Financial Data and Key Metrics - Revenue grew 7% YoY to $1.03 billion, with 9% growth on a constant currency basis [17] - Normalized EBITDA grew 15% to $263 million, with a margin rate of 25%, representing a 180 basis point expansion YoY [19] - Unlevered Free Cash Flow for the quarter totaled $297 million, growing 18% driven by strong profitability [19] - ARR for Applications and Commerce grew 10% to more than $1.2 billion, with Create and Grow products ARR growing 7% to nearly $430 million [18] - Annualized GMV across the GoDaddy ecosystem grew 10% to approximately $29 billion [18] - Core Platform revenue grew 5%, within the target range of 4% to 6%, primarily due to growth in the Aftermarket and increased pricing in domains [18] Business Line Data and Key Metrics - Applications and Commerce revenue grew 13%, within the guided range of 13% to 15%, driven by Create + Grow and Commerce products as well as email attach [17] - Core Platform revenue grew 5%, with ARR for Core Platform growing 2% to $2.3 billion [18] - Hosting business faced challenges due to uneven demand in Europe and FX pressure, with a modest decrease in revenue [18] - GoDaddy Payments saw positive momentum in new customer attachments within Websites + Marketing and Managed WordPress [12] Market Data and Key Metrics - International revenue grew 4% on a reported basis and 9% on a constant currency basis [17] - Europe, particularly the UK and Germany, experienced significant FX pressure and uneven demand [32][34] - The US market is being closely monitored, with no significant shifts reported yet [32] Company Strategy and Industry Competition - Strategic priorities include driving commerce through presence, delivering for GoDaddy Pros, and innovating in domains [7] - The company is focusing on simplifying site creation, enabling payments in all Websites + Marketing plans, and expanding OmniCommerce solutions [8][10] - GoDaddy is targeting larger customers with Managed WooCommerce Stores, aiming to serve high single-digit million sellers [11] - The company is leveraging its one-stop-shop approach to attract and retain customers, particularly in the current economic environment [37] Management Commentary on Operating Environment and Future Outlook - The company is navigating an uneven macro environment, with strong customer retention rates of over 85% [5][31] - Management remains committed to controlling costs, optimizing marketing spend, and investing in growth initiatives [6][24] - The company expects Q4 revenue in the range of $1.03 billion to $1.05 billion, representing 2% YoY growth at the midpoint [21] - Normalized EBITDA for Q4 is expected to be in the range of $250 million to $260 million, with a margin rate of 24% to 25% [23] Other Important Information - The company completed $1.15 billion of share buybacks year-to-date, repurchasing 14.8 million shares and reducing the fully diluted share count by approximately 9% [19] - GoDaddy secured a fixed power contract in Europe to mitigate rising energy costs and expanded its relationship with Amazon Web Services to reduce long-term capital spend and energy expenses [25] - The company is refinancing its 2024 debt to extend the due date to 2029, with a new term loan facility of $1.8 billion and an increased revolving credit facility to $1 billion [20] Q&A Session Summary Question: How has the top of the funnel changed from Q2 to Q3, and has the weakness in Europe extended to the US? - The macro environment has been uneven for over two years, with Europe, particularly the UK and Germany, experiencing significant FX pressure and uneven demand [31][32] - The US market is being closely monitored, with no significant shifts reported yet [32] Question: What changes are being seen in the willingness to attach additional products or buy bundled solutions? - The company is attracting customers with the right intent, leading to consistent cohort performance and rising ARPU [36] - The one-stop-shop approach is proving to be a competitive advantage, with customers attracted to the simplicity and competitive pricing [37] Question: Where did the quarter finish in terms of domains under management, and what is the contribution of the Aftermarket business? - Domains under management data will be available in the Q3 report, with some changes expected due to pull-forward effects during COVID [40] - The Aftermarket business contributed about 2% of revenue in Q4 last year, with no similar strength expected this year [41] Question: How is GoDaddy growing relative to the market in the presence segment, and what is the impact of competitors' changes in spending? - The company is encouraged by the progress in its Create and Grow products, particularly Websites + Marketing, which fits the needs of micro businesses [47] - Competitors' changes in spending have not had a significant impact yet, with GoDaddy's prices remaining very competitive [47] Question: What are the KPIs for Payable Domains, and how does Apple Pay contribute to GMV? - The company is looking at the percentage of customers signing up for and activating Payable Domains, with early engagement rates being attractive [53][55] - It is too early to determine the impact of Apple Pay on GMV, but the company is learning more about the relationship and executing towards it [56] Question: How are demand trends impacting larger users (Pros) versus SMBs, and what is the marketing environment like? - The macro environment is impacting all customer segments similarly, with Pros in the hosting business disproportionately affected by FX and European exposure [59] - The company has achieved marketing leverage through success-based thinking, with a focus on ROI and efficiency [60][63] Question: What are the key priorities for fiscal year 2023, and are there any large investment initiatives expected? - The company is focused on executing its strategic priorities and maintaining momentum into 2023, with a strong outlook for growth and profitability [66][67] Question: What is the progress on the shift to cloud services, and what is the impact on OpEx? - The company has continued to shift more applications into the cloud, improving product velocity and scalability [69] - The AWS contract helps mitigate future energy cost impacts, providing stability for OpEx in 2023 [70] Question: Are there any costs associated with the European business based in the US, and what is the status of price testing? - There is no significant impact on margins from US-based costs for the European business [73] - The company continues to test pricing in a nuanced manner, balancing macroeconomic conditions with competitive positioning [74] Question: How has the tone on the macro environment progressed, and what is the behavior of customers using Payable Domains? - The macro environment remains uneven, with the company navigating it well and maintaining strong customer retention rates [77] - It is too early to determine the behavior of customers using Payable Domains, but early engagement rates are encouraging [77] Closing Remarks - The company is proud of its performance in a challenging environment and looks forward to continuing its strategic priorities and growth initiatives [81]

Financial Performance - GoDaddy's Q3 2022 revenue increased by 7% year-over-year to $1 billion, or 9% on a constant currency basis[8] - Normalized EBITDA (NEBITDA) increased by 15% year-over-year[8] - Bookings increased by 5% year-over-year, or 7% on a constant currency basis, reaching $1.1 billion[19] - Unlevered free cash flow increased by 18% year-over-year to $297 million[19] Revenue Breakdown - Applications & Commerce revenue increased by 13% year-over-year to $326 million[22] - Core Platform revenue increased by 5% year-over-year to $333 million[21] Annualized Recurring Revenue (ARR) - Total ARR reached $3.6 billion[25] - Applications & Commerce ARR was $1.3 billion, a 10% year-over-year increase[25] - Core Platform ARR was $2.3 billion, a 2% year-over-year increase[25] - Create & Grow ARR was $0.43 billion, a 7% year-over-year increase[25] Balance Sheet and Liquidity - Total liquidity as of September 30, 2022, was $1.4 billion[35] - This includes $826 million in cash and cash equivalents[35] - And $600 million undrawn revolver[35] - Net debt was $3.07 billion, with a net leverage of approximately 2.8x[35] Capital Allocation - GoDaddy completed $1.15 billion in share repurchases through October 31, 2022, reducing the share count by approximately 9% of fully diluted shares[37] Guidance - The company projects revenue of $1.03 billion - $1.05 billion for the next quarter and $4.08 billion - $4.10 billion for the full year[41] - Applications & Commerce segment growth is expected to be 10%-12% for the next quarter and 13%-15% for the full year[41] - Core Platform segment growth is expected to be approximately flat for the next quarter and 4%-6% for the full year[41] - Unlevered free cash flow is projected to be $1.09 billion - $1.1 billion for the full year[41]

