10-Q 1 gddy-20220630.htm 10-Q gddy-20220630
000160971112/312022Q2FALSE
Costs and operating expenses include equity-based compensation expense as follows:
Three months ended
 June 30,
20222021
Cost of revenue$0.4 $0.2 
Technology and development35.1 27.9 
Marketing and advertising7.5 7.0 
Customer care5.5 3.7 
General and administrative18.2 12.6 
Total equity-based compensation expense$66.7 $51.4 
Components of OCI are net of the tax effects reflected below:
Unrealized swap gain (loss), net— 1.0 
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-36904
GoDaddy Inc.
(Exact name of registrant as specified in its charter)
Delaware46-5769934
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
2155 E. GoDaddy Way
Tempe, Arizona 85284
(Address of principal executive offices, including zip code)
(480) 505-8800
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.001 par value per shareGDDYNYSE
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    ☒    No    ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                    Yes    ☒    No    ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.                         ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    ☐    No    ☒
As of July 29, 2022, there were 156,367,628 shares of GoDaddy Inc.'s Class A common stock, $0.001 par value per share, outstanding and 312,223 shares of GoDaddy Inc.'s Class B common stock, $0.001 par value per share, outstanding.



GoDaddy Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended June 30, 2022

TABLE OF CONTENTS

i

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this Quarterly Report), including the sections titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors," contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, involving substantial risks and uncertainties. The words "believe," "may," "will," "potentially," "plan," "could," "should," "predict," "ongoing," "estimate," "continue," "anticipate," "intend," "project," "expect," "seek," or the negative of these words, or terms or similar expressions conveying uncertainty of future events or outcomes, or that concern our expectations, strategy, plans or intentions, are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, or expected. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements discussed under the heading "Risk Factors" and in our publicly available filings and press releases. These statements include, among other things, those regarding:
•our ability to continue to add new customers and increase sales to our existing customers;
•our ability to develop new solutions and bring them to market in a timely manner;
•our ability to timely and effectively scale and adapt our existing solutions;
•our dependence on establishing and maintaining a strong brand;
•the occurrence of service interruptions and security or privacy breaches and related remediation efforts and fines;
•system failures or capacity constraints;
•the rate of growth of, and anticipated trends and challenges in, our business and in the market for our products;
•our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, including changes in technology and development, marketing and advertising, general and administrative and customer care expenses, and our ability to achieve and maintain future profitability;
•our ability to continue to efficiently acquire customers, maintain our high customer retention rates and maintain the level of our customers' lifetime spend;
•our ability to provide high quality customer care;
•the effects of increased competition in our markets and our ability to compete effectively;
•our ability to grow internationally;
•the impact of fluctuations in foreign currency exchange rates on our business and our ability to effectively manage the exposure to such fluctuations;
•our ability to effectively manage our growth and associated investments, including our migration of the vast majority of our infrastructure to the public cloud;
•our ability to integrate acquisitions, including our recent acquisition of Pagely, our entry into new lines of business and our ability to achieve expected results from our integrations and new lines of business;
•our ability to maintain our relationships with our partners;
•adverse consequences of our substantial level of indebtedness and our ability to repay our debt;
•our ability to maintain, protect and enhance our intellectual property;
•our ability to maintain or improve our market share;
•sufficiency of cash and cash equivalents to meet our needs for at least the next 12 months;
•beliefs and objectives for future operations;
•our ability to stay in compliance with laws and regulations currently applicable to, or which may become applicable to, our business both in the United States (U.S.) and internationally;
•economic and industry trends or trend analysis;
•our ability to attract and retain qualified employees and key personnel;
ii

NOTE ABOUT FORWARD-LOOKING STATEMENTS (continued)

