UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2021

or

☐ 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)

2155 E. GoDaddy Way

Tempe, Arizona 85284

(Address of principal executive offices, including zip code)

(480) 505-8800

(Registrant's telephone number, including area code)

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, $0.001 par value per share	GDDY	NYSE

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    ☒    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    ☒    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	☒	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    ☒

As of July 30, 2021, there were 168,830,425 shares of GoDaddy Inc.'s Class A common stock, $0.001 par value per share, outstanding and 378,723 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 June 30, 2021

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 (Loss)	3
	Condensed Consolidated Statements of Stockholders' Deficit	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	32
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	68
Item 3	Defaults Upon Senior Securities	69
Item 4	Mine Safety Disclosures	69
Item 5	Other Information	69
Item 6	Exhibits	69
Signatures		70

i

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," "could," "should," "predict," "ongoing," "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 and related remediation efforts and fines;

•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 recent acquisition of Poynt Co., our entry into new lines of business and our ability to achieve expected results from our integrations and new lines of business;

•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;

•anticipated income tax rates, tax estimates and tax standards;

•interest rate changes;

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

ii

NOTE ABOUT FORWARD-LOOKING STATEMENTS (continued)

•our expectations regarding the outcome of any regulatory investigation or litigation;

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

•the length and severity of the novel coronavirus (COVID-19) pandemic and its impact on our business, customers and employees;

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

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).

iii

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)

	June 30,		December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	1,375.2	$	765.2
Accounts and other receivables	54.6		41.8
Registry deposits	31.0		31.1
Prepaid domain name registry fees	426.5		392.4
Prepaid expenses and other current assets	103.5		60.8
Total current assets	1,990.8		1,291.3
Property and equipment, net	241.8		257.3
Operating lease assets	128.2		142.0
Prepaid domain name registry fees, net of current portion	183.0		176.1
Goodwill	3,525.2		3,275.1
Intangible assets, net	1,242.4		1,255.1
Other assets	50.7		36.0
Total assets	$	7,362.1	$	6,432.9
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	77.4	$	51.0
Accrued expenses and other current liabilities	483.6		527.6
Deferred revenue	1,871.4		1,711.3
Long-term debt	24.1		24.3
Total current liabilities	2,456.5		2,314.2
Deferred revenue, net of current portion	767.0		725.1
Long-term debt, net of current portion	3,869.3		3,090.1
Operating lease liabilities, net of current portion	153.4		166.7
Other long-term liabilities	62.4		56.6
Deferred tax liabilities	84.9		92.0
Commitments and contingencies
Stockholders' deficit:
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; 168,720 and 169,157 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	0.2		0.2
Class B common stock, $0.001 par value - 500,000 shares authorized; 379 and 688 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	—		—
Additional paid-in capital	1,458.0		1,308.8
Accumulated deficit	(1,409.2)		(1,190.9)
Accumulated other comprehensive loss	(82.3)		(131.0)
Total stockholders' deficit attributable to GoDaddy Inc.	(33.3)		(12.9)
Non-controlling interests	1.9		1.1
Total stockholders' deficit	(31.4)		(11.8)
Total liabilities and stockholders' deficit	$	7,362.1	$	6,432.9

See accompanying notes to condensed consolidated financial statements.

1

GoDaddy Inc.

Condensed Consolidated Statements of Operations (unaudited)

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenue:
Domains	$	436.7	$	369.6	$	859.4	$	725.5
Hosting and presence	318.5		292.2		628.8		589.4
Business applications	176.1		144.6		344.2		283.5
Total revenue	931.3		806.4		1,832.4		1,598.4
Costs and operating expenses(1):
Cost of revenue (excluding depreciation and amortization)	332.0		289.4		653.2		566.5
Technology and development	172.0		135.9		358.4		270.4
Marketing and advertising	126.5		104.4		259.2		197.5
Customer care	78.3		83.8		156.9		169.0
General and administrative	84.5		82.2		179.7		167.7
Restructuring charges	—		39.4		—		39.4
Depreciation and amortization	50.0		48.4		99.0		100.6
Total costs and operating expenses	843.3		783.5		1,706.4		1,511.1
Operating income	88.0		22.9		126.0		87.3
Interest expense	(32.6)		(19.4)		(61.3)		(40.6)
Tax receivable agreements liability adjustment	—		(674.7)		—		(674.7)
Other income (expense), net	(0.9)		(1.1)		(0.2)		(2.5)
Income (loss) before income taxes	54.5		(672.3)		64.5		(630.5)
Benefit (provision) for income taxes	(7.6)		(0.9)		(6.8)		0.5
Net income (loss)	46.9		(673.2)		57.7		(630.0)
Less: net income attributable to non-controlling interests	0.1		—		0.1		0.3
Net income (loss) attributable to GoDaddy Inc.	$	46.8	$	(673.2)	$	57.6	$	(630.3)
Net income (loss) attributable to GoDaddy Inc. per share of Class A common stock:
Basic	$	0.28	$	(4.06)	$	0.34	$	(3.72)
Diluted	$	0.27	$	(4.06)	$	0.33	$	(3.72)
Weighted-average shares of Class A common stock outstanding:
Basic	168,204		165,845		168,816		169,479
Diluted	171,129		165,845		172,388		169,479
___________________________
(1) Costs and operating expenses include equity-based compensation expense as follows:
Cost of revenue	$	0.2	$	0.2	$	0.4	$	0.3
Technology and development	27.9		22.0		54.9		43.1
Marketing and advertising	7.0		5.4		13.2		10.0
Customer care	3.7		3.3		6.7		5.9
General and administrative	12.6		17.7		28.8		34.7
Total equity-based compensation expense	$	51.4	$	48.6	$	104.0	$	94.0

See accompanying notes to condensed consolidated financial statements.