Financial Data and Key Metrics Changes - Revenue in Q2 was $1 billion, growing 9% on a reported basis and 10% on a constant currency basis [27] - Normalized EBITDA grew 30% to $258 million, with a margin of 25% representing over four points of margin expansion [30] - Unlevered free cash flow for the quarter totaled $274 million, growing 16% driven by strong profitability [31] - Free cash flow per share rose to $5.67 on a trailing 12-month basis, a 19% increase from the prior year [32] Business Line Data and Key Metrics Changes - Applications and Commerce revenue grew 15%, driven by strength in Create and Grow products and Email attach [27] - Annualized GMV across the GoDaddy ecosystem was approximately $28 billion, growing 12% [28] - Core platform revenue grew 7%, primarily due to strength in domain registration, aftermarket, and security [28] Market Data and Key Metrics Changes - International revenue grew 4% on a reported basis and 7% on a constant currency basis [27] - The company noted greater pressure for European customers due to macroeconomic factors [48] Company Strategy and Development Direction - The strategic priorities include driving Commerce through presence, delivering for GoDaddy Pros, and innovating in Domains [9] - The company is focused on attracting high-value customers, maintaining customer retention rates above 85% [7][15] - GoDaddy is committed to disciplined marketing spend aligned with demand signals to create balance across all business components [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing operational and strategic goals for the second half of 2022 despite macroeconomic challenges [33] - The adverse FX impact for the full year is expected to be approximately $35 million, leading to a revised revenue outlook of $4.1 billion to $4.13 billion [34] - Management remains focused on delivering strong financial results and maintaining a strong balance sheet [38] Other Important Information - The company completed $1 billion of share buybacks, reducing the fully diluted share count by approximately 8% since year-end [31] - GoDaddy's technology and development expenses increased as a percent of revenue to advance commerce and innovation strategies [30] Q&A Session Summary Question: What drove the sequential uptick in gross margin? - The change was primarily based on product mix, with FX impact being nominal [42] Question: Are the price increases just for new customers versus existing subscribers? - Price testing is nuanced based on geography and customer expectations, with increases potentially affecting both new and existing customers [43] Question: Are there certain areas where macro impacts are more pronounced? - Greater pressure is observed for European customers due to inflation and other macro factors [48] Question: How does the company view marketing spend in relation to demand? - Marketing spend is adjusted based on demand signals, with a focus on efficiency and optimization [50] Question: What characteristics define subscribers that are successfully upselling products? - The core funnel involves customers starting with domain purchases and attaching additional services, with a focus on intent-driven marketing [74]

[FORM 10-Q](index=1&type=section&id=FORM%2010-Q) [Note About Forward-Looking Statements](index=3&type=section&id=NOTE%20ABOUT%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclosure](index=3&type=section&id=Forward-Looking%20Statements%20Disclosure) The report contains forward-looking statements subject to substantial risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements identified by words like 'believe,' 'may,' 'will,' 'expect,' etc, which involve **substantial risks and uncertainties**[4](index=4&type=chunk)[408](index=408&type=chunk) - Key areas of uncertainty include customer retention, solution development, brand strength, and achieving future profitability[4](index=4&type=chunk)[408](index=408&type=chunk) - Readers are cautioned not to rely on forward-looking statements as predictions of future events[7](index=7&type=chunk)[411](index=411&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements and accompanying notes for GoDaddy Inc [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $770.4 | $1,255.7 | | Total current assets | $1,551.7 | $1,889.8 | | Total assets | $6,904.1 | $7,417.1 | | Total current liabilities | $2,457.6 | $2,436.7 | | Total stockholders' equity (deficit) | $(445.3) | $83.2 | - **Total assets decreased** from $7,417.1 million at December 31, 2021, to $6,904.1 million at June 30, 2022[10](index=10&type=chunk)[414](index=414&type=chunk) - Stockholders' equity shifted from a positive $83.2 million to a **deficit of $(445.3) million**[10](index=10&type=chunk)[414](index=414&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (in millions, except per share amounts) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $1,015.5 | $931.3 | $2,018.2 | $1,832.4 | | Operating income | $124.6 | $88.0 | $234.2 | $126.0 | | Net income attributable to GoDaddy Inc. | $90.4 | $46.8 | $158.8 | $57.6 | | Basic EPS | $0.57 | $0.28 | $0.98 | $0.34 | | Diluted EPS | $0.56 | $0.27 | $0.97 | $0.33 | - **Total revenue increased by 9.0%** for the three months and **10.1%** for the six months ended June 30, 2022, compared to prior year periods[13](index=13&type=chunk)[417](index=417&type=chunk) - **Net income attributable to GoDaddy Inc. increased by 93.0%** for the three months and **175.7%** for the six months ended June 30, 2022[13](index=13&type=chunk)[417](index=417&type=chunk) [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income Highlights (in millions) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net income | $90.5 | $46.9 | | Foreign exchange forward contracts gain (loss), net | $20.6 | $0.9 | | Unrealized swap gain (loss), net | $49.1 | $(6.1) | | Change in foreign currency translation adjustment | $9.0 | $(5.9) | | Comprehensive income attributable to GoDaddy Inc. | $168.9 | $35.7 | - **Comprehensive income attributable to GoDaddy Inc. significantly increased** from $35.7 million in Q2 2021 to $168.9 million in Q2 2022, largely due to foreign exchange and unrealized swap gains[16](index=16&type=chunk)[420](index=420&type=chunk) [Consolidated Statements of Stockholders' Deficit](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Deficit) Stockholders' Deficit Highlights (in millions, except shares in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Class A Common Stock (shares) | 156,545 | 166,901 | | Additional Paid-in Capital | $1,756.3 | $1,594.7 | | Accumulated Deficit | $(2,302.3) | $(1,474.6) | | Accumulated Other Comprehensive Income (Loss) | $98.6 | $(38.6) | | Total Stockholders' Equity (Deficit) | $(445.3) | $83.2 | - The company's total stockholders' equity shifted from a positive $83.2 million to a **deficit of $(445.3) million**, primarily due to an increase in accumulated deficit and share repurchases[19](index=19&type=chunk)[423](index=423&type=chunk) - Repurchases of Class A common stock amounted to **$(236.3) million** for the three months ended June 30, 2022[19](index=19&type=chunk)[423](index=423&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (in millions) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $501.8 | $430.7 | | Net cash used in investing activities | $(30.5) | $(359.9) | | Net cash provided by (used in) financing activities | $(953.7) | $539.6 | | Net increase (decrease) in cash and cash equivalents | $(485.3) | $610.0 | | Cash and cash equivalents, end of period | $770.4 | $1,375.2 | - **Net cash provided by operating activities increased by $71.1 million** to $501.8 million for the six months ended June 30, 2022[25](index=25&type=chunk)[429](index=429&type=chunk) - **Net cash used in financing activities significantly increased to $(953.7) million** for the six months ended June 30, 2022, primarily due to increased share repurchases[25](index=25&type=chunk)[429](index=429&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note 1. Organization and Background](index=11&type=section&id=Note%201.%20Organization%20and%20Background) - GoDaddy Inc. is the sole managing member of Desert Newco, consolidating its financial results and reporting non-controlling interests[29](index=29&type=chunk)[433](index=433&type=chunk) - Financial statements are prepared in accordance with GAAP and are unaudited for interim periods, including normal recurring adjustments[30](index=30&type=chunk)[434](index=434&type=chunk) - Revenue presentation was revised in Q1 2022 to align with new reportable segments, with **no impact on total revenue or net income**[31](index=31&type=chunk)[435](index=435&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=12&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) - The company uses estimates and assumptions in its financial statements, which are periodically evaluated and adjusted prospectively[33](index=33&type=chunk)[437](index=437&type=chunk) - Segment reporting was revised in Q1 2022 to reflect two reportable segments: **Applications and Commerce (A&C)** and **Core Platform (Core)**[34](index=34&type=chunk)[438](index=438&type=chunk) - Derivative financial instruments are used to manage foreign currency exchange rate and interest rate risks[37](index=37&type=chunk)[441](index=441&type=chunk)[442](index=442&type=chunk) - Revenue from A&C products is generally recognized ratably over the contract term[42](index=42&type=chunk)[446](index=446&type=chunk) - Core revenue is mostly recognized ratably over the contract term, with aftermarket domain revenue recognized upon ownership transfer[43](index=43&type=chunk)[447](index=447&type=chunk) Disaggregated Revenue by Product Type (in millions) | Product Type | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Applications and commerce | $317.2 | $276.2 | $620.3 | $538.2 | | Core platform: domains | $485.0 | $438.3 | $968.9 | $862.3 | | Core platform: other | $213.3 | $216.8 | $429.0 | $431.9 | | **Total Revenue** | **$1,015.5** | **$931.3** | **$2,018.2** | **$1,832.4** | Revenue by Geography (in millions) | Geography | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | U.S. | $684.7 | $614.1 | $1,357.6 | $1,212.1 | | International | $330.8 | $317.2 | $660.6 | $620.3 | | **Total** | **$1,015.5** | **$931.3** | **$2,018.2** | **$1,832.4** | - The company early adopted new FASB guidance on January 1, 2022, for measuring acquired liabilities from customer contracts in business combinations[55](index=55&type=chunk)[459](index=459&type=chunk) [Note 3. Goodwill and Intangible Assets](index=16&type=section&id=Note%203.