UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
July 30, 2018
(Exact name of registrant as specified in its charter)
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Delaware
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001-36904
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46-5769934
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(State or other jurisdiction of incorporation or organization)
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(Commission File Number)
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(I.R.S. Employer Identification Number)
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14455 N. Hayden Road
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Scottsdale, Arizona 85260
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(Address of principal executive offices, including zip code)
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(480) 505-8800
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(Registrant’s telephone number, including area code)
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Not Applicable
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(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 2.02 Results of Operations and Financial Condition
On
August 2, 2018
, GoDaddy Inc. issued a press release and will hold a conference call announcing its financial results for the quarter ended
June 30, 2018
. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated by reference herein.
This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
GoDaddy Inc. refers to non-GAAP financial information in both the press release and the conference call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On July 30, 2018, the Board appointed Ryan Roslansky and Caroline Donahue to its Board of Directors, effective immediately. Ms. Donahue will serve in the class of directors whose term expires at the annual meeting of stockholders to be held in 2019. Mr. Roslansky will serve in the class of directors whose term expires at the annual meeting of stockholders to be held in 2020. In addition, Ms. Donahue was appointed as a member of the Audit and Finance Committee of the Board (the “Audit Committee”), effective immediately; she will replace Brian Sharples on the Audit Committee.
In connection with their election to the Board, the Company entered into an offer letter with both Ms. Donahue and Mr. Rolansky, pursuant to which each was granted an award for of restricted stock units with a value of $220,000. The equity award issued to each will vest on Ms. Donahue’s and Mr. Roslansky’s one-year anniversary as a Board member, subject to Ms. Donahue’s and Mr. Roslansky’s continued service on the Board on the vesting date. Each equity award is subject to the terms and conditions of the Company’s 2015 Equity Incentive Plan and the related equity award agreement. Furthermore, in accordance with the Company’s Outside Director Compensation Policy, both Ms. Donahue and Mr. Roslansky are also entitled to additional cash and equity compensation for their service on the Board and its committees.
Ms. Donahue and Mr. Roslansky also executed the Company’s standard form of indemnification agreement, a copy of which has been filed as Exhibit 10.20 to the Company’s Registration Statement on Form S-1 (File No. 333-196615) filed with the Securities and Exchange Commission on February 24, 2015.
There is no arrangement or understanding between either Ms. Donahue or Mr. Roslansky and any other person pursuant to which Ms. Donahue or Mr. Roslansky was elected as a director of the Company. There are no family relationships between either Ms. Donahue or Mr. Roslansky and any director or executive officer of the Company, and, other than as described above, no transactions involving Ms. Donahue or Mr. Roslansky that would require disclosure under Item 404(a) of Regulation S-K.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
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Exhibit Number
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Exhibit Description
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10.1
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10.2
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10.3*
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99.1
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* Incorporated by reference to Exhibit 10.20 filed with the Company’s Registration Statement on Form S-1 (File No. 333-196615), filed with the Securities and Exchange Commission on February 24, 2015.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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GODADDY INC.
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Date:
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August 2, 2018
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/s/ Ray E. Winborne
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Ray E. Winborne
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Chief Financial Officer
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14455 N. Hayden Road
Scottsdale, AZ 8526
O:
480.505.8800
July 24, 2018
{Via email}
Ms. Caroline Donahue
Dear Caroline:
On behalf of GoDaddy Inc. (“GoDaddy”) I am thrilled to offer you a position as a member of its Board of Directors (the “
Board
”) commencing after, and subject to, your nomination by the Nominating and Corporate Governance Committee, and appointment by the Board, further subject to:
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(i)
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your obtaining any approvals that may be required by other Boards on which you serve (if applicable);
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(ii)
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your successful completion of our D&O questionnaire and its review by our counsel;
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(iii)
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the completion of reference and formal background checks (which are already in progress).
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Following the successful completion of these items to the satisfaction of GoDaddy, your appointment to the Board will be official, and you also will be appointed to the Audit Committee. We value your knowledge, expertise and talent and have developed this offer to ensure you will be well compensated for the time and dedication you will bring to our team.
Compensation
. We will compensate you for your services as a member of the Board and any Board committee by providing you with the cash and equity compensation set forth in our Outside Director Compensation Policy, adopted on January 19, 2018 (“
Director Compensation Policy
”). Under the Director Compensation Policy (a copy of which is attached), you will be paid for your services on the Board and Audit Committee with an annual retainer of $50,000 and $15,000, respectively, as well as the RSU awards set forth below. (Both of these payments will be pro-rated for 2018 based on an August 1 date.) In addition, you will be eligible to participate in our medical and dental benefits plan, should you be interested.
RSU Awards
. Upon joining our Board, you will be granted an award of Restricted Stock Units (“
RSUs
”) valued at $220,000 (the “Initial Award”).
The Initial Award vests on the one-year anniversary of the grant date, subject to your continued service through the applicable vesting date.
In addition, on the date of each annual meeting of stockholders (“
Annual Meeting
”) during your service on the Board, you will automatically be granted an additional award of RSUs valued at $220,000, provided that you have, as of the date of the Annual Meeting, been a Service Provider in excess of six (6) months (“
Annual Award
”). The Annual Award vests on the day prior to the date of the next Annual Meeting, subject to your continued service through the applicable vesting date.
