Q4 2020 Earnings Results - February 2021 Azhar Mohamed LESCRIBE.IN
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Q4 2020 Azhar Mohamed
LESCRIBE.IN
Earnings Results
February 2021
Forward–looking statements This presentation contains forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on estimates and information available to us at the time of this presentation and are not guarantees of future performance. Statements in this presentation involve risks, uncertainties and assumptions. If the risks or uncertainties materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact could be deemed forward-looking statements, including, but not limited to: launches of new or expansion of existing products or services, any projections of product or service availability, technology developments and innovation, customer growth, or other future events; any statements about historical results that may suggest future trends for our business; any statements regarding our plans, strategies or objectives with respect to future operations, including international expansion plans, partner integrations and marketing strategy; any statements regarding integration of recent or planned acquisitions, including desired synergies and vertical integration from recent acquisitions, changes to executive leadership, any statements regarding our future financial results; as well as the impact of the COVID-19 pandemic on our business, customers, employees and third-party partners; and any statements of assumptions underlying any of the foregoing. Actual results could differ materially from our current expectations as a result of many factors, including, but not limited to: the unpredictable nature of our rapidly evolving market; fluctuations in our financial and operating results; our rate of growth; interruptions or delays in our service or our web hosting; breaches of our security measures; the impact of any previous or future acquisitions; our ability to continue to release, and gain customer acceptance of, our existing and future products and services; our ability to manage our growth; our ability to hire, retain and motivate employees; the effects of competition; technological, regulatory and legal developments; intellectual property litigation; developments in the economy, financial markets and credit markets, including as a result of COVID-19; and execution of share repurchases. Additional risks and uncertainties that could affect GoDaddy’s financial results are included in the other filings we make with the SEC from time to time, including those described in "Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 as well as those described in “Management's discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2019 and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, which are available on GoDaddy’s website at https://investors.godaddy.net and on the SEC's website at www.sec.gov. Additional information will also be set forth in other filings that GoDaddy makes with the SEC from time to time. All forward-looking statements in this presentation are based on information available to GoDaddy as of the date hereof. GoDaddy does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made. Non-GAAP Financial Measures In addition to financial measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), this presentation includes certain non-GAAP financial measures and other operating metrics. We believe that these non-GAAP financial measures and other operating metrics are useful as a supplement in evaluating our ongoing operational performance and enhancing an overall understanding of our past financial performance. The non-GAAP financial measures included in this presentation should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation between each non-GAAP financial measure and its nearest GAAP equivalent is included at the end of this presentation. © 2021 GoDaddy Inc.
GoDaddy immediately addressable TAM: $180B
Dream Create Grow
Online Presence | Marketing | Commerce |
GoDaddy offering Domains
Branded Email Consumer Engagement
Typical customer spend
$15 $100-$250 $600-$1,000
in category per year
Available TAM $5B + $45B + $130B
Cumulative TAM = $5B = $50B = $180B
TAM figures are GoDaddy estimates for 2020 based on internal metrics and data from the GPFI Global Partnership for Financial Inclusion.
© 2021 GoDaddy Inc.
Q4 2020 results
Bookings Revenue UFCF†
13% Y/Y increase 12% Y/Y increase 2%‡ Y/Y increase
13% Constant Currency 12% Constant Currency 12%‡ excluding 27th pay period
$943M
Q4 2020 $874M $178M $181M
$834M Q4 2020 Q4 2019 Q4 2020
Q4 2019 $780M
Q4 2019
*uFCF is a non-GAAP measure. A reconciliation table between uFCF and its nearest GAAP equivalent for the period presented can be found at the end of this presentation.
© 2021 GoDaddy Inc.
1.4 MILLION
Net new customers in 2020.
© 2021 GoDaddy Inc.
eCommerce value prop
01 Reach more customers
Easily list inventory, in bulk, on multiple
sales channels.
02 Avoid overselling
Adjust and sync inventory across all channels.
03 Streamline fulfillment
Print postage and ship all orders
from a single interface.
© 2021 GoDaddy Inc.
Evolution
• Broader experimentation program
• Delivering functionality faster
• Setting ambitious goals while also
giving us the confidence to achieve
them
• Putting more products in the hands of
more customers and winning the
right to do more for them.
• Leadership evolution
Laura Johnson
YOUANDYOURS.COM
© 2021 GoDaddy Inc.
