GoDaddy 10-Q 2024-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

or

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-36904

GoDaddy Inc.

(Exact name of registrant as specified in its charter)

Delaware												46-5769934
(State or other jurisdiction of incorporation or organization)												(I.R.S. Employer Identification Number)

100 S. Mill Ave

Tempe, Arizona 85281

(Address of principal executive offices) (zip code)

(480) 505-8800

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class						Trading Symbol(s)						Name of each exchange on which registered
Class A Common Stock, $0.001 par value per share						GDDY						New York Stock Exchange

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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☒						Accelerated filer			☐
Non-accelerated filer			☐						Smaller reporting company			☐
									Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 26, 2024, there were 140,940,862 shares of GoDaddy Inc.'s Class A common stock, $0.001 par value per share.

GoDaddy Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended March 31, 2024

TABLE OF CONTENTS

Note About Forward-Looking Statements						ii
PART I. FINANCIAL INFORMATION
Item 1			Financial Statements (unaudited)			1
			Consolidated Balance Sheets			1
			Consolidated Statements of Operations			2
			Consolidated Statements of Comprehensive Income			3
			Consolidated Statements of Stockholders' Equity (Deficit)			4
			Consolidated Statements of Cash Flows			6
			Notes to Consolidated Financial Statements			7
Item 2			Management's Discussion and Analysis of Financial Condition and Results of Operations			25
Item 3			Quantitative and Qualitative Disclosures About Market Risk			35
Item 4			Controls and Procedures			37
PART II. OTHER INFORMATION
Item 1			Legal Proceedings			39
Item 1A			Risk Factors			39
Item 2			Unregistered Sales of Equity Securities and Use of Proceeds			78
Item 3			Defaults Upon Senior Securities			78
Item 4			Mine Safety Disclosures			78
Item 5			Other Information			78
Item 6			Exhibits			79
Signatures						80

i

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this Quarterly Report), including the sections titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors," contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), involving substantial risks and uncertainties. The words "believe," "may," "will," "potentially," "plan," "could," "should," "predict," "ongoing," "estimate," "continue," "anticipate," "intend," "project," "expect," "seek," or the negative of these words, or terms or similar expressions conveying uncertainty of future events or outcomes, or that concern our expectations, strategy, plans or intentions, are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, or expected. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements discussed under the heading "Risk Factors" and in our publicly available filings and press releases. These statements include, among other things, those regarding:

• our ability to continue to add new customers and increase sales to our existing customers;

• our ability to develop new solutions and bring them to market in a timely manner;

• our ability to timely and effectively scale and adapt our existing solutions;

• our ability to deploy new and evolving technologies, such as artificial intelligence, machine learning, data analytics and similar tools (collectively, AI), in our offerings;

• our dependence on establishing and maintaining a strong brand;

• the occurrence of service interruptions and security or privacy breaches and related remediation efforts and fines;

• system failures or capacity constraints;

• the rate of growth of, and anticipated trends and challenges in, our business and in the market for our products;

• our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, including changes in technology and development, marketing and advertising, general and administrative and customer care expenses, and our ability to maintain future profitability;

• our ability to continue to efficiently acquire customers, maintain our high customer retention rates and grow the level of our customers' lifetime spend;

• our ability to provide high quality customer care;

• the effects of increased competition in our markets and our ability to compete effectively;

• our ability to grow internationally;

• the impact of fluctuations in foreign currency exchange rates on our business and our ability to effectively manage the exposure to such fluctuations;

• our ability to effectively manage our growth and associated investments, including the migration of applications and services to the public cloud;

• our ability to integrate acquisitions, our entry into new lines of business and our ability to achieve expected results from our integrations and new lines of business;

• our ability to complete desired or proposed divestitures;

• our ability to maintain our relationships with our partners;

• adverse consequences of our level of indebtedness and our ability to repay our debt;

• our ability to maintain, protect and enhance our intellectual property;

