GoDaddy (GDDY) Q1 Earning Miss Estimates, Revenues Rise Y/Y – May 5, 2022

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GoDaddy Inc.it is (GDDY Free Report) first-quarter 2022 earnings of 41 cents per share missed Zacks’ consensus estimate by 2.4%. Net income also decreased 21.2% sequentially. Nonetheless, it jumped significantly from the 6 cents reported in the prior year quarter.

GDDY generated revenue of $1 billion, up 11.3% year-over-year or 11.5% in constant currency (CC). The reported figure also exceeded Zacks’ consensus estimate of 1.5%. However, the metric was down 1.6% sequentially.

Revenue growth was driven by strong momentum in applications and commerce and the core platform. Growing demand for GoDaddy Payments remained positive. GoDaddy has seen 70% adoption within the Websites + Marketing business level and 25% in Managed WordPress.

Quarter in detail

GoDaddy has two revenue pillars, namely Applications & Commerce and Core Platform.

Apps and Commerce including Websites + Marketing, Managed WordPress, Productivity Apps, Payments and Commerce generated $303.1 million (representing 30% of total revenue), up 15.7% on an annual basis.

The core platform consisting of domains, after-sales services, hosting and security grew 9.5% from the prior year quarter level to $699.6 million (representing 60 % of total revenue).

In the first quarter, international revenue was $329.8 million, up 8.8% year-over-year or 9.5% at cc.

Total bookings of $1.16 billion for the reported quarter increased 6.2% year over year or 7.2% on a CC basis.

For the reported quarter, annualized recurring revenue (ARR) from apps and commerce was $1.2 billion, up 14% year-over-year. Additionally, the main platform’s ARR climbed 5% from the prior year quarter level to $2.2 billion.

GoDaddy’s trade deals with gross merchandise volume grew more than 20% year-over-year to $24 billion.

Operating results

On a non-GAAP basis, normalized EBITDA for the reported quarter was $225.9 million, up 17.5% year-over-year. Normalized EBITDA for Applications and Commerce increased 18.7% to $119.8 million, while Normalized EBITDA for Core Platform was $178.4 million, up 19.3% compared to the same quarter last year.

Operating expenses (technology and development, marketing and advertising, customer service, and general and administrative expenses) of $474.7 million decreased 3.7% year over year. As a percentage of revenue, operating expenses decreased by 740 basis points (bps).

For the reported quarter, operating profit was $109.6 million. As a percentage of revenue, operating profit increased 670 basis points from the level of the quarter a year ago to 10.9%.

Balance sheet and cash flow

As of March 31, 2022, cash and cash equivalents were $742.7 million, compared to $1.26 billion as of December 31, 2021. Accounts and other receivables were $59.7 million , compared to $63.6 million in the prior quarter.

Total debt was $3.91 billion and net debt was $3.17 billion in the quarter under review. GoDaddy reported total debt of $3.92 billion and net debt of $2.67 billion in the prior quarter.

Net cash from operating activities was $250.9 million, compared to $172.2 million in the fourth quarter of 2021.

Additionally, unleveraged free cash flow was $286.8 million for the current quarter.

Orientation

For the second quarter of 2022, management expects revenue in the range of $1.01 billion to $1.02 billion, indicating 9% mid-term growth over the prior year quarter actuals. Zacks’ consensus estimate for revenue is pegged at $1.02 billion.

GDDY also expects app and commerce and core platform revenue growth in the band of 14-16% and 5-7%, respectively.

Normalized EBITDA is expected to be between $232 million and $237 million, implying mid-term growth of 18% versus actual for the prior year comparable period.

For 2022, management expects total revenue of between $4.14 billion and $4.16 billion, suggesting 9% mid-year growth from the prior year. Zacks’ consensus estimate for 2022 revenue is set at $4.15 billion.

For 2022, GDDY also expects app and commerce and core platform revenue growth in the band of 14-16% and 5-7%, respectively.

Normalized EBITDA for the full year should be between 23 and 24%.

For 2022, management also expects unleveraged free cash flow to be $1.1 billion, up 15% from the figure reported a year ago.

Zacks Ranking and Stocks to Consider

Currently, GoDaddy has a Zacks rank of #4 (selling).

Investors interested in the broader tech sector may consider stocks such as Jabil (JBL free report), Jack Henry & Associates (JKHY free report), and Broadcom (AVGO free report). While Jabil currently sports a Zacks Rank #1 (Strong Buy), Jack Henry & Associates and Broadcom currently sports a Zacks Rank #2 (Buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Jabil gained 5.5% year on year. JBL’s long-term earnings growth rate is currently projected at 12%.

Jack Henry & Associates gained 16.9% year on year. JKHY’s long-term earnings growth rate is currently projected at 17%.

Broadcom gained 20% over one year. AVGO’s long-term earnings growth rate is currently projected at 14.5%.

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