GoDaddy (GDDY) 10-K risk factor changes: FY2019 vs FY2018

[removed: Our] [added: *Our] operations and financial results are subject to various risks and uncertainties, including those described below.

Additional risks and uncertainties we are unaware of, or [added: which] we currently believe are not material, may also become important factors affecting us.

In that event, the price of our Class A common stock could [removed: decline.][added: decline.*]

[removed: Risks] [added: Risks] Related to Our [removed: Business][added: Business]

[removed: If] [added: If] we are unable to attract and retain customers and increase sales to new and existing customers, our business and operating results would be [removed: harmed.][added: harmed.]

[removed: If] [added: If] we do not successfully develop and market products that anticipate or respond promptly to the needs of our customers, our business and operating results may [removed: suffer.][added: suffer.]

Our historical success has been based on our ability to identify and anticipate customer needs and design products providing [added: entrepreneurs,] small businesses and ventures with the tools they need to create, manage and augment their digital identity.

To the extent we are not able to continue to identify challenges faced by [added: entrepreneurs,] small businesses and ventures and provide products responding in a timely and effective manner to their evolving needs, our business, operating results and financial condition may be adversely affected.

These product and technology investments include those we develop internally, such as our "do-it-yourself" website builder [removed: GoCentral,] [added: Websites + Marketing,] our hosting [removed: platforms,] [added: platforms] and our security products, those we acquire and develop as a result of acquisitions, such as SmartLine and Website Security, and those related to our partner programs, such as Microsoft.

- negative publicity about product performance or [removed: effectiveness;][added: effectiveness, including negative comments on social media;]

[removed: Our] [added: Our] brand is integral to our success.

If we fail to protect or promote our brand, our business and competitive position may be [removed: harmed.][added: harmed.]

We have invested, and expect to continue to invest, substantial resources to increase our brand awareness, both generally and in specific geographies and to specific customer groups, such as [removed: Web Pros.][added: Partners.]

[added: We recently launched our new logo, the "Go."] There can be no assurance that our brand development [removed: strategies] [added: strategies, including the "Go,"] will enhance the recognition of our brand or lead to increased sales.

[removed: A] [added: A] network attack, a security breach or other data security incident could delay or interrupt service to our customers, harm our reputation or subject us to significant [removed: liability.][added: liability.]

Our response to such DDOS attacks may be insufficient to protect our network and systems, especially as attacks (such as the DYN attack in October 2016) increase in [removed: size.][added: size and nation-state actors use DDOS attacks against political and economic adversaries.]

In addition, there has been an increase in the number of malicious software attacks in the technology [removed: industry,] [added: industry generally,] including [removed: malware] [added: newer strains of malware, ransomware] and [removed: ransomware, such as WannaCry.][added: cryptocurrency mining software.]

We have suspended and terminated, and will in the future suspend or terminate, a customer's use of our products when [removed: the activities on] their [removed: site] [added: activities] breach our terms of service (for example, phishing or resource misuse), interfere with or harm other customers' websites sharing the same [added: hosting] resources or otherwise violate applicable law.

We may also suspend or terminate a customer's website if it is repeatedly targeted by DDOS or other attacks disrupting other customers' websites or servers or otherwise [removed: impacts] [added: impacting] our infrastructure.

We cannot guarantee our backup systems, regular data backups, security protocols, network protection mechanisms and other procedures currently in place, or that may be in place in the future, will be adequate to prevent or remedy network and service interruption, system failure, [added: third-party operating systems and software vulnerabilities,] damage to one or more of our systems, data loss, security breaches or other data security incidents.

Despite the implementation of security measures, our infrastructure may be vulnerable to computer viruses, worms, other malicious software programs, [added: social engineering attacks,] illegal or abusive content or similar disruptive problems caused by our customers, employees, consultants or other Internet users who attempt to invade or disrupt public and private data networks or to improperly access, use or obtain data.

[added: To date, the Bavarian Data Protection Agency has not rendered its final] decision on its investigation of this incident; nor has it issued any fines, but we could be subject to fines in the future related to this incident in an amount we cannot predict at this time.

[removed: If] [added: If] the security of the confidential information or [removed: personally identifiable] [added: personal] information we [added: or our vendors or partners] maintain, including that of our customers and the visitors to our customers' websites stored in our systems, is breached or otherwise subjected to unauthorized access, our reputation may be harmed and we may be exposed to [removed: liability.][added: liability.]

Our business involves the storage and transmission of confidential information, including [removed: personally identifiable] [added: personal] information.

In addition, as nearly all of our products are cloud-based, the amount of data we store for our customers on our servers (including [removed: personally identifiable] [added: personal] information and other potentially sensitive [removed: information)] [added: information), and on servers used by our vendors and partners (such as AWS),] has been increasing.

We take measures intended to protect the security, integrity and confidentiality of the personal information and other sensitive information, including payment card information, [added: that] we collect, store or transmit, but cannot guarantee that inadvertent or unauthorized use or disclosure [added: of such information] will not occur or that third [removed: parties] [added: parties, including nation-states and bad actors,] or our employees will not gain unauthorized access to this information [added: or systems where personal information is processed] despite our preventative [removed: efforts.][added: efforts or those of our vendors or partners.]

Hackers or individuals who attempt to breach our security measures or those of our vendors and partners could, if successful, cause the unauthorized disclosure, misuse, or loss of [removed: personally identifiable] [added: personal] information or other confidential information, including payment card information, [removed: suspend our web-hosting operations] or [removed: cause] malfunctions or interruptions in our [removed: networks.][added: networks and services.]

As we [added: continue to] rely more on third-party and public-cloud infrastructure, such as [removed: Amazon Web Services,] [added: AWS] and other third-party service providers, we [added: have become, and] will [removed: become] [added: become,] more dependent on third-party security measures to protect against unauthorized access, [removed: cyberattacks] [added: cyber attacks] and the mishandling of customer data and we may be required to expend significant time and resources to address any incidents related to the failure of those third-party security measures.

If we or our partners experience any breaches or sabotage of our security measures, or otherwise suffer unauthorized use or disclosure of, or access to, [removed: personally identifiable] [added: personal] information or other confidential information, including payment card information, we might be required to expend significant capital and resources to remediate these problems and protect against additional breaches or sabotage.

We may not be able to remedy any problems caused by hackers or other similar actors in a timely manner, or at [removed: all.][added: all,]

Advances in computer capabilities, discoveries of new [removed: weaknesses] [added: weaknesses, increased likelihood of nation-state cyber attacks,] and other developments with software generally used by the Internet community, such as the Meltdown and Spectre vulnerabilities, which exploit security flaws in chips manufactured in the last 20 years, the Shellshock vulnerability in the Linux Bash shell, or [removed: WannaCry or Petya] [added: continually evolving] ransomware attacks, also increase the risk that we, or our customers using our [removed: servers,] [added: servers and services,] will suffer a security breach.

Our partners and we may also suffer security breaches or unauthorized access to [removed: personally identifiable] [added: personal] information and other confidential information, including payment card information, due to employee error, rogue employee activity, unauthorized access by third parties acting with malicious intent or committing an inadvertent mistake, or social engineering.

Security breaches or other unauthorized access to [removed: personally identifiable] [added: personal] information and other confidential information, including payment card information, could result in claims against us for unauthorized purchases with payment card information, identity theft or other similar fraud claims as well as for other misuses of [removed: personally identifiable] [added: personal] information, including for unauthorized marketing purposes, which could result in a material adverse effect on our business or financial condition.

Although we maintain cyber liability insurance coverage that may cover certain liabilities in connection with a security breach or other security incident, we cannot be certain our insurance coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on commercially reasonable [removed: terms, or] [added: terms (if] at [removed: all,] [added: all)] or that any insurer will not deny coverage as to any future [removed: claim.][added: claim, including if a nation-state is declared the sponsor or perpetrator of such act; for example, following the U.S., U.K., Canadian and Australian governments' attribution of Russia for the NotPetya ransomware attack, Zurich American Insurance Co. denied Mondelez International, Inc.'s claim for damages from that attack, resulting in ongoing litigation between Zurich and Mondelez, which raises broader uncertainty across the cyber insurance market regarding the availability of coverage for nation-state-led cyber attacks.]

The successful assertion of one or more large claims against us that exceed available insurance coverage, [removed: or] the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, [added: or denials of coverage based on "act of war" or similar exclusions triggered by attribution of an attack to a nation-state,] could have a material adverse effect on our business, including our financial condition, results of operations and reputation.

[removed: We] [added: We] are exposed to the risk of system failures and capacity [removed: constraints.][added: constraints.]

As we [added: continue our] transition to [removed: Amazon Web Services] [added: AWS] to host our products over the next several years, we [added: have become, and] will [removed: become] [added: become,] more dependent on third parties to accommodate the high volume of traffic to our websites and those of our customers.

[removed: We also] expect to increasingly rely on third-party cloud computing and hosting providers such as [removed: Amazon Web Services] [added: AWS] as we transition to the public cloud.

Our systems, including those of our data centers and Customer Care operations, are also vulnerable to [added: outages or] damage from fire, power loss, [added: including rolling blackouts,] telecommunications failures, computer viruses, physical and electronic [removed: break-ins] [added: break-ins, misappropriation of computer] and [added: data center resources, and] similar events.

The property and business interruption insurance coverage we carry may [added: be subject to fact-dependent and incident-specific exclusions or may] not be adequate to compensate us fully for losses that may occur.

In addition, we may migrate our customers from a product that we intend to retire to another, substantially similar product.

We may experience technical complications during such migration, which could result in a poor customer experience and which could have an adverse impact on our operating results.

Social engineering efforts may compromise our personnel or those of our third-party vendors, leading to unauthorized access to facilities, systems or information we have a responsibility to protect, which could lead to the unauthorized acquisition of information, the unavailability of systems or information or the compromise of customer accounts.

Despite efforts to promote security awareness and training for our personnel and vendors, malicious actors are increasingly sophisticated and successful in their use of social engineering techniques.

In the last year, we experienced several successful, but immaterial social engineering efforts.

We have taken steps and continue to work to enhance our security and resilience against social engineering, but we cannot guarantee that in all cases our efforts will be successful or that future incidents will be of similarly minimal impact.

From time to time, we have offered certain bespoke services to customers outside of our standard

service offerings.

We are currently working to identify such instances and clarify customers' maintenance responsibilities; however, vulnerabilities relating to such bespoke services may exist or arise on customer systems due to such bespoke services, which may impact our reputation and/or give rise to potential legal action.

In addition, the process of transferring customer personal information in connection with the migration of customers from one product to another may result in data loss.