The Initial Award and any Annual
Award are subject to the terms of the Director Compensation Policy and any plans or agreements referenced therein. You will also need to execute the Notice of Restricted Stock Unit Grant and Restricted Stock Unit Agreement upon official appointment to the Board; copies of those documents are attached.
Expense reimbursement
. You will be reimbursed for all reasonable expenses incurred by you in the performance of your duties in accordance with GoDaddy’s policies.
Indemnification.
As with all our directors and executive officers, you will be afforded indemnity protections pursuant to our standard Indemnification Agreement, a copy of which is attached.
Compliance
. GoDaddy is a Delaware corporation and your rights and duties as a Board member are prescribed by Delaware law and our charter documents, as well as by the policies established by our Board from time to time and the rules and regulations of the U.S. Securities and Exchange Commission and the New York Stock Exchange. Upon appointment to the Board, you will become a Section 16 reporting person of GoDaddy, too. You may also be requested to serve as a director of one or more of our subsidiaries in which case you may be subject to other laws while serving in such a capacity. In addition, please note that, as a director, you will be subject to the corporate policies of GoDaddy, including its Insider Trading Policy, a copy of which is attached.
No conflict
. In accepting our offer, you are representing that you do not know of any conflict that would restrict you from becoming a director of GoDaddy. You also agree that, during the term of your service on the Board, you will not engage in any other employment, occupation, consulting or other business activity directly related to the business in which GoDaddy or any of its affiliates is now involved or becomes involved during your service on the Board, nor will you engage in any other activities that conflict with your obligations to GoDaddy.
Confidentiality
. During your service on the Board and thereafter, you agree to hold in strictest confidence, and not to use, except for the benefit of GoDaddy, or to disclose to any person, firm or corporation without written authorization of the Board, any Confidential Information of GoDaddy, except under a non-disclosure agreement duly authorized and executed by GoDaddy. “
Confidential Information
” means any non-public information that relates to the actual or anticipated business or research and development of GoDaddy and its affiliates (“
GoDaddy Group
”), business strategy, contemplated merger and acquisition activity, technical data, trade secrets or know-how, including, but not limited to, research, product plans or other information regarding the GoDaddy Group’s products or services and markets therefore, customer lists and customers (including, but not limited to, customers of the GoDaddy Group on whom you called or with whom you became acquainted during the term of your directorship), software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances or other business information. Confidential Information does not include any information which
(i)
was publicly known or made generally available prior to the time of disclosure by the GoDaddy Group to you;
(ii)
becomes publicly known or made generally available after disclosure by the GoDaddy Group to you through no wrongful action or omission by you; or
(iii)
is or was in your rightful possession, without confidentiality obligations, at the time of disclosure by the GoDaddy Group as shown by your then-contemporaneous written records.
Caroline, on behalf of myself and the entire GoDaddy Board, we are truly excited to have you on our team and help us make Go Daddy Go! Our quarterly Board and Committee meetings are generally held at our Scottsdale, AZ offices, although at times they are held in CA and NYC; our next Board meeting is scheduled for Wednesday, September 12 in Palo Alto and the Audit Committee meeting to review our Q3 financials is set for November 1 in Scottsdale. Details for both will be forthcoming.
We look forward to receiving your acceptance of this offer, and more importantly, to seeing you soon!
Sincerely,
Nima Jacobs Kelly
EVP, General Counsel & Corporate Secretary
I hereby accept the terms and conditions set forth in this letter.
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/s/ Caroline Donahue
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Caroline Donahue
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July 25, 2018
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Date
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14455 N. Hayden Road
Scottsdale, AZ 85260
O:
480.505.8800
July 24, 2018
{Via email}
Mr. Ryan Roslansky
Dear Ryan:
On behalf of GoDaddy Inc. (“GoDaddy”) I am thrilled to offer you a position as a member of its Board of Directors (the “
Board
”) commencing after, and subject to, your nomination by the Nominating and Corporate Governance Committee, and appointment by the Board, further subject to:
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(i)
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your obtaining any approvals that may be required by other Boards on which you serve (if applicable);
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(ii)
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your successful completion of our D&O questionnaire and its review by our counsel;
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(iii)
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the completion of reference and formal background checks (which are already in progress).
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Following the successful completion of these items to the satisfaction of GoDaddy, your appointment to the Board will be official. We value your knowledge, expertise and talent and have developed this offer to ensure you will be well compensated for the time and dedication you will bring to our team.
Compensation
. We will compensate you for your services as a member of the Board and any Board committee by providing you with the cash and equity compensation set forth in our Outside Director Compensation Policy, adopted on June 8, 2016 (“
Director Compensation Policy
”). Under the Director Compensation Policy (a copy of which is attached), you will be paid for your services on the Board with an annual retainer of $50,000, as well as the RSU awards set forth below. (The annual retainer will be pro-rated for 2018 based on an August 1 date.) In addition, you will be eligible to participate in our medical and dental benefits plan, should you be interested.
RSU Awards
. Upon joining our Board, you will be granted an award of Restricted Stock Units (“
RSUs
”) valued at $220,000 (the “Initial Award”).
The Initial Award vests on the one-year anniversary of the grant date, subject to your continued service through the applicable vesting date.