• our ability to maintain or improve our market share;

• sufficiency of cash and cash equivalents to meet our needs for at least the next 12 months;

• beliefs and objectives for future operations;

• our ability to stay in compliance with laws and regulations currently applicable to, or which may become applicable to, our business both in the United States (U.S.) and internationally;

ii

NOTE ABOUT FORWARD-LOOKING STATEMENTS (continued)

• economic and industry trends or trend analysis;

• our ability to attract and retain qualified employees and key personnel;

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

• our future taxable income and ability to realize our deferred tax assets;

• interest rate changes;

• the future trading prices of our Class A common stock;

• our expectations regarding the outcome of any regulatory investigation or litigation;

• the amount and timing of future repurchases of our Class A common stock under any share repurchase program;

• the potential impact of shareholder activism on our business and operations;

• our expectations regarding the effectiveness of our restructuring efforts;

• our ability to remediate the identified material weakness in our internal control over financial reporting and to maintain effective internal control over financial reporting;

as well as other statements regarding our future operations, financial condition, growth prospects and business strategies.

We operate in very competitive and rapidly-changing environments, and new risks emerge from time-to-time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Quarterly Report may not occur, and actual results could differ materially and adversely from those implied in our forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will be achieved or occur. Neither we, nor any other person, assume responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements for any reason after the date of this Quarterly Report to conform such statements to actual results or to changes in our expectations, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Unless expressly indicated or the context suggests otherwise, references to "GoDaddy," "company," "we," "us" and "our" refer to GoDaddy Inc. and its consolidated subsidiaries, including Desert Newco, LLC and its subsidiaries (Desert Newco).

iii

Part I - FINANCIAL INFORMATION

GoDaddy Inc.

Consolidated Balance Sheets (unaudited)

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

			March 31,						December 31,
			2024						2023
Assets
Current assets:
Cash and cash equivalents			$	664.0					$	458.8
Short-term investments			—						40.0
Accounts and other receivables			93.9						76.6
Registry deposits			35.8						37.3
Prepaid domain name registry fees			480.3						466.0
Prepaid expenses and other current assets			221.8						177.2
Total current assets			1,495.8						1,255.9
Property and equipment, net			171.3						185.3
Operating lease assets			49.3						60.8
Prepaid domain name registry fees, net of current portion			216.4						209.0
Goodwill			3,548.7						3,569.3
Intangible assets, net			1,123.7						1,158.6
Deferred tax assets			1,271.5						1,020.4
Other assets			102.1						105.6
Total assets			$	7,978.8					$	7,564.9
Liabilities and stockholders' equity
Current liabilities:
Accounts payable			$	120.8					$	148.1
Accrued expenses and other current liabilities			409.5						442.2
Deferred revenue			2,174.4						2,074.9
Long-term debt			17.6						17.9
Total current liabilities			2,722.3						2,683.1
Deferred revenue, net of current portion			842.9						802.4
Long-term debt, net of current portion			3,794.8						3,798.5
Operating lease liabilities, net of current portion			83.9						90.2
Other long-term liabilities			91.2						90.7
Deferred tax liabilities			28.9						37.8
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value - 50,000 shares authorized; none issued and outstanding			—						—
Class A common stock, $0.001 par value - 1,000,000 shares authorized; 142,429 and 142,051 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively			0.1						0.1
Class B common stock, $0.001 par value - 500,000 shares authorized; —(1) and 259 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively			—						—
Additional paid-in capital			2,345.9						2,271.6
Accumulated deficit			(2,066.2)						(2,320.7)
Accumulated other comprehensive income			135.0						111.2
Total stockholders' equity			414.8						62.2
Total liabilities and stockholders' equity			$	7,978.8					$	7,564.9

_________________________________

(1)Substantially all Class B shares were no longer outstanding as of March 31, 2024. See Note 1 for further discussion.

See accompanying notes to consolidated financial statements.

