GoDaddy Inc. (NYSE: GDDY) reported Q3 earnings. Stock up in after hours.

On a per-share basis, company said it had net income of 89 cents.

The results surpassed Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of 71 cents per share.

Business Highlights

• GoDaddy delivered net income margin of 12% and expanded Normalized EBITDA (NEBITDA) margin of 28%, achieving the targeted 2023 NEBITDA exit rate one quarter ahead of schedule.
• Applications and Commerce (A&C) revenue grew 11%, year-over-year, to $363 million in the third quarter. Annualized recurring revenue (ARR) for A&C grew 11% year-over-year, to $1.4 billion in the third quarter.
• Core Platform (Core) revenue and ARR totaled $706 million and $2.3 billion, respectively, in the third quarter, both flat year-over-year.
• GoDaddy completed the integration of two platforms into its technology stack, simplifying its infrastructure and enabling further margin opportunities in coming quarters.
• GoDaddy introduced Instant Video, a new AI-powered feature within its GoDaddy Studio App, empowering small businesses to quickly create social media and video content, increase customer engagement, and seize digital marketing and social commerce opportunities.

Share Repurchases

Year-to-date through October 31, 2023, GoDaddy repurchased 17.3 million shares of its common stock for an aggregate purchase price of $1.3 billion, with an average price per share of $72.85. Cumulatively, these repurchases represent an approximate 20% reduction in fully diluted shares from those outstanding at the inception of the current $4.0 billion buyback authorization.

Balance Sheet

As of September 30, 2023, total cash and cash equivalents were $329.2 million, total debt was $3.9 billion and net debt was $3.6 billion.

Restructuring

In the third quarter, GoDaddy implemented further restructuring efforts to reduce future operating expenses and improve cash flows through a reduction in force impacting approximately 250 employees. In the third quarter, GoDaddy recorded $9.8 million of pre-tax restructuring charges for severance and other employee benefits in its statements of operations. 

Business Outlook

For the fourth quarter ending December 31, 2023, GoDaddy raises its targeted NEBITDA margin to approximately 29%.

For the full year ending December 31, 2023, GoDaddy expects revenue to be in the range of $4.250 billion to $4.270 billion, representing year-over-year growth of 4% at the midpoint.  GoDaddy expects NEBITDA margin slightly above the previously guided 26% for the full year ending December 31, 2023.