Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements
	Page
Report of Independent Registered Public Accounting Firm	78
Consolidated Balance Sheets	79
Consolidated Statements of Operations	80
Consolidated Statements of Comprehensive Income (Loss)	81
Consolidated Statements of Stockholders' Equity	82
Consolidated Statements of Cash Flows	84
Notes to Consolidated Financial Statements	86

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of GoDaddy Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of GoDaddy Inc. (the Company) as of December 31, 2018 and 2017, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2018, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2018 and 2017, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 21, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2004.

Phoenix, Arizona

February 21, 2019

GoDaddy Inc.

Consolidated Balance Sheets

(In millions, except shares in thousands and per share amounts)

	December 31,
	2018				2017
Assets
Current assets:
Cash and cash equivalents	$	932.4			$	582.7
Short-term investments	18.9				12.3
Accounts and other receivables	26.4				18.4
Registry deposits	28.3				34.7
Prepaid domain name registry fees	363.2				351.5
Prepaid expenses and other current assets	58.1				59.9
Total current assets	1,427.3				1,059.5
Property and equipment, net	299.0				297.9
Prepaid domain name registry fees, net of current portion	183.6				180.8
Goodwill	2,948.0				2,859.9
Intangible assets, net	1,211.5				1,326.0
Other assets	14.0				14.2
Total assets	$	6,083.4			$	5,738.3
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	61.6			$	59.6
Accrued expenses and other current liabilities	414.3				469.6
Deferred revenue	1,393.7				1,264.8
Long-term debt	16.6				16.7
Total current liabilities	1,886.2				1,810.7
Deferred revenue, net of current portion	623.8				596.8
Long-term debt, net of current portion	2,394.2				2,410.8
Payable to related parties pursuant to tax receivable agreements	174.3				153.0
Other long-term liabilities	63.2				75.0
Deferred tax liabilities	117.2				145.5
Commitments and contingencies
Stockholders' equity:
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; 168,549 and 132,993 shares issued and outstanding as of December 31, 2018 and 2017, respectively	0.2				0.1
Class B common stock, $0.001 par value - 500,000 shares authorized; 6,254 and 35,006 shares issued and outstanding as of December 31, 2018 and 2017, respectively	—				—
Additional paid-in capital	699.8				484.4
Retained earnings	164.8				87.7
Accumulated other comprehensive loss	(72.1		)		(85.7		)
Total stockholders' equity attributable to GoDaddy Inc.	792.7				486.5
Non-controlling interests	31.8				60.0
Total stockholders' equity	824.5				546.5
Total liabilities and stockholders' equity	$	6,083.4			$	5,738.3

See accompanying notes to consolidated financial statements.

GoDaddy Inc.

Consolidated Statements of Operations

(In millions, except shares in thousands and per share amounts)

	Year Ended December 31,
	2018				2017				2016
Revenue:
Domains	$	1,220.3			$	1,057.2			$	927.8
Hosting and presence	1,017.6				847.9				678.7
Business applications	422.2				326.8				241.4
Total revenue	2,660.1				2,231.9				1,847.9
Costs and operating expenses(1):
Cost of revenue (excluding depreciation and amortization)	893.9				775.5				657.8
Technology and development	434.0				355.8				287.8
Marketing and advertising	291.4				253.2				228.8
Customer care	323.1				292.3				242.1
General and administrative	334.0				282.4				221.2
Depreciation and amortization	234.1				205.8				160.1
Total costs and operating expenses	2,510.5				2,165.0				1,797.8
Operating income	149.6				66.9				50.1
Interest expense	(98.4		)		(83.0		)		(57.2		)
Loss on debt extinguishment	—				(7.3		)		—
Tax receivable agreements liability adjustment	14.9				123.2				(12.5		)
Other income (expense), net	6.9				7.0				(1.9		)
Income (loss) from continuing operations before income taxes	73.0				106.8				(21.5		)
Benefit (provision) for income taxes	9.0				18.9				(0.4		)
Income (loss) from continuing operations	82.0				125.7				(21.9		)
Income from discontinued operations, net of income taxes (includes $33.2 gain on disposal, net of tax)	—				14.1				—
Net income (loss)	82.0				139.8				(21.9		)
Less: net income (loss) attributable to non-controlling interests	4.9				3.4				(5.4		)
Net income (loss) attributable to GoDaddy Inc.	$	77.1			$	136.4			$	(16.5	)
Net income (loss) attributable to GoDaddy Inc. per share of Class A common stock—basic:
Continuing operations	$	0.50			$	1.17			$	(0.21	)
Discontinued operations	—				0.08				—
Net income (loss) attributable to GoDaddy Inc.	$	0.50			$	1.25			$	(0.21	)
Net income (loss) attributable to GoDaddy Inc. per share of Class A common stock—diluted:
Continuing operations	$	0.45			$	0.71			$	(0.21	)
Discontinued operations	—				0.08				—
Net income (loss) attributable to GoDaddy Inc.	$	0.45			$	0.79			$	(0.21	)
Weighted-average shares of Class A common stock outstanding:
Basic	155,234				108,779				79,835
Diluted	181,353				177,054				79,835
___________________________
(1) Costs and operating expenses include equity-based compensation expense as follows:
Technology and development	$	57.8			$	37.1			$	23.2
Marketing and advertising	10.3				7.3				8.1
Customer care	6.2				3.6				3.9
General and administrative	51.2				28.4				21.6
Total equity-based compensation expense	$	125.5			$	76.4			$	56.8

See accompanying notes to consolidated financial statements.

GoDaddy Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In millions)

	Year Ended December 31,
	2018				2017				2016
Net income (loss)	$	82.0			$	139.8			$	(21.9	)
Foreign exchange forward contracts gain (loss), net	8.9				(9.3		)		(0.4		)
Unrealized swap gain (loss), net	14.2				(39.2		)		—
Change in foreign currency translation adjustment	(5.5		)		(86.5		)		(0.1		)
Comprehensive income (loss)	99.6				4.8				(22.4		)
Less: comprehensive income (loss) attributable to non-controlling interests	8.9				(43.2		)		—
Comprehensive income (loss) attributable to GoDaddy Inc.	$	90.7			$	48.0			$	(22.4	)

See accompanying notes to consolidated financial statements.

GoDaddy Inc.

Consolidated Statements of Stockholders' Equity

(In millions, except shares in thousands)

	Class A Common Stock							Class B Common Stock							Additional Paid-in Capital				Retained Earnings (Accumulated Deficit)				Accumulated Other Comprehensive Income (Loss)				Non- Controlling Interests				Total Stockholders' Equity
	Shares			Amount				Shares			Amount
Balance at December 31, 2015	67,083			$	0.1			90,398			$	0.1			$	454.6			$	(32.2	)		$	3.2			$	255.2			$	681.0
Net loss	—			—				—			—				—				(16.5		)		—				(5.4		)		(21.9		)
Equity-based compensation expense	—			—				—			—				56.8				—				—				—				56.8
Stock option exercises	9,187			—				—			—				114.8				—				—				(59.8		)		55.0
Effect of exchanges of LLC units	11,844			—				(11,844	)		—				15.3				—				—				(15.3		)		—
Liability pursuant to the tax receivable agreements resulting from exchanges of LLC units	—			—				—			—				(38.5		)		—				—				—				(38.5		)
Distributions to holders of LLC units	—			—				—			—				—				—				—				(23.0		)		(23.0		)
Issuance of Class A common stock under employee stock purchase plan	202			—				—			—				5.0				—				—				—				5.0
Other	242			—				—			—				0.3				—				(0.5		)		—				(0.2		)
Balance at December 31, 2016	88,558			0.1				78,554			0.1				608.3				(48.7		)		2.7				151.7				714.2
Net income	—			—				—			—				—				136.4				—				3.4				139.8
Equity-based compensation expense	—			—				—			—				76.4				—				—				—				76.4
Sales of Class A common stock, net of issuance costs	721			—				—			—				21.3				—				—				—				21.3
Stock option exercises	6,000			—				—			—				80.9				—				—				(19.8		)		61.1
Issuance of Class A common stock under employee stock purchase plan	572			—				—			—				17.4				—				—				—				17.4
Repurchases of LLC units	—			—				(7,345	)		—				(275.0		)		—				—				—				(275.0		)
Effect of exchanges of LLC units	36,203			—				(36,203	)		(0.1		)		28.7				—				—				(28.7		)		(0.1		)
Liability pursuant to the tax receivable agreements resulting from exchanges of LLC units	—			—				—			—				(73.6		)		—				—				—				(73.6		)
Gain (loss) on swaps and foreign currency hedging, net	—			—				—			—				—				—				(48.5		)		—				(48.5		)
Change in foreign currency translation adjustment	—			—				—			—				—				—				(86.5		)		—				(86.5		)
Accumulated other comprehensive income (loss) attributable to non-controlling interests	—			—				—			—				—				—				46.6				(46.6		)		—
Vesting of restricted stock units	939			—				—			—				—				—				—				—				—
Balance at December 31, 2017	132,993			0.1				35,006			—				484.4				87.7				(85.7		)		60.0				546.5

GoDaddy Inc.

Consolidated Statements of Stockholders' Equity (continued)

(In millions, except shares in thousands)

	Class A Common Stock							Class B Common Stock							Additional Paid-in Capital				Retained Earnings (Accumulated Deficit)				Accumulated Other Comprehensive Income (Loss)				Non- Controlling Interests				Total Stockholders' Equity
	Shares			Amount				Shares			Amount
Net income	—			—				—			—				—				77.1				—				4.9				82.0
Equity-based compensation expense	—			—				—			—				125.5				—				—				—				125.5
Sales of Class A common stock, net of issuance costs	8			—				—			—				—				—				—				—				—
Stock option and warrant exercises	4,782			0.1				—			—				76.3				—				—				(9.2		)		67.2
Issuance of Class A common stock under employee stock purchase plan	469			—				—			—				21.9				—				—				—				21.9
Effect of exchanges of LLC units	28,752			—				(28,752	)		—				27.9				—				—				(27.9		)		—
Liability pursuant to the tax receivable agreements resulting from exchanges of LLC units	—			—				—			—				(36.2		)		—				—				—				(36.2		)
Gain (loss) on swaps and foreign currency hedging, net	—			—				—			—				—				—				23.1				—				23.1
Change in foreign currency translation adjustment	—			—				—			—				—				—				(5.5		)		—				(5.5		)
Accumulated other comprehensive income (loss) attributable to non-controlling interests	—			—				—			—				—				—				(4.0		)		4.0				—
Vesting of restricted stock units	1,545			—				—			—				—				—				—				—				—
Balance at December 31, 2018	168,549			$	0.2			6,254			$	—			$	699.8			$	164.8			$	(72.1	)		$	31.8			$	824.5

See accompanying notes to consolidated financial statements.

GoDaddy Inc.

Consolidated Statements of Cash Flows

(In millions)

	Year Ended December 31,
	2018				2017				2016
Operating activities
Net income (loss)	$	82.0			$	139.8			$	(21.9	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	234.1				205.8				160.1
Equity-based compensation	125.5				76.4				56.8
Loss on debt extinguishment	—				7.3				—
Deferred taxes	(26.2		)		(34.5		)		(3.8		)
Tax receivable agreements liability adjustment	(14.9		)		(123.2		)		12.5
Gain on sale of discontinued operations	—				(33.2		)		—
Other	14.8				13.3				20.5
Changes in operating assets and liabilities, net of amounts acquired:
Registry deposits	6.2				(10.1		)		(1.9		)
Prepaid domain name registry fees	(15.9		)		(13.5		)		(22.8		)
Accounts payable	(3.4		)		(8.4		)		19.6
Accrued expenses and other current liabilities	14.9				32.6				10.0
Deferred revenue	158.0				220.0				160.8
Other operating assets and liabilities	(15.3		)		3.3				(3.4		)
Net cash provided by operating activities	559.8				475.6				386.5
Investing activities
Purchases of short-term investments	(24.8		)		(28.3		)		(10.5		)
Maturities of short-term investments	18.5				22.6				8.4
Business acquisitions, net of cash acquired	(147.2		)		(1,876.9		)		(118.5		)
Purchases of intangible assets	(9.3		)		(52.0		)		(1.3		)
Net proceeds from sale of discontinued operations, including post-closing adjustments	(4.3		)		447.7				—
Purchases of property and equipment	(87.7		)		(83.2		)		(61.5		)
Net cash used in investing activities	(254.8		)		(1,570.1		)		(183.4		)
Financing activities
Proceeds received from:
Debt issued to finance HEG acquisition	—				1,953.1				—
Stock option exercises	67.2				61.1				55.0
Sales of Class A common stock, net of issuance costs	—				22.9				—
Issuance of Class A common stock under employee stock purchase plan	21.9				17.4				5.0
Payments made for:
Repurchases of LLC Units and distributions to holders of LLC Units	—				(285.0		)		(18.8		)
Repayment of HEG acquisition bridge financing	—				(596.6		)		—
Repayment of term loans	(25.0		)		(15.3		)		(11.0		)
Financing-related costs	—				(39.7		)		—
Other financing obligations	(17.1		)		(10.4		)		(15.1		)
Net cash provided by financing activities	47.0				1,107.5				15.1
Effect of exchange rate changes on cash and cash equivalents	(2.3		)		3.6				(0.1		)
Net increase in cash and cash equivalents	349.7				16.6				218.1
Cash and cash equivalents, beginning of period	582.7				566.1				348.0
Cash and cash equivalents, end of period	$	932.4			$	582.7			$	566.1

GoDaddy, Inc.

