Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-36904

GoDaddy Inc.

(Exact name of registrant as specified in its charter)




Delaware		46-5769934
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

	14455 N. Hayden Road
	Scottsdale, Arizona 85260
(Address of principal executive offices, including zip code)

	(480) 505-8800
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	GDDY	NYSE

As of April 26, 2019, there were 175,609,274 shares of GoDaddy Inc.'s Class A common stock, $0.001 par value per share, outstanding and 1,611,018 shares of GoDaddy Inc.'s Class B common stock, $0.001 par value per share, outstanding.

GoDaddy Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended March 31, 2019

TABLE OF CONTENTS



Note About Forward-Looking Statements		ii

PART I. FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statement of Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4	Controls and Procedures	33
PART II. OTHER INFORMATION
Item 1	Legal Proceedings	34
Item 1A	Risk Factors	34
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 3	Defaults Upon Senior Securities	67
Item 4	Mine Safety Disclosures	67
Item 5	Other Information	67
Item 6	Exhibits	68

Signatures		69

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NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the sections titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors," contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, involving substantial risks and uncertainties. The words "believe," "may," "will," "potentially," "plan," "estimate," "continue," "anticipate," "intend," "project," "expect" and similar expressions conveying uncertainty of future events or outcomes are intended to identify forward-looking statements. These statements include, among other things, those regarding:


•	our ability to continue to add new customers and increase sales to our existing customers;


•	our ability to develop new solutions and bring them to market in a timely manner;


•	our ability to timely and effectively scale and adapt our existing solutions;


•	our dependence on establishing and maintaining a strong brand;


•	the occurrence of service interruptions and security or privacy breaches;


•	system failures or capacity constraints;


•	the rate of growth of, and anticipated trends and challenges in, our business and in the market for our products;


•	our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, including changes in technology and development, marketing and advertising, general and administrative and customer care expenses, and our ability to achieve and maintain, future profitability;


•	our ability to continue to efficiently acquire customers, maintain our high customer retention rates and maintain the level of our customers' lifetime spend;


•	our ability to provide high quality Customer Care;


•	the effects of increased competition in our markets and our ability to compete effectively;


•	our ability to grow internationally;


•	the impact of fluctuations in foreign currency exchange rates on our business and our ability to effectively manage the exposure to such fluctuations;


•	our ability to effectively manage our growth and associated investments, including our migration of the vast majority of our infrastructure to the public cloud;


•	our ability to integrate acquisitions, including our acquisition of Main Street Hub (MSH);


•	our ability to maintain our relationships with our partners;


•	adverse consequences of our substantial level of indebtedness and our ability to repay our debt;


•	our ability to maintain, protect and enhance our intellectual property;


•	our ability to maintain or improve our market share;


•	sufficiency of cash and cash equivalents to meet our needs for at least the next 12 months;


•	beliefs and objectives for future operations;


•	our ability to stay in compliance with laws and regulations currently applicable to, or which may become applicable to, our business both in the United States (U.S.) and internationally;


•	economic and industry trends or trend analysis;


•	our ability to attract and retain qualified employees and key personnel;


•	the amount and timing of any payments we make under tax receivable agreements (TRAs) or for tax distributions;


•	the future trading prices of our Class A common stock;


•	the amount and timing of any repurchases of our Class A common stock under our share repurchase program;

as well as other statements regarding our future operations, financial condition, growth prospects and business strategies.

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NOTE ABOUT FORWARD-LOOKING STATEMENTS (continued)

We operate in very competitive and rapidly-changing environments, and new risks emerge from time-to-time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report may not occur, and actual results could differ materially and adversely from those implied in our forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will be achieved or occur. Neither we, nor any other person, assume responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements for any reason after the date of this report to conform such statements to actual results or to changes in our expectations, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Unless expressly indicated or the context suggests otherwise, references to GoDaddy, we, us and our refer to GoDaddy Inc. and its consolidated subsidiaries, including Desert Newco, LLC and its subsidiaries (Desert Newco). We refer to Kohlberg Kravis Roberts & Co. L.P., together with its affiliates, as KKR. We refer to Silver Lake Partners, together with its affiliates, as Silver Lake.

iii

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Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

GoDaddy Inc.