Increased handling of personal information and other customer data and confidential information by vendors, partners and other third parties, including through our increased reliance on third-party and public-cloud infrastructure and other third-party service providers, may create increased risks of unauthorized disclosure, misuse or loss of these types of information.

We also anticipate being required to expend significant resources in an effort to maintain and improve efforts in our oversight of vendors and other third parties with whom we share data or otherwise process data on our behalf.

In addition, our customers may request we produce evidence of our data security program as part of their own compliance programs.

Responding to such requests may be costly and time consuming.

due to, among other things, a lack of qualified personnel to handle such problems or the failure of our personnel to follow internal policies and procedures.

Any such system failure or outage could generate negative publicity, including on social media, which could negatively impact our reputation and financial results.

We may be unable to project accurately the rate or timing of these increases or to successfully allocate resources to address such increases, which could have a negative impact on customer experience and our financial results.

In addition, people are increasingly rely solely on social media applications, such as Instagram, to reach customers.

For example, advertising costs have increased and available ad inventory has decreased in connection with the 2020 U.S. elections, which we expect will increase our television marketing costs.

Our Customer Care team primarily engages with customers through direct calls.

As customers increasingly engage with our Customer Care team via other communication channels, such as chat and we provide more self-serve solutions, there is no guarantee our Customer Care team will continue to have the same success in selling product subscriptions and, as a result, our total bookings may decline.

As our Customer Care team engages with customers online and through other communications channels, our Customer Care team may not be as successful or effective as they have been in the past.

We cannot predict the impact any such refinements may have on our ability to sell additional product subscriptions or our overall customer experience.

For example, a portion of our international Customer Care team is engaged through third parties and not directly employed by us.

If our agreements with such third parties are terminated for any reason, we will need to find alternative providers, which could increase our costs; in addition, we would have to train new Customer Care guides, which could adversely impact our ability to serve our customers and to sell products to new and existing customers.

Our performance may be negatively impacted by our recent CEO transition, and we will continue to depend on the services and performance of our other senior management and key employees.

In September 2019, Aman Bhutani was appointed as our new Chief Executive Officer, following the resignation of Scott W.

Wagner.

Our future performance will depend, in part, on the successful transition of Mr. Bhutani as our new Chief Executive Officer.

Mr. Bhutani does not have prior experience as the CEO of a publicly traded company.

If we do not successfully manage our CEO transition, it could be viewed negatively by our customers, employees or investors and could have an adverse impact on our business.

more stringent laws in foreign jurisdictions relating to consumer privacy and protection of data collected from individuals and other third parties;

In addition, certain of our operations are in higher risk regions such as China, India, Russia and Ukraine.

Unanticipated events, such as geopolitical changes, could adversely affect those operations.

For example, the current U.S. administration is pursuing substantial changes to U.S. trade policy with respect to China, the E.U. and other countries.

Given the uncertainty as to how the U.S. and foreign governments will respond to such changes, a trade war and additional changes to tariffs, trade policies, taxes, regulations and enforcement practices could occur in the future, which could have an adverse impact on our international operations and bookings.

Given the risks associated with our international operations, we may decide to relocate international operations either to other foreign countries or domestically.

Any such relocation would require significant management attention and financial resources, could adversely affect our business, operating results and financial condition, and may not prove to be successful.

Historically, we designed our web-based products for use on a desktop or laptop computer.

In addition, we continue to plan for and implement new systems, including e-commerce and revenue recognition, as well as make enhancements to existing platforms and tools.

To date, the Bavarian Data Protection Agency has not rendered its final

We may be unsuccessful in these efforts, or we may be unable to project accurately the rate or timing of these increases.

applications on mobile devices, domain names may become less prominent and their value may decline.

Some of our current and potential

We are dependent on the interoperability of our products with third-party mobile devices and mobile operating systems, as well as web browsers we do not control.

increase in the number of transactions we process have increased the amount of our stored customer data.

We began work on the system implementation of the financial portion in 2017 and expect to continue system implementation through mid-2019.

We may also experience difficulties in implementing this new system at the same time as we work on several other initiatives, such as transitioning certain transactional accounting functions to a professional services firm, implementing a new revenue recognition system and implementing controls and procedures over financial reporting at HEG pursuant to the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act).

The CCPA recently was amended, and it is possible that it will be amended again before it goes into effect.

The GDPR

proprietary technology or intellectual property rights.

We have also registered, or applied to register, the trademarks associated with several of our leading brands in the U.S. and in certain other countries.

The loss of services of senior management or other key employees could significantly delay or prevent the achievement of our development and strategic objectives.

The loss of the services of our senior management or other key employees for any reason could adversely affect our business, financial condition and operating results.

In particular, the U.K. held a referendum in June 2016 in which voters approved an exit from the E.U., commonly referred to as "Brexit." In March 2017, the U.K. notified the E.U. of its intention to exit as provided in Article 50 of the Treaty on European Union.

The terms of the withdrawal are subject to continuing negotiation and it is unclear what economic impact Brexit will have.

relationships and upon which we depend in order to grow our business.

We have calculated the impact of the TCJA in accordance with our understanding of the TCJA and guidance available as of the date of this filing, as described in more detail in the notes to our financial statements.

The consequences of these changes, including whether and how state, local and foreign jurisdictions will react to such changes, have not yet been fully determined.

Additional changes in corporate tax rates, the realizability of the net DTAs relating to our U.S. operations, the taxation of foreign earnings and the deductibility of expenses contained in the TCJA or other tax reform legislation could have a material impact on the value of our DTAs, could result in significant one-time charges and could increase our future U.S. tax expense.

Furthermore, changes to the taxation of undistributed foreign earnings could change our future intentions regarding reinvestment of such earnings.

The foregoing items could have an adverse effect on our operating results, cash flow or financial condition.

price increases on certain particularly successful new gTLDs.

Desert Newco is treated as a partnership for U.S. income tax purposes and, as such, is generally not subject to income tax in most jurisdictions.

Instead, Desert Newco's taxable income or loss is passed through to its members, including us.

Pursuant to the amended and restated limited liability company agreement of Desert Newco (the New LLC Agreement), Desert Newco will make cash distributions to the owners of LLC Units, calculated using an assumed tax rate, to help fund their tax obligations in respect of the cumulative taxable income in excess of cumulative taxable losses of Desert Newco allocated to them.

If we do not have sufficient funds to pay tax or other liabilities or to fund our operations (as a result of

The actual amounts will materially differ from these hypothetical amounts, as the potential

Under the terms of the TRAs, we may not elect an early termination of the TRAs without the consent of (i) each of certain affiliates of KKR and SLP, until such affiliate has exchanged all of its LLC Units (together with the corresponding shares of Class B common stock) for shares of Class A common stock, and (ii) a majority of our directors, other than directors designated or nominated by stockholders affiliated with KKR and SLP.

certain mergers, asset sales, other forms of business combinations or other changes of control.

In certain circumstances, Desert Newco will be required to make distributions to us and to its pre-IPO owners.

The distributions Desert Newco will be required to make may be substantial.

Pursuant to the New LLC Agreement, Desert Newco will make pro rata cash distributions, or tax distributions, to the owners of LLC Units, including us, calculated using an assumed tax rate, to help each of the holders of the LLC Units to pay taxes on such holder's allocable share of the cumulative taxable income, reduced by cumulative taxable losses.

Under the tax rules, Desert Newco is required to allocate net taxable income disproportionately to its owners in certain circumstances.

Because tax distributions will be determined based on the holder of LLC Units who is allocated the largest amount of taxable income on a per unit basis, but will be made pro rata based on ownership, Desert Newco will be required to make tax distributions that, in the aggregate, will likely exceed the amount of taxes Desert Newco would have paid if it were taxed on its net income at the assumed rate.

Funds used by Desert Newco to satisfy its tax distribution obligations will not be available for reinvestment in our business.

Moreover, the tax distributions Desert Newco will be required to make may be substantial, and may exceed (as a percentage of Desert Newco's income) the overall effective tax rate applicable to a similarly situated corporate taxpayer.

In addition, because these payments will be calculated with reference to an assumed tax rate, and because of the disproportionate allocation of net taxable income, these payments will likely significantly exceed the actual tax liability for many of the owners of Desert Newco.

As a result of potential differences in the amount of net taxable income allocable to us and to the other owners of Desert Newco, as well as the use of an assumed tax rate in calculating Desert Newco's distribution obligations, we may receive distributions significantly in excess of our tax liabilities and obligations to make payments under the TRAs.

To the extent, as currently expected, we do not distribute such cash balances as dividends on our Class A common stock and instead, for example, hold such cash balances or lend them to Desert Newco, our existing shareholders would benefit from any value attributable to such accumulated cash balances as a result of their ownership of Class A common stock.

[removed: The] [added: *The] following discussion and analysis of our financial condition and results of operations should be read together with our [removed: consolidated] [added: audited] financial statements and related notes included in "Financial Statements and Supplementary Data." Some of the information contained in this discussion and analysis, including information with respect to our plans and strategies for our business, includes forward-looking statements involving significant risks and uncertainties.

As a result of many factors, such as those set forth in "Risk Factors," our actual results may differ materially from the results described in, or implied by, these forward-looking [removed: statements.][added: statements.*]

[removed: (Throughout] [added: *(Throughout] this discussion and analysis, dollars are in millions, excluding [removed: ARPU or unless otherwise noted.)][added: ARPU, and shares are in thousands.)*]

[removed: Overview][added: Overview]

Securing a domain is [removed: often] [added: usually] the first step to creating a digital identity and our domain products [added: can] often serve as the starting point in our customer relationships.

As of December 31, [removed: 2018,] [added: 2019,] approximately [removed: 92%] [added: 90%] of our customers had purchased a domain from us and we had [removed: 77.6] [added: 79.6] million domains under management.

Based on information reported in VeriSign's Domain Name Industry Brief, we had over 22% of the world's domains registered as of September 30, [removed: 2018.][added: 2019.]

As we have grown, our hosting, presence and business applications products have become increasingly important parts of our business, constituting approximately [removed: 54%] [added: 55%] of total revenue in [removed: 2018.][added: 2019.]

[removed: Financial Highlights][added: Financial Highlights]

Below are our key financial highlights for [removed: 2018,] [added: 2019,] with comparisons to [removed: 2017.][added: 2018.]

[removed: | • |] [added: -] Net income of [removed: $82.0] [added: $138.4] million. [removed: |]

[removed: | • |] [added: -] Total customers increased [removed: 6.8%] [added: 4.1%] to [removed: 18.5] [added: 19.3] million. [removed: |]

[removed: | • |] [added: -] ARPU increased 6.6% to [removed: $148. |][added: $158.]

[removed: | • |] [added: -] Net cash provided by operating activities of [removed: $559.8] [added: $723.4] million, an increase of [removed: 17.7%. |][added: 29.2%.]

