Benchmark Reiterates Buy Rating on GoDaddy Inc (GDDY)

Benchmark analyst Mark Zgutowicz reiterated a Buy rating and $186.00 price target on GoDaddy Inc (NYSE: GDDY).

The analyst commented: "GDDY reports 3Q earnings on Wed., 10/31, AMC (see earnings cheat sheet below). 3QE Adj. EBITDA guidance conservatively implies sequential deleverage despite accretive total revenue mix-shift towards Applications & Commerce (A&C), with incremental margin accretion levers at their disposal NTM+ including automationled op. leverage extending across the P&L following Gabi’s (Customer Care) global rollout in 2Q, and offshoring opportunities. On the call, we will closely monitor bookings momentum, consistent with management’s guidance for ~1-2pt topline/bookings y/y growth delta, resp., which appears conservative considering: (1) growing Airo incrementality (not modeled); (2) new up-market logo progression ($1M+ GMV customers) as GDDY’s AI/ML sophistication and 1P data scale reduce barriers to larger e-comm customers; (3) new product attachments, e.g., Digital Marketing (lowest tier represents a +30% ARPU premium to its average ’23 total ARPU); and (4) pricing momentum is sustainable, reflecting bundling incrementality (ex Airo). Net-net, the stock still underappreciates ARPU escalators independent of Airo incrementality; and (5) our +3% ‘25E Core Platform growth y/y looks conservative given improved Aftermarket prospects YTD and abating Hosting-related divestiture impact (~1 point revenue headwind in ‘24E). We reiterate our Buy rating and $186 PT, reflecting 19.5x '25E EV/FCF, a 25% premium to '20-22 average EV/FCF multiple and roughly in line with the company’s '24E-‘26E FCF/share CAGR target. Note, our ‘24E-‘26E FCF/share CAGR of 17.8% remains -220bps below GDDY’s 20% target. And when considering the multitude of topline growth levers not contemplated in our model, we envision sustainable upward revisions to FCF trajectory NTM+."

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Shares of GoDaddy Inc closed at $164.07 yesterday.

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