Consolidated Statements of Cash Flows (continued)

(In millions)

	Year Ended December 31,
	2018				2017				2016
Supplemental cash flow information:
Cash paid during the period for:
Interest on long-term debt, net of swap benefit	$	84.1			$	88.3			$	46.5
Income taxes, net of refunds received	$	22.8			$	16.6			$	4.0
Supplemental information for non-cash investing and financing activities:
Acquisition date fair value of contingent consideration	$	45.6			$	14.8			$	5.6
Accrued capital expenditures at period end	$	21.9			$	7.4			$	13.1

See accompanying notes to consolidated financial statements.

GoDaddy Inc.

Notes to Consolidated Financial Statements

(In millions, except shares in thousands and per share amounts)

Note 1	Organization and Background	86
Note 2	Summary of Significant Accounting Policies	87
Note 3	Business Acquisitions	98
Note 4	Sale of Discontinued Operations	100
Note 5	Goodwill and Intangible Assets	100
Note 6	Stockholders' Equity	102
Note 7	Equity-Based Compensation Plans	103
Note 8	Deferred Revenue	104
Note 9	Accrued Expenses and Other Current Liabilities	105
Note 10	Long-Term Debt	105
Note 11	Derivatives and Hedging	107
Note 12	Commitments and Contingencies	109
Note 13	Defined Contribution Plan	111
Note 14	Income Taxes	111
Note 15	Payable to Related Parties Pursuant to the TRAs	114
Note 16	Income (Loss) Per Share	116
Note 17	Geographic Information	117
Note 18	Related Party Transactions	117
Note 19	Accumulated Other Comprehensive Income (Loss)	118
Note 20	Selected Quarterly Financial Data (Unaudited)	119

1. Organization and Background

Description of Business

We are a leading technology provider to small businesses, web design professionals and individuals, delivering simple, easy-to-use cloud-based products and outcome-driven, personalized customer care. We have designed and developed an extensive set of easy-to-use cloud-based technology products enabling our customers to establish a digital presence, connect with their customers and manage their ventures. We are inspired by our customers, and are dedicated to helping them turn their powerful ideas into meaningful action.

Organization

Following the completion of our initial public offering (IPO) and other related organizational transactions in 2015, we became the sole managing member of Desert Newco, LLC and its subsidiaries (Desert Newco). As a result, we consolidate its financial results and report non-controlling interests representing the economic interests held by its other members. Non-controlling interests exclude any net income (loss) attributable directly to GoDaddy Inc. We owned approximately 96% of Desert Newco's limited liability company units (LLC Units) as of December 31, 2018.

On December 16, 2011, investment funds managed by Kohlberg Kravis Roberts & Co. L.P. (KKR), Silver Lake Partners (SLP) and Technology Crossover Ventures (TCV) along with other investors purchased a controlling interest in Desert Newco from YAM Special Holdings, Inc. (YAM), an entity owned by Bob Parsons, Desert Newco's founder and a former member of our board of directors (the Board).

Basis of Presentation

Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP), and include our accounts and the accounts of our subsidiaries. All material intercompany accounts and transactions have been eliminated.

Prior Period Reclassifications

Reclassifications of certain immaterial prior period amounts have been made to conform to the current period presentation.

Use of Estimates

GAAP requires us to make estimates and assumptions affecting amounts reported in our financial statements. Our more significant estimates include:

•	the relative stand-alone selling price of the indicated performance obligations included in revenue arrangements with multiple performance obligations;

•	the fair value of assets acquired and liabilities assumed in business acquisitions;

•	the fair value of contingent consideration arrangements;

•	the assessment of recoverability of long-lived assets, including property and equipment, goodwill and intangible assets;

•	the estimated reserve for refunds;

•	the estimated useful lives of intangible and depreciable assets;

•	the grant date fair value of equity-based awards;

•	the fair value of financial instruments;

•	the recognition, measurement and valuation of current and deferred income taxes;

•	the recognition and measurement of amounts payable under tax receivable agreements (TRAs) or as tax distributions to Desert Newco's owners; and

•	the recognition and measurement of loss contingencies, indirect tax liabilities and certain accrued liabilities.

We periodically evaluate these estimates and adjust prospectively, if necessary. We believe our estimates and assumptions are reasonable; however, actual results may differ from our estimates.

Segment

As of December 31, 2018, our chief operating decision maker function was comprised of our Chief Executive Officer who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance for the entire company. Accordingly, we have a single operating and reportable segment.

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, other highly liquid investments with a remaining maturity of 90 days or less at the date of acquisition and receivables related to third-party payment processor transactions normally received within 72 hours. Amounts receivable for payment processor transactions totaled $26.3 million and $26.9 million at December 31, 2018 and 2017, respectively.

Short-Term Investments

Our short-term investments consist of various instruments with a remaining maturity in excess of 90 days at the date of acquisition, which are carried at fair value. The estimated fair value of our short-term investments is determined based on quoted market prices and approximated historical cost. We did not have any material realized or unrealized gains or losses on sales of short-term investments during any of the periods presented.

We classify our short-term investments as available-for-sale at the time of purchase and reevaluate such classification at each balance sheet date. We may sell our short-term investments at any time for use in current operations or for other purposes, such as consideration for acquisitions, even if they have not yet reached maturity. As a result, we classify our short-term investments, including investments with maturities beyond 12 months, as current assets.

Registry Deposits

Registry deposits represent amounts on deposit with, or receivable from, various domain name registries to be used by us to make payments for future domain registrations or renewals.

Prepaid Domain Name Registry Fees

Prepaid domain name registry fees represent amounts charged by a registry at the time a domain is registered or renewed. These amounts are amortized to cost of revenue over the same period revenue is recognized for the related domain registration contracts.

Property and Equipment

Property and equipment is stated at cost. Depreciation is recorded over the shorter of the estimated useful life or the lease term of the applicable assets using the straight-line method beginning on the date an asset is placed in service. We regularly evaluate the estimated remaining useful lives of our property and equipment to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation. Maintenance and repairs are charged to expense as incurred.

Property and equipment consisted of the following:

		Estimated Useful Lives		December 31,
		2018				2017
Computer equipment		3 years		$	417.6			$	355.0
Software		3 years		40.5				33.9
Land		Indefinite		9.0				9.0
Buildings, including improvements		5-40 years		175.0				165.5
Leasehold improvements		Lesser of useful life or remaining lease term		70.8				60.6
Other		1-20 years		27.0				22.0
Total property and equipment				739.9				646.0
Less: accumulated depreciation and amortization				(440.9		)		(348.1		)
Property and equipment, net				$	299.0			$	297.9

Depreciation and amortization expense related to property and equipment was $97.4 million, $88.8 million and $69.9 million during 2018, 2017 and 2016, respectively.

Capitalized Internal-Use Software Costs

Costs incurred to develop software for internal-use during the application development phase and for our websites are capitalized and amortized over such software's estimated useful life. Costs related to the design or maintenance of internal-use software are included in technology and development expenses as incurred. Costs capitalized were not material during any of the periods presented.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill represents the excess of the purchase price over the estimated fair value of net tangible and identifiable intangible assets acquired in business combinations. Indefinite-lived intangible assets consist of the GoDaddy trade names and branding acquired from YAM and our acquired domain portfolio. Goodwill and indefinite-lived intangible assets are not amortized to earnings, but are assessed for impairment at least annually. As individual domains are sold, our indefinite-lived domain portfolio intangible asset is reduced by the allocated carrying cost of each domain, which is included in cost of revenue.

We assess impairment annually for our single reportable segment and our indefinite-lived trade names and branding during the fourth quarter of each year. We also perform an assessment at other times if events or changes in circumstances indicate the carrying value of the assets may not be recoverable. If, based on qualitative analysis, we determine it is more-likely-than-not the fair value of our reporting unit is less than its carrying amount, a quantitative impairment test is performed. Our qualitative analysis did not indicate impairment during any of the periods presented.

Our indefinite-lived domain portfolio is reviewed for impairment annually during the fourth quarter of each year. We also perform an assessment at other times if events or changes in circumstances indicate the carrying amount of the asset may not be fully recoverable. Any identified impairment loss is treated as a permanent reduction in the carrying amount of the asset. We did not record an impairment loss during any of the periods presented.

Long-Lived and Finite-Lived Intangible Assets

Finite-lived intangible assets are amortized over the following estimated useful lives:

Customer relationships	1-9 years
Developed technology	2-7 years
Trade names	1-10 years

Our finite-lived intangible assets are primarily amortized on a straight-line basis. We annually evaluate the estimated remaining useful lives of our intangible assets to determine whether events or changes in circumstances warrant a revision to the remaining period of amortization.

Long-lived and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be fully recoverable. An impairment loss is recognized if the sum of the expected long-term undiscounted cash flows the asset is expected to generate is less than its carrying amount. Any write-downs are treated as permanent reductions in the carrying amount of the respective asset. Our analysis did not indicate impairment during any of the periods presented, and accordingly, we did not record any impairment loss.

Debt Issuance Costs

We defer and amortize issuance costs, underwriting fees and related expenses incurred in connection with the issuance of debt instruments using the effective interest method over the terms of the respective instruments. Debt issuance costs, other than those associated with our revolving credit loan, are reflected as a direct reduction of the carrying amount of the related debt liability. Debt issuance costs related to our revolving credit loan are reflected as an asset.

Derivative Financial Instruments

We are exposed to changes in foreign currency exchange rates as well as changes in interest rates associated with our variable-rate debt. Consequently, we use derivative financial instruments to manage and mitigate such risks. We do not enter into derivative transactions for speculative or trading purposes.

Our derivative financial instruments include foreign exchange forward contracts with financial institutions to hedge certain forecasted sales transactions denominated in currencies other than the United States (U.S.) dollar. In addition, we have entered into an interest rate swap on a portion of our long-term debt and a cross-currency swap on our intercompany debt to manage the variability of cash flows due to movements in interest rates and foreign currency exchange rates. We have designated each of these instruments as a cash flow hedge.

We expect each derivative instrument qualifying for hedge accounting will be highly effective at reducing the risk associated with the exposure being hedged. For each derivative instrument designated as a hedge, we formally document the related risk management strategy and objective, including identification of the hedging instrument, the hedged item and the risk of exposure, as well as how hedge effectiveness will be assessed prospectively and retrospectively over the instrument's term. To assess effectiveness of our swap instruments, we use regression analysis performed utilizing the Hypothetical Derivative Method to compare the change in fair value of the derivative instrument designated as the hedging instrument to the change in the fair value of a similarly modeled hypothetical derivative using the same discount rate. Following our initial quantitative assessment, we may perform subsequent assessments on a qualitative basis unless facts and circumstances change such that we can no longer qualitatively assert that our hedges are highly effective.

We reflect unrealized gains or losses on our cash flow hedges as a component of accumulated other comprehensive income (loss) (AOCI). Gains and losses, once realized, are recorded as a component of AOCI and are amortized to earnings over the same period in which the underlying hedged amounts are recognized. At inception, and each reporting period, we evaluate the effectiveness of each of our hedges, and all hedges were determined to be effective.

Our derivative instruments are recorded at fair value on a gross basis. For cash flow reporting purposes, proceeds received or amounts paid upon the settlement of a derivative instrument are classified in the same manner as the related item being hedged, primarily within cash flows from operating activities.

Leases

We lease office and data center space in various locations. Rent expense under operating leases is recognized on a straight-line basis over the lease term taking into consideration rent abatements, scheduled rent increases and any lease incentives.

