GoDaddy(US:GDDY)2025-05-01 23:03PART I. FINANCIAL INFORMATION Financial Statements (unaudited) This section presents GoDaddy Inc.'s unaudited consolidated financial statements for Q1 2025, highlighting a 7.7% revenue increase, a net income decrease due to a prior-year tax benefit, and significant share repurchases Consolidated Balance Sheets Total assets decreased to $7.84 billion as of March 31, 2025, primarily due to reduced cash from share repurchases, leading to a significant decrease in stockholders' equity Consolidated Balance Sheet Highlights (unaudited) | Account | March 31, 2025 (In millions) | December 31, 2024 (In millions) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $719.4 | $1,089.0 | | Total current assets | $1,553.6 | $1,951.8 | | Goodwill | $3,559.3 | $3,518.9 | | Total assets | $7,838.8 | $8,235.4 | | Liabilities & Equity | | | | Deferred revenue (current) | $2,341.6 | $2,222.3 | | Long-term debt, net | $3,775.7 | $3,779.1 | | Total liabilities | $7,639.1 | $7,543.3 | | Total stockholders' equity | $199.7 | $692.1 | Consolidated Statements of Operations Q1 2025 total revenue increased 7.7% to $1.19 billion, while net income decreased 45.3% to $219.5 million due to a prior-year tax benefit Q1 2025 vs. Q1 2024 Statement of Operations (unaudited) | Metric | Q1 2025 (In millions) | Q1 2024 (In millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $1,194.3 | $1,108.5 | +7.7% | | Operating Income | $247.3 | $175.9 | +40.6% | | Net Income | $219.5 | $401.5 | -45.3% | | Diluted EPS | $1.51 | $2.76 | -45.3% | Consolidated Statements of Cash Flows Net cash from operating activities increased 36.2% to $404.7 million, but significant share repurchases led to a $369.6 million net decrease in cash Q1 2025 vs. Q1 2024 Cash Flows (unaudited) | Activity | Q1 2025 (In millions) | Q1 2024 (In millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $404.7 | $297.2 | | Net cash provided by (used in) investing activities | ($3.6) | $43.7 | | Net cash used in financing activities | ($772.2) | ($135.0) | | Net increase (decrease) in cash | ($369.6) | $205.2 | - The significant increase in cash used for financing was primarily due to $767.4 million in upfront payments for two accelerated share repurchase (ASR) agreements32 Notes to Consolidated Financial Statements Notes detail accounting policies, segment performance, including 16.5% A&C revenue growth, and a $4.0 billion share repurchase program with $767.4 million used in Q1 2025, plus a new $3.0 billion authorization - The company reports results through two segments: Applications and Commerce (A&C) and Core Platform (Core)42106 - During Q1 2025, the company entered into two accelerated share repurchase (ASR) agreements, making upfront payments of $767.4 million. In April 2025, the board approved an additional $3.0 billion for share repurchases through 202760117 Revenue by Segment (Q1 2025 vs Q1 2024) | Segment | Q1 2025 Revenue (In millions) | Q1 2024 Revenue (In millions) | | :--- | :--- | :--- | | Applications and Commerce (A&C) | $446.4 | $383.1 | | Core Platform | $747.9 | $725.4 | - In Q1 2025, the company recognized a $34.6 million income tax benefit from a favorable tax court ruling on an uncertain tax position in a foreign jurisdiction98102 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, noting a 7.7% revenue increase to $1.19 billion and 7.9% bookings growth, driven by strong A&C segment performance and significant share repurchases Q1 2025 Financial Highlights | Metric | Q1 2025 | Change vs. Q1 2024 | | :--- | :--- | :--- | | Total Revenue | $1,194.3 million | +7.7% | | Total Bookings | $1,417.0 million | +7.9% | | Operating Income | $247.3 million | +40.6% | | Net Income | $219.5 million | -45.3% | | Normalized EBITDA | $364.4 million | +16.4% | | Net cash from operating activities | $404.7 million | +36.2% | Results of Operations Q1 2025 total revenue grew 7.7% to $1.19 billion, with A&C revenue up 16.5% and total bookings up 7.9%, while operating income increased 40.6% due to lower restructuring charges Revenue by Segment (Q1 2025 vs Q1 2024) | Segment | Q1 2025 (In millions) | Q1 2024 (In millions) | Change (%) | | :--- | :--- | :--- | :--- | | Applications and commerce | $446.4 | $383.1 | +16.5% | | Core platform | $747.9 | $725.4 | +3.1% | | Total revenue | $1,194.3 | $1,108.5 | +7.7% | - Total bookings increased by 7.9% to $1.42 billion, driven by strength in domains, aftermarket, and continued adoption of A&C products137 - Marketing and advertising expenses increased by 14.4% ($12.6 million) due to discretionary spending in support of strategic initiatives, including the GoDaddy Airo experience143 Segment EBITDA (Q1 2025 vs Q1 2024) | Segment | Q1 2025 EBITDA (In millions) | Q1 2024 EBITDA (In millions) | Change (%) | | :--- | :--- | :--- | :--- | | Applications and Commerce | $196.9 | $161.9 | +21.6% | | Core Platform | $235.3 | $216.7 | +8.6% | Liquidity and Capital Resources Principal liquidity sources are operations and debt, with $404.7 million net cash from operations, while $767.4 million was used for ASRs, and a new $3.0 billion share repurchase program was authorized Cash Flow Summary (Q1 2025 vs Q1 2024) | Cash Flow Activity | Q1 2025 (In millions) | Q1 2024 (In millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $404.7 | $297.2 | | Net cash provided by (used in) investing activities | ($3.6) | $43.7 | | Net cash used in financing activities | ($772.2) | ($135.0) | - In Q1 2025, the company used $767.4 million for accelerated share repurchases (ASRs). Upon completion of the ASRs in April 2025, the previous $4.0 billion authorization was exhausted172 - In April 2025, the board of directors approved a new share repurchase program authorizing up to an additional $3.0 billion of its Class A common stock through the end of 2027173 Quantitative and Qualitative Disclosures About Market Risk The company manages foreign currency and interest rate market risks using derivatives, noting that Q1 2025 revenue and bookings growth would have been 30 and 80 basis points higher, respectively, on a constant currency basis - The company uses