Condensed Consolidated Balance Sheets (unaudited)

(In millions, except shares in thousands and per share amounts)



	March 31,			December 31,
	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	1,090.3		$	932.4
Short-term investments	18.7			18.9
Accounts and other receivables	35.4			26.4
Registry deposits	27.9			28.3
Prepaid domain name registry fees	378.0			363.2
Prepaid expenses and other current assets	61.5			58.1
Total current assets	1,611.8			1,427.3
Property and equipment, net	270.0			299.0
Operating lease assets	136.8			—
Prepaid domain name registry fees, net of current portion	188.5			183.6
Goodwill	2,948.3			2,948.0
Intangible assets, net	1,179.9			1,211.5
Other assets	15.3			14.0
Total assets	$	6,350.6		$	6,083.4
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	99.5		$	61.6
Accrued expenses and other current liabilities	379.9			414.3
Deferred revenue	1,474.6			1,393.7
Long-term debt	16.5			16.6
Total current liabilities	1,970.5			1,886.2
Deferred revenue, net of current portion	648.1			623.8
Long-term debt, net of current portion	2,390.0			2,394.2
Operating lease liabilities, net of current portion	118.9			—
Payable to related parties pursuant to tax receivable agreements	175.3			174.3
Other long-term liabilities	11.3			63.2
Deferred tax liabilities	113.1			117.2
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value - 50,000 shares authorized; none issued and outstanding	—			—
Class A common stock, $0.001 par value - 1,000,000 shares authorized; 175,115 and 168,549 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively	0.2			0.2
Class B common stock, $0.001 par value - 500,000 shares authorized; 1,653 and 6,254 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively	—			—
Additional paid-in capital	815.5			699.8
Retained earnings	181.0			164.8
Accumulated other comprehensive loss	(86.3		)	(72.1		)
Total stockholders' equity attributable to GoDaddy Inc.	910.4			792.7
Non-controlling interests	13.0			31.8
Total stockholders' equity	923.4			824.5
Total liabilities and stockholders' equity	$	6,350.6		$	6,083.4

See accompanying notes to condensed consolidated financial statements.

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GoDaddy Inc.

Condensed Consolidated Statements of Operations (unaudited)

(In millions, except share amounts in thousands and per share amounts)



	Three Months Ended March 31,
	2019			2018
Revenue:
Domains	$	319.6		$	291.7
Hosting and presence	268.9			239.8
Business applications	121.5			101.7
Total revenue	710.0			633.2
Costs and operating expenses⁽¹⁾:
Cost of revenue (excluding depreciation and amortization)	236.4			215.3
Technology and development	124.0			102.0
Marketing and advertising	90.3			74.5
Customer care	90.3			80.4
General and administrative	93.0			76.4
Depreciation and amortization	57.2			57.8
Total costs and operating expenses	691.2			606.4
Operating income	18.8			26.8
Interest expense	(24.4		)	(23.8		)
Tax receivable agreements liability adjustment	8.7			(0.1		)
Other income (expense), net	6.2			1.0
Income before income taxes	9.3			3.9
Benefit for income taxes	3.9			0.3
Net income	13.2			4.2
Less: net income attributable to non-controlling interests	0.3			0.9
Net income attributable to GoDaddy Inc.	$	12.9		$	3.3
Net income attributable to GoDaddy Inc. per share of Class A common stock:
Basic	$	0.08		$	0.02
Diluted	$	0.07		$	0.02
Weighted-average shares of Class A common stock outstanding:
Basic	171,001			137,841
Diluted	183,148			178,787
___________________________
⁽¹⁾Costs and operating expenses include equity-based compensation expense as follows:
Technology and development	$	20.0		$	13.7
Marketing and advertising	4.3			2.9
Customer care	2.6			1.2
General and administrative	20.0			13.7
Total equity-based compensation expense	$	46.9		$	31.5

See accompanying notes to condensed consolidated financial statements.

