Summary
GoDaddy reported third quarter revenue of $1,033.2 million, up 7.2% from the prior-year quarter. On a constant currency basis, revenue rose 8.8%. Year-to-date revenue was $3,051.4 million, up 9.1%. Net income attributable to GoDaddy was $99.8 million, up 2.4%. Year-to-date net income was $258.6 million, up 66.7%. Operating income slipped 1.2% to $129.7 million. Year-to-date operating income was $363.9 million, up 41.4%. Operating margin was 12.6%, down 1.1 percentage points from 13.6%. Year-to-date operating margin was 11.9%, up 2.7 percentage points. The company faced foreign exchange pressure and macroeconomic headwinds. Total bookings of $1,087.0 million grew 4.7%, or 6.7% in constant currency. The CEO said the company delivered solid results despite these challenges. The company said its market leadership, strong customer retention, and product innovation enable it to weather the current economic environment.
Operational metrics showed mixed trends. Annualized recurring revenue for applications and commerce grew 10% year over year to $1.3 billion. Core platform ARR rose 2% to $2.3 billion. Gross merchandise volume reached $29 billion, up 10%. GoDaddy expanded its relationship with Amazon Web Services to migrate workloads to the cloud. The company added simplified website creation for domains customers and enabled Buy Buttons on all Websites + Marketing plans, including free plans. Free SSL launched in all new Web Hosting plans. Domains under management fell 0.4% to 83.8 million from 84.1 million. Deferred revenue was $1.98 billion, up 4.0%. Remaining performance obligations were $2.75 billion, up 3.5%. Normalized EBITDA was $262.7 million, up 15.4%. Segment NEBITDA for applications and commerce was $135.6 million, up 17.9%. Core platform NEBITDA was $202.1 million, up 16.2%. In July 2022, the company completed an acquisition for $69.6 million in net cash consideration. The company appointed Brian Sharples to Chair of its Board of Directors, effective September 30, 2022.
Cash generation remained strong. Operating cash flow for the quarter was $269.9 million, up 19.2%. Year-to-date operating cash flow was $771.7 million, up 17.4%. Capital expenditures were $12.4 million, down 1.6% from the prior-year quarter. Unlevered free cash flow was $296.6 million, up 17.9%. Net debt was $3.07 billion. Year-to-date through October 31, 2022, GoDaddy repurchased 14.8 million shares for $1.15 billion at an average price of $77.86, reducing fully diluted shares by approximately 9% from December 31, 2021. As of September 30, 2022, the company had $1,904.1 million of remaining authorization available for repurchases. In late October 2022, the company launched a $1.77 billion term loan due 2029 to refinance its 2024 term loan, with pricing expected at SOFR plus 325 basis points and a 2.0% upfront fee. It also expects to increase its revolver capacity to $1 billion. The company was in compliance with all debt covenants and had no amounts drawn on its revolver as of September 30, 2022.
Guidance for the fourth quarter of 2022 targets revenue of $1.03 billion to $1.05 billion, representing 2% growth at the midpoint. Fourth quarter normalized EBITDA is targeted at $250 million to $260 million. Applications and commerce revenue growth is expected in the 10% to 12% range, while core platform revenue is expected to be flat. For the full year 2022, GoDaddy now expects revenue of $4.08 billion to $4.10 billion, or 7% growth at the midpoint. Full year unlevered free cash flow is expected at approximately $1.09 billion to $1.1 billion, representing 14% growth over the $960 million generated in 2021. The company cited an estimated adverse foreign exchange impact of approximately $40 million for the year. Management noted that foreign exchange rates and general macro headwinds are likely to remain a challenge in the near term. Risks include uneven demand patterns related to inflation and continued economic uncertainty, competition, and execution of share repurchases. The company does not provide reconciliations from non-GAAP guidance to GAAP equivalents.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.03B | $1.02B | +1.7% | $964.0M | +7.2% |
| General & administrative | $101.6M | $94.7M | +7.3% | $81.2M | +25.1% |
| Total operating expenses | $903.5M | $890.9M | +1.4% | $832.7M | +8.5% |
| Operating income (loss) | $129.7M | $124.6M | +4.1% | $131.3M | -1.2% |
| Operating margin | 12.6% | 12.3% | +0.3 pp | 13.6% | -1.1 pp |
| Net income (loss) | $100.0M | $90.5M | +10.5% | $97.7M | +2.4% |
| Net margin | 9.7% | 8.9% | +0.8 pp | 10.1% | -0.5 pp |
Risks
Inflation and continued economic uncertainty contributed to uneven demand patterns and pressured bookings growth for the three months ended September 30, 2022. Total bookings rose 4.7%, but the filing cites recession and economic slowdown risks that could reduce customer spending, especially for higher-priced do-it-for-you services.