%20Goodwill%20and%20Intangible%20Assets) - Goodwill was evaluated for impairment after segment reporting changes in Q1 2022, with **no impairment identified**[57](index=57&type=chunk)[461](index=461&type=chunk) Goodwill Balance by Segment (in millions) | Segment | December 31, 2021 | June 30, 2022 | | :--- | :--- | :--- | | A&C | $1,522.5 | $1,490.6 | | Core | $2,018.3 | $1,976.2 | | **Total** | **$3,540.8** | **$3,466.8** | Intangible Assets, Net (in millions) | Asset Type | Gross Carrying Amount (June 30, 2022) | Accumulated Amortization (June 30, 2022) | Net Carrying Amount (June 30, 2022) | | :--- | :--- | :--- | :--- | | Trade names and branding | $445.0 | n/a | $445.0 | | Domain portfolio | $244.9 | n/a | $244.9 | | Contractual-based assets | $256.8 | n/a | $256.8 | | Customer-related | $484.8 | $(280.5) | $204.3 | | Developed technology | $232.0 | $(146.1) | $85.9 | | Trade names and other | $109.7 | $(48.0) | $61.7 | | **Total** | **$1,773.2** | **$(474.6)** | **$1,298.6** | - Amortization expense for intangible assets was **$31.7 million** for the three months ended June 30, 2022 and 2021[59](index=59&type=chunk)[463](index=463&type=chunk) [Note 4. Stockholders' Equity](index=17&type=section&id=Note%204.%20Stockholders'%20Equity) - In January 2022, the Board approved an additional $2,251.0 million for Class A common stock repurchases, bringing the total authorized amount to **$3,000.0 million**[61](index=61&type=chunk)[465](index=465&type=chunk) - The company entered into Accelerated Share Repurchase Agreements (ASRs) in February 2022 for **$750.0 million**, repurchasing 9,202 thousand shares[62](index=62&type=chunk)[466](index=466&type=chunk) - An additional 3,389 thousand shares were repurchased in the open market for **$236.3 million** during the three months ended June 30, 2022[63](index=63&type=chunk)[467](index=467&type=chunk) - As of June 30, 2022, **$2,013.7 million of repurchase authorization remained available**[64](index=64&type=chunk)[468](index=468&type=chunk) [Note 5. Equity-Based Compensation Plans](index=17&type=section&id=Note%205.%20Equity-Based%20Compensation%20Plans) - As of June 30, 2022, **34,574 thousand shares** were available for future awards under the 2015 Equity Incentive Plan[64](index=64&type=chunk)[468](index=468&type=chunk) - The company grants stock options, Restricted Stock Units (RSUs), and Performance-based Stock Units (PSUs)[65](index=65&type=chunk)[469](index=469&type=chunk) Stock Option Activity Summary (in thousands, except per share amounts) | Metric | Number of Shares of Class A Common Stock () | Weighted-Average Exercise Price Per Share ($) | | :--- | :--- | :--- | | Outstanding at Dec 31, 2021 | 1,999 | 42.94 | | Exercised | (360) | 37.04 | | Forfeited | (26) | 71.61 | | Outstanding at Jun 30, 2022 | 1,613 | 43.79 | | Vested at Jun 30, 2022 | 1,462 | 41.28 | Stock Award Activity Summary (in thousands) | Metric | Number of Shares of Class A Common Stock () | | :--- | :--- | | Outstanding at Dec 31, 2021 | 6,766 | | Granted: RSUs | 3,700 | | Granted: TSR-based PSUs | 246 | | Vested | (1,564) | | Forfeited | (689) | | Outstanding at Jun 30, 2022 | 8,459 | - Total unrecognized compensation expense for non-vested stock options and stock awards was **$3.0 million** and **$481.9 million**, respectively, as of June 30, 2022[68](index=68&type=chunk)[472](index=472&type=chunk) [Note 6. Deferred Revenue](index=19&type=section&id=Note%206.%20Deferred%20Revenue) Deferred Revenue (in millions) | Category | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Current | $1,980.5 | $1,890.1 | | Noncurrent | $770.7 | $743.3 | | **Total** | **$2,751.2** | **$2,633.4** | - Deferred revenue increased primarily due to payments received in advance, partially offset by **$1,314.0 million of revenue recognized** during the six months ended June 30, 2022[70](index=70&type=chunk)[474](index=474&type=chunk) Expected Recognition of Deferred Revenue (in millions) | Segment | Remainder of 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | A&C | $429.1 | $263.1 | $75.7 | $18.4 | $5.7 | $4.3 | $796.3 | | Core | $904.2 | $659.6 | $193.8 | $82.7 | $49.0 | $65.6 | $1,954.9 | | **Total** | **$1,333.3** | **$922.7** | **$269.5** | **$101.1** | **$54.7** | **$69.9** | **$2,751.2** | [Note 7. Accrued Expenses and Other Current Liabilities](index=19&type=section&id=Note%207.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued Expenses and Other Current Liabilities (in millions) | Category | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Accrued payroll and employee benefits | $105.4 | $124.2 | | Tax-related accruals | $40.6 | $35.6 | | Current portion of operating lease liabilities | $36.1 | $36.9 | | Accrued legal and professional | $25.2 | $23.2 | | Accrued acquisition-related expenses and acquisition consideration payable | $21.7 | $24.5 | | Accrued marketing and advertising | $21.3 | $22.9 | | Share repurchases not yet settled | $19.3 | — | | Derivative liabilities | $2.1 | $89.5 | | Other | $83.5 | $80.5 | | **Total** | **$355.2** | **$437.3** | - Total accrued expenses and other current liabilities decreased from $437.3 million to $355.2 million, primarily due to a **significant decrease in derivative liabilities**[72](index=72&type=chunk)[476](index=476&type=chunk) [Note 8. Long-Term Debt](index=20&type=section&id=Note%208.%20Long-Term%20Debt) Long-Term Debt (in millions) | Debt Instrument | Maturity Date | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | :--- | | 2024 Term Loans | Feb 15, 2024 | $1,770.0 | $1,782.4 | | 2027 Term Loans | Aug 10, 2027 | $735.0 | $738.8 | | 2027 Senior Notes | Dec 2027 | $600.0 | $600.0 | | 2029 Senior Notes | Mar 1, 2029 | $800.0 | $800.0 | | **Total** | | **$3,905.0** | **$3,921.2** | - As of June 30, 2022, the company had **$600.0 million available under its Revolver** and was in compliance with all Credit Facility covenants[75](index=75&type=chunk)[479](index=479&type=chunk) Estimated Fair Values of Long-Term Debt (in millions) as of June 30, 2022 | Debt Instrument | Fair Value | | :--- | :--- | | 2024 Term Loans | $1,714.7 | | 2027 Term Loans | $708.4 | | 2027 Senior Notes | $558.8 | | 2029 Senior Notes | $675.4 | Future Debt Maturities (in millions) | Year Ending December 31 | Principal Payments | | :--- | :--- | | 2022 (remainder of) | $16.3 | | 2023 | $32.5 | | 2024 | $1,740.0 | | 2025 | $7.5 | | 2026 | $7.5 | | Thereafter | $2,101.2 | | **Total** | **$3,905.0** | [Note 9. Derivatives and Hedging](index=21&type=section&id=Note%209.%20Derivatives%20and%20Hedging) - The company uses foreign exchange forward contracts, cross-currency swaps, and interest rate swaps as **cash flow hedges** to manage foreign currency and interest rate risks[81](index=81&type=chunk)[485](index=485&type=chunk) - Cross-currency swaps are also designated as **net investment hedges** to mitigate foreign currency exposure on net investments in foreign operations[81](index=81&type=chunk)[485](index=485&type=chunk) Outstanding Derivative Instruments (in millions) | Instrument | Notional Amount (June 30, 2022) | Fair Value Assets (June 30, 2022) | Fair Value Liabilities (June 30, 2022) | | :--- | :--- | :--- | :--- | | Foreign exchange forward contracts | $358.1 | $18.0 | — | | Cross-currency swaps (cash flow) | $542.3 | $16.8 | $2.1 | | Interest rate swaps | $1,990.9 | $107.6 | — | | Cross-currency swaps (net investment) | $693.7 | $21.7 | — | | **Total hedges** | **$3,585.0** | **$164.1** | **$2.1** | - In March 2022, the company **extended the maturity of certain swaps to August 31, 2027**, de-designating old hedges and designating new ones[91](index=91&type=chunk)[93](index=93&type=chunk)[495](index=495&type=chunk)[497](index=497&type=chunk) - An estimated **$25.5 million of net deferred gains** from designated hedges are expected to be recognized in earnings over the next 12 months[93](index=93&type=chunk)[493](index=493&type=chunk) [Note 10. Leases](index=24&type=section&id=Note%2010.%20Leases) - Operating leases primarily cover office and data center space, with a **weighted average lease term of 7.2 years** and a **weighted average discount rate of 5.1%**[95](index=95&type=chunk)[499](index=499&type=chunk) Lease Costs (in millions) | Category | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Operating lease costs | $9.6 | $12.4 | $22.4 | $24.3 | | Variable lease costs | $2.2 | $2.1 | $4.9 | $4.8 | | Sublease income | $(1.8) | $(0.8) | $(3.6) | $(1.6) | | **Total** | **$10.0** | **$13.7** | **$23.7** | **$27.5** | [Note 11. Commitments and Contingencies](index=24&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) - The company is involved in various litigation and claims, accruing for legal contingencies when losses are **probable and estimable**[97](index=97&type=chunk)[501](index=501&type=chunk) - A **$8.1 million loss provision** related to a Telephone Consumer Protection Act class action settlement was accrued as of December 31, 2021[98](index=98&type=chunk)[502](index=502&type=chunk) - Accrual for estimated indirect tax liabilities was **$9.7 million** as of June 30, 2022[103](index=103&type=chunk)[507](index=507&type=chunk) [Note 12. Income Taxes](index=26&type=section&id=Note%2012.