GoDaddy Pops 6% After-Hours On Solid Q1 Beat; Street Says ‘Buy’


GoDaddy (GDDY), the world’s largest domain name registrar, has reported a solid first quarter earnings beat with Q1 GAAP EPS of $0.24 topping Street expectations by $0.07. Revenue of $792M represented +11.5% year-over-year growth and beat by $2.2M. Shares popped 6.4% in after-hours trading on Wednesday.

“GoDaddy delivered strong results in the first quarter,” commented CEO Aman Bhutani. “In this time of uncertainty for small businesses, we are laser-focused on innovating for our customers, as their digital presence is now more important than ever.”

Looking forward, Q2 Revenue guide of $790M was largely in-line with the Street- despite GDDY facing softer demand for higher- priced products and a negative impact of productivity of their sales force due to work-from-home conditions.

Nonetheless RBC Capital Mark Mahaney is impressed, writing “All in, Q1 fundamental trends were positive, with Revenue growth decelerating ~70bps and uFCF margin improving ~160bps Y/Y to Record High 29.6%.”

GoDaddy- which offers web hosting as well as domain names- is joining a limited list of companies that is seeing positive benefits in this current environment as renewal rates continue to edge up year-over-year, says Mahaney. Indeed, the company “is seeing a notable uptick in April demand, esp. in Germany and Italy where gross customer additions have accelerated to +80% year-over-year.”

“In fact, GDDY’s 2020 April cohort is the strongest April they’ve ever had… Yet another data point confirming the shift to Online is accelerating. And GDDY appears to be emerging a Structural Winner” cheers the RBC analyst.

Given these figures, Mahaney believes GDDY remains on track for his target of $4B in Revenue and $1.1B in unlevered FCF by 2022. On May 7 he reiterated his buy rating while boosting the price target from $71 to $81.

Overall the Street’s average price target works out at $79. With only a marginal year-to-date rally of 3%, the average price target indicates upside potential of 13%. Most notably all ten analysts covering the stock rate GDDY a ‘buy’ giving it its Strong Buy Street consensus. (See GoDaddy stock analysis on TipRanks).

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