GoDaddy Reports First Quarter 2019 Earnings Results
SCOTTSDALE, Ariz., May 2, 2019 /PRNewswire/ -- GoDaddy Inc. (NYSE: GDDY), the company that empowers everyday entrepreneurs, today reported financial results for the first quarter ended March 31, 2019.
"We continue to deliver an expanding set of resources to help entrepreneurs around the world look good, be everywhere, and engage with their audience," said GoDaddy CEO Scott Wagner. "This has supported not only our consistent execution, but also our vision as we continually evolve with our customers' expanding needs."
Consolidated First Quarter Financial Highlights(1)
Three Months Ended March 31,
2019 2018 Change
---
(in millions, except customers in thousands
and ARPU)
GAAP Results
Revenue $
710.0 $
633.2 12.1
%
Net cash
provided by %
operating
activities $
199.7 $
148.4 34.6
Non-GAAP Results
Unlevered
free cash %
flow $
198.8 $
162.4 22.4
Operating Metrics
Total $
870.5 $
783.1 11.2
bookings %
Total
customers at %
period end 18,841 17,705 6.4
ARPU(2) $
150 $
138 8.5
%
(1) See reconciliation
tables for
acquisition costs
included in our
condensed
consolidated
statements of
operations.
(2) The calculation of
ARPU for the
period ended
March 31, 2018
includes
approximately 1.6
million customers
added with the
April 3, 2017
acquisition of
Host Europe
Holdings Limited
(HEG), as if the
acquisition had
been completed as
of March 31,
2017, to better
align with the
revenue included
in the
calculation.
Year-over-year
growth is
impacted by
purchase price
adjustments from
the acquisition
of HEG and the
impact of nine
months of Main
Street Hub
revenue in this
annual measure.
-- Total revenue of $710.0 million, up 12.1% year over year, or
approximately 13.6% on a constant currency basis.
-- Total bookings of $870.5 million, up 11.2% year over year, or
approximately 13.5% on a constant currency basis.
-- Net cash provided by operating activities of $199.7 million, up 34.6%
year over year.
-- Unlevered free cash flow of $198.8 million, up 22.4% year over year.
-- Customers of 18.8 million, up 6.4% year over year.
-- Average revenue per user (ARPU) of $150, up 8.5% year over year.
-- Domains revenue of $319.6 million, up 9.6% year over year.
-- Hosting and Presence revenue of $268.9 million, up 12.1% year over year.
-- Business Applications revenue of $121.5 million, up 19.5% year over
year.
-- International revenue of $245.1 million, up 8.2% year over year, or
approximately 12.2% on a constant currency basis.
Operating Highlights
-- GoCentral, GoDaddy's website builder, and Managed WordPress continue to
see robust subscription growth, driven by feature expansion and
improvements in awareness.
-- GoDaddy acquired Sellbrite, a world-class multi-channel eCommerce suite,
to broaden its tools in eCommerce channel syndication, advanced
inventory management and fulfillment.
-- GoDaddy launched support for digital downloads, enabling customers to
sell music, e-books, videos, art and other content in online stores.
-- After strong reception in Brazil and Mexico, GoDaddy launched its
Open-Xchange powered business email offering for customers in India.
-- GoDaddy launched "Connections," a customer management tool that helps
entrepreneurs organize and engage with their audience.
-- In February, GoDaddy surpassed four million customers in its EMEA
region.
-- GoDaddy acquired CoBlocks and ThemeBeans, continuing its investment in
the WordPress ecosystem.
-- GoDaddy completed a secondary offering of 8.5 million shares of its
Class A common stock sold by certain of its stockholders at $75.40 per
share in February 2019, increasing the publicly available float.
-- In March, GoDaddy's credit rating was upgraded by Moody's to Ba2,
reducing the margin on its debt to 200 basis points from 225 basis
points.
Balance Sheet
At March 31, 2019, total cash, cash equivalents and short-term investments were $1,109.0 million, total debt was $2,451.1 million and net debt was $1,342.1 million.