GoDaddy Inc.

Consolidated Statements of Operations (unaudited)

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

			Three Months Ended March 31,
			2024						2023
Revenue:
Applications and commerce			$	383.1					$	338.0
Core platform			725.4						698.0
Total revenue			1,108.5						1,036.0
Costs and operating expenses(1):
Cost of revenue (excluding depreciation and amortization)			414.5						386.1
Technology and development			202.9						215.0
Marketing and advertising			87.5						92.4
Customer care			76.4						76.8
General and administrative			91.7						94.1
Restructuring and other			22.4						52.3
Depreciation and amortization			37.2						48.5
Total costs and operating expenses			932.6						965.2
Operating income			175.9						70.8
Interest expense			(41.3)						(45.8)
Loss on debt extinguishment			(1.0)						—
Other income (expense), net			9.6						22.6
Income before income taxes			143.2						47.6
Benefit (provision) for income taxes			258.3						(0.2)
Net income			401.5						47.4
Less: net income attributable to non-controlling interests			—						0.1
Net income attributable to GoDaddy Inc.			$	401.5					$	47.3
Net income attributable to GoDaddy Inc. per share of Class A common stock:
Basic			$	2.82					$	0.31
Diluted			$	2.76					$	0.30
Weighted-average shares of Class A c

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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 2023 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, excluding average revenue per user (ARPU), and shares are in thousands.)

Overview

We serve a large market of entrepreneurs, developing and delivering easy-to-use products in a one stop shop solution alongside personalized guidance. We serve small businesses, individuals, organizations, developers, designers and domain investors. We manage and report our business in the following two segments:

• Applications and Commerce (A&C)**, which primarily consists of sales of products containing proprietary software, notably our website building products, as well as our commerce products and third-party email and productivity solutions and sales of certain products when they are included in bundled offerings of our proprietary software products.

• 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 First Quarter Financial Highlights

Below are our key consolidated financial highlights for the three months ended March 31, 2024, with comparisons to the three months ended March 31, 2023.

• Total revenue of $1,108.5 million, an increase of 7.0%, or approximately 6.9% on a constant currency basis(1).

• International revenue of $352.9 million, an increase of 3.6%, or approximately 3.5% on a constant currency basis(1).

• Total bookings of $1,312.7 million, an increase of 9.5%, or approximately 9.5% on a constant currency basis(1).

• Operating income of $175.9 million, an increase of 148.4%(2).

• Net income of $401.5 million, an increase of 747.0%(2).

• Normalized EBITDA(3) of $313.0 million, an increase of 25.4%.

• Net cash provided by operating activities of $297.2 million, an increase of 10.0%.

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

(2) Our operating results for the three months ended March 31, 2024 included $22.4 million in restructuring and other charges, as further discussed in Note 13 to our financial statements.

(3) A reconciliation of Normalized EBITDA to net income, its most directly comparable GAAP financial measure, is set forth in "Reconciliation of NEBITDA" below.

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 March 31,
			2024												2023
			$						% of Total Revenue						$						% of Total Revenue
Revenue:
Applications and commerce			$	383.1					34.6		%				$	338.0					32.6		%
Core platform			725.4						65.4		%				698.0						67.4		%
Total revenue			1,108.5						100.0		%				1,036.0						100.0		%
Costs and operating expenses:
Cost of revenue (excluding depreciation and amortization)			414.5						37.4		%				386.1						37.3		%
Technology and development			202.9						18.3		%				215.0						20.8		%
Marketing and advertising			87.5						7.9		%				92.4						8.9		%
Customer care			76.4						6.9		%				76.8						7.4		%
General and administrative			91.7						8.3		%				94.1						9.1		%
Restructuring and other			22.4						2.0		%				52.3						5.0		%
Depreciation and amortization			37.2						3.4		%				48.5						4.7		%
Total costs and operating expenses			932.6						84.2		%				965.2						93.2		%
Operating income			175.9						15.8		%				70.8						6.8		%
Interest expense			(41.3)						(3.6)		%				(45.8)						(4.4)		%
Loss on debt extinguishment			(1.0)						(0.1)		%				—						—		%
Other income (expense), net			9.6						0.8		%				22.6						2.2		%
Income before income taxes			143.2						12.9		%				47.6						4.6		%
Benefit (provision) for income taxes			258.3						23.3		%				(0.2)						—		%
Net income			401.5						36.2		%				47.4						4.6		%
Less: net income attributable to non-controlling interests			—						—		%				0.1						—		%
Net income attributable to GoDaddy Inc.			$	401.5					36.2		%				$	47.3					4.6		%