%20Income%20Taxes) - GoDaddy Inc. is subject to U.S. federal, state, and foreign income taxes[104](index=104&type=chunk)[508](index=508&type=chunk) - Effective tax rates differ from the U.S. federal statutory rate due to valuation allowance changes and a **$6.8 million discrete charge** in H1 2022[105](index=105&type=chunk)[509](index=509&type=chunk) - A **valuation allowance** has been recorded against deferred tax assets (DTAs) due to uncertainty regarding utilization of domestic net operating losses (NOLs)[106](index=106&type=chunk)[510](index=510&type=chunk) - A reserve of **$12.7 million** for an uncertain tax position was established in Q2 2022, with $11.9 million recorded as an increase to goodwill[109](index=109&type=chunk)[513](index=513&type=chunk) - Total gross unrecognized tax benefits were **$138.3 million** as of June 30, 2022[110](index=110&type=chunk)[514](index=514&type=chunk) [Note 13. Income Per Share](index=28&type=section&id=Note%2013.%20Income%20Per%20Share) - Basic EPS is calculated by dividing net income attributable to GoDaddy Inc. by the weighted-average Class A common stock outstanding[111](index=111&type=chunk)[515](index=515&type=chunk) Income Per Share Calculation (in millions, except shares in thousands and per share amounts) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to GoDaddy Inc. | $90.4 | $46.8 | $158.8 | $57.6 | | Weighted-average shares outstanding—basic | 159,822 | 168,204 | 162,060 | 168,816 | | Weighted-average shares outstanding—diluted | 161,739 | 171,129 | 164,503 | 172,388 | | Basic EPS | $0.57 | $0.28 | $0.98 | $0.34 | | Diluted EPS | $0.56 | $0.27 | $0.97 | $0.33 | Potentially Dilutive Shares Excluded from Diluted EPS (in thousands) | Category | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Stock options | 276 | 500 | 265 | 536 | | RSUs, PSUs and ESPP shares | 3,862 | 1,018 | 2,266 | 760 | | **Total** | **4,138** | **1,518** | **2,531** | **1,296** | [Note 14. Segment Information](index=29&type=section&id=Note%2014.%20Segment%20Information) - Effective January 1, 2022, the company reports operating results through two segments: **Applications and Commerce (A&C)** and **Core Platform (Core)**[116](index=116&type=chunk)[520](index=520&type=chunk) - Segment performance is evaluated based on revenue and **Normalized EBITDA (NEBITDA)**[116](index=116&type=chunk)[520](index=520&type=chunk) - A&C revenue includes proprietary software and commerce products, while Core revenue includes domain registrations and hosting[116](index=116&type=chunk)[520](index=520&type=chunk) Segment Revenue and NEBITDA (in millions) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Revenue:** | | | | | | A&C | $317.2 | $276.2 | $620.3 | $538.2 | | Core | $698.3 | $655.1 | $1,397.9 | $1,294.2 | | **Total Revenue** | **$1,015.5** | **$931.3** | **$2,018.2** | **$1,832.4** | | **Segment NEBITDA:** | | | | | | A&C | $131.8 | $108.3 | $251.6 | $209.2 | | Core | $198.4 | $158.2 | $376.8 | $307.8 | | Corporate overhead and other | $(71.8) | $(68.2) | $(144.1) | $(126.5) | | **Net income** | **$90.5** | **$46.9** | **$159.1** | **$57.7** | [Note 15. Accumulated Other Comprehensive Income (Loss)](index=31&type=section&id=Note%2015.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Accumulated Other Comprehensive Income (Loss) Activity (in millions) | Category | Foreign Currency Translation Adjustments | Unrealized Gains (Losses) on Cash Flow Hedges | Total AOCI | | :--- | :--- | :--- | :--- | | Gross balance as of December 31, 2021 | $(52.9) | $14.2 | $(38.7) | | Other comprehensive income (loss) before reclassifications | $(25.3) | $113.5 | $88.2 | | Amounts reclassified from AOCI | — | $49.3 | $49.3 | | Other comprehensive income (loss) | $(25.3) | $162.8 | $137.5 | | Less: AOCI attributable to non-controlling interests | | | $(0.2) | | **Balance as of June 30, 2022** | **$(78.2)** | **$177.0** | **$98.6** | - Total Accumulated Other Comprehensive Income (AOCI) shifted from a loss of $(38.7) million to a **gain of $98.6 million**, driven by unrealized gains on cash flow hedges[123](index=123&type=chunk)[527](index=527&type=chunk) [Note 16. Subsequent Events](index=31&type=section&id=Note%2016.%20Subsequent%20Events) - In July 2022, the company completed an acquisition for **$71.4 million in cash**[125](index=125&type=chunk)[529](index=529&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results of operations, covering key highlights, segment analysis, and liquidity [COVID-19](index=32&type=section&id=COVID-19) - The COVID-19 pandemic's impact on future results depends on its duration and continuing economic effects[129](index=129&type=chunk)[533](index=533&type=chunk) - The company continues to monitor the pandemic's potential impacts on its financial position, operations, and cash flows[129](index=129&type=chunk)[533](index=533&type=chunk) [Overview](index=32&type=section&id=Overview) - GoDaddy Inc. is a global leader serving everyday entrepreneurs with simple, easy-to-use products and personalized guidance[130](index=130&type=chunk)[534](index=534&type=chunk) - The business is managed and reported in two segments: **Applications and Commerce (A&C)** and **Core Platform (Core)**[130](index=130&type=chunk)[534](index=534&type=chunk) - A&C includes proprietary software and commerce products, while Core Platform focuses on domain registrations and hosting[130](index=130&type=chunk)[534](index=534&type=chunk) [Consolidated Second Quarter Financial Highlights](index=32&type=section&id=Consolidated%20Second%20Quarter%20Financial%20Highlights) Consolidated Second Quarter Financial Highlights (Three Months Ended June 30) | Metric | 2022 ($M) | 2021 ($M) | Change (%) | | :--- | :--- | :--- | :--- | | Total revenue | 1,015.5 | 931.3 | 9.0% | | International revenue | 330.8 | 317.2 | 4.3% | | Total bookings | 1,118.9 | 1,054.8 | 6.1% | | Operating income | 124.6 | 88.0 | 41.6% | | Net income | 90.5 | 46.9 | 93.0% | | Normalized EBITDA | 258.4 | 198.3 | 30.3% | | Net cash from operating activities | 250.9 | 209.4 | 19.8% | - **Total revenue increased by 9.0%** (10.1% constant currency) for the three months ended June 30, 2022[131](index=131&type=chunk)[535](index=535&type=chunk) - **Net income increased by 93.0%** to $90.5 million for the three months ended June 30, 2022[131](index=131&type=chunk)[535](index=535&type=chunk) [Consolidated Results of Operations](index=33&type=section&id=Consolidated%20Results%20of%20Operations) [Revenue](index=33&type=section&id=Revenue) - Total revenue for Q2 2022 was **$1,015.5 million**, an increase of 9.0% (10.1% on a constant currency basis)[136](index=136&type=chunk)[540](index=540&type=chunk) - **Applications & Commerce (A&C) revenue increased by 14.8%** to $317.2 million, driven by adoption of productivity and commerce solutions[136](index=136&type=chunk)[540](index=540&type=chunk) - **Core Platform revenue increased by 6.6%** to $698.3 million, driven by aftermarket domain sales and registry business growth[137](index=137&type=chunk)[541](index=541&type=chunk) [Bookings](index=35&type=section&id=Bookings) Total Bookings (in millions) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total bookings | $1,118.9 | $1,054.8 | $64.1 | 6% | - **Total bookings increased by 6.1%** for the three and six months ended June 30, 2022, driven by aftermarket sales and customer growth[139](index=139&type=chunk)[543](index=543&type=chunk) - Bookings growth was partially offset by approximately **160 basis points due to adverse foreign currency movements**[139](index=139&type=chunk)[543](index=543&type=chunk) [Costs and Operating Expenses](index=35&type=section&id=Costs%20and%20Operating%20Expenses) [Cost of revenue](index=35&type=section&id=Cost%20of%20revenue) Cost of Revenue (excluding depreciation and amortization) (in millions) | Period | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $360.5 | $332.0 | $28.5 | 9% | | Six Months Ended June 30 | $730.7 | $653.2 | $77.5 | 12% | - The increases were primarily due to higher domain costs, increased software licensing fees, and growth in payment processing business[142](index=142&type=chunk)[546](index=546&type=chunk) [Technology and development](index=36&type=section&id=Technology%20and%20development) Technology and Development Expenses (in millions) | Period | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $198.1 | $172.0 | $26.1 | 15% | | Six Months Ended June 30 | $388.2 | $358.4 | $29.8 | 8% | - Increases were driven by **higher personnel costs** due to increased headcount and increased technology costs related to business growth[144](index=144&type=chunk)[548](index=548&type=chunk) - The six-month increase was partially offset by a **$25.2 million decrease in compensation expense** from prior acquisitions[144](index=144&type=chunk)[548](index=548&type=chunk) [Marketing and advertising](index=36&type=section&id=Marketing%20and%20advertising) Marketing and Advertising Expenses (in millions) | Period | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $100.7 | $126.5 | $(25.8) | (20)% | | Six Months Ended June 30 | $217.0 | $259.2 | $(42.2) | (16)% | - Decreases were primarily due to **lower discretionary spending** in the first half of 2022 compared to significant marketing investments in 2021[146](index=146&type=chunk)[550](index=550&type=chunk) [Customer care](index=37&type=section&id=Customer%20care) Customer Care Expenses (in millions) | Period | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $78.9 | $78.3 | $0.6 | 1% | | Six Months Ended June 30 | $156.6 | $156.9 | $(0.3) | 0% | - There were **no material changes** in customer care expenses for the periods presented[149](index=149&type=chunk)[553](index=553&type=chunk) [General and administrative](index=37&type=section&id=General%20and%20administrative) General and Administrative Expenses (in millions) | Period | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $94.7 | $84.5 | $10.2 | 12% | | Six Months Ended June 30 | $185.3 | $179.7 | $5.6 | 3% | - The **12.1% increase** for Q2 2022 was due to increased personnel costs and acquisition-related expenses[150](index=150&type=chunk)[554](index=554&type=chunk) - The **3.1% increase** for H1 2022 was due to increased personnel costs, partially offset by a reversal of equity-based compensation expense[151](index=151&type=chunk)[555](index=555&type=chunk) [Depreciation and amortization](index=37&type=section&id=Depreciation%20and%20amortization) Depreciation and Amortization Expenses (in millions) | Period | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $48.4 | $50.0 | $(1.6) | (3)% | | Six Months Ended June 30 | $96.6 | $99.0 | $(2.4) | (2)% | - There were **no material changes** in depreciation and amortization expenses for the periods presented[153](index=153&type=chunk)[557](index=557&type=chunk) [Interest expense](index=38&type=section&id=Interest%20expense) Interest Expense (in millions) | Period | 2022 ($M) | 2021 ($M) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $34.9 | $32.6 | $2.3 | 7% | | Six Months Ended June 30 | $68.5 | $61.3 | $7.2 | 12% | - The increases were primarily driven by the issuance of the **2029 Senior Notes** in February 2021[154](index=154&type=chunk)[558](index=558&type=chunk) [Segment Results of Operations](index=38&type=section&id=Segment%20Results%20of%20Operations) [Applications & Commerce](index=38&type=section&id=Applications%20&%20Commerce) Applications & Commerce Segment Performance (in millions) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $317.2 | $276.2 | $41.0 | 15% | | Segment NEBITDA | $131.8 | $108.3 | $23.5 | 22% | - **A&C revenue increased by 14.8%** (three months) and **15.3%** (six months) due to higher sales of productivity solutions and commerce-related revenue[157](index=157&type=chunk)[561](index=561&type=chunk) - **A&C Segment NEBITDA increased by 21.7%** (three months) and **20.3%** (six months), driven by revenue growth and lower marketing spend[158](index=158&type=chunk)[562](index=562&type=chunk) [Core Platform](index=38&type=section&id=Core%20Platform) Core Platform Segment Performance (in millions) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $698.3 | $655.1 | $43.2 | 7% | | Segment NEBITDA | $198.4 | $158.2 | $40.2 | 25% | - **Core revenue increased by 6.6%** (three months) and **8.0%** (six months) due to increased aftermarket domain sales and registry business growth[160](index=160&type=chunk)[564](index=564&type=chunk) - **Core Segment NEBITDA increased by 25.4%** (three months) and **22.4%** (six months), driven by revenue growth and lower marketing spend[161](index=161&type=chunk)[565](index=565&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) [Overview](index=39&type=section&id=Overview) - Principal liquidity sources are cash flow from operations, long-term debt, and stock option exercises[162](index=162&type=chunk)[566](index=566&type=chunk) - Capital deployment prioritizes operations, then growth investments, and finally stockholder returns[163](index=163&type=chunk)[567](index=567&type=chunk) - Existing cash and operating cash flow are expected to meet operating needs for at least the next 12 months[165](index=165&type=chunk)[569](index=569&type=chunk) [Credit Facility and Senior Notes](index=39&type=section&id=Credit%20Facility%20and%20Senior%20Notes) - Long-term debt includes a Credit Facility (2024 and 2027 Term Loans, Revolver) and Senior Notes (2027 and 2029)[166](index=166&type=chunk)[570](index=570&type=chunk) - As of June 30, 2022, the company was in compliance with all debt covenants and had **$600.0 million available under the Revolver**[166](index=166&type=chunk)[570](index=570&type=chunk) - A portion of long-term debt is hedged using cross-currency and interest rate swap derivative instruments[167](index=167&type=chunk)[571](index=571&type=chunk) [Share Repurchases](index=39&type=section&id=Share%20Repurchases) - The Board authorized repurchases of up to **$3,000.0 million** of Class A common stock, with **$2,013.7 million remaining** as of June 30, 2022[168](index=168&type=chunk)[572](index=572&type=chunk)[573](index=573&type=chunk) - In February 2022, the company entered into ASRs for **$750.0 million**, repurchasing 9,202 thousand shares[168](index=168&type=chunk)[572](index=572&type=chunk) - An additional 3,389 thousand shares were repurchased in the open market for **$236.3 million** during Q2 2022[169](index=169&type=chunk)[573](index=573&type=chunk) [Acquisitions](index=40&type=section&id=Acquisitions) - In July 2022, the company completed an acquisition for **$71.4 million in cash**[169](index=169&type=chunk)[573](index=573&type=chunk) [Cash Flows](index=40&type=section&id=Cash%20Flows) [Operating Activities](index=40&type=section&id=Operating%20Activities) - **Net cash provided by operating activities increased by $71.1 million** to $501.8 million for H1 2022, driven by bookings growth and reduced marketing[172](index=172&type=chunk)[576](index=576&type=chunk) - This increase was partially offset by higher personnel costs and third-party commissions[172](index=172&type=chunk)[576](index=576&type=chunk) [Investing Activities](index=40&type=section&id=Investing%20Activities) - **Net cash used in investing activities decreased by $329.4 million** to $30.5 million for H1 2022, due to a $320.1 million decrease in acquisition spending[173](index=173&type=chunk)[577](index=577&type=chunk) [Financing Activities](index=40&type=section&id=Financing%20Activities) - **Net cash from financing activities decreased by $1,493.3 million**, shifting from $539.6 million provided in H1 2021 to $953.7 million used in H1 2022[174](index=174&type=chunk)[578](index=578&type=chunk) - This change was primarily due to **$800.0 million in proceeds from 2029 Senior Notes** in 2021 and a **$691.2 million increase in share repurchases** in 2022[174](index=174&type=chunk)[578](index=578&type=chunk) [Deferred Revenue](index=42&type=section&id=Deferred%20Revenue) - Details on the expected future recognition of deferred revenue are provided in Note 6 to the financial statements[175](index=175&type=chunk)[579](index=579&type=chunk) [Off-Balance Sheet Arrangements](index=42&type=section&id=Off-Balance%20Sheet%20Arrangements) - As of June 30, 2022, the company had **no off-balance sheet arrangements** with a material effect on its financial statements[176](index=176&type=chunk)[580](index=580&type=chunk) [Critical Accounting Policies and Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Financial statements are prepared using GAAP, requiring estimates, assumptions, and judgments affecting reported amounts[177](index=177&type=chunk)[581](index=581&type=chunk) - There have been **no material changes** in critical accounting policies from those disclosed in the 2021 Form 10-K[178](index=178&type=chunk)[582](index=582&type=chunk) [Recent Accounting Pronouncements](index=42&type=section&id=Recent%20Accounting%20Pronouncements) - Information regarding recent accounting pronouncements is detailed in Note 2 to the financial statements[179](index=179&type=chunk)[583](index=583&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency exchange rates and variable interest rates, managed via derivative instruments - GoDaddy is exposed to market risk from foreign currency exchange rates and variable interest rates, mitigated by derivative financial instruments[180](index=180&type=chunk)[584](index=584&type=chunk) - Counterparty credit risk from derivatives is managed by contracting with selected financial institutions based on creditworthiness[181](index=181&type=chunk)[585](index=585&type=chunk) [Foreign Currency Risk](index=42&type=section&id=Foreign%20Currency%20Risk) - Foreign currency risk is managed using foreign exchange forward contracts and cross-currency swap contracts[182](index=182&type=chunk)[586](index=586&type=chunk) - A hypothetical **10% change in foreign currency exchange rates** would not materially impact cash and cash equivalents[182](index=182&type=chunk)[586](index=586&type=chunk) - Foreign currency fluctuations adversely impacted total bookings growth by **160 basis points** and total revenue growth by **110 basis points** for Q2 2022[183](index=183&type=chunk)[587](index=587&type=chunk) [Foreign Exchange Forward Contracts](index=42&type=section&id=Foreign%20Exchange%20Forward%20Contracts) - Foreign exchange forward contracts are used to hedge forecasted foreign currency sales transactions, designated as cash flow hedges[185](index=185&type=chunk)[589](index=589&type=chunk) - As of June 30, 2022, realized and unrealized gains included in AOCI were **$4.3 million** and **$17.9 million**, respectively[185](index=185&type=chunk)[589](index=589&type=chunk) [Cross-Currency Swaps](index=44&type=section&id=Cross-Currency%20Swaps) - Cross-currency swaps manage variability from Euro-denominated intercompany loans, with maturities extended to August 31, 2027[186](index=186&type=chunk)[187](index=187&type=chunk)[590](index=590&type=chunk)[591](index=591&type=chunk) - Swaps designated as cash