GoDaddy Reports Strong Fourth Quarter And Full Year 2017 Results
SCOTTSDALE, Ariz., Feb. 22, 2018 /PRNewswire/ -- GoDaddy Inc. (NYSE: GDDY), the world's largest cloud platform dedicated to small, independent ventures, today reported complete financial results for the fourth quarter and year ended December 31, 2017.
"GoDaddy turned in another great quarter - with strong customer, revenue and cash flow growth - solidifying our leadership position as the place people go to start their ideas, grow and thrive online," said Scott Wagner, CEO, GoDaddy. "We see nice momentum heading into 2018, and are confident that our value proposition to customers will enable us to continue to deliver growth at scale."
Consolidated Fourth Quarter Financial Highlights(1)
Three Months Year Ended
Ended December 31, December 31,
------------------ ------------
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
GAAP Results (in millions, except customers in thousands and ARPU)
Revenue $602.2 $485.9 23.9% $2,231.9 $1,847.9 20.8%
Income (loss) from continuing operations $98.3 $(0.8) NM $125.7 $(21.9) NM
Net income (loss) $94.8 $(0.8) NM $139.8 $(21.9) NM
Net cash provided by operating activities $104.3 $89.1 17.1% $475.6 $386.5 23.1%
Non-GAAP Results
Unlevered Free Cash Flow $109.2 $76.6 42.6% $495.5 $356.7 38.9%
Operating Metrics
Total Bookings $657.9 $524.8 25.4% $2,618.2 $2,155.5 21.5%
Total customers at period end 17,339 14,740 17.6% 17,339 14,740 17.6%
ARPU $139 $130 7.4% $139 $130 7.4%
_______________
(1) See reconciliation tables for a
detailed listing of certain
items included in our
consolidated statements of
operations.
-- Total revenue of $602.2 million, up 23.9% year over year.
-- Total bookings of $657.9 million, up 25.4% year over year.
-- Net cash provided by operating activities of $104.3 million, up 17.1%
year over year.
-- Unlevered free cash flow of $109.2 million, up 42.6% year over year.
-- Customers of 17.3 million at December 31, 2017, up 17.6% year over year.
-- Average revenue per user (ARPU) of $139, up 7.4% year over year.
-- Domains revenue of $281.6 million, up 16.1% year over year.
-- Hosting and Presence revenue of $228.8 million, up 29.5% year over year.
-- Business Applications revenue of $91.8 million, up 37.6% year over year.
-- International revenue of $207.3 million, up 52.9% year over year.
Operating Highlights
-- GoDaddy's GoCentral is seeing continued strong adoption, increasing
conversion from free to paid, and generating positive customer feedback
and rising net promoter scores.
-- GoDaddy continues to enhance GoCentral's features, recently launching
Online Appointment scheduling, payments via Square, blogging
capabilities, and integration with Google My Business, among many other
features. GoCentral users can now book client appointments online 24x7,
sync with the most popular calendars, get paid easily offline or online,
and create powerful online identities via Google.
-- GoDaddy continued its successful integration of HEG, including the
recent launch of localized marketing efforts in multiple European
markets.
-- GoDaddy announced it will acquire Main Street Hub for approximately $125
million in cash plus up to $50 million in potential future earnouts.
Main Street Hub provides small businesses with a complete "do-it-for-me"
service for managing engagement on the most popular social networks. The
transaction is expected to close late in the second quarter of 2018.
-- GoDaddy appointed Mark Garrett to its board of directors. Mr. Garrett,
Executive Vice President and Chief Financial Officer at Adobe, brings
deep financial technology leadership to the board.
-- GoDaddy announced it will host an Investor Day on March 28, 2018 at its
Global Technology Center in Tempe, Arizona. Given limited space,
interested shareholders and analysts are encouraged to email
investors@godaddy.com for an invitation.
-- GoDaddy completed a secondary offering of 7.2 million shares of its
Class A common stock sold by certain of its stockholders at $47.32 per
share in December 2017, increasing the publicly available float.
Balance Sheet
At December 31, 2017, total cash and cash equivalents and short-term investments were $595.0 million, total debt was $2,482.3 million and net debt was $1,887.3 million.
