filings.toolsItem 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
54K characters. Original on sec.gov · Markdown
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 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.
Previous: Item 1. Financial Statements · Next: Item 3. Quantitative and Qualitative Disclosures About Market Risk