flow hedges convert Euro interest/principal receipts to fixed U.S. dollar rates[187](index=187&type=chunk)[591](index=591&type=chunk) [Interest Rate Risk](index=44&type=section&id=Interest%20Rate%20Risk) - Interest rate risk is associated with variable-rate debt, including **$1,770.0 million** of 2024 Term Loans and **$735.0 million** of 2027 Term Loans[188](index=188&type=chunk)[592](index=592&type=chunk) - Interest rate swaps convert portions of variable-rate borrowings to fixed rates[189](index=189&type=chunk)[190](index=190&type=chunk)[593](index=593&type=chunk)[594](index=594&type=chunk) - A hypothetical **10% change in interest rates** would not materially impact interest expense for the unhedged portion of long-term debt[190](index=190&type=chunk)[594](index=594&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective as of June 30, 2022, with no material changes in internal control - Management, including the CEO and CFO, concluded that disclosure controls and procedures were **effective** as of June 30, 2022[193](index=193&type=chunk)[597](index=597&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended June 30, 2022[194](index=194&type=chunk)[598](index=598&type=chunk) - Controls and procedures provide only **reasonable, not absolute, assurance** of achieving control objectives[195](index=195&type=chunk)[599](index=599&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) A shareholder derivative complaint was filed in June 2022 related to Tax Receivable Agreement (TRA) Settlement Agreements - A shareholder derivative complaint was filed on June 7, 2022, alleging **breach of fiduciary duty and corporate waste** related to TRA Settlement Agreements[197](index=197&type=chunk)[601](index=601&type=chunk) - The complaint seeks monetary damages, restitution, and changes to corporate governance and internal procedures[197](index=197&type=chunk)[601](index=601&type=chunk) - Further details on legal proceedings are incorporated by reference from Note 11 to the financial statements[198](index=198&type=chunk)[602](index=602&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) The company faces various risks that could materially affect its business, financial condition, and growth prospects - The company's operations and financial results are subject to various risks and uncertainties, which could materially and adversely affect its business[199](index=199&type=chunk)[603](index=603&type=chunk) - Key risk categories include customer retention, product development, competition, international expansion, system failures, and regulatory changes[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk) [Risk Factor Summary](index=46&type=section&id=Risk%20Factor%20Summary) - Inability to attract and retain customers or increase sales to new and existing customers[200](index=200&type=chunk)[201](index=201&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk) - Failure to successfully develop and market products that meet or anticipate customer needs[200](index=200&type=chunk)[201](index=201&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk) - Suffering if the small business market is less lucrative or if small business customers are not effectively acquired and serviced[200](index=200&type=chunk)[201](index=201&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk) - Adverse effects if unable to attract a more diverse customer base (Independents, Web Pros, Domain Registrars, Investors, tech-savvy users)[200](index=200&type=chunk)[201](index=201&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk) - Harm to business and competitive position if the brand is not protected or promoted[200](index=200&type=chunk)[201](index=201&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk) - Significant and intensifying competition for applications, commerce, and core platform products[200](index=200&type=chunk)[201](index=201&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk) - Additional risks due to continued international presence and dependence on international bookings for future growth[200](index=200&type=chunk)[201](index=201&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk) - Investments to support growth strategy may not succeed, and ineffective management of future growth could adversely affect operating results[200](index=200&type=chunk)[201](index=201&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk) - Acquisitions of other businesses or talent could require significant management attention, disrupt business, dilute stockholder value, and adversely affect operating results[200](index=200&type=chunk)[201](index=201&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk) - Entry into new lines of business may subject the company to additional risks[200](index=200&type=chunk)[201](index=201&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[606](index=606&type=chunk) [Strategic Risks](index=47&type=section&id=Strategic%20Risks) - Success depends on attracting and retaining customers; **slower growth rates** in recent periods reflect business maturity, and future growth is uncertain[204](index=204&type=chunk)[608](index=608&type=chunk) - Failure to maintain **strong renewal rates**, which have lower associated costs than new customer acquisition, would reduce operating margins[205](index=205&type=chunk)[609](index=609&type=chunk) - Inability to attract a **diverse customer base** or effectively serve the small business market could harm growth and profitability[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[610](index=610&type=chunk)[611](index=611&type=chunk)[612](index=612&type=chunk)[613](index=613&type=chunk) - Failure to timely develop and market products that anticipate customer needs could adversely affect business[210](index=210&type=chunk)[211](index=211&type=chunk)[614](index=614&type=chunk)[615](index=615&type=chunk) - **Brand protection and promotion** are crucial for attracting new customers globally; activist groups targeting the brand could cause harm[214](index=214&type=chunk)[215](index=215&type=chunk)[618](index=618&type=chunk)[619](index=619&type=chunk) - Evolving Internet technologies could **reduce the value and demand for domain names**, impacting market share[216](index=216&type=chunk)[217](index=217&type=chunk)[620](index=620&type=chunk)[621](index=621&type=chunk) - **Significant competition** from providers like Google, Amazon, Microsoft, Wix, and Shopify could lead to lower sales and reduced margins[221](index=221&type=chunk)[222](index=222&type=chunk)[625](index=625&type=chunk)[626](index=626&type=chunk) - **International expansion** faces risks including compliance with foreign laws, currency exposure, and geopolitical events (e.g, Russia-Ukraine conflict)[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[628](index=628&type=chunk)[629](index=629&type=chunk)[630](index=630&type=chunk)[631](index=631&type=chunk) - Significant investments in growth strategy, including international operations and cloud migration, **may not succeed** or may have delayed benefits[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk)[632](index=632&type=chunk)[633](index=633&type=chunk)[634](index=634&type=chunk)[635](index=635&type=chunk) - **Acquisitions involve risks** such as integration difficulties, unknown liabilities, dilution of stockholder value, and potential impairment charges[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk)[636](index=636&type=chunk)[637](index=637&type=chunk)[638](index=638&type=chunk)[639](index=639&type=chunk)[640](index=640&type=chunk)[641](index=641&type=chunk) - Entering new lines of business introduces risks like diversion of resources, regulatory burdens, and inability to compete effectively[238](index=238&type=chunk)[239](index=239&type=chunk)[642](index=642&type=chunk)[643](index=643&type=chunk) - Failure to maintain corporate culture could negatively affect talent retention, innovation, and operational effectiveness[239](index=239&type=chunk)[240](index=240&type=chunk)[643](index=643&type=chunk)[644](index=644&type=chunk) [Operational Risks](index=56&type=section&id=Operational%20Risks) - The company is exposed to **system failures and capacity constraints**, which can disrupt operations and impact reputation[241](index=241&type=chunk)[242](index=242&type=chunk)[645](index=645&type=chunk)[646](index=646&type=chunk) - **Reliance on third parties** (e.g, AWS) exposes the company to risks of service interruptions, cyber attacks, and increased costs[243](index=243&type=chunk)[244](index=244&type=chunk)[647](index=647&type=chunk)[648](index=648&type=chunk) - The company faces a high rate of **sophisticated network attacks**, which could lead to service disruptions and unauthorized data access[245](index=245&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk)[649](index=649&type=chunk)[650](index=650&type=chunk)[651](index=651&type=chunk)[652](index=652&type=chunk) - **Past security incidents** highlight ongoing risks of litigation, regulatory inquiries, fines, and significant remediation costs[249](index=249&type=chunk)[653](index=653&type=chunk) - **Breaches of confidential, personal, or payment card information** could harm reputation and lead to liability and government investigations[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)[654](index=654&type=chunk)[655](index=655&type=chunk)[656](index=656&type=chunk)[657](index=657&type=chunk)[658](index=658&type=chunk)[659](index=659&type=chunk) - **Marketing efforts** are critical for brand promotion; failure to optimize campaigns could adversely affect