Business Outlook
For the first quarter ending March 31, 2018, GoDaddy expects total revenue in the range of $620 million to $625 million. For the full year ending December 31, 2018, GoDaddy expects total revenue in the range of $2.58 billion to $2.61 billion, representing approximately 16% growth at the midpoint versus the $2.2 billion in revenue generated in 2017. The full year revenue outlook includes approximately $65 million to $70 million from HEG in Q1, and contribution of roughly $10 million per quarter in the back half of the year from our recently announced planned acquisition of Main Street Hub. The implementation of the new revenue recognition accounting standard is not expected to have a material impact on revenue.
For the full year 2018, GoDaddy expects unlevered free cash flow in a range of $605 million to $625 million, representing approximately 24% growth at the midpoint versus the $495.5 million in unlevered free cash generated in 2017. GoDaddy expects full year cash interest payments of approximately $90 million to $95 million and cash tax-related payments of $25 million to $30 million.
Our 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, 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 fourth quarter 2017 results at 5:00 p.m. Eastern Time on February 22, 2018. To hear the call, dial (866) 393-4306 in the United States or (734) 385-2616 from international locations, with passcode 7396408. A live webcast of the call, together with a slide presentation including supplemental financial information and reconciliations of certain non-GAAP financial measures to their nearest GAAP equivalent, will be available through the Company'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 the Company'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 and innovation, 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 the potential acquisition of Main Street Hub, including the time frame in which this will occur and the expected benefits to GoDaddy from completing the acquisition; statements concerning GoDaddy's ability to continue to integrate its acquisition of HEG, and the projected impact of the acquisition on GoDaddy's business and results of operations; 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; 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. 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 discount 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 more than 17 million customers worldwide and more than 75 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.
Consolidated Statements of Operations (unaudited)
(In millions, except shares in thousands and per share amounts)
Three Months Year Ended December
Ended December 31, 31,
2017 2016 2017 2016
---- ---- ---- ----
Revenue:
Domains $281.6 $242.5 $1,057.2 $927.8
Hosting and presence 228.8 176.7 847.9 678.7
Business applications 91.8 66.7 326.8 241.4
---- ---- ----- -----
Total revenue 602.2 485.9 2,231.9 1,847.9
Costs and operating expenses(1):
Cost of revenue (excluding
depreciation and
amortization) 202.0 172.1 775.5 657.8
Technology and development 94.5 73.6 355.8 287.8
Marketing and advertising 64.5 57.9 253.2 228.8
Customer care 75.3 58.5 292.3 242.1
General and administrative 84.2 67.4 282.4 221.2
Depreciation and amortization 58.7 38.5 205.8 160.1
---- -----
Total costs and operating
expenses 579.2 468.0 2,165.0 1,797.8
----- ----- ------- -------
Operating income (loss) 23.0 17.9 66.9 50.1
Interest expense (23.8) (14.2) (83.0) (57.2)
Loss on debt extinguishment (0.3) - (7.3) -
Tax receivable agreements
liability adjustment 86.2 (3.1) 123.2 (12.5)
Other income (expense), net 0.9 (1.1) 7.0 (1.9)
--- ---- --- ----
Income (loss) from continuing
operations before income
taxes 86.0 (0.5) 106.8 (21.5)
Benefit (provision) for
income taxes 12.3 (0.3) 18.9 (0.4)
---- ---- ---- ----
Income (loss) from continuing
operations(2) 98.3 (0.8) 125.7 (21.9)
Income from discontinued
operations, net of income
taxes (includes $33.2 gain
on disposal, net of tax) (3.5) - 14.1 -
---- --- ---- ---
Net income (loss)(2) 94.8 (0.8) 139.8 (21.9)
Less: net income (loss)
attributable to non-
controlling interests 2.2 1.1 3.4 (5.4)
--- --- --- ----
Net income (loss)
attributable to GoDaddy Inc. $92.6 $(1.9) $136.4 $(16.5)
===== ===== ====== ======
Net income (loss) attributable to GoDaddy
Inc. per share of Class A common stock-
basic:
Continuing operations $0.74 $(0.02) $1.17 $(0.21)
Discontinued operations (0.02) - 0.08 -
Net income (loss)
attributable to GoDaddy Inc. $0.72 $(0.02) $1.25 $(0.21)
===== ====== ===== ======
Net income (loss) attributable to GoDaddy
Inc. per share of Class A common stock-
diluted:
Continuing operations $0.56 $(0.02) $0.71 $(0.21)
Discontinued operations (0.02) - 0.08 -
Net income (loss)
attributable to GoDaddy Inc. $0.54 $(0.02) $0.79 $(0.21)
===== ====== ===== ======
Weighted-average shares of Class A common
stock outstanding:
Basic 128,388 87,774 108,779 79,835
======= ====== ======= ======
Diluted 176,732 87,774 177,054 79,835
======= ====== ======= ======
___________________________
(1) Costs and operating expenses include equity-based compensation expense as follows:
Technology and development $10.5 $6.3 $37.1 $23.2
Marketing and advertising 2.1 2.3 7.3 8.1
Customer care 1.0 0.9 3.6 3.9
General and administrative 7.6 7.0 28.4 21.6
(2) See reconciliation tables for a detailed listing of certain items included in our consolidated statements of operations.
