GoDaddy(US:GDDY)2025-08-07 23:04Note About Forward-Looking Statements This section highlights that the report contains forward-looking statements subject to substantial risks and uncertainties, including those related to sales growth, technology development, competition, and operational challenges - This report contains forward-looking statements that involve substantial risks and uncertainties. These statements concern the company's expectations, strategy, plans, and intentions9 - Key areas of uncertainty and risk identified include the ability to increase sales, develop and deploy new technologies like AI, manage a strong brand, handle service interruptions and security incidents, compete effectively, grow internationally, and manage indebtedness914 - The company states it operates in a very competitive and rapidly-changing environment, and it is not possible to predict all risks. Investors are cautioned not to place undue reliance on these forward-looking statements1112 PART I. FINANCIAL INFORMATION This part presents the company's unaudited consolidated financial statements, management's discussion and analysis, and disclosures on market risk and controls Financial Statements This section presents the unaudited consolidated financial statements for the quarter ended June 30, 2025, including Balance Sheets, Statements of Operations, Comprehensive Income, Stockholders' Equity, Cash Flows, and detailed Notes Consolidated Balance Sheets This subsection provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 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 (current) | $2,399.7 | $2,222.3 | | Long-term debt, net | $3,772.4 | $3,779.1 | | Total stockholders' equity | $404.4 | $692.1 | Consolidated Statements of Operations This subsection details the company's financial performance over specific periods, presenting revenues, expenses, and net income for Q2 and the six months ended June 30 Q2 2025 vs Q2 2024 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | 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% | Six Months 2025 vs 2024 Performance (in millions) | Metric | Six Months 2025 | Six Months 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $2,411.9 | $2,233.0 | +8.0% | | Operating Income | $513.6 | $384.1 | +33.7% | | Net Income | $419.4 | $547.8 | -23.4% | Consolidated Statements of Cash Flows This subsection outlines the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30 Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow 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) | Notes to Consolidated Financial Statements This section provides detailed explanations of the company's accounting policies and financial results, including revenue disaggregation, goodwill, share repurchases, debt structure, and segment performance Revenue by Major Product Type (in millions) | Product Type | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | A&C | $463.9 | $405.6 | | Core: domains | $566.2 | $529.2 | | Core: other | $187.5 | $189.7 | Revenue by Geography (in millions) | Geography | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | U.S. | $821.7 | $767.4 | | International | $395.9 | $357.1 | - In April 2025, the Board approved a new share repurchase program of up to $3.0 billion through the end of 2027. This followed the completion of a prior $4.0 billion authorization. As of June 30, 2025, $2.973 billion remained available under the new authorization62 Segment Performance for Q2 (in millions) | Segment | Revenue (2025) | Revenue (2024) | Segment EBITDA (2025) | Segment EBITDA (2024) | | :--- | :--- | :--- | :--- | :--- | | A&C | $463.9 | $405.6 | $205.8 | $176.6 | | Core | $753.7 | $718.9 | $246.1 | $219.5 | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management provides an analysis of the company's financial performance for Q2 2025, highlighting an 8.3% increase in total revenue and a 27.9% increase in operating income, covering segment results, non-GAAP measures, bookings, and liquidity Consolidated Second Quarter Financial Highlights This subsection summarizes the company's key financial achievements for the second quarter of 2025, including significant increases in revenue, operating income, and net income - Key financial highlights for Q2 2025 compared to Q2 2024 include: - Total revenue increased 8.3% to $1,217.6 million - Total bookings increased 6.6% to $1,345.3 million - Operating income increased 27.9% to $266.3 million - Net income increased 36.6% to $199.9 million - Normalized EBITDA increased 15.1% to $381.7 million114 Results of Operations This subsection provides a detailed breakdown of the company's revenue and expense performance, analyzing segment contributions and cost drivers for the reporting period Revenue by Segment - Q2 2025 vs Q2 2024 (in millions) | Segment | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Applications and commerce | $463.9 | $405.6 | $58.3 | 14.4% | | Core platform | $753.7 | $718.9 | $34.8 | 4.8% | | Total revenue | $1,217.6 | $1,124.5 | $93.1 | 8.3% | - A&C revenue growth was driven by continued customer adoption of subscription-based products. Core revenue growth was primarily due to increases in domain registration, add-on revenues, and aftermarket revenue128130 - Cost of revenue increased by 8.3% in Q2 2025, in line with revenue growth. Technology and development expenses increased by 4.1% due to higher personnel costs from continued investment in product development135137 Liquidity and Capital Resources This subsection discusses the company's ability to meet its short-term and long-term financial obligations, focusing on cash flow from operations, debt, and capital allocation strategies - The company's principal sources of liquidity are cash flow from operations