We record assets and liabilities for estimated construction costs incurred under build-to-suit lease arrangements to the extent we are involved in the construction of structural improvements or take construction risk prior to commencement of a lease. Upon completion of the construction project, we evaluate our level of continuing involvement in the facility. If we maintain significant continuing involvement, we continue to account for the facility as a financing obligation. Otherwise, we record a sale of the facility back to the landlord, and accordingly, the related construction assets and liabilities are removed from our financial statements.

Foreign Currency

Our functional and reporting currency is the U.S. dollar. Assets denominated in foreign currencies are remeasured into U.S. dollars at period-end exchange rates. Foreign currency-based revenue and expense transactions are measured at transaction date exchange rates. Foreign currency remeasurement gains and losses are recorded in other income (expense), net and were $(10.4) million, $(1.5) million and $(4.6) million during 2018, 2017 and 2016, respectively.

For certain of our foreign subsidiaries whose functional currency is other than the U.S. dollar, we translate revenue and expense transactions at average exchange rates. We translate assets and liabilities at period-end exchange rates and include foreign currency translation gains and losses as a component of AOCI.

Revenue Recognition

Adoption of New Standard on Revenue from Contracts with Customers

On January 1, 2018, we adopted the Financial Accounting Standards Board's (FASB) new revenue recognition standard using the modified retrospective method applied to those contracts not completed at adoption. Results for reporting periods beginning after January 1, 2018 are presented under the new standard, while prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting.

The adoption of the new standard did not have a material impact on our financial statements.

Revenue Recognition

Revenue is recognized when control of the promised product or service (product) is transferred to our customers, in an amount reflecting the consideration we expect to be entitled to in exchange for such product.

We typically receive payment at the time of sale, the purpose of which is to provide our customers with a simplified and predictable way of purchasing our products. We have determined that our contracts do not include a significant financing component. Payments received in advance of our performance are recorded as deferred revenue. Revenue is recognized net of allowances for returns and applicable transaction-based taxes collected from customers.

Our products are generally sold with a right of return within our policy, which are accounted for as variable consideration when estimating the amount of revenue to recognize. Refunds are estimated at contract inception using the expected value method based on historical refund experience and updated each reporting period as additional information becomes available and only to the extent it is probable a significant reversal of any incremental revenue will not occur. Refunds result in a reduced amount of revenue recognized over the contract term of the applicable product.

Our revenue is categorized and disaggregated as reflected in our statements of operations, as follows:

Domains. Domains revenue primarily consists of domain registrations and renewals, domain privacy, domain application fees, domain back-orders, aftermarket domain sales and fee surcharges paid to ICANN. Consideration is recorded as deferred revenue when received, which is typically at the time of sale, and revenue, other than for aftermarket domain sales, is recognized ratably over the period in which the performance obligations are satisfied, which is generally over the contract term. Aftermarket domain revenue is recognized at the time when ownership of the domain is transferred to the buyer.

Hosting and presence. Hosting and presence revenue primarily consists of website hosting products, website building products, website security products and online visibility products. Consideration is recorded as deferred revenue when received, which is typically at the time of sale, and revenue is recognized ratably over the period in which the performance obligations are satisfied, which is generally over the contract term.

Business applications. Business applications revenue primarily consists of third-party productivity applications, email accounts and email marketing tools. Consideration is recorded as deferred revenue when received, which is typically at the time of sale, and revenue is recognized ratably over the period in which the performance obligations are satisfied, which is generally over the contract term.

See Note 8 for additional information regarding our deferred revenue. See Note 17 for our revenue disaggregated by geography.

Performance Obligations

Our contracts with customers may include multiple performance obligations, including a combination of some or all of the following products: domain registrations, website hosting products, website building products, website security products and other cloud-based products. Judgment may be required in determining whether products are considered distinct performance obligations that should be accounted for separately or as one combined performance obligation. Revenue is recognized ratably over the period in which the performance obligations are satisfied, which is generally over the contract term.

For each domain registration or renewal we provide, we have one performance obligation to our customers consisting of two promises: 1) to ensure the exclusive use of the domain during the applicable registration term and 2) to ensure the domain is accessible and appropriately directed to its underlying content. After the contract term expires, unless renewed, the customer can no longer access or use the domain. We have determined these promises are not distinct within the context of our contracts as they are highly interdependent and interrelated and are inputs to a combined benefit. Accordingly, we concluded that each domain registration or renewal represents one product offering and is a single performance obligation.

We may also offer specific arrangements, such as GoCentral, in which we include promises to transfer multiple performance obligations in a single product offering. For such arrangements, we allocate the transaction price to each of the underlying distinct performance obligations based on its relative stand-alone selling price (SSP), as described below.

We have determined that generally each of our other products constitutes an individual product offering to our customers, and therefore have concluded that each is a single performance obligation.

For arrangements with multiple performance obligations, we allocate revenue to each distinct performance obligation based on its relative SSP. We use judgment to determine SSP based on prices charged to customers for individual products, taking into consideration factors including historical and expected discounting practices, the size, volume and term length of transactions, customer demographics, the geographic areas in which our products are sold and our overall go-to-market strategy.

Principal versus Agent Considerations

We sell our products directly to customers and also through a network of resellers. In certain cases, we act as a reseller of products provided by others. The determination of gross or net revenue recognition is reviewed on a product-by-product basis and is dependent on our determination as to whether we act as principal or agent in the transaction. Revenue associated with sales through our network of resellers, for certain aftermarket domain sales and for third-party offerings is recorded on a gross basis as we have determined that we control the product before transferring it to our end customers.

Assets Recognized from Contract Costs

Commissions paid to our resellers represent an incremental cost of obtaining a contract with a customer. We capitalize and amortize such amounts to cost of revenue consistent with the pattern of transfer of the product to which the asset relates. Amounts capitalized and amortized were not material during any of the periods presented. Other costs to obtain a contract, such as sales compensation, are expensed as incurred as their amortization period is generally one year or less. Such expenses were not material during any of the periods presented.

Fees paid to various registries at the inception of a domain registration or renewal represent costs to fulfill a contract. We capitalize and amortize these prepaid domain name registry fees to cost of revenue consistent with the pattern of transfer of the product to which the asset relates. Amortization expense of such asset was $597.1 million, $554.4 million and $493.1 million during 2018, 2017 and 2016, respectively.

No other material contract costs were capitalized during any of the periods presented.

Operating Expenses

Cost of Revenue (excluding depreciation and amortization)

Costs of revenue are the direct costs we incur in connection with selling an incremental product to our customers. Substantially all cost of revenue relates to domain registration fees paid to the various domain registries, payment processing fees, third-party commissions and licensing fees for third-party productivity applications.

Technology and Development

Technology and development expenses represent the costs associated with the creation, development and distribution of our products and websites. These expenses primarily consist of personnel costs associated with the design, development, deployment, testing, operation and enhancement of our products, as well as costs associated with the data centers and systems infrastructure supporting those products, excluding depreciation expense.

Marketing and Advertising

Marketing and advertising expenses represent the costs associated with attracting and acquiring customers, primarily consisting of fees paid to third parties for marketing and advertising campaigns across a variety of channels. These expenses also include personnel costs and affiliate program commissions.

Advertising costs are expensed either as incurred, at the time a commercial initially airs or when a promotion first appears in the media. Advertising expenses were $231.1 million, $205.8 million and $194.0 million during 2018, 2017 and 2016, respectively. Prepaid advertising, which is included within prepaid expenses and other current assets, was $9.7 million and $9.6 million at December 31, 2018 and 2017, respectively.

Customer Care

Customer care expenses represent the costs to advise and service our customers, primarily consisting of personnel costs.

General and Administrative

General and administrative expenses primarily consist of personnel costs for our administrative functions, professional service fees, office rent for all locations, all employee travel expenses, acquisition-related expenses and other general costs.

Equity-Based Compensation

We grant stock options at exercise prices equal to the fair market value of our Class A common stock on the grant date. We grant both options and restricted stock units (RSUs) vesting solely upon the continued service of the recipient as well as awards vesting upon the achievement of annual or cumulative financial-based targets. We recognize the grant date fair value of equity-based awards as compensation expense over the required service period of each award, taking into account the probability of our achievement of associated performance targets.

We apply the straight-line attribution method to recognize equity-based compensation expense associated with awards not subject to graded vesting. For awards subject to graded vesting and performance based awards, we recognize expense separately for each vesting tranche. We also estimate when and if performance based awards will be earned. If an award is not considered probable of being earned, no amount of expense is recognized. If the award is deemed probable of being earned, expense is recorded over the estimated service period.

Equity-based awards are accounted for using the fair value method. RSUs are measured based on the fair market value of the underlying common stock on the date of grant. Grant date fair values for options are determined using the Black-Scholes option pricing model and a single option award approach. The measurement date for performance vesting awards is the date on which the applicable performance criteria are approved by our Board. The fair value of shares issued under our employee stock purchase plan is estimated on the first day of each offering period using the Black-Scholes option pricing model. An estimate of future award forfeitures, which is based on historical data, is utilized in our equity-based compensation calculations. We regularly estimate when and if performance-based awards will be earned and record equity-based compensation expense only for awards considered probable of being earned.

Key assumptions used in the determination of fair value for stock options are as follows:

Expected term. The expected term represents the period the options are expected to be outstanding. Because of the lack of sufficient historical data necessary to calculate the expected term, we use the simple average of the vesting period and the contractual term to estimate the expected term.

Expected volatility. We determine the expected stock price volatility based on the historical volatility of our Class A common stock and the historical volatilities of our peer group. Industry peers consist of several public companies in the technology industry similar to us in size, stage of life cycle and financial leverage. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient trading history of our Class A common stock becomes available. If circumstances change such that the identified companies are no longer similar to us, we will revise our peer group to substitute more suitable companies in this calculation.

Expected dividend yield. We do not use a dividend rate due to our expectation of not paying dividends in the foreseeable future.

Risk-free interest rate. We base the risk-free interest rate on the yield curve of a zero-coupon U.S. Treasury bond with a maturity equal to the expected term of the option on the grant date.

The fair value of options granted was estimated using the following weighted-average assumptions:

	Year Ended December 31,
	2018			2017			2016
Expected term (in years)	6.1			6.1			6.1
Expected volatility	31.5	%		37.4	%		37.7	%
Risk-free interest rate	2.7	%		2.0	%		1.4	%

Income Taxes

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets (DTAs) and liabilities (DTLs) for the expected future tax consequences of events included in the financial statements. Under this method, we determine DTAs and DTLs on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in the period in which the enactment date occurs.

We recognize DTAs to the extent we believe these assets are more-likely-than-not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations.

We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more-likely-than-not the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions meeting the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

Interest and penalties related to income taxes are included in benefit (provision) for income taxes, and were not material during any of the periods presented.

Payable to Related Parties Pursuant to the TRAs

Concurrent with the completion of our IPO in 2015, we became a party to five TRAs with our pre-IPO owners. Under four of the TRAs, we are generally required to pay to certain pre-IPO owners approximately 85% of the amount of calculated tax savings, if any, we are deemed to realize (using the actual applicable U.S. federal income tax rate and an assumed combined state and local income tax rate) as a result of (1) any existing tax attributes associated with LLC Units acquired in the pre-IPO organizational transactions, the benefit of which is allocable to us as a result of such transactions (including the allocable share of Desert Newco's existing tax basis in its assets), (2) net operating loss (NOL) carryforwards available as a result of such transactions and (3) tax benefits related to imputed interest.

Under the fifth of these agreements, we are generally required to pay our other pre-IPO owners of approximately 85% of the amount of the calculated tax savings, if any, we are deemed to realize (using the actual applicable U.S. federal income tax rate and an assumed combined state and local income tax rate) as a result of (1) any step-up in tax basis created as a result of exchanges of their LLC Units (together with the corresponding shares of Class B common stock) for shares of our Class A common stock, (2) any existing tax attributes associated with their LLC Units, the benefit of which is allocable to us as a result of such exchanges (including the allocable share of Desert Newco's existing tax basis in its assets), (3) tax benefits related to imputed interest and (4) payments under the TRAs.

When LLC Units are exchanged, we receive certain tax attributes, including the original basis adjustments (the OBAs) created from the original acquisition of the LLC Units plus any anticipated basis adjustments. The OBAs entitle us to the depreciation and amortization previously allocable to the original owner of such units. The anticipated basis adjustments will increase, for tax purposes, our depreciation and amortization deductions. To the extent these deductions are used to reduce our taxable income, thereby resulting in actual tax savings, we will be required to pay the original owners approximately 85% of such savings, which is recorded as an additional liability under the TRAs when deemed probable. Adjustments to the liability under the TRAs based on changes in anticipated future taxable income are recorded in our statements of operations.

