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What changed in GoDaddy's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GoDaddy's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+685 added−660 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-16)

Top changes in GoDaddy's 2023 10-K

685 paragraphs added · 660 removed · 534 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

148 edited+40 added−29 removed56 unchanged
Biggest changeWe do all this by providing value well in excess of the price we charge, which often puts our products in a position of strength on functionality while at an affordable cost. Our domain name registration products enable us to engage customers at the initial stage of establishing a digital identity and often are an on-ramp for our other products.
Biggest changeOur domain name registration products enable us to engage customers at a common starting place for establishing an exclusive personally branded identity and often are an on-ramp for our other products. Domains are a part of our Core Platform business, and we believe our Applications and Commerce products are a natural adjacency to our domain registration products.
We understand that no matter what our customers' needs or what stage of their idea they are focusing on, our customers want a "one-stop shop" solution. We offer our customers products and services to meet them at every stage of their journey.
We understand that no matter what our customers' needs are, or what stage of their idea they are focusing on, our customers want a "one-stop shop" solution. We offer our customers products and services to meet them at every stage of their journey.
Surrounding these channels and tactics, our customers also need easy-to-use tools to run their businesses. • Technology that is reliable, secure, performance enhancing and evolves with their needs.
Surrounding these channels and tactics, our customers also need easy-to-use tools to run their businesses. • Technology that is easy-to-use, reliable, secure, performance enhancing and evolves with their needs.
Through our global volunteer and matching programs, we enable our employees to volunteer in their communities with paid time off, and we match employee donations to qualifying nonprofits of choice up to $1,500 per employee per year or country equivalent. In addition, our employees can earn funds for nonprofits they volunteer with through our volunteer rewards program.
Through our global volunteer and matching programs, we enable our employees to volunteer in their communities with paid time off, and we match employee donations to qualifying nonprofits of choice up to $1,500 per employee per year or country equivalent. In addition, our employees can earn funds for qualifying nonprofits they volunteer with through our volunteer rewards program.
Ubiquitous presence represents the need of our customers to present themselves to their customers, which they do through an ever-expanding set of options across social media, marketing channels, email, marketplaces and through their website. Being able to seamlessly create and post content quickly is imperative. What it means for our customers to be online continues to evolve.
Presence represents the need of our customers to present themselves to their customers, which they do through an ever-expanding set of options across social media, marketing channels, email, marketplaces and through their website. Being able to seamlessly create and post content quickly is imperative. What it means for our customers to be online continues to evolve.
The registration of domain names is governed by ICANN, a multi-stakeholder private sector, not-for-profit corporation formed in 1998 for the express purposes of overseeing a number of Internet related tasks, including management of the DNS, allocation of IP addresses, accreditation of domain name registrars and registries and the definition and coordination of policy development for all of these functions.
The registration of domain names is governed by ICANN, a multi-stakeholder private sector, not-for-profit corporation formed in 1998 for the express purposes of overseeing a number of Internet related tasks, including management of the Domain Name System (DNS), allocation of IP addresses, accreditation of domain name registrars and registries and the definition and coordination of policy development for all of these functions.
Our integrated registry solutions provide policy and operational support, and domain marketing, sales and strategic planning. Hosting and Security For more technically sophisticated web designers, developers and customers, we provide high-performance, flexible hosting and security products that can be used with a variety of open source design tools as well as Managed WordPress.
Our integrated registry solutions provide policy and operational support, and domain marketing, sales and strategic planning. Hosting and Security For more technically sophisticated web designers, developers and customers, we provide high-performance, flexible hosting and security products that can be used with a variety of open source design tools as well as WordPress.
Connected commerce recognizes that our customers need commerce to work seamlessly for them both offline and online. Our customers' customer expectations are set by how they engage with enterprise-grade experiences, which means they expect to be able to buy online and pick up in the store in a matter of minutes.
Commerce recognizes that our customers need commerce to work seamlessly for them both offline and online. Our customers' customer expectations are set by how they engage with enterprise-grade experiences, which means they expect to be able to buy online and pick up in the store in a matter of minutes.
We have built a scalable infrastructure platform allowing us to optimize for economies of scale and enable next-generation hosting architecture for our customers, while investing in faster, denser and more efficient data centers, improved network connectivity and improved resiliency, both domestically and internationally. We aim to provide a reliable and secure global platform and infrastructure.
We built a scalable infrastructure platform allowing us to optimize for economies of scale and enable next-generation hosting architecture for our customers, while investing in faster, denser and more efficient data centers, improved network connectivity and improved resiliency, both domestically and internationally. We aim to provide a reliable and secure global platform and infrastructure.
We support a variety of control panels and content management tools favored by WebPros including cPanel, Plesk, Drupal, Joomla and more. Our third largest customer population is Domain Registrars and Investors. Domain registrars are organizations that have their own domain registration offerings, but who use our domain registration and management platform.
We support a variety of third-party control panels and content management tools favored by WebPros including cPanel, Plesk, Drupal, Joomla and more. Our third largest customer population is Domain Registrars and Investors. Domain registrars are organizations that have their own domain registration offerings, but who use our domain registration and management platform.
In 2017, we began reporting on our pay practices across U.S.-based race and ethnic minority and non-minority employee populations and have reported each year that we believe, based on such data, that we have paid minorities and non-minorities substantially the same for performing similar jobs across the company. • Diversity, Equity, Inclusion and Belonging.
In 2017, we began reporting on our pay practices across U.S.-based race and ethnic minority and non-minority employee populations and reported each year that we believe, based on such data, that we paid minorities and non-minorities substantially the same for performing similar jobs across the company. • Diversity, Equity, Inclusion and Belonging.
Our customers are consumers themselves, which makes them keenly aware of the need to have an impactful online presence. While our customers' needs change depending on where they are in their journey, the most common customer needs we serve include: • Digital identity .
Our customers are consumers themselves, which makes them keenly aware of the need to have an impactful online presence. While our customers' needs change depending on where they are in their journey, the most common customer needs we serve include: • Identity .
These customers are looking for the most powerful, secure and intuitive technology to streamline their processes, unparalleled industry experience and expertise to navigate the complexities of managing a corporate portfolio, and a focused and dedicated team that can provide committed support with the highest levels of security, service and domain management. 6 Table of Contents Our Solutions We have designed and developed an extensive set of easy-to-use technology products to enable our customers to establish a digital identity, connect with their customers across multiple platforms and online marketplaces and deliver a seamless customer experience in a connected commerce world.
These customers are looking for the most powerful, secure and intuitive technology to streamline their processes, unparalleled industry experience and expertise to navigate the complexities of managing a corporate portfolio, and a focused and dedicated team that can provide committed support with the highest levels of security, service and domain management. 6 Table of Contents Our Solutions We designed and developed an extensive set of easy-to-use technology products to enable our customers to establish an identity, connect with their customers across multiple platforms and online marketplaces and deliver a seamless customer experience in a connected commerce world.
Our VPS solutions provide our customers with a single virtual machine which runs multiple other virtual machines for other customers. Our VPS is designed for customers who need greater control, more advanced technical capabilities and higher performance than that offered by our shared hosting plans.
Our VPS solutions provide our customers with a single virtual machine which runs multiple other virtual machines for other customers. Our VPS is designed for customers who need greater control, more advanced technical capabilities and higher performance than offered by our shared hosting plans.
We offer Microsoft Office 365 through multiple plans ranging from email with calendar and contacts connected to a full suite of productivity tools, including file sharing and full desktop versions of Microsoft productivity applications, such as Outlook, Word, Excel and PowerPoint.
We offer Microsoft 365 through multiple plans, ranging from email with calendar and contacts connected to a full suite of productivity tools, including file sharing and full desktop versions of Microsoft productivity applications, such as Outlook, Word, Excel and PowerPoint.
Connected Commerce We aim to lead the small business commerce market by enabling GoDaddy customers of all sizes, from those just starting out to established businesses looking to scale and grow, to sell everywhere their customers shop.
Commerce We aim to lead the small business commerce market by enabling GoDaddy customers of all sizes, from those just starting out to established businesses looking to scale and grow, to sell everywhere their customers shop.
And while our customers' online identities start with creating and managing these points of presence, their identities are amplified through content generation and the ability to engage and transact online with their customers and audience. • Ubiquitous presence .
And while our customers' online identities start with creating and managing these points of presence, their identities are amplified through content generation and the ability to engage and transact online with their customers and audience. • Presence .
We manage and report our business in the following two segments: • Applications and Commerce (A&C) , which primarily consists of sales of products containing proprietary software, commerce products and third-party email and productivity solutions as well as sales of certain products when they are included in bundled offerings of our proprietary software products. • Core Platform (Core) , which primarily consists of sales of domain registrations and renewals, aftermarket domain sales, website hosting products and website security products when not included in bundled offerings of our proprietary software as well as sales of products not containing a software component.
We manage and report our business in the following two segments: • Applications and Commerce (A&C) , which primarily consists of sales of products containing proprietary software, notably our website building products, as well as our commerce products and third-party email and productivity solutions and sales of certain products when they are included in bundled offerings of our proprietary software products. • Core Platform (Core) , which primarily consists of sales of domain registrations and renewals, aftermarket domain sales, website hosting products and website security products when not included in bundled offerings of our proprietary software products as well as sales of products not containing a software component.
Independents range from individuals who have an initial business idea and those thinking about starting a business, to established ventures that need help attracting customers, growing their sales, managing their online presence or expanding their operations. Most Independents have fewer than five employees and most self-identify as having little to no technology or design skills.
Independents range from individuals who have an initial business idea and those thinking about starting a business, to established ventures that need help attracting customers, growing their sales, processing payments, managing their online presence or expanding their operations. Most Independents have fewer than five employees, and most self-identify as having little to no technology or design skills.
With each of these plans, customers have access to industry-targeted professional design templates, which can be further customized using our editor by adding intent-driven sections, photos, videos or text. Our design templates cover a wide range of categories with professionally written content for small businesses, organizations, families, weddings and other ideas.
With each of these plans, customers gain access to industry-targeted professional design templates, which can be further customized using our editor by adding intent-driven sections, photos, videos or text. Our design templates cover a wide range of categories with professionally written content for small businesses, organizations, families, weddings and other ideas.
In order to offer retail point-of-sale solutions that connect to payment networks, retail point-of-sale providers must certify their products and services with the payment card networks, financial institutions and payment processors, as well as comply with government and telecommunications company regulations including those imposed by the U.S. Federal Communications Commission (FCC) and similar telecommunications authorities worldwide.
In order to offer retail point-of-sale solutions that connect to payment networks, retail point-of-sale providers must certify their products and services with the payment card networks, financial institutions and payment processors, as well as comply with government and telecommunications company regulations including those imposed by the U.S. Federal Communications Commission (FCC) and similar telecommunications authorities worldwide. Artificial Intelligence .
These customers need our help to create a unique and secure digital identity, especially with the more technical aspects of their online presence.
These customers need our help to create a unique and secure identity, especially with the more technical aspects of their online presence.
Our customers want to develop a digital identity by finding a name that distinctly identifies their business, hobby or passion. We believe their digital identity includes not just a simple, mobile-enabled website, but the ability to get found across various search engines, social media platforms and vertical marketplaces.
Our customers want to develop an identity by finding a name that distinctly identifies their business, hobby or passion. We believe their identity includes not just a simple, mobile-enabled website, but the ability to get found across various search engines, social media platforms and vertical marketplaces.
As their entrepreneurial needs evolve, we help our customers manage and grow their businesses and connect with their customers through our expanded service offerings and access to relevant third-party products and platforms, including website building and hosting, marketplace syndication, social media and bio site management, security, business products and email and other services.
As their entrepreneurial needs evolve, we help our customers manage and grow their presence and connect with their customers through our expanded service offerings and access to relevant third-party products and platforms, including website building and hosting, marketplace syndication, social media and bio site management, security, business products and email and other services.
Not only are we committed to increasing workforce diversity, but we have launched various initiatives to further our goal of being a more diverse, inclusive and equitable workplace. We have several Employee Resource Groups (ERGs), which are employee-driven and led groups focused around common topics, identities, affinities, or interests.
Not only are we committed to increasing workforce diversity, but we launched various initiatives to further our goal of being a more diverse, inclusive and equitable workplace. We support several Employee Resource Groups (ERGs), which are employee-driven and led groups focused around common topics, identities, affinities, or interests.
Serving these customer needs creates a deep relationship, where we are looked to as not just a solution provider, but also a guide and partner to their entrepreneurial journey. This makes for a favorable business and economic model, aligning the interests of GoDaddy and our customers.
Serving these customer needs creates a deep relationship, where we are viewed as not just a solution provider, but also a guide and partner to their entrepreneurial journey. This makes for a favorable business and economic model, aligning the interests of GoDaddy and our customers.
Our goal is to be a trusted partner to these entrepreneurs, bringing together the technology, ease of use and care necessary to bring their ideas to life online. We believe the following strengths provide us with competitive advantages in serving these needs: Global Brand Awareness.
Our goal is to be a trusted partner to these entrepreneurs, bringing together the technology, ease of use and guidance necessary to bring their ideas to life online. We believe the following strengths provide us with competitive advantages in serving these needs: Global Brand Awareness.
WebPros are often freelancers, moonlighters or teams within website design agencies that often have website design as one of multiple streams of income. WebPros generally have more technical acumen and look for tools that provide greater amounts of flexibility, such as our WordPress content management system (CMS).
WebPros are often freelancers, moonlighters or teams within website design agencies that often have website design as one of multiple streams of income. WebPros generally have more technical acumen and look for tools that provide greater amounts of flexibility, such as the WordPress content management system (CMS).
Our GoDaddy Investor mobile application helps investors watch and bid on domains at auction and stay on top of current bids from their mobile devices. We continue to invest in search, discovery and recommendation tools and transfer protocols for both primary and secondary domains. Partnering Up.
Our GoDaddy Investor mobile application helps investors watch and bid on domains at auction and stay on top of current bids from their mobile devices. We continue to invest in search, discovery and recommendation tools and transfer protocols for both primary and secondary domains.
Since 2013, hundreds of new gTLDs have been launched through ICANN's "new gTLD program" initiated in 2012 (the Expansion Program), making it easier for companies and individuals to find and register new, easy-to-remember domain names tailored to their ideas, industry or interests. ccTLDs are important to our international expansion efforts as we have found international customers often prefer the ccTLD for the country or geographic market in which they operate.
Since 2013, hundreds of new gTLDs were launched through ICANN's "new gTLD program" initiated in 2012 (the Expansion Program), making it easier for companies and individuals to find and register new, easy-to-remember domain names tailored to their ideas, industry or interests. ccTLDs are important to our international expansion efforts as we found international customers often prefer the ccTLD for the country or geographic market in which they operate.
For customers wanting to protect their email data, we offer an email backup service, and for customers needing to comply with regulatory requirements, we offer email add-on services such as HIPAA-enabled email, encryption services (in partnerships with ProofPoint and Inky), archiving services (in partnership with Barracuda) and advanced e-mail security.
For customers wanting to protect their email data, we offer an email backup service, and for customers needing to comply with regulatory requirements, we offer email add-on services such as HIPAA-enabled email, encryption services (in partnership with ProofPoint), archiving services (in partnership with Barracuda) and advanced e-mail security.
These investors bring a unique and valuable resource to our business in the form of liquidity and the ability to help our other populations (Independents and WebPros) successfully find a domain name they prefer. We also serve other Registrars and Corporate Domain Portfolio owners.
These investors bring a unique and valuable resource to our business in the form of liquidity and the ability to help our other populations (Independents and WebPros) successfully find a domain name they prefer. We also serve Third Party Registrars and Corporate Domain Portfolio owners.
WordPress is the most used content management application on our shared hosting platform. Website Hosting on Virtual Private Servers and Virtual Dedicated Servers . Our broad range of virtual private server (VPS) offerings allow our customers to select the server configuration best suited for their applications, requirements and growth.
WordPress is the most used content management application on our shared hosting platform. Virtual Private Servers . Our broad range of virtual private server (VPS) offerings allow our customers to select the server configuration best suited for their applications, requirements and growth.
As part of this effort, we regularly run campaigns simultaneously and constantly refine our media mix across our channels. Central to our international strategy is a philosophy of localizing our product offerings and customer experience and deploying them through our global infrastructure.
As part of this effort, we regularly run campaigns simultaneously and constantly refine our media mix across our channels. Central to our international strategy is a philosophy of scaling our product offerings and customer experience and deploying them through our global infrastructure.
While these customer populations tend to utilize many of the same GoDaddy product offerings, there are meaningful differences in their journeys, what they value, their goals and how they communicate with the rest of the world. We aim to establish and provide solutions that address these differences. Our largest customer population, Independents, consists mostly of micro-businesses and noncommercial endeavors.
While these customer populations tend to utilize many of the same GoDaddy product offerings, there are meaningful differences in their journeys, what they value, their goals and how they communicate with the rest of the world. We aim to establish and provide solutions that address these differences. Our largest customer population, Independents, consists mostly of microbusinesses and noncommercial endeavors.
Our commerce products are designed to help our customers sell online, in person and on leading marketplaces, while being able to manage their sales from one place. In addition to robust commerce capabilities, we offer the lowest card transaction fees in the industry when compared to other leading providers, which allows our customers to keep more of what they make.
We design our commerce products to help our customers sell online, in person and on leading marketplaces, while being able to manage their sales from one place. In addition to robust commerce capabilities, we offer the lowest card transaction fees in the industry when compared to other leading providers, which allows our customers to keep more of what they make.
Today, having an effective online presence often means having a combination of: (i) a secure and content-rich website viewable from any device; (ii) a presence on social media channels (e.g., Meta, TikTok, Snapchat, Twitter and WeChat); (iii) getting found by search engines (e.g., Google); and (iv) establishing a presence on: (a) an increasing number of horizontal marketplaces (e.g., Yelp and Eventbrite); (b) vertical marketplaces (e.g., Zillow, OpenTable and HomeAdvisor); and (c) e-commerce platforms (e.g., Amazon, eBay, Etsy). • Connected commerce .
Today, having an effective online presence often means having a combination of: (i) a secure and content-rich website viewable from any device; (ii) a presence on social media channels (e.g., Meta, TikTok, Snapchat, X (f/k/a Twitter) and WeChat); (iii) getting found by search engines (e.g., Google); and (iv) establishing a presence on: (a) an increasing number of horizontal marketplaces (e.g., Yelp and Eventbrite); (b) vertical marketplaces (e.g., Zillow, OpenTable and HomeAdvisor); and (c) e-commerce platforms (e.g., Amazon, eBay and Etsy). • Commerce .
We also provide a link to the section of the SEC's website at www.sec.gov that has all of the reports, proxy and information statements we file or furnish with the SEC. 19 Table of Contents
We also provide a link to the section of the SEC's website at www.sec.gov that has all of the reports, proxy and information statements we file or furnish with the SEC. 20 Table of Contents
Though we rely in part upon these legal and contractual protections, as well as various procedural safeguards, we believe the skill and ingenuity of our employees, the functionality and frequent enhancements to our solutions and our ability to introduce new products and features meeting the needs of our customers are more important to maintaining our competitive position in the marketplace.
Though we rely in part upon these legal and contractual protections, as well as various procedural safeguards, we believe the skill and ingenuity of our employees, the functionality and 19 Table of Contents frequent enhancements to our solutions and our ability to introduce new products and features meeting the needs of our customers are more important to maintaining our competitive position in the marketplace.
Our customers need affordable solutions to level the playing field with the tools to look and act like bigger ventures. We aim to provide affordable products and services for our customers at every level to support their businesses.
Our customers need affordable solutions to level the playing field with the tools to appear and act like bigger ventures. We aim to provide affordable products and services for our customers at every level to support their businesses.
The ACPA provides that registrars may not be held liable for damages for registration or maintenance of a domain name for another person absent a showing of the registrar's bad faith intent to profit. Registrars may, however, be held liable if their activities are deemed outside the scope of basic registrar functions. Lanham Act .
The ACPA provides that registrars may not be held liable for damages for registration or maintenance of a domain name for another person absent a showing of the registrar's bad faith intent to profit. Registrars may, however, be held liable if their activities are deemed outside the scope of basic registrar functions. 18 Table of Contents Lanham Act .
We operate a large domain aftermarket platform, which processes aftermarket, or secondary, domain name sales. Our aftermarket platform is designed to enable the seamless purchase and sale of previously registered domain names through an online auction, an offer and counter offer transaction or a "buy now" transaction, and automation and lease to own options for our customers through Dan.com.
We operate a large domain aftermarket platform, which processes aftermarket, or secondary, domain name sales. We designed our aftermarket platform to enable the seamless purchase and sale of previously registered domain names through an online auction, an offer and counter offer transaction or a "buy now" transaction and automation and lease to own options for our customers.
Our content platform and content creation processes help us realize efficiencies and scalability, which enhance our ability to drive new, high-quality products and customer experiences to market faster. We are focused on driving advancements in experimentation, the speed and volume of content creation, localization and content self-service, while ensuring platform availability and performance.
Our content platform and content creation processes help us realize efficiencies and scalability, which enhance our ability to drive new, high-quality products and customer experiences to market faster. We focus on driving advancements in experimentation, the speed and volume of content creation, localization and content self-service, while ensuring platform availability and performance.
We continue to migrate most of our non-hosting products and internal systems to AWS, which has accelerated our ability to provide speed and reliability in both our product and customer experiences. These efforts and our large technology infrastructure footprint allow us to scale and provide our customers with valuable products at affordable prices.
We continue to migrate many of our non-hosting products and internal systems to AWS, which accelerated our ability to provide speed and reliability in both our product and customer experiences. These efforts and our large technology infrastructure footprint allow us to scale and provide our customers with valuable products at affordable prices.
As of December 31, 2022, approximately 92% of our customers had purchased a domain from us. In addition, GoDaddy Registry provides a high-performance back-end registry technology platform with a portfolio of TLDs including .biz, .co, .nyc, and .us. Our primary domains product offerings include: Primary Registrations .
As of December 31, 2023, approximately 92% of our customers purchased a domain from us. In addition, GoDaddy Registry provides a high-performance back-end registry technology platform with a portfolio of TLDs including .biz, .co, .nyc, and .us. Our primary domains product offerings include: Primary Registrations .
Although our customers have differing degrees of resources and technical capabilities, they all share a desire to find tools to help them bring their ideas to life, enhance connections with their audience and provide a seamless experience for both existing and new customers.
Although our customers have differing degrees of resources and technical capabilities, they all share a desire to find tools to help them bring their ideas to life, enhance connections with their audience, sell their products and services and provide a seamless experience for both existing and new customers.
Online store capability is easy to use and offers powerful commerce features with templates for websites that are optimized for mobile shopping, integrations with GoDaddy Payments and our Smart Terminal POS system, inventory and product catalog management, and growth tools for marketing.
Online store capability is easy to use and offers powerful commerce features with templates for websites that are optimized for mobile shopping, integrations with GoDaddy Payments and our Smart Terminal Point-of-Sale (POS) system, inventory and product catalog management, and growth tools for marketing.
In addition, California enacted the California Consumer Privacy Act (CCPA) in 2018, effective January 1, 2020, which was further modified by the passage of the California Privacy Rights Act (CPRA) in the November 2020 election.
In addition, California enacted the California Consumer Privacy Act (CCPA) in 2018, effective January 1, 2020, which was further modified by the passage of the California Privacy Rights Act (CPRA).
Our products and services provide a platform that can meet the needs of entrepreneurs, who may not be 11 Table of Contents technologically savvy, or WebPros, who have more complex requirements, and the range of customers in between who have different demands and levels of sophistication.
Our products and services provide a platform that can meet the needs of entrepreneurs, who may not be technologically savvy, or WebPros, who have more complex requirements, and the range of customers in between who have different demands and levels of sophistication.
It is also impossible to predict whether new taxes will be imposed on our services, and depending upon the type of such taxes, whether and how we would be affected. 18 Table of Contents Intellectual Property and Proprietary Rights Our intellectual property and proprietary rights are important to our business.
It is also impossible to predict whether new taxes will be imposed on our services, and depending upon the type of such taxes, whether and how we would be affected. Intellectual Property and Proprietary Rights Our intellectual property and proprietary rights are important to our business.
We serve registrars through GoDaddy Registry which provides wholesale generic top level domains (gTLDs) and country-code top level domains (ccTLDs) for registrars to sell to the end customer. These top-level domains (TLDs) provide alternatives to the .com domain that more closely represent the name of our customers' ideas, businesses and brands.
We serve third party registrars through GoDaddy Registry which provides wholesale generic top level domains (gTLDs) and country-code top-level domains (ccTLDs) for registrars to sell to the end customer. These top-level domains (TLDs) provide alternatives to the .com domain that more closely represent the names of our customers' ideas, businesses and brands.
We rely on a combination of trademark, patent, copyright and trade secret laws, confidentiality and access-related procedures and safeguards and contractual provisions to protect our proprietary technologies, confidential information, brands and other intellectual property. As of December 31, 2022, we had 353 issued patents in the U.S. covering various aspects of our product offerings.
We rely on a combination of trademark, patent, copyright and trade secret laws, confidentiality and access-related procedures and safeguards and contractual provisions to protect our proprietary technologies, confidential information, brands and other intellectual property. As of December 31, 2023, we had 368 issued patents in the U.S. and other countries covering various aspects of our product offerings.
These micro-businesses have an entrepreneurial spirit, strong work ethic and, above all, passion for their ideas, yet their specific needs vary depending on the type of their idea and the phase of their journey.
These microbusinesses have an entrepreneurial spirit, strong work ethic and, above all, passion for their ideas, yet their specific needs vary depending on the type of their idea and the phase of their journey.
This service combines dedicated teams of branding experts – photographers, writers, designers, marketers – with proprietary technology to manage activity on Meta, Twitter and Yelp, among others, to help our customers acquire new customers and build stronger relationships with their existing customers.
This service combines dedicated teams of branding experts – photographers, writers, designers, marketers – with proprietary technology to manage activity on Meta, X (f/k/a Twitter) and Yelp, among others, to help our customers acquire new customers and build stronger relationships with their existing customers.
This service enables our customers to start accepting payments in minutes with a simple setup and get paid, in many cases, as early as the next business day all with the lowest fees in the industry 8 Table of Contents when compared to other leading providers.
This service enables our customers to start accepting payments in minutes with a simple setup and get paid, in many cases, as early as the next business day, all with the lowest fees in the industry when compared to other leading providers.
The CDA regulates content of material on the Internet, and provides immunity to Internet service providers and providers of interactive computer services for certain claims based on content posted by third 17 Table of Contents parties.
The CDA regulates content of material on the Internet, and provides immunity to Internet service providers and providers of interactive computer services for certain claims based on content posted by third parties.
Our customers can tailor their VPS plans based on a range of performance, storage, bandwidth and operating system needs. Managed Hosting . With our managed hosting products, we set up, monitor, maintain, secure and patch software and servers for our customers.
Our customers can tailor their VPS plans based on a range of performance, storage, bandwidth and operating system needs. 10 Table of Contents Managed WordPress Hosting . With our managed hosting products, we set up, monitor, maintain, secure and patch software and servers for our customers.
For example, the European Union (E.U.) has enacted the General Data Protection Regulation (GDPR), superseding the 1995 European Union Data Protection Directive. The GDPR includes stringent operational requirements for processors and controllers of E.U. personal data with broad extra-territorial effect and imposes significant penalties for non-compliance.
For example, the European Union (E.U.) has enacted the General Data Protection Regulation (GDPR), which includes stringent operational requirements for processors and controllers of E.U. personal data with broad extra-territorial effect and imposes significant penalties for non-compliance.
In each of the five years ended December 31, 2022, our customer retention rate exceeded 85%, and in 2022, our retention rate for customers who had been with us for over three years was approximately 93%. Additionally, in 2022, we had approximately 1.5 million customers who each spent more than $500 a year on our product offerings.
In each of the five years ended December 31, 2023, our customer retention rate was approximately 85%, and in 2023, our retention rate for customers who had been with us for over three years was approximately 92%. Additionally, in 2023, we had over 1.5 million customers who each spent more than $500 a year on our product offerings.
We invested in the automation of common physical data center components like servers, load balancers, switches and storage, and we use open source solutions when possible to automate manual processes and thereby reduce the risk of human error and lower costs. Additionally, we are leveraging a common automated infrastructure based on OpenStack and KVM to enable next-generation services.
We invested in the automation of common physical data center components like servers, load balancers, switches and storage, and we use open source solutions when possible to automate manual processes and thereby reduce the risk of human error and lower costs. Additionally, we leverage a common automated infrastructure based on OpenStack and Kernel-based Virtual Machine (KVM) to enable next-generation services.
Technology and Infrastructure Our products, customer experiences and business systems are enabled by our technology and infrastructure to provide scalability, security and flexibility. Technology and development expenses, including those expenses related to our technology platform, were $794 million, $706 million and $560 million in 2022, 2021 and 2020, respectively.
Technology and Infrastructure Our products, customer experiences and business systems are enabled by our technology and infrastructure to provide scalability, security and flexibility. Technology and development expenses, including those expenses related to our technology platform, were $840 million, $794 million and $706 million in 2023, 2022 and 2021, respectively.
Our commerce solutions are designed to grow with our customers' businesses by enabling them to seamlessly sell both offline and online, from online marketplaces and social platforms, while easily managing their sales in one place.
Helping customers sell anything anywhere. Our commerce solutions are designed to grow with our customers' businesses by enabling them to seamlessly sell both offline and online, from online marketplaces and social platforms, while easily managing their sales in one place.
Our primary registration offering relies heavily on our search, discovery and recommendation tools which enable our customers to find a domain name that matches their business needs and goals. We also 9 Table of Contents sell domain registrations through relationships with third-party resellers and we provide back-end registry services supporting more than 215 TLDs. Aftermarket .
Our primary registration offering relies heavily on our search, discovery and recommendation tools which enable our customers to find a domain name that matches their business needs and goals. We also sell domain registrations through relationships with third-party resellers and we provide back-end registry services supporting more than 200 TLDs. Aftermarket .
Small Business Administration's Office of Advocacy indicated that there were approximately 32.5 million small businesses in the U.S. (based on the Census Bureau's 2018 Statistics of U.S. Businesses), and they were estimated to have represented approximately 43.5% of total U.S. gross domestic product (GDP) in 2014.
Small Business Administration's Office of Advocacy indicated that there were approximately 33.2 million small businesses in the U.S. (based on the Census Bureau's 2019 Statistics of U.S. Businesses), and they were estimated to have represented approximately 43.5% of total U.S. gross domestic product (GDP) in 2014.
During the five years ended December 31, 2022, we invested to support our growth with $2,987 million in technology and development expenses. The growth in our technology and development expenses has been driven primarily by our focus on enhancing customer experiences through the use of software-driven products. Additionally, we offer Domain Registry and Corporate Domains solutions to our customers.
During the five years ended December 31, 2023, we invested to support our growth with $3,393 million in technology and development expenses. The growth in our technology and development expenses has been driven primarily by our focus on enhancing customer experiences through the use of software-driven products. Additionally, we offer Domain Registry and Corporate Domains solutions to our customers.
Our Customers We serve several customer populations: (i) Independents, (ii) WebPros, (iii) Domain Registrars and Investors, and (iv) other Registrars and Corporate Domain Portfolio owners.
Our Customers We serve several customer populations: (i) Independents, (ii) WebPros, (iii) Domain Registrars and Investors, and (iv) Third Party Registrars and Corporate Domain Portfolio owners.
Our primary website building products (Websites + Marketing and Managed WordPress), website security suite, email offerings (Microsoft Office 365 and Open X-change), commerce products and domain aftermarket each represent significant need states that are complementary to our long-standing offerings and benefit from our strengths as a company in human-infused technology.
Our primary website building products (Websites + Marketing, Managed WordPress and GoDaddy Airo), website security suite, email offerings (Microsoft 365), commerce products and domain aftermarket each represent significant need states that are complementary to our long-standing offerings and benefit from our strengths as a company in human-infused technology.
All of our email accounts are ad-free and include security functionality designed to provide protection from spam, viruses and other forms of online fraud, such as phishing. Microsoft Office 365 . We offer fully-supported Microsoft Office 365 accounts that are easy to set up and use with our customers' domains.
All our email accounts are ad-free and we offer added security functionality designed to protect from spam, viruses and other forms of online fraud, such as phishing. Microsoft 365 . We offer fully-supported Microsoft 365 accounts that are easy to set up and use with our customers' domains.
We offer a range of email service plans with a multi-feature web interface that connects to our customers' domains. The pricing of these plans depends on the customer's desire for additional features, including HIPAA compliant email, advanced email security, archiving, and additional business applications such as Microsoft Bookings and Microsoft Teams.
Our primary email and productivity solutions products include: Email Accounts . We offer a range of email service plans with a multi-feature web interface that connects to our customers' domains. The pricing of these plans depends on the customer's desire for additional features, including HIPAA- compliant email, advanced email security, archiving, and additional business applications such as Microsoft Teams.
Hundreds of new gTLDs were introduced in 2013 through the Expansion Program, expanding the available inventory for GoDaddy and our customers. Through GoDaddy Registry, we operate back-end registry management for more than 215 TLDs. Additionally, we have invested to expand the secondary market to help match buyers to sellers who already own domains.
Hundreds of new gTLDs were introduced in 2013 through the Expansion Program, expanding the available inventory for GoDaddy and our customers. Through GoDaddy Registry, we operate or provide back-end registry services to more than 200 TLDs. Additionally, we invested to expand the secondary market to help match buyers to sellers who already own domains.
Additionally, we monitor employee responses to identify areas of opportunity and set goals and expectations for improvement to ensure employees feel connected and engaged with GoDaddy's mission, our customers and their own teams. • Community Investment. Our social impact work, overseen by our GoDaddy for Good team, is an extension of our company vision and mission.
Additionally, we monitor employee responses to identify areas of opportunity and set goals and expectations for improvement to ensure employees feel connected and engaged with GoDaddy's mission, our customers and their own teams. • Community Rewards. Our social impact work, overseen by our Corporate Sustainability & ESG team, is an extension of our company vision and mission.
As a "payment facilitator," GoDaddy Payments enables our customers to accept all major forms of payment, including Visa, MasterCard, American Express, Discover, and contactless payments including Apple Pay and Google Pay, with no long-term contracts or monthly minimums.
As a "payment facilitator," GoDaddy Payments enables our customers in both the U.S. and Canada to accept all major forms of payment, including Visa, MasterCard, American Express, Discover, and contactless payments including Apple Pay and Google Pay, with no long-term contracts or monthly minimums.
Our customers need to effectively communicate with existing customers and potential customers across a communication landscape that is fragmented in both form and function.
Our customers need to effectively communicate with existing customers and potential customers across a communication landscape that is fragmented in both form and 11 Table of Contents function.
Our customers vary significantly, but they remain the same in their need for a simple platform and set of tools to enable their domain, website, marketing and commerce solutions to easily work together as their ideas grow and become more complex.
Our customers vary significantly, but they remain the same in their need for a simple platform and set of tools to enable their domain, website, marketing and commerce solutions to easily work together as their ideas grow and become more complex. In 2023, we launched GoDaddy Airo in the U.S.
We design these solutions to be easy to use, effective, reliable, flexible and at a great value. We offer a variety of hosting and security products enabling our customers to create and manage their digital identity, or in the case of WebPros, the digital identities of their end-customers. Our primary hosting and security products include: Shared Website Hosting .
We design these solutions to be easy to use, effective, reliable, flexible and provide great value. We offer a variety of hosting and security products enabling our customers to create and manage their identity, or in the case of WebPros, the identities of their end-customers.
For the past seven years, we have published an annual diversity and pay parity report and, according to our analysis, we believe we have paid men and women substantially the same for performing similar jobs across the company for all entities included in the analysis.
Since 2015, we published an annual diversity and pay parity report and, according to our analysis, we believe we paid men and women substantially the same for performing similar jobs across the company for all entities included in the analysis.
GoDaddy registry operates or provides back-end registry services to more than 200 TLDs including country-code TLDs, such as . us and .co, city TLDs such as .nyc and .sydney, generic TLDs such as .club, .tv and .design, and branded TLDs such as .chase and .godaddy.
GoDaddy Registry operates or provides back-end registry services to more than 200 registry TLDs including ccTLDs, such as . us, .tv and .co, city TLDs such as .nyc and .sydney, gTLDs such as .club, .health and .design, and branded TLDs such as .chase and .godaddy.
We also offer our Managed WordPress Hosting 7 Table of Contents Platform with WooCommerce, giving our customers the freedom to sell anything, anywhere online, from physical products to digital downloads, services and subscriptions. Digital Marketing . We offer a range of marketing tools and services designed to help businesses acquire and engage customers and create content.
We also offer Managed WooCommerce Stores, giving our customers the freedom to sell anything, anywhere online, from physical products to digital downloads, services and subscriptions. Digital Marketing . We offer a range of marketing tools and services designed to help businesses acquire and engage customers and create content.
As of December 31, 2022, we had approximately 9.9 million customers outside of the U.S. and derived approximately 32%, 32% and 32% of our total bookings from international sales in 2022, 2021 and 2020, respectively.
As of December 31, 2023, we had approximately 10.2 million customers outside of the U.S. and derived approximately 33%, 32% and 32% of our total bookings from international sales in 2023, 2022 and 2021, respectively.
Applications Products Our primary applications products include: Websites + Marketing . Websites + Marketing is an easy-to-use, do-it-yourself, mobile-optimized online tool that enables our customers, irrespective of their technical skills, to build effective websites and e-commerce enabled online stores. We offer a variety of plans, with pricing dependent on business and marketing features.
Websites + Marketing is an easy-to-use, do-it-yourself, mobile-optimized online tool that enables our customers to build effective websites and e-commerce enabled online stores with minimal technical skill. We offer a variety of plans, with pricing dependent on business and marketing features.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factor Summary The following is a summary of the principal risks that could materially and adversely affect our business, financial condition, operating results and growth prospects. • We may be unable to attract and retain customers or increase sales to new and existing customers. • We may not successfully develop and market products that meet or anticipate our customers' needs, whether organically or inorganically, or may not develop such products on a timely basis. • If we are unable to attract and retain customers and increase sales to new and existing customers, our business and operating results would be harmed. • Our business will suffer if the small business market for our solutions proves less lucrative than projected or if we fail to effectively acquire and service small business customers. • If we are unable to continue to attract a diverse customer base for which we have developed more customized solutions and applications, our business, growth prospects and operating results could be adversely affected. • Our brand is integral to our success.
Biggest changeRisk Factor Summary The following is a summary of the principal risks that could materially and adversely affect our business, financial condition, operating results and growth prospects. • If we are unable to attract and retain customers and increase sales to new and existing customers, our business and operating results would be harmed. • If we are unable to continue to attract a diverse customer base for which we have developed more customized solutions and applications, our business, growth prospects and operating results could be adversely affected. • Our business will suffer if the small business market for our solutions proves less lucrative than projected or if we fail to effectively acquire and service small business customers. • We may not successfully develop and market products that meet or anticipate our customers' needs, whether organically or inorganically, or may not develop such products on a timely basis. • The use of new and evolving technologies, such as AI, in our offerings may result in reputational harm and liability. • Our brand is integral to our success.
There is no assurance we will continue to successfully identify new opportunities, develop and bring new products to market on a timely basis, or that products and technologies developed by others will not render our products or technologies obsolete or noncompetitive.
There is no assurance we will continue to successfully identify new opportunities, develop and bring new products to market on a timely basis, or that products or technologies developed by others will not render our products or technologies obsolete or noncompetitive.
Additionally, if the costs of search engine marketing services, such as Google Ads, increase, we may incur additional marketing expenses or be required to allocate a larger portion of our marketing spend to this channel and our business and operating results could be adversely affected.
Additionally, if the costs of search engine marketing services, such as Google Ads, increase, we may incur additional marketing expenses or may be required to allocate a larger portion of our marketing spend to this channel and our business and operating results could be adversely affected.
Currently none of our workforces in the U.S. are subject to collective bargaining agreements, however, if areas of our workforce were to organize, we may find it difficult to maintain our culture, cost structure, and control over the delivery our products, which could adversely impact our culture and results of operations.
Currently none of our workforces in the U.S. are subject to collective bargaining agreements, however, if areas of our workforce were to organize, we may find it difficult to maintain our culture, cost structure and control over the delivery of our products, which could adversely impact our culture and results of operations.
An interruption in service and other challenges could negatively impact our business. A portion of our international GoDaddy Guides is engaged through third parties and not directly by us. We continue to refine our efforts in customer care so we can adequately serve our domestic and international customers.
An interruption in service and other challenges could negatively impact our business. A portion of our GoDaddy Guides is engaged through third parties and not directly by us. We continue to refine our efforts in customer care so we can adequately serve our domestic and international customers.
If we are unable to maintain our contractual relationships with existing partners or establish new contractual relationships with potential partners, we may not be able to offer the products and related functionality our customers expect, and we may experience delays and increased costs in adding customers and may lose customers.
If we are unable to maintain our contractual relationships with existing partners or establish new contractual relationships with potential partners, we may not be able to offer the products and related functionality our customers expect, we may experience delays and increased costs in adding customers, and we may lose existing customers.
Congress or other legislative bodies in the U.S. could take action unfavorable to us, influencing customers to move their business from our products to those located outside the U.S.; • U.S.
Congress or other legislative bodies in the U.S. could take action unfavorable to us, influencing customers to move their business from our products to those located outside the U.S.; • the U.S.
We take measures intended to protect the security, integrity and confidentiality of the personal information and other sensitive information, including payment card information, that we collect, store or transmit, but cannot guarantee that inadvertent or unauthorized use or disclosure of such information will not occur or that third parties, including nation-states and bad actors, or our personnel, or those of our vendors will not gain unauthorized or other malicious access to this information or systems where personal information is processed despite our preventative efforts or those of our vendors or partners.
We take measures intended to protect the security, integrity and confidentiality of the personal information or other information, including payment card information, that we collect, store or transmit, but cannot guarantee that inadvertent or unauthorized use or disclosure of such information will not occur or that third parties, including nation-states and bad actors, or our personnel, or those of our vendors will not gain unauthorized or other malicious access to this information or systems where personal information is processed despite our preventative efforts or those of our vendors or partners.
We have also registered, or applied to register, the trademarks associated with several of our leading brands in the U.S. and in certain other countries, including for our new logo launched in January 2020, the "Go." Competitors and others may have adopted, and in the future may adopt, tag lines or service or product names similar to ours, which could impede our ability to build our brands' identities and possibly lead to confusion.
We have also registered, or applied to register, the trademarks associated with several of our leading brands in the U.S. and in certain other countries, including for our logo launched in January 2020, the "Go." Competitors and others may have adopted, and in the future may adopt, tag lines or service or product names similar to ours, which could impede our ability to build our brands' identities and possibly lead to confusion.
Security breaches or other unauthorized access to personal information and other confidential information, including payment card information, could result in mandatory customer, regulator, contractual, and/or payment card provider notifications, litigation, government investigations, adverse publicity, and claims against us for unauthorized purchases with payment card information, identity theft or other similar fraud claims, and claims for other misuses of personal information, including for unauthorized marketing purposes, which could result in a material adverse effect on our business, financial condition or reputation.
Security breaches or other unauthorized access to personal, sensitive or confidential information, including payment card information, could result in mandatory customer, regulator, contractual, and/or payment card provider notifications, litigation, government investigations, adverse publicity, and claims against us for unauthorized purchases with payment card information, identity theft or other similar fraud claims, and claims for other misuses of personal information, including for unauthorized marketing purposes, which could result in a material adverse effect on our business, financial condition or reputation.
In the event of a default under our credit facility, Senior Notes or any future agreements governing our indebtedness and our failure to obtain a waiver of such default, our lenders or holders could exercise their right to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, which could have a negative impact on our ability to operate our business.
In the event of a default under our Credit Facility, our Senior Notes or any future agreements governing our indebtedness and our failure to obtain a waiver of such default, our lenders or note holders could exercise their right to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, which could have a negative impact on our ability to operate our business.
We have invested, and expect to continue to invest, substantial resources to increase our brand awareness, both generally and in specific geographies and to specific customer groups, such as individual entrepreneurs, WebPros, including designers, developers and agencies, and Domain Investors. If our efforts to protect and promote our brand are not successful, our operating results may be adversely affected.
We have invested, and expect to continue to invest, resources to increase our brand awareness, both generally and in specific geographies and to specific customer groups, such as individual entrepreneurs, WebPros (including designers, developers and agencies) and Domain Investors. If our efforts to protect and promote our brand are not successful, our operating results may be adversely affected.
Therefore, a reduction in renewals, even if offset by an increase in other revenue, would reduce our operating margins in the near term. Any failure by us to continue to attract new customers or maintain strong renewals could have a material adverse effect on our business, growth prospects and operating results.
Therefore, a reduction in renewals, even if offset by an increase in other revenue, could reduce our operating margins in the near term. Any failure by us to continue to attract new customers or maintain strong renewals could have a material adverse effect on our business, growth prospects and operating results.
Additionally, we may not integrate an acquired company onto our systems as planned, requiring us to depend on their legacy systems or a transition services agreement for longer than anticipated. We may enter into new lines of business that offer new products and/or services, which may subject us to additional risks.
Additionally, we may not integrate an acquired company into our systems as planned, requiring us to depend on their legacy systems or a transition services agreement for longer than anticipated. We may enter into new lines of business that offer new products and/or services, which may subject us to additional risks.
If the security of the confidential information, personal information or payment card information we or our vendors or partners maintain, including that of our customers and the visitors to our customers' websites stored in our systems, is breached or otherwise subjected to unauthorized access, our reputation may be harmed and we may be exposed to liability.
If the security of the personal, sensitive or confidential information, including payment card information, we or our vendors or partners maintain, including that of our customers and the visitors to our customers' websites stored in our information systems, is breached or otherwise subjected to unauthorized access, our reputation may be harmed and we may be exposed to liability.
Any failure to design or operate effective controls, any difficulties encountered in their implementation or improvement, or any failure to implement adequate internal controls for our acquired companies could (i) harm our operating results, (ii) cause us to fail to meet our reporting obligations, (iii) adversely affect the results of management evaluations and independent registered public accounting firm audits of our internal control over financial reporting, about which we are required to include in our periodic reports filed with the SEC, or (iv) cause investors to lose confidence in our reported financial and other information, any of which could have a negative effect on our stock.
In addition, any failure to design or operate effective controls, any difficulties encountered in their implementation or improvement, or any failure to implement adequate internal controls for our acquired companies could (i) harm our operating results, (ii) cause us to fail to meet our reporting obligations, (iii) adversely affect the results of management evaluations and independent registered public accounting firm audits of our internal control over financial reporting, which we are required to include in our periodic reports filed with the SEC, or (iv) cause investors to lose confidence in our reported financial and other information, any of which could have a negative effect on our stock.
We are also required to integrate, operate and manage an acquired company's security infrastructure, which may be particularly challenging when acquired businesses utilize heavily customized or outdated systems or if we face of loss of personnel of the acquired business.
We are also required to integrate, operate and manage an acquired company's security infrastructure, which may be particularly challenging when acquired businesses utilize heavily customized or outdated systems or if we face a loss of personnel of the acquired business.
Although we have not seen a material impact, these and other factors associated with our international operations could impair our growth prospects and adversely affect our business, operating results and financial condition.
Although we have not seen a material impact, these and other factors associated with our international business could impair our growth prospects and adversely affect our business, operating results and financial condition.
We may experience interruptions, delays and outages in service and availability of AWS services due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints due to any number of potential causes, including technical failures, natural disasters, pandemics such as the COVID-19 pandemic, fraud or security attacks, all of which could impact our service to our customers.
We may experience interruptions, delays and outages in service and availability of AWS services due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints due to any number of potential causes, including technical failures, natural disasters, pandemics such as the COVID-19 pandemic, fraud or cybersecurity attacks, all of which could impact our service to our customers.
Furthermore, acquisitions may involve contingent liabilities, adverse tax consequences, additional equity-based compensation expense, the recording and subsequent amortization of amounts related to certain purchased intangible assets and, if unsuccessful, impairment charges resulting from the write-off of goodwill or other intangible assets associated with the acquisition, any of which could negatively impact our future results of operations.
Furthermore, acquisitions may involve contingent liabilities, adverse tax consequences, additional equity-based compensation expense, the recording and subsequent amortization of amounts related to certain purchased intangible assets and, if unsuccessful, impairment charges resulting from the write-off of goodwill or other intangible assets associated with the acquisition, any of which could negatively impact our future results of business.
These threats may arise from human error, fraud, or malice on the part of our employees, insiders, or third parties, or they may result from accidental technological failure.
These cybersecurity threats may arise from human error, fraud, or malice on the part of our employees, insiders, or third parties, or they may result from accidental technological failure.
While our terms of service prohibit the use of our products by our customers for illegal or improper activities and allow us to take appropriate actions in response to such activities, any use of our payments platform for illegal or improper activities or failure by us to detect or prevent illegal or improper activity by our customers may subject us to claims, individual and class action lawsuits, 52 Table of Contents and government and regulatory requests, inquiries, or investigations that could result in liability, restrict our operations, impose additional restrictions or limitations on our business or require us to change our business practices, harm our reputation, increase our costs, and negatively impact our business.
While our terms of service prohibit the use of our products by our customers for illegal or improper activities and allow us to take appropriate actions in response to such activities, any use of our payments platform for illegal or improper activities or failure by us to detect or prevent illegal or improper activity by our customers may subject us to claims, individual and class action lawsuits, and government and regulatory requests, inquiries, or investigations that could result in liability, restrict our operations, impose additional restrictions or limitations on our business or require us to change our business practices, harm our reputation, increase our costs, and negatively impact our business.
In addition, the DSA, a package of legislation intended to update the liability and safety rules for digital platforms, products and services, could negatively impact the scope of the limited immunity provided by the E-Commerce Directive in the EU. Our business depends on our customers' continued and unimpeded access to the Internet and the development and maintenance of Internet infrastructure.
In addition, the DSA, a package of legislation intended to update the liability and safety rules for digital platforms, products and services, could negatively impact the scope of the limited immunity provided by the E-Commerce Directive in the E.U. Our business depends on our customers' continued and unimpeded access to the Internet and the development and maintenance of Internet infrastructure.
Any failure or perceived failure by us to comply with U.S., E.U. or other foreign privacy or security laws, policies, industry standards or legal obligations or any security incident resulting in the unauthorized access to, or acquisition, release or transfer of, personal information or other confidential data relating to our customers, employees and others, including payment card information, may result in governmental enforcement actions, litigation, fines and penalties or adverse publicity and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.
Any failure or perceived failure by us to comply with U.S., E.U. or other foreign privacy or security laws, policies, industry standards or legal obligations or any security incident resulting in the unauthorized access to, or acquisition, release or transfer of, personal, sensitive and confidential information, including payment card information of our customers, employees or others, may result in governmental enforcement actions, litigation, fines and penalties or adverse publicity and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.
We also serve and provide products for other customer populations, such as website designers and developers, or WebPros, organizations with their own domain registration offerings, or Domain Registrars, individuals or organizations that manage a portfolio of registered domains, or Investors, and other registrars and corporate domain portfolio owners, including those that are more technically savvy.
We also serve and provide products for other customer populations, such as website designers and developers (WebPros), organizations with their own domain registration offerings (Domain Registrars), individuals or organizations that manage a portfolio of registered domains (Domain Investors) and third party registrars and corporate domain portfolio owners, including those that are more technically savvy.
If our customers utilize alternative payment methods, our payment costs could increase and our operating results could be adversely impacted. 35 Table of Contents Financial Risks Our quarterly and annual operating results may be adversely affected due to a variety of factors, which could make our future results difficult to predict and could cause our operating results to fall below investor or analyst expectations.
If our customers utilize alternative payment methods, our payment costs could increase and our operating results could be adversely impacted. 38 Table of Contents Financial Risks Our quarterly and annual operating results may be adversely affected due to a variety of factors, which could make our future results difficult to predict and could cause our operating results to fall below investor or analyst expectations.
Any new laws, regulations, other legal obligations or industry standards, or any changed interpretation of existing laws, regulations or other standards may require us to incur additional costs and restrict our business operations. For example, many jurisdictions have enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data.
Any new laws, regulations, other legal obligations or industry standards, or any changed interpretation of existing laws, regulations or other standards may require us to incur additional costs and restrict our business operations. For example, many jurisdictions have enacted laws requiring companies to notify individuals of cybersecurity breaches involving certain types of personal data.
As we expand our international operations, we have experienced an increase in litigation occurring outside of the U.S., due in part to consumer-friendly laws and regulations in certain countries and legal systems with limited experience with claims related to the domain industry. Defending such litigation is costly and time consuming.
As we expand our international business, we have experienced an increase in litigation occurring outside of the U.S., due in part to consumer-friendly laws and regulations in certain countries and legal systems with limited experience with claims related to the domain industry. Defending such litigation is costly and time consuming.
If third parties succeed in penetrating our security measures or those of our vendors and partners, or in otherwise accessing or obtaining without authorization the payment card information or other sensitive or confidential information we or our vendors and partners maintain, we could be subject to liability, loss of business, litigation, government investigations or other losses.
If third parties succeed in penetrating our security measures or those of our vendors and partners, or in otherwise accessing or obtaining without authorization the personal, sensitive or confidential information, including payment card information we or our vendors and partners maintain, we could be subject to liability, loss of business, litigation, government investigations or other losses.
Factors that may cause the market price of our Class A common stock to fluctuate include: • price and volume fluctuations in the overall stock market from time to time; • significant volatility in the market price and trading volume of technology companies in general, and of companies in our industry; • actual or anticipated changes in our results of operations or fluctuations in our operating results; • whether our operating results meet the expectations of securities analysts or investors; • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company or our failure to meet the estimates or the expectations of investors; • announcements of new products or technologies, commercial relationships, acquisitions or other events by us or our competitors; • actual or anticipated developments in our competitors' businesses or the competitive landscape generally; • actual or perceived privacy or data security incidents; • litigation involving us, our industry or both; • regulatory developments in the U.S., foreign countries or both; • general economic conditions and trends; • the commencement or termination of any share repurchase program; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • network or service outages, Internet disruptions, the availability of our service, security breaches or perceived security breaches and vulnerabilities; • changes in accounting standards, policies, guidelines, interpretations or principles; • actions instituted by activist shareholders or others; 53 Table of Contents • major catastrophic events, including those resulting from war, incidents of terrorism, outbreaks of pandemic diseases, such as COVID-19, or responses to these events; • sales of large blocks of our stock; or • departures of key personnel.
Factors that may cause the market price of our Class A common stock to fluctuate includ e: • price and volume fluctuations in the overall stock market from time to time; • significant volatility in the market price and trading volume of technology companies in general, and of companies in our industry; • actual or anticipated changes in our results of operations or fluctuations in our operating results; • whether our operating results meet the expectations of securities analysts or investors; • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company or our failure to meet the estimates or the expectations of investors; • announcements of new products or technologies, commercial relationships, acquisitions or other events by us or our competitors; • actual or anticipated developments in our competitors' businesses or the competitive landscape generally; • actual or perceived privacy or cybersecurity incidents; • litigation involving us, our industry or both; • regulatory developments in the U.S., foreign countries or both; • general economic conditions and trends; • the commencement or termination of any share repurchase program; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; 56 Table of Contents • network or service outages, Internet disruptions, the availability of our service, security breaches or perceived security breaches and vulnerabilities; • changes in accounting standards, policies, guidelines, interpretations or principles; • actions instituted by activist shareholders or others; • sales of large blocks of our stock; • departures of key personnel; or • major catastrophic events, including those resulting from war, incidents of terrorism, outbreaks of pandemic diseases, such as COVID-19, or responses to these events.
These mandatory disclosures regarding a security breach, or any other disclosures we may choose to undertake, could result in an increased risk of litigation and/or negative publicity to us, which may cause our customers to lose confidence in the effectiveness of our data security measures which could impact our operating results.
These mandatory disclosures regarding a security breach, or any other disclosures we may choose to undertake, could result in an increased risk of litigation and/or negative publicity to us, which may cause our customers to lose confidence in the effectiveness of our cybersecurity measures which could impact our operating results.
We have incurred, and will continue to incur, expenses relating to our investments in international operations and infrastructure, such as: (i) the expansion of our offerings and marketing presence in India, Europe, Latin America, the Middle East and North Africa, and Asia; (ii) our marketing spend to attract new customers, such as WebPros and Independents in non-U.S. markets; and (iii) investments in software systems and additional data center resources to keep pace with the growth of our cloud infrastructure and cloud-based product offerings.
We have incurred, and will continue to incur, expenses relating to our investments in international business and infrastructure, such as: (i) our offerings and marketing presence in India, Europe, Latin America, the Middle East and North Africa, and Asia; (ii) our marketing spend to attract new customers, such as WebPros and Independents in non-U.S. markets; and (iii) investments in software systems and additional data center resources to keep pace with the growth of our cloud infrastructure and cloud-based product offerings.
We are subject, and may become subject, to various restrictions with respect to our payments products and services, including under U.S. federal, U.S. state and international laws and regulations, as well as restrictions set forth in agreements we have with payment card networks and third party payment service providers. Payments Regulations .
We are subject, and may become subject, to various restrictions with respect to our payments-related operations and payments products and services, including under U.S. federal, U.S. state and international laws and regulations, as well as restrictions set forth in agreements we have with payment card networks and third-party payment service providers. Payments Regulations .
This evolution may include changes in the administration or operation of the Internet, including the creation and institution of alternate systems for directing Internet traffic without using the existing domain name registration system, or fundamental changes in the domain name resolution protocol used by web browsers and other Internet applications.
This evolution has and may in the future include changes in the administration or operation of the Internet, including the creation and institution of alternate systems for directing Internet traffic without using the existing domain name registration system, or fundamental changes in the domain name resolution protocol used by web browsers and other Internet applications.
We may also face pressure to lower our prices in order to compete in emerging markets, which could adversely affect revenue derived from our international operations. In addition, certain of our operations are in higher risk regions such as China, India, Russia and Ukraine.
We may also face pressure to lower our prices in order to compete in emerging markets, which could adversely affect revenue derived from our international business. In addition, certain of our operations and business are in higher risk regions such as China, India and Ukraine.
In addition, we provide payment options for customers' websites through providers such as PayPal, Stripe, Block (formerly Square) and Mercado Libre. We have invested and will continue to invest in partner programs to provide new product offerings to our customers and help us attract additional customers.
In addition, we provide payment options for customers' websites through providers such as PayPal, Stripe, Block and Mercado Libre. We have invested and will continue to invest in partner programs to provide new product offerings to our customers and help us attract additional customers.
Revenue growth may slow or decline, or we may incur significant losses in the future for any reason, including deteriorating general macroeconomic conditions, increased competition, a decrease in the growth of the markets in which we operate, or if we fail for any reason to continue to capitalize on growth opportunities.
Revenue growth may slow or decline, or we may incur significant losses in the future for any reason, including deteriorating general macroeconomic conditions, increased competition, a decrease in the growth of the markets in which we operate or have business, or if we fail for any reason to continue to capitalize on growth opportunities.
However, we face the risk that we may fail to maintain an adequate level of fraud protection and that one or more credit card associations or other processors may, at any time, assess penalties against us or terminate our ability to accept credit card payments or other form of online payments from customers, which would have a material adverse effect on our business, financial condition and operating results.
However, we face the risk that we may fail to maintain an adequate level of fraud protection or chargebacks and that one or more credit card associations or other processors may, at any time, assess penalties against us or terminate our ability to accept credit card payments or other forms of online payments from customers, which would have a material adverse effect on our business, financial condition and operating results.
We have experienced, and may continue to experience, social engineering attempts, some of which have been successful, including by a persistent threat actor, who, among other things, has attempted to transfer customer domain names and has targeted customer domains related to cryptocurrency.
We have experienced, and may continue to experience, social engineering attempts, some of which have been successful, including by a persistent threat actor group, which, among other things, has attempted to transfer customer domain names and has targeted customer domains related to cryptocurrency.
Our business involves the storage and transmission of confidential information, including personal information and payment card information. In addition, nearly all of our products are cloud-based and we store such data for our customers on our servers, and on servers used by our vendors and partners, such as AWS.
Our business involves the storage and transmission of confidential information, including personal information and payment card information. In addition, nearly all of our products are cloud-based and we process such data for our customers on our servers, and on servers used by our vendors and partners, such as AWS.
In addition, we opted to shut down our GoDaddy website in Russia and have removed support for the Ruble.
In addition, we opted to shut down our GoDaddy website in Russia and removed support for the Ruble.
Our operations depend on our ability to protect our network and systems against interruption, a breach of confidentiality, or other damage from unauthorized entry, computer viruses, denial of service attacks and other security threats both within and beyond our control.
Our operations depend on our ability to protect our information systems against interruption, a breach of confidentiality, or other damage from unauthorized entry, computer viruses, denial of service attacks and other security threats both within and beyond our control.
Any of these parties may also attempt to fraudulently induce employees, customers, or other third-party users of our systems to disclose sensitive information, wittingly or unwittingly, in order to gain access to our data or that of our customers or third parties with whom we interact.
Any of these parties may also attempt to fraudulently induce employees, customers, or other third-party users of our systems to disclose sensitive information, wittingly or unwittingly, to gain access to our data or that of our customers or third parties with whom we interact.
These payment card networks have adopted rules and regulations that apply to all merchants who accept their payment cards including special operating rules that apply to GoDaddy Payments as a "payment facilitator" providing payment processing services to our Go Daddy Payments' customers.
These payment card networks have adopted rules and regulations that apply to all merchants who accept their payment cards including special operating rules that apply to GoDaddy Payments as a "payment facilitator" providing payment processing services to our GoDaddy Payments' customers.
Our quarterly and annual operating results and key metrics have varied from period to period in the past, and may fluctuate in the future as a result of a number of factors, many of which are outside of our control, including, among other things: • our ability to attract new customers and retain existing customers; • the timing and success of introductions of new products; • changes in the growth rate of small businesses and ventures; • changes in renewal rates for our subscriptions and our ability to sell additional products to existing customers; • refunds to our customers could be higher than expected; • the timing of revenue recognition relative to the recording of the related expense; • any negative publicity or other actions which harm our brand; • the timing of our marketing expenditures; • the mix of products sold and our use of "freemium" promotions for those products; • our ability to maintain a high level of personalized customer care and resulting customer satisfaction; • competition in the market for our products; • our ability to expand internationally; • changes in foreign currency exchange rates; • rapid technological change, frequent new product introductions and evolving industry standards; • our ability to implement new financial and other administrative systems; • actual or perceived data security incidents; • systems, data center and Internet failures, breaches and service interruptions; • actions by foreign governments that reduce access to the Internet for their citizens; • changes in U.S. or foreign regulations, such as the CCPA and GDPR, that could impact one or more of our product offerings or changes to regulatory bodies, such as ICANN, as well as increased regulation by governments or multi-governmental organizations, such as the International Telecommunications Union, a specialized agency of the United Nations or the E.U., that could affect our business and our industry; • a delay in the authorization of new TLDs by ICANN or our ability to secure operator rights for new TLDs, both of which would impact the breadth of our customer offerings; • any changes in industry rules restricting our ability to hold domains for sale on the aftermarket; • shortcomings in, or misinterpretations of, our metrics and data which cause us to fail to anticipate or identify market trends; • terminations of, disputes with, or material changes to our relationships with third-party partners, including referral sources, product partners and payment processors; • reductions in the selling prices for our products; • costs and integration issues associated with acquisitions we may make; • changes in legislation affecting our collection of indirect taxes both in the U.S. and in foreign jurisdictions; • changes in legislation affecting exposure to liability resulting from actions of our customers; • increases in rates of failed sales on our aftermarket platform for transactions in which we act as the primary obligor, resulting in higher than expected domain portfolio assets; • timing of expenses; 36 Table of Contents • macroeconomic conditions and the related impact on the worldwide economy, including the effects of inflation, deflation or a recession or other adverse economic conditions, any of which may be as a result of the continued uncertainty resulting from the COVID-19 pandemic or international conflicts such as the Russia-Ukraine military conflict; • threatened or actual litigation; and • loss of key employees.
Our quarterly and annual operating results and key metrics have varied from period to period in the past, and may fluctuate in the future as a result of a number of factors, many of which are outside of our control, including, among other things: • our ability to attract new customers and retain existing customers; • the timing and success of introductions of new products; • changes in the growth rate of small businesses and ventures; • changes in renewal rates for our subscriptions and our ability to sell additional products to existing customers; • higher than expected refunds to our customers; • the timing of revenue recognition relative to the recording of the related expense; • any negative publicity or other actions which harm our brand; • the timing of our marketing expenditures; • the mix of products sold and our use of "freemium" promotions for those products; • our ability to maintain a high level of personalized customer care and resulting customer satisfaction; • competition in the market for our products; • our ability to expand internationally; • changes in foreign currency exchange rates; • rapid technological change, frequent new product introductions and evolving industry standards; • our ability to implement new financial and other administrative systems; • actual or perceived cybersecurity incidents; • systems, data center and Internet failures, breaches and service interruptions; • actions by foreign governments that reduce access to the Internet for their citizens; • changes in U.S. or foreign regulations, such as the CCPA and GDPR, that could impact one or more of our product offerings or changes to regulatory bodies, such as ICANN, as well as increased regulation by governments or multi-governmental organizations, such as the International Telecommunications Union, a specialized agency of the United Nations or the E.U., that could affect our business and our industry; • a delay in the authorization of new TLDs by ICANN or our ability to secure operator rights for new TLDs, both of which would impact the breadth of our customer offerings; • any changes in industry rules restricting our ability to hold domains for sale on the aftermarket; • shortcomings in, or misinterpretations of, our metrics and data which cause us to fail to anticipate or identify market trends; • terminations of, disputes with, or material changes to our relationships with third-party partners, including referral sources, product partners and payment processors; • reductions in the selling prices for our products; • costs and integration issues associated with acquisitions we may make; • changes in legislation affecting our collection of indirect taxes both in the U.S. and in foreign jurisdictions; • changes in legislation affecting exposure to liability resulting from actions of our customers; • increases in rates of failed sales on our aftermarket platform for transactions in which we act as the primary obligor, resulting in higher than expected domain portfolio assets; • timing of expenses; 39 Table of Contents • macroeconomic conditions and the related impact on the worldwide economy, including the effects of inflation, deflation or a recession or other adverse economic conditions; • threatened or actual litigation; and • loss of key employees.
In particular, the extension of the Cooperative Agreement between Verisign Inc. (Verisign), the registry for .com and .net, and the U.S. Department of Commerce in 2018 gave Verisign the right to become an ICANN-accredited registrar for any gTLD other than .com.
In addition, the extension of the Cooperative Agreement between VeriSign Inc. (VeriSign), the registry for .com and .net, and the U.S. Department of Commerce in 2018 gave VeriSign the right to become an ICANN-accredited registrar for any gTLD other than .com.
If we do not successfully develop and market products that anticipate or respond timely to the needs of our customers, our business and operating results may suffer. The markets in which we compete are characterized by constant change and innovation, frequent new product and service introductions and evolving industry standards, and we expect them to continue to evolve rapidly.
If we do not successfully develop and market products that anticipate or respond timely to the needs of our customers, our business and operating results may suffer. The markets where we compete are characterized by constant change and innovation, frequent new product and service introductions and evolving industry standards, and we expect them to continue to evolve rapidly.
Although our terms of service prohibit the illegal use of our products by our customers and permit us to take down or suspend websites or take other appropriate actions in response to illegal uses, customers may nonetheless engage in prohibited activities or upload or store content on our products in violation of applicable law or the customer's own policies, which could subject us to liability.
Although our terms of service prohibit the illegal use of our 48 Table of Contents products by our customers and permit us to take down or suspend websites or take other appropriate actions in response to illegal uses, customers may nonetheless engage in prohibited activities or upload or store content on our products in violation of applicable law or the customer's own policies, which could subject us to liability.
As a result, we could experience 42 Table of Contents difficulties in selling domain names and keeping our existing customer domain names under management if we are unable to reach an amicable contractual solution with ICANN, which could have a material adverse effect on our operations and revenue. ICANN periodically authorizes the introduction of new TLDs.
As a result, we could experience difficulties in selling domain names and keeping our existing customer domain names under management if we are unable to reach an amicable contractual solution with ICANN, which could have a material adverse effect on our operations and revenue. ICANN periodically authorizes the introduction of new TLDs.
We may, in addition to other impacts, experience additional costs associated with increased compliance burdens, and we and our customers face the potential for regulators in the EEA to apply different standards to the transfer of personal data from the EEA to the U.S., and to block, or require ad hoc verification of measures taken with respect to certain data flows from the EEA to the U.S.
We may, in addition to other impacts, experience additional costs associated with increased compliance burdens, and we and our customers face the potential for regulators in the EEA to apply different standards to the transfer of personal data from the EEA to the U.S., and to block, or require ad hoc verifi cation of measures taken with respect to certain data flows from the EEA to the U.S.
In the past we have been successful in striking a balance in our response, but we may not be as successful in the future, such that our brand, company culture or results of operations could be harmed.
In the past, we have been successful in striking a balance in our response to such groups, but we may not be as successful in the future, such that our brand, company culture or results of operations could be harmed.
As an operator of a large Internet infrastructure, the company is frequently targeted and experiences a high rate of attacks. These include the most sophisticated forms of attacks, such as advanced persistent threat attacks and zero-hour threats.
As an operator of a large Internet infrastructure, the company is frequently targeted and experiences a high rate of attacks. These include the most sophisticated forms of attacks, such as advanced persistent threat attacks and zero-day threats.
If a breach of our security or other data security incident occurs or is perceived to have occurred, the perception of the effectiveness of our security measures and our reputation could be harmed and we could lose current and potential customers.
If a breach of our security or other cybersecurity incident occurs or is perceived to have occurred, the perception of the effectiveness of our security measures and our reputation could be harmed and we could lose current and potential customers.
In addition, if we repatriate funds from our international subsidiaries to service our indebtedness, we may be subject to a higher effective tax rate, which could negatively affect our results of operations and financial condition.
In addition, if we repatriate funds from our international subsidiaries, we may be subject to a higher effective tax rate, which could negatively affect our results of operations and financial condition.
We may dedicate significant resources to responding to our customers' SARs, which could have a negative impact on our operating results. In addition, a failure to respond to SARs properly could result in fines, negative publicity and damage to our business.
We may dedicate significant resources to responding to our customers' DSARs, which could have a negative impact on our operating results. In addition, a failure to respond to DSARs properly could result in fines, negative publicity and damage to our business.
Moreover, these claims could cause us to incur penalties from payment card associations (including those resulting from our failure to adhere to industry data security standards), or termination by payment card associations of our ability to accept credit or debit card payments, any of which could have a material adverse effect on our business and financial condition.
Moreover, these claims could cause us to incur penalties from payment card associations (including those resulting from our failure to adhere to industry cybersecurity standards), or termination by payment card associations of our ability to accept credit or debit card payments, any of which could have a material adverse effect on our business and financial condition.
Our customers depend on our GoDaddy Guides to guide them as they create, manage and grow their digital identities, support their ubiquitous presence, both online and offline, and enable them with products to meet their commerce needs.
Our customers depend on our GoDaddy Guides to guide them as they create, manage and grow their identities, support their presence, both online and offline, and enable them with products to meet their commerce needs.
The loss of services of senior management or other key employees and the hiring of new senior leaders and key employees, especially in a competitive labor market, could significantly delay or prevent our achievement of strategic objectives, business plans and product development as we transition to new leaders and could adversely affect our business, financial condition and operating results.
The loss of services of senior management or other key employees and the hiring of new senior leaders and key employees, especially in a competitive labor 35 Table of Contents market, could significantly delay or prevent our achievement of strategic objectives, business plans and product development as we transition to new leaders and could adversely affect our business, financial condition and operating results.
GoDaddy Payments' risk management efforts may not be effective, and we could be exposed to substantial losses and liability which could substantially harm our business. GoDaddy Payments offers payments and other products and services to our customers.
GoDaddy Payments' risk management efforts may not be effective, and we could be exposed to substantial losses and liability which could substantially harm our business. GoDaddy Payments offers payment processing and other payments products and services to our customers.
We are likely to recognize the costs associated with these investments earlier than some of the anticipated benefits, and the return on these investments may be lower or may develop more slowly than we expect.
We are likely to recognize the costs associated with these actions earlier than some of the anticipated benefits, and the return on these actions may be lower or may develop more slowly than we expect.
As a result, our margins may suffer despite substantial sales activity during a particular period, since GAAP does not permit us to recognize all of the revenue from our sales immediately.
As a result, our margins may suffer despite substantial sales activity during a particular period, because GAAP does not permit us to recognize all of the revenue from our sales immediately.
In addition, these payment card networks may increase in the future, the interchange fees and assessments that they charge for each transaction that accesses their networks, and may impose special fees or assessments on any transactions that access their networks.
In addition, these payment card networks may in the future increase the interchange fees and assessments that they charge for each transaction on their networks, and may impose special fees or assessments on any transactions on their networks.
We may incur significant additional indebtedness in the future. Although the agreements governing our indebtedness contain restrictions on our incurrence of additional indebtedness and entry into certain types of other transactions, these restrictions are subject to a number of qualifications and exceptions and we may amend such agreements with the consent of the requisite parties thereto.
We may incur significant additional indebtedness in the future. Although the agreements governing our indebtedness contain restrictions on our incurrence of additional indebtedness and entry into certain types of other transactions, these restrictions are subject to a number of qualifications and exceptions, and we may amend such agreements with the consent of the 42 Table of Contents requisite parties thereto.
In addition, our credit facility requires us to comply with specified leverage ratios under certain circumstances. Our ability to comply with these provisions may be affected by events beyond our control, and these provisions could limit our ability to plan for or react to market conditions, meet capital needs or otherwise conduct our business.
In addition, our Credit Facility requires us to comply with a specified leverage ratio under certain circumstances. Our ability to comply with these provisions may be affected by events beyond our control, and these provisions could limit our ability to plan for or react to market conditions, meet capital needs or otherwise conduct our business.
Some of these providers can take measures including legal actions, that could degrade, disrupt or increase the cost of user access to certain of our products by restricting or prohibiting the use of their infrastructure to support our offerings, charging increased fees to our users to provide our offerings, or regulating online speech.
Some of these 49 Table of Contents providers can take measures including legal actions, that could degrade, disrupt or increase the cost of user access to certain of our products by restricting or prohibiting the use of their infrastructure to support our offerings, charging increased fees to our users to provide our offerings, or regulating online speech.
As a greater number of sellers, including customers with larger sale volumes, use GoDaddy Payments' services, our exposure to material losses from a single seller, or from a small number of sellers, will increase. In addition, customers could attempt to use our payments products and services for illegal activities or improper uses.
As a greater number of sellers, including customers with larger sale volumes, use GoDaddy Payments' services, our exposure to material losses from a single seller, or from a small number of sellers, will increase. 55 Table of Contents In addition, customers could attempt to use our payments products and services for illegal activities or improper uses.
If we fail to accurately predict customers' changing needs, such as the need for expanded online and offline commerce tools, or emerging technological trends, such as artificial intelligence, or if we fail to achieve the benefits expected from our investments in technology, our business and operating results could be harmed.
If we fail to accurately predict customers' changing needs, such as the need for expanded online and offline commerce tools, or emerging technological trends, such as AI, or if we fail to achieve the benefits expected from our investments in technology, our business and operating results could be harmed.
We may never realize the benefits of these transition services agreements and we may be unable to manage and coordinate the performance of personnel providing services to us under these agreements. Leaders and personnel at acquired companies may focus on achieving performance earn-outs or contingent payments 26 Table of Contents rather than integrating with us.
We may never realize the benefits of these transition services agreements and we may be unable to manage and coordinate the performance of personnel providing services to us under these agreements. Leaders and personnel at acquired companies may focus on achieving performance earn-outs or contingent payments rather than integrating with us.
We may not be able to remedy any problems caused by threat actors in a timely manner, or at all, due to, among other things, a lack of qualified personnel to handle such problems or the failure of our personnel to follow internal policies and procedures.
We may not be able to remedy any problems caused by threat actors in a timely manner, or at all, due to, among other things, a lack of qualified personnel to handle such problems or the failure of our personnel to follow internal policies and 33 Table of Contents procedures.
Our response to such DDOS attacks may be insufficient to protect our network and systems, especially as attacks increase in size and nation-state actors use DDOS attacks against political and economic adversaries.
Our response to any such attacks may be insufficient to protect our network and systems, especially as attacks increase in size and nation-state actors use attacks against political and economic adversaries.
Our substantial indebtedness could adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business and our ability to react to changes in the economy or our industry, as well as divert our cash flow from operations for debt payments and prevent us from meeting our debt obligations.
Our level of indebtedness could adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business and our ability to react to changes in the economy or our industry, as well as divert our cash flow from operations for debt payments and prevent us from meeting our debt obligations.
In some jurisdictions in which we operate, such as India, Russia and China, laws and regulations may require us to locally host at least an instance of the data collected in that jurisdiction and in some cases may apply restrictions to the export or transfer of that data across borders.
In some jurisdictions in which we operate or maintain business, such as India and China, laws and regulations may require us to locally host at least an instance of the data collected in that jurisdiction and in some cases may apply restrictions to the export or transfer of that data across borders.
Any failure to preserve our culture could negatively affect our ability to retain and recruit personnel and to effectively focus on and pursue our company objectives. Our corporate culture is central to our devoted GoDaddy Guides, which is a key component of the value we offer our customers.
Any failure to preserve our culture could negatively affect our ability to retain and recruit personnel and to ensure employees effectively focus on and pursue our company objectives. Our corporate culture is central to our devoted GoDaddy Guides, which are a key component of the value we offer our customers.
We are continually working to expand and enhance our website features, technology and network infrastructure and other technologies to accommodate substantial increases in (i) the volume of traffic on our godaddy.com and affiliated websites, (ii) the number of customer websites we host and (iii) our overall total customers.
We continually work to expand and enhance our website features, technology and network infrastructure and other technologies to accommodate substantial increases in (i) the volume of traffic on our godaddy.com and affiliated websites, (ii) the number of customer websites we host and (iii) our overall total customers.
In addition, if security of AWS is compromised, or our products or platform are 28 Table of Contents unavailable or our users are unable to use our products within a reasonable amount of time or at all, then our business, results of operations and financial condition could be adversely affected.
In addition, if security of AWS is compromised, or our products or platform are unavailable or our users are unable to use our products within a reasonable amount of time or at all, then our business, results of operations and financial condition could be adversely affected.
We or our partners may also suffer security breaches or unauthorized access to personal information and other confidential information, including payment card information, due to employee error, rogue employee activity, unauthorized access by third parties acting with malicious intent or committing an inadvertent mistake, or social engineering.
We or our partners may also suffer security breaches or unauthorized access to personal, sensitive or confidential information, including payment card information, due to employee error, rogue employee activity, unauthorized access by third parties acting with malicious intent or committing an inadvertent mistake, or social engineering.
In addition, such a disruption could adversely impact our ability to serve our customers and to sell products to new and existing customers and we may experience a decline in our subscription renewal rates and in our ability to 32 Table of Contents cross-sell our products and our reputation may suffer, any of which could adversely affect our business, reputation and operating results.
In addition, such a disruption could adversely impact our ability to serve our customers and to sell products to new and existing customers and we may experience a decline in our subscription renewal rates and in our ability to cross-sell our products and our reputation may suffer, any of which could adversely affect our business, reputation and operating results.
Under credit card association rules, penalties may be imposed at the discretion of the association for inadequate fraud protection. Any such potential penalties would be imposed on our credit card processor by the association. Under our contracts with our payment processors, we are required to reimburse them for such penalties.
Under credit card association rules, penalties may be imposed at the discretion of the association for inadequate fraud protection or excessive chargebacks. Any such potential penalties would be imposed on our credit card processor by the association. Under our contracts with our payment processors, we are required to reimburse them for such penalties.
This variability and unpredictability could result in our failing to meet our revenue, bookings or operating results expectations or those of securities analysts or investors for any period. In addition, a significant percentage of our operating expenses are fixed in nature and based on forecasted revenue and bookings trends.
This variability and unpredictability could result in our failing to meet our revenue, bookings or operating results expectations or those of securities analysts or investors for any period. In addition, a portion of our operating expenses are fixed in nature and based on forecasted revenue and bookings trends.
For example, we have, and may in the future, enter into transition services agreements with a seller for the provision of support services to assist with the orderly integration of the business.
For example, in the future we may enter into transition services agreements with a seller for the provision of support services to assist with the orderly integration of the business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe lease additional customer care centers and offices located throughout the U.S. as well as internationally, most significantly in Bulgaria, Germany, Romania, Serbia and the UK.
Biggest changeItem 2. Properties. Our corporate headquarters, which we lease, is located in Tempe, Arizona. We lease additional customer care centers and offices located throughout the U.S. as well as internationally, most significantly in Bulgaria, Germany, Romania, Serbia and the UK.
Removed
Item 2. Properties. Our corporate headquarters, which we lease, is located in Tempe, Arizona. We own our offices in Hiawatha, Iowa, which consist of approximately 75,000 square feet used primarily for customer care and product development.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe company filed a motion to dismiss the amended complaint on January 6, 2023; briefing will be complete on April 27, 2023. A hearing on the company's motion is scheduled for May 24, 2023. Other information regarding our legal proceedings required by this item is provided in Note 13 to our financial statements and is incorporated herein by reference.
Biggest changeThe matter is currently stayed pending the SLC's investigation of the allegations. Other information regarding our legal proceedings required by this item is provided in Note 13 to our financial statements and is incorporated herein by reference.
Although the results of any such current or future Proceedings, regardless of the underlying nature of the claims or facts, cannot be predicted with certainty, the final outcome of any current or future Proceedings we face could adversely affect our business, financial condition and results of operations.
Although the results of any such current or future Proceedings, regardless of the underlying nature of the 62 Table of Contents claims or facts, cannot be predicted with certainty, the final outcome of any current or future Proceedings we face could adversely affect our business, financial condition and results of operations.
Mine Safety Disclosures Not applicable. 58 Table of Contents Part II.
Mine Safety Disclosures Not applicable. 63 Table of Contents Part II.
Added
The company filed a motion to dismiss the amended complaint on January 6, 2023; briefing was completed on April 27, 2023. On August 24, 2023, the Court denied the company's motion to dismiss the amended complaint.
Added
On September 21, 2023, the company's Board of Directors resolved to form a Special Litigation Committee (the SLC) that is vested with the full authority of the Board to take any such action with respect to this litigation that the SLC in its sole discretion deems to be in the best interests of the company.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSee "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources." In addition, Desert Newco is generally prohibited under Delaware law from making a distribution to unit holders (including us) to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of Desert Newco (with certain exceptions) exceed the fair value of its assets.
Biggest changeFor example, Desert Newco is generally prohibited under Delaware law from making a distribution to us to the extent that, at the time of the distribution, after giving effect to the 64 Table of Contents distribution, liabilities of Desert Newco (with certain exceptions) exceed the fair value of its assets.
The following graph compares, for the five year period ending December 31, 2022, the cumulative total return to stockholders on our Class A common stock relative to the cumulative total returns of the Standard & Poor's 500 Index (S&P 500) and the NASDAQ Internet Index.
The following graph compares, for the five year period ending December 31, 2023, the cumulative total return to stockholders on our Class A common stock relative to the cumulative total returns of the Standard & Poor's 500 Index (S&P 500) and the NASDAQ Internet Index.
"Risk Factors." Holders of Record As of December 31, 2022, there were 9 holders of record of our Class A common stock, although we believe there are a significantly larger number of beneficial owners because many shares are held by brokers and other institutions on behalf of stockholders.
"Risk Factors." Holders of Record As of December 31, 2023, there were 20 holders of record of our Class A common stock, although we believe there are a significantly larger number of beneficial owners because many shares are held by brokers and other institutions on behalf of stockholders.
Dividend Policy We have not paid any dividends on our Class A common stock and do not intend to pay dividends in the foreseeable future. If, however, we decide to pay a dividend in the future, we would need to cause Desert Newco to make distributions to us in an amount sufficient to cover such dividend.
Dividend Policy We have not paid any dividends on our Class A common stock and we currently do not intend to pay dividends. If, however, we decide to pay a dividend in the future, we would need to cause our subsidiaries to make distributions to us in an amount sufficient to cover such dividend.
Share repurchase activity during the three months ended December 31, 2022 pursuant to our share repurchase programs was as follows: Period Total Number of Shares Purchased (in thousands) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Programs (in thousands) Approximate Dollar Value of Shares that May Yet be Purchased under the Programs (in millions) October 1 - October 31 707 $ 75.86 707 November 1 - November 30 1,379 $ 71.29 1,379 December 1 - December 31 701 $ 74.45 701 Total 2,787 2,787 $ 1,699.9 Item 6. [Reserved]
Share repurchase activity during the three months ended December 31, 2023 pursuant to our share repurchase programs was as follows: Period Total Number of Shares Purchased (in thousands) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Programs (in thousands) Approximate Dollar Value of Shares that May Yet be Purchased under the Programs (in millions) October 1 - October 31 1,601 $ 73.66 1,601 November 1 - November 30 16 $ 73.19 16 December 1 - December 31 — — Total 1,617 1,617 $ 1,435.5 Item 6. [Reserved]
Desert Newco's subsidiaries are generally subject to similar legal limitations on their ability to make distributions to Desert Newco. Share Repurchases Our board of directors has authorized the share repurchase programs described in Note 5 to our financial statements.
Desert Newco's subsidiaries are generally subject to similar legal limitations on their ability to make distributions to Desert Newco. Our ability to pay dividends is also limited by the covenants of our existing indebtedness.
Removed
If Desert Newco makes such distributions to us, the other holders of LLC Units will be entitled to receive pro rata distributions. 59 Table of Contents Our ability to pay dividends is limited by the covenants of our long-term debt agreements.
Added
Each of our subsidiaries is a distinct legal entity and may be subject to legal or contractual restrictions limiting their ability to make distributions to us.
Added
See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources." Share Repurchases Our board of directors has authorized the share repurchase programs described in Note 5 to our financial statements.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

74 edited+25 added−35 removed51 unchanged
Biggest changeYear Ended December 31, 2022 2021 2020 $ % of Total Revenue $ % of Total Revenue $ % of Total Revenue Revenue: A&C $ 1,279.7 31.3 % $ 1,128.3 29.6 % $ 926.1 27.9 % Core 2,811.6 68.7 % 2,687.4 70.4 % 2,390.6 72.1 % Total revenue 4,091.3 100.0 % 3,815.7 100.0 % 3,316.7 100.0 % Costs and operating expenses: Cost of revenue (excluding depreciation and amortization) 1,484.5 36.3 % 1,372.2 36.0 % 1,158.6 34.9 % Technology and development 794.0 19.4 % 706.3 18.5 % 560.4 16.9 % Marketing and advertising 412.3 10.1 % 503.9 13.2 % 438.5 13.2 % Customer care 305.9 7.5 % 306.1 8.0 % 316.9 9.6 % General and administrative 385.5 9.4 % 345.8 9.1 % 323.8 9.8 % Restructuring and other 15.7 0.4 % (0.3) — % 43.6 1.3 % Depreciation and amortization 194.6 4.7 % 199.6 5.2 % 202.7 6.1 % Total costs and operating expenses 3,592.5 87.8 % 3,433.6 90.0 % 3,044.5 91.8 % Operating income 498.8 12.2 % 382.1 10.0 % 272.2 8.2 % Interest expense (146.3) (3.6) % (126.0) (3.3) % (91.3) (2.8) % Loss on debt extinguishment (3.6) (0.1) % — — % — — % Tax receivable agreements liability adjustment — — % — — % (674.7) (20.3) % Other income (expense), net 7.6 0.2 % (2.5) (0.1) % (1.6) — % Income (loss) before income taxes 356.5 8.7 % 253.6 6.6 % (495.4) (14.9) % Benefit (provision) for income taxes (3.6) (0.1) % (10.8) (0.3) % 1.3 — % Net income (loss) 352.9 8.6 % 242.8 6.3 % (494.1) (14.9) % Less: net income attributable to non-controlling interests 0.7 — % 0.5 — % 1.0 — % Net income (loss) attributable to GoDaddy Inc. $ 352.2 8.6 % $ 242.3 6.3 % $ (495.1) (14.9) % Non-GAAP Financial Measure and Other Operating Metrics In addition to our results determined in accordance with GAAP, we believe the following non-GAAP financial measure and other 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, 2022 2021 2020 Normalized EBITDA $ 1,013.0 $ 872.2 $ 722.2 Annualized recurring revenue $ 3,570.1 $ 3,433.7 $ 3,136.8 Total bookings $ 4,413.8 $ 4,231.7 $ 3,775.5 Total customers at period end (in thousands) 20,897 20,704 20,148 Average revenue per user $ 197 $ 187 $ 170 63 Table of Contents Normalized EBITDA (NEBITDA).
Biggest changeYear Ended December 31, 2023 2022 2021 $ % of Total Revenue $ % of Total Revenue $ % of Total Revenue Revenue: A&C $ 1,430.4 33.6 % $ 1,279.7 31.3 % $ 1,128.3 29.6 % Core 2,823.7 66.4 % 2,811.6 68.7 % 2,687.4 70.4 % Total revenue 4,254.1 100.0 % 4,091.3 100.0 % 3,815.7 100.0 % Costs and operating expenses: Cost of revenue (excluding depreciation and amortization) 1,573.6 37.0 % 1,484.5 36.3 % 1,372.2 36.0 % Technology and development 839.6 19.7 % 794.0 19.4 % 706.3 18.5 % Marketing and advertising 352.9 8.3 % 412.3 10.1 % 503.9 13.2 % Customer care 304.5 7.2 % 305.9 7.5 % 306.1 8.0 % General and administrative 374.0 8.9 % 385.5 9.4 % 345.8 9.1 % Restructuring and other 90.8 2.1 % 15.7 0.4 % (0.3) — % Depreciation and amortization 171.3 3.9 % 194.6 4.7 % 199.6 5.2 % Total costs and operating expenses 3,706.7 87.1 % 3,592.5 87.8 % 3,433.6 90.0 % Operating income 547.4 12.9 % 498.8 12.2 % 382.1 10.0 % Interest expense (179.0) (4.2) % (146.3) (3.6) % (126.0) (3.3) % Loss on debt extinguishment (1.5) — % (3.6) (0.1) % — — % Other income (expense), net 36.9 0.8 % 7.6 0.2 % (2.5) (0.1) % Income before income taxes 403.8 9.5 % 356.5 8.7 % 253.6 6.6 % Benefit (provision) for income taxes 971.8 22.8 % (3.6) (0.1) % (10.8) (0.3) % Net income 1,375.6 32.3 % 352.9 8.6 % 242.8 6.3 % Less: net income attributable to non-controlling interests 0.8 — % 0.7 — % 0.5 — % Net income attributable to GoDaddy Inc. $ 1,374.8 32.3 % $ 352.2 8.6 % $ 242.3 6.3 % 67 Table of Contents Non-GAAP Financial Measure and Other Operating Metrics In addition to our results determined in accordance with GAAP, we believe that Normalized EBITDA, a non-GAAP financial measure, and the following other 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, 2023 2022 2021 Normalized EBITDA $ 1,134.5 $ 1,013.0 $ 872.2 Annualized recurring revenue $ 3,729.3 $ 3,570.1 $ 3,433.7 Total bookings $ 4,603.1 $ 4,413.8 $ 4,231.7 Total customers at period end (in thousands) 21,026 20,897 20,701 Average revenue per user $ 203 $ 197 $ 187 Normalized EBITDA (NEBITDA).
A&C revenue primarily consists of revenue from sales of products containing proprietary software such as Websites + Marketing and Managed WordPress and commerce products such as payment processing fees and point-of-sale (POS) hardware as well as sales of third-party email and productivity solutions such as Microsoft Office 365.
A&C revenue primarily consists of revenue from sales of products containing proprietary software such as Websites + Marketing and Managed WordPress and commerce products such as payment processing fees and point-of-sale (POS) hardware as well as sales of third-party email and productivity solutions such as Microsoft 365.
As of December 31, 2022, 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 additional information regarding goodwill and indefinite-lived intangible assets.
As of December 31, 2023, 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 additional information regarding goodwill and indefinite-lived intangible assets.
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 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
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 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Discussion of 2020 items and comparisons between 2021 and 2020 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, 2021.
Discussion of 2021 items and comparisons between 2022 and 2021 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, 2022.
Such contingencies may include, but are not limited to, intellectual property claims, putative class actions, commercial and consumer protection claims, labor and employment claims, breach of contract claims, regulatory proceedings, product service level commitments and losses resulting from other events and developments.
Such contingencies may include, but are not limited to, intellectual property claims, putative class actions, commercial and consumer protection claims, labor and employment claims, breach of contract claims, regulatory proceedings, product service level commitments and 77 Table of Contents losses resulting from other events and developments.
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 74 Table of Contents agencies, court systems in various jurisdictions and other interested parties.
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.
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.
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. 76 Table of Contents See Notes 2 and 3 to our financial statements for additional information regarding business acquisitions.
Year-Over-Year Comparison Revenue We generate substantially all of our revenue from sales of product subscriptions, as described in Note 2 to our financial statements. Our subscriptions can range from monthly terms to multi-annual terms of up to ten years, depending on the product.
Year-Over-Year Comparison Revenue We generate the majority of our revenue from sales of product subscriptions, as described in Note 2 to our financial statements. Our subscriptions can range from monthly terms to multi-annual terms of up to ten years, depending on the product.
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.
As a result, we are limited as to how we conduct our business and may be unable to raise additional debt or equity 73 Table of Contents financing to compete effectively or to take advantage of new business opportunities, strategic acquisitions or share repurchases.
If, based on our qualitative analysis, we were to determine it is more-likely-than-not the fair value of either of our reporting units is less than its carrying amount, a quantitative impairment test would be performed to determine if an impairment loss should be recorded. 73 Table of Contents Our qualitative analyses during 2022, 2021 and 2020 did not indicate any impairment.
If, based on our qualitative analysis, we were to determine it is more-likely-than-not the fair value of either of our reporting units is less than its carrying amount, a quantitative impairment test would be performed to determine if an impairment loss should be recorded. Our qualitative analyses during 2023, 2022 and 2021 did not indicate any impairment.
We selected the 2016 cohort as an example for this analysis, which we believe helps to illustrate the long-term value of our customers. 62 Table of Contents Results of Operations The following table sets forth our results of operations for the periods presented and as a percentage of our total revenue for those periods.
We selected the 2017 cohort as an example for this analysis, which we believe helps to illustrate the long-term value of our customers. Results of Operations The following table sets forth our results of operations for the periods presented and as a percentage of our total revenue for those periods.
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.
We offer our subscriptions on a variety of terms, which 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.
Revenue derived from both 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. In each of the five years ended December 31, 2022, greater than 85% of our total revenue was generated by customers who were also customers in the prior year.
Revenue derived from both 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. 66 Table of Contents In each of the five years ended December 31, 2023, greater than 85% of our total revenue was generated by customers who were also customers in the prior year.
In general, we seek to deploy our capital in a prioritized manner focusing first on requirements for our operations, then on growth investments, and finally on stockholder returns.
In general, we seek to deploy our capital in a prioritized manner fo cusing first on requirements for our operations, then on growth investments, and finally on stockholder returns.
As of December 31, 2022, we were in compliance with all such covenants and had no amounts drawn on our Revolver. As further discussed in Note 11 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.
As of December 31, 2023, we were in compliance with all such covenants and had no amounts drawn on our revolving credit facility. As discussed in Note 11 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.
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.
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets (DTAs) and d eferred tax liabilities (DTLs) for the expected future tax consequences of events included in our financial statements.
For the five years ended December 31, 2022, the average annual revenue retention rate of the 2016 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.
For the five years ended December 31, 2023, the average annual revenue retention rate of the 2017 cohort was more than 93%, 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.
Customer care 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.
Customer care 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 methods of customer interaction utilized as well as the level of personnel required to support our business.
Core revenue primarily consists of revenue from sales of domain registrations and renewals, aftermarket domain sales, website hosting products and website security products when not included in bundled offerings of our proprietary software products. Total revenue from Core Platform products grew at a compound annual growth rate (CAGR) of 5.6% over the three years ended December 31, 2022.
Core revenue primarily consists of revenue from sales of domain registrations and renewals, aftermarket domain sales, website hosting products and website security products when not included in bundled offerings of our proprietary software products. Total revenue from Core Platform products grew at a CAGR of 5.7% over the three years ended December 31, 2023.
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. Applications and Commerce . We generated 31.3% of our 2022 total revenue from the sale of A&C products.
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. Applications and Commerce . We generated 33.6% of our 2023 total revenue from the sale of A&C products.
By the end of 2022, the 2016 cohort had generated an aggregate of approximately $1.6 billion of total bookings and we expect this cohort will continue to generate bookings and revenue in the future.
By the end of 2023, the 2017 cohort had generated an aggregate of approximately $1.9 billion of total bookings and we expect this cohort will continue to generate bookings and revenue in the future.
Year Ended December 31, 2022 to 2021 2021 to 2020 2022 2021 2020 $ change % change $ change % change Cost of revenue $ 1,484.5 $ 1,372.2 $ 1,158.6 $ 112.3 8 % $ 213.6 18 % The 8.2% increase in cost of revenue was primarily attributable to (i) higher domain costs, which were driven by increased aftermarket domain sales, cost increases implemented by various TLD registries and costs associated with our growing registry business, (ii) increased software licensing fees resulting from higher sales of productivity solutions and (iii) increased costs associated with the growth of our payment processing business.
Year Ended December 31, 2023 to 2022 2022 to 2021 2023 2022 2021 $ change % change $ change % change Cost of revenue $ 1,573.6 $ 1,484.5 $ 1,372.2 $ 89.1 6 % $ 112.3 8 % The 6.0% increase in cost of revenue was primarily attributable to (i) increased software licensing fees resulting from higher sales of productivity solutions, (ii) higher domain costs, which were primarily driven by the increased domain registration revenue as well as cost increases implemented by various TLD registries and (iii) increased costs associated with the growth of our payment processing business.
(Throughout the tables and this discussion and analysis, dollars are in millions, excluding average revenue per user (ARPU), and shares are in thousands.) Overview We are a global leader in serving a large market of everyday entrepreneurs, delivering simple, easy-to-use products, and outcome-driven, personalized guidance to small businesses, individuals, organizations, developers, designers and domain investors.
(Throughout the tables and this discussion and analysis, dollars are in millions, excluding average revenue per user (ARPU), and shares are in thousands.) Overview We are a global leader serving a large market of entrepreneurs, developing and delivering easy-to-use products in a one-stop shop solution alongside personalized guidance. We serve small businesses, individuals, organizations, developers, designers and domain investors.
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 our Credit Facility, which includes our secured credit agreement and a revolving credit facility (the Revolver), and the senior notes.
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 consists of the Credit Facility, which includes two tranches of term loans and a revolving credit facility, and the Senior Notes.
Financing Activities Our financing activities generally consist of long-term debt borrowings, the repayment of principal on long-term debt, stock option exercise proceeds and share repurchases.
Financing Activities Our financing activities generally consist of long-term debt borrowings, the repayment of principal on long-term debt, stock option exercise proceeds, ESPP proceeds, payment of certain acquisition-related obligations and share repurchases.
Total revenue from A&C products grew at a compound annual growth rate (CAGR) of 11.4% over the three years ended December 31, 2022. Core Platform . We generated 68.7% of our 2022 total revenue from our Core platform.
Total revenue from A&C products grew at a compound annual growth rate (CAGR) of 15.6% over the three years ended December 31, 2023. Core Platform . We generated 66.4% of our 2023 total revenue from our Core platform.
The following table presents our revenue for the periods indicated: Year Ended December 31, 2022 to 2021 2021 to 2020 2022 2021 2020 $ change % change $ change % change Applications & commerce $ 1,279.7 $ 1,128.3 $ 926.1 $ 151.4 13 % $ 202.2 22 % Core platform $ 2,811.6 $ 2,687.4 $ 2,390.6 $ 124.2 5 % $ 296.8 12 % Total revenue $ 4,091.3 $ 3,815.7 $ 3,316.7 $ 275.6 7 % $ 499.0 15 % 2022 compared to 2021 Total revenue increased 7.2%, due to the increases in our A&C and Core revenues, as described below: A&C.
The following table presents our revenue for the periods indicated: Year Ended December 31, 2023 to 2022 2022 to 2021 2023 2022 2021 $ change % change $ change % change Applications & commerce $ 1,430.4 $ 1,279.7 $ 1,128.3 $ 150.7 12 % $ 151.4 13 % Core platform $ 2,823.7 $ 2,811.6 $ 2,687.4 $ 12.1 0 % $ 124.2 5 % Total revenue $ 4,254.1 $ 4,091.3 $ 3,815.7 $ 162.8 4 % $ 275.6 7 % Total revenue increased 4.0%, due to the increases in our A&C and Core revenues, as described below: A&C.
In each of the five years ended December 31, 2022, our customer retention rate exceeded 85%, and in 2022, our retention rate for customers who had been with us for over three years was 61 Table of Contents approximately 93%.
In each of the five years ended December 31, 2023, our customer retention rate was approximately 85%, and in 2023, our retention rate for customers who had been with us for over three years was approximately 92%.
We have incurred significant long-term debt, primarily to fund acquisitions, share repurchases and the settlement of our prior tax receivable agreements.
We have incurred significant long-term debt, primarily to fund acquisitions, share repurchases and the TRA Settlement Agreements.
We manage and report our business in the following two segments: • Applications and Commerce (A&C) , which primarily consists of sales of products containing proprietary software, commerce products and third-party email and productivity solutions as well as sales of certain products when they are included in bundled offerings of our proprietary software products. • Core Platform (Core) , which primarily consists of sales of domain registrations and renewals, aftermarket domain sales, website hosting products and website security products when not included in bundled offerings of our proprietary software products as well as sales of products not containing a software component. 60 Table of Contents Financial Highlights Below are key consolidated financial highlights for 2022, with comparisons to 2021. • Total revenue of $4,091.3 million, an increase of 7.2%, or approximately 8.4% on a constant currency basis (1) . • International revenue of $1,334 million, an increase of 5.0%, or approximately 8.4% on a constant currency basis (1) . • Total bookings of $4,413.8 million, an increase of 4.3%, or approximately 6.0% on a constant currency basis (1) . • Operating income of $498.8 million, an increase of 30.5%. • Net income of $352.9 million, an increase of 45.3%. • Normalized EBITDA (2) of $1,013.0 million, an increase of 16.1%. • Net cash provided by operating activities of $979.7 million, an increase of 18.1%.
We manage and report our business in the following two segments: • Applications and Commerce (A&C) , which primarily consists of sales of products containing proprietary software, notably our website building products, as well as our commerce products and third-party email and productivity solutions and sales of certain products when they are included in bundled offerings of our proprietary software products. • Core Platform (Core) , which primarily consists of sales of domain registrations and renewals, aftermarket domain sales, website hosting products and website security products when not included in bundled offerings of our proprietary software products as well as sales of products not containing a software component. 65 Table of Contents Financial Highlights Below are our key consolidated financial highlights for 2023, with comparisons to 2022. • Total revenue of $4,254.1 million, an increase of 4.0%, or approximately 4.6% on a constant currency basis (1) . • International revenue of $1,381.1 million, an increase of 3.5%, or approximately 5.3% on a constant currency basis (1) . • Total bookings of $4,603.1 million, an increase of 4.3%, or approximately 4.7% on a constant currency basis (1) . • Operating income of $547.4 million, an increase of 9.7%.
For example, in 2016, we acquired approximately 3 million gross customers, who we collectively refer to as our 2016 cohort, and spent $229 million in marketing and advertising expenses.
For example, in 2017, we acquired approximately 5.0 million gross customers, who we collectively refer to as our 2017 cohort, and spent $253.2 million in marketing and advertising expenses.
We expect our investing cash flows to be affected by the timing of payments we make for capital expenditures, strategic acquisitions or other growth opportunities we decide to pursue.
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, strategic acquisitions or other growth opportunities we decide to pursue.
Year Ended December 31, 2022 to 2021 2021 to 2020 2022 2021 2020 $ change % change $ change % change Customer care $ 305.9 $ 306.1 $ 316.9 $ (0.2) 0 % $ (10.8) (3) % There were no material changes in customer care expenses.
Year Ended December 31, 2023 to 2022 2022 to 2021 2023 2022 2021 $ change % change $ change % change Customer care $ 304.5 $ 305.9 $ 306.1 $ (1.4) 0 % $ (0.2) 0 % There were no material changes in customer care expenses.
See Notes 2 and 16 to our financial statements for additional information regarding income taxes and the considerations that could lead to a release of substantially all of the valuation allowance against our DTAs.
See Notes 2 and 16 to our financial statements for additional information regarding income taxes and the release of the majority of the domestic valuation allowance against our DTAs.
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.
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.
Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2022 2021 2020 Net cash provided by operating activities $ 979.7 $ 829.3 $ 764.6 Net cash used in investing activities (132.0) (635.6) (482.3) Net cash provided by (used in) financing activities (1,326.7) 298.1 (581.7) Effect of exchange rate changes on cash and cash equivalents (2.7) (1.3) 1.8 Net increase (decrease) in cash and cash equivalents $ (481.7) $ 490.5 $ (297.6) Operating Activities Our primary source of cash from operating activities has been cash collections from our customers.
In addition, we made a cash payment of $17.0 million related to the termination of a revenue sharing agreement during 2023. 74 Table of Contents Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 1,047.6 $ 979.7 $ 829.3 Net cash used in investing activities (102.4) (132.0) (635.6) Net cash provided by (used in) financing activities (1,261.7) (1,326.7) 298.1 Effect of exchange rate changes on cash and cash equivalents 1.3 (2.7) (1.3) Net increase (decrease) in cash and cash equivalents $ (315.2) $ (481.7) $ 490.5 Operating Activities Our primary source of cash from operating activities has been cash collections from our customers.
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.
We review our critical accounting policies and estimates with the audit and finance committee of our board of directors on an annual basis. Of our significant accounting policies, which are described in Note 2 to our financial statements, the following accounting policies and specific estimates involve a greater degree of judgement and complexity.
Net cash provided by operating activities increased $150.4 million from $829.3 million in 2021 to $979.7 million in 2022, primarily driven by the growth in total bookings as well as lower acquisition-related payments and discretionary marketing spending.
Net cash provided by operating activities increased $67.9 million from $979.7 million in 2022 to $1,047.6 million in 2023, primarily driven by the growth in total bookings as well as lower discretionary marketing spending.
The 21.8% increase in A&C revenue was primarily driven by: (i) 15.5% growth in revenue related to our productivity applications, most notably our email solutions; (ii) 29.2% growth in revenues due to increased customer adoption of our subscription-based products designed to establish and grow online presence; and (iii) new commerce-related revenue primarily associated with our acquisition of Poynt Co in 2021.
The 11.8% increase in A&C revenue was primarily driven by: (i) 11.2% growth in revenue related to our productivity applications, most notably our email solutions; (ii) 8.2% growth in revenue due to continued customer adoption of our subscription-based products designed to establish and grow online presence; and (iii) 54.0% growth in revenue related to our commerce solutions, as continued customer adoption has resulted in an increase in payment volume.
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 8 to our financial statements for additional information regarding revenue recognition and deferred revenue.
The determination of gross or net revenue recognition is reviewed on a product-by-product basis. See Notes 2 and 8 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.
Year Ended December 31, 2022 to 2021 2021 to 2020 2022 2021 2020 $ change % change $ change % change Technology and development $ 794.0 $ 706.3 $ 560.4 $ 87.7 12 % $ 145.9 26 % The 12.4% increase in technology and development expenses was primarily due to (i) increased personnel costs driven by higher average headcount associated with our continued investment in product development and (ii) increased technology costs associated with the growth of our business, advancement of our commerce and innovation strategies and our migration to a cloud-based infrastructure.
Year Ended December 31, 2023 to 2022 2022 to 2021 2023 2022 2021 $ change % change $ change % change Technology and development $ 839.6 $ 794.0 $ 706.3 $ 45.6 6 % $ 87.7 12 % The 5.7% increase in technology and development expenses was primarily due to increased personnel costs driven by higher average headcount associated with our continued investment in product development.
Applications & Commerce The following table presents the results for our A&C segment for the periods indicated: Year Ended December 31, 2022 to 2021 2021 to 2020 2022 2021 2020 $ change % change $ change % change Revenue $ 1,279.7 $ 1,128.3 $ 926.1 $ 151.4 13 % $ 202.2 22 % Segment EBITDA $ 522.8 $ 447.7 $ 349.7 $ 75.1 17 % $ 98.0 28 % 2022 compared to 2021 The 13.4% increase in A&C revenue was primarily driven by: (i) 13.1% growth in revenue related to our productivity applications, most notably our email solutions; (ii) 8.7% growth in revenues due to increased customer adoption of our subscription-based products designed to establish and grow online presence, such as Websites + Marketing and Managed WordPress hosting; and (iii) 103.2% growth in commerce-related revenue primarily associated with our acquisition of Poynt Co.
See Note 18 to our financial statements for a reconciliation of Segment EBITDA to net income, its most directly comparable GAAP financial measure. 72 Table of Contents Applications & Commerce The following table presents the results for our A&C segment for the periods indicated: Year Ended December 31, 2023 to 2022 2022 to 2021 2023 2022 2021 $ change % change $ change % change Revenue $ 1,430.4 $ 1,279.7 $ 1,128.3 $ 150.7 12 % $ 151.4 13 % Segment EBITDA $ 594.2 $ 522.8 $ 447.7 $ 71.4 14 % $ 75.1 17 % The 11.8% increase in A&C revenue was primarily driven by: (i) 11.2% growth in revenue related to our productivity applications, most notably our email solutions; (ii) 8.2% growth in revenues due to continued customer adoption of our subscription-based products designed to establish and grow online presence; and (iii) 54.0% growth in commerce-related revenue.
Our chief operating decision maker evaluates segment performance based upon several factors, of which the primary financial measures are revenue and Segment EBITDA. See Note 18 to our financial statements for a reconciliation of Segment EBITDA to net income, its most directly comparable GAAP financial measure.
Our chief operating decision maker evaluates segment performance based upon several factors, of which the primary financial measures are revenue and Segment EBITDA, our segment measure of profitability.
The 28.0% increase in A&C Segment EBITDA for the year ended December 31, 2021 primarily resulted from the revenue increases noted above, partially offset by higher personnel costs resulting from headcount additions made to support the continued development of our A&C products as well as increased discretionary marketing spending associated with investments made to drive additional growth.
The 13.7% increase in A&C Segment EBITDA primarily resulted from the revenue increases noted above, in conjunction with lower discretionary marketing spend. These increases were partially offset by increased personnel costs resulting from a higher average headcount made to support the continued development of our A&C products.
Critical 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.
Off-Balance Sheet Arrangements As of December 31, 2023 and 2022, we had no off-balance sheet arrangements that had, or which are reasonably likely to have, a material effect on our financial statements. 75 Table of Contents Critical 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.
Loss on debt extinguishment In 2022, we recognized a loss on debt extinguishment of $3.6 million, primarily related to the refinancing of the 2029 Term Loans. See Note 10 to our financial statements for additional discussion. Segment Results of Operations Our two operating segments, A&C and Core, reflect the way we manage and evaluate the performance of our business.
See Note 10 to our financial statements for additional discussion. Loss on debt extinguishment In 2023, we recognized a loss on debt extinguishment of $1.5 million, primarily related to the refinancing of the 2029 Term Loans. See Note 10 to our financial statements for additional discussion.
Interest expense Year Ended December 31, 2022 to 2021 2021 to 2020 2022 2021 2020 $ change % change $ change % change Interest expense $ 146.3 $ 126.0 $ 91.3 $ 20.3 16 % $ 34.7 38 % The 16.1% increase in interest expense was primarily driven by the higher effective interest rates on our variable-rate debt in 2022, as further discussed in Note 10 to our financial statements.
Interest expense Year Ended December 31, 2023 to 2022 2022 to 2021 2023 2022 2021 $ change % change $ change % change Interest expense $ 179.0 $ 146.3 $ 126.0 $ 32.7 22 % $ 20.3 16 % The 22.4% increase in interest expense was primarily driven by the higher effective interest rates on the unhedged portion of our variable-rate debt partially offset by the refinancing of the 2029 Term Loans which reduced our interest margin.
Partially offsetting these increases was a 5.9% decrease in hosting revenues, which was primarily due to end-of-life migrations from certain products and lower demand for these products amid the uncertain macroeconomic environment.
These increases were partially offset by a decrease in cost of revenue related to our hosting business, which is consistent with the decline in revenue for this business due to end of life migrations away from certain products, the divestiture of certain hosting assets during 2023 and lower demand amid the uncertain macroeconomic environment.
Net cash used in investing activities decreased $503.6 million from $635.6 million in 2021 to $132.0 million in 2022, primarily due to a $295.2 million decrease in spending for business acquisitions and a $201.7 million decrease in purchases of intangible assets.
Net cash used in investing activities decreased $29.6 million from $132.0 million in 2022 to $102.4 million in 2023, primarily due to a $72.5 million decrease in spending for business acquisitions, partially offset by a $35.0 million increase in purchases of intangible assets and the purchase of short-term investments totaling $40.0 million.
Core Platform The following table presents the results for our Core segment for the periods indicated: Year Ended December 31, 2022 to 2021 2021 to 2020 2022 2021 2020 $ change % change $ change % change Revenue $ 2,811.6 $ 2,687.4 $ 2,390.6 $ 124.2 5 % $ 296.8 12 % Segment EBITDA $ 783.7 $ 679.7 $ 628.2 $ 104.0 15 % $ 51.5 8 % 2022 compared to 2021 The 4.6% increase in Core revenue was primarily driven by: (i) 8.5% growth in domain-related revenues as a result of our continued enhancement of online presence and offerings and the continued growth of our registry business; (ii) 5.8% growth in aftermarket revenues due to our continued innovation in auction technologies as well as contributions from our Dan.com acquisition; and (iii) 4.0% growth in our security and SSL product offerings resulting from higher customer renewals year over year, specifically with respect to Website Security.
Core Platform The following table presents the results for our Core segment for the periods indicated: Year Ended December 31, 2023 to 2022 2022 to 2021 2023 2022 2021 $ change % change $ change % change Revenue $ 2,823.7 $ 2,811.6 $ 2,687.4 $ 12.1 0 % $ 124.2 5 % Segment EBITDA $ 816.4 $ 783.7 $ 679.7 $ 32.7 4 % $ 104.0 15 % The 0.4% increase in Core revenue was primarily driven by 4.1% growth in domain-related revenues and the continued growth of our registry business, partially offset by a 7.8% decrease in hosting revenues primarily due to end-of-life migrations from certain products, and the divestiture of certain hosting assets during the year.
Reconciliation of NEBITDA The following table reconciles NEBITDA to net income, its most directly comparable GAAP financial measure: Year Ended December 31, 2022 2021 2020 Net income (loss) $ 352.9 $ 242.8 $ (494.1) Depreciation and amortization 194.6 199.6 202.7 Equity-based compensation 264.4 207.9 191.5 Interest expense, net 135.0 124.9 86.9 Tax receivable agreements liability adjustment — — 674.7 Acquisition-related expenses 35.1 78.2 25.0 Restructuring and other (1) 27.4 8.0 36.8 Provision (benefit) for income taxes 3.6 10.8 (1.3) NEBITDA $ 1,013.0 $ 872.2 $ 722.2 _________________________________ (1) Includes lease-related expenses associated with closed facilities, charges related to certain legal matters, and expenses incurred in relation to the refinancing of our long-term debt.
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. 68 Table of Contents Reconciliation of NEBITDA The following table reconciles NEBITDA to net income, its most directly comparable GAAP financial measure: Year Ended December 31, 2023 2022 2021 Net income $ 1,375.6 $ 352.9 $ 242.8 Depreciation and amortization 171.3 194.6 199.6 Equity-based compensation (1) 294.0 264.4 207.9 Interest expense, net 155.4 135.0 124.9 Acquisition-related expenses (2) 12.1 35.1 78.2 Restructuring and other (3) 97.9 27.4 8.0 Provision (benefit) for income taxes (971.8) 3.6 10.8 NEBITDA $ 1,134.5 $ 1,013.0 $ 872.2 _________________________________ (1) The year ended December 31, 2023 excludes $2.3 million of equity-based compensation expense associated with our restructuring plan, which is included within restructuring and other.
The increase was partially offset by a $27.0 million decrease in compensation expense related to prior acquisitions, primarily Poynt. 66 Table of Contents 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.
This increase was partially offset by an adjustment recognized during 2023 to a previously-recognized acquisition milestone liability following reassessment of its achievement probability, cloud provider credits recognized in 2023 and decreases in professional fees and infrastructure migration costs. 70 Table of Contents 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.
In addition to the ASRs discussed above, during the year ended December 31, 2022, we also repurchased a total of 7,642 shares of our Class A common stock in the open market for an aggregate purchase price of $550.1 million. As of December 31, 2022, we had $1,699.9 million of remaining authorization available for repurchases.
Share Repurchases As discussed in Note 5 to our financial statements, we are authorized to repurchase up to $4,000.0 million of our Class A common stock. During the year ended December 31, 2023, we repurchased a total of 17,356 shares of our Class A common stock in the open market for an aggregate purchase price of $1,264.4 million.
Net cash from financing activities decreased $1,624.8 million from $298.1 million provided in 2021 to $1,326.7 million used in 2022, primarily due to $800.0 million in proceeds received from the issuance of the 2029 Senior Notes in 2021 as well as a $768.6 million increase in share repurchases.
Net cash used in financing activities decreased $65.0 million from $1,326.7 million used in 2022 to $1,261.7 million used in 2023, primarily due to a $34.6 million increase in net proceeds received from the issuance of term loans as a result of the 2029 Term Loans refinancing completed in July 2023 as compared to proceeds from the November 2022 amendment, as discussed in Note 10 to our financial statements, as well as a $24.4 million decrease in share repurchases.
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.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and operating results. Revenue Recognition We sell our products directly to customers and also through a network of resellers. In certain cases, we act as a reseller of products provided by others.
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.
If this threshold is met, the single asset or group of assets, as applicable, is accounted for as an asset acquisition. If the threshold is not met, further assessment is undertaken to ascertain whether the acquisition meets the definition of a business.
The 15.3% increase in Core Segment EBITDA for the year ended December 31, 2022 primarily resulted from the revenue increases noted above, in conjunction with lower discretionary marketing spend in 2022.
The 4.2% increase in Core Segment EBITDA primarily resulted from the revenue increases noted above, in conjunction with lower discretionary marketing spend. These increases were partially offset by cost increases implemented by various TLD registries.
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.
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 for domain costs are established by agreements between registries and registrars and can vary significantly depending on the TLD.
Year Ended December 31, 2022 to 2021 2021 to 2020 2022 2021 2020 $ change % change $ change % change Marketing and advertising $ 412.3 $ 503.9 $ 438.5 $ (91.6) (18) % $ 65.4 15 % The 18.2% decrease in marketing and advertising expenses were primarily attributable to a lower level of discretionary spending in 2022 as compared to the significant additional marketing investments we made in 2021 to drive growth during a period of high demand.
Year Ended December 31, 2023 to 2022 2022 to 2021 2023 2022 2021 $ change % change $ change % change Marketing and advertising $ 352.9 $ 412.3 $ 503.9 $ (59.4) (14) % $ (91.6) (18) % The 14.4% decrease in marketing and advertising expenses was primarily attributable to a lower level of discretionary spending and headcount reductions resulting from our restructuring activities as discussed in Note 14 to our financial statements.
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. 67 Table of Contents 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.
Restructuring and other of $15.7 million during 2022 primarily includes the impairment and loss on disposition of certain assets. 71 Table of Contents 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.
However, cost of revenue may fluctuate as a percentage of total revenue, depending on the mix of products sold in a particular period.
We expect cost of revenue to increase in absolute dollars in future periods due to increased sales of domains and third-party productivity applications as well as continued 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.
See Note 10 to our financial statements for additional information regarding our long-term debt.
See Note 10 to our financial statements for additional information regarding our long-term debt. In January 2024, we entered into an amendment to the Credit Facility to refinance the 2029 Term Loans, as discussed in Note 20 to our financial statements.
Bookings The following table presents our total bookings for the periods indicated: Year Ended December 31, 2022 to 2021 2021 to 2020 2022 2021 2020 $ change % change $ change % change Total bookings $ 4,413.8 $ 4,231.7 $ 3,775.5 $ 182.1 4 % $ 456.2 12 % The 4.3% increase in total bookings was primarily driven by increased aftermarket domain sales, broadened customer adoption of our productivity solutions and our Websites + Marketing and Managed WordPress products as well as an increase in ARPU due to a higher product attach rate and contributions from recent acquisitions, partially offset by approximately 170 basis 65 Table of Contents points due to adverse movements in foreign currency exchange rates due to the strength of the U.S. dollar.
The 0.4% increase in Core revenue was primarily driven by 4.1% growth in domain-related revenues and the continued growth of our registry business, partially offset by a 7.8% decrease in hosting revenues primarily due to end-of-life migrations from certain products, and the divestiture of certain hosting assets during the year. 69 Table of Contents Bookings The following table presents our total bookings for the periods indicated: Year Ended December 31, 2023 to 2022 2022 to 2021 2023 2022 2021 $ change % change $ change % change Total bookings $ 4,603.1 $ 4,413.8 $ 4,231.7 $ 189.3 4 % $ 182.1 4 % The 4.3% increase in total bookings was primarily driven by continued customer adoption of our productivity solutions and our Websites + Marketing product, partially offset by decreased hosting bookings following the divestiture of certain hosting assets during 2023.
These increases were partially offset by higher personnel costs to support our growth, increased domain costs and higher software licensing fees related to increased sales of third-party productivity solutions. 71 Table of Contents Investing Activities Our investing activities generally consist of strategic acquisitions and purchases of property and equipment to support the overall growth of our business.
These increases were partially offset by payments made pursuant to our restructuring activities, as discussed in Note 14 to our financial statements, higher software licensing fees related to increased sales of third-party productivity solutions, increased costs associated with the growth of our payment processing business and increased cash interest payments.
Year Ended December 31, 2022 to 2021 2021 to 2020 2022 2021 2020 $ change % change $ change % change General and administrative $ 385.5 $ 345.8 $ 323.8 $ 39.7 11 % $ 22.0 7 % The 11.5% increase in general and administrative expenses was primarily due to (i) increased personnel costs driven by higher average headcount and the reversal of equity-based compensation expense in 2021 due to the forfeiture of unvested awards related to certain executive departures; (ii) increased legal and professional fees; and (iii) the reversal of an indirect tax reserve as a result of a settlement agreement in 2021.
Year Ended December 31, 2023 to 2022 2022 to 2021 2023 2022 2021 $ change % change $ change % change General and administrative $ 374.0 $ 385.5 $ 345.8 $ (11.5) (3) % $ 39.7 11 % The 3.0% decrease in general and administrative expenses was primarily due to decreases in acquisition-related costs and facilities expenses, partially offset by increases in indirect tax-related reserves and equity-based compensation expense.
As a result of this reevaluation, we revised both our customer and related ARPU disclosures to retrospectively present total customers and ARPU under our updated customer definition, as shown in the table below: Year Ended December 31, 2021 2020 Total customers at period end (in thousands): Previous definition 21,233 20,646 New definition 20,704 20,148 Average revenue per user: Previous definition $ 182 $ 166 New definition $ 187 $ 170 We grew our total customers from 18.8 million as of December 31, 2019 to 20.9 million as of December 31, 2022, 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.
We grew our total customers from 20.1 million as of December 31, 2020 to 21.0 million as of December 31, 2023, 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.
We continue to monitor the pandemic and the potential impacts it may have on our future financial position, results of operations and cash flows. See "Risk Factors" for additional information. 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.
Our Financial Model We have developed a stable and durable business model driven by strong brand recognition, efficient customer acquisition, high customer retention rates and increasing lifetime spend of our customers.
Restructuring As discussed in Note 20 to our financial statements, on February 8, 2023, the audit and finance committee of our board of directors authorized a restructuring plan to reduce future operating expenses and improve cash flows through a combination of a reduction in force and a rationalization of our portfolio.
Restructuring and Other As further discussed in Note 14 to our financial statements, we undertook restructuring activities in 2023 to reduce future operating expenses and improve cash flows through a combination of reductions in force and a commitment to sell certain assets and liabilities of our hosting business within our Core segment.
Deferred Revenue See Note 8 to our financial statements for details regarding the expected future recognition of deferred revenue. Off-Balance Sheet Arrangements As of December 31, 2022 and 2021, we had no off-balance sheet arrangements that had, or which are reasonably likely to have, a material effect on our financial statements.
Deferred Revenue See Note 8 to our financial statements for details regarding the expected future recognition of deferred revenue.
In addition to the currency headwinds, our bookings growth rate was also impacted by uneven demand patterns related to inflation and continued economic uncertainty. Costs and Operating Expenses Cost of revenue Costs of revenue are the direct costs incurred in connection with selling an incremental product to our customers.
Our bookings growth rate was also impacted by uneven demand patterns related to inflation and continued economic uncertainty. Our annual refund rate has declined from 5.3% of total bookings in 2021 to 4.4% in 2023.
(1) Discussion of constant currency is set forth in "Quantitative and Qualitative Disclosures about Market Risk." (2) A reconciliation of Normalized EBITDA to net income, its most directly comparable GAAP financial measure, is set forth in "Reconciliation of Normalized EBITDA" below.
Net income for the year ended December 31, 2023 included a $971.8 million benefit for income taxes primarily due to a $1,014.0 million release of the majority of our domestic valuation allowance . (3) A reconciliation of Normalized EBITDA to net income, its most directly comparable GAAP financial measure, is set forth in "Reconciliation of NEBITDA" below.
Revenue is presented net of refunds, and we maintain a reserve to provide for refunds granted to customers. 64 Table of Contents Beginning in the first quarter of 2022, we revised the presentation of revenue, as described in Note 2 to our financial statements, and accordingly, have revised the prior period amounts in the table below to retrospectively present revenue in the new format.
Revenue is presented net of refunds, and we maintain a reserve to provide for refunds granted to customers.
Restructuring and other Year Ended December 31, 2022 to 2021 2021 to 2020 2022 2021 2020 $ change % change $ change % change Restructuring and other $ 15.7 $ (0.3) $ 43.6 $ 16.0 (5333) % $ (43.9) (101) % Restructuring and other of $15.7 million during 2022 primarily includes the impairment and loss on disposition of certain assets.
Restructuring and other Year Ended December 31, 2023 to 2022 2022 to 2021 2023 2022 2021 $ change % change $ change % change Restructuring and other $ 90.8 $ 15.7 $ (0.3) $ 75.1 478 % $ 16.0 (5333) % Restructuring and other of $90.8 million during 2023 primarily includes costs incurred pursuant to restructuring activities in the first and third quarters of 2023, as further discussed in Note 14 to our financial statements, as well as a charge of $17.0 million related to the termination of a revenue sharing agreement.
Removed
COVID-19 Pandemic The extent to which the ongoing COVID-19 pandemic may impact our future results and operations will depend on future developments, including the duration of the pandemic and the parameters of global governmental measures put in place to control the spread of the virus as well as the continuing economic impact of the pandemic.
Added
(2) • Net income of $1,375.6 million, an increase of 289.8%. (2) • Normalized EBITDA (3) of $1,134.5 million, an increase of 12.0%. • Net cash provided by operating activities of $1,047.6 million, an increase of 6.9%.
Removed
This has changed the way in which we interact with and target our customers, and, as such, in 2022 we reevaluated our definition of a customer based on our current business model.
Added
(1) Discussion of constant currency is set forth in "Quantitative and Qualitative Disclosures about Market Risk." (2) Our operating results for the year ended December 31, 2023 included $90.8 million in restructuring and other charges, as further discussed in Note 14 to our financial statements.
Removed
Under this new definition, we include all customer accounts with paid transactions in the trailing twelve months or with paid subscriptions as of the end of a period, but exclude customer accounts that have active free versions of our products but have not paid us in the trailing twelve months or do not have any paid subscriptions as of the end of the period.
Added
(2) The year ended December 31, 2023 includes an adjustment of $6.0 million to a previously-recognized acquisition milestone liability.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+3 added−2 removed14 unchanged
Biggest changeIn August 2020, we entered into seven-year pay-fixed rate, receive-floating rate interest rate swap arrangements to effectively convert the variable one-month LIBOR interest rate on the 2027 Term Loans borrowings to a fixed rate of 0.705%. These interest rate swaps, which mature on August 10, 2027, had an aggregate notional amount of $731.3 million at December 31, 2022.
Biggest changeThese interest rate swaps, which had a notional amount of $1,235.9 million as of December 31, 2023, serve to convert a portion of the variable-rate borrowings under the 2029 Term Loans to a fixed rate of 4.81%. 79 Table of Contents In August 2020, we entered into seven-year pay-fixed rate, receive-floating rate interest rate swap arrangements to effectively convert a portion of the variable rate borrowings under the 2027 Term Loans to a fixed rate of 0.705%.
To mitigate such counterparty credit risk, we enter into contracts only with carefully selected financial institutions based upon ongoing evaluations of their creditworthiness. As a result, we do not believe we are exposed to any undue concentration of counterparty risk with respect to our derivative contracts as of December 31, 2022.
To mitigate such counterparty credit risk, we enter into contracts only with carefully selected financial institutions based upon ongoing evaluations of their creditworthiness. As a result, we do not believe we are exposed to any undue concentration of counterparty risk with respect to our derivative contracts as of December 31, 2023.
For the balance of our long-term debt not subject to interest rate swaps, the effect of a hypothetical 10% change in interest rates would not have had a material impact on our interest expense. 76 Table of Contents
For the balance of our long-term debt not subject to interest rate swaps, the effect of a hypothetical 10% change in interest rates would not have had a material impact on our interest expense. 80 Table of Contents
Fluctuations in exchange rates may also cause us to recognize transaction gains and losses in our statements of operations; however, such amounts were not material during the current period. As our international operations continue to grow, our exposure to fluctuations in exchange rates will increase, which may increase the costs associated with this growth.
Fluctuations in exchange rates may also cause us to recognize transaction gains and losses in our statements of operations; however, such amounts were not material during the current period. As our international business continues to grow, our exposure to fluctuations in exchange rates will increase, which may increase the costs associated with this growth.
These borrowings bear interest at a rate equal to, at our option, either (a) Secured Overnight Financing Rate (SOFR) for an interest period of one month plus an initial margin of 3.25% per annum or (b) an initial margin of 2.25% per annum plus the highest of (i) the Federal Funds Rate plus 0.5%, (ii) the Prime Rate or (iii) SOFR for an interest period of one month plus 1.0%.
These borrowings bear interest at a rate equal to, at our option, either (a) SOFR for the applicable interest period plus a margin of 2.5% per annum or (b) a margin of 1.5% per annum plus the highest of (i) the Federal Funds Rate plus 0.5%, (ii) the Prime Rate or (iii) SOFR for an interest period of one month plus 1.0%.
See Note 10 to our financial statements for additional information regarding our long-term debt. Total borrowings under our 2027 Term Loans were $731.3 million as of December 31, 2022.
See Note 10 to our financial statements for additional information regarding our long-term debt. Total borrowings under our 2027 Term Loans were $723.8 million as of December 31, 2023.
All LIBOR- and SOFR-based interest rates under the Credit Facility are subject to a 0.0% floor. In April 2017, we entered into a five-year pay-fixed rate, receive-floating rate interest rate swap arrangement to effectively convert a portion of the variable-rate borrowings under the 2029 Term Loans to a fixed rate.
In April 2017, we entered into a five-year pay-fixed rate, receive-floating rate interest rate swap arrangement to effectively convert a portion of the variable-rate borrowings under the 2029 Term Loans to a fixed rate.
During 2022, our total bookings growth in constant currency would have been approximately 170 basis points higher and our total revenue growth would have been approximately 120 basis points higher.
During 2023, our total bookings growth in constant currency would have been approximately 40 basis points higher and our total revenue growth would 78 Table of Contents have been approximately 60 basis points higher.
Gains and losses, once realized, are recorded as a component of AOCI and are amortized to revenue over the same period in which the underlying hedged amounts are recognized.
Gains and losses, once realized, are recorded as a component of AOCI and are amortized to revenue over the same period in which the underlying hedged amounts are recognized. At December 31, 2023, the realized gain and unrealized loss included in AOCI were $6.3 million and $13.2 million, respectively.
The swaps designated as cash flow hedging relationships convert the Euro-denominated interest and principal receipts on the intercompany loan into fixed U.S. dollar interest and principal receipts, thereby reducing our exposure to fluctuations between the Euro and U.S. dollar.
The cross-currency swaps had an aggregate amortizing notional amount of €1,159.4 million at December 31, 2023 (approximately $1,279.7 million). The swaps designated as cash flow hedging relationships convert the Euro-denominated interest and principal receipts on the intercompany loan into fixed U.S. dollar interest and principal receipts, thereby reducing our exposure to fluctuations between the Euro and U.S. dollar.
These borrowings bear interest at a rate equal to, at our option, either (a) LIBOR plus 2.00% per annum or (b) 1.0% per annum plus the highest of (i) the Federal Funds Rate plus 0.5%, (ii) the Prime Rate or (iii) one-month LIBOR plus 1.0%. Total borrowings under our 2029 Term Loans were $1,770.0 million as of December 31, 2022.
These borrowings bear interest at a rate equal to, at our option, either (a) Secured Overnight Financing Rate (SOFR) together with a credit spread adjustment for the applicable interest period plus a margin of 2.0% per annum or (b) a margin of 1.0% per annum plus the highest of (i) the Federal Funds Rate plus 0.5%, (ii) the Prime Rate or (iii) SOFR for an interest period of one month plus 1.0%.
At December 31, 2022, the realized and unrealized gains included in AOCI were $15.6 million and $7.3 million, respectively. 75 Table of Contents Cross-Currency Swap Contract In order to manage variability due to movements in foreign currency exchange rates related to a Euro-denominated intercompany loan, we entered into five-year cross-currency swaps in April 2017.
Cross-Currency Swaps In order to manage variability due to movements in foreign currency exchange rates related to a Euro-denominated intercompany loan, we entered into five-year cross-currency swaps in April 2017. In March 2022, we entered into a transaction to extend the maturity of these swaps to August 31, 2027, as described in Note 11 to our financial statements.
Removed
In March 2022, we entered into a transaction to extend the maturity of these swaps to August 31, 2027, as described in Note 11 to our financial statements. The cross-currency swaps had an aggregate amortizing notional amount of €1,171.8 million at December 31, 2022 (approximately $1,254.3 million).
Added
Total borrowings under our 2029 Term Loans were $1,752.3 million as of December 31, 2023.
Removed
The 2022 Interest Rate Swaps, which had a notional amount of $1,249.2 million as of December 31, 2022, serve to convert a portion of the variable-rate borrowings under the 2029 Term Loans to a fixed rate of 4.81%.
Added
In January 2024, we entered into an amendment to the Credit Facility to refinance the 2029 Term Loans, as discussed in Note 20 to our financial statements. All SOFR-based interest rates under the Credit Facility are subject to a 0.0% floor.
Added
In May 2023, in conjunction with the concurrent Credit Facility amendment discussed in Note 10, the hedged debt index of the swaps was changed from LIBOR to SOFR. These interest rate swaps, which mature on August 10, 2027, had an aggregate notional amount of $723.8 million at December 31, 2023.

Other GDDY 10-K year-over-year comparisons