GoDaddy Reports Continued Strong Growth In Second Quarter
SCOTTSDALE, Ariz., Aug. 8, 2017 /PRNewswire/ -- GoDaddy Inc. (NYSE: GDDY), the world's largest cloud platform dedicated to small, independent ventures, today reported financial results for the second quarter ended June 30, 2017.
"GoDaddy successfully delivered another solid quarter with continued organic customer, revenue and cash flow growth," said GoDaddy CEO Blake Irving. "We are making great progress on our 2017 product and strategic initiatives including growing the adoption of our new mobile-optimized website builder GoCentral, new security offerings and integration of HEG. We remain focused on leveraging our brand and scale to extend our global competitive advantages."
Second Quarter Financial Highlights
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
(in millions, except customers in thousands and ARPU)
GAAP Results
Revenue $557.8 $456.2 22.3% $1,047.5 $889.9 17.7%
Income (loss)
from
continuing
operations $23.4 $(11.1) NM $20.3 $(29.4) NM
Net income
(loss) $18.1 $(11.1) NM $15.0 $(29.4) NM
Net cash
provided by
operating
activities $113.3 $92.4 22.6% $239.9 $197.7 21.3%
Non-GAAP
Results
Unlevered Free
Cash Flow $135.0 $83.9 60.9% $249.1 $184.5 35.0%
Operating
Metrics
Total Bookings $667.5 $538.6 23.9% $1,292.3 $1,096.4 17.9%
Total
customers at
period end 16,878 14,327 17.8% 16,878 14,327 17.8%
ARPU(1) $129 $125 2.8% $129 $125 2.8%
(1) Our ARPU growth was muted by
the impact of the
acquisition of HEG as our
trailing twelve month
revenue included only three
months of HEG's results for
this annual measure. GoDaddy
organic Q2 2017 ARPU
(excluding HEG) was $132, up
5.9% year over year.
-- Total revenue of $557.8 million, up 22.3% year over year, or 23.5% on a
constant currency basis.
-- Total bookings of $667.5 million, up 23.9% year over year, or 25.8% on a
constant currency basis.
-- Net cash provided by operating activities of $113.3 million, up 22.6%
year over year.
-- Unlevered free cash flow of $135.0 million, up 60.9% year over year, and
up 35.0% in the first half of 2017 vs. 2016.
-- Customers were nearly 17 million at quarter end, up 17.8% year over
year, including HEG customers of over 1.6 million.
-- Average revenue per user (ARPU) of $129, up 2.8% year over year, and
organic ARPU of $132, up 5.9% year over year.
-- Domains revenue of $263.3 million, up 14.6% year over year.
-- Hosting and Presence revenue of $214.9 million, up 28.3% year over year.
-- Business Applications revenue of $79.6 million, up 35.1% year over year.
-- International revenue of $187.7 million, up 56.7% year over year, or
61.2% on a constant currency basis.
Business Highlights
-- GoDaddy completed a secondary offering of approximately 27.6 million
shares of its Class A common stock sold by certain of its stockholders
at $38.50 per share in May 2017, increasing the publicly available
float.
-- GoDaddy completed a $275 million share repurchase of 7.3 million LLC
units of Desert Newco (together with a corresponding number of GoDaddy
Class B shares) in May 2017, reducing the effects of share dilution.
-- GoDaddy completed the acquisition of HEG in April 2017, establishing a
market leading position in Europe for small business cloud services.
-- GoDaddy signed a definitive agreement for the sale of the PlusServer
business for an enterprise value of EUR397 million ($456 million USD).
-- GoDaddy's new mobile-optimized website builder, GoCentral, is showing
positive traction in new bookings growth, free to paid conversion, and
increase in average order size with hundreds of thousands of sites
currently published. The company intends to release additional new
GoCentral verticals, markets and features throughout 2017.
-- GoDaddy launched GoDaddy Website Security, a cutting-edge website
protection service to keep customers' sites clean and free of malware on
the following the April 2017 Sucuri acquisition.
-- GoDaddy launched WP Premium Support to provide access to WordPress
expertise and help small businesses fix, update and optimize their
WordPress sites more quickly and conveniently.
Balance Sheet
At June 30, 2017, total cash, cash equivalents and short-term investments were $591.2 million, total debt was $3,065.3 million and net debt was $2,474.1 million.
