Internet domain provider GoDaddy (NYSE: GDDY) recently announced its second quarter results. The company has been using the current crisis conditions to restructure its operations and financial position. The market is pleased with the actions it is taking.
GoDaddy’s Q2 revenues grew 9.4% to $806.4 million, ahead of the market’s forecast of $798 million. Total bookings improved 10.7% over the year to $936.3 million. Non GAAP loss was $4.06 per share, which was significantly worse than the market’s estimates of an EPS of $0.17. The increased loss was on account of GoDaddy settling its Termination and Release Agreement (TRA) obligation with KKR for a one-time payment of $850 million, compared with an estimated $1.8 billion payout over the next 10+ years.
By segment, revenues from the Domain segment grew 10.5% to $369.6. Hosting and Presence revenues improved 4.4% to $292.2 million due to higher subscriptions to Websites and Marketing. Business Applications revenues grew 17.6% to $144.6 million due to an increase in workspace renewals.
For the current quarter, GoDaddy forecast revenues of $835 million, compared with the market’s estimates of $793.74 million. It expects double-digit growth in its Domains segment, mid-single-digit growth in its Hosting and Presence segment, and high-teens growth in Business Applications.
GoDaddy’s Focus Areas
GoDaddy is making significant improvements in its business that are seeing improvements across various metrics. First, it crossed the milestone of 20 million paying customers. During the quarter, it added over 400,000 customers, making this one of the strongest quarter of net customer growth in more than twenty years. The growth was driven by stable retention rates and record gross customer adds in the quarter. GoDaddy believes that both of these trends were not only due to the higher market demand for online presence but also due to GoDaddy’s investments in marketing.
Second, it continued to add several new features and functionality to its products. Some of the new features added include newer marketing tools, video streaming, security options, and bulk purchase experiences. It is leveraging the acquisition of Uniregistry that it made earlier this year to build a GoDaddy Corporate Domains team that is able to deliver new functionalities for bulk purchasers. It is already seeing strength in primary domain sales, domain add-on, and aftermarket transactions through these efforts. GoDaddy is also allowing its customers to use and experiment its products by adding a freemium experience. In the first quarter of the year, it had released the freemium capabilities for its Websites + Marketing offering. Last quarter, it added Sellbrite e-commerce to the freemium portfolio.
Third, it took several actions focused on long-term growth and cash flow generation. In June this year, it restructured its US outbound sales team in response to the COVID-19 crisis. The sales team was not able to deliver on its sales targets due to the crisis, and it made financial sense to reduce the team. Overall, GoDaddy has restructured 814 employees at a charge of $15 million for the year.
GoDaddy’s stock is trading at $79.04 with a market capitalization of $13.3 billion. It touched a 52-week high of $85.46 in June this year. GoDaddy had fallen to a 52-week low of $40.25 in March this year when most stocks fell.
This segment is a part in the series : Cloud Stocks