GoDaddy’s Earnings Call: Innovations Amidst Challenges

GoDaddy Inc. ((GDDY)) has held its Q4 earnings call. Read on for the main highlights of the call.

GoDaddy’s latest earnings call paints a picture of optimism tempered with challenges. The company proudly showcased its significant achievements, particularly in the applications and commerce segment, and celebrated the successful launch and growth of its Aero initiative. However, concerns were raised over a declining customer base and slow growth in the core platform segment. Despite these challenges, GoDaddy remains optimistic about future prospects, focusing on high-value customers and innovative strategies.

Record Annual Bookings

GoDaddy achieved a remarkable milestone by delivering its first $5 billion in annual bookings in 2024. This achievement drove a top-line bookings growth of over 9%, underscoring the company’s robust financial health and strategic prowess.

Strong Financial Performance

The company’s annual revenue grew by 8% to reach $4.6 billion. A significant contributor to this growth was the applications and commerce segment, which saw a 16% increase in revenue, reaching $1.7 billion. Additionally, the normalized EBITDA margin expanded to 31%, marking an improvement of nearly 400 basis points.

Commerce Growth and Innovation

GoDaddy continues to innovate, with its annualized gross payment volume increasing by 55% to $2.6 billion. New initiatives like GoDaddy Capital have been introduced to support customer cash flow management, demonstrating the company’s commitment to enhancing customer experiences and financial solutions.

Successful Aero Initiative

The Aero initiative has been a highlight for GoDaddy, showing promising results with 50% of paid subscriptions originating from the Aero experience. The launch of AeroPlus with advanced features and strategic marketing efforts, including a Super Bowl campaign, have significantly boosted the initiative’s visibility and success.

Applications and Commerce Segment Surge

The applications and commerce segment experienced a surge, with bookings increasing by 21%. This growth contributed to a 25% increase in free cash flow for the year, further solidifying GoDaddy’s strong financial position.

Customer Base Decline

Despite strong financials, GoDaddy faced challenges with a declining customer base, which fell to 20.5 million due to divestitures, the end of deep discounting, and migrations. The overall company retention rate dipped slightly to 84%, although newer cohorts are performing as expected.

Core Platform Segment Slow Growth

The core platform segment showed slower growth, with revenue increasing by only 3% to $2.9 billion. Bookings grew by 4%, but this was tempered by strategic initiatives and divestitures, highlighting an area for potential improvement.

Currency Headwinds

Currency headwinds are expected to impact GoDaddy’s revenue growth, particularly in international markets compared to the US. This challenge underscores the complexities of operating in a global marketplace.

Forward-Looking Guidance

Looking ahead to 2025, GoDaddy has provided guidance with key metrics. The company targets total revenue growth of 7% at the midpoint, with the applications and commerce segment expected to see mid-teens revenue growth. The core platform segment will grow at a low single-digit rate. GoDaddy also anticipates a normalized EBITDA margin expansion of about 100 basis points, aiming for a 33% margin by 2026. Free cash flow is expected to exceed $1.5 billion, representing an over 11% growth, with disciplined capital allocation focusing on shareholder returns.

In conclusion, GoDaddy’s earnings call reflects a company that is navigating both achievements and challenges. While the financial performance is commendable, with strong growth in applications and commerce, the decline in the customer base and slow core platform growth present areas for improvement. The forward-looking guidance indicates optimism, with strategic focus areas poised to drive future success.