Business Outlook
For the third quarter ending September 30, 2017, GoDaddy expects total revenue in the range of $577 to $582 million including HEG. For the full year ending December 31, 2017, GoDaddy raised its revenue expectations to a range of $2.215 to $2.225 billion, representing approximately 20% growth at the midpoint.
For the full year 2017, GoDaddy raised its unlevered free cash flow expectations to a range of $475 to $485 million, representing approximately 35% growth at the midpoint versus the approximately $357 million in unlevered free cash flow generated in 2016.
Assuming continued organic growth in 2018, along with one incremental quarter of contribution from HEG, and expected acquisition synergies, GoDaddy expects unlevered free cash flow of $600 million next year.
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (GAAP). We do not provide reconciliations from non-GAAP guidance to GAAP, 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. Our reported results provide reconciliations of non-GAAP financial measures to their nearest GAAP equivalents.
Quarterly Conference Call and Webcast
GoDaddy will host a conference call and webcast to discuss second quarter 2017 results at 5:00 p.m. Eastern Time on August 8, 2017. To hear the call, dial (877) 648-7976 in the United States or (617) 826-1698 from international locations, with passcode 52323850. A live webcast of the call, together with a slide presentation including supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, will be available through GoDaddy's Investor Relations website at https://investors.godaddy.net. Following the call, a recorded replay of the webcast will be available on the website.
GoDaddy Inc. uses its Investor Relations website at https://investors.godaddy.net as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor GoDaddy's Investor Relations website, in addition to following press releases, Securities and Exchange Commission (SEC) filings, public conference calls and webcasts.
Forward-Looking Statements
This press release contains forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on estimates and information available to us at the time of this press release and are not guarantees of future performance. Statements in this release involve risks, uncertainties and assumptions. If the risks or uncertainties materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact could be deemed forward-looking statements, including, but not limited to: launches of new or adoption and expansion of existing products or services, any projections of product or service availability, technology developments, customer growth, addressable market size, market acceptance of products or other future events; any statements about historical results that may suggest future trends for our business; any statements regarding our plans, strategies or objectives with respect to future operations, including international expansion plans; any statements regarding integration of recent or planned acquisitions, any statements regarding our future financial results; statements concerning GoDaddy's ability to integrate its acquisition of HEG, and the projected impact of the acquisition on GoDaddy's business and results of operations; statements regarding GoDaddy's proposed sale of HEG's PlusServer business and GoDaddy's ability to repay its indebtedness; and any statements of assumptions underlying any of the foregoing.
Actual results could differ materially from our current expectations as a result of many factors, including, but not limited to: the unpredictable nature of our rapidly evolving market; fluctuations in our financial and operating results; our rate of growth; interruptions or delays in our service or our web hosting; breaches of our security measures; the impact of any previous or future acquisitions; our ability to continue to release, and gain customer acceptance of, our existing and future products and services; our ability to manage our growth; our ability to hire, retain and motivate employees; our ability to integrate and execute on our plans for HEG and HEG's PlusServer business; the effects of competition; technological, regulatory and legal developments; intellectual property litigation; and developments in the economy, financial markets and credit markets.
Additional risks and uncertainties that could affect GoDaddy's financial results are included in the other filings we make with the SEC from time to time, including the risks described under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 and the risk factors described the Company's Current Report on Form 8-K filed May 3, 2017, which are available on the Company's website at https://investors.godaddy.net and on the SEC's website at www.sec.gov. Additional information will also be set forth in other filings that the Company makes with the SEC from time to time. Risks related to HEG also include retention of customers and employees and GoDaddy's ability to integrate HEG into GoDaddy and complete the divestiture of the PlusServer business. All forward-looking statements in this press release are based on information available to GoDaddy as of the date hereof. GoDaddy does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
Non-GAAP Financial Measures and Other Operating Metrics
In addition to our results determined in accordance with GAAP, this press release includes Total Bookings and ARPU, as operating metrics, and financial measures defined as "non-GAAP financial measures" by the SEC, including Unlevered Free Cash Flow and Net Debt. These measures may be different from non-GAAP financial measures used by other companies in our industry, as those other companies may calculate their non-GAAP financial measures differently, particularly related to adjustments for acquisition accounting.
We believe these non-GAAP financial measures are useful as a supplement in evaluating our ongoing operational performance and enhancing an overall understanding of our past financial performance. The non-GAAP financial measures included in this release should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation between each non-GAAP financial measure and its nearest GAAP equivalent is included in this release following the financial statements. We use both GAAP and non-GAAP measures to evaluate and manage our operations.
