GoDaddy Reports Second Quarter 2018 Earnings Results
SCOTTSDALE, Ariz., Aug. 2, 2018 /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, 2018.
"GoDaddy successfully delivered another solid quarter with continued customer, revenue, and cash flow growth," said GoDaddy CEO Scott Wagner. "We are making great progress on our 2018 strategic initiatives including growing the adoption of GoCentral and beginning the integration of Main Street Hub. We continue to see tremendous opportunity for long-term growth, as we expand both our product offerings and the customers we serve."
Consolidated Second Quarter Financial Highlights((1))
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
2018 2017 Change 2018 2017 Change
---- ---- ------ ---- ---- ------
(in millions, except customers in thousands and ARPU)
GAAP Results
Revenue $651.6 $557.8 16.8% $1,284.8 $1,047.5 22.7%
Net cash
provided by
operating
activities $128.9 $113.3 13.8% $277.3 $239.9 15.6%
Non-GAAP
Results
Unlevered
free cash
flow $154.7 $135.0 14.6% $317.1 $249.1 27.3%
Operating
Metrics
Total
bookings $754.2 $667.5 13.0% $1,537.3 $1,292.3 19.0%
Total
customers
at period
end 17,980 16,878 6.5% 17,980 16,878 6.5%
ARPU(2) $142 $129 10.2% $142 $129 10.2%
(
)
(1) See
reconciliation
tables for a
detailed listing
of certain items
included in our
condensed
consolidated
statements of
operations.
(2) 2017 ARPU was
muted by the
impact of the
acquisition of
HEG as our
trailing twelve
month revenue
for the period
included only
three months of
HEG's results
for this annual
measure as well
as purchase
price accounting
adjustments.
-- Total revenue of $651.6 million, up 16.8% year over year.
-- Total bookings of $754.2 million, up 13.0% year over year.
-- Net cash provided by operating activities of $128.9 million, up 13.8%
year over year.
-- Unlevered free cash flow of $154.7 million, up 14.6% year over year.
-- Customers of 18.0 million as of June 30, 2018, up 6.5% year over year.
-- Average revenue per user (ARPU) of $142, up 10.2% year over year.
-- Domains revenue of $304.8 million, up 15.8% year over year.
-- Hosting and Presence revenue of $244.6 million, up 13.8% year over year.
-- Business Applications revenue of $102.2 million, up 28.4% year over
year.
-- International revenue of $233.3 million, up 24.3% year over year.
Operating Highlights
-- GoDaddy closed the Main Street Hub acquisition for approximately $127
million, net of cash acquired, 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 and review platforms.
-- GoDaddy's GoCentral website builder continues to show strong momentum
with more users adopting the product's ecommerce capabilities, using
mobile devices for end-to-end editing and publishing, and upgrading to
premium packages.
-- GoCentral continued to launch features designed for customer success in
Q2, including Square inventory import and sync functionality, robust
class and staff scheduling, Facebook integrations allowing sellers to
easily share products via social media in addition to their website and
new in-product dynamic recommendations based on a customer's industry
that will help them get more traffic and bookings.
-- GoDaddy completed a secondary offering of 11.6 million shares of its
Class A common stock sold by certain of its stockholders at $70.73 per
share in May 2018, increasing the publicly available float.
-- GoDaddy appointed Caroline Donahue and Ryan Roslansky to its board of
directors. Ms. Donahue, former Chief Marketing and Sales Officer at
Intuit, and Mr. Roslansky, Senior Vice President of Product at LinkedIn,
bring deep knowledge and leadership in global marketing, sales, product
and customer experience.
Balance Sheet
At June 30, 2018, total cash, cash equivalents and short-term investments were $828.5 million, total debt was $2,469.8 million and net debt was $1,641.3 million.
Business Outlook
For the third quarter ending September 30, 2018, GoDaddy expects total revenue in the range of $670 to $675 million. For the full year 2018, GoDaddy raised its revenue expectations to a range of $2.645 to $2.655 billion, representing approximately 19% growth at the midpoint. The full year revenue outlook includes roughly $10 million per quarter in the back half of the year from the recent acquisition of Main Street Hub.
