GoDaddy Inc.

GDDY Details

GoDaddy Inc. (NYSE: GDDY) provides small businesses, web designers, and individuals with cloud-based products and tailored customer care. It offers website design, hosting, and security solutions to secure customers' online visibility and other services like connecting with consumers and managing their business. Subscriptions, such as domain registrations and renewals, hosting and presentation solutions, and business apps are how GDDY makes money.

Q3FY21 Results:

• Progress in Revenues: Total sales in Q3FY21 (ended September 20, 2021) were USD 964.0 million, up 14.16% from USD 844.4 million in Q3FY20, owing to increased total customers, average revenue per user and contributions from the company's recent acquisition of Poynt, an all-in-one payment platform, in February 2021.
• Rise in Bottomline: In Q3FY21, net income climbed by 50.70% to USD 97.5 million, up from USD 64.7 million in Q3FY20.
• Surge in Bookings: Total bookings increased to USD 1.04 billion in Q3FY21, up from USD 0.95 billion in Q3FY20.
• Cash and Debt Position: The company had USD 1.14 billion in cash and cash equivalents and USD 3.89 billion in total debt as of September 30, 2021.

Key Risks:

• Geographical Concentration Risk: For FY20, FY19, and FY18, bookings outside the United States accounted for roughly 32%, 33%, and 35% of totals. As a result, any slowdown or disruption in its operating regions could jeopardize its financial position.
• Dependence on Third-Parties: For numerous technical, processing, maintenance, and support functions, GDDY relies on third parties. As a result, if these third parties fail to fulfil their contractual obligations, the results may be harmed.

Outlook:

• Q4FY21 Estimates: As of November 03, 2021, GDDY expects its Q4FY21 revenues to be around USD 970 million, representing a YoY growth of 11%.
• FY21 Guidance: GDDY expects sales of USD 3.765 billion in FY21, representing a 14% increase YoY. Its unlevered free cash flow forecast for FY21 has been boosted to nearly USD 960 million, representing a 16% increase.

Valuation Methodology: Price/Earnings Per Share-Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

GDDY Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

GDDY's share price has surged 20.33% in the past three months and is currently leaning towards the mid-band of the 52-week range of USD 65.70 to USD 93.75. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 72.74, indicating an overbought zone. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 70.58.

Considering the uptick in the stock price, current valuation, and technical indicators, we believe the decent business fundamentals are adequately reflected at current trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 83.69, down 0.11%, as of January 05, 2022, at 9:44 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.