Commerce
• Strong growth in our Websites +
Marketing offering for commerce,
and in Sellbrite
• GMV grew 75% across all platforms
• Exceptional WooCommerce
capabilities through SkyVerge
acquisition
• Acquired Poynt February 2021:
§ Head start in integrating a set
of commerce solutions
§ Payment capabilities as
payment facilitator
§ Innovative point of sale terminals
§ Inventory management software,
loyalty management tools, and more
© 2021 GoDaddy Inc.
GoDaddy Pro Hub
Launch
• Enables website designers and
developers to perform their work in a
simple, intuitive way that saves them
time and money
• Enables bulk updates across hundreds
of sites for WordPress Core, plugins,
and themes, allowing pros to roll out
updates for better security, new
functionality, and better availability,
in seconds rather than hours
WATCH THE VIDEO
© 2021 GoDaddy Inc.
Innovation in Domains
• Recently added GoDaddy Corporate
Domains and GoDaddy Registry
• “Find” adaptive user experience
leverages multiple inputs ensuring
customers see the options and
bundles that will create the most value
• List for Sale tool allowing customers
with unused domains to list in the
aftermarket
© 2021 GoDaddy Inc.Websites + Marketing
• Freemium rollout adding millions
to our base with strong conversion
• Freemium availability to additional
markets in the coming year
• Added 9 new commerce templates
to make it easier than ever to get
started selling online
• Enhanced layouts and tools to help
customers promote offers in new
engaging ways
• Improved integration with social Ben Barnett
BARNETTBUILDING.COM.AU
media to improve organic posts
© 2021 GoDaddy Inc.Product Progress — Websites + Marketing
Improved
OLS zero
state &
COVID-19 featured
Online guidance in 30-day no
products
Online Promotional appointments W+M and credit card Social
appointment banner inventory accessible for GoDaddy CTA/button composer
scheduling feature management Integration Partnership global markets mobile app free trial Offer low customization dashboard
transaction
fees & new
payment
options (PP
credit, Venmo)
Pixel code 3rd party 1M+ paid Websites+ with PayPal Inline font
to site ratings & subscriptions Marketing Business sizing for
Integration capability Integration reviews sync Integration Online store for W+M Widget freemium payments GoDaddy desktop
Branded Protection accessible Expanded Upgraded COVID-19 app updates
browser Page Members- by for 20 global gallery of mobile email C2 include push Contact form
icons My Business insights only page recaptcha markets templates marketing rescheduling notifications attachments
Commerce
integrations
Insight TM
with g
smart tech Shopping, the Expanded Website Online
system facebook sync to Store
Enhanced
Privacy Website providing Developer Shopping Facebook expansion
payment policy theme performance Platform & Ads and & Instagram in APAC
Analytics integration creation Meta tag gallery metrics widgets Surfaces Shop countries
2017 2018 2019 2020
Integration Website Cookie Business Blog Integration Enhanced COVID-19 COVID-19 Social media Video hosting
SMS
backup notification listings comment in-line Awareness “one-click” content and creation
notifications
& restore pop-up capabilities editing templates Zoom meeting creation via Vimeo
enabled for
controls links with Over partnership new orders
integration
Content AdSense Integration Reviews E-commerce how-to Enhanced Streamlined COVID-19 Twitch or
sync digital courses media digital local delivery YouTube
Driving products insertion & marketing option livestream
Translate Blog Promo Websites + Consumer Websites + management Gift card suite Website care Product SEO Google
video One-page
tool offer Marketing accounts Marketing tools widget & onboarding proactive improvement AdSense
capability e-commerce
capabilities marketplaces for online store new product gift card outreach for globally template
via & appointments name redemption COVID-19 available
updates
HTML Online / offline Blog post Business Social media Android & Local delivery 3-month free trial Streamlined GoDaddy
customization inventory sync organization hours image iOS app digital marketing suite marketplace conversations
by categories syndication publishing listing flow
© 2021 GoDaddy Inc.Product Progress — Managed WordPress Pre-installing
necessary
Go Added 10 more
Added RTL extensions Blocked Premium WooCommerce