GoDaddy Inc.
Consolidated Balance Sheets (unaudited)
(In millions, except per share amounts)
December 31, December 31,
2017 2016
---- ----
Assets
Current assets:
Cash and cash equivalents $582.7 $566.1
Short-term investments 12.3 6.6
Accounts and other receivables 18.4 8.0
Registry deposits 34.7 20.6
Prepaid domain name registry
fees 351.5 307.0
Prepaid expenses and other
current assets 59.9 24.5
---- ----
Total current assets 1,059.5 932.8
Property and equipment, net 297.9 231.0
Prepaid domain name registry
fees, net of current portion 180.8 172.1
Goodwill 2,859.9 1,718.4
Intangible assets, net 1,326.0 716.5
Other assets 14.2 16.1
---- ----
Total assets $5,738.3 $3,786.9
======== ========
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable $59.6 $61.7
Accrued expenses and other
current liabilities 469.6 143.0
Payable to related parties for
tax distributions - 10.0
Deferred revenue 1,264.8 1,043.5
Long-term debt 16.7 4.0
Total current liabilities 1,810.7 1,262.2
Deferred revenue, net of
current portion 596.8 532.7
Long-term debt, net of current
portion 2,410.8 1,035.7
Payable to related parties
pursuant to tax receivable
agreements 153.0 202.6
Other long-term liabilities 75.0 39.5
Deferred tax liabilities 145.5 -
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
Additional paid-in capital 484.4 608.3
Retained earnings (accumulated
deficit) 87.7 (48.7)
Accumulated other comprehensive
income (loss) (85.7) 2.7
----- ---
Total stockholders' equity
attributable to GoDaddy Inc. 486.5 562.5
Non-controlling interests 60.0 151.7
---- -----
Total stockholders' equity 546.5 714.2
----- -----
Total liabilities and
stockholders' equity $5,738.3 $3,786.9
======== ========
GoDaddy Inc.
Consolidated Statements of Cash Flows (unaudited)
(In millions)
Year Ended
December 31,
2017 2016
---- ----
Operating
activities
Net income
(loss) $139.8 $(21.9)
Adjustments
to
reconcile
net income
(loss) to
net cash
provided by
operating
activities:
Depreciation
and
amortization 205.8 160.1
Equity-
based
compensation 76.4 56.8
Loss on debt
extinguishment 7.3 -
Deferred
taxes (34.5) (3.8)
Tax
receivable
agreements
liability
adjustment (123.2) 12.5
Domain
portfolio
cost of
revenue 4.4 10.7
Gain on sale
of
PlusServer (33.2) -
Other 8.9 9.8
Changes in
operating
assets and
liabilities,
net of
amounts
acquired:
Registry
deposits (10.1) (1.9)
Prepaid
domain name
registry
fees (13.5) (22.8)
Accounts
payable (8.4) 19.6
Accrued
expenses
and other
current
liabilities 32.6 10.0
Deferred
revenue 220.0 160.8
Other
operating
assets and
liabilities 3.3 (3.4)
--- ----
Net cash
provided by
operating
activities 475.6 386.5
Investing
activities
Purchases of
short-term
investments (28.3) (10.5)
Maturities
of short-
term
investments 22.6 8.4
Business
acquisitions,
net of cash
acquired (1,876.9) (118.5)
Purchases of
intangible
assets (52.0) (1.3)
Proceeds
received
from sale
of
PlusServer 447.7 -
Purchases of
property
and
equipment (83.2) (61.5)
Net cash
used in
investing
activities (1,570.1) (183.4)
Financing
activities
Proceeds
received
from:
Acquisition
Term Loan 1,421.4 -
Bridge Loan 531.7 -
Sales of
Class A
common
stock, net
of expenses 22.9 -
Option and
warrant
exercises 61.1 55.0
Issuance of
Class A
common
stock under
employee
stock
purchase
plan 17.4 5.0
Payments
made for:
Repurchases
of LLC
Units and
distributions
to holders
of LLC
