GoDaddy profit beats on HEG deal, hosting business strength

(Reuters) - GoDaddy Inc reported a better-than-expected quarterly profit and revenue on Tuesday, as its Host Europe Group (HEG) acquisition helped growth across its businesses, especially its web-hosting services.

FILE PHOTO: The logo for internet company GoDaddy inc is shown on a computer screen in this illustration photo in Encinitas, California May 3, 2016. REUTERS/Mike Blake/File Photo

Shares of the company which provides a variety of services such as a marketplace to buy domain names, website building tools, hosting as well as security services were up 2.5 percent in after-market trading.

GoDaddy, which is focusing on the more profitable business of hosting websites for small businesses and consumers, acquired HEG in December to help broaden its customer base in Europe.

“We will keep looking at acquisitions...we will buy back our stock in cash and will be inquisitive if we think there’s something within our strategy,” GoDaddy Chief Executive Blake Irving told Reuters on Tuesday.

The company has been involved in multiple deals over the past year. In addition to buying HEG, the company also bought website security firm Sucuri in March and sold HEG unit PlusServer in July.

Revenue from GoDaddy’s hosting business, its second-biggest, grew 28.3 percent to $214.9 million. Analysts had expected $205.9 million, according to financial data and analytics firm FactSet.

The hosting unit is expected to be well over a billion dollar business for the company in the next couple of years, Irving said.

Total customers grew 17.8 percent to 16.9 million at June 30, including more than 1.6 million from HEG which was integrated into GoDaddy’s business in the quarter.

The company also marginally raised the lower end of its full-year revenue forecast range to $2.22 billion from $2.20 billion, while maintaining the top end at $2.23 billion.

Analysts were expecting full-year revenue of $2.21 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to the company was $20.8 million, or 10 cents per share, in the second quarter ended June 30, compared with a loss of $8.9 million, or 11 cents per share, a year earlier.

Analysts on average had expected the company to report a profit of 1 cent per share.

Total revenue rose 22.3 percent to $557.8 million, beating estimates of $551.3 million.

Average revenue per user rose 3.2 percent to $129 at the end of the quarter.

Reporting by Ismail Shakil and Anya George Tharakan in Bengaluru; Editing by Shounak Dasgupta