10-Q: GoDaddy Inc. Reports Strong Second Quarter Earnings, Driven by Growth in Applications and Commerce

• GoDaddy Inc. reported a 7.3% increase in total revenue, reaching $1,124.5 million for the second quarter of 2024.
• The Applications and Commerce segment led the growth with a 15.3% increase in revenue, while the Core Platform segment grew by 3.2%.
• Operating income increased by 74.1% to $208.2 million, and net income rose by 76.1% to $146.3 million.
• The company's normalized EBITDA increased by 25.4% to $331.7 million.
• GoDaddy repurchased 3,303 shares of Class A common stock for $404.2 million and entered into accelerated share repurchase agreements for an upfront payment of $245.0 million.
• The company's total bookings increased by 10.6% to $1,261.9 million.
• Equity-based compensation expenses totaled $76.2 million for the quarter.

Score: 8

Explanation: The document presents a positive outlook with strong financial results and growth in key segments. However, it also acknowledges risks and challenges, indicating a balanced perspective.

• The Applications and Commerce segment showed strong growth, driven by productivity applications and commerce solutions.
• The company's operating income and net income saw significant increases.
• GoDaddy's total bookings and normalized EBITDA also showed strong growth.
• The company is actively repurchasing shares, indicating confidence in its financial position.
• The company has refinanced and extended the maturity of some of its term loans.

• The Core Platform segment's growth was slower compared to the Applications and Commerce segment.
• The company incurred $6.9 million in restructuring and other charges during the quarter.
• There is a material weakness in internal control over financial reporting related to income taxes.
• The company has a significant amount of long-term debt.

• The company faces significant competition in its markets.
• There is a risk of system failures and capacity constraints.
• The company relies on third parties for key functions, which could lead to interruptions.
• Cybersecurity incidents could disrupt services and harm the company's reputation.
• The company's level of indebtedness could adversely affect its financial condition.
• Changes in laws and regulations concerning the domain name system and the Internet could disrupt the business.
• The company's restructuring activities may not adequately reduce operating costs.
• The company's international operations are subject to additional risks.

The company believes its existing cash and cash equivalents and cash generated by operating activities will be sufficient to meet its anticipated operating cash needs for at least the next 12 months. However, future capital requirements will depend on various factors, including growth rate, macroeconomic activity, and strategic acquisitions.

• Management evaluates segment performance based on revenue and Segment EBITDA.
• Management believes that Normalized EBITDA is a useful measure for evaluating ongoing operational performance.
• Management monitors the realizability of deferred tax assets considering all relevant factors at each reporting period.

The document highlights GoDaddy's position in the competitive market for domain registration, web hosting, and e-commerce solutions. It notes the presence of both niche and broader solution providers, emphasizing the need for GoDaddy to innovate and adapt to changing customer needs and technological advancements, particularly in areas like AI.

• GoDaddy competes with a range of companies, including Shopify, Block, and BigCommerce in the Applications and Commerce segment, and Newfold Digital, Namecheap, and Tucows in the Core Platform segment.
• The company's growth in the Applications and Commerce segment, particularly in productivity applications and commerce solutions, is a key differentiator compared to competitors focused solely on domain registration or web hosting.
• GoDaddy's focus on small businesses and entrepreneurs is a strategic choice, contrasting with competitors that may target larger enterprises or specific niches.
• The company's investment in AI, such as GoDaddy Airo, is a response to industry trends and a move to enhance its product offerings.
• GoDaddy's reliance on third-party cloud providers like AWS is consistent with industry trends, but also introduces risks related to service disruptions and security breaches.

• Shareholders will benefit from the increased profitability and share repurchase program.
• Employees may be affected by restructuring activities and changes in compensation.
• Customers will benefit from the company's continued investment in product development and customer care.
• Suppliers and creditors may be impacted by the company's financial performance and debt obligations.

• The company expects to make substantially all remaining restructuring payments by the end of the fourth quarter of 2024.
• The ASRs are expected to be completed in the third quarter of 2024.
• The company will continue to monitor the development of ESG laws, regulations and other evolving disclosure requirements.

• 2017-04-01: GoDaddy entered into five-year cross-currency swaps to manage foreign currency rates related to a Euro-denominated intercompany loan.
• 2017-04-01: GoDaddy entered into a five-year pay-fixed rate, receive-floating rate interest rate swap arrangement.
• 2020-08-01: GoDaddy entered into seven-year pay-fixed rate, receive-floating rate interest rate swaps in conjunction with the issuance of the 2027 Term Loans.
• 2022-03-01: GoDaddy extended the maturity of cross-currency swaps to August 31, 2027.
• 2022-03-01: GoDaddy extended the maturity of interest rate swaps to August 31, 2027.
• 2022-11-01: GoDaddy terminated and entered into new SOFR-based interest rate swaps in conjunction with the Credit Facility refinancing.
• 2023-05-01: GoDaddy terminated and entered into new SOFR-based interest rate swaps in conjunction with the Credit Facility amendment.
• 2023-12-11: GoDaddy completed the DNC Restructure.
• 2024-01-01: Desert Newco was converted from a partnership to a disregarded entity for U.S. income tax purposes.
• 2024-01-01: GoDaddy entered into an amendment to the Credit Facility to provide for a new tranche of term loans maturing in 2029.
• 2024-05-01: GoDaddy entered into an amendment to the Credit Facility to provide for a new tranche of term loans maturing in 2031.
• 2024-06-06: GoDaddy's stockholders approved the adoption of the 2024 Omnibus Incentive Plan and the 2024 Employee Stock Purchase Plan.
• 2024-06-30: End of the quarterly period for this report.
• 2024-07-26: Date of share count for the report.