# GoDaddy (GDDY) Financial Model Free Excel 3-statement financial model and company analysis for GoDaddy. - Canonical: https://finamodel.com/companies/godaddy - Industry: IT Services - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/GDDY.xlsx ## Model Purpose This financial model evaluates the equity value and free cash flow generation of GoDaddy Inc. (GDDY) to determine if the company's shift toward higher-margin Applications & Commerce revenue and aggressive share repurchase programme justify its current market valuation. ## Company Overview GoDaddy is a global provider of cloud-based products and personalised guidance for small businesses, individuals, and everyday entrepreneurs. The company operates as a one-stop shop for digital identity, website building, hosting, and commerce solutions, including point-of-sale systems and payment processing. Business segments include: * **Core Platform (Core)**: Approximately 62% of revenue. Includes domain registrations, aftermarket domain sales, and website hosting. * **Applications and Commerce (A&C)**: Approximately 38% of revenue. Includes proprietary website builders, Managed WordPress, GoDaddy Payments, and third-party productivity applications like Microsoft 365. GoDaddy operates a highly cash-generative, asset-light subscription business model characterised by upfront cash collection and negative working capital. The company holds a dominant competitive position in domain registration (approximately 21% of global domain registrations) and competes with website builders like Wix and Squarespace, as well as commerce platforms like Shopify. Recent major events include the rollout of "GoDaddy Airo" (an AI-powered business creation tool) and a massive $3.0 billion share repurchase programme authorised in early 2025. ## Revenue Deep Dive ### Core Platform (Core) * **Segment name**: Core Platform * **Revenue driver formula**: Domains Under Management x Average Revenue Per Domain + Aftermarket Sales * **Historical growth rate**: 3% to 5% CAGR * **Key growth levers and headwinds**: Driven by domain pricing power, renewal rates, and premium aftermarket domain sales. Headwinds include industry-wide normalisation of domain registrations post-pandemic and the divestiture of non-core hosting assets. * **Pricing dynamics**: Highly contractual and subscription-based for primary domains, with strong pricing power upon renewal. Aftermarket sales are spot transactions. * **Revenue recognition notes**: Domain registrations are paid upfront (often for 1 to 3 years) but recognised rateably over the term of the contract, creating massive deferred revenue balances. * **Seasonality**: Q1 is typically the strongest quarter for bookings due to small business formation trends at the start of the calendar year. ### Applications and Commerce (A&C) * **Segment name**: Applications and Commerce * **Revenue driver formula**: A&C Subscribers x A&C ARPU + Gross Payment Volume (GPV) x Take Rate * **Historical growth rate**: 14% to 17% CAGR * **Key growth levers and headwinds**: Driven by cross-selling productivity and commerce tools to the existing domain customer base. The adoption of GoDaddy Payments and point-of-sale (POS) devices is a massive growth lever. * **Pricing dynamics**: Subscription-based SaaS pricing for software, plus transaction-based percentage fees for GoDaddy Payments. * **Revenue recognition notes**: Software subscriptions are recognised rateably over the term. Payment processing fees are recognised instantly upon transaction completion. * **Seasonality**: Q4 sees a slight uptick in commerce transaction revenue due to holiday shopping volumes processed by GoDaddy Payments merchants. ## Cost Structure ### Variable Costs / COGS * **Line-by-line breakdown**: Cost of revenue primarily includes domain registry fees (paid to ICANN and registries like Verisign), software licensing fees (primarily to Microsoft for email/productivity), payment processing costs, and hosting infrastructure costs (AWS and proprietary data centres). * **Gross margin range**: 62% to 64% historically. * **Key input costs and commodity exposures**: Wholesale domain registry price increases (e.g., Verisign raising .com prices) and third-party software licensing costs. * **How COGS scales with revenue**: Highly linear for domains and software. Payment processing costs scale directly with Gross Payment Volume. ### Operating Expenses * **R&D**: Labelled as "Technology and development". Typically 14% to 16% of revenue. Covers software engineering, AI development (GoDaddy Airo), and infrastructure maintenance. The company capitalises a portion of internal-use software development costs. * **SG&A**: Split into "Marketing and advertising" (9% to 11% of revenue) and "General and administrative" (10% to 12% of revenue). Marketing is highly variable and ROI-driven. * **Customer Care**: A distinct opex line (7% to 9% of revenue) covering the "GoDaddy Guides" support network. * **Depreciation & Amortisation**: Typically 4% to 6% of