GoDaddy(GDDY) - 2024 Q1 - Quarterly Results

Q1 2024 Financial Results Overview GoDaddy reported strong Q1 2024 results, with significant revenue growth, surging net income, and robust free cash flow, driven by its Applications and Commerce segment Management Commentary GoDaddy's leadership expressed confidence following a strong start to 2024, highlighting the company's execution on its mission to empower entrepreneurs - CEO Aman Bhutani highlighted a great start to 2024, focusing on empowering entrepreneurs and driving profitable growth to maximize free cash flow[3] - CFO Mark McCaffrey underscored the commitment to sustainable growth and disciplined capital allocation, leveraging the company's unified software platform to enhance customer attach, conversion, and retention for long-term shareholder value[3] Business Highlights GoDaddy reported strong Q1 2024 results with total revenue reaching $1.1 billion, a 7% year-over-year increase, led by the Applications and Commerce segment Q1 2024 Key Performance Indicators (YoY) | Metric | Q1 2024 Value | YoY Growth | | :--- | :--- | :--- | | Total Revenue | $1.1 billion | 7% | | Applications and Commerce (A&C) Revenue | $383.1 million | 13% | | Core Platform Revenue | $725.4 million | 4% | | Total Bookings | $1.3 billion | 9% | | Net Income | $401.5 million | 747% | | Normalized EBITDA (NEBITDA) | $313.0 million | 25% | | Free Cash Flow | $327.4 million | 26% | - The innovative GoDaddy Airo™ experience, an AI-powered tool, began its rollout to the company's 21 million customer base in March, with plans for expansion to more markets throughout the year[5] Consolidated First Quarter Financial Highlights In Q1 2024, GoDaddy's total revenue grew 7.0% YoY to $1.11 billion, with net income surging to $401.5 million due to a non-cash tax benefit Q1 2024 vs Q1 2023 Financial Comparison | Metric | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,108.5 million | $1,036.0 million | +7.0% | | Net Income | $401.5 million | $47.4 million | +747.0% | | NEBITDA | $313.0 million | $249.7 million | +25.4% | | Free Cash Flow | $327.4 million | $259.2 million | +26.3% | | Total Bookings | $1,312.7 million | $1,199.2 million | +9.5% | | ARPU | $206 | $197 | +4.6% | - Net income for Q1 2024 was significantly impacted by a non-routine, non-cash tax benefit of $267.4 million related to a subsidiary conversion[6] Corporate Developments and Financial Position GoDaddy continued share repurchases and maintained a solid financial position while undertaking corporate restructuring Share Repurchases and Balance Sheet GoDaddy continued its capital return program, repurchasing 2.8 million shares for $345.6 million year-to-date through April 30, 2024 - Year-to-date through April 30, 2024, the company repurchased 2.8 million shares for $345.6 million, averaging $121.49 per share, contributing to an approximate 22% reduction in fully diluted shares since the start of the current $4.0 billion buyback authorization[8] Balance Sheet Summary (as of March 31, 2024) | Item | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $664.0 | | Total debt | $3,900.0 | | Net debt | $3,200.0 | Corporate Actions In the first quarter, GoDaddy executed restructuring efforts, including a reduction in force and a subsidiary conversion that generated a significant non-cash tax benefit - The company implemented restructuring efforts, including a workforce reduction of about 180 employees, leading to $22.4 million in pre-tax charges for severance and other costs[10] - A conversion of the Desert Newco, LLC subsidiary from a partnership to a disregarded entity resulted in a non-cash tax benefit of $267.4 million, simplifying the company's capital structure[11] Business Outlook GoDaddy provided optimistic guidance for Q2 and full-year 2024, projecting continued revenue growth and strong profitability Q2 2024 Guidance For the second quarter of 2024, GoDaddy anticipates total revenue between $1.10 billion and $1.12 billion, marking a 6% year-over-year growth at the midpoint Q2 2024 Outlook | Metric | Guidance Range/Value | | :--- | :--- | | Total Revenue | $1.10B - $1.12B | | YoY Revenue Growth (midpoint) | 6% | | A&C Revenue Growth | Low- to mid-teens | | Core Revenue Growth | Low single digits | | NEBITDA Margin | ~28% | Full Year 2024 Guidance GoDaddy raised its full-year 2024 revenue forecast to a range of $4.50 billion to $4.56 billion, representing 6.5% growth at the midpoint Full Year 2024 Outlook | Metric | Guidance Range/Value | | :--- | :--- | | Total Revenue | $4.50B - $4.56B | | YoY Revenue Growth (midpoint) | 6.5% | | NEBITDA Margin | ~29% | | Unlevered Free Cash Flow | At least $1.4 billion (+12% YoY) | | Free Cash Flow | At least $1.2 billion (+11% YoY) | Consolidated Financial Statements (unaudited) This section presents GoDaddy's unaudited financial statements, including statements of operations, balance sheets, and cash flows for Q1 2024 Consolidated Statements of Operations For Q1 2024, GoDaddy's revenue increased to $1.11 billion, with net income surging to $401.5 million due to a significant tax benefit Q1 2024 Income Statement Highlights (in millions) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Revenue | $1,108.5 | $1,036.0 | | Operating Income | $175.9 | $70.8 | | Income Before Taxes | $143.2 | $47.6 | | Benefit for Income Taxes | $258.3 | ($0.2) | | Net Income | $401.5 | $47.4 | | Diluted EPS | $2.76 | $0.30 | Consolidated Balance Sheets As of March 31, 2024, GoDaddy's total assets stood at $8.0 billion, with total stockholders' equity increasing substantially to $414.8 million Balance Sheet Comparison (in millions) | Account | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $664.0 | $458.8 | | Total Assets | $7,978.8 | $7,564.9 | | Total Liabilities | $7,564.0 | $7,502.7 | | Total Stockholders' Equity | $414.8 | $62.2 | Consolidated Statements of Cash Flows In Q1 2024, GoDaddy generated $297.2 million in net cash from operating activities, with a net increase in cash of $205.2 million Q1 Cash Flow Summary (in millions) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $297.2 | $270.3 | | Net cash provided by (used in) investing activities | $43.7 | ($22.8) | | Net cash used in financing activities | ($135.0) | ($124.2) | | Net increase in cash and cash equivalents | $205.2 | $118.4 | | Cash and cash equivalents, end of period | $664.0 | $892.4 | Non-GAAP Financial Measures and Reconciliations This section provides definitions and reconciliations for non-GAAP financial measures and other key operating metrics used in the report Definitions of Non-GAAP and Other Metrics This section defines key non-GAAP and operating metrics used in the report to supplement GAAP financial results, providing clarity on how management evaluates business performance - The report defines several key performance metrics, including: - Total Bookings: Total value of customer contracts entered into during the period - NEBITDA: Net income adjusted for items like depreciation, interest, taxes, and equity-based compensation - Free Cash Flow: Unlevered free cash flow less interest payments - ARR: Quarterly recurring revenue multiplied by four[22][24][30] Reconciliation of Non-GAAP Measures This section provides detailed tables reconciling GAAP figures to their non-GAAP counterparts, showing adjustments for key metrics like NEBITDA and Free Cash Flow Reconciliation of Net Income to NEBITDA (Q1 2024, in millions) | Line Item | Amount | | :--- | :--- | | Net income | $401.5 | | Adjustments (Depreciation, Interest, Taxes, etc.) | ($88.5) | | NEBITDA | $313.0 | Reconciliation to Free Cash Flow (Q1 2024, in millions) | Line Item | Amount | | :--- | :--- | | Net cash provided by operating activities | $297.2 | | Capital expenditures | ($4.4) | | Other adjustments | $34.6 | | Free cash flow | $327.4 | Net Debt Calculation (March 31, 2024, in millions) | Line Item | Amount | | :--- | :--- | | Total debt | $3,869.9 | | Less: cash and cash equivalents | ($664.0) | | Net debt | $3,205.9 | Shares Outstanding and Constant Currency As of March 31, 2024, total common stock outstanding was 142.4 million shares, reflecting the impact of share repurchases Total Common Stock Outstanding (in thousands) | Date | Shares | | :--- | :--- | | March 31, 2024 | 142,429 | | March 31, 2023 | 154,421 | - The constant currency adjustment for Q1 2024 was minimal, reducing reported revenue by $0.5 million and bookings by $0.1 million to show underlying performance without currency fluctuations[47]