Summary
GoDaddy's second quarter of fiscal 2023 showed steady top-line growth but weaker profitability. Total revenue was $1,048.1 million, up 3.2% from the prior-year quarter. Year to date, revenue reached $2,084.1 million, up 3.3%. Operating income fell to $119.6 million, down 4.0% from the prior-year quarter, and year-to-date operating income was $190.4 million, down 18.7%. Net income attributable to GoDaddy Inc. was $82.9 million, down 8.3% for the quarter, and $130.2 million year to date, down 18.0%. Operating margin compressed to 11.4%, a decline of 0.9 percentage points, and year-to-date operating margin was 9.1%, down 2.5 percentage points. Higher costs, restructuring activity, and a softer Core Platform mix weighed on the bottom line.
Applications and Commerce continued to carry the growth. Segment EBITDA for that unit rose 8.3% to $142.7 million, while Core Platform Segment EBITDA slipped 3.7% to $191.0 million. Total bookings increased 2.0% to $1,141.1 million. Annualized recurring revenue was $3,619.6 million, up 3.7%. The Applications and Commerce ARR reached $1.3 billion, up 10%, and Create + Grow ARR was $465 million, up 11%. Core Platform ARR was $2.3 billion and was flat. Gross merchandise volume totaled $33 billion, up 20%, and gross payments volume is on pace to more than double 2022 GPV by year end. Total customers at period end were 20,985 thousand, up 0.5%. Core Platform remained the drag, with lower aftermarket and hosting demand and domain registry cost increases offsetting growth in domain registration and add-on revenue. The company also closed the sale of certain non-core hosting brands during the quarter.
Cash generation softened. Net cash provided by operating activities was $198.0 million for the quarter, down 21.1%, and $468.3 million year to date, down 6.7%. Capital expenditures were $5.8 million, down 67.6%, and $28.6 million year to date, down 5.3%. Free cash flow was $239.9 million for the quarter, while unlevered free cash flow was $283.6 million, up 3.4%. Normalized EBITDA was $264.6 million, up 2.4%. Deferred revenue stood at $2,081.4 million, up 5.1% from the prior-year quarter, and remaining performance obligations were $2,880.9 million, up 4.7%. Net debt was $3.3 billion. Through July 31, 2023, the company repurchased 10.2 million shares for $745.9 million at an average price of $73.04, reducing fully diluted shares by about 16% from the start of the $3 billion authorization. It also announced an incremental $1 billion buyback through 2025. In July 2023, GoDaddy refinanced $1.8 billion of term loans, lowering interest rate margins by 0.75% and reducing annual cash interest by $13 million.
Guidance points to modest third-quarter growth and stable margins. For the third quarter ending September 30, 2023, GoDaddy targets year-over-year total revenue growth of 3% at the midpoint versus the same period in 2022. The company also targets a Normalized EBITDA margin of approximately 26% for the third quarter. For the full year ending December 31, 2023, GoDaddy expects a Normalized EBITDA margin of approximately 26%, unlevered free cash flow of approximately $1.2 billion, up 9% from $1.1 billion in 2022, and free cash flow of approximately $1.0 billion, up 3% from $968.6 million in 2022. The outlook balances continued investment in AI-powered products and commerce with cost discipline and cash returns.
Risks remain concentrated in the macro backdrop and execution. Management cited uncertain macroeconomic conditions, inflation, foreign currency headwinds, and higher interest rates. The restructuring plan announced in February 2023 is intended to reduce future operating expenses and improve cash flows. The Core Platform faces lower demand in aftermarket and hosting, domain registry cost increases, and the uncertain macroeconomic environment. Competition, security breaches, dependence on payment card networks, intellectual property litigation, and regulatory developments are also named risks. The buyback program adds flexibility, but execution and leverage remain watch items.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2023 | Q1 FY2023 | QoQ | Q2 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.05B | $1.04B | +1.2% | $1.02B | +3.2% |
| General & administrative | $92.7M | $94.1M | -1.5% | $94.7M | -2.1% |
| Total operating expenses | $928.5M | $965.2M | -3.8% | $890.9M | +4.2% |
| Operating income (loss) | $119.6M | $70.8M | +68.9% | $124.6M | -4.0% |
| Operating margin | 11.4% | 6.8% | +4.6 pp | 12.3% | -0.9 pp |
| Net income (loss) | $83.1M | $47.4M | +75.3% | $90.5M | -8.2% |
| Net margin | 7.9% | 4.6% | +3.3 pp | 8.9% | -1.0 pp |
| Customers | 2 | 3 | -33.3% | — | — |
Risks
Uncertain macroeconomic conditions, inflation, and higher interest rates are pressuring demand, with Core platform revenue down 0.3% in the quarter and 0.3% year to date due to lower aftermarket and hosting demand amid the uncertain macroeconomic environment. Bookings growth was also impacted by inflation and continued economic uncertainty.
The February 2023 restructuring plan may not adequately reduce operating costs or improve margins and may cause workforce attrition and operational disruptions. Operating income decreased 4.0% in the quarter and 18.7% year to date, while restructuring and other expense rose 82% to $17.5 million in the quarter and 627% to $69.8 million year to date.
GoDaddy has experienced multiple cybersecurity incidents, including the 2020 hosting credential compromise, the 2021 Managed WordPress incident affecting up to 1.2 million customers, and the 2022 cPanel malware incident, and is responding to FTC Civil Investigative Demands. A future incident could cause regulatory inquiries, litigation, and reputational harm.
The market is highly fragmented and competitive, with competitors including Wix, Squarespace, Shopify, Cloudflare, Google, Amazon, and Microsoft, and some offer domains or security certificates at low or no cost. Increased competition could reduce margins, market share, and pricing.
Substantial indebtedness could limit financial flexibility and divert cash flow to debt payments. Interest expense increased 30.7% in the quarter and 33.4% year to date due to higher effective interest rates on variable-rate debt.
GoDaddy substantially relies on AWS for cloud infrastructure and on a limited number of data centers, so any disruption, termination, or security compromise at these providers could interrupt service and harm results. The company is transitioning more workloads to AWS, increasing dependence.
Growth depends on attracting and retaining customers and maintaining strong renewals, and slower growth reflects the larger size and maturity of the business. A reduction in renewals could reduce operating margins because renewal costs are lower than acquisition costs.
GoDaddy is increasingly using AI and generative AI in its offerings, which may create intellectual property, data privacy, accuracy, bias, and regulatory risks, and competitors may develop AI products that are similar, superior, or more cost-effective. Evolving AI laws could require costly adjustments.
Future performance depends on senior management and skilled employees, and competition for technical talent is intense. The February 2023 workforce reduction may hurt morale, culture, and the ability to attract and retain employees.
Starboard Value L.P. reported approximately 7.7% ownership as of November 2022, and activist involvement could disrupt business, divert management attention, and create stock price volatility.
Bookings outside the U.S. were approximately 32% of total bookings for 2022, exposing GoDaddy to foreign currency, regulatory, geopolitical, and sanctions risks, including the Russia-Ukraine conflict. Bookings growth was reduced by approximately 60 basis points in the quarter from adverse foreign currency movements.
GoDaddy Payments is subject to money transmission, payment card network, and consumer protection rules, and payment processors may impose holdbacks or suspend services. Fraudulent or illegal transactions could cause losses, fines, or termination of card acceptance.
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
Gross Merchandise Volume (GMV)
Normalized EBITDA
Annualized recurring revenue
ARR (Core Platform)
Summary, forecast, risks and KPIs are extracted from GoDaddy Inc.'s SEC filings for Q2 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 2, 2026.