Non-GAAP Financial Measure and Other Operating Metrics

In addition to our results determined in accordance with GAAP, we believe that Normalized EBITDA, a non-GAAP measure, and the following other operating metrics are useful as supplements in evaluating our ongoing operational performance and help provide an enhanced understanding of our business:

			Three Months Ended March 31,
			2024						2023
Normalized EBITDA			$	313.0					$	249.7
Annualized recurring revenue			$	3,772.6					$	3,543.2
Total bookings			$	1,312.7					$	1,199.2
Total customers at period end (in thousands)			20,995						20,997
ARPU			$	206					$	197

Normalized EBITDA (NEBITDA). NEBITDA is a supplemental measure of our operating performance used by management and investors to evaluate our business. We calculate NEBITDA as net income excluding depreciation and amortization, interest expense (net), provision or benefit for income taxes, equity-based compensation expense, acquisition-related costs, restructuring-related expenses and certain other items. We believe that the inclusion or exclusion of certain recurring and non-recurring items provides a supplementary measure of our core operating results and permits useful alternative period-over-period comparisons of our operations but should not be viewed as a substitute for comparable GAAP measures.

Annualized recurring revenue (ARR). ARR is an operating metric defined as quarterly recurring revenue (QRR) multiplied by four. QRR represents the quarterly recurring GAAP revenue, net of refunds, from new and renewed subscription-based services. ARR is exclusive of any revenue that is non-recurring, including, without limitation, domain aftermarket, domain transfers, one-time set-up or migration fees and non-recurring professional website services fees. We believe ARR helps illustrate the scale of certain of our products and facilitates comparisons to other companies in our industry.

Total bookings. Total bookings is an operating metric representing the total value of customer contracts entered into during the period, excluding refunds. We believe total bookings provides additional insight into the performance of our business and the effectiveness of our marketing efforts since we typically collect payment at the inception of a customer contract but recognize revenue ratably over the term of the contract.

Total customers. We define a customer as an individual or entity with paid transactions in the trailing twelve months or with paid subscriptions as of the end of the period. A single user may be counted as a customer more than once if they maintain paid subscriptions or transactions in multiple accounts. Total customers is one way we measure the scale of our business and is an important part of our ability to increase our revenue base.

Average revenue per user (ARPU). We calculate ARPU as total revenue during the preceding 12 month period divided by the average of the number of total customers at the beginning and end of the period. ARPU provides insight into our ability to sell additional products to customers, though the impact to date has been muted due to our continued growth in total customers.

Reconciliation of NEBITDA

The following table reconciles NEBITDA to net income, its most directly comparable GAAP financial measure:

			Three Months Ended March 31,
			2024						2023
Net income			$	401.5					$	47.4
Depreciation and amortization			37.2						48.5
Equity-based compensation expense(1)			71.0						71.6
Interest expense, net			34.7						38.0
Acquisition-related expenses			0.9						4.4
Restructuring and other (2)			26.0						39.6
Provision (benefit) for income taxes			(258.3)						0.2
NEBITDA			$	313.0					$	249.7

_________________________________

(1)The three months ended March 31, 2024 and 2023 excludes $0.8 million and $2.3 million, respectively, of equity-based compensation expense associated with our restructuring activities, which is included within restructuring and other.

