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01/11 03:24
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance with 8% revenue growth, 26% free cash flow increase, and significant share repurchases. Despite economic uncertainty, customer sentiment remains resilient, supporting guidance. The new $3 billion repurchase authorization and positive trends in Airo and Agentic AI indicate growth potential. While some metrics lack clarity, the overall sentiment is positive, suggesting a likely stock price increase of 2% to 8%.
Total Revenue $1.2 billion, growing 8% year-over-year, driven by strong performance in both A&C and core platform segments.
A&C Revenue $446 million, growing 17% year-over-year, attributed to strong adoption of subscription solutions.
Core Platform Revenue $748 million, growing 3% year-over-year, reflecting strength in primary domains and aftermarket sales.
Annual Recurring Revenue (ARR) $4.1 billion, growing 7% year-over-year, indicating stable customer retention and growth.
Normalized EBITDA $364 million, growing 16% year-over-year, with a margin expansion of over 200 basis points due to favorable product mix and operational discipline.
Free Cash Flow $411 million, growing 26% year-over-year, supporting the long-term goal of maximizing free cash flow.
Bookings $1.4 billion, representing 8% growth year-over-year, primarily reflecting cash collected during the period.
Average Revenue Per User (ARPU) $225, growing 9% year-over-year, demonstrating sustainability of ongoing efforts.
Customer Count Stable at 20.5 million, with expectations of returning to customer growth later in the year.
Cash and Total Liquidity $719 million in cash and $1.7 billion in total liquidity, reflecting strong financial position.
Net Debt $3.1 billion, with a net leverage of 1.9 times on a trailing 12-month basis.
GoDaddy Capital: Recently launched high margin offerings such as GoDaddy Capital, our merchant cash advance program, and same-day payouts, while still small, are gaining traction.
Airo Experience: GoDaddy Airo continues to permeate across our products and customer experiences, showing better attach, term length, and renewals.
Airo Plus: Airo Plus, our directly monetized experience, is progressing with new improvements.
International Revenue Growth: International revenue grew 10%, surpassing prior expectations on strong aftermarket sales in international regions.
Normalized EBITDA Margin: Expanded normalized EBITDA margin to 31%, up over 200 basis points.
Free Cash Flow: Free cash flow grew 26% to $411 million.
Customer Retention: Retention above 85% for customers on the GoDaddy platform.
Pricing and Bundling Initiative: Pricing and bundling is a multiyear initiative, delivering ahead of expectations in Q1.
Capital Allocation Framework: The board approved a 2025 repurchase authorization of up to $3 billion through 2027.
Macroeconomic Environment: The broader macroeconomic environment, including tariffs, is a concern, although GoDaddy's direct exposure to tariffs is not material.
Customer Resilience: Customers are navigating a complex landscape, which may impact their ability to compete effectively.
Competitive Pressures: The need for GoDaddy's tools to empower customers to compete efficiently and effectively highlights competitive pressures in the market.
Regulatory Issues: Forward-looking statements are subject to risks and uncertainties discussed in SEC filings, indicating potential regulatory challenges.
Customer Retention: While customer retention is currently above 85%, any changes in market conditions could affect this metric.
Economic Uncertainty: Global economic uncertainty poses risks to small businesses, which may impact GoDaddy's performance.
Bookings Growth: In Q1, GoDaddy drove 8% bookings growth, supporting their North Star of maximizing free cash flow over the long term.
Normalized EBITDA Margin: Normalized EBITDA margin expanded to 31%, reflecting operational discipline and favorable product mix.
Pricing and Bundling Initiative: The 2025 initiative on pricing and bundling delivered ahead of expectations, focusing on customer cohorts to grow bookings and minimize churn.
Seamless Experience Initiative: This initiative improved customer conversion, product engagement, and renewals, resulting in increased average order size and renewal rates.
Airo Initiative: GoDaddy Airo is enhancing customer experiences and driving financial results, with a focus on engaging customers across broader capabilities.
High Margin Offerings: New offerings like GoDaddy Capital and same-day payouts are gaining traction and strengthening GoDaddy's commerce offering.
Full Year 2025 Revenue Guidance: GoDaddy expects total revenue to be within a range of $4.86 billion to $4.94 billion, representing growth of 7% at the midpoint.
Q2 2025 Revenue Guidance: For Q2, total revenue is targeted at $1.195 billion to $1.215 billion, representing 7% growth at the midpoint.
Normalized EBITDA Margin Guidance: Projected normalized EBITDA margin for Q2 is about 31%, with a full year target of 100 basis points expansion.
Free Cash Flow Guidance: GoDaddy reaffirms a full year free cash flow target of at least $1.5 billion, representing growth of over 11%.
Investor Day Targets: Targets include achieving $4.5 billion plus in cumulative free cash flow generation, with 6% to 8% annual revenue growth and a normalized EBITDA margin of 33% by 2026.
Share Repurchase Program: GoDaddy completed its $4 billion, 2022 repurchase authorization program, repurchasing a cumulative 43.7 million shares at an average price of $91, representing a gross share reduction of over 25% in fully diluted shares outstanding since the inception of the program.
2025 Repurchase Authorization: The board approved a new repurchase authorization of up to $3 billion through 2027, reflecting confidence in the strength of the underlying business and cash flows.
The earnings call highlights several negative factors, including a decline in net operating income, increased repair and leasing costs, fair value losses, and decreased occupancy rates. The Q&A session reveals management's lack of concrete updates on key issues like leasing progress and financing, which might further concern investors. These issues, combined with the market rent reset and tenant failures, suggest a negative sentiment, likely leading to a stock price decline in the short term.
The earnings call summary and Q&A reveal strong financial metrics with raised guidance, especially in free cash flow and revenue outlook. The positive sentiment is further supported by strong customer engagement and product attachment. Although there is some uncertainty in AI-driven commerce, GoDaddy's strategic focus on AI, customer retention, and domain growth presents a positive outlook. The raised guidance and strong performance across various segments, including aftermarket domains, suggest a likely positive stock price movement in the short term.
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