business[256](index=256&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk)[660](index=660&type=chunk)[661](index=661&type=chunk)[662](index=662&type=chunk) - **High-quality customer care** is essential for retention; failure to maintain it could harm reputation and financial results[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[663](index=663&type=chunk)[664](index=664&type=chunk)[665](index=665&type=chunk) - **Dependence on senior management** and key employees means loss of their services could delay strategic objectives[262](index=262&type=chunk)[666](index=666&type=chunk) - Inability to **hire and retain qualified personnel**, particularly those with technical skills, could harm business[263](index=263&type=chunk)[264](index=264&type=chunk)[667](index=667&type=chunk)[668](index=668&type=chunk) - Failure to maintain contractual relationships with **partners** (e.g, Microsoft, PayPal) could limit product offerings and increase costs[265](index=265&type=chunk)[266](index=266&type=chunk)[669](index=669&type=chunk)[670](index=670&type=chunk) - **Improper registration or maintenance of customer domain names** could lead to expenses, claims, and negative publicity[267](index=267&type=chunk)[268](index=268&type=chunk)[671](index=671&type=chunk)[672](index=672&type=chunk) - **Reliance on internally developed systems** means maintenance difficulties could cause service interruptions and increase expenditures[269](index=269&type=chunk)[270](index=270&type=chunk)[673](index=673&type=chunk)[674](index=674&type=chunk) - **Reliance on a limited number of data centers** exposes the business to risks of damage and interruption[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk)[675](index=675&type=chunk)[676](index=676&type=chunk)[677](index=677&type=chunk)[678](index=678&type=chunk)[679](index=679&type=chunk) - Exposure to **credit card and payment chargebacks and fraud** could lead to increased refunds and liability[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk)[680](index=680&type=chunk)[681](index=681&type=chunk)[682](index=682&type=chunk)[683](index=683&type=chunk)[684](index=684&type=chunk) [Financial Risks](index=65&type=section&id=Financial%20Risks) - Quarterly and annual operating results are subject to **fluctuations** due to factors like customer acquisition, renewal rates, and macroeconomic conditions[281](index=281&type=chunk)[283](index=283&type=chunk)[685](index=685&type=chunk)[687](index=687&type=chunk) - Failure to meet revenue or operating results expectations could lead to **stock price decline**[285](index=285&type=chunk)[688](index=688&type=chunk) - The company may **not achieve or maintain future profitability** due to increased expenditures or slower revenue growth[286](index=286&type=chunk)[287](index=287&type=chunk)[690](index=690&type=chunk)[691](index=691&type=chunk) - **Future financing** may be needed but might not be available on acceptable terms, potentially leading to dilution[288](index=288&type=chunk)[289](index=289&type=chunk)[692](index=692&type=chunk)[693](index=693&type=chunk) - **Revenue recognition over subscription terms** means sales changes are not immediately reflected in operating results[290](index=290&type=chunk)[291](index=291&type=chunk)[694](index=694&type=chunk)[695](index=695&type=chunk) - Unanticipated changes in **effective tax rates** or adverse audit outcomes could harm operating results[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[696](index=696&type=chunk)[697](index=697&type=chunk)[698](index=698&type=chunk) - **Dependence on distributions from Desert Newco** to pay expenses and taxes means restrictions could adversely affect financial condition[295](index=295&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk)[699](index=699&type=chunk)[700](index=700&type=chunk)[701](index=701&type=chunk) - **Substantial indebtedness** could adversely affect financial condition and restrict business operations[299](index=299&type=chunk)[300](index=300&type=chunk)[703](index=703&type=chunk)[704](index=704&type=chunk) - **Debt agreements impose significant operating and financial restrictions**, limiting ability to incur debt, pay dividends, and make investments[301](index=301&type=chunk)[302](index=302&type=chunk)[303](index=303&type=chunk)[705](index=705&type=chunk)[706](index=706&type=chunk)[707](index=707&type=chunk) - Ability to service and repay debt depends on cash flow; **failure could lead to default** and acceleration of obligations[304](index=304&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk)[307](index=307&type=chunk)[708](index=708&type=chunk)[709](index=709&type=chunk)[710](index=710&type=chunk)[711](index=711&type=chunk) - A **change of control** triggering event could require repurchase of Senior Notes, potentially leading to default[308](index=308&type=chunk)[712](index=712&type=chunk) [Legal and Regulatory Risks](index=73&type=section&id=Legal%20and%20Regulatory%20Risks) - Governmental and regulatory policies concerning the domain name system, particularly **ICANN's role**, may cause industry instability[309](index=309&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk)[713](index=713&type=chunk)[714](index=714&type=chunk)[715](index=715&type=chunk)[716](index=716&type=chunk)[717](index=717&type=chunk) - Conflicts between global privacy laws (e.g, **GDPR**) and ICANN policies could impact revenue[314](index=314&type=chunk)[718](index=718&type=chunk) - Delays in ICANN authorizing new **Top-Level Domains (TLDs)** could adversely impact business[315](index=315&type=chunk)[316](index=316&type=chunk)[719](index=719&type=chunk)[720](index=720&type=chunk) - **Increases in domain name registration fees** imposed by registries (e.g, VeriSign) and ICANN could raise costs or reduce margins[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk)[722](index=722&type=chunk)[723](index=723&type=chunk)[724](index=724&type=chunk) - Failure to comply with **privacy and data protection laws** (e.g, CCPA, GDPR) could result in sanctions and harm to reputation[321](index=321&type=chunk)[322](index=322&type=chunk)[323](index=323&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk)[327](index=327&type=chunk)[328](index=328&type=chunk)[725](index=725&type=chunk)[726](index=726&type=chunk)[727](index=727&type=chunk)[728](index=728&type=chunk)[729](index=729&type=chunk)[730](index=730&type=chunk)[731](index=731&type=chunk)[732](index=732&type=chunk) - **Customer activities or website content** could lead to liability and negative publicity[329](index=329&type=chunk)[330](index=330&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk)[733](index=733&type=chunk)[734](index=734&type=chunk)[735](index=735&type=chunk)[736](index=736&type=chunk)[737](index=737&type=chunk) - Dependence on customers' **unimpeded Internet access** means providers blocking access could lead to customer loss[334](index=334&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk)[738](index=738&type=chunk)[739](index=739&type=chunk)[740](index=740&type=chunk) - Involvement in **lawsuits**, including class actions, is expensive and could lead to substantial damages or fines[337](index=337&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk)[340](index=340&type=chunk)[741](index=741&type=chunk)[742](index=742&type=chunk)[743](index=743&type=chunk)[744](index=744&type=chunk) - Failure to protect and enforce **intellectual property rights** could harm business and operating results[341](index=341&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk)[344](index=344&type=chunk)[345](index=345&type=chunk)[745](index=745&type=chunk)[746](index=746&type=chunk)[747](index=747&type=chunk)[748](index=748&type=chunk)[749](index=749&type=chunk) - Involvement in **intellectual property claims by third parties** is costly and could result in significant expenses or injunctions[346](index=346&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk)[750](index=750&type=chunk)[751](index=751&type=chunk)[752](index=752&type=chunk) - **Disputes over domain name registration** could lead to liability and damage to reputation[349](index=349&type=chunk)[350](index=350&type=chunk)[351](index=351&type=chunk)[753](index=753&type=chunk)[754](index=754&type=chunk)[755](index=755&type=chunk) - Use of **open source technology** could impose limitations on commercializing products[352](index=352&type=chunk)[353](index=353&type=chunk)[756](index=756&type=chunk)[757](index=757&type=chunk) - **Data localization requirements** in certain jurisdictions may increase operating costs[354](index=354&type=chunk)[758](index=758&type=chunk) - New governmental regulations regarding the Internet could increase costs or restrict business operations[355](index=355&type=chunk)[356](index=356&type=chunk)[759](index=759&type=chunk)[760](index=760&type=chunk) - Subject to **export controls and trade sanctions**; non-compliance could lead to civil/criminal penalties[357](index=357&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk)[360](index=360&type=chunk)[761](index=761&type=chunk)[762](index=762&type=chunk)[763](index=763&type=chunk)[764](index=764&type=chunk) - Violations of **anti-bribery and anti-corruption laws** could result in criminal/civil penalties and reputational damage[361](index=361&type=chunk)[362](index=362&type=chunk)[363](index=363&type=chunk)[765](index=765&type=chunk)[766](index=766&type=chunk)[767](index=767&type=chunk) - Changes in **taxation laws** may discourage domain name registration or increase costs[364](index=364&type=chunk)[365](index=365&type=chunk)[768](index=768&type=chunk)[769](index=769&type=chunk) - **Payments