GoDaddy Inc. (NYSE: GDDY) reported financial results for the third quarter ended September 30, 2022.
“GoDaddy delivered solid results in the third quarter despite macroeconomic headwinds and foreign exchange rate pressure,” said GoDaddy CEO Aman Bhutani. “Our market leadership, our strong customer retention and the increased value we deliver through product innovation enable us to weather the current economic environment from a position of strength. We look forward to finishing the year with a continued commitment to execute against our strategic priorities.”
“GoDaddy delivered another $1 billion revenue quarter, along with 2% year-over-year growth in net income and 15% year-over-year growth in operating profit,” said GoDaddy CFO Mark McCaffrey. “While foreign exchange rates and general macro headwinds are likely to remain a challenge in the near term, we remain confident in our ability to drive durable, compounding top and bottom line growth over the long-term based on our recurring revenue model and robust free cash flow.”
- Annualized recurring revenue (ARR) for applications and commerce grew 10% year-over-year to $1.3 billion in the third quarter.
- ARR for core platform grew 2% year-over-year to $2.3 billion in the third quarter.
- GoDaddy drove continued positive momentum in attachment of GoDaddy Payments within Websites + Marketing and Managed WordPress.
- GoDaddy achieved solid growth in its commerce offerings with gross merchandise volume (GMV) of $29 billion, up 10% year-over-year in the third quarter.
- GoDaddy expanded its relationship with Amazon Web Services to continue to migrate workloads and development to the cloud. This contract reduces overall costs in the form of long-term capital spend and energy expenses while providing agility to launch new products at a faster pace.
- GoDaddy added simplified website creation for domains customers through improved guidance on template selection, making it easier for them to start building an online presence, driving higher publish rates.
- Buy Buttons enabled for all Websites + Marketing plans, including free plans, making it easier for nascent businesses, side-hustles, and the like to get started with GoDaddy’s Commerce offerings.
- GoDaddy launched free SSL in all new Web Hosting plans including in key developed countries for GoDaddy Web Hosting customers and their customers resulting in increased term lengths and modest improvements in new units and bookings in the company’s hosting business.
- GoDaddy appointed Brian Sharples to Chair of its Board of Directors, effective September 30, 2022. Brian has served on GoDaddy’s Board of Directors since 2016.
Year-to-date through October 31, 2022, GoDaddy repurchased 14.8 million shares of its common stock for an aggregate purchase price of $1.15 billion, with an average price per share of $77.86. These repurchases represent an approximately 9% reduction in fully diluted shares from those outstanding as of December 31, 2021.
At September 30, 2022, total cash and cash equivalents were $826 million, total debt was $3.9 billion and net debt was $3.07 billion.
In late October 2022, GoDaddy launched and allocated a $1.77 billion tranche of term loans with a 2029 maturity, the proceeds of which are intended to refinance its existing $1.77 billion term loan due in 2024. Pricing on the new term loan is expected to be based on the Secured Overnight Financing Rate plus an initial applicable margin of 325 basis points. An upfront fee of 2.0% of the principal amount of the new term loans would be required to be paid with the incurrence of the new term loans. In connection with the term loan refinancing, GoDaddy also expects to increase its borrowing capacity under its existing $600 million revolving credit facility to $1 billion. The foregoing transactions, which are anticipated to close in the fourth quarter of 2022, are subject to customary closing conditions and would meaningfully increase GoDaddy’s maturity profile and enhance its liquidity.
For the fourth quarter ending December 31, 2022, GoDaddy targets total revenue in the range of $1.03 billion to $1.05 billion, representing year-over-year growth of 2% at the midpoint. GoDaddy expects fourth quarter applications and commerce revenue growth in the range of 10% to 12% and flat core platform revenue growth.
For the fourth quarter ending December 31, 2022, GoDaddy targets normalized EBITDA in the range of $250 million to $260 million, remaining within the target margin range of 24 to 25 percent.
Based on an estimated adverse foreign exchange impact of approximately $40 million for the year, as well as uneven demand patterns, GoDaddy now expects total 2022 revenue to be in the range of $4.08 billion to $4.10 billion, representing year-over-year growth of 7% at the midpoint.
For the full year ending December 31, 2022, GoDaddy expects unlevered free cash flow of approximately $1.09 billion to $1.1 billion, representing growth of 14% year-over-year, versus $960 million of unlevered free cash flow generated in 2021.
GoDaddy’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (GAAP). GoDaddy does not provide reconciliations from non-GAAP guidance to GAAP equivalents because projections of changes in individual balance sheet amounts are not possible without unreasonable effort and presentation of such reconciliations would imply an inappropriate degree of precision. GoDaddy’s reported results provide reconciliations of non-GAAP financial measures to their nearest GAAP equivalents.