filings.toolsItem 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes included in this Quarterly Report as well as our audited financial statements and related notes and the discussion in the "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of our 2021 Form 10-K. 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," actual results may differ materially from the results described in, or implied by, these forward-looking statements.
(Throughout the tables and this discussion and analysis, dollars are in millions and shares are in thousands.)
Overview
We are a global leader in serving a large market of everyday entrepreneurs, delivering simple, easy-to-use products, and outcome-driven, personalized guidance to small businesses, individuals, organizations, developers, designers and domain investors. We manage and report our business in the following two segments:
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Applications and Commerce (A&C)**, which primarily consists of sales of products containing proprietary software, commerce products and third-party email and productivity solutions as well as sales of certain products when they are included in bundled offerings of our proprietary software products.
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Core Platform (Core)**, which primarily consists of sales of domain registrations and renewals, aftermarket domain sales, website hosting products and website security products when not included in bundled offerings of our proprietary software products as well as sales of products not containing a software component.
Consolidated Third Quarter Financial Highlights
Below are our key consolidated financial highlights for the three months ended September 30, 2022, with comparisons to the three months ended September 30, 2021.
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Total revenue of $1,033.2 million, an increase of 7.2%, or approximately 8.8% on a constant currency basis(1).
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International revenue of $332.6 million, an increase of 4.0%, or approximately 8.9% on a constant currency basis(1).
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Total bookings of $1,087.0 million, an increase of 4.7%, or approximately 6.7% on a constant currency basis(1).
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Operating income of $129.7 million, an decrease of 1.2%.
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Net income of $100.0 million, an increase of 2.4%.
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Normalized EBITDA(2) of $262.7 million, an increase of 15.4%.
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Net cash provided by operating activities of $269.9 million, an increase of 19.2%.
(1) Discussion of constant currency is set forth in "Quantitative and Qualitative Disclosures about Market Risk."
(2) A reconciliation of Normalized EBITDA to net income, its most directly comparable GAAP financial measure, is set forth in Note 15 to our financial statements.
The COVID-19 Pandemic
The extent to which the ongoing COVID-19 pandemic may impact our future results and operations will depend on future developments, including the duration of the pandemic and the parameters of global governmental measures put in place to control the spread of the virus as well as the continuing economic impact of the pandemic. We continue to monitor the pandemic and the potential impacts it may have on our future financial position, results of operations and cash flows. See "Risk Factors" for additional information.
Consolidated Results of Operations
The following table sets forth our consolidated results of operations for the periods presented and as a percentage of our total revenue for those periods. The period-to-period comparison of financial results is not necessarily indicative of future results.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||
| $ | % of Total Revenue | $ | % of Total Revenue | $ | % of Total Revenue | $ | % of Total Revenue | ||||||||||||||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||||||||||||||||
| Applications & commerce | $ | 326.0 | 31.6 | % | $ | 289.6 | 30.0 | % | $ | 946.3 | 31.0 | % | $ | 827.8 | 29.6 | % | |||||||||||||||||||||||||||||||
| Core platform | 707.2 | 68.4 | % | 674.4 | 70.0 | % | 2,105.1 | 69.0 | % | 1,968.6 | 70.4 | % | |||||||||||||||||||||||||||||||||||
| Total revenue | 1,033.2 | 100.0 | % | 964.0 | 100.0 | % | 3,051.4 | 100.0 | % | 2,796.4 | 100.0 | % | |||||||||||||||||||||||||||||||||||
| Costs and operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Cost of revenue (excluding depreciation and amortization) | 374.3 | 36.2 | % | 345.8 | 35.9 | % | 1,105.0 | 36.2 | % | 999.0 | 35.7 | % | |||||||||||||||||||||||||||||||||||