Total bookings. Total bookings represents cash receipts from the sale of products to customers in a given period adjusted for products where we recognize revenue on a net basis and without giving effect to certain adjustments, primarily net refunds granted in the period. Total bookings provides valuable insight into the sales of our products and the performance of our business since we typically collect payment at the time of sale and recognize revenue ratably over the term of our customer contracts. We report total bookings without giving effect to refunds granted in the period because refunds often occur in periods different from the period of sale for reasons unrelated to the marketing efforts leading to the initial sale. Accordingly, by excluding net refunds, we believe total bookings reflects the effectiveness of our sales efforts in a given period.
ARPU. We calculate ARPU as total revenue during the preceding 12 month period divided by the average of the number of total customers at the beginning and end of the period. ARPU provides insight into our ability to sell additional products to customers, though the impact to date has been muted due to our continued growth in total customers.
Unlevered Free Cash Flow. Unlevered free cash flow is a measure of our liquidity used by management to evaluate our business prior to the impact of our capital structure and after tax distributions required by Desert Newco's LLC agreement and purchases of property and equipment, such as data center and infrastructure investments, that can be used by us for strategic opportunities and strengthening our balance sheet. However, given our debt obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses.
Net Debt. We define net debt as total debt less cash and cash equivalents and short-term investments. Total debt consists of the current portion of long-term debt plus long-term debt, unamortized original issue discounts and unamortized debt issuance costs. We believe the presentation of net debt provides useful information to investors because our management reviews net debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage. Furthermore, certain analysts and debt rating agencies monitor our net debt as part of their assessments of our business.
About GoDaddy
GoDaddy powers the world's largest cloud platform dedicated to small, independent ventures. With nearly 17 million customers worldwide and over 72 million domain names under management, GoDaddy is the place people come to name their idea, build a professional website, attract customers and manage their work. Our mission is to give our customers the tools, insights and the people to transform their ideas and personal initiative into success. To learn more about the company visit www.GoDaddy.com.
GoDaddy Inc.
Condensed Consolidated Statements of Operations (unaudited)
(In millions, except share amounts in thousands and per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Revenue:
Domains $263.3 $229.8 $504.1 $448.7
Hosting and presence 214.9 167.5 393.2 327.9
Business applications 79.6 58.9 150.2 113.3
---- ---- ----- -----
Total revenue 557.8 456.2 1,047.5 889.9
Costs and operating expenses(1):
Cost of revenue (excluding
depreciation and amortization) 196.4 162.1 373.2 316.5
Technology and development 90.1 70.2 170.3 141.9
Marketing and advertising 62.5 60.0 129.9 117.5
Customer care 75.4 62.1 142.4 123.8
General and administrative(2) 71.8 52.8 132.8 101.0
Depreciation and amortization 55.5 39.3 87.1 78.2
---- ----
Total costs and operating expenses 551.7 446.5 1,035.7 878.9
----- ----- ------- -----
Operating income 6.1 9.7 11.8 11.0
Interest expense (22.0) (14.3) (34.8) (28.6)
Tax receivable agreements
liability adjustment 32.0 (6.1) 37.0 (10.7)
Loss on debt extinguishment - - (1.7) -
Other income (expense), net 2.7 (0.8) 4.4 (0.1)
--- ---- --- ----
Income (loss) from continuing
operations before income taxes 18.8 (11.5) 16.7 (28.4)
Benefit (provision) for income
taxes 4.6 0.4 3.6 (1.0)
--- --- --- ----
Income (loss) from continuing
operations 23.4 (11.1) 20.3 (29.4)
Loss from discontinued operations,
net of income taxes (5.3) - (5.3) -
---- --- ---- ---
Net income (loss) 18.1 (11.1) 15.0 (29.4)
Less: net loss attributable to
non-controlling interests (2.7) (2.2) (6.4) (10.0)
---- ---- ---- -----
Net income (loss) attributable to
GoDaddy Inc. $20.8 $(8.9) $21.4 $(19.4)
===== ===== ===== ======
Net income (loss) attributable to GoDaddy Inc.
per share of Class A common stock -basic:
Continuing operations $0.25 $(0.11) $0.28 $(0.26)
Discontinued operations $(0.05) $ - $(0.06) $ -
====== === === ====== === ===
Net income (loss) attributable to
GoDaddy Inc. $0.20 $(0.11) $0.22 $(0.26)
===== ====== ===== ======
Net income (loss) attributable to GoDaddy Inc.
