GoDaddy (NYSE:GDDY) Q3 Sales Beat Estimates, Reports Guidance In Line

Adam Hejl 2021/11/03 4:15 pm EDT

Domain registrar and web services company, GoDaddy (NYSE:GDDY) reported Q3 FY2021 results that beat analyst expectations, with revenue up 14.1% year on year to $964 million. The company expects that next quarter's revenue would be around $970 million, which is the midpoint of the guidance range. That was in roughly line with analyst expectations. GoDaddy made a GAAP profit of $97.7 million, improving on its profit of $65.1 million, in the same quarter last year.

Is now the time to buy GoDaddy? Access our full analysis of the earnings results here, it's free.

GoDaddy (GDDY) Q3 FY2021 Highlights:

  • Revenue: $964 million vs analyst estimates of $945.7 million (1.92% beat)
  • EPS (GAAP): $0.58
  • Revenue guidance for Q4 2021 is $970 million at the midpoint, roughly in line with what analysts were expecting
  • Free cash flow of $251.5 million, roughly flat from previous quarter
  • Gross Margin (GAAP): 64.1%, down from 65.6% same quarter last year

"GoDaddy stepped out on the commerce stage in a big way with the hardware and payments offerings we launched in Q3," said GoDaddy CEO Aman Bhutani, "New solutions like these, combined with a consistent, cash-generative business, give us confidence in our ability to pursue new opportunities and drive profitable growth at scale."

Founded by Bob Parsons after selling his first company to Intuit, GoDaddy (NYSE:GDDY) provides small and mid-sized businesses with the ability to buy a web domain and tools to create and manage a website.

As more businesses come online and the volume of digital transactions accelerate, the demand for no-code and low-code web making tools is expected to remain strong.

Sales Growth

As you can see below, GoDaddy's revenue growth has been solid over the last year, growing from quarterly revenue of $844.4 million, to $964 million.

GoDaddy Total Revenue

This quarter, GoDaddy's quarterly revenue was once again up 14.1% year on year. We can see that revenue increased by $32.7 million in Q3, up on $30.2 million in Q2 2021. While we've no doubt some investors are looking for higher growth, it's good to see that quarterly revenue growth is re-accelerating.

Analysts covering the company are expecting the revenues to grow 9.9% over the next twelve months, although estimates are likely to change post earnings.

There are others doing even better than GoDaddy. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 400% since the IPO in December. You can find it on our platform for free.

Profitability

What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. GoDaddy's gross profit margin, an important metric measuring how much money there is left after paying for servers, licences, technical support and other necessary running expenses was at 64.1% in Q3.

GoDaddy Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.64 left to spend on developing new products, marketing & sales and the general administrative overhead. This would be considered a low gross margin for a SaaS company and we would like to see it start improving.

Key Takeaways from GoDaddy's Q3 Results

With a market capitalization of $11.3 billion, more than $1.14 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

GoDaddy topped analysts’ revenue expectations this quarter, even if just narrowly. That feature of these results really stood out as a positive. On the other hand, revenue growth is overall a bit slower these days. Overall, this quarter's results were decent. The company is up 2.85% on the results and currently trades at $69.18 per share.

Should you invest in GoDaddy right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.