GoDaddy(GDDY) - 2025 Q2 - Quarterly Results

Executive Summary GoDaddy reported strong Q2 2025 results, highlighting profitable growth and robust cash generation, with leadership emphasizing innovation through agentic AI and focus on high-intent customers - CEO Aman Bhutani highlighted the acceleration of innovation, energized by the transformative potential of agentic AI, to deliver sustained profitable growth[3] - CFO Mark McCaffrey emphasized the durability of the business model and the focus on high-intent customers with greater lifetime value to maximize free cash flow[3] Q2 2025 Financial & Operational Highlights The company delivered strong growth in Q2 2025, with total revenue up 8% YoY to $1.2 billion and free cash flow increasing 21% to $391.5 million, driven by the Applications and Commerce segment, while Average Revenue Per User (ARPU) grew by 9.5% to $230 despite a slight decrease in total customers Q2 2025 Key Metrics (YoY) | Metric | Q2 2025 Value | YoY Growth | | :--- | :--- | :--- | | Total Revenue | $1.2 billion | 8% | | Total Bookings | $1.3 billion | 7% | | Applications & Commerce Revenue | $463.9 million | 14% | | Core Platform Revenue | $753.7 million | 5% | | Operating Income | $266.3 million | 28% | | Net Income | $199.9 million | 37% | | Normalized EBITDA (NEBITDA) | $381.7 million | 15% | | Free Cash Flow | $391.5 million | 21% | Q2 2025 Operating Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Customers (end of period) | 20,409 thousand | 20,866 thousand | (2.2)% | | Average Revenue Per User (ARPU) | $230 | $210 | 9.5% | | Annualized Recurring Revenue (ARR) | $4,181.0 million | $3,853.4 million | 8.5% | Capital Management GoDaddy actively returned capital to shareholders, repurchasing 5.2 million shares for $906.0 million year-to-date through August 6, 2025, holding $1.1 billion in cash and cash equivalents against $3.8 billion in total debt, resulting in a net debt position of $2.8 billion Share Repurchases (YTD through Aug 6, 2025) | Metric | Value | | :--- | :--- | | Shares Repurchased | 5.2 million | | Aggregate Purchase Price | $906.0 million | | Average Price Per Share | $174.42 | Balance Sheet Summary (as of June 30, 2025) | Item | Amount | | :--- | :--- | | Total Cash and Cash Equivalents | $1.1 billion | | Total Debt | $3.8 billion | | Net Debt | $2.8 billion | Business Outlook (Guidance) GoDaddy provided positive guidance, expecting Q3 revenue between $1.22 billion and $1.24 billion (7% YoY growth at midpoint), raising its full-year 2025 revenue forecast to a range of $4.89 billion to $4.94 billion and its free cash flow target to approximately $1.6 billion, with a minor headwind anticipated in Q4 from the .CO domain registry service transition Q3 2025 Guidance | Metric | Guidance Range | YoY Growth (Midpoint) | | :--- | :--- | :--- | | Total Revenue | $1.22B - $1.24B | 7% | | NEBITDA Margin | Approx. 32% | N/A | Full Year 2025 Raised Guidance | Metric | Guidance Range | YoY Growth (Midpoint) | | :--- | :--- | :--- | | Total Revenue | $4.89B - $4.94B | 7% | | Free Cash Flow | Approx. $1.6B | N/A | | NEBITDA Margin Expansion | Approx. 100 bps | N/A | - The company will no longer operate as the registry for the .CO top-level domain starting in Q4 2025, which is expected to create an approximate 50 basis point headwind to bookings and revenue[12] Consolidated Financial Statements This section presents the detailed unaudited GAAP financial statements for the three and six months ended June 30, 2025, including the Statements of Operations, Balance Sheets, and Statements of Cash Flows Consolidated Statements of Operations For Q2 2025, total revenue grew to $1.22 billion from $1.12 billion in Q2 2024, driving operating income up 28% to $266.3 million and net income up 37% to $199.9 million, with diluted EPS for the quarter at $1.41 Q2 Statement of Operations Summary (in millions) | Line Item | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,217.6 | $1,124.5 | +8.3% | | Operating Income | $266.3 | $208.2 | +27.9% | | Net Income | $199.9 | $146.3 | +36.6% | | Diluted EPS | $1.41 | $1.01 | +39.6% | Consolidated Balance Sheets As of June 30, 2025, total assets were $8.27 billion, a slight increase from year-end 2024, with key assets including $1.09 billion in cash and $3.64 billion in goodwill, while total liabilities stood at $7.87 billion, primarily composed of $3.34 billion in deferred revenue and $3.79 billion in long-term debt Balance Sheet Summary (in millions) | Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,086.7 | $1,089.0 | | Goodwill | $3,644.0 | $3,518.9 | | Total Assets | $8,273.9 | $8,235.4 | | Liabilities & Equity | | | | Deferred Revenue (Total) | $3,337.5 | $3,105.5 | | Long-term Debt (Total) | $3,788.1 | $3,795.0 | | Total Stockholders' Equity | $404.4 | $692.1 | | Total Liabilities & Equity | $8,273.9 | $8,235.4 | Consolidated Statements of Cash Flows For the first six months of 2025, net cash from operating activities was $784.6 million, a 32.5% increase from the prior year, driven by higher net income and changes in operating assets and liabilities, with the company using $792.5 million for share repurchases, resulting in a net cash usage of $781.7 million in financing activities Six Months Ended June 30 Cash Flow Summary (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $784.6 | $592.0 | | Net cash provided by (used in) investing activities | $(10.0) | $40.9 | | Net cash used in financing activities | $(781.7) | $(646.2) | | Net (decrease) in cash and cash equivalents | $(2.3) | $(13.9) | Non-GAAP Financial Measures & Reconciliations This section defines the non-GAAP and other operating metrics GoDaddy uses to evaluate its business, such as NEBITDA and Free Cash Flow, and provides detailed tables reconciling these non-GAAP measures to their most directly comparable GAAP figures Definitions of Key Metrics Provides definitions for key operational and non-GAAP metrics used by management, including Total Bookings, Constant Currency, Normalized EBITDA (NEBITDA), Free Cash Flow, Net Debt, Annualized Recurring Revenue (ARR), Average Revenue Per User (ARPU), and Total Customers - Total Bookings: Total value of customer contracts entered into during the period, excluding refunds[22] - NEBITDA: Net income excluding interest, taxes, depreciation, amortization, equity-based compensation, and other specific items[24] - Free Cash Flow: A liquidity measure calculated as net cash from operating activities adjusted for capital expenditures and certain restructuring/acquisition costs[26] - ARPU: Total revenue over the preceding 12 months divided by the average number of total customers[30] Reconciliation Tables Presents the numerical reconciliations for key non-GAAP measures, where for Q2 2025, Net Income of $199.9 million was reconciled to NEBITDA of $381.7 million, and Net cash from operating activities of $379.9 million was reconciled to Free Cash Flow of $391.5 million Reconciliation of Net Income to NEBITDA (Q2 2025, in millions) | Line Item | Amount | | :--- | :--- | | Net income | $199.9 | | Depreciation and amortization | $30.6 | | Equity-based compensation expense | $81.0 | | Interest expense, net | $29.5 | | Restructuring and other | $1.5 | | Provision for income taxes | $39.2 | | NEBITDA | $381.7 | Reconciliation to Free Cash Flow (Q2 2025, in millions) | Line Item | Amount | | :--- | :--- | | Net cash provided by operating activities | $379.9 | | Capital expenditures | $(4.1) | | Cash paid for acquisition-related costs | $9.3 | | Cash paid for restructuring and other charges | $6.4 | | Free cash flow | $391.5 | Forward-Looking Statements This section contains the company's safe harbor statement, cautioning that forward-looking statements regarding business outlook, product launches, and financial results are subject to various risks and uncertainties, including market evolution, competition, and macroeconomic conditions - Statements regarding business outlook, launches of new products (including AI-based solutions), customer growth, and future financial results are considered forward-looking[18] - Key risks that could cause actual results to differ materially include the evolving market, competition, cybersecurity threats, macroeconomic conditions, geopolitical tensions, and the ability to innovate with new technologies like AI[18]