per share of Class A common stock -diluted:
Continuing operations $0.13 $(0.11) $0.11 $(0.26)
Discontinued operations $(0.03) $ - $(0.03) $ -
====== === === ====== === ===
Net income (loss) attributable to
GoDaddy Inc. $0.10 $(0.11) $0.08 $(0.26)
===== ====== ===== ======
Weighted-average shares of Class A common stock
outstanding:
Basic 101,800 79,872 95,734 73,853
======= ====== ====== ======
Diluted 176,716 79,872 177,796 73,853
======= ====== ======= ======
(1) Costs and operating expenses include equity-based compensation expense as follows:
Technology and development $8.9 $4.4 $17.3 $9.9
Marketing and advertising 1.5 1.6 3.2 3.5
Customer care 1.2 0.6 1.6 1.4
General and administrative 7.4 4.2 13.3 8.0
(2) General and administrative
expenses for the three and six
months ended June 30, 2017
includes acquisition and
integration-related expenses of
$13.7 million and $17.2 million,
respectively, and for the three
and six months ended June 30,
2016 includes $0.8 million and
$1.2 million, respectively.
General and administrative
expenses for the three and six
months ended June 30, 2017
include financing-related fees
of $0 and $3.2 million related to
our February 2017 debt
modification. There were no
financing-related fees in 2016.
GoDaddy Inc.
Condensed Consolidated Balance Sheets (unaudited)
(In millions, except per share amounts)
June 30, December 31,
2017 2016
---- ----
Assets
Current assets:
Cash and cash equivalents $578.8 $566.1
Short-term investments 12.4 6.6
Accounts and other receivables 17.4 8.0
Registry deposits 21.8 20.6
Prepaid domain name registry
fees 357.0 307.0
Prepaid expenses and other
current assets 55.5 24.5
Assets of business held for
sale 562.1 -
----- ---
Total current assets 1,605.0 932.8
Property and equipment, net 297.0 231.0
Prepaid domain name registry
fees, net of current portion 186.7 172.1
Goodwill 2,820.9 1,718.4
Intangible assets, net 1,332.3 716.5
Other assets 12.0 16.1
---- ----
Total assets $6,253.9 $3,786.9
======== ========
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable $66.4 $61.7
Accrued expenses and other
current liabilities 333.4 143.0
Payable to related parties for
tax distributions - 10.0
Deferred revenue 1,217.0 1,043.5
Long-term debt 580.8 4.0
Liabilities of business held
for sale 126.5 -
----- ---
Total current liabilities 2,324.1 1,262.2
Deferred revenue, net of
current portion 584.3 532.7
Long-term debt, net of
current portion 2,419.1 1,035.7
Payable to related parties
pursuant to tax receivable
agreements 186.3 202.6
Deferred tax liabilities 180.6 -
Other long-term liabilities 64.5 39.5
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par
value - -
Class A common stock, $0.001
par value 0.1 0.1
Class B common stock, $0.001
par value 0.1 0.1
Additional paid-in capital 435.3 608.3
Accumulated deficit (27.3) (48.7)
Accumulated other
comprehensive income (loss) (22.8) 2.7
----- ---
Total stockholders' equity
attributable to GoDaddy Inc. 385.4 562.5
Non-controlling interests 109.6 151.7
----- -----
Total stockholders' equity 495.0 714.2
----- -----
Total liabilities and
stockholders' equity $6,253.9 $3,786.9
======== ========
GoDaddy Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(In millions)
Six Months Ended
June 30,
2017 2016
---- ----
Operating
activities
Net
income
(loss) $15.0 $(29.4)
Adjustments
to activities:
reconcile
net
income
(loss)
to net
cash
provided
by
operating
Depreciation
and
amortization 87.1 78.2
Equity-
based
compensation 35.4 22.8
Tax
receivable
agreements
liability
adjustment (37.0) 10.7
Other 1.5 6.3
Changes
in
operating
assets
and
liabilities,
net of
amounts
acquired:
Registry
deposits (0.2) (2.3)
Prepaid
domain
name
registry
fees (26.8) (24.7)
Deferred
revenue 161.9 130.0
Other
operating
assets
and
liabilities 3.0 6.1
--- ---
Net cash
provided
by
operating
activities 239.9 197.7
Investing
activities
Purchases
of short-
term
investments (6.4) (10.5)