GoDaddy Inc.

Condensed Consolidated Statements of Comprehensive Income (unaudited)

(In millions)



	Three Months Ended March 31,
	2019			2018
Net income	$	13.2		$	4.2
Foreign exchange forward contracts gain (loss), net	0.8			(0.7		)
Unrealized swap gain (loss), net	(1.0		)	3.0
Change in foreign currency translation adjustment	27.8			5.6
Comprehensive income	40.8			12.1
Less: comprehensive income attributable to non-controlling interests	1.0			3.5
Comprehensive income attributable to GoDaddy Inc.	$	39.8		$	8.6

See accompanying notes to condensed consolidated financial statements.

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GoDaddy Inc.

Condensed Consolidated Statement of Stockholders' Equity (unaudited)

(In millions, except share amounts in thousands)



	Class A Common Stock			Class B Common Stock				Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Non- Controlling Interests			Total
	Shares	Amount		Shares		Amount		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Non- Controlling Interests			Total
Balance at December 31, 2018	168,549	$	0.2	6,254		$	—	$	699.8		$	164.8	$	(72.1	)	$	31.8		$	824.5
Impact of adoption of lease accounting standard	—	—		—		—		—			3.3		—			—			3.3
Net income	—	—		—		—		—			12.9		—			0.3			13.2
Equity-based compensation expense	—	—		—		—		46.9			—		—			—			46.9
Sales of Class A common stock, net of issuance costs	8	—		—		—		—			—		—			—			—
Stock option exercises	894	—		—		—		18.3			—		—			(0.7		)	17.6
Exchanges of LLC Units	4,601	—		(4,601	)	—		8.5			—		(2.6		)	(5.9		)	—
Liability pursuant to the tax receivable agreements resulting from exchanges of LLC Units	—	—		—		—		(9.7		)	—		—			—			(9.7		)
Gain (loss) on swaps and foreign currency hedging, net	—	—		—		—		—			—		(0.2		)	—			(0.2		)
Change in foreign currency translation adjustment	—	—		—		—		—			—		27.8			—			27.8
Accumulated other comprehensive income attributable to non-controlling interests	—	—		—		—		—			—		(0.7		)	0.7			—
Vesting of restricted stock units	1,063	—		—		—		—			—		—			—			—
Adjustment to prior period allocations of non-controlling interests	—	—		—		—		51.7			—		(38.5		)	(13.2		)	—
Balance at March 31, 2019	175,115	$	0.2	1,653		$	—	$	815.5		$	181.0	$	(86.3	)	$	13.0		$	923.4

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GoDaddy Inc.

Condensed Consolidated Statement of Stockholders' Equity (unaudited)

(In millions, except share amounts in thousands)



	Class A Common Stock			Class B Common Stock				Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Non- Controlling Interest			Total
	Shares	Amount		Shares		Amount		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Non- Controlling Interest			Total
Balance at December 31, 2017	132,993	$	0.1	35,006		$	—	$	484.4		$	87.7	$	(85.7	)	$	60.0		$	546.5
Net income	—	—		—		—		—			3.3		—			0.9			4.2
Equity-based compensation expense	—	—		—		—		31.5			—		—			—			31.5
Stock option exercises	1,632	—		—		—		24.4			—		—			(3.7		)	20.7
Exchanges of LLC Units	12,925	—		(12,925	)	—		11.8			—		—			(11.8		)	—
Liability pursuant to the tax receivable agreements resulting from exchanges of LLC Units	—	—		—		—		(14.5		)	—		—			—			(14.5		)
Gain (loss) on swaps and foreign currency hedging, net	—	—		—		—		—			—		2.3			—			2.3
Change in foreign currency translation adjustment	—	—		—		—		—			—		5.6			—			5.6
Accumulated other comprehensive income attributable to non-controlling interests	—	—		—		—		—			—		(2.6		)	2.6			—
Vesting of restricted stock units	809	—		—		—		—			—		—			—			—
Balance at March 31, 2018	148,359	$	0.1	22,081		$	—	$	537.6		$	91.0	$	(80.4	)	$	48.0		$	596.3

See accompanying notes to condensed consolidated financial statements.