Comments surpassed WordPress
premium language based on user’s extensions for free to
Spam which 1,000,000 5.5 & 5.5.1
support goals eCommerce plan
improved Improve downloads rollout
storefront
Updated in app FAQs and Improved
themes to Rollout MySQL
editor purchase and documentation Built phase one of WP-Cron
E-com plan centralized performance
setting upgrades for for both Go & the GoDaddy with better
Core on and reduced layout CoBlocks layout and design stability
Web (1.2) panel slow queries MWP plans
logos & selector
pattern library
badges icon block Launched
Deployed
block extension Managed
integration the OWS Phase one
(custom UX Core WordPress on
website on of removing
iconography) styling our EMEA
Rollout WordPress jQuery
applied to Go is now Partner Brands
centralized using the block support
Core on from the #7 most TSO Host,
CDN collage editor for
Auto-install SFTP (1.2) Core popular DomainFactory,
integration gallery Go theme and Go
NextGen layouts Improved theme at Heart Internet
block available in blocks added to
for gradient 50,000+
WordPress RTL
eCommerce the Go controls active
repository support
intenders theme for Go installs
post
carousel
block Added Light-box
products gallery
New tour in support
offset onboarding Action
contact for lazy-
gallery available in Center for
form loading
block block all markets
plugins
2019 2020
New Gutter & Added
MWP was
masonry, map block provisioning column viewport
labeled as
carousel, (simple + flow with utility block
a top-tier
important classes animation
stacked Google WordPress
across all controls
gallery Maps API tips hosting
blocks support) blocks acquisition
product by
enhanced Review
form block Signal
Removed Vertical Global
Launched Improved Enabled
irrelevant slide out alignment viewport
acquired ecommerce premium SSL on
plugin cart in Go controls basis control
plan with temp
“Summer notifications Custom for site Added Successfully Launched
Introduced premium extensions domains added to
Refresh” from newly CSS spacing in ability migrated all new Domain
form events interface the Row to serve
UI launch provisioned properties Go customers Attach
utility- extensions variations block blocks layouts and
timed w/ sites for block from MWP Widget for
based class (contact,
DeepSee spacing patterns via 2.0 to MWP EMEA Brands
framework RSVP, appt the WPNUX
launch New Provisioned 1.0
forms) Sites have all pre- API
installed plugins
up-to-date Added card WordPress
Developed Update CoBlocks
became the #1 WordPress & Go to support and overlap 5.5.2 /
introduce customizable a process
Launched eCommerce blocks plugin by number of WordPress 5.5 styles to 5.5.3 and
social PHP unit typography for MySQL
#OpenWeStand active installs (usage), the Media 5.6 rollout
profiles testing fonts Balancing
promotion including used by & Text
block WordPress UI Request WordPress.com block
prototype free SSL
posts
© 2021 GoDaddy Inc.
block certificateDomains Hosting & Presence Business Applications
14% Y/Y increase 5% Y/Y increase 20% Y/Y increase
$402M $309M $163M
Q4402
2020 $293M Q4 2020 Q4 2020
$352M Q4 2019 $135M
Q4 352
2019
Q4 2019
• Continued strong renewals and • Expanding presence suite to help • Microsoft M365 continued strong
registrations entrepreneurs be everywhere they need to adoption
be to meet their customers
• Better and differentiated search • Open-Xchange in emerging markets
across desktop and mobile devices • Increasing functionality and feature set of
commerce offering • Strong Workspace renewals
• Broadest and deepest domain
aftermarket marketplace • Broad integrations and partnerships
• Launch of GoDaddy Registry • Build and customize your site on
any device
© 2021 GoDaddy Inc.Global footprint
Continued global expansion
International Revenue: 12% Y/Y growth | 12% Constant Currency
$293M
$261M
Q4 2020 100+ Countries
Q4 2019
$1.2B Run Rate
50+ Markets
Vanika Choudhary
SEQUELMUMBAI.IN
Ayah Sharaf
Ayah Sharaf Designs
AYAHSHARAFDESIGNS.COM
© 2021 GoDaddy Inc.Exceptional unlevered free cash flow (uFCF)
Trailing Twelve Month uFCF 15%
900 CAGR
280
800
$822M $825M
230 $771M $789M
700
$736M
$669M $685M
600 $656M
180
500
130
400
300
80
200
30
100
0
-20
Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20
A reconciliation table between uFCF and its nearest GAAP equivalent for the period presented can be found at the end of this presentation.
