The global pandemic has accelerated the digital transformation movement across all industries. While larger organizations are focusing on transforming their business processes, smaller businesses are accelerating the creation of their online avatars. Internet domain provider GoDaddy (NYSE: GDDY) is helping SMBs make this transition by continuing to add product offerings geared towards their needs.
GoDaddy’s Q4 revenues grew 12% to $874 million, ahead of the market’s forecast by 1.01%. Total bookings improved 13% over the year to $943 million. EPS of $0.41 per share was better than the market’s estimates of an EPS of $0.33. By segment, revenues from the Domain segment grew 14.2% to $402.2 million. Hosting and Presence revenues improved 5% to $308.8 million. Business Applications revenues grew 20% to $162.9 million.
Total revenue for the year 2020 was up 11% to $3.32 billion.
For the first quarter, GoDaddy forecast revenues of $885 million, compared with the market’s estimates of $881 million. For the year 2021, it expects revenues of $3.7 billion, compared with the market’s forecast of $3.67 billion.
Recently, GoDaddy announced its acquisition of California-based Poynt for an estimated $320 million. Founded in 2013 by Osama Bedier, Poynt builds POS and commerce hardware and software tools for businesses. Poynt was founded with the mission of creating an open commerce platform that could connect merchants, resellers, and developers with the hardware, software, tools, and services required to grow their business. Its patented Android-based smart POS terminals and PoyntOS-powered third-party terminals deliver advanced in-person capabilities that help drive merchant and consumer engagement. It provides a mobile app and web/desktop software for POS, invoicing, and virtual terminals. It also offers small businesses access to various payment processing models, including integration with 16 different payment processors.
Prior to the acquisition, Poynt had raised $133 million in four rounds of funding from investors Kevin Milden, Elavon, National Australia Bank, Oak HC/FT, Matrix Partners, StartX, and GV. The acquisition will help GoDaddy expand its commerce services for help small businesses grow both on and offline. It will also help GoDaddy further accelerate its ability to provide a full suite of services that cater to both commerce and payment services for businesses.
Based on its Brandsight acquisition last year, GoDaddy has recently launched its domain management solution for large companies called GoDaddy Corporate Domains. It enables companies contain costs, optimize portfolios, and reduce risks, by giving access to domain name and website data.
GoDaddy’s hosting services are supported by a single automated infrastructure built on OpenStack. It offers an integrated set of services to help customers build and deploy new products quickly and easily. It also uses open-source Apache Hadoop to store and process data it collects through web crawling, local listings, social, and mobile platforms and provide business intelligence to its customers. It has become the world’s largest cloud platform focused on SMBs and entrepreneurs, but it still does not have a strong PaaS strategy. I think GoDaddy will need to focus on building its PaaS capabilities to help it get to the next level of growth.
GoDaddy’s stock is trading at $85.01 with a market capitalization of $14.36 billion. It touched a 52-week high of $93.75 earlier this month and a 52-week low of $40.25 in March last year.
Meanwhile, rival Wix already has a PaaS strategy and is also focusing on product innovation and partnership expansion.
Wix’s Financials Wix’s third-quarter revenues grew 29% over the year to $254.18 million, surpassing the market’s estimates by 1.7%. Adjusted net loss of $0.14 per share was worse than the market’s forecast of a loss of $0.11 per share.
By segment, revenues from creative subscriptions grew 23% to $203 million. Business service revenues grew 60% to $51.2 million for the quarter.
Among key metrics, Creative Subscriptions ARR grew 24% to $840.5 million. Total collections grew 36% to $280.9 million. Wix added 302,000 net premium subscriptions to end Q3 with 5.3 million premium subscribers. It added 7.8 million registered users to end Q3 with 189 million total subscribers.
For the fourth quarter, Wix expects revenues of $266-$271 million, while the market forecasts revenues of $265.67 million.
Wix’s Product Expansion Wix continued to focus on product and partner expansion to drive growth. It entered into a partnership with Vodafone to put Wix into the Vodafone Business Marketplace platform, allowing customers to create an online presence. As part of the tie-up, Vodafone’s customers will be able to choose a Wix subscription package that includes launching a professional business website and adding online capabilities such as a store or online scheduling and appointment booking. The partnership is a key milestone for Wix’s Channels initiative for global growth as it enables international service providers to sell Wix website subscriptions and business solutions directly to their customers.
Wix’s Editor X recently announced the official launch launched out of beta testing. Editor X is the first web creation platform that enables concurrent editing, allowing team members to simultaneously work on a website. With new features such as live commenting, advanced roles and permissions, and shared design libraries, design teams will now be able to increase the speed at which they publish websites and work more efficiently. Wix believes that this is a revolutionary platform as it creates smarter collaboration between stakeholders and a seamless handoff to clients.
Unlike GoDaddy, Wix has been focused on a PaaS strategy that allows developers to use its various REST APIs to access Wix user’s site data. Developers can build apps on Wix that can be accessed by millions of customers and, in return, Wix allows these developers to earn subscription-based revenue. Wix does not provide detailed metrics on the number of developers on its platform or the revenues earned by these developers, but its platform has been well received by developers for its simplicity and monetization capabilities. Read my opinion on Paas companies here: Cloud Stocks: Which SaaS Players Will Win in PaaS.
Its stock is trading at $279.46 with a market capitalization of $15.55 billion. It hit a 52-week high of $319.34 in July. In March last year, the stock had fallen to a 52-week low of $76.81 due to the crisis.
Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.