GoDaddy (GDDY) Q3 Earnings and Revenues Outpace Estimates
GoDaddy (GDDY) reports solid third-quarter revenues driven by strong product demand across all segments.
GoDaddy Inc. GDDY reported third-quarter 2021 earnings of 58 cents per share, beating the Zacks Consensus Estimate by 65.7%. The reported earnings also increased 52.6% on a year-over-year basis.
The company generated revenues of $964 million, up 14.2% year over year or 13.5% on a constant-currency (CC) basis. The reported figure also surpassed the Zacks Consensus Estimate by 1.9%.
Revenue growth was driven by solid demand for products across all segments. It introduced an OmniCommerce solution for Websites + Marketing, and a new feature in the Hub by GoDaddy Pro named Invoicing and Payments, which remained tailwinds.
International revenues were $319.7 million for the third quarter, up 12.7% year over year or 10.6% on a CC basis.
Total bookings of $1.04 billion for the reported quarter increased 9.9% year over year or 9.1% on a CC basis.
For the reported quarter, Websites + Marketing annualized recurring revenues (ARR) grew more than 20% year over year. Also, Commerce ARR increased more than 30%.
GoDaddy Inc. Price, Consensus and EPS Surprise
GoDaddy generates revenues from three segments — Domains, Hosting and Presence as well as Business Applications.
Domains: The company generated revenues of $453.2 million (accounting for 47% of total revenues) from this segment. The figure improved 17% from the year-ago quarter, driven by strong renewals on primary registrations and strong performance in the aftermarket.
Hosting and Presence: This segment generated revenues of $324.7 million (34% of revenues), which increased 7.4% on a year-over-year basis. The revenue growth can be primarily attributed to higher subscriptions to Websites + Marketing.
Business Applications: Revenues from this segment came in at $186.1 million (19% of revenues), increasing 20.4% year over year. The increase was driven by new customer inclusion, strong renewals, and addition of additional seats of email and productivity solutions by existing customers.
Gross margin was 64.1%, down 150 basis points (bps) from the prior-year quarter, driven by product mix.
Operating expenses (technology and development, marketing and advertising, customer care as well as general and administrative) of $451.6 million increased 11% year over year. As a percentage of revenues, operating expenses contracted 133 bps.
For the reported quarter, operating margin was 13.6%. It expanded 268 bps from the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2021, total cash and cash equivalents were $1.14 billion compared with $1.38 billion on Jun 30, 2021. Accounts and other receivables were $63.8 million compared with $54.6 million in the second quarter.
Total debt was $3.93 billion and net debt was $2.79 billion for the third quarter.
Net cash provided by operating activities was $226.4 million compared with $209.4 million in the second quarter.
On a trailing 12-month basis, capital expenditure was reported at $61.1 million.
Additionally, free cash flow was $251.5 million for the reported quarter.
For fourth-quarter 2021, management expects revenues to be $970 million, indicating year-over-year growth of 11%. The Zacks Consensus Estimate for revenues is pegged at $970.5 million for the quarter.
For 2021, management has raised the guidance for revenues from $3.75 billion to $3.77 billion, suggesting year-over-year growth of 14%. The Zacks Consensus Estimate for 2021 revenues is pegged at $3.75 billion.
For 2021, it expects free cash flow to be $960 million, representing 16% year over year growth.
Zacks Rank & Other Stocks to Consider
Currently, GoDaddy has a Zacks Rank #2 (Buy).
Other similar-ranked stocks in the broader technology sector include Advanced Micro Devices AMD, PerkinElmer PKI and Mimecast Limited MIME. While Advanced Micro Devices sports a Zacks Rank #1 (Strong Buy), PerkinElmer and Mimecast carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rates for Advanced Micro Devices, PerkinElmer, and Mimecast are currently projected at 46.2%, 41.7%, and 35%, respectively.
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