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Category: Stock Market and GoDaddy
Date: 11 November 2019 Stock Price: $69.00 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of GoDaddy, company that assists everyday entrepreneurs around the world by providing them with help and tools to succeed online. The group currently has over 19 million clients
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About GoDaddy
GoDaddy is empowering everyday entrepreneurs around the world by providing all of the help and tools to succeed online. With 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
Business Highlights for GoDaddy
Overview of GoDaddy's 3rd quarter 2019 earnings report
- Total Revenues: $760.5 million (up from $679.5 million for the same quarter of the previous year
- Revenue increased by 11.9% over the last 12 months
- Operating Expenses: $669.1 million (up from $642 million for the same quarter of the previous year)
- Operating expenses increased by 4.2% over the last 12 months
- Net income: $76.2 million (up from $13.2 million for the same quarter of the previous year)
- Diluted earnings per share: $0.42 (up from $0.08 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 181.654 million (down from 182.392 million for the same quarter of the previous year)
- Cash and cash equivalents: $966.7 million
- Cash and cash equivalents per share: $5.32
- Cash and cash equivalents makes up 7.7% of GoDaddy's market capital
- Cash and cash equivalents makes up 11.8% of GoDaddy's total assets
- Stockholders equity of GoDaddy: $679.9 million
- Stockholders equity per share: $3.74
- GoDaddy is trading at 18.4 times its stockholders equity which is within the expected range of between 2 and 4 times that most firms tend to trade at
- Cash generated from operations (for 9 months): $561.2 million
- Cash generated from operations per share (for 9 months): $3.09
- Goodwill: $2.932 billion
- Goodwill per share:$16.14
- Goodwill makes up 47.5% of GoDaddy's total assets. We always get worried when ta fair chunk of a firm's total assets is made up by Goodwill. It is prone to revaluations and easy to inflate to boost a company's value of total assets
GoDaddy's management commentary on their 3rd quarter earnings results and guidance
SCOTTSDALE, Ariz., Nov. 6, 2019 /PRNewswire/ -- GoDaddy Inc. (NYSE: GDDY), the company that empowers everyday entrepreneurs, today reported financial results for the third quarter ended September 30, 2019.
"GoDaddy sits in a privileged position relative to a massive opportunity, strengthened by our differentiation in guidance, seamlessly intuitive experiences, and the potential in activating our community," said GoDaddy CEO Aman Bhutani. "Our execution focus is on strengthening our platform, increasing our experimentation, and continually accelerating our product, which lays the foundation to increase value to customers and returns to shareholders for years to come."
"GoDaddy sits in a privileged position relative to a massive opportunity, strengthened by our differentiation in guidance, seamlessly intuitive experiences, and the potential in activating our community," said GoDaddy CEO Aman Bhutani. "Our execution focus is on strengthening our platform, increasing our experimentation, and continually accelerating our product, which lays the foundation to increase value to customers and returns to shareholders for years to come."
Share Repurchase Authorization
GoDaddy today announced that its Board of Directors has approved a new share repurchase authorization to acquire an incremental $500.0 million of the company's Class A common stock, bringing the total repurchase capacity to $541.0 million. GoDaddy may purchase shares from time to time in open market purchases, block transactions and privately negotiated transactions, in accordance with applicable federal securities laws. The new program has no time limit and may be modified, suspended or terminated by the company at any time without prior notice. The amount and timing of repurchases are subject to a variety of factors including liquidity, share price, market conditions and legal requirements. Share repurchases will be funded by available cash and cash equivalents.
Business Outlook
For the full year 2019, GoDaddy expects revenue in the range of $2.98 billion to $2.99 billion, representing full-year growth of 12% versus 2018, and unlevered free cash flow of $730 million to $740 million, representing full-year growth of 18% to 19% versus 2018. GoDaddy expects full-year cash interest payments of approximately $80 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.
GoDaddy today announced that its Board of Directors has approved a new share repurchase authorization to acquire an incremental $500.0 million of the company's Class A common stock, bringing the total repurchase capacity to $541.0 million. GoDaddy may purchase shares from time to time in open market purchases, block transactions and privately negotiated transactions, in accordance with applicable federal securities laws. The new program has no time limit and may be modified, suspended or terminated by the company at any time without prior notice. The amount and timing of repurchases are subject to a variety of factors including liquidity, share price, market conditions and legal requirements. Share repurchases will be funded by available cash and cash equivalents.