| Technology and development | 199.5 | 19.3 | % | 172.4 | 17.9 | % | 587.7 | 19.3 | % | 530.8 | 19.0 | % | |||||||||||||||||||||||||||||||||||
| Marketing and advertising | 100.4 | 9.7 | % | 124.0 | 12.9 | % | 317.4 | 10.4 | % | 383.2 | 13.7 | % | |||||||||||||||||||||||||||||||||||
| Customer care | 74.0 | 7.2 | % | 74.0 | 7.7 | % | 230.6 | 7.6 | % | 230.9 | 8.3 | % | |||||||||||||||||||||||||||||||||||
| General and administrative | 101.6 | 9.9 | % | 81.2 | 8.4 | % | 286.9 | 9.4 | % | 260.9 | 9.3 | % | |||||||||||||||||||||||||||||||||||
| Restructuring and other | 5.2 | 0.5 | % | (15.4) | (1.6) | % | 14.8 | 0.5 | % | (15.4) | (0.6) | % | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 48.5 | 4.7 | % | 50.7 | 5.2 | % | 145.1 | 4.7 | % | 149.7 | 5.4 | % | |||||||||||||||||||||||||||||||||||
| Total costs and operating expenses | 903.5 | 87.5 | % | 832.7 | 86.4 | % | 2,687.5 | 88.1 | % | 2,539.1 | 90.8 | % | |||||||||||||||||||||||||||||||||||
| Operating income | 129.7 | 12.5 | % | 131.3 | 13.6 | % | 363.9 | 11.9 | % | 257.3 | 9.2 | % | |||||||||||||||||||||||||||||||||||
| Interest expense | (35.6) | (3.4) | % | (32.5) | (3.4) | % | (104.1) | (3.4) | % | (93.8) | (3.4) | % | |||||||||||||||||||||||||||||||||||
| Other income (expense), net | 3.1 | 0.3 | % | (1.2) | (0.1) | % | 0.8 | — | % | (1.4) | (0.1) | % | |||||||||||||||||||||||||||||||||||
| Income before income taxes | 97.2 | 9.4 | % | 97.6 | 10.1 | % | 260.6 | 8.5 | % | 162.1 | 5.7 | % | |||||||||||||||||||||||||||||||||||
| Benefit (provision) for income taxes | 2.8 | 0.2 | % | 0.1 | — | % | (1.5) | (0.1) | % | (6.7) | (0.2) | % | |||||||||||||||||||||||||||||||||||
| Net income | 100.0 | 9.6 | % | 97.7 | 10.1 | % | 259.1 | 8.4 | % | 155.4 | 5.5 | % | |||||||||||||||||||||||||||||||||||
| Less: net income attributable to non-controlling interests | 0.2 | — | % | 0.2 | — | % | 0.5 | — | % | 0.3 | — | % | |||||||||||||||||||||||||||||||||||
| Net income attributable to GoDaddy Inc. | $ | 99.8 | 9.6 | % | $ | 97.5 | 10.1 | % | $ | 258.6 | 8.4 | % | $ | 155.1 | 5.5 | % |
Revenue
We generate substantially all of our revenue from sales of product subscriptions, as described in Note 2 to our financial statements. Our subscriptions can range from monthly terms to multi-annual terms of up to ten years, depending on the product. Revenue is presented net of refunds, and we maintain a reserve to provide for refunds granted to customers.
Beginning in the first quarter of 2022, we revised the presentation of revenue, as described in Note 2 to our financial statements, and accordingly, have revised the prior period amounts in the table below to retrospectively present revenue in the new format.
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Applications & commerce | $ | 326.0 | $ | 289.6 | $ | 36.4 | 13 | % | $ | 946.3 | $ | 827.8 | $ | 118.5 | 14 | % | |||||||||||||||||||||||||||||||
| Core platform | 707.2 | 674.4 | $ | 32.8 | 5 | % | 2,105.1 | 1,968.6 | $ | 136.5 | 7 | % | |||||||||||||||||||||||||||||||||||
| Total revenue | $ | 1,033.2 | $ | 964.0 | $ | 69.2 | 7 | % | $ | 3,051.4 | $ | 2,796.4 | $ | 255.0 | 9 | % |
The 7.2% and 9.1% increases in total revenue for the three and nine months ended September 30, 2022, respectively, were driven by growth in total customers and average revenue per user as well as contributions from recent acquisitions, partially offset by approximately 160 and 100 basis points, respectively, due to adverse movements in foreign currency exchange rates against the U.S. dollar. The increase in customers impacted both of our revenue categories, as the additional customers purchased subscriptions across our product portfolio.
The 12.6% and 14.3% increases in A&C revenue for the three and nine months ended September 30, 2022, respectively, were primarily driven by increased customer adoption of our productivity solutions and our Websites + Marketing and Managed WordPress products as well as increased commerce-related revenue primarily associated with our acquisition of Poynt Co. (now known as GoDaddy Payments).
The 4.9% and 6.9% increases in Core revenue for the three and nine months ended September 30, 2022, respectively, were primarily driven by increased revenue from domain registrations and domain add-ons, increased aftermarket domain sales as a result of our continued innovation in auction technologies, higher average revenue per user and the growth of our registry business. These increases were partially offset by a decrease in our hosting business as well as a 0.4% decrease in domains under management from 84.1 million as of September 30, 2021 to 83.8 million as of September 30, 2022.