business (GoDaddy Payments)** is subject to various laws and payment network rules; non-compliance could lead to penalties[366](index=366&type=chunk)[367](index=367&type=chunk)[368](index=368&type=chunk)[369](index=369&type=chunk)[370](index=370&type=chunk)[770](index=770&type=chunk)[771](index=771&type=chunk)[772](index=772&type=chunk)[773](index=773&type=chunk)[774](index=774&type=chunk) [Risks Related to Owning our Class A Common Stock](index=90&type=section&id=Risks%20Related%20to%20Owning%20our%20Class%20A%20Common%20Stock) - **Shareholder activism** could negatively impact business by disrupting operations and diverting management attention[371](index=371&type=chunk)[775](index=775&type=chunk) - The Class A common stock price may be **highly volatile** due to market fluctuations, operating results, and macroeconomic conditions[372](index=372&type=chunk)[373](index=373&type=chunk)[776](index=776&type=chunk)[777](index=777&type=chunk) - Provisions in the company's charter and bylaws may have **anti-takeover effects**[374](index=374&type=chunk)[375](index=375&type=chunk)[376](index=376&type=chunk)[778](index=778&type=chunk)[779](index=779&type=chunk)[780](index=780&type=chunk) - Bylaws designate **Delaware Court of Chancery as exclusive forum** for certain litigation, potentially limiting stockholders' choice of forum[377](index=377&type=chunk)[378](index=378&type=chunk)[781](index=781&type=chunk)[782](index=782&type=chunk) - The company **does not intend to pay dividends**, making capital appreciation the sole source of gain for investors[379](index=379&type=chunk)[783](index=783&type=chunk) - There is **no guarantee of additional share repurchases**, and failure to repurchase could negatively impact stock price[380](index=380&type=chunk)[381](index=381&type=chunk)[784](index=784&type=chunk)[785](index=785&type=chunk) [Other Risks](index=93&type=section&id=Other%20Risks) - The **COVID-19 pandemic** has adversely impacted customers and could harm business by reducing spending and disrupting operations[382](index=382&type=chunk)[383](index=383&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk)[786](index=786&type=chunk)[787](index=787&type=chunk)[788](index=788&type=chunk)[789](index=789&type=chunk) - **Economic conditions** (e.g, inflation, Russia-Ukraine conflict) may adversely impact demand for products[386](index=386&type=chunk)[387](index=387&type=chunk)[790](index=790&type=chunk)[791](index=791&type=chunk) - Failure to maintain **effective disclosure controls and internal control** could impair ability to produce timely financial statements[388](index=388&type=chunk)[389](index=389&type=chunk)[390](index=390&type=chunk)[391](index=391&type=chunk)[392](index=392&type=chunk)[792](index=792&type=chunk)[793](index=793&type=chunk)[794](index=794&type=chunk)[795](index=795&type=chunk)[796](index=796&type=chunk) - Business is subject to risks from **catastrophic events** which could cause service disruptions and damage reputation[393](index=393&type=chunk)[394](index=394&type=chunk)[797](index=797&type=chunk)[798](index=798&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=95&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details share repurchases during Q2 2022 under ASR agreements and open market purchases Share Repurchases (Three Months Ended June 30, 2022) | Period | Total Number of Shares Purchased (in thousands) | Average Price Paid Per Share | | :--- | :--- | :--- | | May 1 - May 31 (ASRs) | 2,670 | $81.50 | | May 1 - May 31 (Open market) | 1,045 | $71.12 | | June 1 - June 30 (Open market) | 2,344 | $69.16 | | **Total** | **6,059** | | - In total, **9,202 thousand shares were repurchased under ASRs** at an average price of $81.50 per share[800](index=800&type=chunk) - As of June 30, 2022, **$2,013.7 million of repurchase authorization remained available**[800](index=800&type=chunk) [Item 3. Defaults Upon Senior Securities](index=95&type=section&id=Item%203.%20Defaults%20Upon%

Financial Data and Key Metrics - Revenue grew 11% YoY to $1 billion, with international revenue growing 10% YoY on a constant currency basis [6][12] - Normalized EBITDA grew 18% YoY to $226 million, with a 23% margin, representing over a point of margin expansion compared to the same period last year [6][15] - Unlevered free cash flow for the quarter was $287 million, growing 7% YoY driven by strong profitability [17] - Annualized GMV across the GoDaddy ecosystem grew 20% YoY to $24 billion, primarily driven by offline point of sale [8][14] Business Line Data and Key Metrics - Applications and Commerce revenue grew 16% YoY, with ARR growing 14% YoY to $1.2 billion [13] - Core Platform revenue, which includes Domains, Hosting, and Security products, grew 9% YoY, with ARR growing 5% YoY to $2.2 billion [14] - GoDaddy Payments adoption increased to 70% of customers in Commerce SKUs, up from 60% in February [8][42] Market Data and Key Metrics - The company is closely monitoring the impact of the war in Ukraine, which has limited financial impacts but may cause delays in product releases [6] - FX headwinds due to the strength of the US dollar are affecting industries broadly, but the company has medium-term contracts and FX hedges to mitigate some impacts [16][17] Company Strategy and Industry Competition - The company's mission is to empower entrepreneurs through digital identity, ubiquitous presence, and Connected Commerce, forming the "entrepreneurs wheel" [4][5] - GoDaddy is focusing on three strategic priorities: driving Commerce through presence, delivering for GoDaddy Pros, and innovating in Domains [7] - The company is testing a new product called Payable Domains in the US, aiming to bring innovative solutions to the market [9][66] Management Commentary on Operating Environment and Future Outlook - The company is navigating a fluid macro environment, including the impact of COVID-19, inflation, and FX headwinds, but remains focused on its three-year plan [6][19] - Management is confident in the company's durable business model and ability to adapt to economic challenges, citing strong customer retention and competitive advantages [11][21] - The company is targeting Q2 revenue in the range of $1.01 billion to $1.02 billion, representing 9% YoY growth at the midpoint, and expects to deliver $6-plus free cash flow per share for the year [19][20] Other Important Information - The company repurchased 6.5 million shares in Q1, reducing the total share count by 4% since year-end, and plans to fulfill a $1 billion buyback target for 2022 [17][21] - GoDaddy is transitioning to cloud infrastructure, which is expected to improve productivity and responsiveness, with no significant issues reported [49][68] Q&A Session Summary Question: Customer growth trends and international revenue impact [24] - The company does not guide to customer growth but highlighted strong 15-month retention rates for the 2020 cohort [25] - International revenue declined slightly QoQ, with no significant material impact from the Russia-Ukraine conflict, but macroeconomic trends are affecting Europe broadly [26][27] Question: Macro impacts on Domain demand and aftermarket performance [29] - Domain demand remains strong, with 40% of Core Platform revenue growth driven by aftermarket performance, which is in line with expectations [30][32] Question: Investment plan changes due to macro environment [33] - The company does not view the shift in contractor resources due to the Ukraine conflict as a significant headwind, given its global workforce and vendor network [34][35] Question: Impact of macro environment on e-commerce and SMEs [36] - GoDaddy is well-positioned in the Connected Commerce space, with offline POS driving GMV growth, and sees its products as essential for SMEs even in challenging economic times [37][40] Question: Commerce Plus product and its target market [41] - Commerce Plus is a higher-tier SKU targeting customers with up to $1 million in GMV, with 80% of sales coming from new purchases, indicating strong customer adoption [42] Question: Cloud transition and labor costs [48] - The cloud transition is progressing well, with improved productivity and responsiveness, while labor costs remain under control despite a competitive talent market [49][51] Question: Competitive landscape and Google Domains [52] - The company has been competing with Google Domains for years and does not see the removal of the beta label as a significant change in the competitive landscape [53] Question: GoDaddy Payments adoption and legacy customers [54] - While new customers are adopting GoDaddy Payments at a high rate, converting legacy customers remains a priority and an ongoing opportunity [55] Question: Bookings growth and interest rate impact [56] - Bookings growth trailed revenue due to tough comparisons from the previous year, but the company remains optimistic about momentum [57] - The company has a 13% variable interest rate and is monitoring the impact of rising rates on its customer base, but believes its products are essential for SMEs [59][61] Question: Overhead expenses and payable Domains [63] - G&A expenses increased due to office reopenings but remain below historical levels, while payable Domains is seen as a fundamentally new product with significant potential [65][66] Question: Inflationary pressures on cloud infrastructure costs [67] - The company is managing inflationary pressures on cloud infrastructure costs and remains comfortable with its normalized EBITDA margin guidance [68]