Business Outlook
For the full year 2019, GoDaddy expects revenue in the range of $2.97 billion to $3.00 billion, representing full-year growth of 12% to 13%. For the second quarter ending June 30, 2019, GoDaddy expects revenue of $730 million to $740 million.
For the full year 2019, GoDaddy expects unlevered free cash of approximately $730 million to $745 million, representing full-year growth of 18% to 20% versus 2018. GoDaddy expects full-year cash interest payments of approximately $80 million to $85 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 first quarter 2019 results at 5:00 p.m. Eastern Time on May 2, 2019. To hear the call, dial (833) 286-5800 in the United States or (647) 689-4445 from international locations, with passcode 5078531. 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 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; developments in the economy, financial markets and credit markets; and execution of share repurchases.
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, 2018, 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 Metrics
In addition to our results determined in accordance with GAAP, this release includes certain non-GAAP financial measures and other operating metrics. We believe that these non-GAAP financial measures and other operating metrics 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 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 is empowering everyday entrepreneurs around the world by providing all of the help and tools to succeed online. With nearly 19 million customers worldwide, 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
March 31,
2019 2018
---
Revenue:
Domains $
319.6 $
291.7
Hosting and presence 268.9 239.8
Business applications 121.5 101.7
Total revenue 710.0 633.2
Costs and operating expenses(1):
Cost of revenue (excluding depreciation and amortization) 236.4 215.3
Technology and development 124.0 102.0
Marketing and advertising 90.3 74.5
Customer care 90.3 80.4
General and administrative 93.0 76.4
Depreciation and amortization 57.2 57.8
Total costs and operating expenses 691.2 606.4
Operating income(2) 18.8 26.8
Interest expense (24.4) (23.8)
Tax receivable agreements liability adjustment 8.7 (0.1)
Other income (expense), net 6.2 1.0
Income before income taxes 9.3 3.9
Benefit for income taxes 3.9 0.3
Net income 13.2 4.2
Less: net income attributable to non-controlling interests 0.3 0.9
Net income attributable to GoDaddy Inc. $
12.9 $
3.3
Net income attributable to GoDaddy Inc. per share of Class A common stock:
Basic $
0.08 $
0.02
Diluted $
0.07 $
0.02
Weighted-average shares of Class A common stock outstanding:
Basic 171,001 137,841
Diluted 183,148 178,787
___________________________
(1) Costs and operating expenses include equity-based compensation expense as follows:
Technology and development $
20.0 $
13.7
Marketing and advertising 4.3 2.9
Customer care 2.6 1.2
General and administrative 20.0 13.7
Total equity-based compensation expense 46.9 31.5
(2) See reconciliation tables
for acquisition costs included
in our condensed consolidated
statements of operations.
GoDaddy Inc.
Condensed Consolidated Balance Sheets (unaudited)
(In millions, except per share amounts)
March 31, December 31,
2019 2018
---
Assets
Current assets:
Cash and cash equivalents $
1,090.3 $
932.4
Short-term investments 18.7 18.9
Accounts and other receivables 35.4 26.4
Registry deposits 27.9 28.3
Prepaid domain name registry
fees 378.0 363.2
Prepaid expenses and other
current assets 61.5 58.1
Total current assets 1,611.8 1,427.3
Property and equipment, net 270.0 299.0
Operating lease assets 136.8
Prepaid domain name registry
fees, net of current portion 188.5 183.6
Goodwill 2,948.3 2,948.0
Intangible assets, net 1,179.9 1,211.5
Other assets 15.3 14.0
Total assets $
6,350.6 $
6,083.4
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $
99.5 $
61.6
Accrued expenses and other
current liabilities 379.9 414.3
Deferred revenue 1,474.6 1,393.7
Long-term debt 16.5 16.6
Total current liabilities 1,970.5 1,886.2
Deferred revenue, net of
current portion 648.1 623.8
Long-term debt, net of current