Units (285.0) (18.8)
Repayment of
Bridge Loan (596.6) -
Repayment of
term loans (15.3) (11.0)
Financing-
related
costs (39.7) -
Capital
leases and
other
financing
obligations (10.4) (15.1)
----- -----
Net cash
provided by
financing
activities 1,107.5 15.1
------- ----
Effect of
exchange
rate
changes on
cash and
cash
equivalents 3.6 (0.1)
--- ----
Net increase
in cash and
cash
equivalents 16.6 218.1
Cash and
cash
equivalents,
beginning
of period 566.1 348.0
----- -----
Cash and
cash
equivalents,
end of
period $582.7 $566.1
====== ======
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 Year Ended
Ended December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Total Bookings:
Total revenue $602.2 $485.9 $2,231.9 $1,847.9
Change in
deferred revenue 10.1 5.2 214.4 163.5
Net refunds 44.9 33.1 170.0 141.9
Other 0.7 0.6 1.9 2.2
--- --- --- ---
Total bookings $657.9 $524.8 $2,618.2 $2,155.5
====== ====== ======== ========
Three Months Year Ended
Ended December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Unlevered Free
Cash Flow:
Net cash provided
by operating
activities $104.3 $89.1 $475.6 $386.5
Impact of
discontinued
operations - - (3.5) -
Cash paid for
interest on
long-term debt 21.5 11.5 80.8 46.5
Cash paid for
acquisition-
related costs 6.4 2.7 35.8 3.5
Capital
expenditures (23.0) (18.7) (83.2) (61.5)
Cash paid for
tax-related
distributions - (8.0) (10.0) (18.3)
--- ---- ----- -----
Unlevered free
cash flow $109.2 $76.6 $495.5 $356.7
====== ===== ====== ======
The following table details certain items included in our consolidated statements of operations:
Three Months Year Ended
Ended December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
(in millions)
Income (loss) from continuing operations includes
the following:
Loss on debt extinguishment
related to the retirement of the
Bridge Loan following the sale of
PlusServer $ - $ - $(5.3) $ -
Loss on debt extinguishment
related to debt modifications $(0.3) $ - $(2.0) $ -
Indirect tax expenses recorded in
general and administrative
expenses $(11.7) $ - $(11.7) $ -
Acquisition-related expenses
recorded in general and
administrative expenses $(6.2) $(10.5) $(27.0) $(13.1)
Benefit to tax receivable
agreements liability resulting
from Tax Cuts and Jobs Act of
2017 $86.2 $ - $86.2 $ -
Net income (loss) includes the following:
Gain (loss) on disposal of
PlusServer, net of tax $(3.5) $ - $33.2 $ -
Benefit for income taxes resulting
from Tax Cuts and Jobs Act of
2017 $7.9 $ - $7.9 $ -
December 31,
2017
----
(in millions)
Net Debt:
Current portion of long-term debt $16.7
Long-term debt 2,410.8
Unamortized original issue discount on long-term debt 33.0
Unamortized debt issuance costs 21.8
----
Total debt 2,482.3
Less: Cash and cash equivalents (582.7)
Less: Short-term investments (12.3)
-----
Net debt $1,887.3
========
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:
December 31,
2017 2016
---- ----
(in thousands)
Shares Outstanding:
Class A common stock 132,993 88,558
Class B common stock 35,006 78,554
------ ------
Total common stock outstanding 167,999 167,112
Effect of dilutive securities(1) 10,276 13,880
------ ------
178,275 180,992
======= =======
_______________
(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.
© 2018 GoDaddy Inc. All Rights Reserved.
Source: GoDaddy Inc.
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