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GoDaddy (GDDY) Q3 Earnings In Line, Revenues Beat Estimates

GoDaddy's Inc. 's GDDY third-quarter 2017 adjusted earnings of 7 cents per share came in line with the Zacks Consensus Estimate. Earnings increased 40% from the year-ago quarter.

Management remains positive about strong product and marketing roadmap for 2017. The company's new mobile-optimized website builder, GoCentral, has been gaining momentum. The company intends to release additional new GoCentral verticals, markets and features throughout 2017.

Notably, on a year-to-date basis, the stock has outperformed the industry it belongs to. It gained 35.3% compared with the industry 's growth of 25.7%.

Revenues

Revenues of $582.2 million increased4.4% sequentially and 23.3% year over year and beat the Zacks Consensus Estimate of $579.0 million. Moreover, the reported figure came slightly above management's guidance of $577-$582 million.

At the end of the third quarter, customers were nearly 17.1 million, increasing 17.7% year over year. Also, average revenue per user (ARPU) was $134, up 5.1% year over year.

Strong growth in customers, contribution from HEG acquisition and expanding ARPU led to the improvement.

Revenues by Segment

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

Domain revenues of $271.5 million contributed 46.6% to total revenues. Revenues were up 3.1% sequentially and 14.8% year over year.

Hosting and Presence revenues of $225.9 million accounted for 38.8% of total revenues. The figure represented 5.1% sequential and 29.8% year-over-year growth.

Business Applications revenues of $84.8 million, which accounted for 14.6% of total revenues, increased 6.5% sequentially and 38.1% 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 third quarter, total bookings of $668 million increased 25% year over year.

Margins

Gross margin was 65.6%, up 81 basis points (bps) sequentially and 144 bps year over year.

Operating expenses of $215.2 million increased 20.6% year over year.

Net Income

The quarter's GAAP net income was $30 million compared with net income of $8.3 million in the year-ago quarter.

Pro forma earnings were 7 cents compared with 5 cents 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 Sep 30, 2017, total cash and cash equivalents and short-term investments were $553.3 million compared with $591.2 million in the second quarter. Accounts and other receivables were $17.3 million compared with $17.4 million in the prior quarter.

Total long-term debt, including current portion, was $2,415.8 million, while net debt was $1,935.3 million in the third quarter.

Net cash provided by operating activities in the third quarter was $131.4 million compared with $113.3 million in the prior quarter.

Guidance

For the fourth quarter, the company expects revenues in the range of $591-$596 million, including HEG. The Zacks Consensus Estimate is pegged at $594.9 million.

For full-year 2017, GoDaddy raised its revenue guidance to $2.221-$2.226 billion, representing a year-over-year growth of approximately 20%. The Zacks Consensus Estimate is pegged at $2.22 billion. For the full year of 2018, GoDaddy expects revenue growth in the range of 13-15%.

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). A few better-ranked stocks in the broader technology sector are NVIDIA Corporation NVDA and SMART Global Holdings, Inc. SGH , each sporting a Zacks Rank #1 (Strong Buy), while Applied Materials, Inc. AMAT , carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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