revenue, heavily weighted toward amortisation of acquired intangible assets from historical M&A. * **Stock-Based Compensation**: Typically 5% to 7% of revenue. * **Restructuring / one-time charges**: Occasional restructuring charges (e.g., $39 million in FY2024) related to workforce reductions and brand streamlining. ### Margin Profile * **Gross margin**: 62% to 64%. * **EBITDA margin (Normalized)**: 31% to 33% (expanding). * **Operating margin**: 18% to 23%. * **Net margin**: 15% to 20% (highly variable due to tax valuation allowance releases). * **Margin trend**: Expanding rapidly. Normalized EBITDA margin expanded from 24% in 2021 to 32% in 2025 due to a mix shift toward the higher-margin A&C segment and disciplined marketing spend. ## Balance Sheet Structure * **Total assets**: Approximately $6.5 billion to $7.0 billion. * **Key asset categories**: Cash and cash equivalents, Goodwill, Intangible assets, and Prepaid domain name registry fees. * **Goodwill & intangibles as % of total assets**: Approximately 60% to 65%, reflecting a history of acquisitions (e.g., Host Europe Group, Main Street Hub, Poynt). * **Working capital profile**: * **Days Sales Outstanding (DSO)**: Very low (5 to 10 days) as most customers pay upfront via credit card. * **Days Inventory Outstanding (DIO)**: Not applicable (service/software business). * **Days Payable Outstanding (DPO)**: 30 to 45 days. * **Net working capital as % of revenue**: Highly negative (typically -25% to -30% of revenue). * **Is working capital positive or negative?**: Deeply negative. GoDaddy collects cash upfront for annual or multi-year subscriptions but recognises revenue over time. This deferred revenue model provides a massive structural cash flow advantage, funding operations and buybacks. * **PP&E**: Very light (approximately 3% to 4% of assets), consisting of data centre equipment and leasehold improvements. * **Right-of-use assets / operating leases**: Material but manageable, representing office space and data centre leases. ## Capital Expenditure & Investment * **Capex as % of revenue**: 1.5% to 2.5% (highly asset-light). * **Maintenance capex vs. growth capex**: Almost entirely maintenance and internal software development. * **Major capex programmes underway or planned**: Investments in AI infrastructure for GoDaddy Airo and commerce terminal hardware. * **Capitalised software / development costs**: Material. The company capitalises internal-use software costs, which are then amortised over 2 to 5 years. * **M&A pattern**: Historically a serial bolt-on acquirer (Poynt for commerce, Dan.com for aftermarket), but recent focus has shifted entirely to organic growth and share repurchases. ## Debt & Capital Structure * **Total debt**: Approximately $3.8 billion. * **Net debt**: Approximately $2.9 billion. * **Debt/EBITDA ratio**: Target leverage is 1.5x to 2.5x Net Debt to NEBITDA. Currently operating around 1.7x. * **Credit rating**: Non-investment grade (typically BB/Ba2 range). * **Key debt instruments**: Senior secured term loans and senior unsecured notes. * **Maturity profile**: Well-laddered, with major term loan maturities pushed out past 2028 following recent refinancings. * **Interest rate profile**: Approximately 85% to 90% fixed or hedged via interest rate swaps. * **Covenants**: Standard incurrence covenants; ample headroom. * **Share repurchase programme**: Extremely active. The company retired over 25% of its outstanding shares between 2022 and 2025. A new $3.0 billion multi-year authorisation was launched in early 2025. * **Dividend policy**: No dividend. All return of capital is executed via share repurchases. ## Cash Flow Characteristics * **Operating cash flow conversion**: OCF is typically 1.5x to 2.0x Net Income due to massive non-cash amortisation and deferred revenue growth. * **Free cash flow margin**: 30% to 33% (FCF / Revenue). * **Major non-cash items**: Depreciation and amortisation, stock-based compensation, and deferred income taxes. * **Working capital cash flow impact**: Growth in deferred revenue is a major source of cash. When bookings grow faster than recognised revenue, working capital provides a cash inflow. * **Capex intensity**: Extremely low, allowing almost all operating cash flow to convert to free cash flow. * **Cash tax rate vs. GAAP effective tax rate**: Cash taxes are historically lower than the statutory rate due to tax attributes and amortisation of goodwill for tax purposes, though this gap is narrowing. ## Sheet Structure 1. **Assumptions**: Hardcoded inputs for macroeconomic drivers, segment growth rates, margin targets, tax rates, and capital return policies. 2. **Bookings & Revenue**: Calculates total bookings, models the deferred revenue roll-forward, and outputs recognised revenue for the Core Platform and A&C segments. 3. **Income Statement**: Projects revenue, cost of revenue, technology and development, marketing and advertising, customer care, G&A, and calculates Normalized EBITDA and Net Income. 