Bookings
In addition to revenue, we believe total bookings is a useful operating metric to help evaluate our performance and provide an enhanced understanding of our business. Total bookings is an operating metric representing the total sales of products to customers in a given period, excluding refunds. We believe total bookings provides valuable insight into (i) the performance of our business since we typically collect payment at the time of sale but recognize subscription revenue ratably over the term of our customer contracts and (ii) the effectiveness of our sales efforts since refunds often occur in periods different from the period of sale for reasons unrelated to the marketing efforts leading to the initial sale.
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Total bookings | $ | 1,087.0 | $ | 1,038.1 | $ | 48.9 | 5 | % | $ | 3,362.2 | $ | 3,181.6 | $ | 180.6 | 6 | % |
The 4.7% and 5.7% increases in total bookings for the three and nine months ended September 30, 2022, respectively, were primarily driven by increased aftermarket domain sales, broadened customer adoption of our productivity solutions and our Websites + Marketing and Managed WordPress products as well as increases in total customers and contributions from recent acquisitions, partially offset by approximately 200 and 150 basis points, respectively, due to adverse movements in foreign currency exchange rates due to the strength of the U.S. dollar. In addition to the currency headwinds, our bookings growth rate was also impacted by uneven demand patterns related to inflation and continued economic uncertainty.
Costs and Operating Expenses
Cost of revenue
Costs of revenue are the direct costs incurred in connection with selling an incremental product to our customers. Substantially all cost of revenue relates to domain registration fees, payment processing fees, third-party commissions and licensing fees for third-party productivity applications. Similar to our billing practices, we pay domain costs at the time of purchase for the life of each subscription but recognize the costs of service ratably over the term of our customer contracts. The terms for domain costs are established by agreements between registries and registrars and can vary significantly depending on
the top-level domain (TLD). We expect cost of revenue to increase in absolute dollars in future periods due to increased sales of domains and third-party productivity applications as well as continued growth in our customer base. However, cost of revenue may fluctuate as a percentage of total revenue, depending on the mix of products sold in a particular period.
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Cost of revenue (excluding depreciation and amortization) | $ | 374.3 | $ | 345.8 | $ | 28.5 | 8 | % | $ | 1,105.0 | $ | 999.0 | $ | 106.0 | 11 | % |
The 8.2% and 10.6% increases in cost of revenue for the three and nine months ended September 30, 2022, respectively, were primarily attributable to (i) higher domain costs, which were driven by increased aftermarket domain sales, cost increases implemented by various TLD registries and costs associated with our growing registry business, (ii) increased software licensing fees resulting from higher sales of productivity solutions and (iii) increased costs associated with the growth of our payment processing business.
Technology and development
Technology and development expenses represent the costs associated with the creation, development and distribution of our products and websites. These expenses primarily consist of personnel costs associated with the design, development, deployment, testing, operation and enhancement of our products, as well as costs associated with the data centers and systems infrastructure supporting those products, excluding depreciation expense. We expect technology and development expense to increase in absolute dollars as we continue to invest in product development and migrate our infrastructure to a cloud-based third-party provider. Technology and development expenses may fluctuate as a percentage of total revenue depending on our level of investment in additional personnel and the pace of our infrastructure transition.
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Technology and development | $ | 199.5 | $ | 172.4 | $ | 27.1 | 16 | % | $ | 587.7 | $ | 530.8 | $ | 56.9 | 11 | % |
The 15.7% and 10.7% increases in technology and development expenses for the three and nine months ended September 30, 2022, respectively, were primarily due to (i) increased personnel costs driven by higher average headcount associated with our continued investment in product development and (ii) increased technology costs associated with the growth of our business, advancement of our commerce and innovation strategies and our migration to a cloud-based infrastructure. The increase for the nine months ended was partially offset by a $25.5 million decrease in compensation expense related to prior acquisitions, primarily Poynt.
Marketing and advertising
Marketing and advertising expenses represent the costs associated with attracting and acquiring customers, primarily consisting of fees paid to third parties for marketing and advertising campaigns across a variety of channels. These expenses also include personnel costs and affiliate program commissions. We expect marketing and advertising expenses to fluctuate depending on both the mix of internal and external marketing resources used, the size and scope of our future campaigns and the level of discretionary investments we make in marketing to drive future sales.