For the full year 2018, GoDaddy is raising its unlevered free cash outlook to $615 to $625 million, representing approximately 25% growth at the midpoint versus the $496 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). 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 release 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 2018 results at 5:00 p.m. Eastern Time on August 2, 2018. To hear the call, dial (866) 393-4306 in the United States or (734) 385-2616 from international locations, with passcode 8879006. 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 expansion of existing products or services, any projections of product or service availability, technology developments and innovation, customer growth, 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 and marketing strategy; any statements regarding the integration of recent or planned acquisitions; any statements regarding our future financial results; statements concerning our acquisitions of HEG and Main Street Hub, and the projected impact of the acquisitions on our 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; 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 under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the GoDaddy's Annual Report on Form 10-K for the year ended December 31, 2017, which is available on GoDaddy'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 GoDaddy makes with the SEC from time to time. 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 Metric
In addition to our results determined in accordance with GAAP, this release includes certain non-GAAP financial measures and other operating metric. We believe that these non-GAAP financial measures and other operating metric 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. Our management reviews net debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage and we believe such information is useful to investors. 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 18 million customers worldwide and 77 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 Six Months
Ended June 30, Ended June 30,
2018 2017 2018 2017
---- ---- ---- ----
Revenue:
Domains $304.8 $263.3 $596.5 $504.1
Hosting and presence 244.6 214.9 484.4 393.2
Business applications 102.2 79.6 203.9 150.2
----- ---- ----- -----
Total revenue 651.6 557.8 1,284.8 1,047.5
Costs and operating expenses(1):
Cost of revenue (excluding
depreciation and amortization) 221.3 196.4 436.6 373.2
Technology and development 105.1 90.1 207.1 170.3
Marketing and advertising 67.4 62.5 141.9 129.9
Customer care 76.3 75.4 156.7 142.4
General and administrative 81.0 71.8 157.4 132.8
Depreciation and amortization 57.0 55.5 114.8 87.1
---- -----
Total costs and operating expenses 608.1 551.7 1,214.5 1,035.7
----- ----- ------- -------
Operating income(2) 43.5 6.1 70.3 11.8
Interest expense (24.7) (22.0) (48.5) (34.8)
Tax receivable agreements liability
adjustment - 32.0 (0.1) 37.0
Loss on debt extinguishment - - - (1.7)
Other income (expense), net 0.2 2.7 1.2 4.4
--- --- --- ---
Income from continuing operations
before income taxes 19.0 18.8 22.9 16.7
Benefit for income taxes 1.2 4.6 1.5 3.6
--- --- --- ---
Income from continuing operations 20.2 23.4 24.4 20.3
Loss from discontinued operations, net
of income taxes - (5.3) - (5.3)
--- ---- --- ----
Net income 20.2 18.1 24.4 15.0
Less: net income (loss) attributable
to non-controlling interests 2.1 (2.7) 3.0 (6.4)
--- ---- --- ----
Net income attributable to GoDaddy
Inc. $18.1 $20.8 $21.4 $21.4
===== ===== ===== =====
Net income (loss) attributable to GoDaddy Inc. per
share of Class A common stock-basic:
Continuing operations $0.12 $0.25 $0.15 $0.28
Discontinued operations - (0.05) - (0.06)
--- ----- --- -----
Net income attributable to GoDaddy
Inc. $0.12 $0.20 $0.15 $0.22
===== ===== ===== =====
Net income (loss) attributable to GoDaddy Inc. per
share of Class A common stock-diluted:
Continuing operations $0.11 $0.13 $0.14 $0.11
Discontinued operations - (0.03) - (0.03)
--- ----- --- -----
Net income attributable to GoDaddy
Inc. $0.11 $0.10 $0.14 $0.08
===== ===== ===== =====
Weighted-average shares of Class A common stock
outstanding:
Basic 152,577 101,800 145,249 95,734
======= ======= ======= ======
Diluted 180,881 176,716 179,955 177,796
======= ======= ======= =======
(1) Costs and operating expenses include equity-based compensation expense as follows:
Technology and development $13.6 $8.9 $27.3 $17.3
Marketing and advertising 2.1 1.5 5.0 3.2
Customer care 1.3 1.2 2.5 1.6
General and administrative 11.2 7.4 24.9 13.3
Total equity-based compensation
expense 28.2 19.0 59.7 35.4
==== ==== ==== ====
(2) See reconciliation tables for a
detailed listing of certain
items included in our condensed
consolidated statements of
operations.
GoDaddy Inc.
Condensed Consolidated Balance Sheets (unaudited)
(In millions, except per share amounts)
June 30, December 31,
2018 2017
---- ----
Assets
Current assets:
Cash and cash equivalents $809.7 $582.7
Short-term investments 18.8 12.3
Accounts and other receivables 23.6 18.4
Registry deposits 46.1 34.7
Prepaid domain name registry
fees 373.5 351.5
Prepaid expenses and other
current assets 79.1 59.9
---- ----
Total current assets 1,350.8 1,059.5
Property and equipment, net 281.0 297.9
Prepaid domain name registry
fees, net of current portion 184.5 180.8
Goodwill 2,837.5 2,859.9
Intangible assets, net 1,251.3 1,326.0
Other assets 22.8 14.2
---- ----
Total assets $5,927.9 $5,738.3