In addition, on the date of each annual meeting of stockholders (“
Annual Meeting
”) during your service on the Board, you will automatically be granted an additional award of RSUs valued at $220,000, provided that you have, as of the date of the Annual Meeting, been a Service Provider in excess of six (6) months (“
Annual Award
”). The Annual Award vests on the day prior to the date of the next Annual Meeting, subject to your continued service through the applicable vesting date.
The Initial Award and any Annual
Award are subject to the terms of the Director Compensation Policy and any plans or agreements referenced therein. You will also need to execute the Notice of Restricted Stock Unit Grant and Restricted Stock Unit Agreement upon official appointment to the Board; copies of those
documents are attached.
Expense reimbursement
. You will be reimbursed for all reasonable expenses incurred by you in the performance of your duties in accordance with GoDaddy’s policies.
Indemnification.
As with all our directors and executive officers, you will be afforded indemnity protections pursuant to our standard Indemnification Agreement, a copy of which is attached.
Compliance
. GoDaddy is a Delaware corporation and your rights and duties as a Board member are prescribed by Delaware law and our charter documents, as well as by the policies established by our Board from time to time and the rules and regulations of the U.S. Securities and Exchange Commission and the New York Stock Exchange. Upon appointment to the Board, you will become a Section 16 reporting person of GoDaddy, too. You may also be requested to serve as a director of one or more of our subsidiaries in which case you may be subject to other laws while serving in such a capacity. In addition, please note that, as a director, you will be subject to the corporate policies of GoDaddy, including its Insider Trading Policy, a copy of which is attached.
No conflict
. In accepting our offer, you are representing that you do not know of any conflict that would restrict you from becoming a director of GoDaddy. You also agree that, during the term of your service on the Board, you will not engage in any other employment, occupation, consulting or other business activity directly related to the business in which GoDaddy or any of its affiliates is now involved or becomes involved during your service on the Board, nor will you engage in any other activities that conflict with your obligations to GoDaddy.
Confidentiality
. During your service on the Board and thereafter, you agree to hold in strictest confidence, and not to use, except for the benefit of GoDaddy, or to disclose to any person, firm or corporation without written authorization of the Board, any Confidential Information of GoDaddy, except under a non-disclosure agreement duly authorized and executed by GoDaddy. “
Confidential Information
” means any non-public information that relates to the actual or anticipated business or research and development of GoDaddy and its affiliates (“
GoDaddy Group
”), business strategy, contemplated merger and acquisition activity, technical data, trade secrets or know-how, including, but not limited to, research, product plans or other information regarding the GoDaddy Group’s products or services and markets therefore, customer lists and customers (including, but not limited to, customers of the GoDaddy Group on whom you called or with whom you became acquainted during the term of your directorship), software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances or other business information. Confidential Information does not include any information which
(i)
was publicly known or made generally available prior to the time of disclosure by the GoDaddy Group to you;
(ii)
becomes publicly known or made generally available after disclosure by the GoDaddy Group to you through no wrongful action or omission by you; or
(iii)
is or was in your rightful possession, without confidentiality obligations, at the time of disclosure by the GoDaddy Group as shown by your then-contemporaneous written records.
Ryan, on behalf of myself and the entire GoDaddy Board, we are truly excited to have you on our team and help us make Go Daddy Go! Our quarterly Board and Committee meetings are generally held at our Scottsdale, AZ offices, although at times they are held in CA and NYC; our next Board meeting is scheduled for Wednesday, September 12 in Palo Alto. Details for this meeting will be forthcoming.
We look forward to receiving your acceptance of this offer, and more importantly, to seeing you soon!
Sincerely,
Nima Jacobs Kelly
EVP, General Counsel & Corporate Secretary
I hereby accept the terms and conditions set forth in this letter.
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/s/ Ryan Roslansky
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Ryan Roslansky
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July 26, 2018
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Date
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news release
GODADDY REPORTS
SECOND
QUARTER 2018 EARNINGS RESULTS
Q2
Revenue up
17%
on Growing Customers and ARPU;
Operating Cash Flow up
14%
and uFCF up
15%
SCOTTSDALE, Ariz.,
August 2, 2018
/PRNewswire/
- GoDaddy Inc. (NYSE: GDDY), the world’s largest cloud platform dedicated to small, independent ventures, today reported financial results for the
second
quarter ended
June 30, 2018
.
“GoDaddy successfully delivered another solid quarter with continued customer, revenue, and cash flow growth,” said GoDaddy CEO Scott Wagner. “We are making great progress on our 2018 strategic initiatives including growing the adoption of GoCentral and beginning the integration of Main Street Hub. We continue to see tremendous opportunity for long-term growth, as we expand both our product offerings and the customers we serve."