portion 2,390.0 2,394.2
Operating lease liabilities,
net of current portion 118.9
Payable to related parties
pursuant to tax receivable
agreements 175.3 174.3
Other long-term liabilities 11.3 63.2
Deferred tax liabilities 113.1 117.2
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par
value -
Class A common stock, $0.001
par value 0.2 0.2
Class B common stock, $0.001
par value -
Additional paid-in capital 815.5 699.8
Retained earnings 181.0 164.8
Accumulated other comprehensive
loss (86.3) (72.1)
Total stockholders' equity
attributable to GoDaddy Inc. 910.4 792.7
Non-controlling interests 13.0 31.8
Total stockholders' equity 923.4 824.5
Total liabilities and
stockholders' equity $
6,350.6 $
6,083.4
GoDaddy Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(In millions)
Three Months Ended
March 31,
2019 2018
---
Operating activities
Net income $
13.2 $
4.2
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 57.2 57.8
Equity-based compensation 46.9 31.5
Tax receivable agreements
liability adjustment (8.7) 0.1
Other 4.2 1.8
Changes in operating assets and liabilities,
net of amounts acquired:
Registry deposits 0.4 (6.4)
Prepaid domain name registry
fees (20.2) (17.4)
Deferred revenue 105.2 103.1
Other operating assets and
liabilities 1.5 (26.3)
Net cash provided by
operating activities 199.7 148.4
Investing activities
Purchases of short-term
investments (17.9) (6.9)
Maturities of short-term
investments 18.3 0.4
Business acquisitions, net of
cash acquired - (6.6)
Purchases of property and
equipment (29.4) (16.1)
Other investing activities - (4.3)
Net cash used in investing
activities (29.0) (33.5)
Financing activities
Proceeds received from:
Stock option exercises 17.6 20.7
Payments made for:
Repayment of term loans (6.2) (6.2)
Contingent consideration for
business acquisitions (22.2)
Leases and other financing
obligations (1.1) (2.6)
Net cash provided by (used
in) financing activities (11.9) 11.9
Effect of exchange rate
changes on cash and cash
equivalents (0.9) 1.2
Net increase in cash and cash
equivalents 157.9 128.0
Cash and cash equivalents,
beginning of period 932.4 582.7
Cash and cash equivalents,
end of period $
1,090.3 $
710.7
Reconciliation of Non-GAAP Financial Measures and Other Operating Metric
The following tables reconcile each non-GAAP financial measure and other operating metric to its most directly comparable GAAP financial measure:
Three Months Ended
March 31,
2019 2018
---
(in millions)
Total Bookings:
Total revenue $
710.0 $
633.2
Change in
deferred
revenue 105.3 102.3
Net refunds 55.2 49.9
Other - (2.3)
Total
bookings $
870.5 $
783.1
Three Months Ended
March 31,
2019 2018
---
(in millions)
Unlevered Free Cash Flow:
Net cash
provided by
operating
activities $
199.7 $
148.4
Cash paid for
interest on
long-term
debt 21.4 20.5
Cash paid for
acquisition-
related
costs 7.1 9.6
Capital
expenditures (29.4) (16.1)
Unlevered
free cash
flow $
198.8 $
162.4
The following table details acquisition costs included in our condensed consolidated statements of operations:
Three Months Ended
March 31,
2019 2018
(in millions)
Operating income includes the
following:
Acquisition-related expenses
recorded in general and
administrative expenses 2.6 6.3
The following table provides a reconciliation of net debt:
March 31,
2019
(in millions)
Net Debt:
Current portion of long-term
debt $
16.5
Long-term debt 2,390.0
Unamortized original issue
discount on long-term debt 26.9
Unamortized debt issuance costs 17.7
Total debt 2,451.1
Less: Cash and cash equivalents (1,090.3)
Less: Short-term investments (18.7)
Net debt $
1,342.1
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:
March 31,
2019 2018
(in thousands)
Shares Outstanding:
Class A common stock 175,115 148,359
Class B common stock 1,653 22,081
Total common stock outstanding 176,768 170,440
Effect of dilutive securities 7,482 9,671
184,250 180,111
© 2019 GoDaddy Inc. All Rights Reserved.
Source: GoDaddy Inc.
View original content to download multimedia:http://www.prnewswire.com/news-releases/godaddy-reports-first-quarter-2019-earnings-results-300843051.html
SOURCE GoDaddy Inc.
