Why Godaddy, Inc. Jumped Nearly 13% Higher Today

By Anders BylundMarketsFool.com

Image source: GoDaddy.

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What: Shares of GoDaddy (NYSE: GDDY) rose as much as 12.9% on Thursday morning, driven by a solid second-quarter earnings report.

So what: In the second quarter, GoDaddy's revenue increased 15.6% year over year, stopping at $456.2 million. The provider of technology services, such as domain-name registrations and website hosting for small businesses, reported a GAAP net loss of $11.1 million per share, up from a $71.3 million loss in the year-ago period. Net losses per diluted share improved from $0.46 to $0.11.

But it wasn't all red ink: Free cash flow increased by 9%, to $83.9 million, and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rose 26%, to $103.5 million. The wide spread between cash-based profits and GAAP losses stems from large and rapidly changing balances of amortization, depreciation, and deferred sales.

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For the third quarter, GoDaddy guided to sales of roughly $470 million, yielding adjusted EBITDA profits near $104 million. Full-year targets for both of these metrics were tightened around the top end of each guidance range.

Now what: GoDaddy's focus on small- and medium-sized business clients is paying dividends. Order bookings are trailing slightly behind revenues, growing at a 14% clip in constant-currency figures. But the average quarterly revenue per user is up 6%, to $125 (as I said, the focus is on small businesses), and the company is still growing its customer list by 8% annually.

Looking ahead, the company is aiming at international growth by adding services in Spanish and several Indian languages. International sales outgrew the domestic division in the second quarter, rising 17.6% year over year, to $119 million. If not for currency-exchange effects, that growth rate would have soared to 25%.

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Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.