Summary
GoDaddy's first quarter of fiscal 2023 showed revenue growth but weaker profitability. Total revenue rose 3.3% to $1.04 billion from $1.00 billion in the prior-year quarter. Operating income fell 35.4% to $70.8 million from $109.6 million. Operating margin dropped to 6.8% from 10.9%, a decline of 4.1 percentage points. Net income attributable to GoDaddy Inc. was $47.3 million, down 30.8% from $68.4 million. The profit decline came alongside a restructuring plan announced in February 2023, which included a reduction in force and a commitment to sell certain assets. The company also signed an agreement to sell two smaller European hosting brands within the Core Platform segment.
Cash generation improved. Operating cash flow was $270.3 million, up 7.7% from $250.9 million. Capital expenditures rose 85.4% to $22.8 million from $12.3 million. Deferred revenue was $2.04 billion, up 4.2% from $1.96 billion. Remaining performance obligations were $2.84 billion, up 4.2% from $2.73 billion. Free cash flow was $259.2 million, up 0.2% from $258.7 million. Unlevered free cash flow was $303.9 million, up 6.0% from $286.8 million. Normalized EBITDA was $249.7 million, up 10.5% from $225.9 million.
Operational metrics pointed to momentum in commerce and applications. GoDaddy Payments annualized gross payments volume crossed $1 billion in its first year. Create + Grow annualized recurring revenue accelerated to 10% growth year-over-year. Applications and commerce ARR grew to $1.3 billion, up 9% year-over-year. Core platform ARR grew to $2.2 billion, up 1% year-over-year. Total ARR was $3,543.2 million, up 4.0% from $3,407.2 million. Total bookings were $1,199.2 million, up 3.7% from $1,156.3 million. Gross merchandise volume was $28 billion, up 18% year-over-year. Total customers at period end were 20,997, up 0.7% from 20,859. Domains under management were 84.2 million.
Guidance for the second quarter ending June 30, 2023 targets year-over-year growth of 4% at the midpoint versus the same period in 2022. For the full year ending December 31, 2023, GoDaddy targets year-over-year growth of 5% at the midpoint. The second-quarter outlook also targets Normalized EBITDA margin of approximately 25%. For the full year, the company expects Normalized EBITDA margin of approximately 26%, unlevered free cash flow of approximately $1.2 billion, representing growth of 9% year-over-year, and free cash flow of approximately $1.0 billion, representing growth of 3% year-over-year.
The quarter carried several risks. Management cited uncertain macroeconomic conditions, inflation, and foreign currency headwinds as pressures on bookings and Core Platform demand. Aftermarket demand softened, and hosting revenue faced end of life migrations and lower demand. The restructuring plan aims to reduce future operating expenses and improve cash flows, but execution risk remains. GoDaddy also carries significant long-term debt, and its debt agreements restrict certain actions. The company was in compliance with all such covenants as of March 31, 2023 and had no amounts drawn on its revolver. Other named risks include competition, security breaches, and the unpredictable nature of its market.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.04B | $1.04B | -0.4% | $1.00B | +3.3% |
| General & administrative | $94.1M | $98.6M | -4.6% | $90.6M | +3.9% |
| Total operating expenses | $965.2M | $905.0M | +6.7% | $893.1M | +8.1% |
| Operating income (loss) | $70.8M | $134.9M | -47.5% | $109.6M | -35.4% |
| Operating margin | 6.8% | 13.0% | -6.1 pp | 10.9% | -4.1 pp |
| Net income (loss) | $47.4M | $93.8M | -49.5% | $68.6M | -30.9% |
| Net margin | 4.6% | 9.0% | -4.4 pp | 6.8% | -2.3 pp |
| Customers | 3 | — | — | — | — |
Risks
GoDaddy announced a February 2023 restructuring plan cutting about 550 employees, roughly 8% of total employees, and recorded $50.4 million of pre-tax restructuring charges. The plan may not adequately reduce operating costs or improve operating margins and could cause workforce attrition and operational disruptions; first quarter operating income fell 35.4% to $70.8 million and operating margin fell 4.1 percentage points to 6.8%.
Inflation, higher interest rates, recession risk and geopolitical conflict are pressuring demand. First quarter Core platform revenue decreased 0.2% with aftermarket revenue down 8.0% and hosting revenue down 4.8% due to lower demand amid the uncertain macroeconomic environment, and bookings growth was hurt by inflation and economic uncertainty.
GoDaddy disclosed multiple prior incidents, including unauthorized access to about 28,000 hosting customer credentials in March 2020, up to 1.2 million Managed WordPress customers in November 2021, and cPanel hosting server malware in December 2022. It is responding to FTC Civil Investigative Demands and faces risk of greater costs and sanctions because of past incidents.
The market is highly fragmented and competitive, with competitors including Google, Amazon, Microsoft, Wix, Squarespace, Shopify and Cloudflare, some offering low or no cost services. GoDaddy also cites emerging technological trends such as artificial intelligence and the risk that failure to anticipate them could harm product demand and operating results.
GoDaddy outsources a substantial majority of its cloud infrastructure to AWS and is transitioning workloads to public cloud, making it vulnerable to AWS service interruptions, capacity constraints, security compromises or termination of the agreement. Any disruption could interrupt customer access and harm revenue and reputation.
GoDaddy has substantial long-term debt and first quarter interest expense increased 36.3% to $45.8 million due to higher effective interest rates on variable-rate debt. Debt covenants restrict the business and could limit ability to raise capital, make acquisitions or repurchase shares.
The February 2023 workforce reduction may make it harder to preserve company culture, hurt employee morale and impair GoDaddy's ability to attract, retain and motivate highly qualified employees, especially in competitive technical labor markets. The restructuring could also lead to attrition beyond the intended reduction.
Starboard Value L.P. reported approximately 7.7% ownership as of November 2022, and activist involvement could disrupt the business, divert management attention and create perceived uncertainty about future direction. This may make it harder to attract and retain personnel and business partners.
Bookings outside the U.S. were about 32% of total bookings for 2022, 2021 and 2020, exposing GoDaddy to foreign regulatory, tax, currency and geopolitical risks. The Russia-Ukraine conflict and related sanctions could delay product launches if contractors in the region cannot work, and GoDaddy shut down its Russia website and removed Ruble support.
GoDaddy Payments is subject to money transmission, payment card network and consumer protection rules, and commerce-related revenue grew 104.2% in the first quarter. Failure to comply or manage fraud and chargebacks could lead to fines, loss of card acceptance, holdbacks or suspension of processing services.
SaaS KPIs
All quarters →Total bookings
Domains under management
Unlevered free cash flow
Free cash flow
Average revenue per user (ARPU)
Total customers at period end
Annualized Recurring Revenue (ARR)
Gross Merchandise Volume (GMV)
Normalized EBITDA
ARR (Core Platform)
ARR (Applications and Commerce)
Summary, forecast, risks and KPIs are extracted from GoDaddy Inc.'s SEC filings for Q1 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.