GODADDY INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)

The following discussion and analysis of our financial condition and results of
operations should be read together with our financial statements and related
notes included in "Financial Statements and Supplementary Data." Some of the
information contained in this discussion and analysis, including information
with respect to our plans and strategies for our business, includes
forward-looking statements involving significant risks and uncertainties. As a
result of many factors, such as those set forth in "Risk Factors," actual
results may differ materially from the results described in, or implied by,
these forward-looking statements.

This section generally discusses items from 2021 and 2020 and year-over-year comparisons between 2021 and 2020. A discussion of items from 2019 and comparisons between 2020 and 2019 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the year ended December 31, 2020.

(Throughout the tables and this discussion and analysis, dollars are in

million, excluding average revenue per user (ARPU), and shares are in

                                  thousands.)

Covid-19 pandemic

We have implemented a variety of measures to attempt to minimize the impact of
the ongoing COVID-19 pandemic on our business, to ensure the availability and
functioning of our critical infrastructure and to promote the safety and
security of our employees. These measures have included remote working
arrangements for nearly all of our workforce since March 2020 and safety
protocols for any on-site personnel in accordance with federal, state and local
regulations. In late 2021, we reopened certain offices and allowed employees to
return to such offices on a voluntary basis. We expect to do this for other
offices and employees in 2022. Incremental costs of these remote working
arrangements have not been material, though such arrangements have increased the
risk of cybersecurity incidents as individuals have been working through less
secure network connections.

While the pandemic has not had a material impact on our results of operations so
far, the extent to which it may impact our future results and operations will
depend on future developments, including: (i) the duration of the pandemic; (ii)
the widespread distribution and long-term efficacy of vaccines and the
availability of effective treatments; (iii) the duration and parameters of
global governmental measures put in place to control the spread of the virus;
and (iv) the continuing economic impact of the pandemic. We are actively
monitoring the pandemic and the potential impacts it may have on our financial
position, results of operations and cash flows in the future. See "Risk Factors"
for additional information.

Overview

We serve several customer populations: Independents, Partners, Domain Registrars
and Investors, other Registrars and Corporate Domain Portfolio owners. While
these customer populations tend to utilize many of the same GoDaddy product
offerings, we consider the meaningful differences in their journeys, what they
value, their ultimate goals and how they communicate with the rest of the world
and aim to provide, and establish, solutions that address these differences. We
are the global market leader in domain registration. As of December 31, 2021,
approximately 89% of our customers had purchased a domain from us and we had
84.4 million domains under management. Based on information reported in
VeriSign's Domain Name Industry Brief, we had over 23% of the world's domains
registered as of September 30, 2021.

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We also offer hosting, presence and business applications products and services
(products) enhancing our value proposition by enabling our customers to create,
manage and syndicate their, or their customers', digital identities. These
products are often purchased in conjunction with, or subsequent to, an initial
domain registration. As we have grown, these products have become increasingly
important parts of our business, constituting approximately 53% of total revenue
in 2021.

Financial Highlights

Below are key financial highlights for 2021, with comparisons to 2020.

• Total turnover of $3,815.7 millionan increase of 15.0%, or approximately 14.4% at constant exchange rates(1).

• International turnover of $1,270.8 millionan increase of 15.0%, or approximately 13.2% at constant exchange rates(1).

• Total reservations(2) of $4,231.7 millionan increase of 12.1%, or approximately 11.2% at constant exchange rates(1).

• Operating result of $382.1 millionan increase of 40.4%.

• Net cash provided by operating activities of $829.3 millionan increase of 8.5%.

(1) Discussion of constant currency is set forth in "Quantitative and
Qualitative Disclosures about Market Risk."
(2) A reconciliation of total bookings to total revenue, its most directly
comparable GAAP financial measure, is set forth in "Reconciliation of Bookings"
below.

Our Financial Model

We have developed a stable and predictable business model driven by efficient
customer acquisition, high customer retention rates and increasing lifetime
spend. We grew our total customers from 18.5 million as of December 31, 2018 to
21.2 million as of December 31, 2021, through a combination of our industry
leading products built on a cloud platform, brand advertising, direct marketing
efforts, customer referrals, world-class customer care and acquisitions. In each
of the five years ended December 31, 2021, our customer retention rate exceeded
85%, and in 2021, our retention rate for customers who had been with us for over
three years was more than 93%. We believe the breadth and depth of our product
offerings and the high quality and responsiveness of our customer care team
build strong relationships with our customers and are key to our high level of
customer retention.

We generate bookings and revenue from sales of product subscriptions, including
domain products, hosting and presence products and business applications
products as well as from aftermarket domain sales. We offer our subscriptions on
a variety of terms, which average approximately one year, but can range from
monthly to multi-annual terms of up to ten years depending on the product. We
monitor total bookings as we typically collect payment at the time of sale and
generally recognize revenue ratably over the term of our customer contracts.
Accordingly, we believe total bookings is an indicator of the expected growth in
our revenue and is a supplemental measure of the operating performance of our
business. See "Reconciliation of Bookings" below for a reconciliation of total
bookings to total revenue.

Domains. We generated 47% of our 2021 total revenue from the sale of domain
products, primarily from domain registrations and renewals, aftermarket domain
sales and domain add-ons such as domain protection. Total revenue from domain
products grew at a compound annual growth rate (CAGR) of 14.0% over the three
years ended December 31, 2021.

Hosting and Presence. We generated 34% of our 2021 total revenue from the sale
of hosting and presence products, primarily from a variety of website hosting
products, website building products and website security products, which
generally have higher margins than conventional domain registrations. Total
revenue from hosting and presence products grew at a CAGR of 8.0% over the three
years ended December 31, 2021.

Business Applications. We generated 19% of our 2021 total revenue from the sale
of business applications products, primarily from third-party productivity
applications, which generally also have higher margins than conventional domain
registrations. Total revenue from business applications products grew at a CAGR
of 19.6% over the three years ended December 31, 2021.

Revenue derived from each of our product categories has increased in each of the
last three years, with many of our non-domains products growing faster in recent
periods.

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In each of the five years ended December 31, 2021, greater than 85% of our total
revenue was generated by customers who were also customers in the prior year. To
track our growth and the stability of our customer base, we monitor, among other
things, revenue, retention rates and ARPU generated by our annual customer
cohorts over time, as well as corresponding marketing and advertising spend. We
define an annual customer cohort to include each customer who first became a
customer during a calendar year. For example, in 2014, we acquired 2.9 million
gross customers, who we collectively refer to as our 2014 cohort, and spent
$165 million in marketing and advertising expenses. By the end of 2021, the 2014
cohort had generated an aggregate of approximately $1.7 billion of total
bookings and we expect this cohort will continue to generate bookings and
revenue in the future. For the five years ended December 31, 2021, the average
annual revenue retention rate of the 2014 cohort was more than 98%, which is
calculated by averaging the ratio of the cohort's annual revenue for each of the
five years to its annual revenue for each respective preceding year. Over this
period, ARPU for the 2014 cohort grew from $106 in 2016 to $197 in 2021,
representing a CAGR of 13%. We selected the 2014 cohort for this analysis
because we believe it is representative of the spending patterns and revenue
impact of our other cohorts. We believe our cohort analysis is important to
illustrate the long-term value of our customers.

Operating results

The following table sets forth our results of operations for the periods presented and as a percentage of our total revenues for those periods. Comparison of financial results from period to period is not necessarily indicative of future results.

                                                                               Year Ended December 31,
                                                      2021                               2020                               2019
                                                         % of Total                         % of Total                         % of Total
                                               $           Revenue                $           Revenue                $           Revenue
Revenue:
Domains                                   $ 1,809.9            47.4  %       $ 1,515.1            45.7  %       $ 1,351.6            45.2  %
Hosting and presence                        1,283.4            33.7  %         1,200.6            36.2  %         1,126.5            37.7  %
Business applications                         722.4            18.9  %           601.0            18.1  %           510.0            17.1  %
Total revenue                               3,815.7           100.0  %         3,316.7           100.0  %         2,988.1           100.0  %
Costs and operating expenses:
Cost of revenue (excluding depreciation
and amortization)                           1,372.2            36.0  %         1,158.6            34.9  %         1,026.8            34.3  %
Technology and development                    706.3            18.5  %           560.4            16.9  %           492.6            16.5  %
Marketing and advertising                     503.9            13.2  %           438.5            13.2  %           345.6            11.6  %
Customer care                                 306.1             8.0  %           316.9             9.6  %           348.7            11.7  %
General and administrative                    345.8             9.1  %           323.8             9.8  %           362.1            12.1  %
Restructuring and other                        (0.3)              -  %            43.6             1.3  %               -               -  %
Depreciation and amortization                 199.6             5.2  %           202.7             6.1  %           209.7             7.0  %
Total costs and operating expenses          3,433.6            90.0  %         3,044.5            91.8  %         2,785.5            93.2  %
Operating income                              382.1            10.0  %           272.2             8.2  %           202.6             6.8  %
Interest expense                             (126.0)           (3.3) %           (91.3)           (2.8) %           (92.1)           (3.1) %
Loss on debt extinguishment                       -               -  %               -               -  %           (14.8)           (0.5) %
Tax receivable agreements liability
adjustment                                        -               -  %          (674.7)          (20.3) %             8.7             0.3  %
Other income (expense), net                    (2.5)           (0.1) %            (1.6)              -  %            22.0             0.7  %
Income (loss) before income taxes             253.6             6.6  %          (495.4)          (14.9) %           126.4             4.2  %
Benefit (provision) for income taxes          (10.8)           (0.3) %             1.3               -  %            12.0             0.4  %

Net income (loss)                             242.8             6.3  %          (494.1)          (14.9) %           138.4             4.6  %
Less: net income attributable to
non-controlling interests                       0.5               -  %             1.0               -  %             1.4               -  %
Net income (loss) attributable to GoDaddy
Inc.                                      $   242.3             6.3  %       $  (495.1)          (14.9) %       $   137.0             4.6  %


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Operating Metrics

In addition to our results determined in accordance with GAAP, we believe the
following operating metrics are useful as supplements in evaluating our ongoing
operational performance and help provide an enhanced understanding of our
business:
                                                         Year Ended December 31,
                                                   2021           2020           2019
Total bookings                                  $ 4,231.7      $ 3,775.5      $ 3,401.2
Total customers at period end (in thousands)       21,233         20,646         19,274
Average revenue per user                        $     182      $     166      $     158


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.

Average revenue per user. 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, though the impact to date has
been muted due to our continued growth in total customers.

Reconciliation of reservations

The following table reconciles total reservations to total revenue, its most directly comparable GAAP financial measure:

                                          Year Ended December 31,
                                    2021           2020           2019
Total revenue                    $ 3,815.7      $ 3,316.7      $ 2,988.1
Change in deferred revenue(1)        186.6          210.5          180.5
Net refunds                          224.2          247.3          233.4
Other                                  5.2            1.0           (0.8)
Total bookings                   $ 4,231.7      $ 3,775.5      $ 3,401.2

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(1) The change in deferred revenue includes the impact of capital gains or losses realized on the hedging of foreign currency reservations.

Comparison of 2021 and 2020

Income

We generate substantially all of our revenue from sales of subscriptions,
including domain registrations and renewals, hosting and presence products and
business applications products as well as from aftermarket domain sales. Our
subscription terms can range from monthly terms to multi-annual terms of up
to ten years depending on the product. We generally collect the full amount of
subscription fees at the time of sale, while revenue, other than for aftermarket
domain sales, is primarily recognized over the period in which the performance
obligations are satisfied, which is generally over the contract term. Revenue
from aftermarket domain sales is recognized at the time when ownership of the
domain is transferred to the buyer. Revenue is presented net of refunds, and we
maintain a reserve to provide for refunds granted to customers.

Domain revenue primarily consists of revenue from the sale of domain registration subscriptions, aftermarket domain sales, and domain extensions such as domain protection.

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Hosting and Presence revenue primarily consists of revenue from the sale of subscriptions for website hosting, website building, website security and commercial products.

Business applications revenue primarily consists of revenue from the sale of
subscriptions for third-party productivity applications, email accounts, email
marketing tools and telephony solutions.

The following table presents our revenues for the periods indicated:

                                               Year Ended December 31,                                 2021 to 2020                               2020 to 2019
                                      2021               2020               2019              $ change             % change              $ change             % change
Domains                           $ 1,809.9          $ 1,515.1          $ 1,351.6          $     294.8                    19  %       $     163.5                    12  %
Hosting and presence                1,283.4            1,200.6            1,126.5                 82.8                     7  %              74.1                     7  %
Business applications                 722.4              601.0              510.0                121.4                    20  %              91.0                    18  %
Total revenue                     $ 3,815.7          $ 3,316.7          $ 2,988.1          $     499.0                    15  %       $     328.6                    11  %


The 15.0% increase in total revenue was driven by the 2.8% growth in total
customers, the 9.7% growth in ARPU as well as incremental revenue from
acquisitions completed in 2021. The increase in customers impacted each of our
revenue lines, as the additional customers purchased subscriptions across our
product portfolio.

Domains. The 19.5% increase in domains revenue was primarily driven by the
increase in domains under management from 82.7 million as of December 31, 2020
to 84.4 million as of December 31, 2021, the approximately 70.0% increase in
aftermarket domain sales fueled by our continued innovation in auction
technologies and contributions from recent registry acquisitions.

Hosting and presence. The 6.9% increase in hosting and presence revenue was
primarily driven by increased demand for our website building and website
security products as well as contributions from recent acquisitions, including
commerce-related revenue from GoDaddy Payments (formerly Poynt). The increase
was partially offset by lower demand for certain higher-priced subscriptions,
such as GoDaddy Social.

Commercial applications. The 20.2% increase in enterprise applications revenue was primarily driven by increased customer adoption of our productivity solutions.

Reservations

The following table shows our total reservations for the periods indicated:

                                             Year Ended December 31,                                 2021 to 2020                               2020 to 2019
                                    2021               2020               2019              $ change             % change              $ change             % change
Total bookings(1)               $ 4,231.7          $ 3,775.5          $ 3,401.2          $     456.2                    12  %       $     374.3                    11  %


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(1) A reconciliation of Total Reservations to Total Revenue, its most directly comparable GAAP financial measure, is provided in the “Reconciliation of Reservations” section above.

The 12.1% increase in total bookings was primarily driven by increases in total
customers and domains under management, increased aftermarket domain sales,
broadened customer adoption of non-domain products and contributions from recent
acquisitions. Additionally, total bookings in 2021 was favorably impacted by
approximately 90 basis points due to movements in foreign currency exchange
rates.

Operating costs and expenses

Revenue cost

Costs of revenue are the direct costs incurred in connection with selling an
incremental product to our customers. Substantially all cost of revenue relates
to domain registration fees, payment processing fees, third-party commissions
and licensing fees for third-party productivity applications. Similar to our
billing practices, we pay domain costs at the time of purchase for the life of
each subscription, but recognize the costs of service ratably over the term of
our customer contracts. The terms of registry pricing are established by
agreements between registries and registrars, and can vary significantly
depending on the TLD. We expect cost of revenue to increase in absolute dollars
in future periods related to the expansion of our domains

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business, higher sales of third-party productivity applications and growth in
our customer base. However, cost of revenue may fluctuate as a percentage of
total revenue, depending on the mix of products sold in a particular period.
                                         Year Ended December 31,                                 2021 to 2020                               2020 to 2019
                                2021               2020               2019              $ change             % change              $ change             % change

Cost of revenue             $ 1,372.2          $ 1,158.6          $ 1,026.8          $     213.6                    18  %       $     131.8                    13  %

The 18.4% increase in cost of revenue was primarily due to higher domain costs, which was driven by increased domains under management, increased secondary market domain sales and associated with our recently acquired registry business, as well as increased software license fees resulting from increased sales of productivity solutions and increased payment processing fees resulting from the growth of our reservations.

Technology and development

Technology and development expenses represent the costs associated with the
creation, development and distribution of our products and websites. These
expenses primarily consist of personnel costs associated with the design,
development, deployment, testing, operation and enhancement of our products, as
well as costs associated with the data centers and systems infrastructure
supporting those products, excluding depreciation expense. We expect technology
and development expense to increase in absolute dollars as we continue to invest
in product development and migrate our infrastructure to a cloud-based
third-party provider. Technology and development expenses may fluctuate as a
percentage of total revenue depending on our level of investment in additional
personnel and the pace of our infrastructure transition.
                                           Year Ended December 31,                               2021 to 2020                               2020 to 2019
                                    2021              2020             2019             $ change             % change              $ change             % change

Technology and development      $   706.3          $ 560.4          $ 492.6          $     145.9                    26  %       $      67.8                    14  %


The 26.0% increase in technology and development expenses was primarily as a
result of increased personnel costs driven by higher average headcount
associated with our continued investment in product development as well as
increased technology costs associated with the growth of our business and our
migration to a cloud-based infrastructure. Additionally, during 2021 we recorded
approximately $44.1 million in compensation expense resulting from our
acquisitions, primarily Poynt (now known as GoDaddy Payments).

Marketing and Advertising

Marketing and advertising expenses represent the costs associated with
attracting and acquiring customers, primarily consisting of fees paid to third
parties for marketing and advertising campaigns across a variety of channels.
These expenses also include personnel costs and affiliate program commissions.
We expect marketing and advertising expenses to fluctuate depending on both the
mix of internal and external marketing resources used, the size and scope of our
future campaigns and the level of discretionary investments we make in marketing
to drive future sales.
                                           Year Ended December 31,                               2021 to 2020                               2020 to 2019
                                    2021              2020             2019             $ change             % change              $ change             % change

Marketing and advertising       $   503.9          $ 438.5          $ 345.6          $      65.4                    15  %       $      92.9                    27  %


The 14.9% increase in marketing and advertising expenses were primarily
attributable to increased personnel costs and discretionary spending associated
with the marketing investments we made to drive additional growth, partially
offset by some expected deceleration due to the significant investments we made
in 2020 to capture higher demand.

Customer service

Customer care expenses represent the costs to guide and service our customers,
primarily consisting of personnel costs. We expect customer care expenses to
fluctuate depending on the level of personnel required to support our business.
                       Year Ended December 31,                  2021 to 2020                   2020 to 2019
                   2021          2020         2019         $ change        % change       $ change        % change

Customer care   $   306.1      $ 316.9      $ 348.7      $     (10.8)          (3) %    $     (31.8)          (9) %


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The 3.4% decrease in customer care expenses was primarily due to the headcount
reductions related to the restructuring plan we implemented during the second
quarter of 2020 as well as operating efficiencies gained as we scale our
business and increase our use of alternative methods of customer interaction.

general and administrative

General and administrative expenses primarily consist of personnel costs for our
administrative functions, professional service fees, office rent and facilities
expenses for all locations, acquisition-related expenses and other general
costs. We expect general and administrative expenses to fluctuate depending on
the level of personnel and other administrative costs required to support our
business as well as the significance of any strategic acquisitions we choose to
pursue.
                                              Year Ended December 31,                               2021 to 2020                               2020 to 2019
                                       2021              2020             2019             $ change             % change              $ change             % change

General and administrative         $   345.8          $ 323.8          $ 362.1          $      22.0                     7  %       $     (38.3)                  (11) %


The 6.8% increase in general and administrative expenses was primarily due to
increased acquisition-related expenses and professional fees, partially offset
by the reversal of a $5.7 million indirect tax reserve as a result of a
settlement agreement as well as the reversal of equity-based compensation
expense resulting from the forfeiture of unvested awards as a result of certain
executive departures.

Restructuring and other

Restructuring and other during 2021 includes (i) the $15.4 million gain on sale
of the land and buildings of our former corporate headquarters and (ii) a
$15.1 million charge related to the impairment of certain operating lease assets
and related leasehold improvements associated with the decision to close one of
our leased offices.

During 2020, we recorded $43.6 million in pre-tax restructuring charges pursuant
to a restructuring plan implemented in June 2020, as further discussed in Note
13.

Depreciation and amortization

Depreciation and amortization expenses consist of charges relating to the
depreciation of the property and equipment used in our operations and the
amortization of acquired intangible assets. These expenses may increase or
decrease in absolute dollars in future periods depending on our future level of
capital investments in hardware and other equipment as well as the significance
of any future acquisitions.
                                            Year Ended December 31,                               2021 to 2020                               2020 to 2019
                                     2021              2020             2019             $ change             % change              $ change             % change

Depreciation and amortization $199.6 $202.7 $209.7 $(3.1)

                   (2) %       $      (7.0)                   (3) %


There were no significant changes in the amortizations.

Interest expense

                                         Year Ended December 31,                                2021 to 2020                               2020 to 2019
                                   2021               2020            2019             $ change             % change              $ change             % change

Interest expense             $    126.0             $ 91.3          $ 92.1          $      34.7                    38  %       $      (0.8)                   (1) %


The 38.0% increase in interest expense was primarily driven by the issuance of
the 2027 Term Loans in August 2020 and the 2029 Senior Notes in February 2021,
as further discussed in Note 9 to our financial statements, partially offset by
a decrease in the effective interest rate on our variable rate borrowings.

Adjustment of liability for agreements on tax receivables

In 2020, we recorded a $674.7 million charge as a result of the settlement of
our obligations under the TRAs, as further discussed in Note 16 to our financial
statements.

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Cash and capital resources

Overview

Our principal sources of liquidity have been cash flow generated from
operations, long-term debt borrowings and stock option exercises. Our principal
uses of cash have been to fund operations, acquisitions and capital
expenditures, as well as to make mandatory principal and interest payments on
our long-term debt and to repurchase shares of our Class A common stock.

In general, we seek to deploy our capital in a prioritized manner focusing first
on requirements for operations, then on growth investments, and finally on
stockholder returns. Our strategy is to deploy capital, whether debt, equity or
internally generated cash, depending on the adequacy and availability of the
source of capital and which source may be used most efficiently and at the
lowest cost at such time. Therefore, while cash from operations is our primary
source of operating liquidity and we believe our internally-generated cash flows
are sufficient to support our day-to-day operations, we may use a variety of
capital sources to fund our needs for less predictable investment decisions such
as strategic acquisitions and share repurchases.

We have incurred significant long-term debt, primarily to fund acquisitions,
share repurchases and the settlement of our prior tax receivable agreements. As
a result, we are limited as to how we conduct our business and may be unable to
raise additional debt or equity financing to compete effectively or to take
advantage of new business opportunities, strategic acquisitions or share
repurchases. However, the restrictions under our long-term debt agreements are
subject to a number of qualifications and may be amended with the consent of the
lenders and the holders of the senior notes, as applicable.

We believe our existing cash and cash equivalents and cash generated by
operating activities will be sufficient to meet our anticipated operating cash
needs for at least the next 12 months. However, our future capital requirements
will depend on many factors, including our growth rate, macroeconomic activity,
potential business disruptions associated with the ongoing COVID-19 pandemic,
the timing and extent of spending to support domestic and international
development efforts, continued brand development and advertising spend, the
level of customer care and general and administrative activities, the
introduction of new and enhanced product offerings, the costs to support new and
replacement capital equipment, the completion of strategic acquisitions or share
repurchases and other factors. Should we pursue additional strategic
acquisitions or share repurchases, we may need to raise additional capital,
which may be in the form of long-term debt or equity financings.

Credit Facility and Senior Notes

Our long-term debt obligations consist of the Credit Facility and the senior
notes. In February 2021, we issued the 2029 Senior Notes in the principal amount
of $800.0 million, which bear interest at 3.50%. The proceeds were retained for
general corporate purposes, which may include working capital, capital
expenditures, potential acquisitions and strategic transactions. In addition, in
March 2021, we refinanced the 2027 Term Loans to lower the interest rate margins
by 0.5%. Estimated future interest payments associated with our long-term
totaled $554.8 million as of December 31, 2021, with $108.2 million payable
within 12 months. See Note 9 to our financial statements for additional
information regarding our long-term debt.

Our long-term debt agreements contain covenants restricting, among other things,
our ability, or the ability of our subsidiaries, to incur indebtedness, issue
certain types of equity, incur liens, enter into fundamental changes including
mergers and consolidations, sell assets, make restricted payments including
dividends, distributions and investments, prepay junior indebtedness and engage
in operations other than in connection with acting as a holding company, subject
to customary exceptions. As of December 31, 2021, we were in compliance with all
such covenants and had no amounts drawn on our Revolver.

As further discussed in Note 10 to our financial statements, we have hedged a
portion of our long-term debt through the use of cross-currency and interest
rate swap derivative instruments. These instruments help us manage and mitigate
our risk of exposure to changes in foreign currency exchange rates and interest
rates. See "Quantitative and Qualitative Disclosures About Market Risk" for
additional discussion of our hedging activities.

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Share buybacks

During 2021, we repurchased a total of 3,500 shares of our Class A common stock
in the open market for an aggregate purchase price of $275.9 million, including
commissions, and entered into an accelerated share repurchase (ASR) program in
August 2021 in which we repurchased an additional 3,425 shares for
$250.0 million. As of December 31, 2021, we had $749.2 million of remaining
authorization available for repurchases. See Note 5 to our financial statements
for additional information.

In January 2022, our board of directors approved the repurchase of up to an
additional $2,251.0 million of our Class A common stock. Such approval was in
addition to the amount remaining available for repurchases under prior approvals
of our board of directors, such that we have authority to repurchase up to
$3,000.0 million of shares of our Class A common stock. Under this authority, in
February 2022, we entered into a new ASR to repurchase shares of our Class A
common stock in exchange for an up-front payment of $750.0 million. See Note 5
to our financial statements for additional information.

Acquisitions

In February 2021, we completed the acquisition of Poynt (now known as GoDaddy
Payments) for $297.1 million in cash consideration to expand our commerce
capabilities. At closing, we also paid an additional $29.4 million in cash that
was recorded as compensation expense during the three months ended March 31,
2021. The acquisition agreements also call for $45.0 million in additional
compensatory cash payments subject to certain performance and employment
conditions over the three-year period following the closing date.

During 2021, we completed two other acquisitions for aggregate purchase
consideration of $65.7 million in cash paid at closing and additional contingent
earn-out payments of up to $18.5 million subject to the achievement of certain
operational and financial milestones over the two-year periods following the
respective closing dates.

See Note 3 to our financial statements for additional discussion of our business acquisitions.

During 2021, we purchased intangible assets for a total of $200.1 million in
cash. One of these purchases also includes a variable earn-out payment of up to
$12.0 million based on the achievement of specified future performance
conditions. See Note 4 to our financial statements for additional discussion.

Cash flow

The following table summarizes our cash flows for the periods indicated:

Year ended the 31st of December,

                                                                    2021              2020              2019
Net cash provided by operating activities                        $  829.3          $  764.6          $ 723.4
Net cash used in investing activities                              (635.6)           (482.3)          (135.3)
Net cash provided by (used in) financing activities                 298.1            (581.7)          (456.9)
Effect of exchange rate changes on cash and cash equivalents         (1.3)              1.8             (0.8)
Net increase (decrease) in cash and cash equivalents             $  490.5   

$(297.6) $130.4

Operational activities

Our primary source of cash from operating activities has been cash collections
from our customers. Our primary uses of cash from operating activities have been
for domain registration costs paid to registries, software licensing fees
related to third-party productivity solutions, personnel costs, discretionary
marketing and advertising costs, technology and development costs and interest
payments. We expect cash outflows from operating activities to be affected by
the timing of payments we make to registries as well as by increases in
personnel and other operating costs as we continue to grow our business.

Net cash provided by operating activities increased $64.7 million from $764.6
million in 2020 to $829.3 million in 2021, primarily driven by our bookings
growth. This increase was partially offset by $29.4 million in compensatory
payments made in connection with the closing of our acquisition of Poynt (now
known as GoDaddy Payments) as well as increased discretionary spending
associated with the marketing investments we made to drive additional growth.

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Investing activities

Our investing activities generally consist of strategic acquisitions and
purchases of property and equipment to support the overall growth of our
business. We expect our investing cash flows to be affected by the timing of
payments we make for capital expenditures and the strategic acquisition or other
growth opportunities we decide to pursue.

Net cash used in investing activities increased $153.3 million from $482.3
million in 2020 to $635.6 million in 2021, primarily driven by a $187.1 million
increase of purchases of intangible assets and $40.0 million in purchases of
equity investments in 2021, partially offset by a $57.0 million decrease in
spending for business acquisitions.

Fundraising activities

Our financing activities generally consist of long-term debt borrowings, long-term debt principal repayments, exercise of stock options and share buybacks.

Net cash from financing activities increased $879.8 million from $581.7 million
used in 2020 to $298.1 million provided in 2021, primarily due to $849.8 million
in payments made to settle our prior tax receivable agreements in 2020 and
$800.0 million in proceeds from the issuance of the 2029 Senior Notes in 2021,
partially offset by the receipt of $746.3 million in net proceeds from the
issuance of the 2027 Term Loans in 2020.

Deferred revenue

See Note 7 to our financial statements for further details regarding the expected future recognition of deferred revenue.

Off-balance sheet arrangements

As of December 31, 2021 and 2020, we had no off-balance sheet arrangements that
had, or which are reasonably likely to have, a material effect on our financial
statements.

Significant Accounting Policies and Estimates

We prepare our financial statements in accordance with GAAP, and in doing so, we
make estimates, assumptions and judgments affecting the reported amounts of
assets, liabilities, revenues and expenses, as well as the related disclosure of
contingent assets and liabilities. We base our estimates, assumptions and
judgments on historical experience and on various other factors we believe to be
reasonable under the circumstances, and we evaluate these estimates, assumptions
and judgments on an ongoing basis. Different assumptions and judgments would
change the estimates used in the preparation of our financial statements, which,
in turn, could change our results from those reported. We refer to estimates,
assumptions and judgments of this type as our critical accounting policies and
estimates, which we discuss further below. We review our critical accounting
policies and estimates with the audit and finance committee of our board of
directors on an annual basis.

See Note 2 to our financial statements for a summary of our significant accounting policies.

Revenue recognition

We recognize revenue when control of the promised products is transferred to a
customer, in an amount reflecting the consideration we expect to be entitled to
in exchange for those products. Payments received in advance of our performance
are recorded as deferred revenue. Revenue is recognized net of allowances for
returns and transaction-based taxes collected.

We generally sell our products with a right of return, which we account for as
variable consideration when estimating the amount of revenue to recognize.
Refunds are estimated at contract inception using the expected value method
based on historical refund experience and updated each reporting period as
additional information becomes available. Our annual refund rate has declined
from 6.9% of total bookings in 2019 to 5.3% in 2021.

We may sell multiple products to customers at the same time. For example, we may
design a customer website and separately offer other products such as hosting
and an SSL certificate, or a customer may combine a domain registration with
other products such as Websites + Marketing or email. Judgment may be required
in determining whether products contain multiple distinct performance
obligations that should each be accounted for separately or as one combined
performance

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obligation. The majority of our revenue agreements consist of multiple performance obligations, with revenue being recognized over the period in which each performance obligation is satisfied, which is generally the term of the contract.

For arrangements with multiple performance obligations, we allocate revenue to
each distinct performance obligation based on its relative stand-alone selling
price (SSP). Our process for determining SSP requires judgment and considers
multiple factors that may vary over time depending upon the unique facts and
circumstances related to each performance obligation. We determine SSP based on
prices charged to customers for individual products, taking into consideration
other factors, which may include (i) historical and expected discounting
practices; (ii) the size, volume and term length of transactions; (iii) customer
demographics; (iv) the geographic areas in which our products are sold; and (v)
our overall go-to-market strategy.

We sell our products directly to customers and also through a network of
resellers. In certain cases, such as for aftermarket domain sales, we act as a
reseller of products provided by others. The determination of gross or net
revenue recognition is reviewed on a product-by-product basis and is dependent
on whether we act as principal or agent in the transaction.

See Notes 2 and 7 to our financial statements for additional information regarding revenue recognition and deferred revenue.

Acquisitions

We determine whether substantially all of the fair value of assets acquired is
concentrated in a single identifiable asset or a group of similar identifiable
assets. If this threshold is met, the single asset or group of assets, as
applicable, is accounted for as an asset acquisition.

We include the results of operations of acquired businesses in our financial
statements as of the respective dates of acquisition. Accounting for business
acquisitions requires us to make significant estimates and assumptions,
especially at the acquisition date, with respect to tangible and intangible
assets acquired, liabilities assumed and pre-acquisition contingencies. The
purchase price, including estimates of the fair value of contingent
consideration when applicable, is allocated to the tangible and intangible
assets acquired and the liabilities assumed based on their estimated fair values
on the respective acquisition dates, with the excess recorded as goodwill.
Critical estimates used in valuing certain acquired intangible assets include,
but are not limited to, future expected cash flows (primarily from customer
relationships and developed technology) and discount rates.

Contingent consideration liabilities, which relate to future earn-out payments
associated with our acquisitions, are generally valued using discounted cash
flow valuation methods. Critical estimates used in valuing these liabilities
include estimated operating results scenarios for the applicable performance
periods, probability weightings assigned to operating results scenarios and
discount rates.

We use our best estimates and assumptions to determine acquisition-date fair
values. These estimates are inherently uncertain and subject to refinement. We
continue to collect information and reevaluate our preliminary estimates and
assumptions and record any qualifying measurement period adjustments to
goodwill. Contingent consideration is adjusted to fair value in subsequent
periods as an increase or decrease in general and administrative expenses.

See notes 2 and 3 to our financial statements for additional information regarding business acquisitions.

Good will and indefinite life intangible assets

We make estimates, assumptions and judgments when valuing goodwill and other
intangible assets in connection with the initial purchase price allocations of
business acquisitions, as well as when evaluating the recoverability of our
goodwill and other intangible assets on an ongoing basis. We assess our goodwill
and indefinite-lived intangible assets for impairment at least annually during
the fourth quarter. We will also perform an assessment at other times if and
when events or changes in circumstances indicate the carrying value of these
assets may not be recoverable.

We perform our impairment assessment based on qualitative analysis, which
includes considering various factors including macroeconomic conditions,
industry and market conditions and our historical and projected operating
results. If, based on our qualitative analysis, we were to determine it is
more-likely-than-not the fair value of our single reporting unit is less than
its carrying amount, we would record an impairment loss for the amount equal to
such excess.

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Our qualitative analyses during 2021, 2020 and 2019 did not indicate any
impairment. As of December 31, 2021, we believe such assets are recoverable;
however, there can be no assurance these assets will not be impaired in future
periods. Any future impairment charges could adversely impact our results of
operations.

See notes 2 and 4 to our financial statements for more information on goodwill and indefinite life intangible assets.

Income taxes

We are subject to U.S. federal, state and foreign income taxes with respect to
our allocable share of any taxable income or loss of Desert Newco, as well as
any stand-alone income or loss we generate. Significant judgment is required in
determining our provision or benefit for income taxes and in evaluating
uncertain tax positions.

We account for income taxes under the asset and liability method, which requires
the recognition of DTAs and DTLs for the expected future tax consequences of
events included in our financial statements. Under this method, we determine
DTAs and DTLs on the basis of the differences between the financial statement
and tax bases of assets and liabilities by using enacted tax rates in effect for
the year in which the differences are expected to reverse. The effect of a
change in tax rates on DTAs and DTLs is recognized in income in the period in
which the enactment date occurs.

We recognize DTAs to the extent we believe these assets are more-likely-than-not
to be realized. In evaluating our ability to realize our DTAs, in full or in
part, we consider all available positive and negative evidence, including future
reversals of existing taxable temporary differences, projected future taxable
income, prudent and feasible tax planning strategies and recent results of
operations. The assumptions utilized in determining future taxable income
require significant judgment and are consistent with the plans and estimates we
use to manage our business. Actual operating results in future years could
differ from our current assumptions, judgments and estimates, which could have a
material impact on the amount of DTAs we ultimately realize.

We recognize tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be maintained after review by tax authorities based on the technical merits of the position. The tax benefits recognized for these positions are assessed on the basis of the most significant benefit with a probability of realization greater than 50%.

See Notes 2 and 15 to our financial statements for additional information regarding income taxes and considerations that could lead to a release of substantially all of the valuation allowance on our DTAs.

Indirect taxes

We are subject to indirect taxation in some, but not all, of the various states
and foreign jurisdictions in which we and our subsidiaries conduct business.
Laws and regulations attempting to subject communications and commerce conducted
over the Internet to various indirect taxes are becoming more prevalent, both in
the U.S. and internationally, and may impose additional burdens on us in the
future. Increased regulation could negatively affect our business directly, as
well as the businesses of our customers. Taxing authorities may impose indirect
taxes on the Internet-related revenue we generate based on regulations currently
being applied to similar, but not directly comparable, industries. There are
many transactions and calculations where the ultimate indirect tax determination
is uncertain. In addition, domestic and international indirect taxation laws, or
interpretations thereof, are subject to change.

The calculation of our provision for indirect taxes involves significant management estimates and is based on an ongoing analysis of our business activities, income subject to indirect taxes and applicable regulations. Although we believe that our indirect tax estimates and associated liabilities are reasonable, the final determination of indirect tax audits, litigation or settlements could be materially different from the amounts determined for indirect tax contingencies.

See note 12 to our financial statements for additional information regarding indirect taxes.

Loss Contingencies

We are subject to the possibility of various loss contingencies arising from
uncertain and unresolved matters in the ordinary course of business and from
events or actions by others having the potential to result in a future loss.
Such contingencies may include, but are not limited to, intellectual property
claims, putative class actions, commercial and consumer protection

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claims, labor and employment claims, breach of contract claims, regulatory
proceedings, product service level commitments and losses resulting from other
events and developments. We consider the likelihood of loss, the impairment of
an asset or the incurrence of a liability, as well as our ability to reasonably
estimate the amount of loss, in determining loss contingencies.

When a loss is considered probable and reasonably estimable, we record a
liability in the amount of our best estimate for the ultimate loss. When there
appears to be a range of possible costs with equal likelihood, a liability is
recorded based on the low-end of such range. However, the likelihood of a loss
with respect to a particular contingency is often difficult to predict and
determining a meaningful estimate of the loss or a range of loss may not be
practicable based on the information available and the potential effect of
future events and decisions by third parties impacting the ultimate resolution
of the contingency. It is also not uncommon for such matters to be resolved over
many years, during which time relevant developments and new information must be
continuously evaluated to determine both the likelihood of potential loss and
whether it is possible to reasonably estimate a range of possible loss. When a
loss is probable but a reasonable estimate cannot be made, disclosure is
provided. Disclosure is also provided when it is reasonably possible a loss will
be incurred or when it is reasonably possible the amount of a loss will exceed
the recorded amounts.

We regularly review all contingencies to determine whether the likelihood of
loss has changed and to assess whether a reasonable estimate of the loss or
range of loss can be made. Development of a meaningful estimate of loss, or a
range of potential loss, is complex when the outcome is directly dependent on
negotiations with, or decisions by, third parties such as regulatory agencies,
court systems in various jurisdictions and other interested parties. Such
factors bear directly on whether it is possible to reasonably estimate a range
of potential loss and boundaries of high and low estimates. Until the final
resolution of such matters, there may be an exposure to loss in excess of the
amounts recorded, and such amounts could be material. Should any of our
estimates and assumptions change or prove to have been incorrect, it could have
a material impact on our business, operating results or financial condition.

See Note 12 to our financial statements for additional information regarding loss contingencies.

Recent accounting pronouncements

For more information on recent accounting pronouncements, see Note 2 to our financial statements.

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