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GoDaddy Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(In millions)



	Three Months Ended March 31,
	2019			2018
Operating activities
Net income	$	13.2		$	4.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	57.2			57.8
Equity-based compensation	46.9			31.5
Tax receivable agreements liability adjustment	(8.7		)	0.1
Other	4.2			1.8
Changes in operating assets and liabilities, net of amounts acquired:
Registry deposits	0.4			(6.4		)
Prepaid domain name registry fees	(20.2		)	(17.4		)
Deferred revenue	105.2			103.1
Other operating assets and liabilities	1.5			(26.3		)
Net cash provided by operating activities	199.7			148.4
Investing activities
Purchases of short-term investments	(17.9		)	(6.9		)
Maturities of short-term investments	18.3			0.4
Business acquisitions, net of cash acquired	—			(6.6		)
Purchases of property and equipment	(29.4		)	(16.1		)
Other investing activities	—			(4.3		)
Net cash used in investing activities	(29.0		)	(33.5		)
Financing activities
Proceeds received from:
Stock option exercises	17.6			20.7
Payments made for:
Repayment of term loans	(6.2		)	(6.2		)
Contingent consideration for business acquisitions	(22.2		)	—
Leases and other financing obligations	(1.1		)	(2.6		)
Net cash provided by (used in) financing activities	(11.9		)	11.9
Effect of exchange rate changes on cash and cash equivalents	(0.9		)	1.2
Net increase in cash and cash equivalents	157.9			128.0
Cash and cash equivalents, beginning of period	932.4			582.7
Cash and cash equivalents, end of period	$	1,090.3		$	710.7



Supplemental cash flow information:
Cash paid during the period for:
Interest on long-term debt, net of swap benefit	$	21.4	$	20.5
Income taxes, net of refunds received	$	3.6	$	5.3
Supplemental information for non-cash investing and financing activities:
Acquisition date fair value of contingent consideration	$	—	$	2.2
Accrued capital expenditures at period end	$	7.9	$	10.5

See accompanying notes to condensed consolidated financial statements.

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GoDaddy Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

(In millions, except share amounts in thousands and per share amounts)



Note 1	Organization and Background	7
Note 2	Summary of Significant Accounting Policies	8
Note 3	Goodwill and Intangible Assets	11
Note 4	Stockholders' Equity	12
Note 5	Equity-Based Compensation Plans	12
Note 6	Deferred Revenue	13
Note 7	Accrued Expenses and Other Current Liabilities	14
Note 8	Long-Term Debt	14
Note 9	Derivatives and Hedging	15
Note 10	Leases	17
Note 11	Commitments and Contingencies	18
Note 12	Income Taxes	19
Note 13	Payable to Related Parties Pursuant to the TRAs	19
Note 14	Income Per Share	20
Note 15	Geographic Information	21
Note 16	Related Party Transactions	21
Note 17	Accumulated Other Comprehensive Income (Loss)	22

1. Organization and Background

Organization

We are the sole managing member of Desert Newco, and as a result, we consolidate its financial results and report non-controlling interests representing the economic interests held by its other members. Non-controlling interests exclude any net income attributable directly to GoDaddy Inc. We owned approximately 99% of Desert Newco's limited liability company units (LLC Units) as of March 31, 2019.

Basis of Presentation

Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP), and include our accounts and the accounts of our subsidiaries. All material intercompany accounts and transactions have been eliminated.

Our interim financial statements are unaudited, and in our opinion, include all adjustments of a normal recurring nature necessary for the fair presentation of the periods presented. The results for interim periods are not necessarily indicative of the results to be expected for any subsequent period or for the year ending December 31, 2019.

These financial statements should be read in conjunction with our audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2018 (the 2018 Form 10-K).

Prior Period Reclassifications

Reclassifications of certain immaterial prior period amounts have been made to conform to the current period presentation.

