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GoDaddy (GDDY) Incurs Lower-than-Expected Loss in Q1

GoDaddy’s GDDY first-quarter 2016 adjusted loss of 15 cents per share came in lower than the Zacks Consensus Estimate of a loss of 18 cents.

Revenues

Revenues of $433.7 million increased 15.3% year over year and beat the Zacks Consensus Estimate of $431.0 million. Balanced growth in customers and average revenue per user (ARPU) led to the improvement. On a constant currency basis, total revenues were up approximately 17.6%.

In the quarter, ARPU was $123, up 6.1% year over year.

Revenues by Segment

GoDaddy generates revenues from three segments — Domain, Hosting and Presence, and Business Applications.
 
Domains revenues of $218.9 million contributed 50.5% to the total revenue. Revenues were up 49.9% year over year.

Hosting and Presence revenues of $160.4 million accounted for 37.0% of the total revenue. The figure represented 14.4% year-over-year growth.

Business Applications revenues of $54.4 million, which accounted for 12.5% of the total revenue, were up 47.4% year over year.

Booking

GoDaddy uses total bookings as a performance measure since payment is usually collected at the time of sale, and recognizes revenue ratably over the term of customer contracts. In the second quarter, total bookings of $557.8 million increased 11.9% year over year. On a constant currency basis, total revenues were up approximately 13.5%.

Margins

Gross margin was 64.4%, up 86 basis points year over year. The increase was driven by higher revenues and better operational efficiency.

Operating expenses of $278.0 million increased 7.1% year over year.

Net Income

The quarter’s GAAP net loss was $10.5 million or loss of 15 cents per share compared with net loss of $43.4 million or loss of 34 cents a year ago.

Pro forma loss was 15 cents compared with a break-even in the prior quarter. Our pro-forma calculation excludes restructuring, intangibles amortization, asset impairments and other one-time charges on a tax-adjusted basis.

Balance Sheet & Cash Flow

On Mar 31, 2016, total cash and cash equivalents and short-term investments were $440.1 million, total long-term debt, including current portion, was $1,042.9 million, gross debt was $1,080.7 million and net debt was $640.6 million.

Guidance

For the second quarter, the company expects revenues in the range of $448–$452 million. The Zacks Consensus Estimate is pegged at $451 million.

For full-year 2016, GoDaddy expects its revenue and adjusted EBITDA outlook to be $1,830–$1,845 million and $404–$414 million, respectively.

Going Forward

GoDaddy, Inc. is engaged in the designing and development of cloud-based technology products for small businesses, Web design professionals and individuals. The company incurred narrower-than-expected loss in the first quarter and revenues beat the Zacks Consensus Estimate.

Going forward, investment in products, technology platform, and customer care as well as delivering innovative and increasingly personalized products and services globally should drive shareholders value.

Currently, GoDaddy has a Zacks Rank #2 (Buy).

Stocks to Consider

Some better-ranked stocks in the same space are Travelport Worldwide Limited TVPT, Mercadolibre, Inc. MELI and Amazon.com Inc. AMZN, all carrying a Zacks Rank #2 (Buy).

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GODADDY INC-A (GDDY): Free Stock Analysis Report
 
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