© 2021 GoDaddy Inc.Disciplined investment $439 MILLON
drives growth at great invested in Marketing and
Advertising in 2020
returns
For each $1 invested in Marketing in $374M $197M
2020, GoDaddy generated $0.85 in
Incremental Incremental
incremental Bookings and $0.45 in
incremental Gross Profit on $3,776M
$3,401M 2020
products that: 2019 $2,158M
2020
• create significant, immediate $1,961M
2019
customer value
• have high renewal rates
• have strong potential for upsell
and cross-sell
• have significant pricing power Bookings Gross profit
• are only getting betterBalance sheet and liquidity
Strong liquidity position Leverage Ratio $1.8B Term Loan Deployable capital
(LTM) Maturity – 2024 through 2023
Cash generative / +25% uFCF margins
$765M in cash on balance sheet $748M Term Loan
Maturity - 2027
2.6X leverage
• No significant debt maturities until 2024
$600M Unsecured
2.6X Debt – 2027
600M undrawn revolver $5B+
TRA 2.2X
Settled TRA for one-time payment of $850M 1.8X
Variable
Eliminates approximately $1.0B in tax-related
payments through 2028, and more thereafter Interest Rate
Exposure
Future growth targets
$3B+ in cumulative uFCF through 2023
Targeted leverage of 2X-4X
Variable Fixed
Incremental debt capacity of more than $1B,
with total deployable capital of more than
2018 2019 2020
$5B through 2023, assuming 4X leverage.
© 2021 GoDaddy Inc.Key investment highlights
• Clear global leader in serving massive
market of everyday entrepreneurs 4-1-1
• Innovative customer-led offering driving
share gains across the customer journey On GoDaddy
• Capability to invest capital aggressively
• Distinctive financial profile with profitable
$4B Revenue
growth at scale
• Experienced management with a track
$1.1B uFCF
record of success Organic target for 2022
Potential for upside from future M&A
Reconciliations to non-GAAP metrics can be found in the appendix.
© 2021 GoDaddy Inc.Q1 2021 Outlook
Total Revenue ~$885M; ~12% growth
Domains double-digit growth
Hosting & Presence mid-single-digit growth
Business Applications high-teens growth
© 2021 GoDaddy Inc.2021 Outlook
Total Revenue $3.7B; ~12% growth
Unlevered Free Cash Flow ~$945M; ~15% growth
Domains double-digit growth
Hosting & Presence high-single digit growth
Business Applications high-teens growth
© 2021 GoDaddy Inc.Non-GAAP Reconciliation: Bookings & uFCF
Three Months Ended December 31 Twelve Months Ended December 31
Reconciliation of Bookings ($M)
2019 2020 2019 2020
Total revenue $780.4 $873.9 $2,988.1 $3,316.7
Change in deferred revenue (3.1) 11.9 180.5 210.5
Net refunds 56.6 55.9 233.4 247.3
Other (0.3) 1.4 (0.8) 1.0
Total Bookings $833.6 $943.1 $3,401.2 $3,775.5
Three Months Ended December 31 Twelve Months Ended December 31
Reconciliation of Unlevered Free Cash Flow ($M)
2019 2020 2019 2020
Net cash provided by operating activities $162.2 $165.9 $723.4 $764.6
Cash paid for interest 26.9 31.9 80.3 80.5
Cash paid for acquisition-related costs 5.1 7.0 19.5 27.4
Capital expenditures (16.5) (27.4) (87.6) (66.5)
Cash paid for restructuring charges — 3.7 — 19.4
Unlevered Free Cash Flow $177.7 $181.1 $735.6 $825.4
© 2021 GoDaddy Inc.Non-GAAP Reconciliation: Normalized EBITDA
Three Months Ended December 31 Twelve Months Ended December 31
Reconciliation of Normalized EBITDA ($M)
2019 2020 2019 2020
Net income (loss) $61.1 $70.8 $138.4 ($494.1)
Interest, net 17.6 26.6 69.9 86.9
Benefit/Provision for income taxes & TRA adjustments (4.6) (5.5) (20.7) 673.4
Equity-based compensation expense 40.8 49.4 147.0 191.5
Depreciation and amortization 48.8 51.4 209.7 202.7
Acquisition-related costs 2.7 5.3 9.4 25.0
Restructuring charges — 1.1 — 46.8
Accrual for legal settlement expenses — (2.3) 18.1 (10.0)
Debt refinance expenses 0.3 — 14.8 —
Normalized EBITDA $166.7 $196.8 $586.6 $722.2
In Q3 2019, we recognized a $20.4M credit to correct an immaterial error related to certain performance-based awards in prior periods.
This adjustment increased Net Income by $20.4M and lowered equity-based compensation by $20.4M.