2

GoDaddy Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)

(In millions)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income (loss)	$	46.9	$	(673.2)	$	57.7	$	(630.0)
Foreign exchange forward contracts gain (loss), net	0.9		(8.0)		3.0		6.3
Unrealized swap gain (loss), net of tax effect(1)	(6.1)		(4.1)		18.3		7.6
Change in foreign currency translation adjustment	(5.9)		(10.7)		27.8		(35.6)
Comprehensive income (loss)	35.8		(696.0)		106.8		(651.7)
Less: comprehensive income (loss) attributable to non-controlling interests	0.1		(0.1)		0.4		0.3
Comprehensive income (loss) attributable to GoDaddy Inc.	$	35.7	$	(695.9)	$	106.4	$	(652.0)
___________________________
(1) The tax effect on our unrealized swap gain (loss) is reflected below:
Unrealized swap gain (loss), gross	$	(5.1)	$	(7.0)	$	19.8	$	8.7
Income tax effect	1.0		(2.9)		1.5		1.1
Unrealized swap gain (loss), net of tax effect	$	(6.1)	$	(4.1)	$	18.3	$	7.6

See accompanying notes to condensed consolidated financial statements.

3

GoDaddy Inc.

Condensed Consolidated Statements of Stockholders' Deficit (unaudited)

(In millions, except shares in thousands)

	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non- Controlling Interests		Total
	Shares	Amount		Shares	Amount
Balance at December 31, 2020	169,157	$	0.2	688	$	—	$	1,308.8	$	(1,190.9)	$	(131.0)	$	1.1	$	(11.8)
Net income	—	—		—	—		—		10.8		—		—		10.8
Equity-based compensation, including amounts capitalized	—	—		—	—		53.2		—		—		—		53.2
Stock option exercises	309	—		—	—		11.8		—		—		(0.2)		11.6
Repurchases of Class A common stock	(2,544)	—		—	—		—		(195.1)		—		—		(195.1)
Impact of derivatives, net	—	—		—	—		—		—		26.5		—		26.5
Change in foreign currency translation adjustment	—	—		—	—		—		—		33.7		—		33.7
Vesting of restricted stock units and other	1,523	—		(209)	—		(0.4)		—		(0.4)		0.9		0.1
Balance at March 31, 2021	168,445	0.2		479	—		1,373.4		(1,375.2)		(71.2)		1.8		(71.0)
Net income	—	—		—	—		—		46.8		—		0.1		46.9
Equity-based compensation, including amounts capitalized	—	—		—	—		52.1		—		—		—		52.1
Stock option exercises	337	—		—	—		14.2		—		—		—		14.2
Repurchases of Class A common stock	(956)	—		—	—		—		(80.8)		—		—		(80.8)
Issuance of Class A common stock under ESPP	291	—		—	—		18.4		—		—		—		18.4
Impact of derivatives, net	—	—		—	—		—		—		(5.2)		—		(5.2)
Change in foreign currency translation adjustment	—	—		—	—		—		—		(5.9)		—		(5.9)
Vesting of restricted stock units and other	603	—		(100)	—		(0.1)		—		—		—		(0.1)
Balance at June 30, 2021	168,720	$	0.2	379	$	—	$	1,458.0	$	(1,409.2)	$	(82.3)	$	1.9	$	(31.4)

4

GoDaddy Inc.

Condensed Consolidated Statements of Stockholders' Deficit (unaudited) (continued)

(In millions, except shares in thousands)