Growth rates have slowed as the business matures, and gross customer adds for 2021 declined relative to 2020. Domains under management decreased 0.4% from 84.1 million as of September 30, 2021 to 83.8 million as of September 30, 2022, while Core Platform revenue increased 4.9% for the three months ended September 30, 2022.
GoDaddy focuses a large part of its operations on small businesses, which frequently have limited budgets and may shift spending during economic uncertainty or recessions. Failure to effectively acquire and service small business customers, directly or through Web Pros, could harm revenue growth and profitability.
Competition is intense and expected to intensify from domain, hosting, website, e-commerce, payments, and cloud providers including Wix, Squarespace, Shopify, Google, Amazon, Microsoft, Cloudflare, and others. Some competitors offer domains or security certificates at low or no cost, and larger competitors have more resources and brand recognition.
GoDaddy has experienced repeated security incidents, including the 2018 Domain Factory data access, a 2020 compromise of about 28,000 hosting customer credentials, the 2021 Confluence data exfiltration, and the November 2021 Managed WordPress incident that impacted up to 1.2 million active and inactive customers. The company has received FTC Civil Investigative Demands and faces uncertain regulatory outcomes and potential fines, including from the Bavarian Data Protection Agency.
Adverse movements in foreign currency exchange rates reduced total revenue growth by approximately 160 basis points for the three months ended September 30, 2022 and approximately 100 basis points for the nine months ended September 30, 2022. Bookings growth was reduced by approximately 200 and 150 basis points, respectively, and international bookings were about 32% of total bookings for 2021.
Substantial indebtedness and related covenants limit flexibility and divert cash flow to debt service. Interest expense increased 11.0% for the nine months ended September 30, 2022, primarily driven by the 2029 Senior Notes, and in October 2022 the company announced plans to refinance the 2024 Term Loans and increase Revolver capacity.
Future performance depends on senior management and key employees, and competition for skilled technical personnel is intense in U.S. tech hubs. Immigration limits on H-1B visas and return-to-office or hybrid work pressures may make hiring, retention, and culture maintenance harder.
The GoDaddy Payments expansion into offline commerce and payment facilitation subjects the company to payment card network rules, money transmission and consumer protection laws, chargeback and fraud risks, and potential processor holdbacks or fines. Failures could reduce liquidity or terminate card acceptance.
GoDaddy has made and may continue acquisitions such as Dan.com and GoDaddy Payments, and integration challenges could divert management attention, dilute stockholders, or expose it to unknown liabilities. The company completed a $69.6 million acquisition in July 2022.
Starboard Value L.P. has reported an approximately 6.5% ownership interest in the outstanding common stock, and activist actions could disrupt operations, divert management attention, or cause stock price fluctuations.
GoDaddy relies on marketing channels to acquire customers, but marketing and advertising expenses decreased 19.0% for the three months ended September 30, 2022 and 17.2% for the nine months ended September 30, 2022 due to lower discretionary spending. If reduced marketing harms customer acquisition or renewals, growth could be adversely affected.
Failure to anticipate emerging technological trends such as artificial intelligence or changing customer needs could render products obsolete or reduce demand, particularly as customers increasingly rely on mobile applications and social media rather than domain names.
SaaS KPIs
All quarters →Total bookings
Domains under management
Unlevered free cash flow
Normalized EBITDA (NEBITDA)
Gross Merchandise Volume (GMV)
Summary, forecast, risks and KPIs are extracted from GoDaddy Inc.'s SEC filings for Q3 FY2022 (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.