4. **Balance Sheet**: Projects assets (cash, prepaid domain fees, goodwill) and liabilities (deferred revenue, debt). Must balance automatically. 5. **Cash Flow Statement**: Reconciles Net Income to OCF (adding back SBC, D&A, and deferred revenue changes), subtracts capex to reach FCF, and models share repurchases. 6. **Debt Schedule**: Tracks term loan and senior note balances, calculates interest expense based on fixed/floating mix, and models mandatory debt paydowns. 7. **Working Capital & Fixed Assets**: Detailed schedules for deferred revenue, prepaid registry fees, capex, and D&A waterfalls. 8. **Valuation (DCF)**: Calculates Unlevered Free Cash Flow, applies WACC, calculates terminal value, and bridges enterprise value to equity value per share. ## Key Financial Relationships 1. `Total Bookings = Core Platform Bookings + A&C Bookings` 2. `Ending Deferred Revenue = Beginning Deferred Revenue + Total Bookings - Total Recognised Revenue` 3. `A&C Revenue = Prior Year A&C Revenue x (1 + A&C Growth Rate Assumption)` 4. `Core Platform Revenue = Prior Year Core Revenue x (1 + Core Growth Rate Assumption)` 5. `Gross Profit = Total Revenue - Cost of Revenue` 6. `Normalized EBITDA = Gross Profit - Tech & Dev - Marketing & Advertising - Customer Care - G&A (excluding SBC and Restructuring)` 7. `Prepaid Domain Name Registry Fees = % of Core Platform Deferred Revenue` 8. `Free Cash Flow = Cash Provided by Operating Activities - Capital Expenditures` 9. `Shares Outstanding = Prior Period Shares - (Share Repurchase Spend / Average Share Price)` 10. `Interest Expense = (Average Term Loan Balance x Term Loan Rate) + (Average Senior Notes Balance x Notes Rate)` 11. `Net Debt = Total Debt - Cash and Cash Equivalents` 12. `Leverage Ratio = Net Debt / Normalized EBITDA` ## Cross-Sheet Dependencies * The **Bookings & Revenue** sheet is the engine of the model. It feeds recognised revenue to the **Income Statement** and the change in deferred revenue to the **Balance Sheet** and **Cash Flow Statement**. * The **Income Statement** generates Net Income, which begins the **Cash Flow Statement**. * The **Cash Flow Statement** calculates Free Cash Flow, which dictates the cash available for share repurchases on the **Assumptions** sheet and debt paydown on the **Debt Schedule**. * The **Debt Schedule** calculates interest expense, which feeds back into the **Income Statement**, creating a circular reference that must be managed (or bypassed using beginning-of-period debt balances for interest calculations). * The **Balance Sheet** pulls ending cash from the **Cash Flow Statement**, ending debt from the **Debt Schedule**, and ending deferred revenue from the **Bookings & Revenue** sheet. ## Sign Convention * **Revenues, Assets, and Equity**: Positive. * **Expenses and Capital Expenditures**: Positive in their supporting schedules, but subtracted in the Income Statement and Cash Flow Statement totals. * **Liabilities**: Positive. * **Cash Flow Outflows** (e.g., debt repayment, share repurchases): Negative on the Cash Flow Statement. * **Contra-accounts** (e.g., accumulated depreciation): Negative on the Balance Sheet. ## Things Most Likely to Go Wrong * **Failing to model the Bookings vs. Revenue dynamic**: GoDaddy's cash flow is driven by bookings, but the income statement is driven by recognised revenue. If the model links cash collection directly to revenue rather than bookings, operating cash flow will be severely understated. * **Misunderstanding Prepaid Registry Fees**: When GoDaddy registers a domain for a customer for 3 years, it collects cash upfront (deferred revenue liability) but also pays the registry upfront (prepaid domain fee asset). Both must be amortised over the 3-year period. * **Ignoring the share count reduction**: GoDaddy is retiring shares at a massive rate. Using a static share count for valuation will severely understate the per-share value. * **Including Aftermarket sales in recurring ARPU**: Domain aftermarket sales are highly lucrative but transactional. Blending them into subscription ARPU will create false growth assumptions. * **Miscalculating Normalized EBITDA**: GoDaddy excludes stock-based compensation and restructuring charges from its NEBITDA metric. The model must add these back to operating income to match company guidance. * **Overestimating Capex**: GoDaddy is not a traditional hosting company building massive data centres; it relies heavily on AWS. Capex should remain below 2.5% of revenue. * **Constant Currency vs. Reported**: Foreign currency translation can swing reported revenue by 1% to 3% YoY. The model should rely on reported figures but acknowledge constant currency trends in the assumptions. * **Tax Valuation Allowance Noise**: Historical net income is heavily distorted by massive non-cash tax benefits (e.g., $971 million in 2023, $267 million in 2024). The model must use a normalised cash tax rate for forward projections. ## Validation Checks * "Normalized EBITDA margin should expand toward 33% by 2026; flag if it drops below 31%." * "Free Cash Flow should be approximately $1.5 billion to $1.6 billion in FY2025; flag if FCF margin falls below 30%." * "Net Debt to NEBITDA should remain between 1.5x and 2.5x; flag if leverage exceeds 3.0x." * "Total Bookings must be greater than Total Revenue in a growing environment; flag if Bookings < Revenue." * "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period." * "Share count should decrease by 3% to 6% annually based on the $3.0 billion repurchase authorisation." * "Capex as a percentage of revenue should not exceed 2.5%." * "A&C revenue growth should outpace Core Platform revenue growth in all projected periods." ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | Core Platform Revenue Growth | 4.0 | % | Based on FY2025 actuals and mature domain industry trends. | | A&C Revenue Growth | 14.0 | % | Based on FY2025 actuals and strong adoption of GoDaddy Payments/Airo. | | Gross Margin | 63.0 | % | Historical average; stable due to mix of high-margin software and lower-margin domains. | | Tech & Dev % of Revenue | 15.0 | % | Historical average, supporting continued AI and platform investments. | | Marketing % of Revenue | 10.0 | % | Optimised spend level achieved in FY2024/FY2025. | | G&A % of Revenue | 11.0 | % | Historical average, scaling slightly with revenue. | | Customer Care % of Revenue | 8.0 | % | Historical average for GoDaddy Guides support network. | | Capex % of Revenue | 1.5 | % | Asset-light infrastructure model relying on public cloud. | | Effective Tax Rate | 21.0 | % | Long-term normalised corporate tax rate assumption. | | Annual Share Repurchase Spend | 1,000 | $ Millions | Run-rate based on the $3.0 billion authorisation through 2027. | | Average Interest Rate on Debt | 5.5 | % | Weighted average cost of debt based on recent term loan refinancings. | | Customer Retention Rate | 85.0 | % | Hardcoded historical average reported in 10-K. | | WACC | 8.5 | % | Standard discount rate for a mature, cash-generative tech infrastructure firm. | | Terminal Growth Rate | 2.5 | % | Aligns with long-term GDP growth and mature domain market expansion. | ## Data Sources & Benchmarks * **Filings**: SEC EDGAR (Form 10-K for FY2024 and FY2025, Form 8-K for Q4 2025 earnings). * **Investor Relations**: GoDaddy IR website (investors.godaddy.net) for quarterly slide decks and Investor Day presentations. * **Key Peers for Benchmarking**: Wix.com (WIX), Squarespace (SQSP), Shopify (SHOP), Verisign (VRSN). * **Industry Data Sources**: ICANN domain registration statistics, Verisign Domain Name Industry Brief. * **Consensus Estimates**: Bloomberg or FactSet for forward revenue and NEBITDA estimates. ## Sources * GoDaddy Inc. Form 10-K for the Fiscal Year Ended December 31, 2025 * GoDaddy Inc. Q4 2024 and Q4 2025 Earnings Press Releases * GoDaddy Inc. Q3 2025 Earnings Presentation and Prepared Remarks * GoDaddy Investor Relations Website (https://investors.godaddy.net) --- ## Frequently asked questions ### What does GoDaddy do? GoDaddy is a global provider of cloud-based products and personalized guidance for small businesses, individuals, and everyday entrepreneurs. It offers a one-stop shop for digital identity, website building, hosting, and commerce solutions, including point-of-sale systems and payment processing. ### How does GoDaddy generate revenue? GoDaddy generates revenue primarily through its Core Platform (domains, hosting) and Applications and Commerce (A&C) segments (website builders, payments, productivity apps). The company operates a highly cash-generative, asset-light subscription business model characterized by upfront cash collection. ### What is the assumed revenue growth rate for GoDaddy in the financial model? The financial model for GoDaddy assumes a revenue growth rate of approximately 9.23%. This assumption is key to forecasting the company's future financial performance and evaluating its equity value. ### What is GoDaddy's capital expenditure profile, and how does it impact its financial model? GoDaddy maintains a highly asset-light capital expenditure profile, with Capex as a percentage of revenue typically ranging from 1.5% to 2.5%. The financial model incorporates a Capex_Pct_Revenue assumption of approximately 1.74%, reflecting its service-oriented, subscription business model. ### What is the purpose of the GoDaddy financial model? The financial model evaluates GoDaddy Inc.'s equity value and free cash flow generation. Its purpose is to determine if the company's strategic shift toward higher-margin Applications & Commerce revenue and aggressive share repurchase program justify its current market valuation. ### Can I download an Excel financial model for GoDaddy? Yes, an Excel financial model for GoDaddy (GDDY) is available for download. This general corporate model provides a forecast horizon from FY2026 to FY2030, allowing for detailed analysis of the company's financial outlook. [Interactive forecast calculator](https://finamodel.com/companies/godaddy/forecast)