Maturities
of
short-
term
investments 0.6 5.4
Business
acquisitions,
net of
cash
acquired (1,871.2) (41.3)
Purchases
of
property
and
equipment,
excluding
improvements (33.7) (24.6)
Purchases
of
leasehold
and
building
improvements (2.8) (2.0)
Net cash
used in
investing
activities (1,913.5) (73.0)
Financing
activities
Proceeds
received
from:
Acquisition
Term
Loan 1,421.4 -
Bridge
Loan 531.7 -
Stock
option
exercises 33.3 23.3
Sale of
Class A
common
stock,
net of
expenses 21.7 -
Issuance
of Class
A common
stock
under
employee
stock
purchase
plan 9.2 -
Payments
made
for:
Repurchases
of LLC
Units (275.0) -
Financing-
related
costs (38.9) -
Distributions
to
holders
of LLC
Units (10.0) (10.8)
Repayment
of term
loan (2.7) (5.5)
Capital
leases
and
other
financing
obligations (6.2) (7.6)
---- ----
Net cash
provided
by (used
in)
financing
activities 1,684.5 (0.6)
------- ----
Effect of
exchange
rate
changes
on cash
and cash
equivalents 1.8 -
--- ---
Net
increase
in cash
and cash
equivalents 12.7 124.1
Cash and
cash
equivalents,
beginning
of
period 566.1 348.0
----- -----
Cash and
cash
equivalents,
end of
period $578.8 $472.1
====== ======
Reconciliation of Non-GAAP Financial Measures and Other Operating Metric
The following tables reconcile the most directly comparable GAAP financial measure to each non-GAAP financial measure and other operating metric:
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Total Bookings:
Total revenue $557.8 $456.2 $1,047.5 $889.9
Change in
deferred revenue 66.1 47.7 159.8 131.0
Net refunds 41.8 35.0 81.7 73.4
Other 1.8 (0.3) 3.3 2.1
--- ---- --- ---
Total bookings $667.5 $538.6 $1,292.3 $1,096.4
====== ====== ======== ========
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Unlevered Free Cash Flow:
Net cash provided
by operating
activities $113.3 $92.4 $239.9 $197.7
Impact of
discontinued
operations (3.0) - (3.0) -
Cash paid for
interest 25.9 11.7 34.7 23.3
Cash paid for
acquisition and
sponsor-related
costs 18.5 0.1 24.0 0.4
Capital
expenditures (16.7) (14.6) (36.5) (26.6)
Cash paid for
tax-related
distributions (3.0) (5.7) (10.0) (10.3)
---- ---- ----- -----
Unlevered free
cash flow $135.0 $83.9 $249.1 $184.5
====== ===== ====== ======
June 30, 2017
Actual Proforma(1)
(in millions)
Net Debt:
Current portion of long-term debt $580.8 $10.3
Long-term debt 2,419.1 2,419.1
Unamortized original issue discount on long-term debt 35.3 34.2
Unamortized debt issuance costs 30.1 24.8
---- ----
Total debt 3,065.3 2,488.4
Less: Cash and cash equivalents (578.8) (407.6)
Less: Short-term investments (12.4) (12.4)
----- -----
Net debt $2,474.1 $2,068.4
======== ========
(1) Assumes net
proceeds from
the sale of
PlusServer,
after
transaction
costs and
taxes, of
approximately
$399 million
along with
cash on hand
are used to
retire our
short-term
bridge loan
of $571
million as of
June 30,
2017.
Proceeds and
bridge loan
converted to
USD based on
the June 30,
2017 Euro to
U.S. dollar
exchange rate
of 1.141.
Shares Outstanding
Shares of Class B common stock do not share in our earnings and are not participating securities. Total shares of common stock outstanding are as follows:
June 30, 2017 June 30, 2016
------------- -------------
(in thousands)
Shares Outstanding:
Class A common stock 110,751 82,042
Class B common stock 53,994 79,258
------ ------
Total common stock
outstanding 164,745 161,300
Effect of dilutive
securities(1) 10,157 14,600
------ ------
174,902 175,900
======= =======
(1) In periods in
which we have a
net loss, the
impact of
potentially
dilutive
securities is
excluded from the
calculation of
earnings per
share because the
effect would be
antidilutive.
Source: GoDaddy Inc.
© 2017 GoDaddy Inc. All Rights Reserved.
http://photos.prnewswire.com/prnvar/20150330/195302LOGO
View original content:http://www.prnewswire.com/news-releases/godaddy-reports-continued-strong-growth-in-second-quarter-300501381.html
SOURCE GoDaddy Inc.