Consolidated
Second
Quarter Financial Highlights
(1)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2018
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2017
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Change
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2018
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2017
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Change
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(in millions, except customers in thousands and ARPU)
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GAAP Results
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Revenue
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$
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651.6
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$
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557.8
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16.8
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%
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$
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1,284.8
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$
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1,047.5
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22.7
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%
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Net cash provided by operating activities
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$
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128.9
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$
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113.3
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13.8
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%
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$
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277.3
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$
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239.9
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15.6
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%
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Non-GAAP Results
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Unlevered free cash flow
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$
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154.7
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$
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135.0
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14.6
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%
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$
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317.1
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$
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249.1
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27.3
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%
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Operating Metrics
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Total bookings
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$
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754.2
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$
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667.5
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13.0
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%
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$
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1,537.3
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$
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1,292.3
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19.0
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%
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Total customers at period end
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17,980
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16,878
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6.5
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%
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17,980
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16,878
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6.5
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%
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ARPU
(2)
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$
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142
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$
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129
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10.2
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%
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$
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142
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$
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129
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10.2
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%
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(1)
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See reconciliation tables for a detailed listing of certain items included in our condensed consolidated statements of operations.
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(2)
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2017 ARPU was muted by the impact of the acquisition of HEG as our trailing twelve month revenue for the period included only three months of HEG’s results for this annual measure as well as purchase price accounting adjustments.
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14455 N. Hayden Road, Suite 219 Scottsdale, AZ 85260 T: 480.505.8800 https://investors.godaddy.net
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•
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Total revenue of
$651.6 million
, up
16.8%
year over year.
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•
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Total bookings of
$754.2 million
, up
13.0%
year over year.
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•
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Net cash provided by operating activities of
$128.9 million
, up
13.8%
year over year.
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•
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Unlevered free cash flow of
$154.7 million
, up
14.6%
year over year.
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•
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Customers of
18.0 million
as of
June 30, 2018
, up
6.5%
year over year.
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•
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Average revenue per user (ARPU) of
$142
, up
10.2%
year over year.
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•
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Domains revenue of
$304.8 million
, up
15.8%
year over year.
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•
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Hosting and Presence revenue of
$244.6 million
, up
13.8%
year over year.
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•
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Business Applications revenue of
$102.2 million
, up
28.4%
year over year.
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•
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International revenue of
$233.3 million
, up
24.3%
year over year.
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Operating Highlights
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•
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GoDaddy closed the Main Street Hub acquisition for approximately
$127 million
, net of cash acquired, plus up to $50 million in potential future earnouts. Main Street Hub provides small businesses with a complete "do-it-for-me" service for managing engagement on the most popular social networks and review platforms.
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•
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GoDaddy's GoCentral website builder continues to show strong momentum with more users adopting the product's ecommerce capabilities, using mobile devices for end-to-end editing and publishing, and upgrading to premium packages.
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•
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GoCentral continued to launch features designed for customer success in Q2, including Square inventory import and sync functionality, robust class and staff scheduling, Facebook integrations allowing sellers to easily share products via social media in addition to their website and new in-product dynamic recommendations based on a customer's industry that will help them get more traffic and bookings.
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•
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GoDaddy completed a secondary offering of 11.6 million shares of its Class A common stock sold by certain of its stockholders at $70.73 per share in May 2018, increasing the publicly available float.
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•
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GoDaddy appointed Caroline Donahue and Ryan Roslansky to its board of directors. Ms. Donahue, former Chief Marketing and Sales Officer at Intuit, and Mr. Roslansky, Senior Vice President of Product at LinkedIn, bring deep knowledge and leadership in global marketing, sales, product and customer experience.
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Balance Sheet
At
June 30, 2018
, total cash, cash equivalents and short-term investments were
$828.5 million
, total debt was
$2,469.8 million
and net debt was
$1,641.3 million
.
Business Outlook
For the
third
quarter ending
September 30, 2018
, GoDaddy expects total revenue in the range of
$670
to
$675 million
. For the full year
2018
, GoDaddy raised its revenue expectations to a range of
$2.645
to
$2.655 billion
, representing approximately
19%
growth at the midpoint. The full year revenue outlook includes roughly $10 million per quarter in the back half of the year from the recent acquisition of Main Street Hub.
For the full year
2018
, GoDaddy is raising its unlevered free cash outlook to
$615
to
$625 million
, representing approximately
25%
growth at the midpoint versus the
$496 million
in unlevered free cash generated in 2017. GoDaddy expects full year cash interest payments of
14455 N. Hayden Road, Suite 219 Scottsdale, AZ 85260 T: 480.505.8800 https://investors.godaddy.net
approximately $90 million to $95 million and cash tax-related payments of $25 million to $30 million.
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (GAAP). We do not provide reconciliations from non-GAAP guidance to GAAP, because projections of changes in individual balance sheet amounts are not possible without unreasonable effort, and release of such reconciliations would imply an inappropriate degree of precision. Our reported results provide reconciliations of non-GAAP financial measures to their nearest GAAP equivalents.
Quarterly Conference Call and Webcast
GoDaddy will host a conference call and webcast to discuss
second
quarter
2018
results at 5:00 p.m. Eastern Time on
August 2, 2018
. To hear the call, dial (866) 393-4306 in the United States or (734) 385-2616 from international locations, with passcode 8879006. A live webcast of the call, together with a slide presentation including supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, will be available through GoDaddy's Investor Relations website at https://investors.godaddy.net. Following the call, a recorded replay of the webcast will be available on the website.
GoDaddy Inc. uses its Investor Relations website at https://investors.godaddy.net as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor GoDaddy’s Investor Relations website, in addition to following press releases, Securities and Exchange Commission (SEC) filings, public conference calls and webcasts.