Unutilized depreciation and amortization deductions related to the OBAs and the anticipated basis adjustments are converted to NOL carryforwards. If the utilization is considered to be more-likely-than-not, a liability under the TRAs relating to NOL carryforwards is recorded.

Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. The framework for measuring fair value provides a three-tier hierarchy prioritizing inputs to valuation techniques used in measuring fair value as follows:

Level 1— Observable inputs such as quoted prices for identical assets or liabilities in active markets;

Level 2— Inputs, other than quoted prices for identical assets or liabilities in active markets, which are observable either directly or indirectly; and

Level 3— Unobservable inputs in which there is little or no market data requiring the reporting entity to develop its own assumptions.

We hold certain assets required to be measured at fair value on a recurring basis. These may include reverse repurchase agreements, commercial paper or other securities, which are classified as either cash and cash equivalents or short-term investments. We classify these assets within Level 1 or Level 2 because we use either quoted market prices or alternative pricing sources utilizing market observable inputs to determine their fair value. In addition, Level 2 assets and liabilities include derivative financial instruments associated with hedging activity, as further discussed in Note 11. Derivative financial instruments are measured at fair value on the contract date and are subsequently remeasured each reporting period using inputs such as spot rates, discount rates and forward rates. There are not active markets for the hedge contracts themselves; however, the inputs used to calculate the fair value of the instruments are tied to active markets.

The following tables set forth assets and liabilities measured at fair value on a recurring basis:

	December 31, 2018
Assets:	Level 1				Level 2				Level 3				Total
Cash and cash equivalents:
Reverse repurchase agreements(1)	$	—			$	70.0			$	—			$	70.0
Commercial paper	—				71.4				—				71.4
Money market funds	338.6				—				—				338.6
Short-term investments:
Certificates of deposit and time deposits	1.0				—				—				1.0
Commercial paper	—				18.0				—				18.0
Total assets measured and recorded at fair value	$	339.6			$	159.4			$	—			$	499.0
Liabilities:
Contingent consideration liabilities	$	—			$	—			$	67.9			$	67.9
Derivative liabilities	—				120.5				—				120.5
Total liabilities measured and recorded at fair value	$	—			$	120.5			$	67.9			$	188.4

(1)	Reverse repurchase agreements include a $70.0 million repurchase agreement with Morgan Stanley, callable with 31 days notice.

	December 31, 2017
Assets:	Level 1				Level 2				Level 3				Total
Cash and cash equivalents:
Reverse repurchase agreements(1)	$	—			$	130.0			$	—			$	130.0
Commercial paper	—				50.0				—				50.0
Short-term investments:
Certificates of deposit and time deposits	0.4				—				—				0.4
Commercial paper	—				11.9				—				11.9
Total assets measured and recorded at fair value	$	0.4			$	191.9			$	—			$	192.3
Liabilities:
Contingent consideration liabilities	$	—			$	—			$	20.7			$	20.7
Derivative liabilities	—				206.4				—				206.4
Total liabilities measured and recorded at fair value	$	—			$	206.4			$	20.7			$	227.1

(1)	Reverse repurchase agreements include a $70.0 million repurchase agreement with Morgan Stanley, callable with 31 days notice, and a $60.0 million one-week repurchase agreement with Wells Fargo.

Our contingent consideration liabilities, which relate to future earn-out payments associated with our business acquisitions, are classified within Level 3 and valued using discounted cash flow valuation methods encompassing significant unobservable inputs. The inputs include estimated operating results scenarios for the applicable performance periods, probability weightings assigned to operating results scenarios (generally assessed at 100% probability) and the discount rates applied (generally ranging from 14% to 25%). The fair values of our contingent consideration arrangements are sensitive to changes in forecasts and discount rates. A reconciliation of these liabilities is as follows:

	Year Ended December 31,
	2018				2017
Balance at beginning of period	$	20.7			$	6.0
Acquisition date fair value of contingent consideration	45.6				14.8
Adjustments to fair value recognized in earnings	11.9				—
Contingent consideration payments	(11.2		)		(0.5		)
Impact of foreign currency translation and other	0.9				0.4
Balance at end of period	$	67.9			$	20.7

We have no other material assets or liabilities measured at fair value on a recurring basis.

Business Combinations

We include the results of operations of acquired businesses as of the respective acquisition dates. Purchase price is allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values, with the excess recorded as goodwill. If applicable, we estimate the fair value of contingent consideration payments in determining the purchase price. Measurement period adjustments to provisional purchase price allocations are recognized in the period in which they are determined, with the effect on earnings of changes in depreciation, amortization or other income resulting from such changes calculated as if the accounting had been completed at the acquisition date. Contingent consideration is adjusted to fair value in subsequent periods as an increase or decrease in general and administrative expenses. Acquisition-related costs are expensed as incurred.

Concentrations of Risks

Our financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents and short-term investments. Although we deposit cash with multiple banks, these deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. These deposits may generally be redeemed upon demand and bear minimal risk.

No single customer represented over 10% of our total revenue for any period presented.

In order to reduce the risk of downtime of the products we provide, we have established data centers in various geographic regions. We have internal procedures to restore products in the event of a service disruption or disaster at any of our data center facilities. We serve our customers and users from data center facilities operated either by us or third parties, which are located in Arizona, California, Missouri, Virginia, New York, France, Germany, the Netherlands, Singapore and the United Kingdom (U.K.). Even with these procedures for disaster recovery in place, the availability of our products could be significantly interrupted during the implementation of restoration procedures.

Recent Accounting Pronouncements

In February 2016, the FASB issued new guidance related to accounting for leases. The new standard requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and the disclosure of key information about leasing arrangements. We will adopt the new standard on January 1, 2019 using a modified retrospective approach with a cumulative-effect adjustment to opening retained earnings. Therefore, upon adoption, we will not adjust our comparative period financial information or make new required lease disclosures for periods before the effective date. We have evaluated the available accounting policy elections and practical expedients permitted by the standard and will adopt the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. While we are continuing to assess the potential impacts, we expect the accounting for our operating leases and our lease financing obligation will be the most significant changes as a result of the new guidance. We will recognize right-of-use assets and lease liabilities in our consolidated balance sheets upon adoption, which we expect to increase our total assets and total liabilities in the range of $105 million to $115 million, excluding the impact of deferred taxes. We expect no material impact to our statements of operations or cash flows.

In June 2016, the FASB issued new guidance for the accounting for credit losses on instruments that will require entities to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial instruments measured at amortized cost and also applies to some off-balance sheet credit exposures. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the timing of our adoption and the expected impact of this new guidance.

In January 2017, the FASB issued new guidance simplifying the goodwill impairment test, eliminating the requirement for an entity to determine the fair value of its assets and liabilities (including unrecognized assets and liabilities) at the impairment testing date following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, an entity will be required to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will be required to recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to a reporting unit. Our adoption of this guidance on January 1, 2019 is not expected to have a material impact.

In May 2017, the FASB issued new guidance to amend the scope of modification accounting for share-based payment arrangements. The amendment provides guidance on the types of changes to the terms or conditions of share-based payment awards which would require an entity to apply modification accounting. Our adoption of this guidance on January 1, 2018 did not have a material impact.

In June 2018, the FASB issued new guidance to simplify the accounting for nonemployee share-based payment transactions, aligning most of the guidance with the requirements for share-based payments granted to employees. Our adoption of this new guidance effective July 1, 2018 did not have a material impact.

In August 2018, the FASB issued new guidance to modify or eliminate certain fair value disclosures and require additional disclosures for Level 3 measurements. The guidance is effective for annual and interim reporting periods beginning

after December 15, 2019, with early adoption permitted. We are currently evaluating the timing of our adoption and the expected impact of this new guidance.

In August 2018, the FASB issued new guidance that aligns the accounting for implementation costs incurred in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the timing of our adoption and the expected impact of this new guidance.

3. Business Acquisitions

2018 Acquisition

In July 2018, we completed the acquisition of Main Street Hub (MSH), a social media and reputation management company, for total purchase consideration of $182.0 million, including contingent earn-out payments of up to a maximum of $50.0 million subject to the achievement of certain revenue and operational milestones. The acquisition was completed to further our professional services strategy for our customers. The contingent consideration was recorded at an estimated acquisition date fair value of $43.4 million.

The purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess recorded to goodwill. The recognition of goodwill, none of which is deductible for income tax purposes, was made based on the strategic and synergistic benefits we expect to realize from the acquisition.

The following table summarizes the preliminary estimated fair values of the MSH assets acquired and liabilities assumed:

Total purchase consideration		$	182.0
Fair value of assets acquired and liabilities assumed:
Cash and cash equivalents		8.0
Intangible assets, net		35.7
Other assets and liabilities, net		3.2
Total assets acquired, net of liabilities assumed		46.9
Goodwill		$	135.1

Identified finite-lived intangible assets, which were valued using income-based approaches, consist primarily of developed technology and customer relationships. The acquired finite-lived intangible assets have a total weighted-average amortization period of 4.3 years.

Pro forma financial information is not presented because the acquisition of MSH was not material, either individually or when aggregated with other immaterial acquisitions completed during 2018.

2017 Acquisition of Host Europe Holdings Limited

In April 2017, we completed the acquisition of Host Europe Holdings Limited (HEG), a U.K.-based provider of domains, website hosting, applications hosting and managed hosting to small and medium-sized customers throughout Europe. Pursuant to the terms of the purchase agreement, we purchased all of the outstanding shares of HEG and certain loan notes issued by Host Europe Finance Co. Ltd. for total consideration transferred of €1.7 billion. We funded the acquisition with debt financing, as described in Note 10, and incurred $18.6 million in nonrecurring transaction costs in connection with the acquisition, which were recognized within general and administrative expense. As a result of the acquisition, HEG became our wholly-owned subsidiary. We believe the acquisition allowed us to leverage HEG's existing footprint to accelerate our expansion in Europe through the delivery of a broader range of cloud-based products.

Our operating results include HEG's results from the closing date. The purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess recorded to goodwill. The recognition of goodwill, none of which is deductible for income tax purposes, was made based on the strategic and synergistic benefits we expect to realize from the acquisition.

The following table summarizes the final estimated acquisition date fair values of the HEG assets acquired and liabilities assumed:

Total purchase consideration(1)		$	1,849.5
Fair value of assets acquired:
Cash and cash equivalents		27.2
Other current assets		66.3
Assets held for sale(2)		497.5
Property and equipment, net		61.9
Intangible assets, net		595.7
Other assets		9.3
Amount attributable to assets acquired		1,257.9
Fair value of liabilities assumed:
Accounts payable and accrued expenses		65.1
Current portion of deferred revenue		45.5
Liabilities directly associated with the assets held for sale(2)		93.0
Other long-term liabilities		14.0
Deferred tax liabilities		177.6
Amount attributable to liabilities assumed		395.2
Goodwill		$	986.8

(1)	The purchase consideration was translated using the Euro to U.S. dollar exchange rate in effect on the closing date of approximately 1.066.

(2)	Assets held for sale, and liabilities directly associated with the assets held for sale, represented those of HEG's PlusServer managed hosting business (PlusServer), which met the criteria for held for sale designation at the acquisition date and was sold in August 2017. See Note 4 for further discussion.

The purchase price allocation to identifiable finite-lived intangible assets acquired was as follows:

Finite-lived Intangible Assets		Estimated Useful Lives
Trade names		10 years		$	75.2
Developed technology		6 years		62.4
Customer relationships		9 years		458.1
				$	595.7

We valued trade names by applying the relief-from-royalty method, which is a variation of the income approach. This valuation method is based on the application of a royalty rate to the forecasted revenue expected from the trade names. Projected cash flows were then discounted using a rate of return reflecting the relative risk of achieving the cash flows as well as the time value of money. Our valuation of developed technology also used the relief-from-royalty method, in which the forecasted revenue associated with each of the domain and hosting technologies was estimated assuming useful lives ranging from six to eight years. A royalty rate, calculated considering factors such as market competition, profitability and market share, was applied to the forecasted revenue. The projected cash flows were then discounted using a rate of return reflecting the risk and uncertainty of their achievement relative to the overall business. Customer relationships were valued using the multi-period excess earnings method under the income approach, which reflects the present value of the projected cash flows expected to be generated by the customer relationship assets less charges representing the contribution of other assets to those cash flows. We determined the assumptions used in developing these valuations based on our future plans, historical data, current and anticipated market conditions, estimated growth rates and market comparables. The acquired finite-lived intangible assets have a total weighted-average amortization period of 8.8 years.