Business Outlook
For the full year 2019, GoDaddy expects revenue in the range of $2.98 billion to $2.99 billion, representing full-year growth of 12% versus 2018, and unlevered free cash flow of $730 million to $740 million, representing full-year growth of 18% to 19% versus 2018. GoDaddy expects full-year cash interest payments of approximately $80 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.
GoDaddy (NASDAQ: STAY) stock price history
The image below shows the stock price history of GoDaddy (NYSE:GDDY) since their listing almost 5 years ago. And it's not been a very good time for GoDaddy stockholders. 5 years ago the stock was trading at around $26.50 and it is currently trading at $69.11 a stock. So over an almost 5 year period the stock of GoDaddy increased by 160.7% . The stock is trading at close to the mid point between its 52 week high and its 52 week low which to us is indication that the short term sentiment and momentum of GoDaddy's stock is neutral
GoDaddy (NYSE:GDDY)) stock price history over the last 5 years
Recent coverage of GoDaddy
The extract below covers the latest on GoDaddy as obtained from TheStreet,com
SCOTTSDALE, Ariz., Nov. 4, 2019 /PRNewswire/ -- GoDaddy Inc. (NYSE: GDDY), the company that empowers everyday entrepreneurs, today announced its strategic partnership with Kabbage, Inc. , a data and technology company providing small businesses cash flow solutions. Kabbage's online lending platform is now available to GoDaddy's U.S. customers so they can easily access a business line of credit in minutes to manage and grow their businesses. By completing a simple application process from Kabbage, customers can quickly access flexible lines of credit of up to $250,000 in minutes if approved. With increased financial capacity, GoDaddy customers can access the extra cash flow to staff up for the busy holiday season, purchase additional inventory or equipment, apply it toward digital marketing initiatives, or other strategic investments to support their ventures. "Working every day with our small business customers has made us intimately familiar with what our customers are doing to successfully grow their business, as well as common challenges," said Melissa Schneider, GoDaddy's vice president of global marketing operations.
SCOTTSDALE, Ariz., Nov. 4, 2019 /PRNewswire/ -- GoDaddy Inc. (NYSE: GDDY), the company that empowers everyday entrepreneurs, today announced its strategic partnership with Kabbage, Inc. , a data and technology company providing small businesses cash flow solutions. Kabbage's online lending platform is now available to GoDaddy's U.S. customers so they can easily access a business line of credit in minutes to manage and grow their businesses. By completing a simple application process from Kabbage, customers can quickly access flexible lines of credit of up to $250,000 in minutes if approved. With increased financial capacity, GoDaddy customers can access the extra cash flow to staff up for the busy holiday season, purchase additional inventory or equipment, apply it toward digital marketing initiatives, or other strategic investments to support their ventures. "Working every day with our small business customers has made us intimately familiar with what our customers are doing to successfully grow their business, as well as common challenges," said Melissa Schneider, GoDaddy's vice president of global marketing operations.
Clients of GoDaddy
Extended Stay America (NASDAQ: STAY) latest stock valuation
So what is GoDaddy (NYSE: GDDY) stock worth based on the release of their latest earnings report and their outlook provided? Based on their earnings report and the fiscal guidance provided our valuation models provide a target (full value) price for GoDaddy of $57.90 a stock
We therefore believe that the stock is overvalued.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $57.90. A good entry point into GoDaddy stock would be at $52.10 or below. We expect the stock of GoDaddy to pull back from its current levels to levels closer to our target (full value) price in coming weeks and months as we cannot see the group holding on to its lofty valuation for much longer unless the bottom line line starts shows significant growth.
We therefore believe that the stock is overvalued.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $57.90. A good entry point into GoDaddy stock would be at $52.10 or below. We expect the stock of GoDaddy to pull back from its current levels to levels closer to our target (full value) price in coming weeks and months as we cannot see the group holding on to its lofty valuation for much longer unless the bottom line line starts shows significant growth.
Next earnings release for GoDaddy
It is expected that GoDaddy's 4th quarter and full fiscal 2019 earnings will be released towards the middle of February 2020