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Marketing and advertising | $ | 100.4 | $ | 124.0 | $ | (23.6) | (19) | % | $ | 317.4 | $ | 383.2 | $ | (65.8) | (17) | % |
The 19.0% and 17.2% decreases in marketing and advertising expenses for the three and nine months ended September 30, 2022, respectively, were primarily attributable to a lower level of discretionary spending in 2022 as compared to the significant additional marketing investments we made in 2021 to drive growth during a period of high demand.
Customer care
Customer care expenses represent the costs to guide and service our customers, primarily consisting of personnel costs. We expect customer care expenses to fluctuate depending on the methods of customer interaction utilized as well as the level of personnel required to support our business.
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Customer care | $ | 74.0 | $ | 74.0 | $ | — | — | % | $ | 230.6 | $ | 230.9 | $ | (0.3) | — | % |
There were no material changes in customer care expenses.
General and administrative
General and administrative expenses primarily consist of personnel costs for our administrative functions, professional service fees, office rent for all locations, all employee travel expenses, acquisition-related expenses and other general costs. We expect general and administrative expenses to fluctuate depending on the level of personnel and other administrative costs required to support our business as well as the significance of any strategic acquisitions we choose to pursue.
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| General and administrative | $ | 101.6 | $ | 81.2 | $ | 20.4 | 25 | % | $ | 286.9 | $ | 260.9 | $ | 26.0 | 10 | % | |||||||||||||||||||||||||||||||
The 25.1% increase in general and administrative expenses for the three months ended September 30, 2022 was primarily due to increased legal and professional fees as well as increased personnel costs driven by higher average headcount.
The 10.0% increase in general and administrative expenses for the nine months ended September 30, 2022 was primarily due to increased personnel costs driven by higher average headcount and the reversal of equity-based compensation expense in 2021 due to the forfeiture of unvested awards related to certain executive departures as well as increased legal and professional fees. These increases were partially offset by lower office rent expense.
Restructuring and other
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Restructuring and other | $ | 5.2 | $ | (15.4) | $ | 20.6 | (134) | % | $ | 14.8 | $ | (15.4) | $ | 30.2 | (196) | % | |||||||||||||||||||||||||||||||
Restructuring and other for the three and nine months ended September 30, 2022 includes the impairment and loss on disposition of certain assets.
During the three and nine months ended September 30, 2021 we recognized a $15.4 million gain on the sale of our former corporate headquarters.
Depreciation and amortization
Depreciation and amortization expenses consist of charges relating to the depreciation of the property and equipment used in our operations and the amortization of acquired intangible assets. These expenses may increase or decrease in absolute dollars in future periods depending on our future level of capital investments in hardware and other equipment as well as the significance of any future acquisitions.
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | $ | 48.5 | $ | 50.7 | $ | (2.2) | (4) | % | $ | 145.1 | $ | 149.7 | $ | (4.6) | (3) | % |
There were no material changes in depreciation and amortization.
Interest expense
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Interest expense | $ | 35.6 | $ | 32.5 | $ | 3.1 | 10 | % | $ | 104.1 | $ | 93.8 | $ | 10.3 | 11 | % |
There was no material change in interest expense for the three months ended September 30, 2022.
The 11.0% increase in interest expense for the nine months ended September 30, 2022 was primarily driven by the issuance of the 2029 Senior Notes in February 2021, as further discussed in Note 9 to our financial statements.
Segment Results of Operations
Our two operating segments, A&C and Core, reflect the way we manage and evaluate the performance of our business. Our CODM evaluates segment performance based upon several factors, of which the primary financial measures are revenue and Segment NEBITDA. See Note 15 to our financial statements for a reconciliation of Segment NEBITDA to net income, its most directly comparable GAAP financial measure.
Applications & Commerce
The following table presents the results for our A&C segment for the periods indicated:
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 326.0 | $ | 289.6 | $ | 36.4 | 13 | % | $ | 946.3 | $ | 827.8 | $ | 118.5 | 14 | % | |||||||||||||||||||||||||||||||
| Segment NEBITDA | $ | 135.6 | $ | 115.0 | $ | 20.6 | 18 | % | $ | 387.2 | $ | 324.2 | $ | 63.0 | 19 | % |
The 12.6% and 14.3% increases in A&C revenue for the three and nine months ended September 30, 2022, respectively, were primarily driven by increased sales of our productivity solutions and Websites + Marketing and Managed WordPress products as well as increased commerce-related revenue, as described above.
The 17.9% and 19.4% increases in A&C Segment NEBITDA for the three and nine months ended September 30, 2022, respectively, primarily resulted from the revenue increases noted above, in conjunction with lower discretionary marketing spend in 2022. These increases were partially offset by higher personnel costs resulting from headcount additions made to support the continued development of our A&C products.
