GoDaddy Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing; the supplied filing text does not provide a standalone Q4 income statement or cash flow summary.
Business context
GoDaddy provides domain registration, hosting, website and marketing tools, email and productivity applications, and commerce and payment services to entrepreneurs and other customers. It reported 20.9 million customers and nearly 84 million domains under management at year-end. Revenue is reported in Applications and Commerce (A&C) and Core Platform segments.
Key financial metrics
| Metric | FY 2022 | FY 2021 | Change |
|---|---|---|---|
| Revenue | $4,091.3 million | $3,815.7 million | +7.2% |
| Operating income / margin | $498.8 million / 12.2% | $382.1 million / 10.0% | +30.5% income |
| Net income / margin | $352.9 million / 8.6% | $242.8 million / 6.4% | +45.3% income |
| Bookings | $4,413.8 million | $4,231.7 million | +4.3% |
| Normalized EBITDA | $1,013.0 million | $872.2 million | +16.1% |
| Cash from operations | $979.7 million | $829.3 million | +18.1% |
Cost of revenue was $1,484.5 million, equivalent to a 63.7% gross margin before depreciation and amortization, versus 64.0% in 2021. Diluted EPS was $2.19, compared with $1.42. International revenue was $1,334.0 million, up 5.0% reported and approximately 8.4% on a constant-currency basis.
A&C revenue increased 13.4% to $1,279.7 million; Core revenue increased 4.6% to $2,811.6 million. A&C represented 31.3% of revenue and Core 68.7%.
Cash, debt and liquidity
- Cash and cash equivalents were $774.0 million at year-end, down from $1,255.7 million.
- Long-term debt, including current maturities and before unamortized discounts and issuance costs, totaled $3,901.3 million; reported carrying value was $3,831.1 million. The filing identifies $3.0 billion of term loans and $1.4 billion of senior notes. The $1.0 billion revolving facility was undrawn.
- Cash less gross debt implies net debt of approximately $3.13 billion. The company reported $1,455.3 million of estimated future interest payments, including $241.6 million due within 12 months.
- Current assets were $1,582.6 million and current liabilities were $2,459.8 million. Current liabilities include $1,954.0 million of deferred revenue, generally to be recognized as the company provides contracted services.
- Cash from investing activities was negative $132.0 million; financing activities used $1,326.7 million, including $1,294.6 million of share repurchases. Cash declined by $481.7 million overall.
- Management said existing cash and expected operating cash flows should cover anticipated operating needs for at least the next 12 months. The company was in compliance with debt covenants at year-end.
Material changes versus FY 2021
- Revenue growth slowed to 7.2% from 15.0% in 2021; bookings growth was 4.3% versus 12.1%. Management cited U.S. dollar strength, inflation and economic uncertainty as headwinds to bookings.
- Operating margin improved to 12.2% from 10.0%, supported in part by an 18.2% reduction in marketing and advertising expense. Technology and development expense rose 12.4% as the company invested in products and cloud infrastructure.
- Hosting revenue decreased 5.9%, reflecting product end-of-life migrations and weaker demand. In contrast, domain-related revenue grew 8.5%; commerce-related A&C revenue grew 103.2%, principally reflecting GoDaddy Payments and its acquisition history.
- Interest expense rose 16.1% to $146.3 million, primarily due to higher effective rates on variable-rate debt. In November 2022, GoDaddy refinanced term loans due in 2024 with $1.77 billion of term loans due in 2029 and increased its revolver capacity to $1.0 billion.
- GoDaddy acquired Dan.com in July 2022 for $69.6 million net cash consideration.
Outlook, risks and unusual items
- No specific revenue, earnings or bookings guidance is provided in the filing. Management expects continued investment in product development, marketing, customer care and migration of infrastructure to third-party cloud services.
- On February 8, 2023, the company announced a restructuring affecting approximately 550 employees, or 8% of its workforce. Estimated pretax charges are $55–$65 million, including $30–$40 million in future cash severance and benefit costs; most charges were expected in Q1 2023, with completion substantially in the first half of 2023.
- Material risks include competition, customer retention and small-business demand, execution of product and cloud investments, substantial indebtedness and variable interest rates, foreign-exchange exposure, privacy and regulatory obligations, and service outages or cyber incidents.
- The filing describes security incidents affecting hosting and Managed WordPress customers, including a December 2022 incident in which malware on cPanel servers intermittently redirected customer websites. The company reported no material adverse business impact to date, but investigations and regulatory inquiries remain relevant, including FTC inquiries related to an earlier incident.
- A shareholder derivative lawsuit challenges the 2020 tax receivable agreement settlement. A separate TCPA class-action settlement approval was vacated and remanded by the appeals court; its final status was uncertain at filing. Management stated that accruals for other matters were not material.
- The 2022 results include $15.7 million of restructuring and other expense and a $3.6 million loss on debt extinguishment. The 2020 comparison included a $674.7 million tax receivable agreement liability adjustment, contributing to that year’s net loss.
- The company did not declare dividends and said it did not expect to pay them in the foreseeable future. It had $1,699.9 million of remaining share repurchase authorization at year-end.
Most important facts for investors to verify
- Whether bookings, customer growth and renewals stabilize after reported currency and macroeconomic headwinds; review reported and constant-currency trends together.
- Whether hosting weakness persists and whether growth in commerce, applications and aftermarket domains can offset it profitably.
- Debt repayment capacity, interest-rate sensitivity, covenant flexibility and the effect of the 2029 refinancing on interest expense and cash available for investment or buybacks.
- Progress and cash costs of the 2023 workforce reduction, alongside planned cloud migration and product investments.
- Updates on cybersecurity investigations, customer remediation and the derivative and TCPA litigation, including any changes to estimated exposure.
- Reconcile non-GAAP Normalized EBITDA with GAAP operating cash flow and net income; the filing presents Normalized EBITDA as a supplemental, non-GAAP measure.