•anticipated income tax rates, tax estimates and tax standards;
•interest rate changes;
•the future trading prices of our Class A common stock;
•our expectations regarding the outcome of any regulatory investigation or litigation;
•the amount and timing of future repurchases of our Class A common stock under any share repurchase program;
•the potential impact of shareholder activism on our business and operations;
•the length and severity of the coronavirus (COVID-19) pandemic and its impact on our business, customers and employees;
as well as other statements regarding our future operations, financial condition, growth prospects and business strategies.
We operate in very competitive and rapidly-changing environments, and new risks emerge from time-to-time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Quarterly Report may not occur, and actual results could differ materially and adversely from those implied in our forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. Although we believe the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will be achieved or occur. Neither we, nor any other person, assume responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements for any reason after the date of this Quarterly Report to conform such statements to actual results or to changes in our expectations, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Unless expressly indicated or the context suggests otherwise, references to "GoDaddy," "company," "we," "us" and "our" refer to GoDaddy Inc. and its consolidated subsidiaries, including Desert Newco, LLC and its subsidiaries (Desert Newco).
iii
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
GoDaddy Inc.
Consolidated Balance Sheets (unaudited)
(In millions, except shares in thousands and per share amounts)
June 30,December 31,
 20222021
Assets
Current assets:
Cash and cash equivalents$770.4 $1,255.7 
Accounts and other receivables60.5 63.6 
Prepaid domain name registry fees435.7 419.7 
Prepaid expenses and other current assets285.1 150.8 
Total current assets1,551.7 1,889.8 
Property and equipment, net222.3 220.0 
Operating lease assets93.6 109.2 
Prepaid domain name registry fees, net of current portion187.5 181.4 
Goodwill3,466.8 3,540.8 
Intangible assets, net1,298.6 1,384.7 
Other assets83.6 91.2 
Total assets$6,904.1 $7,417.1 
Liabilities and stockholders' equity (deficit)
Current liabilities:
Accounts payable$97.4 $85.2 
Accrued expenses and other current liabilities355.2 437.3 
Deferred revenue1,980.5 1,890.1 
Long-term debt24.5 24.1 
Total current liabilities2,457.6 2,436.7 
Deferred revenue, net of current portion770.7 743.3 
Long-term debt, net of current portion3,848.0 3,858.2 
Operating lease liabilities, net of current portion125.9 142.7 
Other long-term liabilities87.9 77.7 
Deferred tax liabilities59.3 75.3 
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, $0.001 par value - 50,000 shares authorized; none issued and outstanding
— — 
Class A common stock, $0.001 par value - 1,000,000 shares authorized; 156,545 and 166,901 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
0.2 0.2 
Class B common stock, $0.001 par value - 500,000 shares authorized; 312 and 320 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
— — 
Additional paid-in capital1,756.3 1,594.7 
Accumulated deficit(2,302.3)(1,474.6)
Accumulated other comprehensive income (loss)98.6 (38.6)
Total stockholders' equity (deficit) attributable to GoDaddy Inc.(447.2)81.7 
Non-controlling interests1.9 1.5 
Total stockholders' equity (deficit)(445.3)83.2 
Total liabilities and stockholders' equity (deficit)$6,904.1 $7,417.1 
See accompanying notes to consolidated financial statements.
1
GoDaddy Inc.
Consolidated Statements of Operations (unaudited)
(In millions, except shares in thousands and per share amounts)

Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Revenue:
Applications & commerce$317.2 $276.2 $620.3 $538.2 
Core platform698.3 655.1 1,397.9 1,294.2 
Total revenue1,015.5 931.3 2,018.2 1,832.4 
Costs and operating expenses(1):
Cost of revenue (excluding depreciation and amortization)360.5 332.0 730.7 653.2 
Technology and development198.1 172.0 388.2 358.4 
Marketing and advertising100.7 126.5 217.0 259.2 
Customer care78.9 78.3 156.6 156.9 
General and administrative94.7 84.5 185.3 179.7 
Restructuring and other9.6 — 9.6 — 
Depreciation and amortization48.4 50.0 96.6 99.0 
Total costs and operating expenses890.9 843.3 1,784.0 1,706.4 
Operating income124.6 88.0 234.2 126.0 
Interest expense(34.9)(32.6)(68.5)(61.3)
Other income (expense), net(1.2)(0.9)(2.3)(0.2)
Income before income taxes88.5 54.5 163.4 64.5 
Benefit (provision) for income taxes2.0 (7.6)(4.3)(6.8)
Net income 90.5 46.9 159.1 57.7 
Less: net income attributable to non-controlling interests0.1 0.1 0.3 0.1 
Net income attributable to GoDaddy Inc. $90.4 $46.8 $158.8 $57.6 
Net income attributable to GoDaddy Inc. per share of Class A common stock:
Basic$0.57 $0.28 $0.98 $0.34 
Diluted$0.56 $0.27 $0.97 $0.33 
Weighted-average shares of Class A common stock outstanding:
Basic159,822 168,204 162,060 168,816 
Diluted161,739 171,129 164,503 172,388 
___________________________
(1) Costs and operating expenses include equity-based compensation expense as follows:
Cost of revenue$0.4 $0.2 $0.7 $0.4 
Technology and development35.1 27.9 68.0 54.9 
Marketing and advertising7.5 7.0 14.5 13.2 
Customer care5.5 3.7 9.7 6.7 
General and administrative18.2 12.6 35.0 28.8 
Total equity-based compensation expense$66.7 $51.4 $127.9 $104.0 
See accompanying notes to consolidated financial statements.
2
GoDaddy Inc.
Consolidated Statements of Comprehensive Income (unaudited)
(In millions)

Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Net income$90.5 $46.9 $159.1 $57.7 
Foreign exchange forward contracts gain (loss), net20.6 0.9 23.8 3.0 
Unrealized swap gain (loss), net(1)
49.1 (6.1)139.0 18.3 
Change in foreign currency translation adjustment9.0 (5.9)(25.3)27.8 
Comprehensive income169.2 35.8 296.6 106.8 
Less: comprehensive income attributable to non-controlling interests0.3 0.1 0.6 0.4 
Comprehensive income attributable to GoDaddy Inc.$168.9 $35.7 $296.0 $106.4 
___________________________
(1) Amounts are net of the tax effects reflected below:
Unrealized swap gain (loss), net$— $1.0 $(2.5)$1.5 
See accompanying notes to consolidated financial statements.
3
GoDaddy Inc.
Consolidated Statements of Stockholders' Deficit (unaudited)
(In millions, except shares in thousands)