Property and equipment was valued using the cost approach, which estimates value by determining the current cost of replacing an asset with another of equivalent economic utility. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the property, less an allowance for loss in value due to depreciation. Deferred revenue was valued using the income approach, in which we estimated costs required to fulfill the obligation associated with the deferred revenue and then applied an appropriate profit margin. The result was then discounted to represent value at a risk adjusted rate. Estimated DTLs

primarily represent the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their respective tax bases.

In 2017, HEG contributed approximately $155.1 million of our total revenue and a net loss of approximately $17.2 million within our income from continuing operations.

Other 2017 Acquisition

In April 2017, we completed an acquisition for consideration consisting of cash of $45.7 million, $9.0 million payable in future periods upon expiration of the contractual holdback period, $15.0 million of time-based milestone payments and additional contingent earn-out payments of up to $15.0 million subject to the achievement of certain revenue and integration milestones. We recognized a liability of $33.7 million representing the estimated aggregate acquisition-date fair value of the future payments. The aggregate purchase price was allocated based upon our assessment of acquisition-date fair values with $63.5 million allocated to goodwill, none of which is tax deductible, $28.5 million to identified finite-lived intangible assets and $12.6 million of net liabilities assumed. Identified finite-lived intangible assets, which were valued using income-based approaches, consist of developed technology, customer relationships and trade names. The acquired finite-lived intangible assets have a total weighted-average amortization period of 5.5 years. The acquisition was not material to our results of operations.

2016 Acquisitions

During 2016, we completed six acquisitions for cash of $125.5 million, including $7.0 million payable in future periods following the expiration of contractual holdback periods, and additional contingent earn-out payments of up to $6.0 million subject to the achievement of certain revenue targets. The aggregate purchase price was allocated based upon our assessment of acquisition-date fair values with $59.3 million attributed to indefinite-lived domain portfolio intangible assets, $55.0 million to goodwill, of which $37.5 million is not tax-deductible, $21.4 million to other identified finite-lived intangible assets and $11.3 million of net liabilities assumed. We also recorded a $1.1 million reduction of our existing deferred revenue from prior transactions with one of the acquired businesses. These acquisitions were not material to our results of operations, either individually or in the aggregate.

Other Acquisition-Related Payments

During 2018 and 2017, we made $21.7 million and $10.8 million of aggregate holdback and contingent consideration payments related to prior acquisitions. Payments in 2016 were not material.

4. Sale of Discontinued Operations

In connection with the HEG acquisition, we committed to a formal plan to sell PlusServer as its business model differed from ours. The operating results of PlusServer from the acquisition date to the date of its sale are reported within discontinued operations. On August 31, 2017, we sold all of the outstanding shares of PlusServer, receiving net proceeds of $447.7 million. As a result of the sale, we recorded a gain on disposal of $33.2 million in 2017, which includes the reclassification of the associated cumulative translation adjustment on PlusServer's net assets.

5. Goodwill and Intangible Assets

The following table summarizes changes in our goodwill balance:

Balance at December 31, 2016	$	1,718.4
Goodwill related to 2017 acquisitions	1,048.4
Impact of foreign currency translation	93.1
Balance at December 31, 2017	2,859.9
Goodwill related to 2018 acquisitions(1)	139.8
Impact of foreign currency translation	(51.7		)
Balance at December 31, 2018	$	2,948.0

(1)	Includes immaterial measurement period adjustments related to acquisitions completed in 2017.

Intangible assets, net are summarized as follows:

	December 31, 2018
	Gross Carrying Amount				Accumulated Amortization				Net Carrying Amount
Indefinite-lived intangible assets:
Trade names and branding	$	445.0			n/a				$	445.0
Domain portfolio	152.4				n/a				152.4
Finite-lived intangible assets:
Customer-related	850.5				$	(407.5	)		443.0
Developed technology	206.9				(103.1		)		103.8
Trade names and other	92.9				(25.6		)		67.3
	$	1,747.7			$	(536.2	)		$	1,211.5

	December 31, 2017
	Gross Carrying Amount				Accumulated Amortization				Net Carrying Amount
Indefinite-lived intangible assets:
Trade names and branding	$	445.0			n/a				$	445.0
Domain portfolio	152.2				n/a				152.2
Finite-lived intangible assets:
Customer-related	868.0				$	(320.4	)		547.6
Developed technology	184.5				(82.2		)		102.3
Trade names	94.4				(15.5		)		78.9
	$	1,744.1			$	(418.1	)		$	1,326.0

During 2017, we completed three purchases of intangible assets for $52.0 million in cash. The assets purchased consisted of $50.5 million in indefinite-lived domain portfolios and $1.5 million in customer-related intangible assets. The purchased customer-related intangible assets were valued at cost and are being amortized over 36 months. Transaction costs were immaterial and were expensed as incurred.

Customer-related intangible assets, developed technology and trade names and other have weighted-average useful lives from the date of purchase of 103 months, 71 months and 110 months, respectively. Amortization expense was $136.7 million, $117.0 million and $90.2 million during 2018, 2017 and 2016, respectively. The weighted-average remaining amortization period for amortizable intangible assets was 76 months as of December 31, 2018.

Based on the balance of finite-lived intangible assets at December 31, 2018, expected future amortization expense is as follows:

Year Ending December 31:
2019	$	119.0
2020	109.5
2021	86.5
2022	84.8
2023	69.7
Thereafter	144.6
	$	614.1

6. Stockholders' Equity

Certificate of Incorporation

Our amended and restated certificate of incorporation authorized the issuance of up to 1,000,000 shares of Class A common stock, up to 500,000 shares of Class B common stock and up to 50,000 shares of undesignated preferred stock, each having a par value of $0.001 per share. Shares of Class A common stock have both economic and voting rights. Shares of Class B common stock have no economic rights, but do have voting rights. Holders of Class A and Class B common stock are entitled to one vote per share and, except as otherwise required, will vote together as a single class on all matters on which stockholders generally are entitled to vote.

We are required to, at all times, maintain (i) a one-to-one ratio between the number of shares of Class A common stock outstanding and the number of LLC Units owned by us and (ii) a one-to-one ratio between the number of shares of Class B common stock and LLC Units owned by Desert Newco's pre-IPO owners. We may issue shares of Class B common stock only to the extent necessary to maintain these ratios. Shares of Class B common stock are transferable only together with an equal number of LLC Units if we, at the election of a pre-IPO owner, exchange LLC Units for shares of Class A common stock.

Secondary Offerings and LLC Unit Repurchase

We have completed several underwritten public offerings in which certain stockholders, including KKR, SLP, TCV, YAM and certain of our executive officers sold shares of our Class A common stock. We did not receive any proceeds from the shares sold by the selling stockholders in these offerings. We used the net proceeds from the shares sold by us to pay expenses incurred in connection with the offerings. Each offering included the exchange of LLC Units (together with the corresponding shares of Class B common stock) for Class A common stock by the selling stockholders, which resulted in increases in additional paid-in capital, with offsetting reductions in non-controlling interests, and material increases to the liability under the TRAs (see Note 15). Significant details for each offering are as follows:

Offering Date		Offering Price Per Share ($)			Shares Sold by GoDaddy (#)			Gross Proceeds Received by GoDaddy ($)			Aggregate Shares Sold by Selling Stockholders (#)			LLC Units Exchanged by Selling Stockholders (#)			Increase in Additional Paid-in Capital ($)
August 2018(1)		75.75			8			0.6			10,391			7,405			7.8
May 2018		70.73			—			—			11,625			8,052			7.6
March 2018		59.21			—			—			16,916			12,821			11.2
December 2017(2)		47.32			50			2.4			7,228			4,689			4.7
September 2017		44.00			50			2.2			20,000			13,774			10.8
May 2017		38.50			100			3.7			27,615			16,701			10.8
April 2016		30.25			—			—			18,975			10,382			8.8

(1)	Following the August 2018 secondary offering, YAM no longer owns shares of GoDaddy's common stock.

(2)	Following the December 2017 secondary offering, TCV no longer owns shares of GoDaddy's common stock.

In May 2017, we repurchased 7,345 LLC units from KKR, SLP, TCV and YAM for an aggregate of $275.0 million, or $37.44 per share, which is the same per share price, net of discounts and commissions, paid by the underwriters to the selling stockholders in the May 2017 secondary offering. In connection with this repurchase, the corresponding shares of Class B common stock were canceled. In May 2017, we also sold an aggregate of 521 shares of Class A common stock to certain executives for total proceeds of $19.2 million.

Share Repurchase Program

In November 2018, our Board approved the repurchase of up to $500.0 million of our Class A common stock. We may purchase shares from time to time in open market purchases, block transactions and privately negotiated transactions, in accordance with applicable federal securities laws. The share repurchase program has no time limit, does not obligate us to make any repurchases and may be modified, suspended or terminated by us at any time without prior notice. The amount and timing of repurchases are subject to a variety of factors including liquidity, share price, market conditions and legal requirements, and will be funded by available cash and cash equivalents. As of December 31, 2018, no shares have been repurchased.

7. Equity-Based Compensation Plans

On March 31, 2015, we adopted the 2015 Equity Incentive Plan (the 2015 Plan) and reserved a total of 10,285 shares of Class A common stock for issuance thereunder. The shares reserved for issuance under the 2015 Plan also included up to 28,133 shares rolled over from our previous equity plan and from certain other option plans assumed in connection with acquisitions. The number of shares reserved for issuance are increased automatically each year by a number equal to the least of (i) 20,571 shares, (ii) 4% of the total shares of all classes of common stock outstanding as of the last day of the preceding year or (iii) such other amount as may be determined by our Board. On January 1, 2018, an additional 6,720 shares were reserved for issuance pursuant to the 2015 Plan. As of December 31, 2018, 19,195 shares were available for issuance as future awards under the 2015 Plan.

On March 31, 2015, we adopted the 2015 Employee Stock Purchase Plan (the ESPP) and reserved a total of 2,000 shares of Class A common stock for issuance thereunder. The number of shares reserved for issuance are increased automatically each year by a number equal to the least of (i) 1,000 shares, (ii) 1% of the total shares of all classes of common stock outstanding as of the last day of the preceding year or (iii) such other amount as may be determined by our Board. On January 1, 2018, an additional 1,000 shares were reserved for issuance pursuant to the ESPP. As of December 31, 2018, 3,082 shares were available for issuance under the ESPP.

The following table summarizes our option activity:

		Number of Shares of Class A Common Stock (#)			Weighted- Average Grant- Date Fair Value ($)			Weighted- Average Exercise Price ($)			Weighted- Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value ($)
Outstanding at December 31, 2015		27,419						10.25
Granted		2,136			11.97			30.93
Exercised		(9,187	)					5.99					242.4
Forfeited		(1,740	)					17.25
Outstanding at December 31, 2016		18,628						14.06
Granted		2,077			15.07			38.03
Exercised		(6,000	)					10.18					187.1
Forfeited		(1,245	)					23.46
Outstanding at December 31, 2017		13,460						18.63
Granted		1,208			22.19			61.49
Exercised		(4,779	)					14.08					246.4
Forfeited		(362	)					34.05
Outstanding at December 31, 2018		9,527						25.77			6.3		381.2
Vested at December 31, 2018		5,593						16.51			5.2		274.6

The following table summarizes our RSU activity:

		Number of Shares of Class A Common Stock (#)			Weighted- Average Grant- Date Fair Value ($)
Outstanding at December 31, 2015		93
Granted		3,129			30.98
Vested		(241	)
Forfeited		(224	)
Outstanding at December 31, 2016		2,757
Granted		2,877			38.68
Vested		(939	)
Forfeited		(496	)
Outstanding at December 31, 2017		4,199
Granted		3,152			64.26
Vested		(1,545	)
Forfeited		(450	)
Outstanding at December 31, 2018		5,356

At December 31, 2018, total unrecognized compensation expense related to non-vested stock options and RSUs was $35.7 million and $165.0 million, respectively, with expected remaining weighted-average recognition periods of approximately 2.3 years and 1.8 years, respectively. We currently believe the performance targets related to the vesting of performance awards will be achieved. If such targets are not achieved, or are subsequently determined to not be probable of being achieved, we will not recognize any compensation expense for performance awards, and will reverse any previously recognized expense on such awards.

