GoDaddy (GDDY) Q4 Earnings Miss Estimates, Revenues Beat

GoDaddy Inc. (NYSE:GDDY) reported fourth-quarter 2019 adjusted earnings of 34 cents per share, missing the Zacks Consensus Estimate of 37 cents. However, the bottom line was up 21.4% from the year-ago quarter.

The company generated revenues of $780.4 million, up 12.2% year over year or 13% on a constant-currency basis. The reported figure surpassed the Zacks Consensus Estimate by 0.4%.

The revenue growth was driven by strong performance of its product segments on a year-over-year basis. Also, the increase in revenue per user aided growth.

International revenues were $261.4 million in the fourth quarter, up 8.8% year over year or approximately 11.2% on a constant-currency basis.

Segmental Revenues

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

Domain: The company generated revenues of $352.3 million (45% of total revenues) from this segment. The figure improved 12.1% from the year-ago quarter, driven by strong liquid domain aftermarket and renewals.

Hosting and Presence: This segment generated revenues of $292.8 million (38% of revenues), increasing 8.4% on a year-over-year basis. The revenue growth can be primarily attributed to robust feature engagements, bookings and appointments within this segment. Further, the well-performing GoCentral remained a major positive.

Business Applications: Revenues from this segment came in at $135.3 million (17% of revenues), increasing 21.3% year over year.

GoDaddy Inc. Price, Consensus and EPS Surprise

GoDaddy Inc. Price, Consensus and EPS Surprise

GoDaddy Inc. price-consensus-eps-surprise-chart | GoDaddy Inc. Quote

Operating Metrics

The company’s customer base reached 19.3 million at the end of the fourth quarter. Notably, the figure was up 4.1% from the prior-year quarter. Growing website adoption in emerging markets aided the growth of its customer base. Average revenue per user was $158 in the reported quarter, up 6.6% on a year-over-year basis, attributable to solid momentum across international markets served by the company.

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 fourth quarter, total bookings of $833.6 million increased 13.8% year over year or 14.1% on a constant-currency basis.

Operating Results

Gross margin was 65.3%, down 160 basis points from the prior-year quarter.

Operating expenses (technology and development, marketing and advertising, & general and administrative) of $302.5 million increased 7.7% year over year.

Balance Sheet & Cash Flow

At the end of the fourth quarter, total cash and cash equivalents, along with short-term investments were $1.09 billion compared with $990.2 million in third-quarter 2019. Accounts and other receivables were $30.2 million compared with $29 million in the third quarter.

Long-term debt was $18.4 billion at the end of the fourth quarter.

Net cash provided by operating activities was $162.2 million compared with $200.2 million in the third quarter. Capital expenditure was $16.5 million at the end of fourth quarter.

Additionally, adjusted free cash flow was $177.7 million during the reported quarter.

Guidance

For full-year 2020, management expects revenues to be $3.315 billion, indicating year-over-year growth of 11%. The Zacks Consensus Estimate for full-year revenues is pegged at $3.31 billion.

Additionally, free cash flow in 2019 is projected at $835 million, suggesting year-over-year growth of 14%.

Zacks Rank and Stocks to Consider

GoDaddy currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Itron, Inc. (NASDAQ:ITRI) , Splunk Inc. (NASDAQ:SPLK) and Agilent Technologies (NYSE:A) , 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 Itron, Splunk, and Agilent is currently projected at 25%, 31.2% and 12.5%, respectively.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.

This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.

See their latest picks free >>