GoDaddy Expects Revenues to Rise Under New Leadership
Domain-names manager and online business-services provider GoDaddy (NYSE: GDDY) reported earnings on August 1, covering the second quarter of fiscal year 2019. Here's a detailed look at GoDaddy's report and near-term business prospects.
GoDaddy's second-quarter results: The raw numbers
Metric | Q2 2019 | Q2 2018 | Change |
|---|---|---|---|
Revenue | $737 million | $652 million | 13% |
Net income (loss) | ($13.5 million) | $19 million | N/A |
GAAP earnings (loss) per share (diluted) | ($0.07) | $0.11 | N/A |
Data source: GoDaddy. GAAP = generally accepted accounting principles.
What happened with GoDaddy this quarter?
Order bookings rose 12% year over year, landing at $846 million. The book-to-bill ratio stopped at 1.15, suggesting that the company should report average revenue growth near 15% in the next few quarters.
The company expanded its customer count by 5.5% over the last four quarters, stopping at 19 million this time. Meanwhile, the average revenue per user (ARPU) increased by 7.8%, to $153.
Business applications sales rose 20%, to $123 million, highlighting GoDaddy's recent strategy shift, where hosted business tools should play a larger role than domain names in the company's long-term strategy. That's a higher-margin business where companies compete more on quality than on price, which is where the commodity domain-name industry stands today.
Hosting and presence revenues rose 14% year over year, to $280 million. This is the other half of GoDaddy's new business-to-business focus.
Legacy operations reported slower growth as GoDaddy is shifting marketing assets and financial resources away from them and into the aforementioned focus areas. Domain sales increase by 10%, to $334 million.
International revenues rose 6%, to $248 million. This is not a separate business division but represents the international portion of GoDaddy's entire business. GoDaddy achieved this result despite a significant currency-exchange headwind. International growth worked out to 10% on a constant-currency basis.
Alongside the results, GoDaddy also announced that longtime CEO Scott Wagner is stepping down for health reasons. Former Expedia executive Aman Bhutani will step in to take the wheel from Wagner on September 4.
Image source: Getty Images.
What management had to say
Scott Wagner ended the earnings call with this call for open communication between the company and its many stakeholders under Aman Bhutani's leadership. Wagner said:
Thank you to the investment community, both on the sell and the buy sides. Our dialog over the past four-plus years has been consistently both thoughtful and respectful. Good companies are always evolving, as GoDaddy no doubt will, but our one constant will be transparency and a view toward building a well-rounded business that delivers for customers, shareholders, and employees.
Looking ahead
Based on the second-quarter's results, GoDaddy's management held its financial full-year estimates steady at $2.99 billion in top-line revenues and roughly $740 million of free cash flows. To get there, the company should report third-quarter sales near $760 million. That would be a 17% boost compared to the year-ago period.
Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends GoDaddy. The Motley Fool has a disclosure policy.
This article was originally published on Fool.com