[removed: (1) A] [added: (2) *A] reconciliation of total bookings to total revenue, its most directly comparable GAAP financial measure, is set forth in "Selected Financial Data—Reconciliation of [removed: Bookings."][added: Bookings."*]

[removed: Our] [added: Our] Financial [removed: Model][added: Model]

We grew our total customers from [removed: 14.7] [added: 17.3] million as of December 31, [removed: 2016] [added: 2017] to [removed: 18.5] [added: 19.3] million as of December 31, [removed: 2018, primarily] [added: 2019,] through a combination of our industry leading products built on a single cloud platform, brand advertising, direct marketing efforts, customer referrals and world-class customer care.

In each of the five years ended December 31, [removed: 2018,] [added: 2019,] our customer retention rate exceeded 85%, and in [removed: 2018,] [added: 2019,] our retention rate for customers who had been with us for over three years was approximately 92%.

We generate bookings and revenue from sales of product subscriptions, including domain products, hosting and presence [removed: offerings] [added: products] and business applications, as described below.

We offer our product subscriptions on a variety of terms, which [removed: are typically] [added: average] one year, but can range from monthly to multi-annual terms of up to ten years depending on the product.

[added: We monitor] total bookings as we typically collect payment at the time of sale and recognize revenue ratably over the term of our customer contracts.

We generated [removed: 46%] [added: 45%] of our [removed: 2018] [added: 2019] total revenue from the sale of domain products, primarily from domain registrations and renewals, domain add-ons such as privacy and aftermarket sales.

Total revenue from domain products grew at a CAGR of [removed: 13.2%] [added: 13.4%] over the three years ended December 31, [removed: 2018.][added: 2019.]

[removed: Hosting] [added: *Hosting] and [removed: Presence.][added: Presence*.]

We generated 38% of our [removed: 2018] [added: 2019] total revenue from the sale of hosting and presence products, primarily from a variety of website hosting [removed: offerings,] [added: products,] website [removed: builder] [added: building] products, security products and e-commerce products.

Total revenue from hosting and presence products grew at a CAGR of [removed: 19.8%] [added: 18.4%] over the three years ended December 31, [removed: 2018.][added: 2019.]

We generated [removed: 16%] [added: 17%] of our [removed: 2018] [added: 2019] total revenue from the sale of business applications products, primarily from productivity tools such as domain-specific email accounts, which generally also have higher margins than conventional domain registrations.

Total revenue from business applications products grew at a CAGR of [removed: 34.2%] [added: 28.3%] over the three years ended December 31, [removed: 2018.][added: 2019.]

In each of the five years ended December 31, [removed: 2018,] [added: 2019,] greater than 85% of our total revenue, excluding the impact of purchase accounting, was generated by customers who were also customers in the prior year.

By the end of [removed: 2018,] [added: 2019,] the 2014 cohort had generated an aggregate of [removed: $1,070] [added: $1,266] million of total [removed: bookings,] [added: bookings] and we expect this cohort will continue to generate bookings and revenue in the future.

For the [removed: four] [added: five] years ended December 31, [removed: 2018,] [added: 2019,] the average [added: annual] bookings retention rate of the 2014 cohort was approximately [removed: 90%.][added: 93%.]

Over this period, ARPU, excluding the impact of purchase accounting, for the 2014 cohort grew from $79 in 2015 to [removed: $143] [added: $163] in [removed: 2018,] [added: 2019,] representing a CAGR of [removed: 22%.][added: 20%.]

[removed: Key Metrics][added: Key Metrics]

| | [removed: Year] [added: | | Year] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | [added: | | | | | | | | | | | | | | | |]

| | [removed: 2018] | | [added: 2019] | | [removed: 2017] | | | | [removed: 2016] [added: 2018] | | | [added: | | | 2017 | | | | | | | | | | | | | | |]

| | [removed: (unaudited)] | | [added: (unaudited)] | | | | | | | | | [added: | | | | | | | | | | | | | | | | | |]

| Total bookings | [added: | |] $ | [added: 3,401.2 | | | | | $ |] 3,011.5 | | | [added: | |] $ | 2,618.2 | | | [removed: $] | [removed: 2,155.5] | | [added: | | | | | | | |]

| Total customers at period end (in thousands) | [added: | | 19,274 | | | | | |] 18,518 | | | | [added: | |] 17,339 | | | | [removed: 14,740] | | | [added: | | | | | | | |]

| Average revenue per user | [added: | |] $ | [added: 158 | | | | | $ |] 148 | | | [added: | |] $ | 139 | | | [removed: $] | [removed: 130] | | [added: | | | | | | | |]

The [removed: 21.5%] [added: 12.9%] increase in total bookings [removed: from 2016 to 2017 and the 15.0% increase from 2017 to 2018 were] [added: in 2019 was] primarily driven by [removed: our 2017 acquisition of HEG, increases] [added: an increase] in total customers and domains under management, [removed: continued increases in] [added: increased] aftermarket domain [removed: sales,] [added: sales and] broadened customer adoption of non-domain [removed: products and an increased growth rate associated with our greater international presence,] [added: products,] partially offset by the impact of [removed: adverse] movements in foreign currency exchange rates.

*This section of the Form 10-K generally discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018.

Discussions of 2017 items and year-to-year comparisons between 2018 and 2017 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2018, and are incorporated by reference herein and considered part of this Form 10-K only to the extent referenced.*

- Total revenue of $2,988.1 million, an increase of 12.3%, or approximately 13.7% on a constant currency basis(1).

- International revenue of $1,008.5 million, an increase of 7.7%, or approximately 11.4% on a constant currency basis(1).

- Total bookings(2) of $3,401.2 million, an increase of 12.9%, or approximately 14.3% on a constant currency basis(1).

(1) *Discussion of constant currency is set forth in "Quantitative and Qualitative Disclosures about Market Risk."*

*Domains*.

*Business Applications*.

To calculate a cohort's bookings retention rate, we compare the number of active customers within a specific cohort as of the end of the current year to the number of customers that were in the cohort in the year of acquisition.

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*Total bookings*.

The 6.6% increase in ARPU in 2019 was primarily due to broadened customer adoption of our products resulting in increased customer spend combined with a full year of revenue from our July 2018 acquisition of Main Street Hub (MSH).

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Comparison of 2019 and 2018

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The 12.3% increase in total revenue was driven by growth in total customers and ARPU as well as having a full year of revenue from MSH in 2019, partially offset by the impact of movements in foreign currency exchange rates.

*Business applications*.

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| | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | $ change | | | | | | % change | | | | | | $ change | | | | | | % change | | | | | | | | | | | | | | | | | | | | | | | | | | |

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| | | | Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2019 to 2018 | | | | | | | | | | | | | | | | | | 2018 to 2017 | | | | | | | | | | | | | | |

| | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | $ change | | | | | | % change | | | | | | $ change | | | | | | % change | | | | | | | | | | | | | | | | | | | | | | | | | | |

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| | | | Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2019 to 2018 | | | | | | | | | | | | | | | | | | 2018 to 2017 | | | | | | | | | | | | | | |

| | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | $ change | | | | | | % change | | | | | | $ change | | | | | | % change | | | | | | | | | | | | | | | | | | | | | | | | | | |

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| --- | --- |

| • | Total revenue of $2,660.1 million, an increase of 19.2%. |

| • | International revenue of $936.2 million, an increase of 28.7%. |

| • | Total bookings(1) of $3,011.5 million, an increase of 15.0%. |

We also added approximately 1.6 million customers from our acquisition of HEG in April 2017.

We monitor

Domains.

Business Applications.

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Total bookings.

Additionally, the acquisition of MSH in July 2018 contributed to our bookings growth in 2018, which was partially offset by a slight reduction in average subscription term as our product mix shifted away from longer term domain

products.

We also tested merchandising tactics, resulting in a shift towards shorter initial and renewal terms in order to increase customer touch points and ultimately, customer satisfaction.

Total customers.

As of December 31, 2018, 2017 and 2016, we had 18,518, 17,339 and 14,740 total customers, respectively.

The 7.4% increase in ARPU from 2016 to 2017 and the 6.6% increase from 2017 to 2018 were primarily due to broadened customer adoption of our products resulting in increased customer spend and revenue from acquired businesses, partially offset by the impact of adverse movements in foreign currency exchange rates.

Our ARPU growth in 2017 is muted by the impact of the acquisition of HEG as our trailing 12 month revenue includes only nine months of HEG's results, while all of the customers acquired from HEG are included in the average customers calculation.

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The 19.2% increase in total revenue was primarily driven by growth in total customers and ARPU as well as revenue from our April 2017 acquisition of HEG and our July 2018 acquisition of MSH.

The increase in customers impacted each of our revenue lines, as the additional customers purchased subscriptions across our product portfolio.

2017 compared to 2016

The 20.8% increase in total revenue was primarily driven by $155.1 million in total revenue from our acquisition of HEG as well as growth in total customers and ARPU.

The 13.9% increase in domains revenue was primarily driven by our acquisition of HEG, the 18.2% increase in domains under management from 63.5 million as of December 31, 2016 to 75.0 million as of December 31, 2017, international growth, strong renewals and increased aftermarket domain sales.

Domains under management in 2017 includes approximately 1.0 million .uk domains for which we provided free initial registration to the owners of the associated third-level domains (e.g. .co.uk) following the 2017 launch of the .uk ccTLD.

The 24.9% increase in hosting and presence revenue was primarily driven by our acquisition of HEG as well as increased revenue from our website hosting, website building and website security products.

The 35.4% increase in business applications was primarily driven by increased customer adoption of our expanded email and productivity solutions.

2018 compared to 2017.

In addition, software licensing fees increased due to higher sales of email and productivity solutions and payment processing fees increased due to our bookings growth.

2017 compared to 2016.

The 17.9% increase in cost of revenue was primarily attributable to our acquisition of HEG, increased domain costs driven by the increase in domains under management, higher registration costs associated with many new gTLDs and increased aftermarket domain sales, increased software licensing fees primarily related to increased sales of email and productivity solutions and increased third-party commissions driven by the increased aftermarket domain sales.

These expenses

The 15.1% increase in marketing and advertising expenses was primarily attributable to increased discretionary advertising spend driven by our international growth.

The 10.7% increase in marketing and advertising expenses was primarily attributable to increased discretionary advertising spend driven by our international growth and new product launches as well as our acquisition of HEG.

The 20.7% increase in customer care expenses was primarily driven by headcount additions to support the continued growth of our business and our international expansion as well as our acquisition of HEG.

The 18.3% increase in general and administrative expenses was primarily due to increased compensation-related costs associated with the continued growth of our business, increased acquisition-related expenses and incremental expenses from our integration of HEG and MSH.