and long-term debt. Management believes existing cash and cash generated from operations will be sufficient to meet operating needs for at least the next 12 months157159 - Net cash from operating activities increased by $192.6 million for the six months ended June 30, 2025, compared to the same period in 2024, driven by growth in total bookings and lower restructuring payments162 - Net cash used in financing activities increased by $135.5 million, primarily due to a $143.3 million increase in share repurchases during the first six months of 2025 compared to 2024165 Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to market risks, primarily from fluctuations in foreign currency exchange rates and variable interest rates, and its use of derivative financial instruments to mitigate these risks - The company's most significant foreign currency exposures are to the British pound, Canadian dollar, and Euro. It uses foreign exchange forward contracts and cross-currency swaps to manage this risk181183 - GoDaddy is exposed to interest rate risk from its variable-rate debt. It manages this exposure through the use of interest rate swaps to effectively convert portions of this debt to fixed rates186 Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation, the CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures are effective at a reasonable assurance level193 - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting194 PART II. OTHER INFORMATION This part provides additional disclosures beyond financial statements, covering legal proceedings, risk factors, equity sales, and other pertinent information Legal Proceedings The company reports no material changes from the legal proceedings that were described in its 2024 Form 10-K - There have been no material changes from the legal proceedings described in the company's 2024 Form 10-K197 Risk Factors This section outlines the significant risks and uncertainties facing the company, including strategic challenges, operational risks, financial risks, and legal/regulatory risks Strategic Risks This subsection addresses risks related to the company's long-term growth, market positioning, and ability to adapt to technological advancements and competitive pressures - The company's success depends on its ability to increase sales to new and existing customers, but growth rates have slowed. Failure to attract new customers or a reduction in renewals could harm operating results200201 - The use of new and evolving technologies like AI involves significant risks, including potential intellectual property infringement, privacy concerns, regulatory scrutiny, and reputational harm if the technology produces inaccurate or biased content206210 - The market is highly competitive, with rivals ranging from niche point-solution providers to large companies with greater resources. Increased competition could lead to lower sales, price reductions, and loss of market share215217218 Operational Risks This subsection covers risks associated with the company's day-to-day operations, including system reliability, cybersecurity, and the quality of customer service - The company is exposed to system failures and capacity constraints and relies heavily on third-party cloud providers like Amazon Web Services (AWS). Any disruption of AWS services could adversely affect business operations232239 - Cybersecurity incidents, including those from external threat actors or internal threats, could impair the ability to conduct business, lead to significant costs, cause reputational harm, and result in liability241243244 - The company's ability to increase sales is highly dependent on providing high-quality customer care through its GoDaddy Guides. A failure to maintain this level of service could harm the business and brand249 Legal and Regulatory Risks This subsection addresses potential legal and compliance challenges, including those related to domain name governance, data privacy regulations, and liability for user-generated content - The company's domain name registration business is subject to policies and accreditation by ICANN. Changes in ICANN's structure, policies, or authority could create instability and disrupt business282283 - The company is subject to a variety of evolving international and U.S. laws related to data processing and privacy, such as GDPR and CCPA. Failure to comply could result in litigation, government enforcement, and reputational harm291292 - Activities of customers, such as posting illegal or offensive content, could damage the company's reputation and lead to liability, despite terms of service and limited legal protections like the CDA and DMCA298299 Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity for the three months ended June 30, 2025, with a total of 4.51 million shares repurchased during the period Share Repurchases for Q2 2025 | Period | Total Shares Purchased (thousands) | Average Price Paid Per Share | | :--- | :--- | :--- | | April 1 - April 30 | 4,359 | $176.02 | | May 1 - May 31 | 41 | $181.69 | | June 1 - June 30 | 110 | $178.01 | | Total | 4,510 | N/A | Other Information Discloses that on June 10, 2025, Chief Operating Officer Roger Chen adopted a 10b5-1 trading plan for the sale of up to 18,000 shares of Class A common stock - On June 10, 2025, Roger Chen, Chief Operating Officer, adopted a 10b5-1 trading plan for the sale of an aggregate of 18,000 shares of the company's Class A common stock between October 15, 2025, and October 15, 2026362 Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act - The report includes several exhibits, such as corporate governance documents (Exhibit 3.1, 3.2), CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1), and Inline XBRL documents363