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 September 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 October 29, 2021, there were 166,206,941 shares of GoDaddy Inc.'s Class A common stock, $0.001 par value per share, outstanding and 320,223 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 September 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	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4	Controls and Procedures	35
PART II. OTHER INFORMATION
Item 1	Legal Proceedings	36
Item 1A	Risk Factors	36
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 3	Defaults Upon Senior Securities	71
Item 4	Mine Safety Disclosures	71
Item 5	Other Information	71
Item 6	Exhibits	72
Signatures		73

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 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)

	September 30,		December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	1,143.4	$	765.2
Accounts and other receivables	63.8		41.8
Registry deposits	30.5		31.1
Prepaid domain name registry fees	424.4		392.4
Prepaid expenses and other current assets	107.4		60.8
Total current assets	1,769.5		1,291.3
Property and equipment, net	228.5		257.3
Operating lease assets	122.2		142.0
Prepaid domain name registry fees, net of current portion	180.8		176.1
Goodwill	3,500.4		3,275.1
Intangible assets, net	1,408.9		1,255.1
Other assets	87.7		36.0
Total assets	$	7,298.0	$	6,432.9
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	75.0	$	51.0
Accrued expenses and other current liabilities	485.8		527.6
Deferred revenue	1,900.1		1,711.3
Long-term debt	24.1		24.3
Total current liabilities	2,485.0		2,314.2
Deferred revenue, net of current portion	756.7		725.1
Long-term debt, net of current portion	3,863.7		3,090.1
Operating lease liabilities, net of current portion	148.3		166.7
Other long-term liabilities	66.3		56.6
Deferred tax liabilities	79.1		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; 166,121 and 169,157 issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	0.2		0.2
Class B common stock, $0.001 par value - 500,000 shares authorized; 320 and 688 issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	—		—
Additional paid-in capital	1,521.8		1,308.8
Accumulated deficit	(1,561.8)		(1,190.9)
Accumulated other comprehensive loss	(63.0)		(131.0)
Total stockholders' deficit attributable to GoDaddy Inc.	(102.8)		(12.9)
Non-controlling interests	1.7		1.1
Total stockholders' deficit	(101.1)		(11.8)
Total liabilities and stockholders' deficit	$	7,298.0	$	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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue:
Domains	$	453.2	$	387.4	$	1,312.6	$	1,112.9
Hosting and presence	324.7		302.4		953.5		891.8
Business applications	186.1		154.6		530.3		438.1
Total revenue	964.0		844.4		2,796.4		2,442.8
Costs and operating expenses(1):
Cost of revenue (excluding depreciation and amortization)	345.8		290.2		999.0		856.7
Technology and development	172.4		141.4		530.8		411.8
Marketing and advertising	124.0		115.4		383.2		312.9
Customer care	74.0		73.6		230.9		242.6
General and administrative	81.2		76.4		260.9		244.1
Restructuring and other	(15.4)		4.3		(15.4)		43.7
Depreciation and amortization	50.7		50.7		149.7		151.3
Total costs and operating expenses	832.7		752.0		2,539.1		2,263.1
Operating income	131.3		92.4		257.3		179.7
Interest expense	(32.5)		(23.9)		(93.8)		(64.5)
Tax receivable agreements liability adjustment	—		—		—		(674.7)
Other income (expense), net	(1.2)		1.2		(1.4)		(1.3)
Income (loss) before income taxes	97.6		69.7		162.1		(560.8)
Benefit (provision) for income taxes	0.1		(4.6)		(6.7)		(4.1)
Net income (loss)	97.7		65.1		155.4		(564.9)
Less: net income attributable to non-controlling interests	0.2		0.4		0.3		0.7
Net income (loss) attributable to GoDaddy Inc.	$	97.5	$	64.7	$	155.1	$	(565.6)
Net income (loss) attributable to GoDaddy Inc. per share of Class A common stock:
Basic	$	0.58	$	0.39	$	0.92	$	(3.35)
Diluted	$	0.58	$	0.38	$	0.90	$	(3.35)
Weighted-average shares of Class A common stock outstanding:
Basic	167,542		167,258		168,387		168,734
Diluted	169,823		171,405		171,724		168,734
___________________________
(1) Costs and operating expenses include equity-based compensation expense as follows:
Cost of revenue	$	0.3	$	0.2	$	0.7	$	0.5
Technology and development	27.3		22.5		82.2		65.6
Marketing and advertising	5.6		5.7		18.8		15.7
Customer care	3.5		2.6		10.2		8.5
General and administrative	14.2		17.1		43.0		51.8
Total equity-based compensation expense	$	50.9	$	48.1	$	154.9	$	142.1

See accompanying notes to condensed consolidated financial statements.