Consequently, we may employ policies and procedures to mitigate such risks, including the use of derivative financial [removed: instruments.][added: instruments, which are discussed in more detail in Note 11 to our financial statements.]

As a result, we do not believe we are exposed to any undue concentration of counterparty risk with respect to our derivative contracts as of December 31, [removed: 2018.][added: 2019.]

[removed: Foreign] [added: Foreign] Currency [removed: Risk][added: Risk]

[removed: Foreign] [added: *Foreign] Exchange Forward [removed: Contracts][added: Contracts*]

Our most significant foreign currency exposures are the Euro, the British pound, the [removed: Indian rupee, the] Canadian [added: dollar, the Australian] dollar and the [removed: Australian dollar.][added: Indian Rupee.]

Fluctuations in [removed: foreign currency] exchange rates may also cause us to recognize transaction gains and losses in our [removed: consolidated] statements of operations; however, to date, such amounts have not been material.

[removed: With our acquisition of HEG, and as] [added: As] our international operations continue to grow, our exposure to fluctuations in [removed: currency] [added: exchange] rates will increase, which may increase the costs associated with this growth.

During [removed: 2018,] [added: 2019,] our total bookings growth in constant currency would have been approximately [removed: 40] [added: 140] basis points [removed: lower] [added: higher] and our total revenue growth would have been approximately [removed: 50] [added: 140] basis points [removed: lower.][added: higher.]

We [added: generally] designate these forward contracts as cash flow hedges for accounting purposes.

Changes in the intrinsic value of [removed: these] [added: designated] hedges are recorded as a component of [removed: AOCI.][added: accumulated other comprehensive income (loss) (AOCI).]

[removed: Cross-Currency] [added: *Cross-Currency] Swap [removed: Contract][added: Contract*]

In order to manage variability due to movements in foreign currency rates related to a Euro-denominated intercompany loan, we entered into a [removed: five\-year] [added: five-year cross-currency swap arrangement (the] Cross-Currency [removed: Swap] [added: Swap)] in April 2017.

The Cross-Currency Swap, which matures on April 3, 2022, had a notional amount of [removed: €1,221.5] [added: €1,209.1] million at December 31, [removed: 2018] [added: 2019] and converts the fixed rate Euro-denominated interest and principal receipts on the intercompany loan into fixed U.S. dollar interest and principal [removed: receipts.][added: receipts, thereby reducing our exposure to fluctuations between the Euro and the U.S. dollar.]

[removed: Interest] [added: Interest] Rate [removed: Sensitivity][added: Sensitivity]

Total borrowings under our [removed: Credit Facility] [added: term loans] were [removed: $2,457.3] [added: $1,832.3] million as of December 31, [removed: 2018.][added: 2019.]

[removed: These borrowings] [added: Borrowings under these loans] bear interest at a rate equal to, at our option, either (a) LIBOR plus [removed: 2.25%] [added: 1.75%] per annum or (b) [removed: 1.25%] [added: 0.75%] 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%.

See Note 10 to our financial statements for additional information regarding the [removed: Credit Facility.][added: term loans.]

In April 2017, [removed: in connection with the closing of the additional term loan used to finance a portion of the HEG acquisition,] we entered into a [removed: five\-year] [added: five-year] pay-fixed rate, receive-floating rate interest rate swap arrangement to effectively convert a portion of the variable-rate debt to fixed.

The interest rate swap, the notional amount of which was [removed: $1,302.3] [added: $1,289.0] million at December 31, [removed: 2018,] [added: 2019,] matures on April 3, 2022 and swaps the variable interest rate on our LIBOR-based borrowings for a fixed rate of 5.44%.

At December 31, 2019, the realized and unrealized gain (loss) included in AOCI related to designated hedges was not material.

The Cross-Currency Swap is designated as a cash flow hedge and recognized as an asset or liability at fair value.

At December 31, 2018, we had no forward contracts outstanding and the realized gain included in accumulated other comprehensive income totaled $2.6 million.

The Cross-Currency Swap, which is designated as a cash flow hedge and recognized as an asset or liability at fair value, effectively creates a fixed-rate U.S. dollar intercompany loan from a fixed rate Euro-denominated intercompany loan, thereby reducing our exposure to foreign currency fluctuations between the Euro and U.S. dollar.

Our vision is to radically shift the global economy toward [removed: life-fulfilling] independent [added: entrepreneurial] ventures.

[removed: Overview][added: Overview]

[removed: They] [added: Our 19.3 million customers] are [removed: risk-takers] [added: passionate everyday entrepreneurs] with [removed: passion and grit,] [added: vibrant ideas, who are] determined to make their way in the world and to transform their ideas into something meaningful.

Our customers have many [removed: roles;] [added: roles in their venture;] they [removed: have to] simultaneously run marketing, accounting, [removed: and] service delivery [removed: operations.][added: operations, customer service, people operations and many other tasks.]

Time is their most valuable [removed: resource;] [added: resource and complexity is their hindrance;] they want an [added: impactful] online [removed: presence that makes an impact,] [added: presence,] but may not have the time and skills to make that happen.

We are a leading [removed: technology] provider [removed: to small businesses, web design professionals and individuals,] [added: of cloud-based solutions,] delivering simple, easy-to-use [removed: cloud-based products] [added: products, services] and outcome-driven, personalized [removed: Customer Care.][added: guidance to small businesses, individuals, organizations, developers, designers and domain investors.]

This often starts with the most intimate of brand [removed: considerations - their] [added: considerations—their] domain [removed: name - and] [added: name—and] expands through our website building, hosting, [removed: social,] [added: social media,] security, productivity and [removed: do-it-for-you] [added: other services] offerings.

As our customers [removed: grow,] [added: grow through their entrepreneurial journey,] we provide applications and access to relevant third-party products and platforms helping them connect to their [removed: customers,] [added: customers and] manage and grow their [removed: businesses and get found online.][added: businesses.]

What it means to be online has evolved from [added: having] a static website to a [added: mobile-ready,] responsive website integrated with social channels, search engines, reputation platforms and e-commerce marketplaces.

[removed: This creates the] [added: Our customers] need to [removed: syndicate] [added: integrate] dynamic information across all [added: of] the places [removed: our customers] [added: they] engage with their [removed: audience,] [added: audiences,] including things like appointment availability, retail inventory, digital [removed: subscriptions,] [added: subscriptions] and social media [removed: presence, among many other things.][added: presence.]

[removed: We believe engaging] [added: Engaging] with our customers in a proactive, consultative way helps them knock down the technology hurdles they [removed: face.][added: face, through personalized guidance via phone and digital experiences.]

We take responsibility for driving successful outcomes [removed: and are accountable to our customers,] which we believe has been a key factor in enabling our [removed: rapid] customer and revenue growth.

We believe we have one of the most recognized [removed: technology] [added: Internet] brands in the U.S. and our international awareness continues to rapidly increase as we've entered into new markets.

[removed: | • | As] [added: Additionally, as] of December 31, [removed: 2018,] [added: 2019,] we had [removed: 1.1] [added: 1.3] million customers who each spent more than $500 a year. [removed: |]

[removed: | • |] We are the global market leader in domain name [removed: registration—a key on-ramp to establishing a business online in our connected economy—with] [added: registration, with] more than [removed: 77] [added: 79] million domains under management as of December 31, [removed: 2018, which,] [added: 2019 and,] based on information reported in VeriSign's Domain Name Industry Brief, [removed: represented more than] [added: we held over] 22% of the [removed: world's] [added: approximately 360 million domain names] registered [removed: domains. |][added: worldwide as of September 30, 2019.]

[removed: | • |] In each of the five years ended December 31, [removed: 2018,] [added: 2019,] our customer retention rate exceeded 85%, and in [removed: 2018,] [added: 2019,] our retention rate for customers who had been with us for over three years was approximately 92%. [removed: |]

[removed: | • |] In [removed: 2018,] [added: 2019,] we generated [removed: $3,011] [added: $3,401] million in total bookings, up [removed: 15.0%] [added: 12.9%] from [removed: $2,618] [added: $3,011] million in [removed: 2017. In] 2018, [added: and] we [removed: had $2,660] [added: generated $2,988] million of revenue, up [removed: 19.2%] [added: 12.3%] from [removed: $2,232] [added: $2,660] million in [removed: 2017. |][added: 2018.]

[removed: | • |] As of December 31, [removed: 2018,] [added: 2019,] we [removed: provided localized solutions in] [added: had] over [removed: 50 markets. In 2018,] [added: 8.7 million customers outside of the U.S. and derived] approximately [added: 33%,] 35% [added: and 33%] of our total bookings [removed: was attributable to customers outside of the U.S. |][added: from international sales in 2019, 2018 and 2017, respectively.]

Our customers represent a large and diverse market which we believe is largely [removed: underserved.][added: underserved by other Internet companies.]

Furthermore, the Kauffman Index of Entrepreneurial Activity Report estimated that in 2017 there were approximately 540,000 new business owners created each month in the U.S. [removed: Moreover,] [added: Around the world, there are more than 500 million micro, small and medium enterprises,] according to a study performed by the International Finance Corporation and McKinsey [removed: Company, there are more than 500 million micro, small and medium enterprises] [added: Company] (defined as one to 250 [removed: employees) worldwide.]

What it means for [removed: small businesses, ventures and ideas] [added: our customers] to be online continues to evolve.

Today, having an effective online presence often means having a combination of: (i) a secure and [removed: content rich] [added: content-rich] website viewable from any device; (ii) presence on social media channels (e.g. [removed: Facebook,] Instagram, [added: Facebook,] WhatsApp and [removed: WeChat),] [added: WeChat);] (iii) search engines [added: (e.g. Google)] and an increasing number of horizontal marketplaces (e.g. Yelp and [removed: Eventbrite),] [added: Eventbrite);] (iv) vertical marketplaces (e.g. [added: Zillow,] OpenTable and HomeAdvisor); [removed: (v) branded email communication; (vi) online marketing;] and [removed: (vii) Internet-enabled commerce ability with reservation and scheduling capabilities for service-based businesses and a product catalog and] [added: (v)] e-commerce [removed: capabilities for product-based businesses.][added: platforms (e.g. Amazon, eBay, Etsy).]

[removed: Our Customers][added: Our Customers]

[removed: They] [added: Independents] have an entrepreneurial spirit, strong work ethic and, above all, passion for their ideas, yet their specific needs vary depending on the type and stage of their ideas.

[removed: They] [added: Independents] range from individuals who have an idea and those thinking about starting a [removed: business as well as] [added: business, to] established ventures needing help attracting customers, growing their sales, managing their presence or expanding their operations.

