By Jonathan Griffin. Editor, SEO Consultant, & Developer.
GoDaddy published on Monday its November 2016 Overview, revealing details about the financial state of the company, current values, mission statements as well as various performance metrics.
The statement, which is in PDF form, and some 29 pages long provides a wide array of information. If you have the time it makes an interesting read. We will highlight some of the more interesting parts below:
GoDaddy Vision & Mission
Their vision is relatively simple, but indicates a desire to help small businesses succeed, no matter where they are located:
- “Our vision is to radically shift the global economy toward life-fulfilling independent ventures.”
Their mission is clear. To give their customers the tools required to succeed:
- “Our mission is to help our customers kick ass by giving them the tools, insights and the people to transform their ideas and personal initiative into success, however they measure it.”
The report sets out five different company values; Be extraordinary, Own outcomes, Join forces, Work fearlessly and Live passionately.
It is clear the company values not only excellence, but also wants to promote passion when helping their customers. You can read the full values directly in the report, on page 5.
The Business Plan
We have covered briefly the GoDaddy mission statement, and touched on their values. The question is, how do they translate this into not only profit, but customer satisfaction.
The answer it would seem, is to create low-cost low-entry products such as domains and hosting, and then assist small companies to grow, which then continually upgrade and add more products such as private email, online stores, SEO services, email marketing, telephony and Office 365.
If you have ever been a GoDaddy customer, the following table will help you understand why you are subjected to so much upselling. It is obviously working for them.
According to the statement, the average annual spend per customer is $149, with an annual churn (those who don’t renew) of approximately 15 percent. Estimating a gross profit contribution of 62 percent, GoDaddy estimates a lifetime annual profit per customer of $616.
They estimate that it costs $63 to acquire each customer (advertising, affiliate commissions and other costs) with a lifetime value of roughly ten times the cost.
Average Revenue Per User (ARPU) Growth Strategy
Their strategy for customer growth appears to be twofold; Firstly, continue International Expansion, and secondly “Win the Web Pro”. The latter point is a little unclear, but we believe it relates to the quality of support and service making them the preferred hosting choice, or something like that.
To Drive ARPU, they intend to enhance the value to the customer with an expanding suite of “elegantly simple products”. An example of this is their recent acquisition of FreedomVoice to offer VOIP services.
As a customer, you may just have to get used to the upselling, however annoying it may be.
Let’s now take a look at the three types of revenue; Domains, Hosting & Presence, and Business Apps.
The revenue received from Domain sales increased by 10 percent between Q3 2015, and Q3 2016, from $215 million to $237 million respectively.
They achieved this by:
- Optimizing their domain search functionality across mobile, tablets and desktops.
- Increasing the number of customers renewing their domain
- Increasing their presence in the growing demand for aftermarket domains
- Increased customer choice, selling over 435 different Top Level Domains.
Hosting & Presence
The revenue received from their hosting and presence products rose 15 percent between Q3 2015, and Q3 2016 with revenue of $151 million and $174 million respectively.
The products falling under this category include:
- Standard hosting - including Shared, VPS hosting and dedicated solutions.
- Presence - Their growing suite of tools for small business, web designers and developers.
- WordPress - Their specialist WordPress hosting and services
There is no mention of specific actions taken to encourage growth, so we can conclude that their constant development and improvements to their range of products is the reason.
The revenue received from their business applications rose a fairly significant 36% percent between Q3 2015, and Q3 2016 with revenue of $45 million and $61 million respectively.
The products falling under this category include:
- Email Marketing - integrated with their website builder
- Microsoft 365 - strong adoption caused by bundling it in with domains and website builder.
- Workspace - professional email
It would seem revenues have been strengthened carefully bundling in these business applications with their core hosting and domain products.
A Look at GoDaddy’s Growth over the past year
We have already seen significant growth with the different product areas, but the next two screenshots reveal not only the extent of the growth internationally over the last year, but also the accelerating nature of the growth since 2014 when the new CEO, Blake Irving took over.
The first chart shows that international revenue rose 21 percent between Q3 2015, and Q3 2016 with revenue of $106 million and $129 million respectively. Significantly, GoDaddy now has presence in 56 different markets.
The second, and final chart, shows the sheer scale of the revenue growth over the past few years, as well as indicating a total revenue growth of 15% between Q3 2015, and Q3 2016 with revenue of $476 million and $534 million respectively (including bookings).
The report goes into some more accounting information, but the final highlights we will leave you with are the following:
- The outlook for Q4, 2016 growth is between $483 and $487 million, a 14 percent growth over the previous year.
- The outlook for full year 2016 revenue is between $1,845 - $1,849 million, a 15 percent growth over the previous year.
- The outlook for the full year Unlevered Free Cash Flow is estimated to be $350 million, a 20 percent growth over the previous year.