Technology

GoDaddy (GDDY) Earnings & Revenues Miss Estimates in Q1

GoDaddy Inc. (GDDY) reported first-quarter 2019 adjusted earnings of 7 cents per share, missing the Zacks Consensus Estimate by 5 cents. The bottom line was down 75% sequentially but up 250% year over year.

The company generated revenues of $710 million, increasing 2% sequentially and 12.1% year over year. However, the top line missed the Zacks Consensus Estimate of $711 million.

The sequential and year-over-year revenue growth was driven by strong performance of its product segments. Moreover, growing subscription of GoDaddy’s mobile-optimized website builder, GoCentral, contributed well to top-line growth during the reported quarter.

The company’s customer base reached 18.8 million at the end of the first quarter. Notably, the figure advanced 6.4% from the prior-year quarter. Growing website adoption in the emerging markets aided customer base growth. Average revenue per user (ARPU) was $150 in the reported quarter, up 8.5% on a year-over-year basis, attributable to solid momentum across the United States and international markets.

International revenues were $245.1 million in the first quarter, up 8.2% year over year or approximately 12.2% on a constant-currency basis.

Coming to share price performance, the stock has gained 24.9% in the past year against its industry’s decline of 16.3%.

Segment Details

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

Domain: The company generated revenues of $319.6 million (45% of the total revenues) from this segment. The figure improved 9.6% from the year-ago quarter driven by strong liquid domain aftermarket and renewals.

Hosting and Presence: This segment generated revenues of $268.9 million (37.9% of revenues), increasing 12.1% on a year-over-year basis during the reported quarter. 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 $121.5 million (17.1% of revenues), increasing 19.5% year over year.

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 first quarter, total bookings of $870.5 million increased 11.2% year over year.

Operating Results

Gross margin was 66.7%, up 70 basis points from the prior-year quarter.

Operating expenses of $454.8 million increased 16.3% 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 $1.1 billion compared with $951.3 million in fourth-quarter 2018. Accounts and other receivables were $35.4 million compared with $26.4 million in the fourth quarter.

Total debt was $2,451.1 million and net debt was $1,342.1 million at the end of the first quarter.

Net cash provided by operating activities was $199.7 million compared with $128.5 million in the fourth quarter.

Additionally, adjusted free cash flow was $198.8 million during the reported quarter.

Guidance

For second-quarter 2019, the company expects revenues within $730-$740 million. The Zacks Consensus Estimate for second-quarter revenues is pegged at $732.6 million.

For full-year 2019, management maintained its revenue and free cash flow guidance.

The company expects revenues within $2.97-$3 billion, indicating year-over-year growth of approximately 12-13%. The Zacks Consensus Estimate for full-year revenues is pegged at $2.99 billion.

Additionally, free cash flow for 2019 is projected between $730 million and $745 million, suggesting year-over-year growth of 18-20%.

GoDaddy Inc. Price, Consensus and EPS Surprise

 

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

Zacks Rank and Stocks to Consider

GoDaddy currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Facebook, Inc. FB, Shopify Inc. SHOP and AXT, Inc. AXTI, 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 Facebook, Shopify and AXT is currently projected at 20.2%, 23.7% and 15%, respectively.

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