Most [removed: of our customers] [added: Independents] have fewer than five employees and most self-identify as having little to no [removed: technology or design skills.]

They need our help to create a unique and secure digital [removed: identity.][added: identity, especially the more technical aspects of their presence.]

Our customers are consumers [removed: themselves and use the Internet to research and shop for solutions,] [added: themselves,] which makes them keenly aware of the need to have an impactful online presence.

[removed: | • | Getting online and looking great. Our customers want to develop an online presence by finding a name that perfectly identifies their business, hobby or passion. They want to create a digital identity so their customers can find, engage and transact with them online.] We believe [removed: a complete] [added: their] digital identity includes [added: not just] an elegant, mobile-enabled [removed: website and] [added: website, but] the ability to get found across various search engines, social media platforms and vertical marketplaces. [removed: |]

[removed: | • | Connecting with a real person when they need help. Our customers sometimes need assistance to set up a website, launch a new feature or try something new.] They need real people who are available 24/7/365 and in the manner that works best for them, whether by phone, by chat or in community forums. [removed: |]

[removed: | • | Technology that grows with them and their customers. Our customers need a simple platform and set of tools enabling their domain, website and other solutions to easily work together as their idea grows and becomes more complex.] The right platform can meet the needs of [removed: entrepreneurs] [added: entrepreneurs,] who may not be technologically savvy, [removed: Web Pros with] [added: and our Partners, who have] more complex [removed: requirements and] [added: requirements, as well as all the] customers [removed: with] [added: in between that have] a range of needs [removed: in between. |][added: and sophistication.]

[removed: | • | Reliability, security and performance.] Our customers [removed: expect reliable products and want to be confident their digital presence is secure. Our customers] work on their ideas whenever and however they can and need solutions fitting their lifestyle and schedule. [removed: |]

[removed: | • | Affordable solutions.] Our customers often have limited financial resources and are unable to make large, upfront investments in the latest technology. [removed: Our customers need affordable solutions leveling the playing field and giving them the tools to look and act like bigger ventures. |]

We built GoDaddy to serve our customers by providing elegant, easy-to-use cloud-based products on a single technology platform wrapped with personalized [removed: Customer Care.][added: guidance.]

[removed: | • | Get a great domain name. Every great idea needs a great name. Staking a claim with a domain name is an integral part of establishing an idea and presence online.] When inspiration strikes, we are there to provide our customers with high-quality search, discovery and recommendation tools as well as the broadest selection of domains to help them find the right name for their idea. [removed: |]

[removed: | • | Build a dynamic online presence. GoCentral and other GoDaddy offerings enable anyone to create an elegant website or online store, for both desktop and mobile, regardless of technical skill.] Our products, powered by a unified cloud platform, enable our customers to get found online by helping to enhance the information on their website and extending their website and its content to where they need to be, from search engine results (e.g. Google) to social media (e.g. Facebook) to vertical marketplaces (e.g. Yelp), all from one location. [removed: For more technically-sophisticated web designers, developers and customers, we provide high-performance, flexible hosting and security products that can be used with a variety of open source design tools. We design these solutions to be easy to use, effective, reliable, flexible and at a great value. |]

[removed: | • | Add back-office and marketing products. Our customers want to spend their time on what matters most to them, selling their products or services or helping their customers do the same.] We provide them with productivity tools such as domain-specific email, second-line telephony, online storage and payment solutions to help run their ventures. [removed: We also provide robust marketing products, such as social media management and email marketing, to help them attract and retain customers. |]

[removed: Our Advantages—Why We Win][added: Our Advantages]

[removed: We] [added: Therefore, we] believe the following strengths provide us with competitive [removed: advantages:][added: advantages in serving their needs:]

[removed: | • | In] [added: During] the five years ended December 31, [removed: 2018,] [added: 2019,] we invested to support our growth with [removed: $1,599] [added: $1,840] million in technology and development [removed: expenses and $1,140 million in marketing and advertising] expenses. [removed: |]

Our mission is to empower entrepreneurs everywhere, making opportunity more inclusive for all.

We champion everyday entrepreneurs by empowering them with sage guidance set in seamlessly intuitive experiences to name, create, grow and manage their ventures.

We do this all while activating the exponential power of our community at global scale to deliver profitable revenue growth.

This enables our customers to name their venture, build their website, establish and manage their online marketing, and get branded email.

Our stable and predictable business model is driven by efficient customer acquisition, high customer retention rates and increasing lifetime spend.

We believe the breadth and depth of our product offerings and the high quality guidance and responsiveness of our GoDaddy Guides builds strong customer relationships and are key to our high customer retention rate.

Our Opportunity and Advantages

Our Opportunity—Empowering the Everyday Entrepreneur

employees) worldwide.

- Showing up, looking great.

Our customers want to develop an online presence by finding a name that distinctly identifies their business, hobby or passion.

And while our customers' online identities start with creating and managing these points of presence, their identities are amplified through content generation and the ability to engage and transact online with their customers and audience.

- Getting found in all the right places.

- Interacting with customers as they grow their business. Our customers need to communicate with their existing customers and find new ones across a landscape that is fragmented in both form and function.

They have distinct needs in (i) branded email communication, originating with domain registration and email creation through an email client; (ii) online marketing in a variety of content types and channels; (iii) online commerce with reservation and scheduling, product catalogs and e-commerce and payment processing capabilities; (iv) messaging capabilities across SMS, Facebook Messenger, WhatsApp and others; (v) email marketing for audience engagement; and (vi) telephony, for inbound and outbound voice communication.

Surrounding these channels and tactics, our customers also need easy-to-use tools to run their businesses.

- Technology that is reliable, secure, performant and evolves with their needs. Our various customer types need a simple platform and set of tools enabling their domain, website, marketing and other solutions to easily work together as their ideas grow and become more complex.

All the while, our customers expect reliable products and want to be confident their digital presence is secure, even as they insert customization that can create vulnerabilities.

- Connecting with a real person when they need help. Our customers sometimes need guidance to set up a website, launch a new feature or try something new.

In addition to guiding our customers along the way, we also provide support by handling the most difficult and arduous tasks for them through a collection of managed service offerings.

- Affordable solutions.

Our customers need affordable solutions to level the playing field with the tools to look and act like bigger ventures.

Serving these customer needs creates a deep relationship, where we are looked to as not just a solution provider, but also a guide and partner to their entrepreneurial journey.

This makes for a favorable business and economic model, aligning the interests of GoDaddy and our customer.

Our goal is to be a trusted partner to these entrepreneurs, bringing together the technology, ease of use and care necessary to bring their ideas to life online.

Seamlessly Intuitive Experiences. Our customers often self-identify as non-technical and inexperienced in a variety of areas like marketing, content creation and customer management.

This often manifests in our customers not having the expertise to take full advantage of powerful tools, due to complexity and an over-abundance of functionality.

Combined with the great degree of fragmentation of experiences, channels and mediums on the Internet, our customers can often be overwhelmed as they attempt to bring their idea online.

We believe that the antidote to this complexity is to radically simplify our solutions and services into seamlessly intuitive experiences.

GoDaddy has the two leading website building content management systems (CMS) with Websites + Marketing and Managed WordPress.

With Managed WordPress, we dramatically reduce the complexity in provisioning, managing and customizing the WordPress CMS.

We do this by wrapping the WordPress CMS with our own security tools (web application firewall (WAF), content delivery network (CDN) and secure sockets layer (SSL)), design tools, plugin pre-installs at initiation and automatic, managed updates.

In Websites + Marketing, our own captive CMS, we incorporate seamlessly intuitive experiences by uniting marketing, content, commerce and customer management tools into single experiences.

We also seek to leverage data and insights to personalize the products and experiences of our customers as well as tailor our solutions and marketing efforts to each of our customer groups.

We are constantly seeking to improve our website, marketing programs and Customer Care to intelligently respond to where customers are in their lifecycle and identify their specific product needs.

This allows us to interact more frequently with our customers.

We intend to continue investing in our technology and data platforms to further enable our personalization efforts.

Sage Guidance. Our customers deeply value expertise and know-how, which has been part of the GoDaddy DNA through our GoDaddy Guides since our founding.

Our customers' needs are highly individualized and tailored to their ventures, which makes operating a guidance experience – at scale – a substantial form of differentiation.

In recent years, we've extended this competency into a number of new interfaces and subject matters, which are taking the insights gained from inbound calls and inserting them tactically into places that are driving higher engagements with GoDaddy.

Our customers have bold aspirations—the drive to be their own boss, write their own story and take a leap of faith to pursue their dreams.

Launching that salon, opening that gym, organizing that community event, starting their blog, or whatever sparks their passion.

We are inspired by our customers, and are dedicated to helping them turn their powerful ideas into meaningful action.

Our 18.5 million customers are everyday entrepreneurs with vibrant ideas.

Our products enable our customers to transform their ideas into reality through their website, email and social presence.

Our Size and Scale

Our combination of easy-to-use cloud-based products, personalized Customer Care, a powerful brand and a unique culture have helped us build an attractive business with strong financial performance.

| | |

| --- | --- |

| • | As of December 31, 2018, we had 18.5 million customers, with approximately 1.2 million customers added in 2018. |

| • | Our highly-rated Customer Care team of over 6,300 specialists, including nearly 2,300 outside the U.S., is focused on providing high-quality, personalized care. As a result of their ongoing dialogue with customers, our Customer Care team also drives bookings and in 2018 generated approximately 17% of our total bookings. |

Our Market

Despite the ubiquity and importance of the Internet to individual consumers, most small businesses and organizations have remained offline given their limited resources and inadequate tools.

However, as proliferation of mobile devices blurs the online/offline distinction into an "always online" world, having an impactful online presence is becoming a "must have" for small businesses worldwide.

In addition, other needs such as telephony, payment processing, and accounting and tax preparation, which had traditionally been separate point solutions, can now be part of an integrated solution.

Our customers share common traits, such as tenacity and determination.