Core Platform
The following table presents the results for our Core segment for the periods indicated:
| Three Months Ended September 30, | Change | Nine Months Ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | ||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 707.2 | $ | 674.4 | $ | 32.8 | 5 | % | 2,105.1 | 1,968.6 | $ | 136.5 | 7 | % | |||||||||||||||||||||||||||||||||
| Segment NEBITDA | $ | 202.1 | $ | 173.9 | $ | 28.2 | 16 | % | 578.9 | $ | 481.7 | $ | 97.2 | 20 | % |
The 4.9% and 6.9% increases in Core revenue for the three and nine months ended September 30, 2022, respectively, were primarily driven by increased revenue from domain registrations and domain add-ons, increases in aftermarket domain sales and average revenue per user and the growth of our registry business, partially offset by a decrease in our hosting business, as described above.
The 16.2% and 20.2% increases in Core Segment NEBITDA for the three and nine months ended September 30, 2022, respectively, primarily resulted from the revenue increases noted above, in conjunction with lower discretionary marketing spend in 2022. These increases were partially offset by higher third-party commissions associated with the increased aftermarket domain sales as well as cost increases implemented by various TLD registries.
Liquidity and Capital Resources
Overview
Our principal sources of liquidity have been cash flow generated from operations, long-term debt borrowings and stock option exercises. Our principal uses of cash have been to fund operations, acquisitions and capital expenditures, as well as to make mandatory principal and interest payments on our long-term debt and to repurchase shares of our Class A common stock.
In general, we seek to deploy our capital in a prioritized manner focusing first on requirements for our operations, then on growth investments, and finally on stockholder returns. Our strategy is to deploy capital, whether debt, equity or internally generated cash, depending on the adequacy and availability of the source of capital and which source may be used most efficiently and at the lowest cost at such time. Therefore, while cash from operations is our primary source of operating liquidity and we believe our internally-generated cash flows are sufficient to support our day-to-day operations, we may use a variety of capital sources to fund our needs for less predictable investment decisions such as strategic acquisitions and share repurchases.
We have incurred significant long-term debt, primarily to fund acquisitions, share repurchases and the settlement of our prior tax receivable agreements. As a result, we are limited as to how we conduct our business and may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities, strategic acquisitions or share repurchases. However, the restrictions under our long-term debt agreements are subject to a number of qualifications and may be amended with the consent of the lenders and the holders of the senior notes, as applicable.
We believe our existing cash and cash equivalents and cash generated by operating activities will be sufficient to meet our anticipated operating cash needs for at least the next 12 months. However, our future capital requirements will depend on many factors, including our growth rate, macroeconomic activity, the timing and extent of spending to support domestic and international development efforts, continued brand development and advertising spend, the level of customer care and general and administrative activities, the introduction of new and enhanced product offerings, the costs to support new and replacement capital equipment, the completion of strategic acquisitions or share repurchases and other factors. Should we pursue additional strategic acquisitions or share repurchases, we may need to raise additional capital, which may be in the form of long-term debt or equity financings.
Credit Facility and Senior Notes
Our long-term debt consists of the Credit Facility and the Senior Notes described in Note 9 to our financial statements.
Our long-term debt agreements contain covenants restricting, among other things, our ability, or the ability of our subsidiaries, to incur indebtedness, issue certain types of equity, incur liens, enter into fundamental changes including mergers and consolidations, sell assets, make restricted payments including dividends, distributions and investments, prepay junior indebtedness and engage in operations other than in connection with acting as a holding company, subject to customary exceptions. As of September 30, 2022, we were in compliance with all such covenants and had no amounts drawn on our Revolver.
As discussed in Note 10 to our financial statements, we have hedged a portion of our long-term debt through the use of cross-currency and interest rate swap derivative instruments. These instruments help us manage and mitigate our risk of exposure to changes in foreign currency exchange rates and interest rates. See "Quantitative and Qualitative Disclosures About Market Risk" for additional discussion of our hedging activities.
As discussed in Note 17, in October 2022, we announced the allocation of funding for a new term loan facility to refinance the 2024 Term Loans and to extend their maturity date to 2029 as well as to increase the borrowing capacity under our Revolver from $600.0 million to $1.0 billion under a new revolving credit facility maturing in 2027. The refinanced term loans are expected to be issued at a 2.0% discount on the face of the note at original issue and to bear interest at the Secured Overnight Financing Rate plus 3.25% per annum. The foregoing transactions are subject to finalized terms and customary closing conditions and are anticipated to close in the fourth quarter of 2022.