Forward-Looking Statements
This press release contains forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on estimates and information available to us at the time of this press release and are not guarantees of future performance. Statements in this release involve risks, uncertainties and assumptions. If the risks or uncertainties materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact could be deemed forward-looking statements, including, but not limited to: launches of new or expansion of existing products or services, any projections of product or service availability, technology developments and innovation, customer growth, or other future events; any statements about historical results that may suggest future trends for our business; any statements regarding our plans, strategies or objectives with respect to future operations, including international expansion plans and marketing strategy; any statements regarding the integration of recent or planned acquisitions; any statements regarding our future financial results; statements concerning our acquisitions of HEG and Main Street Hub, and the projected impact of the acquisitions on our business and results of operations; and any statements of assumptions underlying any of the foregoing.
Actual results could differ materially from our current expectations as a result of many factors, including, but not limited to: the unpredictable nature of our rapidly evolving market; fluctuations in our financial and operating results; our rate of growth; interruptions or delays in our service or our web hosting; breaches of our security measures; the impact of any previous or future acquisitions; our ability to continue to release, and gain customer acceptance of, our existing and future products and services; our ability to manage our growth; our ability to hire, retain and
14455 N. Hayden Road, Suite 219 Scottsdale, AZ 85260 T: 480.505.8800 https://investors.godaddy.net
motivate employees; the effects of competition; technological, regulatory and legal developments; intellectual property litigation; and developments in the economy, financial markets and credit markets.
Additional risks and uncertainties that could affect GoDaddy’s financial results are included in the other filings we make with the SEC from time to time, including under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the GoDaddy's Annual Report on Form 10-K for the year ended December 31, 2017, which is available on GoDaddy's website at https://investors.godaddy.net and on the SEC's website at www.sec.gov. Additional information will also be set forth in other filings that GoDaddy makes with the SEC from time to time. All forward-looking statements in this press release are based on information available to GoDaddy as of the date hereof. GoDaddy does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
Non-GAAP Financial Measures and Other Operating Metric
In addition to our results determined in accordance with GAAP, this release includes certain non-GAAP financial measures and other operating metric. We believe that these non-GAAP financial measures and other operating metric are useful as a supplement in evaluating our ongoing operational performance and enhancing an overall understanding of our past financial performance. The non-GAAP financial measures included in this release should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation between each non-GAAP financial measure and its nearest GAAP equivalent is included in this release following the financial statements. We use both GAAP and non-GAAP measures to evaluate and manage our operations.
Total bookings.
Total bookings represents cash receipts from the sale of products to customers in a given period adjusted for products where we recognize revenue on a net basis and without giving effect to certain adjustments, primarily net refunds granted in the period. Total bookings provides valuable insight into the sales of our products and the performance of our business since we typically collect payment at the time of sale and recognize revenue ratably over the term of our customer contracts. We report total bookings without giving effect to refunds granted in the period because refunds often occur in periods different from the period of sale for reasons unrelated to the marketing efforts leading to the initial sale. Accordingly, by excluding net refunds, we believe total bookings reflects the effectiveness of our sales efforts in a given period.
ARPU
.
We calculate ARPU as total revenue during the preceding 12 month period divided by the average of the number of total customers at the beginning and end of the period. ARPU provides insight into our ability to sell additional products to customers, though the impact to date has been muted due to our continued growth in total customers.
Unlevered Free Cash Flow
.
Unlevered free cash flow is a measure of our liquidity used by management to evaluate our business prior to the impact of our capital structure and after tax distributions required by Desert Newco's LLC agreement and purchases of property and equipment, such as data center and infrastructure investments, that can be used by us for strategic opportunities and strengthening our balance sheet. However, given our debt obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses.
14455 N. Hayden Road, Suite 219 Scottsdale, AZ 85260 T: 480.505.8800 https://investors.godaddy.net
Net Debt
.
We define net debt as total debt less cash and cash equivalents and short-term investments. Total debt consists of the current portion of long-term debt plus long-term debt, unamortized original issue discount and unamortized debt issuance costs. Our management reviews net debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage and we believe such information is useful to investors. Furthermore, certain analysts and debt rating agencies monitor our net debt as part of their assessments of our business.
About GoDaddy
GoDaddy powers the world's largest cloud platform dedicated to small, independent ventures. With
18 million
customers worldwide and
77 million
domain names under management, GoDaddy is the place people come to name their idea, build a professional website, attract customers and manage their work. Our mission is to give our customers the tools, insights and the people to transform their ideas and personal initiative into success. To learn more about the company visit www.GoDaddy.com.
14455 N. Hayden Road, Suite 219 Scottsdale, AZ 85260 T: 480.505.8800 https://investors.godaddy.net
GoDaddy Inc.