2

GoDaddy Inc.

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

(In millions)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income (loss)	$	97.7	$	65.1	$	155.4	$	(564.9)
Foreign exchange forward contracts gain (loss), net	11.0		(9.4)		14.0		(3.1)
Unrealized swap gain (loss), net(1)	4.6		(13.4)		22.9		(5.8)
Change in foreign currency translation adjustment	3.8		(8.4)		31.6		(44.0)
Comprehensive income (loss)	117.1		33.9		223.9		(617.8)
Less: comprehensive income (loss) attributable to non-controlling interests	0.3		0.3		0.7		0.6
Comprehensive income (loss) attributable to GoDaddy Inc.	$	116.8	$	33.6	$	223.2	$	(618.4)
___________________________
(1) Components of OCI are net of the tax effects reflected below:
Unrealized swap gain (loss), net	$	0.3	$	0.5	$	1.8	$	1.6

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
Net income	—	—		—	—		—		97.5		—		0.2		97.7
Equity-based compensation, including amounts capitalized	—	—		—	—		52.0		—		—		—		52.0
Stock option exercises	322	—		—	—		11.3		—		—		(0.1)		11.2
Repurchases of Class A common stock	(3,425)	—		—	—		—		(250.1)		—		—		(250.1)
Impact of derivatives, net	—	—		—	—		—		—		15.6		—		15.6
Change in foreign currency translation adjustment	—	—		—	—		—		—		3.8		—		3.8
Vesting of restricted stock units and other	504	—		(59)	—		0.5		—		(0.1)		(0.3)		0.1
Balance at September 30, 2021	166,121	$	0.2	320	$	—	$	1,521.8	$	(1,561.8)	$	(63.0)	$	1.7	$	(101.1)

5

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)

6

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
Net income	—	—		—	—		—		64.7		—		0.4		65.1
Equity-based compensation, including amounts capitalized	—	—		—	—		48.6		—		—		—		48.6
Stock option exercises	517	—		—	—		14.7		—		—		(0.5)		14.2
Distributions to holders of LLC Units	—	—		—	—		—		—		—		(6.0)		(6.0)
Impact of derivatives, net	—	—		—	—		—		—		(22.8)		—		(22.8)
Change in foreign currency translation adjustment	—	—		—	—		—		—		(8.4)		—		(8.4)
Vesting of restricted stock units and other	545	—		(127)	—		0.2		—		0.1		(0.3)		—
Balance at September 30, 2020	167,813	$	0.2	993	$	—	$	1,228.0	$	(1,261.4)	$	(131.0)	$	0.4	$	(163.8)

See accompanying notes to condensed consolidated financial statements.

7

GoDaddy Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(In millions)

	Nine Months Ended September 30,
	2021		2020
Operating activities
Net income (loss)	$	155.4	$	(564.9)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	149.7		151.3
Equity-based compensation expense	154.9		142.1
Non-cash restructuring charges	—		29.0
Tax receivable agreements liability adjustment	—		674.7
Other	10.7		30.6
Changes in operating assets and liabilities, net of amounts acquired:
Prepaid domain name registry fees	(42.0)		(15.1)
Deferred revenue	214.8		200.5
Other operating assets and liabilities	13.6		(49.5)
Net cash provided by operating activities	657.1		598.7
Investing activities
Maturities of short-term investments	—		23.7
Business acquisitions, net of cash acquired	(320.1)		(420.7)
Purchases of intangible assets	(201.8)		—
Purchases of property and equipment	(33.7)		(39.1)
Purchases of equity investments	(40.0)		—
Other investing activities	25.3		0.2
Net cash used in investing activities	(570.3)