GoDaddy (GDDY) Up 5.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for GoDaddy (GDDY). Shares have added about 5.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is GoDaddy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
GoDaddy Q4 Earnings Beat Estimates, Revenues Rise Y/Y
GoDaddy fourth-quarter 2023 adjusted earnings of $1.08 per share beat the Zacks Consensus Estimate by 4.85%. The bottom line jumped 74.2% year over year.
GDDY generated revenues of $1.10 billion, lagging the Zacks Consensus Estimate by 0.11%. Revenues rose 5.8% year over year on a reported basis, as well as a constant-currency (cc) basis.
Quarter in Detail
Applications & Commerce, comprising Websites + Marketing, Managed WordPress, productivity applications, and payments & commerce, generated $377.4 million (contributing 34.3% to the total revenues), up 13.2% on a year-over-year basis. The figure beat the consensus mark by 0.23%.
Core Platform, consisting of domains, aftermarket, hosting and security, increased 2.3% year over year to $722.9 million (contributing 65.7% to the total revenues). The figure missed the consensus mark by 0.26%.
In the fourth quarter, international revenues were $354 million, up 4% year over year on a reported basis and at cc.
Total bookings of $1.1 billion increased 7% year over year and 6% at cc. The figure beat the consensus mark by 0.61%.
Average revenues per user were $203, up 3% year over year. The figure beat the Zacks Consensus Estimate by 0.5%.
Total annualized recurring revenues (ARR) were $3.69 billion, up 3.4% year over year. In the reported quarter, Applications & Commerce ARR was $1.4 billion, rising 10% year over year. Core platform ARR totaled $2.3 billion, flat year over year.
Total customers at the end of the fourth quarter were 21,026, increasing 0.6% year over year.
Operating Results
On a non-GAAP basis, normalized EBITDA in the fourth quarter was $324.2 million, up 22% year over year.
Operating expenses (technology and development, marketing and advertising, customer care, and general and administrative) of $458.3 million declined 3.5% year over year. As a percentage of revenues, operating expenses contracted 400 basis points (bps) year over year to 41.7%.
Operating income was $189.9 million, up 40.8% year over year. As a percentage of revenues, operating income expanded 430 bps year over year to 17.3%.
Balance Sheet & Cash Flow
As of Dec 31, 2023, cash and cash equivalents were $498.8 million compared with $329.2 million as of Sep 30, 2023.
As of Dec 31, 2023, GoDaddy had a total debt of $3.82 billion compared with a total debt of $3.9 billion as of Sep 30, 2023.
The unlevered free cash flow grew 46% to $347 million, whereas the free cash flow rose 51% to $305 million in the reported quarter.
Guidance
For first-quarter 2024, GoDaddy expects revenues of $1.085-$1.105 billion, indicating year-over-year growth of 6% at the mid-point.
For the first quarter, GDDY expects the normalized EBITDA margin to be 27%.
For 2024, GoDaddy expects total revenues of $4.48-$4.56 billion.
The normalized EBITDA margin for the full year is expected to be 29%.
For 2024, GoDady anticipates an unlevered free cash flow of at least $1.2 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, GoDaddy has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. It comes with little surprise GoDaddy has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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GoDaddy Inc. (GDDY) : Free Stock Analysis Report