Condensed Consolidated Statements of Operations (unaudited)
(In millions, except share amounts in thousands and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Domains
|
$
|
304.8
|
|
|
$
|
263.3
|
|
|
$
|
596.5
|
|
|
$
|
504.1
|
|
|
Hosting and presence
|
244.6
|
|
|
214.9
|
|
|
484.4
|
|
|
393.2
|
|
|
Business applications
|
102.2
|
|
|
79.6
|
|
|
203.9
|
|
|
150.2
|
|
|
Total revenue
|
651.6
|
|
|
557.8
|
|
|
1,284.8
|
|
|
1,047.5
|
|
|
Costs and operating expenses
(1)
:
|
|
|
|
|
|
|
|
|
Cost of revenue (excluding depreciation and amortization)
|
221.3
|
|
|
196.4
|
|
|
436.6
|
|
|
373.2
|
|
|
Technology and development
|
105.1
|
|
|
90.1
|
|
|
207.1
|
|
|
170.3
|
|
|
Marketing and advertising
|
67.4
|
|
|
62.5
|
|
|
141.9
|
|
|
129.9
|
|
|
Customer care
|
76.3
|
|
|
75.4
|
|
|
156.7
|
|
|
142.4
|
|
|
General and administrative
|
81.0
|
|
|
71.8
|
|
|
157.4
|
|
|
132.8
|
|
|
Depreciation and amortization
|
57.0
|
|
|
55.5
|
|
|
114.8
|
|
|
87.1
|
|
|
Total costs and operating expenses
|
608.1
|
|
|
551.7
|
|
|
1,214.5
|
|
|
1,035.7
|
|
|
Operating income
(2)
|
43.5
|
|
|
6.1
|
|
|
70.3
|
|
|
11.8
|
|
|
Interest expense
|
(24.7
|
)
|
|
(22.0
|
)
|
|
(48.5
|
)
|
|
(34.8
|
)
|
|
Tax receivable agreements liability adjustment
|
—
|
|
|
32.0
|
|
|
(0.1
|
)
|
|
37.0
|
|
|
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.7
|
)
|
|
Other income (expense), net
|
0.2
|
|
|
2.7
|
|
|
1.2
|
|
|
4.4
|
|
|
Income from continuing operations before income taxes
|
19.0
|
|
|
18.8
|
|
|
22.9
|
|
|
16.7
|
|
|
Benefit for income taxes
|
1.2
|
|
|
4.6
|
|
|
1.5
|
|
|
3.6
|
|
|
Income from continuing operations
|
20.2
|
|
|
23.4
|
|
|
24.4
|
|
|
20.3
|
|
|
Loss from discontinued operations, net of income taxes
|
—
|
|
|
(5.3
|
)
|
|
—
|
|
|
(5.3
|
)
|
|
Net income
|
20.2
|
|
|
18.1
|
|
|
24.4
|
|
|
15.0
|
|
|
Less: net income (loss) attributable to non-controlling interests
|
2.1
|
|
|
(2.7
|
)
|
|
3.0
|
|
|
(6.4
|
)
|
|
Net income attributable to GoDaddy Inc.
|
$
|
18.1
|
|
|
$
|
20.8
|
|
|
$
|
21.4
|
|
|
$
|
21.4
|
|
|
Net income (loss) attributable to GoDaddy Inc. per share of Class A common stock—basic:
|
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.12
|
|
|
$
|
0.25
|
|
|
$
|
0.15
|
|
|
$
|
0.28
|
|
|
Discontinued operations
|
—
|
|
|
(0.05
|
)
|
|
—
|
|
|
(0.06
|
)
|
|
Net income attributable to GoDaddy Inc.
|
$
|
0.12
|
|
|
$
|
0.20
|
|
|
$
|
0.15
|
|
|
$
|
0.22
|
|
|
Net income (loss) attributable to GoDaddy Inc. per share of Class A common stock—diluted:
|
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.11
|
|
|
$
|
0.13
|
|
|
$
|
0.14
|
|
|
$
|
0.11
|
|
|
Discontinued operations
|
—
|
|
|
(0.03
|
)
|
|
—
|
|
|
(0.03
|
)
|
|
Net income attributable to GoDaddy Inc.
|
$
|
0.11
|
|
|
$
|
0.10
|
|
|
$
|
0.14
|
|
|
$
|
0.08
|
|
|
Weighted-average shares of Class A common stock outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
152,577
|
|
|
101,800
|
|
|
145,249
|
|
|
95,734
|
|
|
Diluted
|
180,881
|
|
|
176,716
|
|
|
179,955
|
|
|
177,796
|
|
|
(1)
Costs and operating expenses include equity-based compensation expense as follows:
|
|
|
|
Technology and development
|
$
|
13.6
|
|
|
$
|
8.9
|
|
|
$
|
27.3
|
|
|
$
|
17.3
|
|
|
Marketing and advertising
|
2.1
|
|
|
1.5
|
|
|
5.0
|
|
|
3.2
|
|
|
Customer care
|
1.3
|
|
|
1.2
|
|
|
2.5
|
|
|
1.6
|
|
|
General and administrative
|
11.2
|
|
|
7.4
|
|
|
24.9
|
|
|
13.3
|
|
|
Total equity-based compensation expense
|
28.2
|
|
|
19.0
|
|
|
59.7
|
|
|
35.4
|
|
|
|
|
|
(2)
|
See reconciliation tables for a detailed listing of certain items included in our condensed consolidated statements of operations.
|
14455 N. Hayden Road, Suite 219 Scottsdale, AZ 85260 T: 480.505.8800 https://investors.godaddy.net
GoDaddy Inc.