8. Deferred Revenue

Deferred revenue consisted of the following:

	December 31,
	2018				2017
Current:
Domains	$	686.3			$	638.5
Hosting and presence	483.3				444.7
Business applications	224.1				181.6
	$	1,393.7			$	1,264.8
Noncurrent:
Domains	$	365.8			$	341.3
Hosting and presence	180.6				183.2
Business applications	77.4				72.3
	$	623.8			$	596.8

The increase in the deferred revenue balance is primarily driven by payments received in advance of satisfying our performance obligations, offset by $1,339.8 million of revenue recognized during 2018 that was included in the deferred revenue balance as of December 31, 2017. The deferred revenue balance as of December 31, 2018 represents our aggregate remaining performance obligations that will be recognized as revenue over the period in which the performance obligations are satisfied.

Deferred revenue as of December 31, 2018 is expected to be recognized as revenue as follows:

	2019				2020				2021				2022				2023				Thereafter				Total
Domains	$	686.3			$	188.9			$	76.3			$	42.8			$	23.7			$	34.1			$	1,052.1
Hosting and presence	483.3				125.3				31.7				13.2				5.6				4.8				663.9
Business applications	224.1				53.9				15.8				4.6				1.7				1.4				301.5
	$	1,393.7			$	368.1			$	123.8			$	60.6			$	31.0			$	40.3			$	2,017.5

9. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	December 31,
	2018				2017
Derivative liabilities	$	120.5			$	206.4
Accrued payroll and employee benefits	105.9				92.3
Accrued acquisition-related expenses and acquisition consideration payable	74.4				32.9
Tax-related accruals	38.4				54.7
Tax and bonus accruals related to sale of discontinued operations	—				28.1
Accrued marketing and advertising expenses	19.4				10.3
Accrued other	55.7				44.9
	$	414.3			$	469.6

10. Long-Term Debt

Long-term debt consisted of the following:

	December 31,
	2018				2017
Term loans (effective interest rate of 4.6% at December 31, 2018 and 4.1% at December 31, 2017)	$	2,457.3			$	2,482.3
Revolver	—				—
Total	2,457.3				2,482.3
Less: unamortized original issue discount on long-term debt(1)	(27.9		)		(33.0		)
Less: unamortized debt issuance costs(1)	(18.6		)		(21.8		)
Less: current portion of long-term debt	(16.6		)		(16.7		)
	$	2,394.2			$	2,410.8

(1)	Original issue discount and debt issuance costs are amortized to interest expense over the life of the related debt instruments using the effective interest method.

Credit Facility

Our amended and restated secured credit agreement (the Credit Facility) included a $1,100.0 million original balance term loan maturing on May 13, 2021 and an available $150.0 million revolving credit loan maturing on May 13, 2019.

In February 2017, we refinanced the Credit Facility to provide for: (i) a $1,072.5 million seven-year term loan, (ii) a second $1,425.0 million term loan, which was issued on April 3, 2017 upon the completion of our acquisition of HEG, and (iii) a $150.0 million five-year revolving credit facility, which increased to $200.0 million upon the completion of our acquisition of HEG (the Revolver). See Note 3 for further information regarding our acquisition of HEG.

The refinanced term loan was issued at a 0.25% discount on the face of the note at original issue for net proceeds of $1,069.8 million. Pursuant to the terms of the amended credit agreement, we drew down the additional term loan upon completion of the HEG acquisition. The additional term loan was issued at a 0.25% discount at original issue for net proceeds of $1,421.4 million. The term loans mature on February 15, 2024. A portion of the additional term loan is hedged by an interest rate swap. See Note 11 for discussion of this hedging instrument and its impact on the interest rate associated with this loan.

The Revolver matures on February 15, 2022 and bears interest at a rate equal to, at our option, either (a) LIBOR plus a margin ranging from 2.00% to 2.50% per annum or (b) the higher of (i) the Federal Funds Rate plus 0.5%, (ii) the Prime Rate or (iii) one-month LIBOR plus 1.0% plus a margin ranging from 1.00% to 1.50% per annum, with the margins determined based on our first lien net leverage ratio. The Revolver also contains a financial covenant requiring us to maintain a maximum net leverage ratio of 5.75:1.00 when our usage exceeds 35.0% of the maximum capacity. The net leverage ratio is calculated as the ratio of first lien secured debt less cash and cash equivalents to consolidated EBITDA (as defined in the Credit Facility).

In November 2017, we refinanced the Credit Facility such that borrowings under the term loans bear interest at a rate equal to, at our option, either (a) LIBOR plus 2.25% per annum or (b) 1.25% per annum plus the highest of (i) the Federal Funds Rate plus 0.5%, (ii) the Prime Rate or (iii) one-month LIBOR plus 1.0%. In addition, the refinancing allows for an additional 0.25% reduction in the interest rate margins upon improvement in our corporate credit rating. The maturity dates were unchanged.

In evaluating the above refinancings, we compared the net present value cash flows of the previous instruments and the refinanced instruments to determine whether the terms of the new debt and original instruments were "substantially different" on a creditor-by-creditor basis. In each case, certain of the creditors in the loan syndication did not reinvest in the refinanced debt, and we accounted for their proportionate share of the unamortized original issue discount and deferred financing costs as an aggregate $2.0 million loss on debt extinguishment. As the cash flows for all of the continuing creditors varied by less than 10% between the old and new instruments, we concluded that debt modification accounting was appropriate and aggregate fees paid to the lenders of $3.7 million were recorded as additional discount. In addition, $3.3 million in aggregate fees paid to third parties were recorded as general and administrative expense in 2017.

In addition to paying interest on the outstanding principal under the term loans, we are required to pay a commitment fee of 0.25% per annum for any unutilized commitments under the Revolver.

Significant terms of the refinanced Credit Facility are as follows:

•	we are required to prepay outstanding term loans, subject to certain exceptions, with percentages of excess cash flow, proceeds of non-ordinary course asset sales or dispositions of property, insurance or condemnation proceeds and proceeds from the incurrence of certain debt;

•	we are restricted by certain covenants, including, among other things, limitations on our ability to incur additional indebtedness, sell assets, incur additional liens, make certain fundamental changes, pay distributions and make certain investments;

•	we are required to maintain certain financial ratios; and

•	all obligations are unconditionally guaranteed by all of our material domestic subsidiaries and is secured by substantially all of our and such subsidiaries real and personal property.

At December 31, 2018, we had $200.0 million available for borrowing under the Revolver and were not in violation of any covenants of the Credit Facility.

The estimated fair value of the Term Loans was $2,343.6 million at December 31, 2018 based on observable market prices for these loans, which are traded in a less active market and therefore classified as a Level 2 fair value measurement.

Bridge Financing

On April 3, 2017, we entered into a bridge credit agreement pursuant to which we borrowed an aggregate principal amount of €500 million (approximately $533.0 million on the date of issuance) in connection with the HEG acquisition. Following the sale of PlusServer on August 31, 2017, as further discussed in Note 4, we prepaid this loan in its entirety and the underlying credit agreement was canceled. We recognized a $5.3 million loss on debt extinguishment, representing the remaining unamortized original issue discount and debt issuance costs on this loan. As this loan was contractually required to be repaid with any proceeds received from the sale of PlusServer, interest expense attributable to the loan of $12.4 million in 2017 was recorded within discontinued operations.

Future Debt Maturities

Aggregate principal payments, exclusive of any unamortized original issue discount and debt issuance costs, due on long-term debt as of December 31, 2018 are as follows:

Year Ending December 31:
2019	$	25.0
2020	25.0
2021	25.0
2022	25.0
2023	25.0
2024	2,332.3
	$	2,457.3

11. Derivatives and Hedging

We are exposed to changes in foreign currency exchange rates, primarily relating to debt and certain forecasted sales transactions denominated in currencies other than the U.S. dollar, as well as to changes in interest rates as a result of our variable-rate debt. Consequently, we use derivative financial instruments to manage and mitigate such risk. We do not enter into derivative transactions for speculative or trading purposes.

The following table summarizes our outstanding derivative instruments, all of which are designated as cash flow hedges, on a gross basis:

	Notional Amount								Fair Value of Derivative Assets(2)								Fair Value of Derivative Liabilities(2)
	December 31, 2018				December 31, 2017				December 31, 2018				December 31, 2017				December 31, 2018				December 31, 2017
Derivative Instrument:
Level 2:
Foreign exchange forward contracts	$	—			$	241.3			$	—			$	—			$	—			$	4.4
Cross-currency swap(1)	1,397.8				1,478.3				—				—				119.1				182.9
Interest rate swap	1,302.3				1,315.5				—				—				1.4				19.1
Total hedges	$	2,700.1			$	3,035.1			$	—			$	—			$	120.5			$	206.4

(1)	The notional values of the cross-currency swap have been translated from Euros to U.S. dollars at the foreign currency rates in effect at December 31, 2018 and 2017 of approximately 1.14 and 1.20, respectively.

(2)	In our consolidated balance sheets, all derivative assets are recorded within prepaid expenses and other current assets and all derivative liabilities are recorded within accrued expenses and other current liabilities.

The following table summarizes the effect of our designated cash flow hedging derivative instruments on AOCI:

	Unrealized Gains (Losses) Recognized in Other Comprehensive Income
	Year Ended December 31,
	2018				2017				2016
Derivative Instrument:
Foreign exchange forward contracts(1)	$	8.9			$	(9.3	)		$	(0.4	)
Cross-currency swap	(3.5		)		(20.1		)		—
Interest rate swap	17.7				(19.1		)		—
Total hedges	$	23.1			$	(48.5	)		$	(0.4	)

(1)	Amounts include gains and losses realized upon contract settlement but not yet recognized into earnings from AOCI.

The following table summarizes the locations and amounts of gains (losses) recognized within earnings related to our cash flow hedging relationships:

	Year Ended December 31,
	2018												2017												2016
	Revenue				Interest Expense				Other Income (Expense), Net				Revenue				Interest Expense				Other Income (Expense), Net				Revenue				Interest Expense				Other Income (Expense), Net
Foreign Exchange Forward Contracts:
Reclassified from AOCI into income	$	(2.1	)		$	—			$	—			$	0.8			$	—			$	—			$	1.8			$	—			$	—
Cross-Currency Swap:
Reclassified from AOCI into income (1)	—				28.3				65.9				—				21.6				(163.8		)		—				—				—
Interest Rate Swap:
Reclassified from AOCI into income	—				(6.5		)		—				—				(12.8		)		—				—				—				—
Total hedges	$	(2.1	)		$	21.8			$	65.9			$	0.8			$	8.8			$	(163.8	)		$	1.8			$	—			$	—

(1)	The amount reflected in other income (expense), net includes $(67.3) million, $162.8 million and $0 reclassified from AOCI to offset the earnings impact of the remeasurement of the Euro-denominated intercompany loan hedged by the cross-currency swap during 2018, 2017 and 2016, respectively.

As of December 31, 2018, we estimate that approximately $29.6 million of net deferred gains related to our cash flow hedges will be recognized in earnings over the next 12 months. No amounts were excluded from our effectiveness testing during any of the periods presented.

Risk Management Strategies

Foreign Exchange Forward Contracts

From time-to-time, we may enter into foreign exchange forward contracts with financial institutions to hedge certain forecasted sales transactions denominated in foreign currency. We designate these forward contracts as cash flow hedges, which are recognized as either assets or liabilities at fair value. We had no forward contracts outstanding at December 31, 2018.

Cross-Currency Swap Contract

In April 2017, in order to manage variability due to movements in foreign currency rates related to a Euro-denominated intercompany loan, we entered into a five-year cross-currency swap arrangement (the Cross-Currency Swap). The Cross-Currency Swap, which matures on April 3, 2022, had an amortizing notional amount of €1,243.3 million at inception (approximately $1,325.4 million). It converts the 3.00% fixed rate Euro-denominated interest and principal receipts on the intercompany loan into fixed U.S. dollar interest and principal receipts at a rate of 5.44%. Pursuant to the contract, the Euro notional value will be exchanged for the U.S. dollar notional value at maturity. The Cross-Currency Swap has been designated as a cash flow hedge. Accordingly, it is recognized as an asset or liability at fair value and the unrealized gains and losses on the contract are included in gain (loss) on swaps and foreign currency hedging, net within AOCI. Gains and losses are reclassified to interest income or expense over the period the hedged loan affects earnings. As such, amounts recorded in other comprehensive income (loss) (OCI) will be recognized in earnings within or against interest expense when the hedged interest payment is accrued each month. In addition, an amount is reclassified from AOCI to other income (expense), net each reporting period, to offset the earnings impact of the hedged instrument.