Class A Common StockClass B Common StockAdditional
Paid-in
Capital		Accumulated DeficitAccumulated Other Comprehensive Income (Loss)Non-
Controlling
Interests		Total
SharesAmountSharesAmount
Balance at December 31, 2021166,901 $0.2 320 $— $1,594.7 $(1,474.6)$(38.6)$1.5 $83.2 
Net income — — — — — 68.4 — 0.2 68.6 
Equity-based compensation, including amounts capitalized— — — — 62.2 — — — 62.2 
Stock option exercises202 — — — 8.5 — — — 8.5 
Repurchases of Class A common stock(6,532)— — — — (750.2)— — (750.2)
Impact of derivatives, net— — — — — — 93.1 — 93.1 
Change in foreign currency translation adjustment— — — — — — (34.3)— (34.3)
Vesting of restricted stock units and other1,115 — (8)— 0.2 — (0.1)0.1 0.2 
Balance at March 31, 2022161,686 0.2 312 — 1,665.6 (2,156.4)20.1 1.8 (468.7)
Net income— — — — — 90.4 — 0.1 90.5 
Equity-based compensation, including amounts capitalized— — — — 67.5 — — — 67.5 
Stock option exercises158 — — — 4.9 — — — 4.9 
Repurchases of Class A common stock(6,059)— — — — (236.3)— — (236.3)
Issuance of Class A common stock under ESPP302 — — — 18.4 — — — 18.4 
Impact of derivatives, net— — — — — — 69.7 — 69.7 
Change in foreign currency translation adjustment— — — — — — 9.0 — 9.0 
Vesting of restricted stock units and other458 — — — (0.1)— (0.2)— (0.3)
Balance at June 30, 2022156,545 $0.2 312 $— $1,756.3 $(2,302.3)$98.6 $1.9 $(445.3)
4
GoDaddy Inc.
Condensed Consolidated Statements of Stockholders' Deficit (unaudited) (continued)
(In millions, except shares in thousands)
Class A Common StockClass B Common StockAdditional
Paid-in
Capital		Accumulated DeficitAccumulated Other Comprehensive LossNon-
Controlling
Interests		Total
SharesAmountSharesAmount
Balance at December 31, 2020169,157 $0.2 688 $— $1,308.8 $(1,190.9)$(131.0)$1.1 $(11.8)
Net income — — — — — 10.8 — — 10.8 
Equity-based compensation, including amounts capitalized— — — — 53.2 — — — 53.2 
Stock option exercises309 — — — 11.8 — — (0.2)11.6 
Repurchases of Class A common stock(2,544)— — — — (195.1)— — (195.1)
Impact of derivatives, net— — — — — — 26.5 — 26.5 
Change in foreign currency translation adjustment— — — — — — 33.7 — 33.7 
Vesting of restricted stock units and other1,523 — (209)— (0.4)— (0.4)0.9 0.1 
Balance at March 31, 2021168,445 0.2 479 — 1,373.4 (1,375.2)(71.2)1.8 (71.0)
Net income— — — — — 46.8 — 0.1 46.9 
Equity-based compensation, including amounts capitalized— — — — 52.1 — — — 52.1 
Stock option exercises337 — — — 14.2 — — — 14.2 
Repurchases of Class A common stock(956)— — — — (80.8)— — (80.8)
Issuance of Class A common stock under ESPP291 — — — 18.4 — — — 18.4 
Impact of derivatives, net— — — — — — (5.2)— (5.2)
Change in foreign currency translation adjustment— — — — — — (5.9)— (5.9)
Vesting of restricted stock units and other603 — (100)— (0.1)— — — (0.1)
Balance at June 30, 2021168,720 $0.2 379 $— $1,458.0 $(1,409.2)$(82.3)$1.9 $(31.4)
See accompanying notes to consolidated financial statements.
5
GoDaddy Inc.
Consolidated Statements of Cash Flows (unaudited)
(In millions)
 
Six Months Ended
June 30,
 20222021
Operating activities
Net income$159.1 $57.7 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization96.6 99.0 
Equity-based compensation expense127.9 104.0 
Other45.8 16.8 
Changes in operating assets and liabilities, net of amounts acquired:
Prepaid domain name registry fees(24.8)(40.6)
Deferred revenue127.0 196.4 
Other operating assets and liabilities(29.8)(2.6)
Net cash provided by operating activities501.8 430.7 
Investing activities
Business acquisitions, net of cash acquired— (320.1)
Purchases of property and equipment(30.2)(21.1)
Other investing activities(0.3)(18.7)
Net cash used in investing activities(30.5)(359.9)
Financing activities
Proceeds received from:
Issuance of senior notes— 800.0 
Stock option exercises13.3 25.8 
Issuance of Class A common stock under ESPP18.4 18.4 
Payments made for:
Repurchases of Class A common stock(967.1)(275.9)
Repayment of term loans(16.2)(16.2)
Other financing obligations(2.1)(12.5)
Net cash provided by (used in) financing activities(953.7)539.6 
Effect of exchange rate changes on cash and cash equivalents(2.9)(0.4)
Net increase (decrease) in cash and cash equivalents(485.3)610.0 
Cash and cash equivalents, beginning of period1,255.7 765.2 
Cash and cash equivalents, end of period$770.4 $1,375.2 
Cash paid during the period for:
Interest on long-term debt, including impact of interest rate swaps$59.6 $45.7 
Income taxes, net of refunds received$6.9 $11.6 
Amounts included in the measurement of operating lease liabilities$25.3 $27.0 
Supplemental disclosure of non-cash transactions
Operating lease assets obtained in exchange for operating lease liabilities$7.1 $6.5 
Accrued purchases of property and equipment at period end$6.1 $2.2 
Share repurchases not yet settled$19.3 $— 
See accompanying notes to consolidated financial statements.
6
GoDaddy Inc.
Notes to Consolidated Financial Statements (unaudited)
(In millions, except shares in thousands and per share amounts)