Our Opportunity—What Successful Ideas Need

| • | Growing their business and running their operations. Our customers need to communicate with their existing customers and find new ones. They also need easy-to-use products and tools to help run their businesses, including productivity, marketing, payment and security tools. |

Our Solution—What We Do and How We Do It

Our customers turn to us to:

| • | Receive assistance from our highly-rated Customer Care team. Our Customer Care team consists of over 6,300 specialists worldwide who are available 24/7/365 and provide care to customers who have different levels of technical sophistication. We strive to provide high-quality, consultative care and deliver a distinctive experience helping us create loyal customers who renew their subscriptions, purchase additional products and refer their family and friends to us. Our specialists are evaluated on customer outcomes and the quality of the experience they provide. |

| • | Receive high value. We price most of our products at a few dollars per month while providing our customers with robust features and functionality. We believe our high-quality products and personalized Customer Care provide our customers with an affordable bridge between their available resources and their aspirations. |

| • | We are the leading domain name marketplace, a key on-ramp in establishing a digital identity. We are the global market leader in domain name registration with more than 77 million domains under management as of December 31, 2018. Based on information reported in VeriSign's Domain Name Industry Brief, we held over 22% of the approximately 342 million worldwide domain names under management as of September 30, 2018. |

| • | We provide a reliable and secure global platform and infrastructure. Our investments in technology, including engineers, patents, online security, customer privacy, reliable infrastructure and data science capabilities, enable us to innovate and deliver personalized solutions to our customers. Our API-driven technology platform is built on state-of-the-art, open source technologies like Hadoop, OpenStack and other large-scale, distributed systems. Additionally, our platform allows our developers to create new and enhanced products or product features assembled from common building blocks leading to faster deployment cycles. We believe our products work well together and are more valuable and easier to use together than had our customers purchased them individually from other companies and tried to integrate them. As of December 31, 2018, we had 1,557 engineers, 264 issued patents and 109 pending patent applications in the U.S. |

| • | We operate an industry-leading Customer Care team that also drives bookings. We give our customers much more than typical customer support. Our team is unique, blending personalized Customer Care with the ability to evaluate our customers' needs, which allows us to help and advise them as well as drive incremental bookings. Our Customer Care team contributed approximately 17% of our total bookings in 2018. Our customers respond to our personalized approach with high marks for customer satisfaction. Our proactive Customer Care model is a key component helping create long-term customer relationships, which is reflected in our high retention rates. |

| • | Our brand and marketing efficiency. We believe GoDaddy is one of the most recognized technology brands in the U.S. with increasing awareness worldwide. Through a combination of cost-effective direct-marketing, brand advertising and customer referrals, we have added approximately one million net new customers organically each year from 2013 through 2018. |

| • | Our financial model. Our stable and predictable business model is driven by efficient customer acquisition, high customer retention rates and increasing lifetime spend. In each of the five years ended December 31, 2018, our customer retention rate exceeded 85%, and in 2018, our retention rate for customers who had been with us for over three years was approximately 92%. We believe the breadth and depth of our product offerings and the high quality and responsiveness of our Customer Care team builds strong customer relationships and are key to our high customer retention rate. |

| • | Our people and our culture. Our people embody the same grit and determination as our customers. Our world-class engineers, designers, marketers and Customer Care specialists share a passion for technology and its ability to change our customers' lives. We value hard work, extraordinary effort, living passionately, taking intelligent risks and working together toward successful customer outcomes. Our relentless pursuit of doing right for our customers has been a crucial ingredient of our growth. |

| • | Our scale. We have achieved significant scale in our business enabling us to efficiently acquire new customers, serve our existing customers and continue to invest in growth. |

| • | In 2018, we generated $3,011 million in total bookings up from $1,398 million in 2013, representing a compound annual growth rate (CAGR) of 16.6%. |

| • | In 2018, we had $2,660 million of revenue up from $1,131 million in 2013, representing a CAGR of 18.7%. |

| • | In 2018, we had $560 million of net cash provided by operating activities. |

Our Strategy—How We Grow

We're focused on helping our customers with individualized solutions for each phase of their journey.

We leverage our team's deep understanding of what our customers need to develop new products and provide empathetic and targeted customer care.

We are pursuing the following principal strategies to drive our business:

| • | Expand and innovate our product and service offerings to provide more comprehensive solutions for our customers and to offer more ways for new customers to find us. We are working both to grow our core product offerings and create innovative new products, including: |

| • | Delivering the next generation of naming. The first generation of naming included a limited set of generic top-level domains (gTLDs), such as .com and .net, and country code top-level domains (ccTLDs), such as .uk and .in. Hundreds of new gTLDs have been introduced in recent years, expanding the available inventory for us and our customers. Additionally, we have invested to expand the secondary market to help match buyers to sellers who already own domains. Our GoDaddy Investor mobile application helps investors watch and bid on domains at auction and stay on top of current bids from their mobile devices. We continue to invest in search, discovery and recommendation tools and transfer protocols for both primary and secondary domains. |

| • | Powering elegant and effortless presence. We offer a range of products and services that help our customers get their ideas online. GoCentral combines a mobile-optimized website builder with an integrated set of marketing and e-commerce tools to help our customers create an audience for their idea or business, enabling them to design a professional website in under an hour. We continue to invest in GoCentral and other tools, templates and technology to make building, maintaining and updating a professional looking mobile or desktop presence simple and easy. In 2018, we introduced social media management tools through our acquisition of Main Street Hub, which help our customers develop, maintain and own their social media brand and reputation as well as interact with their customers. Additionally, we are investing in products to help our customers drive their customer acquisition, retention and communication efforts by managing their presence across search engines, social networks and vertical marketplaces and keep their online presence and information secure. |

| • | Go global. As of December 31, 2018, approximately 44% of our customers were located in international markets, notably Canada, India, United Kingdom (U.K.) and Australia. We have made significant investments in the localization of our service offerings in markets outside of the U.S. and, as of December 31, 2018, we offered localized products and Customer Care in over 50 markets. To support our international growth, we will continue investing to develop our local capabilities across products, marketing programs, data centers and Customer Care. International acquisitions, including our acquisition of HEG, are an important part of this international growth. |

The information required by this item is provided in Note 13 to our financial statements included in Part 2, Item 8 of this Form 10-K, and is incorporated herein by reference.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

| [removed: x] [added: ☒] | [removed: ANNUAL] [added: | | ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] | | | | [added: | | | | | | | | | | | | | | | | |]

For the fiscal year ended December 31, [removed: 2018][added: 2019]

| [removed: ¨] [added: ☐] | [removed: TRANSITION] [added: | | TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] | | | | [added: | | | | | | | | | | | | | | | | |]

[removed: GoDaddy Inc.][added: GoDaddy Inc.]

| [removed: Delaware] [added: Delaware] | | | | [removed: 46-5769934] | [added: | | | | | | | 46-5769934 | | |]

| (State or other jurisdiction of incorporation or organization) | | | | [added: | | | | | | | |] (I.R.S. Employer Identification Number) | [added: | |]

[removed: | | | 14455 N.] Hayden [removed: Road | | |][added: Road]

[removed: | | | Scottsdale,] [added: Scottsdale,] Arizona [removed: 85260 | | |][added: 85260]

[removed: |] (Address of principal executive offices, including zip code) [removed: | | | | |]

[removed: | | | (480) 505-8800 | | |][added: (480) 505-8800]

[removed: |] (Registrant's telephone number, including area code) [removed: | | | | |]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| [removed: Title] [added: Title] of each [removed: class] [added: class] | | [removed: Name] [added: | | | | Trading Symbol(s) | | | | | | Name] of each exchange on which [removed: registered] [added: registered] | [added: | |]

| Class A Common Stock, par value $0.001 per share | | [added: | | | | GDDY | | | | | |] New York Stock Exchange | [added: | |]

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the Act: [removed: None][added: None]

Yes x No [removed: ¨][added: ☐]

Yes [removed: ¨] [added: ☐] No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such [removed: reports),] [added: reports)] and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company or an emerging growth] company.

See the definitions of "large accelerated filer," "accelerated [removed: filer",] [added: filer,"] "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

| Large accelerated filer | [added: | |] x | | [added: | | | |] Accelerated filer | [removed: ¨] | [added: | ☐ | | |]

| Non-accelerated filer | [removed: ¨] | | [added: ☐ | | | | | |] Smaller reporting company | [removed: ¨] | [added: | ☐ | | |]

| | | | [added: | | | | | |] Emerging growth company | [removed: ¨] | [added: | ☐ | | |]

As of June 30, [removed: 2018,] [added: 2019,] the aggregate market value of the registrant's Class A common stock held by non-affiliates, based upon the closing sales price for the registrant's Class A common stock as reported by the New York Stock Exchange, was [removed: $10,628,537,575.][added: $12,377,121,842.]

As of February [removed: 15, 2019,] [added: 14, 2020,] there were [removed: 169,173,941] [added: 173,549,763] shares of GoDaddy Inc.'s Class A common stock, $0.001 par value per share, outstanding and [removed: 6,182,297] [added: 1,347,434] shares of GoDaddy Inc.'s Class B common stock, $0.001 par value per share, outstanding.

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Such Definitive Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the end of the registrant's fiscal year ended December 31, [removed: 2018.][added: 2019.]

[removed: Annual] [added: Annual] Report on Form [removed: 10-K][added: 10-K]

[removed: Year] [added: Year] Ended December 31, [removed: 2018][added: 2019]

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

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| [Note about Forward-Looking [removed: Statements](#sB490AB93685B8AF79333A2D4284D16D7)] [added: Statements](#i_0_10)] | | [removed: [3](#sB490AB93685B8AF79333A2D4284D16D7)] | [added: | | | | | | [4](#i_0_10) | | |]

| [removed: [PART I.](#s6F50BD58C101A66517F0A2D42869B694)] [added: [PART I.](#i_0_13)] | | | [added: | | | | | | | | |]

| [Item [removed: 1.](#s9B45BC85F9885F8233C1A2D405F205E4)] [added: 1.](#i_0_16)] | [removed: [Business](#s9B45BC85F9885F8233C1A2D405F205E4)] | [removed: [5](#s9B45BC85F9885F8233C1A2D405F205E4)] | [added: [Business](#i_0_16) | | | [6](#i_0_16) | | | | | |]

| [Item [removed: 1A.](#sBA3D7D746AC982615B5AA2D3F39C3F9D)] [added: 1A.](#i_0_19)] | [added: | |] [Risk [removed: Factors](#sBA3D7D746AC982615B5AA2D3F39C3F9D)] [added: Factors](#i_0_19)] | [removed: [18](#sBA3D7D746AC982615B5AA2D3F39C3F9D)] | [added: | [19](#i_0_19) | | | | | |]

| [Item [removed: 1B.](#s711DAFB786A901A6DC84A2D429E105B2)] [added: 1B.](#i_0_22)] | [added: | |] [Unresolved Staff [removed: Comments](#s711DAFB786A901A6DC84A2D429E105B2)] [added: Comments](#i_0_22)] | [removed: [52](#s711DAFB786A901A6DC84A2D429E105B2)] | [added: | [56](#i_0_22) | | | | | |]

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GoDaddy Inc.

