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But My Heart Belongs to GoDaddy

April 12, 2024

Not just about domain names any more, GoDaddy has big plans.

Our vision is to radically shift the global economy toward life-fulfilling entrepreneurial ventures. Our mission is to empower entrepreneurs everywhere, making opportunity more inclusive for all. Our strategy: Everyday entrepreneurs trust their ideas with us. We guide them to build their business digitally. Our global solutions seamlessly connect their identity and presence with commerce, leading to profitable growth.

GoDaddy, website

Calendar 2023 was a highly successful year.

Here, if you can make sense of it, is all the stuff they do.

It is hard not to be impressed by what they are doing.

The exciting growth driver and arguably ‘something new’ at GoDaddy is its Applications and Commerce segment.

The core Domains and Hosting business is more like a cash cow funding the growth business and the share buybacks, which are creating so much shareholder value. In 2023 the share count was reduced from 156.2m to 144.6m., which is a phenomenally aggressive programme. Since January 2022 the company has repurchased 34.2m shares reducing the share count by 20pc. It is hard to imagine that there is any other quoted company being so aggressive.

The rate at which free cash flow is being generated is extraordinary.

Also impressive is the rate at which profitability is improving.

The chart below highlights the growing importance of the high margin, fast-growing, Applications & Commerce business, which is key to the future success of the company but makes a killer combo with the original Domains business which is throwing off so much cash.

The future is for more of the same. Not crazy growth like we see with some companies but exciting because of the combination of a growing share for the faster growing higher margin Applications & Commerce business and the dramatic programme of share buybacks.

The shares have been in a strong uptrend since 2015 and I see no reason for that to change. GoDaddy is a classic climb-aboard stock.

Strategy – Buy for Steady Long-Term Growth

GoDaddy held an investor day on 6 March 2024. As CEO, Aman Bhutani, pointed out domain names are where entrepreneurs start and then they need many other services as they build their businesses. This makes it easy for GoDaddy to attract new customers and then sell their more services locking them into the GoDaddy ecosystem.

Their plans for generating more free cash flow are amazing.

Just in their customer base they see a huge opportunity.

Also exciting is a new product they call GoDaddy Aero.

Here it gets baffling but at least we can see that they are very excited about Airo.

They talk more about how the foot-in-the-door Domain strategy works.

And.

There is so much innovation happening.

Aman Bhutani summed it all up when reporting Q4 2023 results.

Our strategy centers on creating customer value, driving profitable growth resulting in compounding free cash flow per share and long-term shareholder value. Our focus remains on margin expansion and growth in our Applications and Commerce segment. 2023 was a pivotal year for us and I am pleased with our financial and operational results. Innovation accelerated as we brought together our technology capabilities into a unified technology stack, enabling us to launch our compelling GoDaddy Airo experience. We also drove 2023 normalized EBITDA margin ahead of our guidance as we balanced investment in growth and cost structure management.

Aman Bhutani, CEO, GoDaddy, Q4 2023, 14 February 2024

Share Recommendations

GoDaddy. GDDY. Buy @ $126

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