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GoDaddy Inc. (NYSE: GDDY) today reported financial results for the second quarter that ended June 30, 2023.
“Our mission at GoDaddy – to empower entrepreneurs everywhere, making opportunity more inclusive for all – is getting an unprecedented boost by AI technology,” said GoDaddy CEO Aman Bhutani. “For the first time, we can bundle domains with an increasing array of AI-powered capabilities that help small businesses quickly overcome administrative burdens, attract new customers and focus on growth. When our customers succeed, GoDaddy succeeds.”
“GoDaddy successfully built a growing, competitive, and robust set of tools and services in a one-stop shop,” said GoDaddy CFO Mark McCaffrey. “GoDaddy’s product innovation and targeted investment has led to an enhanced suite of products driving the momentum of our business. We have put in place the building blocks to propel us to the next level of growth while driving increased profitability and cash flow ahead of targets.”
Business Highlights
- Applications and Commerce revenue grew to $352 million in the second quarter, up 11%, year-over-year, with annualized recurring revenue (ARR) up 10% year-over-year, growing to $1.3 billion in the second quarter.
- ARR for GoDaddy’s Create + Grow suite of website builders grew to $465 million, up 11% year-over-year, in the second quarter, representing a one point sequential lift in growth rate from Q1.
- Gross payments volume (GPV) from GoDaddy’s Commerce offerings continued its strong growth and is on pace to more than double 2022 GPV by year end.
- Gross merchandise volume (GMV) totaled $33 billion in the second quarter, up 20% year-over-year.
- Core Platform revenue totaled $696 million in the second quarter, flat year-over-year, and ARR totaled $2.3 billion in the second quarter, flat year-over-year.
- GoDaddy implemented powerful generative AI tools into Websites + Marketing, helping micro businesses run their business and manage their site through auto-generated online store product descriptions, customer service messages, and Instagram and Facebook ads.
- Released GoDaddy.AI, a free online resource for customers, which provides tips and current news on all things generative AI for small businesses.
- Brought AI-powered tools to GoDaddy Pros with GoDaddy’s AI Assistant in the Pro Hub, using generative AI to expedite time consuming, repetitive tasks including generating suggested site content, proposals, invoicing and client communications. GoDaddy also launched AI-powered conversational onboarding, delivering an easier method to set up a new WordPress site.
- GoDaddy will hold an in-person Investor Day in Q1 2024 at its Tempe, Arizona, office during which leaders will discuss the company’s long-term strategy, innovation initiatives, financial framework and capital allocation strategy, as well as provide demonstrations of recently launched products. Additional details regarding event logistics will be provided in winter 2024.
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Consolidated Second Quarter Financial Highlights |
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2023 |
2022 |
Change |
Constant |
2023 |
2022 |
Change |
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(in millions, except customers in thousands and ARPU in dollars) |
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GAAP Results: |
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Total Revenue |
$ 1,048.1 |
$ 1,015.5 |
3.2 % |
4.1 % |
$ 2,084.1 |
$ 2,018.2 |
3.3 % |
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Applications & commerce revenue |
$ 351.7 |
$ 317.2 |
10.9 % |
$ 689.7 |
$ 620.3 |
11.2 % |
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Core platform revenue |
$ 696.4 |
$ 698.3 |
(0.3) % |
$ 1,394.4 |
$ 1,397.9 |
(0.3) % |
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International revenue |
$ 341.1 |
$ 330.8 |
3.1 % |
5.7 % |
$ 681.7 |
$ 660.6 |
3.2 % |
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Net income(1) |
$ 83.1 |
$ 90.5 |
(8.2) % |
$ 130.5 |
$ 159.1 |
(18.0) % |
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Net cash provided by operating activities |
$ 198.0 |
$ 250.9 |
(21.1) % |
$ 468.3 |
$ 501.8 |
(6.7) % |
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Segment EBITDA – Applications & commerce |
$ 142.7 |
$ 131.8 |
8.3 % |
$ 275.1 |
$ 251.6 |
9.3 % |
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Segment EBITDA – Core platform |
$ 191.0 |
$ 198.4 |
(3.7) % |
$ 380.0 |
$ 376.8 |
0.8 % |
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Non-GAAP Results: |
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Normalized EBITDA (NEBITDA) |
$ 264.6 |
$ 258.4 |
2.4 % |
$ 514.3 |
$ 484.3 |
6.2 % |
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Unlevered free cash flow |
$ 283.6 |
$ 274.3 |
3.4 % |
$ 587.5 |
$ 561.1 |
4.7 % |
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Free cash flow |
$ 239.9 |
$ 242.8 |
(1.2) % |
$ 499.1 |
$ 501.5 |
(0.5) % |
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Operating and Business Metrics: |
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Total bookings |
$ 1,141.1 |
$ 1,118.9 |
2.0 % |
2.6 % |
$ 2,340.3 |
$ 2,275.2 |
2.9 % |
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Total customers at period end |
20,985 |
20,876 |
0.5 % |
20,985 |
20,876 |
0.5 % |
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Average revenue per user (ARPU) |
$ 199 |
$ 193 |
3.1 % |
$ 199 |
$ 193 |
3.1 % |
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ARR |
$ 3,619.6 |
$ 3,489.3 |
3.7 % |
$ 3,619.6 |
$ 3,489.3 |
3.7 % |
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(1) |
Net income for the three and six months ended June 30, 2023 includes $17.5 million and $69.8 million, respectively, in restructuring and other charges. |
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Share Repurchases
Year-to-date through July 31, 2023, GoDaddy repurchased 10.2 million shares of its common stock for an aggregate purchase price of $745.9 million, with an average price per share of $73.04. Cumulatively, these repurchases represent an approximate 16% reduction in fully diluted shares from those outstanding at the inception of the current $3 billion buyback authorization. Additionally, GoDaddy announces an incremental $1 billion share buyback authorization through 2025.
Balance Sheet
As of June 30, 2023, total cash and cash equivalents were $582.6 million, total debt was $3.9 billion and net debt was $3.3 billion.
Debt Refinancing
In July 2023, GoDaddy refinanced $1.8 billion of the outstanding principal amount of its term loans to lower the interest rate margins by 0.75%, reducing annual cash interest by $13 million. The refinanced loans retain the original maturity date and other terms and conditions.
Restructuring
In February 2023, GoDaddy announced a restructuring plan to reduce future operating expenses and improve cash flows through a combination of a reduction in force and a commitment to sell certain assets. In the second quarter, GoDaddy closed on the sale of the previously announced non-core hosting brands for a net pre-tax loss on disposal of $16.8 million.
Business Outlook
For the third quarter ending September 30, 2023, GoDaddy targets total revenue in the range of $1.055 billion to $1.075 billion, representing year-over-year growth of 3% at the midpoint, versus the same period in 2022.
For the third quarter ending September 30, 2023, GoDaddy targets Normalized EBITDA margin of approximately 26%. For the full year ending December 31, 2023, GoDaddy expects Normalized EBITDA margin of approximately 26%.
For the full year ending December 31, 2023, GoDaddy expects unlevered free cash flow of approximately $1.2 billion, representing growth of 9%, year-over-year, versus $1.1 billion of unlevered free cash flow generated in 2022. GoDaddy expects free cash flow of approximately $1.0 billion, representing growth of 3%, year-over-year, versus the $968.6 million of free cash flow generated in 2022.
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.
