GoDaddy’s build + buy expansion continues. Its latest move was this week’s acquisition of mobile payments provider Poynt for $320 million in cash and $45 million in conditional payments over the next three years. Poynt’s technology will be integrated with GoDaddy’s SMB Commerce Platform.
Specifically, Poynt is hoped to bring more online-offline fusion to GoDaddy’s existing SMB commerce capabilities. For example, integrating Poynt with GoDaddy’s Website + Marketing program will enable SMBs to offer more transactional versatility that spans online and offline shopping.
Some of you may recognize the name Poynt from its notoriety in the early to mid-stages of the smartphone era. It was an early mobile payments leader that has since quietly grown into an SMB payments platform that offers POS systems, invoicing, loyalty programs, and transaction management.
To quantify that, Poynt is currently used by more than 100,000 merchants, driving $16 billion in gross merchandise volume. It’s compatible with Android-based smart POS terminals and its own PoyntOS-powered third party terminals. It’s also integrated with 16 different payment processors.
This reach and comprehensiveness was an attractive target for GoDaddy in accelerating its own payments growth. It was a classic buy versus build decision, with speed to market as the primary driver. GoDaddy quantifies Poynt’s near-term impact to be more than $150 million in transactions by 2023.
Back to GoDaddy’s broader expansion, the company is a product of the website-builder sector where it competes. The sector has been compelled in the past few years to expand functionality. That’s partly due to product maturity, where additional revenue streams must be achieved to maintain growth.
This trend is also due to “race to the bottom” downward pricing pressure on website components like hosting. This positions websites as more of an onboarding carrot to a larger bundle of adjacent services that have greater margin (CRM, eCommerce, etc.). That bundling play has driven an M&A land grab.
This is something we predicted last year, given the uptick in M&A activity we were tracking at the time. That theory has been validated throughout 2020, though a pandemic moved the goalposts a bit. In this case, a Covid-inflected economic downturn has created undervalued assets that fuel the M&A drive.
As we wrote at the time:
Website Builders Continue to Broaden Functionality: As the website sector in general matures, there’s less growth so competition intensifies for market share. The result is a spate of moves in the past six months to beef up their bundle of services with more functionality to attract customers and reduce churn. This has ratcheted up as website builders like GoDaddy, Automattic and others are rapidly expanding (though building and buying) to offer marketing and promotion, in addition to the core “presence” functionality of websites. That will continue into 2020, with feature expansion that most prominently includes email marketing, SEO and CRM.
Given the website world’s momentum and Covid factors that have been thrown into the mix, we’re doubling down on the above prediction for 2021. Additional Covid factors include growth in eCommerce, and product-based business’ pivots to greater online presence in general.
Even when the world returns to normal, the cat is out of the bag. Consumers have acclimated to greater levels of eCommerce (and locally-fulfilled eCommerce like order-ahead). And nimble businesses have gotten a crash course in digital strategies. These habits on both sides will be semi-permanent.
This is the latest in Localogy’s Website Windup series. It examines the ongoing evolution and advancement of SMB-focused website builders, including acquisitions and feature expansion to enhance product bundles.