© 2021 GoDaddy Inc.Non-GAAP Reconciliation: Net Debt Reconciliation of Net Debt ($M) December 31, 2020 Current portion of long-term debt $24.3 Long-term debt 3,090.1 Unamortized original issue discount on long-term debt 13.5 Unamortized debt issuance costs 25.7 Total debt $3,153.6 Less: Cash and cash equivalents (765.2) Net Debt $2,388.4 © 2021 GoDaddy Inc.
Non-GAAP Reconciliation: Trailing Twelve Months uFCF Reconciliation of uFCF ($M) Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Net cash provided by operating activities $611.1 $643.5 $689.7 $723.4 $757.0 $763.8 $760.9 $764.6 Impact of discontinued operations 23.8 2.4 — — — — — — Cash paid for interest 85.0 83.4 75.7 80.3 70.1 76.6 75.4 80.5 Cash paid for restructuring charges — — — — — 0.4 15.7 19.4 Cash paid for acquisition-related costs 29.7 30.1 27.3 19.5 15.9 21.1 25.6 27.4 Capital expenditures (101.0) (97.7) (109.3) (87.6) (71.7) (72.4) (55.6) (66.5) Cash paid for indirect taxes 7.3 7.3 1.3 — — — — — Unlevered Free Cash Flow $655.9 $669.0 $684.7 $735.6 $771.3 $789.5 $822.1 $825.4 © 2021 GoDaddy Inc.
Non-GAAP Financial Measures & Other Operating Metrics In addition to our results determined in accordance with GAAP, this presentation includes certain non-GAAP financial measures and other operating metrics. We believe that these non-GAAP financial measures and other operating metrics are useful as a supplement in evaluating our ongoing operational performance and enhancing an overall understanding of our past financial performance. The non-GAAP financial measures included in this release should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation between each non-GAAP financial measure and its nearest GAAP equivalent is included in this release following the financial statements. We use both GAAP and non-GAAP measures to evaluate and manage our operations. © 2021 GoDaddy Inc.
Total Bookings. Total bookings represents cash receipts from the sale of products to customers in a given period adjusted for products where we recognize revenue on a net basis and without giving effect to certain adjustments, primarily net refunds granted in the period. Total bookings provides valuable insight into the sales of our products and the performance of our business since we typically collect payment at the time of sale and recognize revenue ratably over the term of our customer contracts. We report total bookings without giving effect to refunds granted in the period because refunds often occur in periods different from the period of sale for reasons unrelated to the marketing efforts leading to the initial sale. Accordingly, by excluding net refunds, we believe total bookings reflects the effectiveness of our sales efforts in a given period. Total customers. We define a customer as an individual or entity, as of the end of a period, having an account with one or more paid product subscriptions. A single user may be counted as a customer more than once if they maintain paid subscriptions in multiple accounts. Total customers is one way we measure the scale of our business and is an important part of our ability to increase our revenue base. ARPU. We calculate ARPU as total revenue during the preceding 12-month period divided by the average of the number of total customers at the beginning and end of the period. ARPU provides insight into our ability to sell additional products to customers. Unlevered Free Cash Flow. Unlevered free cash flow is a measure of our liquidity used by management to evaluate our business prior to the impact of our capital structure and restructuring and purchases of property and equipment, such as data center and infrastructure investments, that can be used by us for strategic opportunities and strengthening our balance sheet. However, given our debt obligations, unlevered free cash flow does not represent residual cash flow available for discretionary expenses. Normalized EBITDA. Normalized EBITDA is a supplemental measure of our operating performance used by management to evaluate our business. We believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide the most accurate measure of core operating results and permits period-over-period comparisons of our operations. We calculate Normalized EBITDA as net income excluding depreciation and amortization, interest expense (net), provision or benefit for income taxes and TRA adjustments, equity-based compensation expense, acquisition-related costs and certain other certain items. Net Debt. We define net debt as total debt less cash and cash equivalents and short-term investments. Total debt consists of the current portion of long-term debt plus long-term debt, unamortized original issue discount and unamortized debt issuance costs. We believe the presentation of net debt provides useful information to investors because our management reviews net debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage. Furthermore, certain analysts and debt rating agencies monitor our net debt as part of their assessments of our business. Gross Merchandise Volume (GMV) is an operating metric and represents the total dollar value of orders facilitated by our customers through the Websites + Marketing and Sellbrite platforms, including shipping and handling, and taxes, and is shown net of discounts, and returns (where visibility exists). While GMV is not indicative of our performance, we believe it is helpful to illustrate the volume of commerce facilitated by our products. © 2021 GoDaddy Inc.
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