Interest Rate Swap Contract

In April 2017, we entered into a five-year pay-fixed rate, receive-floating rate interest rate swap arrangement (the Interest Rate Swap) to effectively convert a portion of the variable-rate debt to fixed. The Interest Rate Swap, which matures on April 3, 2022, had an amortizing notional amount of $1,325.4 million at inception and swaps the variable interest rate on our LIBOR-based borrowings for a fixed rate of 5.44%. The objective of the Interest Rate Swap, which is designated as a cash flow hedge and recognized as an asset or liability at fair value, is to manage the variability of cash flows in the interest payments related to the portion of the variable-rate debt designated as being hedged. The unrealized gains and losses on the contract are included in gain (loss) on swaps and foreign currency hedging, net within AOCI, and will be recognized in earnings within or against interest expense when the hedged interest payment is accrued each month.

12. Commitments and Contingencies

Lease Financing Obligation

In 2013, we entered into an 11-year lease agreement for new office space in Tempe, Arizona under which we occupied the total available space commencing in September 2014. As a result of our involvement during the construction period, we were considered to be the owner of the construction project for accounting purposes. Upon completion of construction in September 2014, we did not meet the sale-leaseback criteria for derecognition of the building assets and liabilities. We capitalized $18.1 million of building construction costs incurred by the lessor, which are being depreciated over an estimated useful life of 40 years. As of December 31, 2018, the lease financing obligation totaled $19.4 million, which is primarily recorded in other long-term liabilities.

Future minimum payments under this lease as of December 31, 2018 are as follows:

Year Ending December 31:
2019	$	3.2
2020	3.5
2021	3.6
2022	3.6
2023	3.6
Thereafter	4.8
	$	22.3

Operating Leases

We lease office and data center space (including commitments for specified levels of power) under non-cancelable operating leases expiring at various dates through November 2036. Total rent expense was $44.1 million, $38.3 million and $43.3 million during 2018, 2017 and 2016, respectively.

Future minimum lease obligations under non-cancelable operating leases at December 31, 2018 are as follows:

Year Ending December 31:
2019	$	41.2
2020	30.2
2021	25.3
2022	22.4
2023	20.7
Thereafter	101.0
Total minimum payments(1)	$	240.8

(1)	Total minimum lease obligations includes $81.1 million related to leases expected to commence in 2019.

Service Agreements

We have entered into long-term agreements with certain vendors to provide for software and equipment maintenance, specified levels of bandwidth and other services. Under these arrangements, we are required to make periodic payments. Future minimum obligations under these non-cancelable agreements with initial terms in excess of one year at December 31, 2018 are as follows:

Year Ending December 31:
2019	$	33.8
2020	16.1
2021	24.3
2022	35.6
2023	13.1
Thereafter	—
Total minimum payments	$	122.9

Litigation

From time-to-time, we are a party to litigation and subject to claims incident to the ordinary course of business, including intellectual property claims, putative class actions, commercial and consumer protection claims, labor and employment claims, breach of contract claims and other asserted and unasserted claims. We investigate claims as they arise and accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. The amounts currently accrued for such matters are not material. While the results of such normal course claims and legal proceedings cannot be predicted with certainty, management does not believe, based on current knowledge and the likely timing of resolution of various matters, any additional reasonably possible potential losses above the amounts accrued for such matters would be material. Regardless of the outcome, legal proceedings may have an adverse effect on us because of defense costs, diversion of management resources and other factors.

Indemnifications

In the normal course of business, we have made indemnities under which we may be required to make payments in relation to certain transactions, including to our directors and officers to the maximum extent permitted under applicable state laws and indemnifications related to certain lease agreements. In addition, certain advertiser and reseller partner agreements contain indemnification provisions, which are generally consistent with those prevalent in the industry. We have not incurred material obligations under indemnification provisions historically, and do not expect to incur material obligations in the future. Accordingly, we have not recorded any liabilities related to such indemnities as of December 31, 2018 and 2017.

We include service level commitments to our customers guaranteeing certain levels of uptime reliability and performance for our hosting and premium DNS products. These guarantees permit those customers to receive credits in the event we fail to meet those levels, with exceptions for certain service interruptions including but not limited to periodic maintenance. We have not incurred any material costs as a result of such commitments during any of the periods presented, and have not recorded any liabilities related to such obligations as of December 31, 2018 and 2017.

Indirect Taxes

We are subject to indirect taxation in some, but not all, of the various states and foreign jurisdictions in which we conduct business. Laws and regulations attempting to subject communications and commerce conducted over the Internet to various indirect taxes are becoming more prevalent, both in the U.S. and internationally, and may impose additional burdens on us in the future. Increased regulation could negatively affect our business directly, as well as the businesses of our customers. Taxing authorities may impose indirect taxes on the Internet-related revenue we generate based on regulations currently being applied to similar, but not directly comparable, industries. There are many transactions and calculations where the ultimate indirect tax determination is uncertain. In addition, domestic and international indirect taxation laws are complex and subject to change. We may be audited in the future, which could result in changes to our indirect tax estimates. We continually evaluate those jurisdictions in which nexus exists, and believe we maintain adequate indirect tax accruals.

As of December 31, 2018 and 2017, our accrual for estimated indirect tax liabilities was $11.6 million and $18.8 million, respectively, reflecting our best estimate of the probable liability based on an analysis of our business activities, revenues subject to indirect taxes and applicable regulations. Although we believe our indirect tax estimates and associated liabilities are reasonable, the final determination of indirect tax audits, litigation or settlements could be materially different than the amounts established for indirect tax contingencies.

13. Defined Contribution Plan

We maintain defined contribution 401(k) plans covering eligible U.S. employees, who may contribute up to 100% of their compensation, subject to limitations established by the Internal Revenue Code. We match employee contributions on a discretionary basis. Expense for our matching contributions was $13.5 million, $9.9 million and $8.5 million during 2018, 2017 and 2016, respectively.

We maintain defined contribution benefit plans covering eligible foreign employees. Expense related to such plans was not material in any period presented.

14. Income Taxes

Overview

We are subject to U.S. federal, state and foreign income taxes with respect to our allocable share of any taxable income or loss of Desert Newco, as well as any stand-alone income or loss we generate. Desert Newco is treated as a partnership for U.S. income tax purposes and for most applicable state and local income tax purposes and generally does not pay income taxes on its taxable income in most jurisdictions. Instead, Desert Newco's taxable income or loss is passed through to its members, including us. Despite its partnership treatment, Desert Newco is liable for income taxes in certain foreign jurisdictions in which it operates, in those states not recognizing its pass-through status and for certain of its subsidiaries not taxed as pass-through entities. We have acquired the outstanding stock of various domestic and foreign entities taxed as corporations, which are now wholly-owned by us or our subsidiaries. Where required or allowed, these subsidiaries also file and pay tax as a consolidated group for U.S. federal and state income tax purposes and internationally, primarily within the U.K. and Germany. We anticipate this structure to remain in existence for the foreseeable future.

Tax Cuts and Jobs Act of 2017

In December 2017, the Tax Cuts and Jobs Act of 2017 (the TCJA) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a U.S. federal corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings.

As of December 31, 2017, we recorded provisional amounts for certain enactment-date effects by applying the guidance in SAB 118 because we had not yet completed our accounting for the effects of the TCJA. In 2017, we recorded a tax benefit of $7.9 million related to adjusting DTAs and DTLs for the rate decrease. This net benefit results from a $363.1 million reduction in deferred tax expense, which was primarily offset by a $371.0 million increase in the associated valuation allowance as we concluded, based primarily on our limited operating history and our historical losses, that the majority of our U.S. DTAs will more-likely-than-not not be realized. We did not record an adjustment for the one-time transition tax due to an accumulated deficit in the earnings of our controlled foreign corporations as of the measurement date. During 2018, we completed our accounting for the enactment-date effects of the TCJA and recognized no adjustments to the provisional amounts recorded in 2017.

In January 2018, the FASB released guidance on the accounting for the global intangible low-taxed income (GILTI) provisions of the TCJA. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. We have elected to treat taxes on GILTI inclusions as period costs. For 2018, we did not record any amounts related to GILTI.

Benefit (Provision) for Income Taxes

Our tax benefit (provision) includes U.S. federal, state and foreign income taxes. The domestic and foreign components of our income (loss) from continuing operations before income taxes were as follows:

	Year Ended December 31,
	2018				2017				2016
U.S.	$	138.9			$	180.6			$	(28.5	)
Foreign	(65.9		)		(73.8		)		7.0
Income (loss) from continuing operations before income taxes	$	73.0			$	106.8			$	(21.5	)

Our benefit (provision) for income taxes was as follows:

	Year Ended December 31,
	2018				2017				2016
Current:
Federal	$	(1.3	)		$	(1.4	)		$	(0.3	)
State	(0.7		)		(0.6		)		(0.3		)
Foreign	(10.3		)		(9.5		)		(3.5		)
	(12.3		)		(11.5		)		(4.1		)
Deferred:
Federal	1.4				9.6				3.1
State	1.0				0.8				0.3
Foreign	18.9				20.0				0.3
	21.3				30.4				3.7
Benefit (provision) for income taxes	$	9.0			$	18.9			$	(0.4	)

A reconciliation of the statutory U.S. federal income tax rate to our effective income tax rate was as follows:

	Year Ended December 31,
	2018				2017				2016
Expected benefit (provision) at U.S. federal statutory tax rate	$	(15.3	)		$	(37.4	)		$	7.5
Effect of TCJA rate reduction, net of the effect on valuation allowances	—				7.9				—
Effect of Investment in Desert Newco	13.1				27.4				(0.1		)
TRA liability adjustment	0.3				24.3				(3.8		)
Foreign earnings	3.1				(15.3		)		(0.9		)
State taxes, net of federal benefit	2.1				(3.1		)		0.1
Income of non-controlling interests	0.9				0.9				(1.8		)
Other	—				(0.4		)		0.1
Effect of changes in valuation allowances, excluding effect of TCJA rate reduction	4.8				14.6				(1.5		)
Benefit (provision) for income taxes	$	9.0			$	18.9			$	(0.4	)

Our effective tax rate for 2018 is driven by changes in the valuation allowance based on current year earnings and the impact of foreign earnings primarily related to our U.K. and German subsidiaries. In 2017, the increase in the impact of foreign earnings primarily results from our acquisition of HEG and the TRA liability adjustment primarily represents the non-deductible portion of the benefit resulting from the decrease in the liability under the TRAs due to the TCJA rate reduction.

Deferred Taxes

The components of our net (DTL) DTAs were as follows:

	December 31,
	2018				2017
					(as revised)
DTAs:
NOLs	$	391.3			$	247.8
Credits and incentives	3.1				3.0
Investment in Desert Newco(1)	942.5				507.3
Deferred interest	19.3				10.9
TRA liability	22.1				16.8
Unrealized losses	6.3				9.7
Other	6.5				4.4
Valuation allowance(1)	(1,372.8		)		(788.5		)
Total DTAs	18.3				11.4
DTLs:
Identified intangible assets	(133.8		)		(155.8		)
Total DTLs	(133.8		)		(155.8		)
Net DTLs	$	(115.5	)		$	(144.4	)

(1)	In 2018, we determined the Investment in Desert Newco DTA and associated valuation allowance for 2017 were understated by $77.4 million, with no change to total DTAs. We determined this was immaterial to the prior period, but have presented the balances as revised for comparability.

As a result of the pre-IPO organizational transactions, we acquired LLC Units and recognized a DTA for the difference between the financial reporting and tax basis of our investment in Desert Newco. During 2016, the DTAs associated with our investment increased $183.6 million due to exchanges of LLC Units and stock option exercises, and we also recorded additional DTAs of $36.7 million as a result of our portion of Desert Newco's losses. During 2017, the DTAs associated with our investment increased $674.6 million due to exchanges of LLC Units and stock option exercises. During 2018, the DTAs associated with our investment increased $648.3 million due to exchanges of LLC Units and stock option exercises, and we recorded additional DTAs of $125.3 million as a result of our portion of Desert Newco's losses.

Based primarily on our limited operating history and our historical losses, we believe there is significant uncertainty as to when we will be able to utilize our NOLs, credit carryforwards and other DTAs. Therefore, we have recorded a valuation allowance against the DTAs for which we have concluded it is more-likely-than-not they will not be realized.

