivered a positive earnings surprise of 2.92%, on average, in the trailing four quarters.
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