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| [Signatures](#i_0_226) | | | | | | [133](#i_0_226) | | | | | |

- our ability to integrate acquisitions;

- anticipated income tax rates, tax estimates and tax standards;

- interest rate changes;

- our expectations regarding the outcome of any litigation;

10-K 1 a201810-kx10kdocument.htm 10-K

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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

| [Signatures](#s3B41834E359394A583E9A2D4370CE9BF) | | [125](#s3B41834E359394A583E9A2D4370CE9BF) |

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| • | our ability to integrate acquisitions, including our acquisitions of Host Europe Holdings Limited (HEG) and Main Street Hub (MSH); |

We refer to Kohlberg Kravis Roberts & Co. L.P., together with its affiliates, as KKR.

We refer to Silver Lake Partners, together with its affiliates, as SLP.

We provide our cloud-based products via a network of data centers including (i) an approximately 320,000 square foot data center we own and operate in Phoenix, Arizona; (ii) co-located data centers located throughout the U.S. in Arizona, California, Missouri, Virginia and New York; and (iii) co-located data centers located internationally in France, Germany, the Netherlands, [removed: Norway,] Singapore and the U.K. Our data center leases expire on various dates through [removed: 2028.][added: 2033.]

[removed: Part II.][added: Part II.]

[removed: Stock] [added: Stock] Performance [removed: Graph][added: Graph]

[removed: The] [added: *The] following performance graph and related information shall not be deemed to be "soliciting material" or "filed" for purposes of Section 18 of the Exchange Act nor shall such information be incorporated by reference into any filing of GoDaddy Inc. under the Exchange Act or the Securities Act, except to the extent we specifically incorporate it by reference in such [removed: filing.][added: filing.*]

An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our Class A common stock and in each index on April 1, 2015, the date our Class A common stock began trading on the NYSE, with relative performance tracked through December 31, [removed: 2018.][added: 2019.]

[removed: ][added: ]

[removed: Holders] [added: Holders] of [removed: Record][added: Record]

As of December 31, [removed: 2018,] [added: 2019,] there were [removed: 11] [added: 6] holders of record of our Class A common stock, although we believe there are a significantly larger number of beneficial owners of our Class A common stock because many shares are held by brokers and other institutions on behalf of stockholders.

[removed: Dividend Policy][added: Dividend Policy]

Our ability to pay dividends is limited by the covenants of our [removed: Credit Facility.][added: debt agreements.]

Share Repurchases

Our board of directors has authorized two share repurchase programs as described in Note 6 to our audited financial statements appearing in "Financial Statements and Supplementary Data." Share repurchase activity during the three months ended December 31, 2019 pursuant to our share repurchase programs was as follows:

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| Period | | | | | | Total Number of Shares Purchased (in thousands) | | | | | | Average Price Paid Per Share | | | | | | Total Number of Shares Purchased as Part of Publicly Announced Programs (in thousands) | | | | | | Approximate Dollar Value of Shares that May Yet be Purchased under the Programs (in millions) | | |

| October 1 - October 31 | | | | | | 959 | | | | | | $ | 61.60 | | | | | 959 | | | | | | | | |

| November 1 - November 30 | | | | | | — | | | | | | N/A | | | | | | — | | | | | | | | |

| December 1 - December 31 | | | | | | — | | | | | | N/A | | | | | | — | | | | | | | | |

| Total | | | | | | 959 | | | | | | | | | | | | 959 | | | | | | $ | 541.4 | |

You should read the following selected [removed: consolidated] financial data in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our [removed: consolidated] financial statements and the related notes appearing in "Financial Statements and Supplementary Data."

Because [removed: the] [added: our] pre-IPO organizational transactions were considered transactions between entities under common control, the financial statements for [removed: periods prior to our April] 2015 [removed: IPO] have been adjusted to combine the previously separate entities for presentation purposes.

The [removed: consolidated] statements of operations data for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016] [added: 2017,] and the [removed: consolidated] balance sheets data as of December 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018,] are derived from our audited [removed: consolidated] financial statements and the related notes appearing in "Financial Statements and Supplementary Data." The [removed: consolidated] statements of operations data for the years ended December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] and the [removed: consolidated] balance sheets data as of December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015,] are derived from our audited [removed: consolidated] financial statements not included in this Form 10-K.

| | [removed: Year] [added: | | Year] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| | [removed: 2018] | | [added: 2019] | | [removed: 2017] | | | | [removed: 2016] [added: 2018] | | | | [removed: 2015] | | [added: 2017] | | [removed: 2014] | | | [added: | 2016 | | | | | | 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| [removed: Consolidated] [added: Consolidated] Statements of Operations [removed: Data:] [added: Data:] | [removed: (in] [added: | | (in] millions, except shares in thousands and per share [removed: amounts)] [added: amounts)] | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Total revenue | [added: | |] $ | [added: 2,988.1 | | | | | $ |] 2,660.1 | | | [added: | |] $ | 2,231.9 | | | [added: | |] $ | 1,847.9 | | | [added: | |] $ | 1,607.3 | | | [removed: $] | [removed: 1,387.3] | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Costs and operating expenses(1): | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Cost of revenue (excluding depreciation and amortization) | [added: | | 1,026.8 | | | | | |] 893.9 | | | | [added: | |] 775.5 | | | | [added: | |] 657.8 | | | | [added: | |] 565.9 | | | | [removed: 518.4] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Technology and development | [added: | | 492.6 | | | | | |] 434.0 | | | | [added: | |] 355.8 | | | | [added: | |] 287.8 | | | | [added: | |] 270.2 | | | | [removed: 250.8] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Marketing and advertising | [added: | | 345.6 | | | | | |] 291.4 | | | | [added: | |] 253.2 | | | | [added: | |] 228.8 | | | | [added: | |] 202.2 | | | | [removed: 164.7] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Customer care | [added: | | 348.7 | | | | | |] 323.1 | | | | [added: | |] 292.3 | | | | [added: | |] 242.1 | | | | [added: | |] 221.5 | | | | [removed: 190.5] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| General and administrative | [added: | | 362.1 | | | | | |] 334.0 | | | | [added: | |] 282.4 | | | | [added: | |] 221.2 | | | | [added: | |] 219.7 | | | | [removed: 172.0] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Depreciation and amortization | [added: | | 209.7 | | | | | |] 234.1 | | | | [added: | |] 205.8 | | | | [added: | |] 160.1 | | | | [added: | |] 158.8 | | | | [removed: 152.8] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Total costs and operating expenses | [added: | | 2,785.5 | | | | | |] 2,510.5 | | | | [added: | |] 2,165.0 | | | | [added: | |] 1,797.8 | | | | [added: | |] 1,638.3 | | | | [removed: 1,449.2] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Operating income (loss) | [added: | | 202.6 | | | | | |] 149.6 | | | | [added: | |] 66.9 | | | | [added: | |] 50.1 | | | | [removed: (31.0] | | [removed: )] [added: (31.0)] | | [removed: (61.9] | | [removed: )] | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Interest expense | [removed: (98.4] | | [removed: )] [added: (92.1)] | | [removed: (83.0] | | [removed: )] | | [removed: (57.2] [added: (98.4)] | | [removed: )] | | [removed: (69.2] | | [removed: )] [added: (83.0)] | | [removed: (85.0] | | [removed: )] | [added: | (57.2) | | | | | | (69.2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Loss on debt extinguishment | [removed: —] | | [added: (14.8)] | | [removed: (7.3] | | [removed: )] | | — | | | | [removed: (21.4] | | [removed: )] [added: (7.3)] | | [added: | | | |] — | | | [added: | | | (21.4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Tax receivable agreements liability adjustment | [added: | | 8.7 | | | | | |] 14.9 | | | | [added: | |] 123.2 | | | | [removed: (12.5] | | [removed: )] [added: (12.5)] | | [removed: —] | | | | — | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Other income (expense), net | [added: | | 22.0 | | | | | |] 6.9 | | | | [added: | |] 7.0 | | | | [removed: (1.9] | | [removed: )] [added: (1.9)] | | [added: | | | |] 1.0 | | | | [removed: 0.8] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Income (loss) from continuing operations before income taxes | [added: | | 126.4 | | | | | |] 73.0 | | | | [added: | |] 106.8 | | | | [removed: (21.5] | | [removed: )] [added: (21.5)] | | [removed: (120.6] | | [removed: )] | | [removed: (146.1] [added: (120.6)] | | [removed: )] | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Benefit (provision) for income taxes | [added: | | 12.0 | | | | | |] 9.0 | | | | [added: | |] 18.9 | | | | [removed: (0.4] | | [removed: )] [added: (0.4)] | | [added: | | | |] 0.2 | | | | [removed: 2.8] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Income (loss) from continuing operations | [added: | | 138.4 | | | | | |] 82.0 | | | | [added: | |] 125.7 | | | | [removed: (21.9] | | [removed: )] [added: (21.9)] | | [removed: (120.4] | | [removed: )] | | [removed: (143.3] [added: (120.4)] | | [removed: )] | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Income from discontinued operations, net of income taxes | [added: | |] — | | | | [added: | | — | | | | | |] 14.1 | | | | [added: | |] — | | | | [added: | |] — | | | | [removed: —] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Net income (loss) | [added: | | 138.4 | | | | | |] 82.0 | | | | [added: | |] 139.8 | | | | [removed: (21.9] | | [removed: )] [added: (21.9)] | | [removed: (120.4] | | [removed: )] | | [removed: (143.3] [added: (120.4)] | | [removed: )] | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Less: net income (loss) attributable to non-controlling interests | [added: | | 1.4 | | | | | |] 4.9 | | | | [added: | |] 3.4 | | | | [removed: (5.4] | | [removed: )] [added: (5.4)] | | [removed: (44.8] | | [removed: )] | | [removed: —] [added: (44.8)] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Net income (loss) attributable to GoDaddy Inc. | [added: | |] $ | [added: 137.0 | | | | | $ |] 77.1 | | | [added: | |] $ | 136.4 | | | [added: | |] $ | [removed: (16.5] [added: (16.5)] | [removed: )] | | [added: | |] $ | [removed: (75.6] [added: (75.6)] | [removed: )] | | [removed: $] | [removed: (143.3] | [removed: )] | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Net income (loss) attributable to GoDaddy Inc. per share of Class A common stock—basic(2): | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Continuing operations | [added: | |] $ | [added: 0.79 | | | | | $ |] 0.50 | | | [added: | |] $ | 1.17 | | | [added: | |] $ | [removed: (0.21] [added: (0.21)] | [removed: )] | | [added: | |] $ | [removed: (0.81] [added: (0.81)] | [removed: )] | | [removed: $] | [removed: (1.11] | [removed: )] | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Discontinued operations | [added: | |] — | | | | [added: | | — | | | | | |] 0.08 | | | | [added: | |] — | | | | [added: | |] — | | | | [removed: —] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Net income (loss) attributable to GoDaddy Inc. | [added: | |] $ | [added: 0.79 | | | | | $ |] 0.50 | | | [added: | |] $ | 1.25 | | | [added: | |] $ | [removed: (0.21] [added: (0.21)] | [removed: )] | | [added: | |] $ | [removed: (0.81] [added: (0.81)] | [removed: )] | | [removed: $] | [removed: (1.11] | [removed: )] | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Net income (loss) attributable to GoDaddy Inc. per share of Class A common stock—diluted(2): | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Continuing operations | [added: | |] $ | [added: 0.76 | | | | | $ |] 0.45 | | | [added: | |] $ | 0.71 | | | [added: | |] $ | [removed: (0.21] [added: (0.21)] | [removed: )] | | [added: | |] $ | [removed: (0.81] [added: (0.81)] | [removed: )] | | [removed: $] | [removed: (1.11] | [removed: )] | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Net income (loss) attributable to GoDaddy Inc. | [added: | |] $ | [added: 0.76 | | | | | $ |] 0.45 | | | [added: | |] $ | 0.79 | | | [added: | |] $ | [removed: (0.21] [added: (0.21)] | [removed: )] | | [added: | |] $ | [removed: (0.81] [added: (0.81)] | [removed: )] | | [removed: $] | [removed: (1.11] | [removed: )] | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Weighted-average shares of Class A common stock outstanding(2): | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Basic | [added: | | 173,431 | | | | | |] 155,234 | | | | [added: | |] 108,779 | | | | [added: | |] 79,835 | | | | [added: | |] 58,676 | | | | [removed: 38,826] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Diluted | [added: | | 181,721 | | | | | |] 181,353 | | | | [added: | |] 177,054 | | | | [added: | |] 79,835 | | | | [added: | |] 58,676 | | | | [removed: 38,826] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| (1) Costs and operating expenses include equity-based compensation expense as follows: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Technology and development | [removed: $] | [added: | 70.3 | | | | | |] 57.8 | | | [removed: $] | [added: | |] 37.1 | | | [removed: $] | [added: | |] 23.2 | | | [removed: $] | [added: | |] 18.2 | | | [removed: $] | [removed: 10.4] | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Marketing and advertising | [added: | | 15.4 | | | | | |] 10.3 | | | | [added: | |] 7.3 | | | | [added: | |] 8.1 | | | | [added: | |] 6.1 | | | | [removed: 6.1] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Discontinued operations | | | — | | | | | | — | | | | | | 0.08 | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| ___________________________ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Cost of revenue | | | $ | 0.4 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | | | | | 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