	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Non- Controlling Interests		Total
	Shares	Amount		Shares	Amount
Balance at December 31, 2019	172,867	$	0.2	1,490	$	—	$	1,003.5	$	(153.5)	$	(78.2)	$	10.1	$	782.1
Net income	—	—		—	—		—		42.9		—		0.3		43.2
Equity-based compensation, including amounts capitalized	—	—		—	—		46.0		—		—		—		46.0
Stock option exercises	724	—		—	—		16.0		—		—		(0.7)		15.3
Repurchases of Class A common stock	(7,341)	—		—	—		—		(398.0)		—		—		(398.0)
Impact of derivatives, net	—	—		—	—		—		—		26.0		—		26.0
Change in foreign currency translation adjustment	—	—		—	—		—		—		(24.9)		—		(24.9)
Vesting of restricted stock units and other	1,377	—		(204)	—		1.4		(0.6)		(0.1)		(1.3)		(0.6)
Balance at March 31, 2020	167,627	0.2		1,286	—		1,066.9		(509.2)		(77.2)		8.4		489.1
Net loss	—	—		—	—		—		(673.2)		—		—		(673.2)
Equity-based compensation, including amounts capitalized	—	—		—	—		49.4		—		—		—		49.4
Stock option exercises	907	—		—	—		29.7		—		—		(0.5)		29.2
Repurchases of Class A common stock	(2,645)	—		—	—		—		(143.7)		—		—		(143.7)
Issuance of Class A common stock under ESPP	302	—		—	—		17.5		—		—		—		17.5
Impact of derivatives, net	—	—		—	—		—		—		(12.1)		—		(12.1)
Change in foreign currency translation adjustment	—	—		—	—		—		—		(10.7)		—		(10.7)
Vesting of restricted stock units and other	560	—		(166)	—		1.0		—		0.1		(1.1)		—
Balance at June 30, 2020	166,751	$	0.2	1,120	$	—	$	1,164.5	$	(1,326.1)	$	(99.9)	$	6.8	$	(254.5)

See accompanying notes to condensed consolidated financial statements.

5

GoDaddy Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(In millions)

	Six Months Ended June 30,
	2021		2020
Operating activities
Net income (loss)	$	57.7	$	(630.0)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	99.0		100.6
Equity-based compensation expense	104.0		94.0
Non-cash restructuring charges	—		29.0
Tax receivable agreements liability adjustment	—		674.7
Other	16.8		18.4
Changes in operating assets and liabilities, net of amounts acquired:
Prepaid domain name registry fees	(40.6)		(17.5)
Prepaid expenses and other current assets	(20.9)		(16.9)
Accounts payable	25.7		7.2
Deferred revenue	196.4		155.1
Other operating assets and liabilities	(7.4)		(13.2)
Net cash provided by operating activities	430.7		401.4
Investing activities
Maturities of short-term investments	—		23.7
Business acquisitions, net of cash acquired	(320.1)		(189.9)
Purchases of intangible assets	(9.8)		—
Purchases of property and equipment	(21.1)		(30.7)
Purchases of equity investments	(10.0)		—
Other investing activities	1.1		0.3
Net cash used in investing activities	(359.9)		(196.6)
Financing activities
Proceeds received from:
Issuance of senior notes	800.0		—
Stock option exercises	25.8		44.5
Issuance of Class A common stock under ESPP	18.4		17.5
Payments made for:
Repurchases of Class A common stock	(275.9)		(541.7)
Repayment of term loans	(16.2)		(12.5)
Other financing obligations	(12.5)		(1.8)
Net cash provided by (used in) financing activities	539.6		(494.0)
Effect of exchange rate changes on cash and cash equivalents	(0.4)		(0.9)
Net increase (decrease) in cash and cash equivalents	610.0		(290.1)
Cash and cash equivalents, beginning of period	765.2		1,062.8
Cash and cash equivalents, end of period	$	1,375.2	$	772.7

Cash paid during the period for:
Interest on long-term debt, including impact of interest rate swaps	$	45.7	$	36.2
Income taxes, net of refunds received	$	11.6	$	8.0
Amounts included in the measurement of operating lease liabilities	$	27.0	$	24.7
Supplemental disclosure of non-cash transactions:
Operating lease assets obtained in exchange for operating lease liabilities	$	6.5	$	11.1
Accrued purchases of property and equipment at period end	$	2.2	$	3.7

See accompanying notes to condensed consolidated financial statements.

6

GoDaddy Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

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

Note 1	Organization and Background	7
Note 2	Summary of Significant Accounting Policies	8
Note 3	Business Acquisitions	9
Note 4	Goodwill and Intangible Assets	9
Note 5	Stockholders' Equity	11
Note 6	Equity-Based Compensation Plans	11
Note 7	Deferred Revenue	12
Note 8	Accrued Expenses and Other Current Liabilities	13
Note 9	Long-Term Debt	13
Note 10	Derivatives and Hedging	15
Note 11	Leases	17
Note 12	Commitments and Contingencies	17
Note 13	Income Taxes	19
Note 14	Income (Loss) Per Share	20
Note 15	Geographic Information	21
Note 16	Accumulated Other Comprehensive Loss	21
Note 17	Subsequent Events	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. The calculation of non-controlling interests excludes any net income attributable directly to GoDaddy Inc. As of June 30, 2021, we owned approximately 99.8% of Desert Newco.

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, 2021.

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, 2020 (the 2020 Form 10-K).

Prior Period Reclassifications

Certain immaterial prior period amounts have been reclassified to conform to the current period presentation.

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.

7

Segment

As of June 30, 2021, our chief operating decision maker was 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

Assets Recognized from Contract Costs

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 product to which the asset relates. Amortization expense of such asset was $167.7 million and $162.3 million for the three months ended June 30, 2021 and 2020, respectively and was $328.6 million and $320.7 million, for the six months ended June 30, 2021 and 2020, respectively.

Fair Value Measurements

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

	June 30, 2021
	Level 1		Level 2		Level 3	Total
Assets:
Cash and cash equivalents:
Money market funds and time deposits	$	539.1	$	—	$