Is GoDaddy Stock Still a Go After Q2 Earnings?

website-domainWith 60 million domains under management, GoDaddy Inc. (NYSE: GDDY) is the world’s largest Internet domain registrar. About one-fifth of all domains are registered under GoDaddy, causing the company to be called the “Wal-Mart of the domain industry.”

But how has the king of domains performed since its initial public offering this past spring?

GoDaddy’s second-quarter earnings report, released after Wednesday’s closing bell, is a mixed bag. Revenue beat expectations, rising 16.5% to $394.5 million. However, the company posted a net loss of $71.3 million for the quarter, compared to a $37.6 million loss in the year-ago quarter. In the first quarter of 2015, GoDaddy lost $43.3 million.

GoDaddy’s CEO, John Irving, is not concerned though. He noted that in this most recent filing, the company had a $29.7 million payment “in connection with the completion of the initial public offering.”

Last quarter Irving stated that international customers would be a focus. In the most recent statement, half of the customers that purchased the GoDaddy Pro services live abroad. 

International revenue rose 19.6% year-over-year. International business is now 25% of the company’s total revenue, which shows promise for the company as it prepares to offer its services in the Asia-Pacific region in 2016.

GoDaddy’s International Expansion Shows Promise

Expansion into New Markets for GoDaddy

Source: GoDaddy Inc.

The 18-year-old company made its name registering domain names. Since the beginning it has added more services for small businesses, including Web hosting and email marketing.

As the chart below indicates, small businesses are at their strongest level of employment in the past eight years, and these companies will likely look for more and more services to expand their businesses digitally. They use more of GoDaddy’s other service offerings, like its new accounting software and digital marketing services.

Paychex | IHS Small Business Jobs Index



Saying Goodbye to the Racy Ads

Irving listed ways GoDaddy is continuing to reduce its costs, including marketing expenses. Last quarter he announced that the company is dropping its NASCAR sponsorship for Danica Patrick after 2015.

Say goodbye to the racy ads, too. GoDaddy is “redeploying marketing costs in ways that we think are more effective for us as a business,” Irving said.

With a recent IPO and more international expansion on the horizon, Blake Irving’s mission has been to clean up the company’s image, which has been defined by controversial Super Bowl ads that are often deemed sexist.

The mission of the company is centered around supporting the small-business owner. More than half of all small businesses are owned by women, so GoDaddy is working to correct its negative brand image to show women as strong business owners.

While the brand recognition for GoDaddy is prevalent in the United States, it doesn’t have the same high profile abroad. Branding success in India over the past few years, however, gives it a strong model to implement as it expands throughout Asia.

GoDaddy Slammed After Q2 Earnings Report

After the Wednesday earnings announcement, GoDaddy fell by 7% in after-hours trading.

On Thursday it continued to be hit, falling 11% and closing at $26.22. With such a strong market reaction to an underperforming earnings report, is it time to sell?

Despite the reaction, GoDaddy stock is still a go. The IPO expenses were a significant part of the quarterly loss, and the expansion opportunities into new service offerings and international markets are strong.

Keep holding on to GoDaddy. There is still promise on the horizon.

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