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Use of Estimates

GAAP requires us to make estimates and assumptions affecting amounts reported in our financial statements. We periodically evaluate our estimates and adjust prospectively, if necessary. We believe our estimates and assumptions are reasonable; however, actual results may differ.

Segment

As of March 31, 2019, our chief operating decision maker function was comprised of our Chief Executive Officer who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance for the entire company. Accordingly, we have a single operating and reportable segment.

2. Summary of Significant Accounting Policies

Revenue Recognition

See Note 6 for information regarding our deferred revenue. See Note 15 for our revenue disaggregated by geography.

Assets Recognized from Contract Costs

Commissions paid to our resellers represent an incremental cost of obtaining a contract with a customer. We capitalize and amortize such amounts to cost of revenue consistent with the pattern of transfer of the service to which the asset relates. Amounts capitalized and amortized were not material during any of the periods presented. Other costs to obtain a contract, such as sales compensation, are expensed as incurred as their amortization period is generally one year or less. Such expenses were not material during any of the periods presented.

Fees paid to various registries at the inception of a domain registration or renewal represent costs to fulfill a contract. We capitalize and amortize these prepaid domain name registry fees to cost of revenue consistent with the pattern of transfer of the service to which the asset relates. During the three months ended March 31, 2019 and 2018, amortization expense of such asset was $150.6 million and $145.3 million, respectively.

No other material contract costs were capitalized during any of the periods presented.

Leases

Adoption of New Standard on Leases

On January 1, 2019, we adopted the Financial Accounting Standards Board's (FASB) new lease accounting standard using a modified retrospective transition and recorded a $3.3 million cumulative-effect adjustment to beginning retained earnings (the effective date method). Under the effective date method, comparative period financial information is not adjusted. The new standard requires lessees to recognize a right-of-use (ROU) asset and lease liability on the balance sheet for operating leases while the accounting for finance leases is substantially unchanged. We recognized $111.3 million and $108.0 million of additional assets and liabilities, respectively, upon adoption of the new standard. The impact to deferred taxes was immaterial.

The increases to assets and liabilities resulting from the recognition of ROU assets and operating lease liabilities included the derecognition of existing assets and liabilities related to leases. The most significant impact resulted from the derecognition of our lease financing obligation and related building asset. At adoption, we were required to reassess whether the failed sale-leaseback transaction that resulted in the recognition of a lease financing obligation and related building asset would have met the sale criteria under the new standard. We concluded that the sale criteria would have been met and recognized a $3.3 million adjustment to beginning retained earnings as a result of the derecognition of the lease financing obligation and related building asset. The previously recognized lease financing obligation is now classified as an operating lease and was included in the initial measurement of the ROU assets and operating lease liabilities.

We have adopted the package of practical expedients allowing us to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. Adoption of this standard did not have a material impact to our statements of operations or cash flows.

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We determine whether a contract contains a lease at contract inception. We have lease agreements with lease and non-lease components and have elected the practical expedient to account for such components as a single lease component. This election must be made by class of underlying asset and was elected for our leases of office and data center space. We initially recognize and measure contracts containing a lease and determine lease classification at commencement. ROU assets and operating lease liabilities are measured based on the estimated present value of lease payments over the lease term. In determining the present value of lease payments, we use our estimated incremental borrowing rate when the rate implicit in the lease cannot be readily determined. The estimated incremental borrowing rate is based upon information available at lease commencement including publicly available data for debt instruments. The lease term includes periods covered by options to extend when it is reasonably certain we will exercise such options as well as periods subsequent to an option to terminate the lease if it is reasonably certain we will not exercise the termination option. Operating lease costs are recognized on a straight-line basis over the lease term while finance leases result in a front-loaded expense pattern. Variable lease costs are recognized as incurred. On our balance sheets, assets and liabilities associated with operating leases are included within operating lease assets, accrued expenses and other current liabilities and operating lease liabilities. Assets and liabilities associated with finance leases are included in property and equipment, net, accrued expenses and other current liabilities and other long-term liabilities.

See Note 10 for additional information regarding leases.

