Summary
GoDaddy reported third quarter revenue of $1.07 billion, up 3.5% from the prior-year quarter. Operating income rose 28.8% to $167.1 million, and net income attributable to GoDaddy Inc. climbed 31.0% to $130.7 million. Operating margin expanded to 15.6% from 12.6%, a gain of 3.1 percentage points. The nine-month picture is less flattering. Revenue for the year to date was $3.15 billion, up 3.4%, but operating income fell 1.8% to $357.5 million and net income edged up 0.9% to $260.9 million. Operating margin for the year-to-date period was 11.3%, down 0.6 percentage points.
The mix keeps tilting toward software. Applications and Commerce revenue grew 11.4% in the quarter, while Core Platform revenue slipped 0.1%. Commerce-related revenue rose 22.9%, productivity applications revenue rose 12.1%, and subscription products for establishing an online presence added 8.5%. Core Platform absorbed a 10.7% decline in hosting revenue after the divestiture of certain hosting assets in the second quarter, end-of-life migrations away from certain products and softer demand. Domain registration and domain add-on revenue rose 4.2% and partly offset that drop. Domains under management stood at 84.0 million at September 30, 2023. Applications and Commerce ARR grew 11% to $1.4 billion, Core ARR held flat at $2.3 billion, and total ARR rose 4.0% to $3,675.1 million. Total bookings were $1,138.9 million, up 4.8%. Total customers reached 21,025 thousand, up 0.7%, and ARPU was $200 versus $196.
Cash generation held up. Net cash provided by operating activities was $281.6 million in the quarter, up 4.3%, though the nine-month figure of $749.9 million was down 2.8%. Capital expenditures fell 24.2% to $9.4 million in the quarter. Free cash flow was $280.2 million, up 5.5%, and unlevered free cash flow was $320.1 million, up 7.9%. Normalized EBITDA rose 12.7% to $296.0 million on a 27.7% margin, up from 25.4%. The company ended September with $329.2 million in cash and cash equivalents, $3.9 billion of total debt and $3.6 billion of net debt. Through October 31, 2023, GoDaddy repurchased 17.3 million shares for $1.3 billion at an average price of $72.85, roughly a 20% reduction in fully diluted shares since the current $4.0 billion authorization began.
Management guided fourth quarter total revenue growth to about 6% at the midpoint. Within that, Applications and Commerce revenue is expected to grow roughly 13% and Core Platform 2% to 3%. The fourth quarter NEBITDA margin target was raised to approximately 29%. For the full year 2023, revenue growth is guided to 4% at the midpoint, with NEBITDA margin slightly above the previously guided 26%. Full-year unlevered free cash flow is targeted at no less than $1.2 billion, up 9%, and free cash flow at no less than $1.0 billion, up 3%. For the fourth quarter of 2024, the company targets roughly a 31% NEBITDA margin.
Cost discipline is doing heavy lifting. Restructuring and other charges were $9.8 million in the quarter and $79.6 million for the nine months, tied to a reduction in force of about 250 employees and the earlier hosting divestiture. Interest expense rose 24% to $44.0 million as rates climbed on the unhedged portion of variable-rate debt. Marketing and advertising spending fell 13.9% to $86.4 million, which supports near-term margins but raises questions about the durability of customer acquisition. Deferred revenue was $2.09 billion, up 6.1%, and remaining performance obligations were $2.90 billion, up 5.4%. Management flags macroeconomic uncertainty, inflation, higher interest rates, competition, security breaches and the execution of share repurchases among the risks that could change the outlook.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2023 | Q2 FY2023 | QoQ | Q3 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.07B | $1.05B | +2.1% | $1.03B | +3.5% |
| General & administrative | $91.6M | $92.7M | -1.2% | $101.6M | -9.8% |
| Total operating expenses | $902.6M | $928.5M | -2.8% | $903.5M | -0.1% |
| Operating income (loss) | $167.1M | $119.6M | +39.7% | $129.7M | +28.8% |
| Operating margin | 15.6% | 11.4% | +4.2 pp | 12.6% | +3.1 pp |
| Net income (loss) | $131.0M | $83.1M | +57.6% | $100.0M | +31.0% |
| Net margin | 12.3% | 7.9% | +4.3 pp | 9.7% | +2.6 pp |
| Customers | 2 | 2 | ±0.0% | — | — |
Risks
MD&A states Core hosting revenue decreased 10.7% in Q3 2023 due to lower demand amid the uncertain macroeconomic environment, and nine-month bookings growth was adversely impacted by softness in aftermarket demand and uneven demand patterns due to inflation and continued economic uncertainty. This pressure could slow revenue growth and customer spending.
GoDaddy implemented additional restructuring in Q3 2023 impacting approximately 250 employees, and restructuring and other expense was $79.6 million for the nine months ended September 30, 2023, up 438% from the prior-year period. The company may face workforce attrition, operational disruptions, and failure to achieve expected cost savings.
The filing details past incidents including compromised hosting login credentials for approximately 28,000 customers plus more than 5,000 additional customers, unauthorized access impacting up to 1.2 million Managed WordPress customers, and December 2022 cPanel malware. GoDaddy is also responding to FTC Civil Investigative Demands, and a history of incidents may increase future costs and sanctions.
Interest expense increased 23.6% in Q3 2023 and 30.1% for the nine months ended September 30, 2023, driven by higher effective interest rates on the unhedged portion of variable-rate debt. Substantial indebtedness could limit financial flexibility and divert cash flow from operations.
GoDaddy is increasingly using AI and generative AI in its offerings, which may create intellectual property, data privacy, accuracy, bias, and regulatory risks. The filing also warns that competitors may develop AI products that are similar or superior or more cost-effective to develop or deploy.
The filing names competitors such as Google, Amazon, Microsoft, Wix, Squarespace, Shopify, and Cloudflare, and notes that some competitors offer services at low or no cost, including Cloudflare domains at wholesale cost and Let's Encrypt security certificates at no cost. Increased competition could reduce margins, market share, and pricing power.
Starboard Value L.P. reported approximately 7.8% ownership of GoDaddy common stock as of September 2023. Activist actions may disrupt operations, divert management attention, and cause stock price fluctuations based on temporary or speculative market perceptions.
The filing states that workforce reductions in the first and third quarters of 2023 may impact GoDaddy's ability to attract, retain, and motivate highly qualified employees and may harm its reputation with current or prospective employees. Competition for technical and engineering talent is intense, and immigration limits such as H-1B visa caps may constrain recruiting.
GoDaddy has limited customers and contractors in Russia and Ukraine, and the Russia-Ukraine conflict could delay product launches if contractors cannot work. The company shut down its GoDaddy website in Russia and removed support for the Ruble, and it also operates in higher-risk regions such as China, India, and Ukraine.
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
NEBITDA margin
Normalized EBITDA
Annualized recurring revenue
Summary, forecast, risks and KPIs are extracted from GoDaddy Inc.'s SEC filings for Q3 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.