GoDaddy GDDY shares have surged 86.4% year to date (YTD), outperforming the broader Zacks Computer & Technology sector’s appreciation of 28.3% and the Zacks Internet - Delivery Services industry’s return of 63.4%.

This significant outperformance reflects investors’ confidence in GoDaddy’s growth potential on the back of its innovative product portfolio and back-to-back quarters of strong financial performances.

GoDaddy’s Impressive Financial Performance

GDDY has a long history of reporting strong quarterly performance, with earnings surpassing the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 5.3%. In the third quarter of 2024, GDDY’s earnings of $1.32 per share jumped 48.3% year over year and beat the consensus mark by 5.6%.

Total revenues grew 7% on a reported and constant-currency basis to $1.15 billion, driven by a 16% year-over-year increase in Applications and Commerce (A&C) revenues.

The most important key metric, average revenue per user (ARPU), rose 7.5% year over year to $215 in the third quarter, supported by its robust customer retention rate of 85%. The continued success in the A&C segment underscores GoDaddy's focus on innovation and its ability to deliver tailored solutions that enhance customer engagement and ARPU growth.

GDDY Prospects Ride on Strong Portfolio

GoDaddy has made significant progress in leveraging artificial intelligence (AI) within its portfolio. Its AI-powered Airo platform has become a key driver of discovery, engagement and monetization.

Customers using Airo are rapidly becoming the primary source for website and marketing subscriptions, with more than 40% of its paid subscriptions in the third quarter originating from the Airo experience.

As part of its expansion strategy, GoDaddy plans to keep investing in Airo's development and marketing, with larger launches set for 2025. Airo's features are expected to play a major role in driving GoDaddy's revenue growth, especially through new customer engagement models like paywalls.
    
Airo is expanding globally and is now available in more than 180 countries, and GoDaddy is utilizing application programming to improve customer interactions on the platform. The Airo platform has already attracted nearly 3 million customers.

GDDY has recently introduced two SaaS plans — Point-Of-Sale Plus and Invoicing Plus —which have been well-received and have shown strong adoption trends since their launch.

GoDaddy has made significant strides with its conversational bot and the AI-powered GABI tool. These innovations are continuously improving customer service and enhancing the overall experience for users globally.

GDDY Offers Positive Guidance

For the fourth quarter of 2024, GoDaddy expects revenues of $1.165-$1.185 billion, indicating year-over-year growth of 7% at the mid-point. The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $1.18 billion, suggesting 6.91% growth from the figure reported in the year-ago quarter.

The consensus mark for fourth-quarter earnings is pegged at $1.47 per share, which has moved up by a penny in the past 30 days. The estimate indicates 36.11% growth from the figure reported in the year-ago quarter.

For 2024, GoDaddy expects total revenues of $4.545-$4.565 billion, indicating year-over-year growth of 7% at the mid-point. The Zacks Consensus Estimate for revenues is pegged at $4.56 billion, indicating year-over-year growth of 7.12%.

The consensus mark for 2024 earnings is pegged at $6.55 per share, which has risen 6 cents per share in the past 30 days. This also indicates a year-over-year upsurge of 146.24%.

Zacks Rank & Valuation

GoDaddy’s 86% YTD rally highlights its strength in the Internet domain registrar and web hosting space. The company’s robust portfolio, improving ARPU and financial strength make the stock a compelling investment option. However, considering its stretched valuation multiple as depicted from the Zacks Value Style Score of D, it is advisable to wait for a better entry point.

GoDaddy currently carries Zacks Rank #3 (Hold).

Some Better Rank Picks

Amphenol APH, BILL Holdings, Inc. BILL and Ciena CIEN are some better-ranked stocks in the broader tech sector. These three companies currently have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rates for APH, BILL and CIEN are pegged at 16.37%, 13.41% and 6.76%, respectively.

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