derivative instruments (foreign exchange forward contracts, cross-currency swaps, interest rate swaps) to hedge against foreign currency and interest rate risks177179185 - A portion of the variable-rate debt is converted to fixed rates using interest rate swaps, with notional amounts of $1,219.4 million tied to 2029 Term Loans and $714.4 million to 2027 Term Loans as of March 31, 2025188189 - On a constant currency basis, Q1 2025 total revenue growth would have been 30 basis points higher, and total bookings growth would have been 80 basis points higher180 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures are effective at a reasonable assurance level192 - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting193 PART II. OTHER INFORMATION Legal Proceedings No material changes to legal proceedings have occurred since those described in the 2024 Form 10-K - There have been no material changes to the legal proceedings previously disclosed in the 2024 Form 10-K196 Risk Factors This section details significant strategic, operational, financial, and legal/regulatory risks, including intense competition, cybersecurity threats, AI technology adoption, and substantial debt, which could adversely affect the company Strategic Risks Strategic risks encompass intense competition, challenges in customer acquisition and product development, risks from new technologies like AI, international growth complexities, and potential acquisition failures - The company faces significant competition, which is expected to intensify, and may not be able to maintain its market position against competitors with greater resources or disruptive pricing214216 - The use of new and evolving technologies like AI presents risks of reputational harm, liability, intellectual property infringement, and increased regulatory scrutiny from evolving legal frameworks like the E.U. AI Act205207 - Future growth depends on increasing international revenue, which exposes the company to various risks including geopolitical instability, regulatory compliance, and currency fluctuations219220 - Acquisitions and strategic transactions could divert management attention, disrupt business, and may not yield expected benefits228 Operational Risks Operational risks include reliance on technology infrastructure and third-party services like AWS, cybersecurity threats, fraudulent activity, and the importance of effective marketing and high-quality customer care - The company is exposed to system failures and capacity constraints, and relies heavily on third-party cloud services like AWS, where disruptions could adversely affect business233239 - Actual or perceived cybersecurity incidents could impair business operations, lead to substantial costs, and cause reputational harm241 - The business is exposed to risks from credit card fraud and chargebacks, and must comply with PCI data security standards255256 - Failure to provide high-quality customer care, a portion of which is handled by third parties, could harm the brand and operating results248250 Financial Risks Financial risks include fluctuating quarterly results, significant indebtedness impacting operational flexibility, delayed revenue recognition from subscription terms, and potential adverse tax law changes or examination outcomes - Quarterly and annual operating results may fluctuate due to various factors, including competition, marketing timing, and macroeconomic conditions, making future results difficult to predict264265 - The company's substantial level of indebtedness could require a significant portion of cash flow for debt service, limiting operational flexibility and increasing vulnerability to economic downturns274277 - Revenue is recognized ratably over subscription terms, so changes in sales are not immediately reflected in operating results, which can mask deteriorating sales activity270 Legal and Regulatory Risks Legal and regulatory risks involve potential instability from ICANN policies, compliance with evolving international data privacy and cybersecurity laws, liability from customer activities, intellectual property disputes, and adherence to export controls - The business is subject to laws and policies from ICANN, and changes could cause instability in the domain name industry and disrupt business283 - The company must comply with numerous local and international laws regarding data privacy and security, such as GDPR and the California Consumer Privacy Act, with non-compliance leading to potential litigation and fines293294 - Activities of customers, such as posting illegal or offensive content, could damage the company's reputation and lead to liability, despite safe harbor provisions like the CDA and DMCA300301 - The GoDaddy Payments business is subject to extensive regulation, including rules from payment card networks and laws governing money transmission, which could result in fines or restrictions if violated330331332 Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased during Q1 2025 outside of the Accelerated Share Repurchase (ASR) agreements detailed in the financial notes - No shares were repurchased during the three months ended March 31, 2025, other than through the Accelerated Share Repurchase (ASR) agreements detailed in the financial notes360 Other Information CEO Aman Bhutani and Chief Strategy and Legal Officer Jared Sine adopted Rule 10b5-1 trading plans in March 2025 for share sales scheduled between mid-2025 and mid-2026 - CEO Aman Bhutani adopted a 10b5-1 trading plan in March 2025 for the sale of 72,000 shares of Class A common stock between July 2025 and July 2026363 - Chief Strategy and Legal Officer Jared Sine adopted a 10b5-1 trading plan in March 2025 for the sale of 11,450 shares of Class A common stock between June 2025 and June 2026364 Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Lists the required CEO and CFO certifications and XBRL data files submitted with the report365 Signatures The report was signed by Mark McCaffrey, Chief Financial Officer, on May 1, 2025 - The report was signed by Mark McCaffrey, Chief Financial Officer, on May 1, 2025370