Condensed Consolidated Balance Sheets (unaudited)
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
2018
|
|
2017
|
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
809.7
|
|
|
$
|
582.7
|
|
|
Short-term investments
|
18.8
|
|
|
12.3
|
|
|
Accounts and other receivables
|
23.6
|
|
|
18.4
|
|
|
Registry deposits
|
46.1
|
|
|
34.7
|
|
|
Prepaid domain name registry fees
|
373.5
|
|
|
351.5
|
|
|
Prepaid expenses and other current assets
|
79.1
|
|
|
59.9
|
|
|
Total current assets
|
1,350.8
|
|
|
1,059.5
|
|
|
Property and equipment, net
|
281.0
|
|
|
297.9
|
|
|
Prepaid domain name registry fees, net of current portion
|
184.5
|
|
|
180.8
|
|
|
Goodwill
|
2,837.5
|
|
|
2,859.9
|
|
|
Intangible assets, net
|
1,251.3
|
|
|
1,326.0
|
|
|
Other assets
|
22.8
|
|
|
14.2
|
|
|
Total assets
|
$
|
5,927.9
|
|
|
$
|
5,738.3
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
$
|
51.9
|
|
|
$
|
59.6
|
|
|
Accrued expenses and other current liabilities
|
400.3
|
|
|
469.6
|
|
|
Deferred revenue
|
1,385.2
|
|
|
1,264.8
|
|
|
Long-term debt
|
16.7
|
|
|
16.7
|
|
|
Total current liabilities
|
1,854.1
|
|
|
1,810.7
|
|
|
Deferred revenue, net of current portion
|
628.7
|
|
|
596.8
|
|
|
Long-term debt, net of current portion
|
2,402.5
|
|
|
2,410.8
|
|
|
Payable to related parties pursuant to tax receivable agreements
|
179.2
|
|
|
153.0
|
|
|
Other long-term liabilities
|
52.6
|
|
|
75.0
|
|
|
Deferred tax liabilities
|
136.5
|
|
|
145.5
|
|
|
Commitments and contingencies
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Preferred stock, $0.001 par value
|
—
|
|
|
—
|
|
|
Class A common stock, $0.001 par value
|
0.2
|
|
|
0.1
|
|
|
Class B common stock, $0.001 par value
|
—
|
|
|
—
|
|
|
Additional paid-in capital
|
590.1
|
|
|
484.4
|
|
|
Retained earnings
|
109.1
|
|
|
87.7
|
|
|
Accumulated other comprehensive loss
|
(67.8
|
)
|
|
(85.7
|
)
|
|
Total stockholders' equity attributable to GoDaddy Inc.
|
631.6
|
|
|
486.5
|
|
|
Non-controlling interests
|
42.7
|
|
|
60.0
|
|
|
Total stockholders' equity
|
674.3
|
|
|
546.5
|
|
|
Total liabilities and stockholders' equity
|
$
|
5,927.9
|
|
|
$
|
5,738.3
|
|
14455 N. Hayden Road, Suite 219 Scottsdale, AZ 85260 T: 480.505.8800 https://investors.godaddy.net
GoDaddy Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2018
|
|
2017
|
|
Operating activities
|
|
|
|
|
Net income
|
$
|
24.4
|
|
|
$
|
15.0
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
Depreciation and amortization
|
114.8
|
|
|
87.1
|
|
|
Equity-based compensation
|
59.7
|
|
|
35.4
|
|
|
Tax receivable agreements liability adjustment
|
0.1
|
|
|
(37.0
|
)
|
|
Other
|
(6.5
|
)
|
|
1.5
|
|
|
Changes in operating assets and liabilities, net of amounts acquired:
|
|
|
|
|
Registry deposits
|
(11.5
|
)
|
|
(0.2
|
)
|
|
Prepaid domain name registry fees
|
(26.6
|
)
|
|
(26.8
|
)
|
|
Deferred revenue
|
154.2
|
|
|
161.9
|
|
|
Other long-term liabilities
|
(20.6
|
)
|
|
1.5
|
|
|
Other operating assets and liabilities
|
(10.7
|
)
|
|
1.5
|
|
|
Net cash provided by operating activities
|
277.3
|
|
|
239.9
|
|
|
Investing activities
|
|
|
|
|
Purchases of short-term investments
|
(6.9
|
)
|
|
(6.4
|
)
|
|
Maturities of short-term investments
|
0.4
|
|
|
0.6
|
|
|
Business acquisitions, net of cash acquired
|
(14.1
|
)
|
|
(1,871.2
|
)
|
|
Payment of PlusServer sales price adjustment
|
(4.3
|
)
|
|
—
|
|
|
Purchases of property and equipment
|
(35.9
|
)
|
|
(36.5
|
)
|
|
Other investing activities
|
(10.0
|
)
|
|
—
|
|
|
Net cash used in investing activities
|
(70.8
|
)
|
|
(1,913.5
|
)
|
|
Financing activities
|
|
|
|
|
Proceeds received from:
|
|
|
|
|
Debt issued to finance HEG acquisition
|
—
|
|
|
1,953.1
|
|
|
Stock option exercises
|
35.7
|
|
|
33.3
|
|
|
Sale of Class A common stock, net of expenses
|
—
|
|
|
21.7
|
|
|
Issuance of Class A common stock under employee stock purchase plan
|
11.9
|
|
|
9.2
|
|
|
Payments made for:
|
|
|
|
|
Repurchases of LLC Units
|
—
|
|
|
(275.0
|
)
|
|
Financing-related costs
|
—
|
|
|
(38.9
|
)
|
|
