Jeff Bailey wrote a good piece on Seeking Alpha about the upcoming Go Daddy IPO. This article is worth reading for those contemplating investing in Go Daddy. Bailey does a good job at looking at the metrics Go Daddy uses and a look at their past financial history.
As far as metrics go Bailey points out that Go Daddy likes to focus on bookings rather than revenue.
In its IPO filing, GoDaddy makes clear it prefers different metrics. It likes bookings, which are all the cash receipts taken in during a given period, better than revenue. It only records revenue as the domain name and other customer agreements progress, so a two-year domain name rental paid up results in revenue spread out over 24 months. Bookings for 2013 were $1.40 billion, versus revenue of $1.13 billion. Some sales don’t stick, however, and GoDaddy is forced to make refunds: $96.1 million of refunds in 2013.
GoDaddy also likes adjusted EBITDA, which omits those pesky depreciation and amortization expenses. And it’s also enamored by a metric known as unlevered free cash flow, which is akin to a consumer making a monthly budget that omits the mortgage payment. It’s fun to dream.
Bailey also points out that the last time Go Daddy was profitable on a full year basis was back in 2009.
GoDaddy was last profitable on a full-year basis in 2009, with net income of $14.6 million on revenue of $610.3 million. A modest loss in 2010 was followed by big losses in the following three years. It reported a net loss of $51.3 million for the quarter ended March 31, roughly equal to last year’s quarterly loss.
Go Daddy also boosted its debt by paying a $350 million special dividend to KKR, Silver Lake Partners, Technology Crossover Ventures and founder Bob Parsons.
Read the full article here as it gives a good synopsis of what the Go Daddy investment picture is.
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