GoDaddy Faces Soft Near-Term Outlook as Pandemic-Era Digitization Tailwinds Fade; Shares Attractive

No-moat GoDaddy reported a mixed third-quarter fiscal 2022 result as pandemic era digitization tailwinds continue to fade, and demand softens amid challenging macroeconomic conditions. Group revenue increased 7% year on year, or 9% in constant currency, aided by resilient client retention and higher average revenue per user due to incremental uptake of website design, email and commerce solutions. While GoDaddy has benefited from an increasingly diversified product suite and exposure to higher value clients, demand for new domain registration has tempered, reflecting a pull forward of demand during the pandemic, and now a reversal toward long-term normalized growth. Despite this, GoDaddy achieved year-over-year adjusted EBITDA margin expansion of 180 basis points to 25.4%, reflecting a mix shift to higher margin products and reduced marketing spend amid a softer demand environment.