GoDaddy Expands Margins as Revenue Growth Stays Modest
Second-quarter revenue reached $1.298 billion, within the company’s previous forecast.
GoDaddy Inc. (GDDY), the web-services provider, expanded its operating margin 450 basis points to 26.4% as profit growth outpaced a modest increase in sales.
Revenue rose 6.6% from a year earlier, edging up from 6.1% growth in the first quarter. GoDaddy’s third-quarter forecast points to a renewed slowdown as the company faces a tougher comparison with strong prior-year Aftermarket performance.
Second-quarter revenue increased to $1.298 billion from $1.2669 billion in the preceding quarter. Net income rose 20.1% from a year earlier to $240.1 million, reversing the first quarter’s decline, while operating income climbed 28.6% to $342.5 million.
Applications and Commerce remained the faster-growing business, with revenue rising 11% to $514.8 million. Its growth rate slowed from 11.6% in the first quarter, though segment EBITDA increased 17.2% and its margin widened to 46.8%. Core Platform revenue rose 3.9% to $783.2 million, accelerating from 2.8% growth in the preceding quarter, while its segment margin expanded to 33.4%.
The company continued to generate more revenue from each customer as average revenue per user rose 8.7% to $250. Its customer base increased by 22,000 during the quarter to 20.5 million. Airo’s annualized bookings run rate reached $50 million, five times the level disclosed one quarter earlier.
Normalized EBITDA increased 13.7% to $434.1 million, and its margin rose to 33.4% from 31.3% a year earlier. Free cash flow climbed 13.3% to $443.5 million, though it declined from the first quarter as its year-over-year growth rate moderated.
GoDaddy narrowed its full-year revenue forecast to $5.215 billion to $5.255 billion, implying 6% growth at the midpoint. It continues to expect a normalized EBITDA margin above 33% and about $1.8 billion of free cash flow. For the third quarter, the company expects revenue of $1.315 billion to $1.335 billion, representing about 5% growth at the midpoint.
GoDaddy repurchased 9.8 million shares for $851.8 million through July 29, contributing to a 7% reduction in fully diluted shares since year-end. Diluted shares outstanding fell to 127.1 million at June 30 from 141.5 million a year earlier, extending the effect of margin gains on results attributable to shareholders.