_________________________________

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | | | | | 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

*Total bookings*.

*Total customers*.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | | | | | 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total revenue | | | $ | 2,988.1 | | | | | $ | 2,660.1 | | | | | $ | 2,231.9 | | | | | $ | 1,847.9 | | | | | $ | 1,607.3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

_________________________________

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| ___________________________ | | | | | | | | | | | | | | | | | | | |

| | |

| --- | --- |

Total bookings.

Total customers.

| [removed: Index] [added: Index] to Consolidated Financial [removed: Statements] [added: Statements] | | [added: | | | | | | |]

| | [removed: Page] | [added: | Page | | | | | |]

| [Report of Independent Registered Public Accounting [removed: Firm](#s45C3F8165BCB1817C044A2D3FAB5EDFC)] [added: Firm](#i_0_76)] | [removed: [78](#s45C3F8165BCB1817C044A2D3FAB5EDFC)] | [added: | [81](#i_0_76) | | | | | |]

| [Consolidated Balance [removed: Sheets](#s1A8366E702E77951274BA2D3E35CD2C5)] [added: Sheets](#i_0_82)] | [removed: [79](#s1A8366E702E77951274BA2D3E35CD2C5)] | [added: | [83](#i_0_82) | | | | | |]

| [Consolidated Statements of [removed: Operations](#sC91C5A29AA3A908107F3A2D3DE5B2236)] [added: Operations](#i_0_88)] | [removed: [80](#sC91C5A29AA3A908107F3A2D3DE5B2236)] | [added: | [84](#i_0_88) | | | | | |]

| [Consolidated Statements of Comprehensive [removed: Income (Loss)](#sE8862DC002103E0CA3D9A2D3E2D38E7A)] [added: Income](#i_0_94)] | [removed: [81](#sE8862DC002103E0CA3D9A2D3E2D38E7A)] | [added: | [85](#i_0_94) | | | | | |]

| [Consolidated Statements of Stockholders' [removed: Equity](#s5DD5B73B6BABB9E6AB20A2D3E33966FB)] [added: Equity](#i_0_97)] | [removed: [82](#s5DD5B73B6BABB9E6AB20A2D3E33966FB)] | [added: | [86](#i_0_97) | | | | | |]

[removed: | [Consolidated] [added: Consolidated] Statements of Cash [removed: Flows](#s796DBCB17BA49EF421C7A2D3DE9CC81E) | [84](#s796DBCB17BA49EF421C7A2D3DE9CC81E) |][added: Flows]

[removed: | [Notes] [added: Notes] to Consolidated Financial [removed: Statements](#s05D0B447FDE4C5880108A2D430389A1E) | [86](#s05D0B447FDE4C5880108A2D430389A1E) |][added: Statements]

[removed: Report] [added: Report] of Independent Registered Public Accounting [removed: Firm][added: Firm]

[removed: Opinion] [added: Opinion] on the Financial [removed: Statements][added: Statements]

We have audited the accompanying consolidated balance sheets of GoDaddy Inc. (the Company) as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the related consolidated statements of operations, comprehensive [removed: income (loss),] [added: income,] stockholders' equity, and cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] 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, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] 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, [removed: 2018,] [added: 2019,] 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 [removed: 21, 2019] [added: 20, 2020] expressed an unqualified opinion thereon.

[removed: Basis] [added: Basis] for [removed: Opinion][added: Opinion]

[removed: GoDaddy Inc.][added: GoDaddy Inc.]

[removed: Consolidated] [added: Consolidated] Balance [removed: Sheets][added: Sheets]

[removed: (In] [added: (In] millions, except shares in thousands and per share [removed: amounts)][added: amounts)]

| | [removed: December 31,] | | [added: December 31,] | | | | | [added: | | | | | | | | | |]

| | [removed: 2018] | | [added: 2019] | | [removed: 2017] | | | [added: | 2018 | | | | | | 2017 | | | | | | | | | | | | | | |]

| [removed: Assets] [added: Assets] | | | | | | | | [added: | | | | | | | | | |]

| Current assets: | | | | | | | | [added: | | | | | | | | | |]

| Cash and cash equivalents | [added: | |] $ | [removed: 932.4] [added: 1,062.8] | | | [added: | |] $ | [removed: 582.7] [added: 932.4] | | [added: | | | | | |]

| Short-term investments | [added: | | 23.6 | | | | | |] 18.9 | | | | [removed: 12.3] | | | [added: | |]

| Accounts and other receivables | [added: | | 30.2 | | | | | |] 26.4 | | | | [removed: 18.4] | | | [added: | |]

| Registry deposits | [added: | | 27.2 | | | | | |] 28.3 | | | | [removed: 34.7] | | | [added: | |]

| Prepaid domain name registry fees | [added: | | 382.6 | | | | | |] 363.2 | | | | [removed: 351.5] | | | [added: | |]

| Prepaid expenses and other current assets | [added: | | 48.9 | | | | | |] 58.1 | | | | [removed: 59.9] | | | [added: | |]

| Total current assets | [added: | | 1,575.3 | | | | | |] 1,427.3 | | | | [removed: 1,059.5] | | | [added: | |]

| Property and equipment, net | [added: | | 258.6 | | | | | |] 299.0 | | | | [removed: 297.9] | | | [added: | |]

| Prepaid domain name registry fees, net of current portion | [added: | | 179.3 | | | | | |] 183.6 | | | | [removed: 180.8] | | | [added: | |]

| Goodwill | [added: | | 2,976.5 | | | | | |] 2,948.0 | | | | [removed: 2,859.9] | | | [added: | |]

| Intangible assets, net | [added: | | 1,097.7 | | | | | |] 1,211.5 | | | | [removed: 1,326.0] | | | [added: | |]

| Other assets | [added: | | 17.2 | | | | | |] 14.0 | | | | [removed: 14.2] | | | [added: | |]

| Total assets | [added: | |] $ | [removed: 6,083.4] [added: 6,301.2] | | | [added: | |] $ | [removed: 5,738.3] [added: 6,083.4] | | [added: | | | | | |]

| [removed: Liabilities] [added: Liabilities] and stockholders' [removed: equity] [added: equity] | | | | | | | | [added: | | | | | | | | | |]

| Current liabilities: | | | | | | | | [added: | | | | | | | | | |]

| Accounts payable | [added: | |] $ | [removed: 61.6] [added: 72.3] | | | [added: | |] $ | [removed: 59.6] [added: 61.6] | | [added: | | | | | |]

| Accrued expenses and other current liabilities | [added: | | 366.0 | | | | | |] 414.3 | | | | [removed: 469.6] | | | [added: | |]

| Deferred revenue | [added: | | 1,544.4 | | | | | |] 1,393.7 | | | | [removed: 1,264.8] | | | [added: | |]

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

| | | | | | | Payable to Related Parties Pursuant to Tax Receivable Agreements | | |

| *Description of the Matter* | | | | | | As discussed in Notes 2 and 16 of the December 31, 2019 consolidated financial statements, the Company has recorded a $175.3 million liability, payable to counterparties pursuant to Tax Receivable Agreements (TRA). The TRA liability represents the amount the Company estimates to pay to the counterparties to the TRA that are former owners of the Company (pre-IPO owners). The liability is computed as 85% of the estimated cash tax savings to be received by the Company from utilizing the positive tax attributes contributed by pre-IPO owners. Auditing the TRA liability computation each period is a complex process as a result of the assumptions and management judgement utilized in the determination of the expected cash tax savings to be realized. In particular, estimated future taxable income can be sensitive to changes in the assumed revenue growth rate and expected operating margin, which are affected by expectations about future market conditions and are inherently uncertain due to their forward-looking nature. | | |

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| *How We Addressed the Matter in Our Audit* | | | | | | We tested controls that address the risks of material misstatement relating to the measurement of the TRA liability. For example, we tested controls over management's review of the sensitivity of the projections of future taxable income to the recorded TRA liability. Our audit procedures included, among others, independent recalculations of the recorded liability. We also evaluated management's estimates used in developing a forecast of future taxable income. For example, we compared the projections of future taxable income with the actual results of prior periods, as well as management's consideration of current industry and economic trends. We also compared the projections of future taxable income with other forecasted financial information prepared by the Company. | | |

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