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Cloud Stocks: GoDaddy is Making Strategic Acquisitions for the Next Level of Growth

Posted on Thursday, Jun 27th 2019

The global internet domain name provider GoDaddy’s (NYSE: GDDY) recent quarterly results failed to meet market expectations. The stock hasn’t fared well since the result announcement despite the various measures taken by the company to promise growth. Meanwhile, the company continues to add smaller players to its portfolio to expand its service offerings.

GoDaddy’s Financials

For the first quarter, GoDaddy’s revenues grew 12% over the year to $710 million, falling short of the market’s forecast of $711 million. Revenue growth was attributed to the strong performance of its product segments and growing subscription of its mobile-optimized website builder GoCentral. Adjusted EPS grew 250% over the year to $0.07, falling short of the consensus of $0.12.

By segment, GoDaddy’s Domain revenues grew 10% to $319.6 million. Hosting and Presence revenues grew 12% to $268.9 million and Business Applications revenues grew 20% to $121.5 million. During the quarter, total bookings grew 11% to $870.5 million.

Among other metrics, its customer base grew 6% over the year to 18.8 million and average revenue per user (ARPU) grew 9% to $150.

For the current quarter, it expects revenues of $730-$740 million, compared with the Street’s forecast of $732.6 million. It expects to end the year with revenues of $2.97-$3 billion for the year, compared with the Street’s estimate of $2.99 billion.

GoDaddy’s Acquisitions

GoDaddy continued to improve its product offering especially within the e-commerce, digital marketing, and the WordPress ecosystem. Within the e-commerce offering, it continued to add to the functionality by releasing support for digital downloads and online stores so that its customers can sell digital content through their website.

As part of this effort, in April this year, it announced the acquisition of Sellbrite, a multi-channel commerce suite, for an undisclosed sum. Sellbrite’s technology will allow GoDaddy’s US-based customers to list and sell their online store inventory through Amazon, eBay, Etsy, Jet, and Walmart.com, from a single location.

Prior to the acquisition, Sellbrite had enabled tens of millions of orders on multiple e-commerce platforms. Greater Los Angeles-based Sellbrite was founded in 2013 and had raised $2.8 million in various rounds of debt and venture funding from investors including Lighter Capital, Quixotic Ventures, and Idealab. Sellbrite is estimated to have annual revenues of $3.8 million. GoDaddy plans to integrate Sellbrite’s e-channel capabilities inventory, management, and fulfillment tools into its e-commerce offering.

Within the digital marketing segment, GoDaddy recently launched a customer management tool called Connections that will help entrepreneurs organize and stay connected to their customers. In April this year, GoDaddy also acquired CoBlocks, ThemeBeans, Block Gallery, and Block Unit Tests, one of the leading Gutenberg product lines in the WordPress ecosystem. CoBlocks streamlines the WordPress website creation process, ThemeBeans is a library of elegant and modern website themes, Block Gallery is a suite of gallery Gutenberg blocks for photographers, artists, writers and content marketers, and Block Unit Test is a development tool to help users make better WordPress themes by preparing for the upcoming Gutenberg block editor. The acquisition of the tools will help GoDaddy expand its resource library dedicated to helping WordPress support services. Terms of the acquisition were not disclosed. But these projects were created by Rich Tabor, a WordPress expert, who will be joining GoDaddy as the Senior Product Manager of WordPress Experience.

Additionally, GoDaddy is looking to grow its international footprint by developing products and experiences tailored to the unique needs of regional markets. For instance, within Asia, it is expanding the support for conversations in WeChat and other relevant messaging platforms. In India, Brazil, and Mexico it recently launched value-priced email through open Exchange to cater to the price sensitive decision making in these countries.

I think GoDaddy is making the right strategic acquisitions to grow its operations. But despite its promising moves, its stock hasn’t fared well. It is trading at $69.71 with a market capitalization of $12.4 billion. It touched a high of $84.97 in September last year. Like other technology stocks, GoDaddy’s stock had fallen to a 52-week low of $56.67 in December last year.

This segment is a part in the series : Cloud Stocks


. Smartsheet Acquiring Bootstrapped Startups to Drive Growth
. Bootstrapped Unicorn Atlassian is Acquiring Capital Efficient Startups
. Netflix Price Hike Ruffles Competition
. How Will Carbon Black Differentiate?
. ServiceNow Grows Through Addition of Capital-Efficient Startups
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. Tableau Grows Through Small Acquisitions
. Open Platform Strategy Stands Intuit in Good Stead
. Will GoDaddy Follow the PaaS Route?
. Adobe Delivers Via PaaS
. A Look at Oracle’s 2018 M&A Activity
. What Apps Will Drive More Traction for Cloudera?
. Slack's App Focus Will Be Key to Post-IPO Success
. IBM Counts on its Cloud and Platform for the Turnaround
. Atlassian Acquires From its PaaS Marketplace
. What Should SAP Acquire to Triple its Value by 2023?
. Expect ServiceNow to Acquire From App Marketplace
. Should Alarm.com Follow a PaaS Strategy?
. How Upwork Can Leverage the Virtual Company Trend
. Qualys Scouting For Acquisitions
. Should SAP Acquire Zendesk or Freshworks?
. HubSpot Counts on its API Strategy
. SurveyMonkey Eyes Acquisitions for Growth
. Workday Wants to Disrupt Cloud Computing Using Machine Learning
. Einstein and Open-Source Platform Lead the Charge for Salesforce
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. Veeva Soars, But Dassault Acquires Medidata for $5.8 Billion
. Tableau Acquisition Signals Massive Analytics Push for Salesforce
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