Share Repurchases
As discussed in Note 5 to our financial statements, our Board has authorized us to repurchase up to $3,000.0 million of our Class A common stock.
In February 2022, we entered into ASRs to repurchase shares of our Class A common stock in exchange for an up-front aggregate payment of $750.0 million. We completed the ASRs in May 2022, repurchasing a total of 9,202 shares of our Class A common stock at an average price of $81.50 per share under these arrangements.
In addition to the ASRs discussed above, during the nine months ended September 30, 2022, we also repurchased a total of 4,855 shares of our Class A common stock in the open market for an aggregate purchase price of $345.9 million.
As of September 30, 2022, we had $1,904.1 million of remaining authorization available for repurchases.
Acquisitions
In July 2022, we completed an acquisition for $69.6 million in net cash consideration. See Note 3 to our financial statements for a discussion of this acquisition.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
| Nine Months Ended September 30, | ||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||
| Net cash provided by operating activities | $ | 771.7 | $ | 657.1 | ||||||||||||||||
| Net cash used in investing activities | (115.5) | (570.3) | ||||||||||||||||||
| Net cash provided by (used in) financing activities | (1,081.0) | 292.4 | ||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (4.7) | (1.0) | ||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | $ | (429.5) | $ | 378.2 |
Operating Activities
Our primary source of cash from operating activities has been cash collections from our customers. Our primary uses of cash from operating activities have been for domain registration costs paid to registries, software licensing fees related to third-party productivity solutions, personnel costs, discretionary marketing and advertising costs, technology and development costs and interest payments. We expect cash outflows from operating activities to be affected by the timing of payments we make to registries as well as increases in personnel and other operating costs as we continue to grow our business.
Net cash provided by operating activities increased $114.6 million from $657.1 million during the nine months ended September 30, 2021 to $771.7 million during the nine months ended September 30, 2022, primarily driven by the growth in total bookings as well as lower acquisition-related payments and discretionary marketing spending. These increases were partially offset by higher personnel costs to support our growth, increased domain costs and higher software licensing fees related to increased sales of third-party productivity solutions.
Investing Activities
Our investing activities generally consist of strategic acquisitions and purchases of property and equipment to support the overall growth of our business. We expect our investing cash flows to be affected by the timing of payments we make for capital expenditures, strategic acquisitions or other growth opportunities we decide to pursue.
Net cash used in investing activities decreased $454.8 million from $570.3 million during the nine months ended September 30, 2021 to $115.5 million during the nine months ended September 30, 2022, primarily due to a $247.6 million decrease in spending for business acquisitions and a $201.4 million decrease in purchases of intangible assets.
Financing Activities
Our financing activities generally consist of long-term debt borrowings, the repayment of principal on long-term debt, stock option exercise proceeds and share repurchases.
Net cash from financing activities decreased $1,373.4 million from $292.4 million provided during the nine months ended September 30, 2021 to $1,081.0 million used during the nine months ended September 30, 2022, primarily due to $800.0 million in proceeds received from the issuance of the 2029 Senior Notes in 2021 and a $564.5 million increase in share repurchases.
Deferred Revenue
See Note 7 to our financial statements for details regarding the expected future recognition of deferred revenue.
Off-Balance Sheet Arrangements
As of September 30, 2022 and December 31, 2021, we had no off-balance sheet arrangements that had, or which are reasonably likely to have, a material effect on our financial statements.
Critical Accounting Policies and Estimates
We prepare our financial statements in accordance with GAAP, and in doing so, we make estimates, assumptions and judgments affecting the reported amounts of assets, liabilities, revenues and expenses, as well as the related disclosure of contingent assets and liabilities. We base our estimates, assumptions and judgments on historical experience and on various other factors we believe to be reasonable under the circumstances, and we evaluate these estimates, assumptions and judgments on an ongoing basis. Different assumptions and judgments would change the estimates used in the preparation of our financial statements, which, in turn, could change our results from those reported. We refer to estimates, assumptions and judgments of this type as our critical accounting policies and estimates, which we discussed in our 2021 Form 10-K. We review our critical accounting policies and estimates with the audit and finance committee of our board of directors on an annual basis.
There have been no material changes in our critical accounting policies from those disclosed in our 2021 Form 10-K.
Recent Accounting Pronouncements
For information regarding recent accounting pronouncements, see Note 2 to our financial statements.
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