Domain registrar and web services company, GoDaddy (NYSE:GDDY) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 7% year on year to $1.11 billion. The company expects next quarter's revenue to be around $1.11 billion, in line with analysts' estimates. It made a GAAP profit of $2.76 per share, improving from its profit of $0.30 per share in the same quarter last year.
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GoDaddy (GDDY) Q1 CY2024 Highlights:
- Revenue: $1.11 billion vs analyst estimates of $1.10 billion (1.1% beat)
- EPS: $2.76 vs analyst estimates of $0.96 (187% beat)
- Revenue Guidance for Q2 CY2024 is $1.11 billion at the midpoint, roughly in line with what analysts were expecting
- The company reconfirmed its revenue guidance for the full year of $4.53 billion at the midpoint
- Gross Margin (GAAP): 62.6%, in line with the same quarter last year
- Free Cash Flow of $327.4 million, up 11.5% from the previous quarter
- Market Capitalization: $17.36 billion
Founded by Bob Parsons (NYSE:PSN) after selling his first company to Intuit (NASDAQ:INTU), GoDaddy (NYSE:GDDY) provides small and mid-sized businesses with the ability to buy a web domain and tools to create and manage a website.
E-commerce SoftwareWhile e-commerce has been around for over two decades and enjoyed meaningful growth, its overall penetration of retail still remains low. Only around $1 in every $5 spent on retail purchases comes from digital orders, leaving over 80% of the retail market still ripe for online disruption. It is these large swathes of the retail where e-commerce has not yet taken hold that drives the demand for various e-commerce software solutions.
Sales GrowthAs you can see below, GoDaddy's revenue growth has been unremarkable over the last three years, growing from $901.1 million in Q1 2021 to $1.11 billion this quarter.
GoDaddy's quarterly revenue was only up 7% year on year, which might disappoint some shareholders. Additionally, its growth did slow down compared to last quarter as the company's revenue increased by just $8.2 million in Q1 compared to $30.6 million in Q4 CY2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.
Next quarter's guidance suggests that GoDaddy is expecting revenue to grow 5.9% year on year to $1.11 billion, improving on the 3.2% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 6.4% over the next 12 months before the earnings results announcement.
Cash Is KingIf you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. GoDaddy's free cash flow came in at $327.4 million in Q1, up 32.3% year on year.
GoDaddy has generated $1.09 billion in free cash flow over the last 12 months, an eye-popping 25.1% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.
Key Takeaways from GoDaddy's Q1 Results It was encouraging to see GoDaddy top analysts' revenue expectations this quarter, though its gross margin decreaed. Its EPS also beat, but the outperformance was driven by a one-time tax benefit that is not indicative of the company's fundamentals. Looking ahead, its revenue guidance for next quarter underwhelmed. Overall, this was a mediocre quarter for GoDaddy. The stock is up 1.8% after reporting and currently trades at $126.5 per share.
