GoDaddy GDDY shares have returned 30.2% over the trailing three months, outperforming the broader Zacks Computer & Technology sector’s appreciation of 6.9% and the Zacks Internet - Delivery Services industry’s return of 17.9%.

GDDY shares have also outperformed its industry peers, including QuinStreet QNST, MakeMyTrip MMYT and Asure Software ASUR.

Over the same timeframe, shares of QuinStreet and MakeMyTrip have gained 8.5% and 2.7%, while Asure Software shares have lost 0.4%.

GDDY’s positive share price movement has been driven by an expanding AI-powered portfolio and solid third-quarter 2024 results, driven by strong performance in the Applications and Commerce segment.

GDDY Gains Momentum From Airo Growth

GoDaddy has made notable advancements in integrating AI-powered innovation into its portfolio. Its “GoDaddy Airo,” now operational in more than 180 countries, aims to enhance user engagement and optimize monetization pathways.

The platform has attracted nearly 3 million users and above 50% of these customers actively engage with the platform, highlighting its effectiveness and value in meeting user needs.

More than 40% of websites plus marketing subscriptions in the third quarter originated through GoDaddy Airo, highlighting its strong impacts on customer acquisition and subscription growth.

TechRadar named GoDaddy Airo the best AI website builder for small businesses. This platform helps small business owners quickly and easily build professional websites using AI tools. GoDaddy intends to continue investing in the development and marketing of Airo, with larger launches planned for 2025.

Key Drivers Behind GDDY Stock’s Momentum

In the third quarter, GoDaddy achieved $1.2 billion in bookings, reflecting 9% growth on both reported and constant-currency basis. It represents the cash collected during the period, providing a strong revenue indicator, and reflecting healthy demand for GoDaddy's products and services.

Average revenue per user (ARPU), which is a key metric, increased 8% year over year to $215 in the third quarter of 2024, driven by a strong customer retention rate of 85%.

GoDaddy's recent launch of two SaaS plans — “Point-Of-Sale Plus” and “Invoicing Plus” — has shown strong adoption trends since their full rollout in the second quarter of 2024. These offerings cater to small businesses by providing advanced tools for transaction management and invoicing, reflecting the company's ability to meet customer needs.

GDDY Raises 2024 Outlook

GoDaddy raises its annual revenue outlook on robust internet services demand.

For 2024, the company 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 $6.56 per share, up by a penny over the past 30 days. This also indicates a year-over-year surge of 146.62%.

Everything Not So Rosy for GDDY

The company's high debt level and weaknesses in its Core Platform segment are concerning for investors.

Total debt remains high at $3.9 billion, with a net debt of $3.1 billion as of Sept. 30, 2024, which could impact investments and financial flexibility.

The Core Platform segment recorded approximately 3% year-over-year growth in the third quarter of 2024, reflecting challenges in its legacy business areas.

Challenges from competitors in domains and web hosting may continue to pressure pricing and market share in certain segments.

Zacks Rank

Currently, GoDaddy carries a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable entry point to accumulate the stock. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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