Why Godaddy Inc. Gained 13% in November

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What: Shares of GoDaddy gained 13.1% in November, according to data from S&P Capital IQ . No mystery here -- the Internet domain name registrar and cloud service operator surged higher thanks to a strong third-quarter report.

Image source: GoDaddy.

So what: In the third quarter, GoDaddy saw sales rise 15% year over year thanks to a 9% larger customer base. Average revenue per customer/user, or ARPU, also jumped 7% higher year over year. EBITDA earnings rose an even more muscular 22%.

The company beat Wall Street's revenue estimates and raised its full-year guidance. Soaking in all of these fine achievements, GoDaddy investors pushed share prices as much as 15% higher the next day.

Now what: GoDaddy's superstar division was its budding business applications segment. While every segment reported low double-digit sales growth in the third quarter, business apps recorded a 47% revenue leap.

Don't get me wrong -- GoDaddy is still tightly focused on small businesses. We're talking about a very large number of very small contracts. The average GoDaddy customer spent just $119 on its domain names and cloud computing solutions in the third quarter.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

That's a far cry from the million-dollar contracts you'd expect an enterprise services specialist to report. You won't see GoDaddy going head to head with Verisign and IBM over million-dollar contracts anytime soon.

Landing just one such deal would be a game-changing moment for GoDaddy, and the company just isn't built to support that kind of business. That could change over time, but Big Blue and Verisign can sleep easy for years to come. GoDaddy is dominating the small-business space in some respects, and that's quite enough for now.

GoDaddy shares have now gained 30% since the company went public in April.

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The article Why Godaddy Inc. Gained 13% in November originally appeared on

Anders Bylund owns shares of International Business Machines. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days .We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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