Why GoDaddy Shares Are Dipping Today

GoDaddy Inc GDDY shares are trading lower by around 6% after it reported worse-than-expected Q2 FY23 financial results and issued Q3 revenue guidance below estimates.

Revenue grew 3.2% Y/Y to $1.048 billion (+4.1% Y/Y constant currency), missing the consensus of $1.06 billion. 

Applications & commerce revenue rose 10.9% Y/Y, while the Core platform fell 0.3% Y/Y. International revenue increased by 3.1% Y/Y in the quarter. 

ARR for the Applications and commerce segment rose 10% Y/Y, and Core platform revenues were flat Y/Y.

Gross merchandise volume rose 20% Y/Y to $33 billion. 

Total bookings and customers grew by 2.0% and 0.5% Y/Y respectively, with an Average revenue per user (ARPU) growth of 3.1% Y/Y.

Normalized EBITDA rose 2.4% Y/Y to $264.6 million in the quarter.

EPS of $0.54 missed the consensus of $0.57.

As of June 30, 2023, cash and equivalents stood at $582.6 million, while total debt of $3.9 billion.

Unlevered free cash flow increased 3.4% Y/Y to $283.6 million in the quarter.

GoDaddy repurchased shares worth $746 million year-to-date through July 2023.

Outlook: For Q3 2023, GDDY expects revenues of $1.055 billion-$1.075 billion (+3% Y/Y at mid-point, consensus $1.08 billion) and a normalized EBITDA margin of about 26%. 

GDDY reiterated its FY23 outlook for an unlevered free cash flow at around $1.2 billion (+9% Y/Y). 

Price Action: GDDY shares are down by 6.91% at $70.49 on the last check Friday.