Analysis of GoDaddy’s Dan.com Acquisition

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According to a recent report, the number of registered domain names is projected to grow at 7% CAGR to 557.7 million by 2026 from 379.2 million in 2020. Recently, GoDaddy (NYSE: GDDY) reported its first quarter results that failed to impress the market.

GoDaddy’s Financials

GoDaddy’s Q2 revenues grew 10.1% to $1.015 billion, falling short of the market’s forecast of $1.02 billion. Total bookings improved 7.7% over the year to $1.118.9 billion. It reported an EPS of $0.56 per share which was better than the market’s estimates of an EPS of $0.47.

By segment, revenues from the Applications and Commerce segment grew 14.8% to $317.2 million. Core Platform revenues improved 6.6% to $698.3 million.

For the third quarter, GoDaddy forecast revenues of $1.03-$1.045 billion, compared with the market’s estimates of $1.05 million. For the year, it expects revenues of $4.10-$4.13 billion, compared with the market’s forecast of $4.15 billion.

GoDaddy’s Product Expansion

Recently, GoDaddy announced Apple Pay on GoDaddy Payments, improving the buying experience for customers while Apple selected GoDaddy as a Tap to Pay partner. The partnership will allow Apple to provide Tap to Pay on iPhone to GoDaddy customers later this year.

It also announced new capabilities within Websites + Marketing plans, making it easier for entrepreneurs to market their products, sell online, manage their business, and grow. The new features include product image enhancement such as background removal, quick view and buy capabilities, enabling single-click add to cart, integrated discounting shipping labels, and online appointment features to make calendaring and appointments more intuitive.?The new enhancements allow customers to grow their business while also building retention and creating greater lifetime value for GoDaddy. It also continues to test price increases for its Websites + Marketing product.

GoDaddy’s Dan.com Acquisition

GoDaddy recently announced its acquisition of Amsterdam-based Dan.com for an undisclosed sum. Founded in 2013 as Undeveloped.com in 2014 by Reza Sardeha, the Amsterdam-based startup renamed itself to Dan.com in early 2019. Since its inception nine years ago, Dan has reinvented domain trading from start to end by making domain trading easier and accessible to all.

Dan.com currently has 17 million domains listed, has processed over 100,000 secondary market domain transfers, and hosts 2.5 million domain for sale pages. It offers buyers and sellers access to millions of aftermarket domains in its marketplace. The acquisition will integrate Dan.com’s automation and lease to own options with GoDaddy’s platform, bolstering GoDaddy’s goal of offering domain investors an integrated experience within a best-in-class marketplace empowered by sage guidance, cutting-edge data science, and the world’s premier brokerage team. Prior to the acquisition, Dan.com had raised €500 thousand (~$516 thousand) in one round of funding led by Airbridge Equity Partners in April 2016.

GoDaddy’s stock is trading at $79.91 with a market capitalization of $12.5 billion. It touched a 52-week high of $88.32 in April. GoDaddy had fallen to a 52-week low of $64.81 in June.

Disclosure:?All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

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