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GoDaddy (GDDY) Announces Proposed Offering of $600M Notes

Zacks Equity Research

GoDaddy Inc.’s GDDY) subsidiaries, Go Daddy Operating Company, LLC and GD Finance Co, Inc. recently announced proposed offering of unsecured senior notes aggregating $600 million.

The interest rate, redemption provisions, maturity date and other terms of the notes are yet to be determined. The notes will be offered to qualified institutional buyers only and in accordance with Rule 144A under the Securities Act of 1933, as amended.

The company stated that the transaction proceeds from this offering together with cash on hand shall be used to redeem $600 million of principal amount of term loan borrowings.

Cash Position

At the end of first-quarter 2019, its cash and restricted cash totaled $1.1 billion, up from $951.3 million in the comparable year-ago period. The company’s total debt was $2,451.1 million and net debt was $1,342.1 million at the end of the first quarter.

Net cash provided by operating activities was $199.7 million compared with $128.5 million in the fourth quarter. Additionally, adjusted free cash flow was $198.8 million during the reported quarter.

We believe that the company has a strong balance sheet, which will help it capitalize on investment opportunities and pursue strategic acquisitions, further improving growth prospects. In our view, the senior notes’ offering will bring down the company’s cost of capital, in turn strengthening the balance sheet and supporting growth.

These notes should provide financial flexibility and propel long-term growth.

Bottom Line

GoDaddy has a well-diversified product portfolio, which will continue to drive revenues. The company generates revenues from three segments — Domain, Hosting and Presence, and Business Applications.

All its segments should continue to perform well, driven by increasing investments in products and technology platform, as well as strong customer growth. The most fundamental driving force is the growing demand for security products. Given that cybercrime is increasingly becoming a concern, GoDaddy has been continuously investing in security and compliance technology.

The company is expanding internationally by investing in technology, marketing programs and customer service teams. Growing international expansion and the shift toward dynamic online presence for small businesses should continue to drive growth.

GoDaddy Inc. Price and Consensus

 

GoDaddy Inc. Price and Consensus

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

Zacks Rank and Stocks to Consider

GoDaddy currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Facebook, Inc. FB, IAC/InterActiveCorp IAC and AXT, Inc. AXTI, 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 Facebook, IAC/InterActiveCorp and AXT is currently projected at 20.2%, 20.5% and 15%, respectively.

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