Fair Value Measurements

The following tables set forth assets and liabilities measured at fair value on a recurring basis:



	March 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents:
Reverse repurchase agreements⁽¹⁾	$	—	$	70.0	$	—	$	70.0
Commercial paper	—		105.2		—		105.2
Money market funds	341.0		—		—		341.0
Short-term investments:
Certificates of deposit and time deposits	0.7		—		—		0.7
Commercial paper	—		18.0		—		18.0
Derivative assets	—		1.7		—		1.7
Total assets measured and recorded at fair value	$	341.7	$	194.9	$	—	$	536.6
Liabilities:
Contingent consideration liabilities	$	—	$	—	$	42.1	$	42.1
Derivative liabilities	—		93.9		—		93.9
Total liabilities measured and recorded at fair value	$	—	$	93.9	$	42.1	$	136.0


(1)	Reverse repurchase agreements include a $70.0 million repurchase agreement with Morgan Stanley, callable with 31 days notice.

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	December 31, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents:
Reverse repurchase agreements⁽¹⁾	$	—	$	70.0	$	—	$	70.0
Commercial paper	—		71.4		—		71.4
Money market funds	338.6		—		—		338.6
Short-term investments:
Certificates of deposit and time deposits	1.0		—		—		1.0
Commercial paper	—		18.0		—		18.0
Total assets measured and recorded at fair value	$	339.6	$	159.4	$	—	$	499.0
Liabilities:
Contingent consideration liabilities	$	—	$	—	$	67.9	$	67.9
Derivative liabilities	—		120.5		—		120.5
Total liabilities measured and recorded at fair value	$	—	$	120.5	$	67.9	$	188.4


(1)	Reverse repurchase agreements include a $70.0 million repurchase agreement with Morgan Stanley, callable with 31 days notice.

Our contingent consideration liabilities, which relate to future earn-out payments associated with our business acquisitions, are classified within Level 3 and valued using discounted cash flow valuation methods encompassing significant unobservable inputs. The inputs include estimated operating results scenarios for the applicable performance periods, probability weightings assigned to operating results scenarios (generally assessed at 100% probability) and the discount rates applied (generally ranging from 14% to 25%). The fair values of our contingent consideration arrangements are sensitive to changes in forecasts and discount rates. A reconciliation of these liabilities is as follows:



	Three Months Ended March 31,
	2019			2018
Balance at beginning of period	$	67.9		$	20.7
Acquisition date fair value of contingent consideration	—			2.2
Adjustments to fair value recognized in earnings	0.8			1.1
Contingent consideration payments	(26.6		)	—
Impact of foreign currency translation and other	—			0.2
Balance at end of period	$	42.1		$	24.2

We have no other material assets or liabilities measured at fair value on a recurring basis.

Recent Accounting Pronouncements

In June 2016, the FASB issued new guidance for the accounting for credit losses on instruments that will require entities to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial instruments measured at amortized cost and also applies to some off-balance sheet credit exposures. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. We plan to adopt this guidance on January 1, 2020 and are currently evaluating its expected impact.

In January 2017, the FASB issued new guidance simplifying the goodwill impairment test, eliminating the requirement for an entity to determine the fair value of its assets and liabilities (including unrecognized assets and liabilities) at the impairment testing date following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, an entity will be required to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will be required to recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss

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recognized should not exceed the total amount of goodwill allocated to the reporting unit. Our adoption of this guidance on January 1, 2019 did not have a material impact.

In August 2018, the FASB issued new guidance to modify or eliminate certain fair value disclosures and require additional disclosures for Level 3 measurements. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. We plan to adopt this guidance on January 1, 2020 and are currently evaluating its expected impact.

In August 2018, the FASB issued new guidance aligning the accounting for implementation costs incurred in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the timing of our adoption and the expected impact of this new guidance.