(2)In addition to the restructuring and other in our statements of operations, other charges included are primarily composed of lease-related expenses associated with closed facilities and lease abandonments, charges related to certain legal matters, adjustments to the fair value of our equity investments, expenses incurred in relation to the refinancing of our long-term debt, and incremental expenses associated with certain professional services.

Revenue

We generate the majority of our revenue from sales of product subscriptions, as described in our 2023 Form 10-K. 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.

			Three Months Ended March 31,												Change
			2024						2023						$						%
Applications and commerce			$	383.1					$	338.0					$	45.1					13		%
Core platform			725.4						698.0						27.4						4		%
Total revenue			$	1,108.5					$	1,036.0					$	72.5					7		%

The 7.0% increase in total revenue for the three months ended March 31, 2024 was due to the changes in our A&C and Core revenues, as described below:

A&C

For the three months ended March 31, 2024, the 13.3% increase in A&C revenue was driven by: (i) 17.3% growth in revenue related to our productivity applications, most notably our email solutions; (ii) 8.7% growth in revenues due to continued customer adoption of our subscription-based products designed to establish and grow online presence; and (iii) 41.1% growth in revenue related to our commerce solutions, as continued customer adoption has resulted in an increase in payment volume.

Core

For the three months ended March 31, 2024, the 3.9% increase in Core revenue was driven by 7.0% growth in domain registration and add-on revenues and 12.1% growth in aftermarket revenues due to increasing sales volume. Partially offsetting these increases was a 9.0% decrease in hosting revenues primarily due to end-of-life migrations from certain products and disposition of certain hosting assets. Domains under management was 84.6 million as of March 31, 2024.

Bookings

The following table presents our total bookings for the periods indicated:

			Three Months Ended March 31,												Change
			2024						2023						$						%
Total bookings			$	1,312.7					$	1,199.2					$	113.5					9		%

The 9.5% increase in total bookings for the three months ended March 31, 2024 was driven by continued customer adoption of our productivity solutions and related add-ons as well as price increases, strength in domains and aftermarket and continued strong adoption of website-building presence products. These increases were partially offset by decreased hosting bookings following the divestiture of certain hosting assets.

Costs and Operating Expenses

Cost of revenue

Costs of revenue are primarily 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 March 31,												Change
			2024						2023						$						%
Cost of revenue (excluding depreciation and amortization)			$	414.5					$	386.1					$	28.4					7		%

The 7.4% increase in cost of revenue for the three months ended March 31, 2024 was driven by (i) 7.0% growth in domain registration and add-on revenues and 12.1% growth in aftermarket revenues; (ii) 17.3% growth in revenue related to our productivity applications, most notably our email solutions; and (iii) 41.1% growth in revenue related to our commerce solutions.

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 decrease as a percentage of revenue in future periods following a period of investment in product development and migration toward a unified infrastructure platform.

			Three Months Ended March 31,												Change
			2024						2023						$						%
Technology and development			$	202.9					$	215.0					$	(12.1)					(6)		%

The 5.6% decrease in technology and development expenses for the three months ended March 31, 2024 was attributable to a $4.5 million decrease in personnel costs driven by lower average headcount and a $3.5 million decrease in data center and systems infrastructure costs driven by migration towards a unified infrastructure platform.

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 March 31,												Change
			2024						2023						$						%
Marketing and advertising			$	87.5					$	92.4					$	(4.9)					(5)		%

The 5.3% decrease in marketing and advertising expenses for the three months ended March 31, 2024 was attributable to a $2.7 million decrease in advertising expenses driven by the level of discretionary investments.

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 March 31,												Change
			2024						2023						$						%
Customer care			$	76.4					$	76.8					$	(0.4)					(1)		%

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 March 31,												Change
			2024						2023						$						%
General and administrative			$	91.7					$	94.1					$	(2.4)					(3)		%

There were no material changes in general and administrative expenses.

