It has been about a month since the last earnings report for GoDaddy (GDDY). Shares have added about 18.6% 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 the most recent earnings report in order to get a better handle on the important drivers.
GoDaddy reported third-quarter 2024 earnings of $1.32 per share, beating the Zacks Consensus Estimate by 5.6% and jumping 48.3% year over year.
GDDY generated revenues of $1.15 billion, surpassing the Zacks Consensus Estimate by 0.4%. Revenues increased 7.3% year over year on a reported and constant-currency (cc) basis.
Applications and Commerce (A&C), comprising Websites and Marketing, Managed WordPress, Productivity Applications, and Payments and Commerce, generated $423.1 million (contributing 36.9% to total revenues), up 16.5% on a year-over-year basis.
Core Platform, consisting of domains, aftermarket, hosting, and security, increased 2.6% year over year to $724.5 million (contributing 63.1% to total revenues).
International revenues in the third quarter reached $369.4 million, up 6.9% year over year on a reported and cc basis.
Total bookings of $1.2 billion increased 9% year over year and 9.4% on a cc basis.
Average revenues per user were $215, up 7.5% year over year.
Total annualized recurring revenues (ARR) were $3.97 billion, up 8.1% year over year. In the reported quarter, Applications & Commerce ARR was $1.6 billion, up 15% year over year. Core platform ARR totaled $2.4 billion and moved up 4% year over year.
Total customers at the end of the third quarter were 20,725, down 1.4% year over year.
On a non-GAAP basis, normalized EBITDA in the third quarter was $366.5 million, up 23.8% year over year. The normalized EBITDA margin expanded 420 basis points (bps) year over year.
Operating expenses (technology and development, marketing and advertising, customer care, and general and administrative) of $453.2 million declined 0.5% year over year. As a percentage of revenues, operating expenses contracted 310 bps year over year to 39.5%.
Operating income was $253.8 million, up 51.9% year over year. The operating margin expanded 650 bps year over year to 22.1%.
As of Sept. 30, 2024, cash and cash equivalents were $767.1 million compared with $444.9 million as of June 30, 2024.
As of Sept. 30, 2024, GoDaddy had a total debt of $3.9 billion, unchanged sequentially.
The free cash flow was $362.7 million compared with the previous quarter’s $323.4 million.
In the third quarter, GoDaddy repurchased 5.2 million shares of its common stock for an aggregate purchase price of $668.1 million.
For the fourth quarter of 2024, GoDaddy expects revenues of $1.165-$1.185 billion, indicating year-over-year growth of 7% at the mid-point.
The company expects fourth-quarter A&C revenue growth in the mid-teens and Core revenue growth in the low single digits.
For the fourth quarter, GDDY anticipates a normalized EBITDA margin of 31%.
For 2024, GoDaddy expects total revenues of $4.545-$4.565 billion, indicating year-over-year growth of 7% at the mid-point.
The company expects full-year A&C revenue growth in the mid-teens and Core revenue growth in the low-single digits.
The normalized EBITDA margin for the year is expected to be 30%.
For 2024, GoDaddy anticipates a free cash flow of at least $1.325 billion.
It turns out, estimates revision have trended upward during the past month.
At this time, GoDaddy has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, GoDaddy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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