As of December 31, 2018, we have U.S. federal, state and foreign gross NOLs, credits and incentives, a portion of which will begin to expire in 2030, as follows:

	Gross NOLs, Credits and Incentives				Portion Subject to a Valuation Allowance
Federal NOLs and credits	$	1,439.4			$	1,438.9
State NOLs, credits and incentives	1,807.7				1,763.9
Foreign NOLs	31.9				30.3
Total NOLs, credits and incentives	$	3,279.0			$	3,233.1

Other

We have filed all income tax returns for years through 2017, other than for Germany. These returns are subject to examination by the taxing authorities in the respective jurisdictions, generally for three or four years after they were filed. Based on our analysis of tax positions taken on income tax returns filed, we have determined no material liabilities related to uncertain income tax positions were required. Although we believe the amounts reflected in our tax returns substantially comply with applicable U.S. federal, state and foreign tax regulations, the respective taxing authorities may take contrary positions based on their interpretation of the law. A tax position successfully changed by a taxing authority could result in an adjustment to our benefit for income taxes in the period in which a final determination is made.

As of December 31, 2018, we have provided income taxes on the earnings of foreign subsidiaries, except to the extent such earnings are considered indefinitely reinvested. We have determined the amount of unrecognized DTL related to these temporary differences to be immaterial.

15. Payable to Related Parties Pursuant to the TRAs

In the pre-IPO organizational transactions, we received certain tax attributes, including the OBAs and NOL carryforwards, from certain of our pre-IPO owners. These OBAs entitle us to the depreciation and amortization previously allocable to such parties, which are allowed prior to the utilization of any NOL or tax credit carryforwards against income taxes. If these additional depreciation and amortization deductions are greater than our taxable income, the excess deductions allocated to us will increase the amount of our NOL carryforwards. Based on current projections of taxable income, and before deduction of any specially allocated depreciation and amortization, we anticipated having enough taxable income to utilize a portion of these specially allocated deductions related to the OBAs.

As of December 31, 2016, the liability under the TRAs was $202.6 million, representing approximately 85% of the calculated tax savings based on the portion of the OBAs we anticipate being able to utilize in future years.

During 2017, we decreased this liability through: (i) an $86.2 million benefit to our statements of operations resulting from the U.S. federal corporate tax rate reduction enacted in December 2017 as part of the TCJA, as discussed in Note 14, (ii) a $33.6 million benefit to our statements of operations resulting from the impact of an Internal Revenue Service approved filing election, (iii) a $12.2 million increase in additional paid-in capital resulting from an immaterial adjustment related to our accounting for this liability and (iv) a $3.4 million benefit to our statements of operations primarily resulting from our increased ownership of Desert Newco and changes in forecasted taxable income, which impacts our evaluation of the timing and utilization of the tax benefits, and in turn, future payments to be made, under the TRAs. These decreases were offset by an increase in this liability through an aggregate $85.8 million reduction in additional paid-in capital resulting from exchanges of LLC Units in the secondary offerings discussed in Note 6. As of December 31, 2017, the liability under the TRAs was $153.0 million.

During 2018, we increased this liability through a $36.2 million reduction of additional paid-in-capital resulting from exchanges of LLC Units in the secondary offerings discussed in Note 6, partially offset by a $14.9 million benefit to our statements of operations primarily resulting from changes in forecasted taxable income. As of December 31, 2018, the liability under the TRAs was $174.3 million.

The projection of future taxable income involves significant judgment. Actual taxable income may differ from our estimates, which could significantly impact the liability under the TRAs. We have determined it is more-likely-than-not we will be unable to utilize all of our DTAs subject to TRAs; therefore, we have not recorded a liability under the TRAs related to the tax savings we may realize from the utilization of NOL carryforwards and the amortization related to basis adjustments created by exchanges of LLC Units. If utilization of these DTAs becomes more-likely-than-not in the future, at such time, we will record liabilities under the TRAs of up to an additional $1,101.5 million as a result of basis adjustments under the Internal Revenue Code and up to an additional $372.3 million related to the utilization of NOL and credit carryforwards, which will be recorded through charges to our statements of operations. However, if the tax attributes are not utilized in future years, it is reasonably possible no amounts would be paid under the TRAs. In this scenario, the reduction of the liability under the TRAs would result in a benefit to our statements of operations.

16. Income (Loss) Per Share

Basic income (loss) per share is computed by dividing net income (loss) attributable to GoDaddy Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted income (loss) per share is computed giving effect to all potentially dilutive shares unless their effect is antidilutive.

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share is as follows:

	Year Ended December 31,
	2018				2017				2016
Numerator:
Income (loss) from continuing operations	$	82.0			$	125.7			$	(21.9	)
Income from discontinued operations, net of income taxes	—				14.1				—
Net income (loss)	82.0				139.8				(21.9		)
Less: net income (loss) attributable to non-controlling interests	4.9				3.4				(5.4		)
Net income (loss) attributable to GoDaddy Inc.	$	77.1			$	136.4			$	(16.5	)
Denominator:
Weighted-average shares of Class A common stock outstanding—basic	155,234				108,779				79,835
Effect of dilutive securities:
Class B common stock	16,534				57,999				—
Stock options	7,123				8,791				—
RSUs and ESPP shares	2,462				1,485				—
Weighted-average shares of Class A Common stock outstanding—diluted	181,353				177,054				79,835
Net income (loss) attributable to GoDaddy Inc. per share of Class A common stock—basic:
Continuing operations	$	0.50			$	1.17			$	(0.21	)
Discontinued operations	—				0.08				—
Net income (loss) attributable to GoDaddy Inc.	$	0.50			$	1.25			$	(0.21	)
Net income (loss) attributable to GoDaddy Inc. per share of Class A common stock—diluted:(1)
Continuing operations	$	0.45			$	0.71			$	(0.21	)
Discontinued operations	—				0.08				—
Net income (loss) attributable to GoDaddy Inc.	$	0.45			$	0.79			$	(0.21	)

(1)	The dilutive income per share calculations exclude the net income (loss) attributable to non-controlling interests.

The following number of weighted-average potentially dilutive shares were excluded from the calculation of diluted income (loss) per share because the effect of including such potentially dilutive shares would have been antidilutive:

	Year Ended December 31,
	2018			2017			2016
Class B common stock	—			—			82,068
Stock options	742			1,642			16,295
RSUs and ESPP shares	240			58			390
	982			1,700			98,753

Shares of Class B common stock do not share in our earnings and are not participating securities. Accordingly, separate presentation of income (loss) per share of Class B common stock under the two-class method has not been presented. Each share of Class B common stock (together with a corresponding LLC Unit) is exchangeable for one share of Class A common stock. Total shares of common stock outstanding were as follows:

	December 31,
	2018			2017
Class A common stock	168,549			132,993
Class B common stock	6,254			35,006
	174,803			167,999

17. Geographic Information

Revenue by geography is based on the customer's billing address, and was as follows:

	Year Ended December 31,
	2018				2017				2016
U.S.	$	1,723.9			$	1,504.5			$	1,350.1
International	936.2				727.4				497.8
	$	2,660.1			$	2,231.9			$	1,847.9

No individual international country represented more than 10% of total revenue in any period presented.

Property and equipment, net by geography was as follows:

	Year Ended December 31,
	2018				2017
U.S.	231.0				221.2
France	28.7				31.6
International	39.3				45.1
	$	299.0			$	297.9

Other than France, no individual international country represented more than 10% of property and equipment, net in any period presented.

18. Related Party Transactions

Tax Distributions to Desert Newco's Owners

Desert Newco is subject to an operating agreement containing numerous provisions related to allocations of income and loss, as well as timing and amounts of distributions to its owners. This agreement also includes a provision requiring cash distributions enabling its owners to pay their taxes on income passing through from Desert Newco. In addition, under the tax rules, Desert Newco is required to allocate taxable income disproportionately to its unit holders. Because tax distributions are determined based on the holder of LLC Units who is allocated the largest amount of cumulative taxable income for the current year on a per unit basis, but are made pro rata based on ownership, Desert Newco may be required to make tax distributions that, in the aggregate, will likely exceed the amount of taxes it would have otherwise paid.

During 2017, Desert Newco paid total distributions of $10.0 million based on ownership as of the various payment dates as follows: $4.0 million to YAM, $2.3 million to SLP, $2.1 million to KKR, $1.2 million to TVC and $0.4 million to other Desert Newco owners. During 2016, Desert Newco paid total distributions of $18.4 million based on ownership as of the various payment dates as follows: $7.3 million to YAM, $4.1 million to SLP, $3.9 million to KKR, $2.2 million to TVC and $0.9 million to other Desert Newco owners.

No tax distributions were paid in 2018 and an accrual for tax distributions was not required at December 31, 2018.

Other

As of December 31, 2018 and 2017, affiliates of KKR held $10.4 million and $15.4 million, respectively, of the outstanding principal balance of our term loans as participating lenders. No material amounts were paid to KKR during any of the periods presented.

In the ordinary course of business, we purchase and lease computer equipment, technology licensing and software maintenance and support from affiliates of Dell Inc. of which SLP and its affiliates have a significant ownership interest. During 2018, 2017 and 2016, we paid $15.5 million, $15.2 million and $15.4 million, respectively, to Dell Inc.

19. Accumulated Other Comprehensive Income (Loss)

The following table presents AOCI activity in equity:

	Foreign Currency Translation Adjustments				Net Unrealized Gains (Losses) on Cash Flow Hedges(1)				Total Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2016	$	(0.3	)		$	3.0			$	2.7
Other comprehensive income (loss) before reclassifications	(39.6		)		(202.7		)		(242.3		)
Amounts reclassified from AOCI	(46.9		)		154.2				107.3
Other comprehensive income (loss) - 2017	(86.5		)		(48.5		)		(135.0		)
Less: AOCI attributable to non-controlling interests	(23.4		)		(23.2		)		(46.6		)
Balance as of December 31, 2017	(63.4		)		(22.3		)		(85.7		)
Other comprehensive income (loss) before reclassifications	(5.5		)		(62.5		)		(68.0		)
Amounts reclassified from AOCI	—				85.6				85.6
Other comprehensive income (loss) - 2018	(5.5		)		23.1				17.6
Less: AOCI attributable to non-controlling interests	0.3				3.7				4.0
Balance as of December 31, 2018	$	(69.2	)		$	(2.9	)		$	(72.1	)

(1)	Amounts shown for our foreign exchange forward contracts include gains and losses realized upon contract settlement but not yet recognized into earnings from AOCI.

The sale of discontinued operations in August 2017 resulted in the reclassification from AOCI of $46.9 million in cumulative foreign currency translation adjustments, which was reported in the gain on disposal within discontinued operations in 2017. The income tax impact associated with this reclassified amount was not material.

See Note 11 for the effect on net income (loss) of amounts reclassified from AOCI related to our cash flow hedging instruments. The income tax impact associated with these reclassified amounts was not material in any period presented.

20. Selected Quarterly Financial Data (Unaudited)

The following table contains selected unaudited consolidated statements of operations information for each quarter of 2018 and 2017. The following information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.

	Three Months Ended
	Dec. 31, 2018				Sept. 30, 2018				Jun. 30, 2018				Mar. 31, 2018				Dec. 31, 2017				Sept. 30, 2017				Jun. 30, 2017				Mar. 31, 2017
Total revenue	$	695.8			$	679.5			$	651.6			$	633.2			$	602.2			$	582.2			$	557.8			$	489.7
Operating income	41.8				37.5				43.5				26.8				23.0				32.1				6.1				5.7
Income (loss) from continuing operations	43.5				14.1				20.2				4.2				98.3				7.1				23.4				(3.1		)
Net income (loss)	43.5				14.1				20.2				4.2				94.8				30.0				18.1				(3.1		)
Net income attributable to GoDaddy Inc.	42.5				13.2				18.1				3.3				92.6				22.4				20.8				0.6
Net income (loss) attributable to GoDaddy Inc. per share of Class A common stock—basic:
Continuing operations	$	0.25			$	0.08			$	0.12			$	0.02			$	0.74			$	0.05			$	0.25			$	0.01
Discontinued operations	—				—				—				—				(0.02		)		0.15				(0.05		)		—
Net income attributable to GoDaddy, Inc.	$	0.25			$	0.08			$	0.12			$	0.02			$	0.72			$	0.20			$	0.20			$	0.01
Net income (loss) attributable to GoDaddy Inc. per share of Class A common stock—diluted:
Continuing operations	$	0.24			$	0.08			$	0.11			$	0.02			$	0.56			$	0.04			$	0.13			$	0.01
Discontinued operations	—				—				—				—				(0.02		)		0.13				(0.03		)		—
Net income attributable to GoDaddy, Inc.	$	0.24			$	0.08			$	0.11			$	0.02			$	0.54			$	0.17			$	0.10			$	0.01