Restructuring and other

			Three Months Ended March 31,												Change
			2024						2023						$						%
Restructuring and other			$	22.4					$	52.3					$	(29.9)					(57)		%

Restructuring and other was $22.4 million for the three months ended March 31, 2024 which includes $11.1 million of costs incurred pursuant to restructuring activities during the quarter and $5.8 million of expense related to the abandonment of certain operating leases, as further discussed in Note 13 to our financial statements.

During the three months ended March 31, 2023, restructuring and other was $52.3 million which primarily includes $29.4 million in severance, employee benefits and equity-based compensation costs incurred pursuant to a restructuring plan implemented in February 2023 and a $21.0 million charge in connection with the planned disposition of certain assets and liabilities of our hosting business within our Core segment which closed on June 30, 2023.

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 March 31,												Change
			2024						2023						$						%
Depreciation and amortization			$	37.2					$	48.5					$	(11.3)					(23)		%

The 23.3% decrease for the three months ended March 31, 2024 was attributable to a $12.3 million decrease in amortization of acquired intangible assets driven by certain intangible assets reaching the end of their useful lives.

Interest expense

			Three Months Ended March 31,												Change
			2024						2023						$						%
Interest expense			$	41.3					$	45.8					$	(4.5)					(10)		%

The 9.8% decrease in interest expense for the three months ended March 31, 2024 was attributable to the refinancing of the 2029 Term Loans in July 2023 and January 2024 which reduced our interest margin. See Note 10 to our financial statements for additional discussion.

Other income (expense), net

			Three Months Ended March 31,												Change
			2024						2023						$						%
Other income (expense), net			9.6						22.6						$	(13.0)					(58)		%

The 57.5% decrease in other income (expense), net for the three months ended March 31, 2024 was attributable to a $14.4 million increase in the carrying value of one of our equity investments during the three months ended March 31, 2023. See Note 2 to our financial statements for additional information regarding our equity investments.

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 EBITDA, our segment measure of profitability.

Applications and Commerce

The following table presents the results for our A&C segment for the periods indicated:

			Three Months Ended March 31,												Change
			2024						2023						$						%
Revenue			$	383.1					$	338.0					$	45.1					13		%
Segment EBITDA			$	161.9					$	132.4					$	29.5					22		%

The 13.3% increase in A&C revenue for the three months ended March 31, 2024 was driven by: (i) 17.3% growth in revenue related to our productivity applications, most notably our email solutions; (ii) 8.7% growth in revenues due to continued customer adoption of our subscription-based products designed to establish and grow online presence; and (iii) 41.1% growth in revenue related to our commerce solutions, as continued customer adoption has resulted in an increase in payment volume.

The 22.3% increase in A&C Segment EBITDA for the three months ended March 31, 2024 was attributed to a $45.1 million increase in revenue as described. This increase was partially offset by an increase in cost of revenue (excluding depreciation and amortization) resulting from 17.3% growth in revenue related to our productivity applications, most notably our email solutions and 41.1% growth in revenue related to our commerce solutions.

Core Platform

The following table presents the results for our Core segment for the periods indicated:

			Three Months Ended March 31,												Change
			2024						2023						$						%
Revenue			$	725.4					$	698.0					$	27.4					4		%
Segment EBITDA			$	216.7					$	189.0					$	27.7					15		%

The 3.9% increase in Core revenue for the three months ended March 31, 2024 was driven by 7.0% growth in domain-related revenues and the continued growth of our registry business and 12.1% growth in aftermarket revenues due to increasing sales volume. Partially offsetting these increases was a 9.0% decrease in hosting revenues due to end-of-life migrations from certain products and disposition of certain hosting assets.