======== ========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $51.9 $59.6
Accrued expenses and other
current liabilities 400.3 469.6
Deferred revenue 1,385.2 1,264.8
Long-term debt 16.7 16.7
----
Total current liabilities 1,854.1 1,810.7
Deferred revenue, net of
current portion 628.7 596.8
Long-term debt, net of
current portion 2,402.5 2,410.8
Payable to related parties
pursuant to tax receivable
agreements 179.2 153.0
Other long-term liabilities 52.6 75.0
Deferred tax liabilities 136.5 145.5
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par
value - -
Class A common stock, $0.001
par value 0.2 0.1
Class B common stock, $0.001
par value - -
Additional paid-in capital 590.1 484.4
Retained earnings 109.1 87.7
Accumulated other
comprehensive loss (67.8) (85.7)
----- -----
Total stockholders' equity
attributable to GoDaddy Inc. 631.6 486.5
Non-controlling interests 42.7 60.0
---- ----
Total stockholders' equity 674.3 546.5
----- -----
Total liabilities and
stockholders' equity $5,927.9 $5,738.3
======== ========
GoDaddy Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(In millions)
Six Months Ended
June 30,
2018 2017
---- ----
Operating activities
Net income $24.4 $15.0
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation
and
amortization 114.8 87.1
Equity-based
compensation 59.7 35.4
Tax
receivable
agreements
liability
adjustment 0.1 (37.0)
Other (6.5) 1.5
Changes in operating assets
and liabilities, net of
amounts acquired:
Registry
deposits (11.5) (0.2)
Prepaid
domain name
registry
fees (26.6) (26.8)
Deferred
revenue 154.2 161.9
Other long-
term
liabilities (20.6) 1.5
Other
operating
assets and
liabilities (10.7) 1.5
----- ---
Net cash
provided by
operating
activities 277.3 239.9
Investing activities
Purchases of
short-term
investments (6.9) (6.4)
Maturities of
short-term
investments 0.4 0.6
Business
acquisitions,
net of cash
acquired (14.1) (1,871.2)
Payment of
PlusServer
sales price
adjustment (4.3) -
Purchases of
property and
equipment (35.9) (36.5)
Other
investing
activities (10.0) -
Net cash used
in investing
activities (70.8) (1,913.5)
Financing activities
Proceeds received from:
Debt issued
to finance
HEG
acquisition - 1,953.1
Stock option
exercises 35.7 33.3
Sale of Class
A common
stock, net
of expenses - 21.7
Issuance of
Class A
common stock
under
employee
stock
purchase
plan 11.9 9.2
Payments made for:
Repurchases
of LLC Units - (275.0)
Financing-
related
costs - (38.9)
Distributions
to holders of
LLC Units - (10.0)
Repayment of
term loans (12.5) (2.7)
Contingent
consideration
for business
acquisitions (9.2) (0.7)
Capital
leases and
other
financing
obligations (4.0) (5.5)
---- ----
Net cash
provided by
financing
activities 21.9 1,684.5
---- -------
Effect of
exchange
rate changes
on cash and
cash
equivalents (1.4) 1.8
---- ---
Net increase
in cash and
cash
equivalents 227.0 12.7
Cash and cash
equivalents,
beginning of
period 582.7 566.1
----- -----
Cash and cash
equivalents,
end of
period $809.7 $578.8
====== ======
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 Six Months Ended
Ended June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
(in millions)
Total Bookings:
Total revenue $651.6 $557.8 $1,284.8 $1,047.5
Change in deferred revenue 52.2 66.1 154.5 159.8
Net refunds 50.0 41.8 99.9 81.7
Other 0.4 1.8 (1.9) 3.3
--- --- ---- ---
Total bookings $754.2 $667.5 $1,537.3 $1,292.3
====== ====== ======== ========
Three Months Six Months Ended
Ended June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
(in millions)
Unlevered Free Cash Flow:
Net cash provided by operating
activities $128.9 $113.3 $277.3 $239.9
Impact of discontinued
operations(1) 21.4 (3.0) 21.4 (3.0)
Cash paid for interest on long-
term debt 20.0 25.9 40.5 34.7
Cash paid for acquisition-
related costs 4.2 18.5 13.8 24.0
Capital expenditures (19.8) (16.7) (35.9) (36.5)
Cash paid for tax-related
distributions - (3.0) - (10.0)
--- ---- --- -----
Unlevered free cash flow $154.7 $135.0 $317.1 $249.1
====== ====== ====== ======
(1) Impact of discontinued operations in 2018 relates to cash tax payments made in connection with the gain on the August 2017 sale of PlusServer.
The following table details certain items included in our condensed consolidated statements of operations:
Three Months Six Months Ended
Ended June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
(in millions)
Operating income includes the following:
Financing-related fees related
to debt modifications recorded
in general and administrative
expenses $ - $ - $ - $3.2
Acquisition-related expenses
recorded in general and
administrative expenses 10.2 13.7 16.5 17.2
June 30,
2018
(in millions)
Net Debt:
Current portion of long-term debt $16.7
Long-term debt 2,402.5
Unamortized original issue discount on
long-term debt 30.4
Unamortized debt issuance costs 20.2
----
Total debt 2,469.8
Less: Cash and cash equivalents (809.7)
Less: Short-term investments (18.8)
-----
Net debt $1,641.3
========
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:
June 30,
2018 2017
---- ----
(in thousands)
Shares Outstanding:
Class A common stock 158,098 110,751
Class B common stock 13,906 53,994
------ ------
Total common stock outstanding 172,004 164,745
Effect of dilutive securities 9,642 10,157
----- ------
181,646 174,902
======= =======
© 2018 GoDaddy Inc. All Rights Reserved.
Source: GoDaddy Inc.
View original content with multimedia:http://www.prnewswire.com/news-releases/godaddy-reports-second-quarter-2018-earnings-results-300691370.html
SOURCE GoDaddy Inc.