Distributions to holders of LLC Units
|
—
|
|
|
(10.0
|
)
|
|
Repayment of term loans
|
(12.5
|
)
|
|
(2.7
|
)
|
|
Contingent consideration for business acquisitions
|
(9.2
|
)
|
|
(0.7
|
)
|
|
Capital leases and other financing obligations
|
(4.0
|
)
|
|
(5.5
|
)
|
|
Net cash provided by financing activities
|
21.9
|
|
|
1,684.5
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
(1.4
|
)
|
|
1.8
|
|
|
Net increase in cash and cash equivalents
|
227.0
|
|
|
12.7
|
|
|
Cash and cash equivalents, beginning of period
|
582.7
|
|
|
566.1
|
|
|
Cash and cash equivalents, end of period
|
$
|
809.7
|
|
|
$
|
578.8
|
|
14455 N. Hayden Road, Suite 219 Scottsdale, AZ 85260 T: 480.505.8800 https://investors.godaddy.net
Reconciliation of Non-GAAP Financial Measures and Other Operating Metric
The following tables reconcile the most directly comparable GAAP financial measure to each non-GAAP financial measure and other operating metric:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Total Bookings:
|
|
|
|
|
|
|
|
|
Total revenue
|
$
|
651.6
|
|
|
$
|
557.8
|
|
|
$
|
1,284.8
|
|
|
$
|
1,047.5
|
|
|
Change in deferred revenue
|
52.2
|
|
|
66.1
|
|
|
154.5
|
|
|
159.8
|
|
|
Net refunds
|
50.0
|
|
|
41.8
|
|
|
99.9
|
|
|
81.7
|
|
|
Other
|
0.4
|
|
|
1.8
|
|
|
(1.9
|
)
|
|
3.3
|
|
|
Total bookings
|
$
|
754.2
|
|
|
$
|
667.5
|
|
|
$
|
1,537.3
|
|
|
$
|
1,292.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Unlevered Free Cash Flow:
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
$
|
128.9
|
|
|
$
|
113.3
|
|
|
$
|
277.3
|
|
|
$
|
239.9
|
|
|
Impact of discontinued operations
(1)
|
21.4
|
|
|
(3.0
|
)
|
|
21.4
|
|
|
(3.0
|
)
|
|
Cash paid for interest on long-term debt
|
20.0
|
|
|
25.9
|
|
|
40.5
|
|
|
34.7
|
|
|
Cash paid for acquisition-related costs
|
4.2
|
|
|
18.5
|
|
|
13.8
|
|
|
24.0
|
|
|
Capital expenditures
|
(19.8
|
)
|
|
(16.7
|
)
|
|
(35.9
|
)
|
|
(36.5
|
)
|
|
Cash paid for tax-related distributions
|
—
|
|
|
(3.0
|
)
|
|
—
|
|
|
(10.0
|
)
|
|
Unlevered free cash flow
|
$
|
154.7
|
|
|
$
|
135.0
|
|
|
$
|
317.1
|
|
|
$
|
249.1
|
|
|
|
|
|
(1)
|
Impact of discontinued operations in 2018 relates to cash tax payments made in connection with the gain on the August 2017 sale of PlusServer.
|
The following table details certain items included in our condensed consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Operating income includes the following:
|
|
|
|
|
|
|
|
|
Financing-related fees related to debt modifications recorded in general and administrative expenses
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.2
|
|
|
Acquisition-related expenses recorded in general and administrative expenses
|
10.2
|
|
|
13.7
|
|
|
16.5
|
|
|
17.2
|
|
14455 N. Hayden Road, Suite 219 Scottsdale, AZ 85260 T: 480.505.8800 https://investors.godaddy.net
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
|
|
|
|
(in millions)
|
|
Net Debt:
|
|
|
Current portion of long-term debt
|
$
|
16.7
|
|
|
Long-term debt
|
2,402.5
|
|
|
Unamortized original issue discount on long-term debt
|
30.4
|
|
|
Unamortized debt issuance costs
|
20.2
|
|
|
Total debt
|
2,469.8
|
|
|
Less: Cash and cash equivalents
|
(809.7
|
)
|
|
Less: Short-term investments
|
(18.8
|
)
|
|
Net debt
|
$
|
1,641.3
|
|
Shares Outstanding
Shares of Class B common stock do not share in our earnings and are not participating securities. Total shares of common stock outstanding are as follows:
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
(in thousands)
|
|
Shares Outstanding:
|
|
|
|
|
Class A common stock
|
158,098
|
|
|
110,751
|
|
|
Class B common stock
|
13,906
|
|
|
53,994
|
|
|
Total common stock outstanding
|
172,004
|
|
|
164,745
|
|
|
Effect of dilutive securities
|
9,642
|
|
|
10,157
|
|
|
|
181,646
|
|
|
174,902
|
|
CONTACTS:
Investors
Christie Masoner
602.817.7253
investors@godaddy.com
Media
Karen Tillman
480.366.3183
pr@godaddy.com
© 2018 GoDaddy Inc. All Rights Reserved.
14455 N. Hayden Road, Suite 219 Scottsdale, AZ 85260 T: 480.505.8800 https://investors.godaddy.net