The 14.7% increase in Core Segment EBITDA for the three months ended March 31, 2024 was attributed to a $27.4 million increase in revenue as described above and a $13.2 million decrease in operating expenses excluding acquisition-related costs and equity-based compensation expense attributable to lower marketing and technology and development costs. Partially offsetting these increases was an increase in cost of revenue (excluding depreciation and amortization) due to 7.0% growth in domain registration and add-on revenues and 12.1% growth in aftermarket revenues.

Liquidity and Capital Resources

Overview

Our principal sources of liquidity have been cash flow generated from operations and long-term debt borrowings. 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. Our liquidity position also benefits from U.S. and state deferred tax assets (DTAs) such that we have not historically paid a significant amount of U.S. federal or state income taxes. We acquired the right to benefit from the majority of our DTAs when we settled the Tax Receivable Agreements (collectively TRA Settlement Agreements) in 2020. In connection with executing the TRA Settlement Agreements, we paid $850.0 million for approximately $1,400.0 million of cash tax benefits, with substantially all of them expected to be realized within the next ten years.

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, which includes two tranches of term loans and a revolving credit facility, and the Senior Notes. In January 2024, we entered into an amendment to the Credit Facility to refinance the 2029 Term Loans. See Note 9 to our financial statements for additional information regarding our long-term debt.

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 March 31, 2024, we were in compliance with all such covenants and had no amounts drawn on our revolving credit facility.

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.

Share Repurchase Program

As discussed in Note 4 to our financial statements, we are authorized to repurchase up to $4,000.0 million of our Class A common stock. During the three months ended March 31, 2024, we repurchased a total of 1,245 shares of our Class A common stock in the open market for an aggregate purchase price of $147.7 million. As of March 31, 2024, we had $1,287.8 million of remaining authorization available for repurchases.

Restructuring and Other

As further discussed in Note 13 to our financial statements, we undertook restructuring activities during the three months ended March 31, 2024 to reduce future operating expenses and improve cash flows through a combination of reductions in force and the sale of certain assets and liabilities of our hosting business within our Core segment. Cash payments of $1.3 million related to these restructuring activities were made during the three months ended March 31, 2024, with approximately $10.0 million remaining to be paid relating to the 2023 and Q1 2024 restructuring activities as of March 31, 2024. We expect to make substantially all remaining restructuring payments by the end of the third quarter of 2024.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

			Three Months Ended March 31,
			2024						2023
Net cash provided by operating activities			$	297.2					$	270.3
Net cash provided by (used in) investing activities			43.7						(22.8)
Net cash used in financing activities			(135.0)						(124.2)
Cash and cash equivalents classified within assets held for sale			—						(5.2)
Effect of exchange rate changes on cash and cash equivalents			(0.7)						0.3
Net increase in cash and cash equivalents			$	205.2					$	118.4

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 and other operating costs as we continue to grow our business.

Net cash provided by operating activities increased $26.9 million from $270.3 million during the three months ended March 31, 2023 to $297.2 million during the three months ended March 31, 2024, driven by the growth in total bookings due to increased adoption of productivity solutions and our Websites + Marketing product. The increase was also driven by lower restructuring related payments as well as lower discretionary marketing and technology and development related spending.

Investing Activities

Our investing activities generally consist of strategic acquisitions, dispositions 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 provided by investing activities increased $66.5 million from $22.8 million net cash used during the three months ended March 31, 2023 to $43.7 million net cash provided during the three months ended March 31, 2024, due to maturities of short-term investments totaling $40.0 million as well as proceeds from dispositions of certain assets and liabilities of our hosting business.

Financing Activities

Our financing activities generally consist of long-term debt borrowings, the repayment of principal on long-term debt, stock option exercise and ESPP proceeds and share repurchases.

Net cash used in financing activities increased $10.8 million from $124.2 million during the three months ended March 31, 2023 to $135.0 million during the three months ended March 31, 2024, primarily due to a $8.6 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

There have been no material changes in our off-balance sheet arrangements as discussed in our 2023 Form 10-K.

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 2023 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 2023 Form 10-K.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, see Note 2 to our financial statements.