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

• GoDaddy Inc. reported a 7.3% increase in total revenue, reaching $1,147.6 million for the third quarter of 2024.
• The Applications and Commerce segment revenue grew by 16.5%, while the Core Platform segment saw a more modest increase of 2.6%.
• Net income for the quarter increased by 45.4% to $190.5 million.
• The company's total bookings increased by 9.0% to $1,241.7 million.
• Normalized EBITDA for the quarter was $366.5 million, a 23.8% increase year-over-year.
• Equity-based compensation expenses totaled $74.4 million for the quarter.
• The company repurchased 1,875 shares of Class A common stock during the quarter.
• GoDaddy's international revenue grew by 6.9% on a reported and constant currency basis.
• The company's annualized recurring revenue reached $3,974.6 million.

Score: 7

Explanation: The document presents a generally positive outlook with strong revenue growth in the Applications and Commerce segment and significant increases in net income and EBITDA. However, the presence of a material weakness in internal controls and ongoing restructuring activities temper the overall sentiment.

• The Applications and Commerce segment showed strong growth, driven by productivity applications, online presence products, and commerce solutions.
• The company's total bookings increased by 9.0%, indicating strong customer demand.
• GoDaddy's international revenue grew by 6.9% on a reported and constant currency basis.
• The company's net income increased significantly by 45.4% year-over-year.
• Normalized EBITDA increased by 23.8% year-over-year, demonstrating improved profitability.

• The Core Platform segment's revenue growth was relatively low at 2.6%, with a decrease in hosting revenues.
• Restructuring and other charges were $0.4 million for the quarter, indicating ongoing restructuring activities.
• The company has identified a material weakness in its internal control over financial reporting related to income taxes.

• The company faces significant competition in both its Applications and Commerce and Core Platform segments.
• The company's restructuring activities may not adequately reduce operating costs or improve operating margins.
• The company is exposed to risks associated with system failures, capacity constraints, and cybersecurity incidents.
• The company's level of indebtedness could adversely affect its financial condition and ability to raise additional capital.
• The company is subject to governmental regulation and other legal obligations related to privacy, data protection, and content moderation.
• The company's business depends on customers' continued access to the Internet and the development of Internet infrastructure.
• The company's share price may be volatile.

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. The company also expects technology and development expenses to decrease as a percentage of revenue in future periods following a period of investment in product development and migration toward a unified infrastructure platform.

• The company's chief operating decision maker evaluates the performance of and allocates resources to its segments based on each segment's revenue and earnings before interest, taxes, depreciation and amortization (Segment EBITDA).

The document highlights GoDaddy's position in the competitive market for domain registration, web hosting, and online business solutions. The company faces competition from both niche point-solution products and broader solution providers. The document also notes the increasing importance of AI in the industry and the need for companies to adapt to evolving technologies.

• GoDaddy's revenue growth of 7.3% is solid, but it is important to compare this to competitors like Shopify, which has seen higher growth rates in recent quarters, particularly in the e-commerce space.
• The company's EBITDA growth of 23.8% is strong, indicating improved profitability, but it is important to compare this to other companies in the web hosting and domain registration space, such as Newfold Digital and Tucows.
• GoDaddy's focus on small businesses and entrepreneurs is a key differentiator, but it is important to assess how well it is competing with other companies targeting this market, such as Wix and Squarespace.
• The company's investment in AI is a positive sign, but it is important to monitor how well it is integrating AI into its products and services compared to competitors like Google and Amazon.
• GoDaddy's international revenue growth of 6.9% is a positive sign, but it is important to compare this to other companies with a stronger international presence, such as Alibaba and Tencent.

• Shareholders will benefit from the increased net income and share repurchases.
• Employees may be affected by ongoing restructuring activities.
• Customers will benefit from the company's continued investment in new products and services.
• Suppliers and creditors may be affected by the company's financial performance and debt levels.

• The company expects to make substantially all remaining restructuring payments by the end of 2024.
• The company will continue to monitor the development of ESG laws, regulations and other evolving disclosure requirements.
• The company will continue to work to remediate the material weakness in its internal control over financial reporting.

• 2017-04-01: GoDaddy entered into five-year cross-currency swaps to manage variability due to movements in 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 to effectively convert a portion of the variable-rate borrowings under the previously issued term loans maturing in 2024 to a fixed rate.
• 2020-08-01: GoDaddy entered into seven-year pay-fixed rate, receive-floating rate interest rate swaps to effectively convert the variable one-month LIBOR interest rate on the 2027 Term Loans borrowings to a fixed rate.
• 2022-03-01: GoDaddy entered into a transaction to extend the maturity of the cross-currency swaps to August 31, 2027.
• 2022-03-01: GoDaddy entered into a transaction to extend the maturity of the interest rate swaps to August 31, 2027.
• 2022-11-01: GoDaddy terminated the interest rate swaps and entered into new SOFR-based interest rate swaps.
• 2023-05-01: GoDaddy terminated the interest rate swaps and entered into new SOFR-based interest rate swaps.
• 2023-06-30: GoDaddy completed the disposition of certain assets and liabilities of its hosting business within the Core segment.
• 2023-12-11: GoDaddy completed the DNC Restructure, making Desert Newco a wholly-owned subsidiary.
• 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.
• 2024-09-30: End of the reporting period for the third quarter of 2024.
• 2024-10-25: As of this date, there were 140,391,395 shares outstanding of GoDaddy Inc.'s Class A common stock.
• 2024-10-30: Date of the filing of the Quarterly Report on Form 10-Q.