3. Goodwill and Intangible Assets

The following table summarizes changes in our goodwill balance:



Balance at December 31, 2018	$	2,948.0
Impact of foreign currency translation	0.3
Balance at March 31, 2019	$	2,948.3

Intangible assets, net are as follows:



	March 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Indefinite-lived intangible assets:
Trade names and branding	$	445.0	n/a			$	445.0
Domain portfolio	151.8		n/a			151.8
Finite-lived intangible assets:
Customer-related	833.0		$	(411.0	)	422.0
Developed technology	145.0		(47.4		)	97.6
Trade names	80.7		(17.2		)	63.5
	$	1,655.5	$	(475.6	)	$	1,179.9



	December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Indefinite-lived intangible assets:
Trade names and branding	$	445.0	n/a			$	445.0
Domain portfolio	152.4		n/a			152.4
Finite-lived intangible assets:
Customer-related	850.5		$	(407.5	)	443.0
Developed technology	206.9		(103.1		)	103.8
Trade names and other	92.9		(25.6		)	67.3
	$	1,747.7	$	(536.2	)	$	1,211.5

Amortization expense was $30.8 million and $33.2 million for the three months ended March 31, 2019 and 2018, respectively. The weighted-average remaining amortization period for amortizable intangible assets was 74 months as of March 31, 2019.

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Based on the balance of finite-lived intangible assets at March 31, 2019, expected future amortization expense is as follows:



Year Ending December 31:
2019 (remainder of)	$	88.0
2020	109.2
2021	86.4
2022	84.8
2023	69.6
Thereafter	145.1
	$	583.1

4. Stockholders' Equity

Secondary Offering

In February 2019, we completed an underwritten public offering in which KKR and SLP sold shares of our Class A common stock. We did not receive any proceeds from the shares sold by the selling stockholders. We used the net proceeds from the shares sold by us to pay expenses incurred in connection with the offering. The offering included the exchange of LLC Units (together with the corresponding shares of Class B common stock) for Class A common stock by the selling stockholders, which resulted in an increase in additional paid-in capital, with an offsetting reduction in non-controlling interests, and a material increase to the liability under the TRAs (see Note 13). Significant details for the offering are as follows:



Offering Date	Offering Price Per Share ($)	Shares Sold by GoDaddy (#)	Proceeds Received by GoDaddy ($)	Aggregate Shares Sold by Selling Stockholders (#)	LLC Units Exchanged by Selling Stockholders (#)	Increase in Additional Paid-in Capital ($)
February 2019⁽¹⁾	75.40	8	0.6	8,539	4,278	5.7


(1)	Following the offering, KKR and SLP no longer own shares of GoDaddy's common stock.

Share Repurchase Program

In November 2018, our Board approved the repurchase of up to $500.0 million of our Class A common stock. We may purchase shares from time to time in open market purchases, block transactions and privately negotiated transactions, in accordance with applicable federal securities laws. The share repurchase program has no time limit, does not obligate us to make any repurchases and may be modified, suspended or terminated by us at any time without prior notice. The amount and timing of repurchases are subject to a variety of factors including liquidity, share price, market conditions and legal requirements, and will be funded by available cash and cash equivalents. As of March 31, 2019, no shares have been repurchased.

5. Equity-Based Compensation Plans

As of December 31, 2018, 19,195 shares of Class A common stock were available for issuance as future awards under the 2015 Equity Incentive Plan (the 2015 Plan). On January 1, 2019, an additional 6,992 shares were reserved for issuance pursuant to the automatic increase provisions of the 2015 Plan. As of March 31, 2019, 23,236 shares were available for issuance as future awards under the 2015 Plan.

As of December 31, 2018, 3,082 shares of Class A common stock were available for issuance under the 2015 Employee Stock Purchase Plan (the ESPP). On January 1, 2019, an additional 1,000 shares were reserved for issuance pursuant to the ESPP. As of March 31, 2019, 4,082 shares were available for issuance under the ESPP.

We grant options at exercise prices equal to the fair market value of our Class A common stock on the grant date. We grant both options and restricted stock units (RSUs) vesting solely upon the continued service of the recipient as well as awards vesting upon the achievement of annual or cumulative financial-based targets. We recognize the grant date fair value of equity-

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based awards as compensation expense over the required service period of each award, taking into account the probability of our achievement of associated performance targets.

The following table summarizes our option activity: