GoDaddy Tops 4Q Sales Outlook, Adds 1M Customers; Street Bullish

Shares of GoDaddy are up 2.2.% in Thursday’s pre-market trading after the internet domain and web hosting company announced upbeat fourth-quarter revenue guidance and added 1 million net new customers in 2020.

GoDaddy (GDDY) expects 4Q revenues to grow about 11% to about $865 million year-on-year, which is above the Street estimates of $855.7 million. The company said that revenue growth will be projected to come from “double-digit growth in domains, mid-single-digit growth in Hosting and Presence, and high-teens growth in Business Applications.”

GoDaddy also anticipates unlevered free cash flow of approximately $820 million for 2020. (See GDDY stock analysis on TipRanks).

Meanwhile, GoDaddy’s 3Q revenues of $844.4 million rose 11% year-over-year and exceeded analysts’ expectations of $835.2 million. The company’s bookings also increased by 11% year-over-year to $945 million in 3Q. Its EPS of $0.38 came ahead of the Street’s estimates of $0.34 but declined 10% year-over-year.

GoDaddy CFO Ray Winborne said that “Integration of the four acquisitions we’ve completed this year is paying off in both exciting new product capabilities and improved financial performance.”

On Nov. 5, Oppenheimer analyst Jason Helfstein raised the stock’s price target to $92 (15.3% upside potential) from $83 and maintained his Buy rating, as he believes that “the company remains well positioned to capitalize on sustained eCommerce tailwinds heading into FY:21.” Helfstein noted that the 3Q results were driven by “record subscriber growth (>400K) driven by strong renewal rates and continued adoption of higher-priced commerce tier offerings.” The analyst added “GDDY will continue leaning into marketing as payback period is shortening, creating favorable near-term outlook.”

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 13 unanimous Buys. The average price target of $96.73 implies upside potential of about 21.3% to current levels. Shares have advanced 17.5% year-to-date.

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