1.    Organization and Background
Organization
We are the sole managing member of Desert Newco, and as a result, we consolidate its financial results and report non-controlling interests representing the economic interests held by other members. The calculation of non-controlling interests excludes any net income attributable directly to GoDaddy Inc. As of June 30, 2022, we owned more than 99.8% of Desert Newco.
Basis of Presentation
Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and include our accounts and the accounts of our subsidiaries. All material intercompany accounts and transactions have been eliminated.
Our interim financial statements are unaudited, and in our opinion, include all adjustments of a normal recurring nature necessary for the fair presentation of the periods presented. The results for interim periods are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2022.
These financial statements should be read in conjunction with our audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2021, as superseded by, and solely to the extent set forth in, our Current Report on Form 8-K filed on July 15, 2022 (collectively, the 2021 Form 10-K).
Prior Period Reclassifications
In the first quarter of 2022, we revised the presentation of revenue in our statements of operations, as described in Note 2. Reclassifications of certain other immaterial prior period amounts have been made to conform to the current period presentation.
7
Use of Estimates
GAAP requires us to make estimates and assumptions affecting amounts reported in our financial statements. We periodically evaluate our estimates and adjust prospectively, if necessary. We believe our estimates and assumptions are reasonable; however, actual results may differ.
Segments
Beginning in the first quarter of 2022, we revised the presentation of segment information to reflect changes in the way we manage and evaluate our business. As such, we now report our operating results through two reportable segments: Applications and Commerce (A&C) and Core Platform (Core), as further discussed in Note 14. Accordingly, we have revised our segment information for the comparable prior year period.
2.    Summary of Significant Accounting Policies
Property and Equipment
Property and equipment, net by geography was as follows:
 June 30, 2022December 31, 2021
U.S.$165.2 $162.6 
France26.1 23.8 
All other international31.0 33.6 
$222.3 $220.0 
No other international country represented more than 10% of property and equipment, net in any period presented.
Derivative Financial Instruments
We are exposed to changes in foreign currency exchange rates, primarily relating to intercompany debt, the net assets of our foreign operations and sales transactions denominated in currencies other than the U.S. dollar, as well as to changes in interest rates as a result of our variable-rate debt. Consequently, we use derivative financial instruments to manage and mitigate such risks. We do not enter into derivative transactions for speculative or trading purposes.
We utilize a variety of derivative instruments and expect that each derivative instrument qualifying for hedge accounting will be highly effective at reducing the risk associated with the exposure being hedged. For each derivative instrument designated as a hedge, we formally document, at inception, the related risk management strategy and objective, including identification of the hedging instrument, the hedged item and the risk of exposure. In addition, we formally assess, both at the inception and at least quarterly thereafter, whether the financial instruments used in the hedging transactions are effective at offsetting changes in either the fair values or cash flows of the relating underlying exposures.
Our derivative instruments are recorded at fair value on a gross basis. For cash flow reporting purposes, proceeds received or amounts paid upon the settlement of a derivative instrument are classified in the same manner as the related item being hedged.
Cash Flow Hedges
We utilize a variety of derivative instruments designated as cash flow hedges: