Document and Entity Information Document

3 Months Ended

Mar. 31, 2017

May 4, 2017

Class A Common Stock

May 4, 2017

Class B Common Stock

Document Information [Line Items]

Entity Registrant Name

GoDaddy Inc.

Entity Central Index Key

0001609711

Current Fiscal Year End Date

--12-31

Entity Filer Category

Large Accelerated Filer

Document Type

10-Q

Document Period End Date

Mar. 31, 2017

Document Fiscal Year Focus

2017

Document Fiscal Period Focus

Q1

Amendment Flag

false

Entity Common Stock, Shares Outstanding

91,536,646

78,404,899

Condensed Consolidated Balance Sheets (Unaudited) (USD $)

In Millions, unless otherwise specified

Mar. 31, 2017

Dec. 31, 2016

Current assets:

Cash and cash equivalents

$ 658.2

$ 566.1

Short-term investments

12.4

6.6

Accounts and other receivables

8.4

8.0

Registry deposits

18.7

20.6

Prepaid domain name registry fees

323.3

307.0

Prepaid expenses and other current assets

25.2

24.5

Total current assets

1,046.2

932.8

Property and equipment, net

228.1

231.0

Prepaid domain name registry fees, net of current portion

178.6

172.1

Goodwill

1,718.4

Intangible assets, net

701.1

716.5

Other assets

12.1

11.1

Deferred tax assets

5.4

5.0

Total assets

3,889.9

3,786.9

Current liabilities:

Accounts payable

70.0

61.7

Accrued expenses and other current liabilities

132.2

143.0

Payable to related parties pursuant to tax receivable agreements

3.0

10.0

Deferred revenue

1,111.8

1,043.5

Long-term debt

6.0

4.0

Total current liabilities

1,323.0

1,262.2

Deferred revenue, net of current portion

559.1

532.7

Long-term debt, net of current portion

1,031.4

1,035.7

Payable to related parties pursuant to tax receivable agreements

197.6

202.6

Other long-term liabilities

39.4

39.5

Commitments and contingencies

Stockholders' equity:

Preferred stock, $0.001 par value - 50,000 shares authorized; none issued and outstanding

0

Additional paid-in capital

645.8

608.3

Accumulated deficit

(48.1)

(48.7)

Accumulated other comprehensive income

0.7

2.7

Total stockholders' equity attributable to GoDaddy Inc.

598.6

562.5

Non-controlling interests

140.8

151.7

Total stockholders' equity

739.4

714.2

Total liabilities and stockholders' equity

3,889.9

3,786.9

Class A Common Stock

Stockholders' equity:

Common stock

0.1

Class B Common Stock

Stockholders' equity:

Common stock

$ 0.1

Condensed Consolidated Balance Sheets (Unaudited) Parenthetical (USD $)

Mar. 31, 2017

Dec. 31, 2016

Preferred stock par value (in dollars per share)

$ 0.001

Preferred stock shares authorized (in shares)

50,000,000

Preferred stock shares issued (in shares)

0

Preferred stock outstanding (in shares)

0

Common stock outstanding (in shares)

169,043,000

167,112,000

Class A Common Stock

Par value (in dollars per share)

$ 0.001

Common stock shares authorized (in shares)

1,000,000,000

Common stock shares issued (in shares)

90,633,000

88,558,000

Common stock outstanding (in shares)

90,633,000

88,558,000

Class B Common Stock

Par value (in dollars per share)

$ 0.001

Common stock shares authorized (in shares)

500,000,000

Common stock shares issued (in shares)

78,410,000

78,554,000

Common stock outstanding (in shares)

78,410,000

78,554,000

Condensed Consolidated Statements of Operations (Unaudited) (USD $)

In Millions, except Share data in Thousands, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Revenue

$ 489.7

$ 433.7

Costs and operating expenses

Cost of revenue (excluding depreciation and amortization)

176.8 ¹

154.4 ¹

Technology and development

80.2 ¹

71.7 ¹

Marketing and advertising

67.4 ¹

57.5 ¹

Customer care

67.0 ¹

61.7 ¹

General and administrative

61.0 ¹

48.2 ¹

Depreciation and amortization

31.6 ¹

38.9 ¹

Total costs and operating expenses

484.0

432.4

Operating income

5.7

1.3

Interest expense

(12.8)

(14.3)

Tax receivable agreements liability adjustment

5.0

(4.6)

Loss on debt extinguishment

(1.7)

0

Other income (expense), net

1.7

0.7

Loss before income taxes

(2.1)

(16.9)

Provision for income taxes

(1.0)

(1.4)

Net loss

(3.1)

(18.3)

Less: net loss attributable to non-controlling interests

(3.7)

(7.8)

Net income (loss) attributable to GoDaddy Inc.

0.6

(10.5)

Technology and development

Costs and operating expenses

Equity-based compensation expense

8.4

5.5

Marketing and advertising

Costs and operating expenses

Equity-based compensation expense

1.7

1.9

Customer care

Costs and operating expenses

Equity-based compensation expense

0.4

0.8

General and administrative

Costs and operating expenses

Equity-based compensation expense

5.9

3.8

Domains

Revenue

240.8

218.9

Hosting and presence

Revenue

178.3

160.4

Business applications

Revenue

$ 70.6

$ 54.4

Class A Common Stock

Costs and operating expenses

Net income (loss) per share, basic (in USD per share)

$ 0.01

$ (0.15)

Net income (loss) per share, diluted (in USD per share)

$ 0.01

$ (0.15)

Weighted-average shares outstanding, basic (in shares)

89,600

67,834

Weighted-average shares outstanding, diluted (in shares)

100,242

67,834

[1] Costs and operating expenses include equity-based compensation expense as follows:Technology and development of $8.4 and $5.5 for the three months ended March 31, 2017 and 2016, respectively.Marketing and advertising of $1.7 and $1.9 for the three months ended March 31, 2017 and 2016, respectively.Customer care of $0.4 and $0.8 for the three months ended March 31, 2017 and 2016, respectively.General and administrative of $5.9 and $3.8 for the three months ended March 31, 2017 and 2016, respectively

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) Statement (USD $)

In Millions, except Share data in Thousands

Total

USD ($)

Class A Common Stock

Class B Common Stock

Common Stock

Class A Common Stock

USD ($)

Common Stock

Class B Common Stock

USD ($)

Additional Paid-in Capital

USD ($)

Accumulated Deficit

USD ($)

Accumulated Other Comprehensive Income

USD ($)

Non- Controlling Interest

USD ($)

Equity at beginning of period at Dec. 31, 2016

$ 714.2

$ 0.1

$ 608.3

$ (48.7)

$ 2.7

$ 151.7

Common stock outstanding (in shares) at Dec. 31, 2016

167,112

88,558

78,554

Net income (loss)

(3.1)

0.6

(3.7)

Equity-based compensation expense

16.4

Stock option exercises (in shares)

1,486

Stock option exercises

13.9

20.1

(6.2)

Effect of exchanges of LLC Units (in shares)

144

(144)

Effect of exchanges of LLC Units

0

1.0

(1.0)

Vesting of restricted stock units and other (in shares)

445

Vesting of restricted stock units and other

(2.0)

Equity at end of period at Mar. 31, 2017

$ 739.4

$ 0.1

$ 645.8

$ (48.1)

$ 0.7

$ 140.8

Common stock outstanding (in shares) at Mar. 31, 2017

169,043

90,633

78,410

90,633

78,410

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Statement of Cash Flows [Abstract]

Net income (loss)

$ (3.1)

$ (18.3)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

31.6

38.9

Equity-based compensation

16.4

12.0

Other

2.7

8.3

Changes in operating assets and liabilities, net of amounts acquired:

Registry deposits

1.9

(6.7)

Prepaid domain name registry fees

(22.8)

(19.6)

Deferred revenue

94.7

82.3

Other operating assets and liabilities

5.2

8.4

Net cash provided by operating activities

126.6

105.3

Investing activities

Purchases of short-term investments

(6.4)

(3.9)

Maturities of short-term investments

0.6

0

Acquisition-related payments

(4.0)

0

Purchases of property and equipment, excluding improvements

(18.7)

(11.9)

Purchases of leasehold and building improvements

(1.1)

(0.1)

Net cash used in investing activities

(29.6)

(15.9)

Financing activities

Stock option exercises

13.9

6.4

Payments made for:

Distributions to holders of LLC Units

(7.0)

(5.1)

Repayment of term loan

0

(2.8)

Financing-related costs

(9.1)

0

Capital leases and other financing obligations

(2.7)

(4.2)

Net cash used in financing activities

(4.9)

(5.7)

Net increase in cash and cash equivalents

92.1

83.7

Cash and cash equivalents, beginning of period

566.1

348.0

Cash and cash equivalents, end of period

658.2

431.7

Supplemental cash flow information:

Interest on long-term debt

8.8

11.6

Income taxes, net of refunds received

1.4

1.1

Supplemental information for non-cash investing and financing activities:

Accrued capital expenditures, excluding improvements, at period end

6.7

7.9

Accrued capital expenditures, leasehold and building improvements, at period end

$ 1.3

$ 0.7

Organization and Background

Organization

We were incorporated on May 28, 2014 for the purpose of facilitating an IPO and other related organizational transactions, completed on April 7, 2015, in order to operate and control all of the business and affairs of Desert Newco. As sole managing member, we have all voting power in, and control the management of, Desert Newco. As a result, we consolidate Desert Newco’s financial results and report a non-controlling interest representing the economic interest held by the other members of Desert Newco. Non-controlling interest excludes any net income (loss) attributable directly to GoDaddy Inc. As of March 31, 2017, we owned approximately 54% of Desert Newco's limited liability company units (LLC Units).

Basis of Presentation

Our condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP), and include our accounts and the accounts of our subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

A consolidated statement of comprehensive income (loss) is not presented because we had no material components of other comprehensive income (loss) during any of the periods presented.

Our interim condensed consolidated financial statements are unaudited. These financial statements have been prepared in accordance with GAAP, and in our opinion, include all adjustments of a normal recurring nature necessary for the fair presentation of the interim periods presented. The results for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for any subsequent quarter or for the year ending December 31, 2017.

These financial statements should be read in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016, (the 2016 Form 10-K).

Prior Period Reclassifications

Reclassifications of certain immaterial prior period amounts have been made to conform to the current period presentation.

Use of Estimates

GAAP requires us to make estimates and assumptions affecting amounts reported in our financial statements. Our more significant estimates include:


•	the determination of the best estimate of selling price of the deliverables included in multiple-deliverable revenue arrangements;


•	the fair value of assets acquired and liabilities assumed in business acquisitions;


•	the assessment of recoverability of long-lived assets, including property and equipment, goodwill and intangible assets;


•	the estimated reserve for refunds;


•	the estimated useful lives of intangible and depreciable assets;


•	the grant date fair value of equity-based awards;


•	the recognition, measurement and valuation of current and deferred income taxes;


•	the recognition and measurement of amounts payable under TRAs;


•	the recognition and measurement of amounts payable as tax distributions to Desert Newco's owners; and


•	the recognition and measurement of loss contingencies, indirect tax liabilities and certain accrued liabilities.

We periodically evaluate these estimates and adjust prospectively, if necessary. We believe our estimates and assumptions are reasonable; however, actual results may differ from our estimates.

Segment and Reporting Unit

Our chief operating decision maker function is comprised of our Chief Executive Officer and Chief Operating Officer who collectively review financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance for the entire company. Accordingly, we have a single operating segment and reporting unit.

Summary of Significant Accounting Policies

Derivative Financial Instruments

We enter into foreign exchange forward contracts with financial institutions to hedge certain forecasted sales transactions denominated in currencies other than the U.S. dollar. We designate these forward contracts as cash flow hedges, which are recognized as either assets or liabilities at fair value. We do not hold or issue derivative instruments for speculative or trading purposes. At March 31, 2017, the total notional amount of such contracts was $83.2 million, all having remaining maturities of nine months or less.

We reflect unrealized gains or losses on the effective portion of a cash flow hedge as a component of accumulated other comprehensive income. Gains and losses, once realized, are recorded as a component of accumulated other comprehensive income and are amortized to revenue over the same period in which the underlying hedged amounts are recognized. Any ineffective portion of gains or losses are recorded as other income (expense), net and were immaterial during all periods presented. At inception, and each period, we evaluate the effectiveness of each of our hedges, and all hedges were determined to be effective.

Fair Value Measurements

We hold certain assets required to be measured at fair value on a recurring basis. These may include reverse repurchase agreements, commercial paper or other securities, which are classified as either cash and cash equivalents or short-term investments. We classify these assets within Level 1 or Level 2 because we use either quoted market prices or alternative pricing sources utilizing market observable inputs to determine their fair value, as follows:



	March 31, 2017
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Reverse repurchase agreements⁽¹⁾	$	—	$	135.0	$	—	$	135.0
Commercial paper	—		85.0		—		85.0
Short-term investments:
Certificates of deposit and time deposits	12.4		—		—		12.4
Total assets measured and recorded at fair value	$	12.4	$	220.0	$	—	$	232.4


(1)	Reverse repurchase agreements include an $80.0 million repurchase agreement with Morgan Stanley, callable with 31 days notice, and a $55.0 million one-week repurchase agreement with Wells Fargo.



	December 31, 2016
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Reverse repurchase agreements⁽¹⁾	$	—	$	130.0	$	—	$	130.0
Commercial paper	—		55.9		—		55.9
Short-term investments:
Certificates of deposit and time deposits	6.6		—		—		6.6
Total assets measured and recorded at fair value	$	6.6	$	185.9	$	—	$	192.5


(1)	Reverse repurchase agreements include an $80.0 million repurchase agreement with Morgan Stanley, callable with 31 days notice, and a $50.0 million one-week repurchase agreement with Wells Fargo.

We have no other material assets or liabilities measured at fair value on a recurring basis.

Recent Accounting Pronouncements

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard on revenue recognition from contracts with customers. The new standard requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled to in exchange for those goods or services. The FASB has recently issued several amendments to the new standard, including clarification on identifying performance obligations, principal-versus-agent implementation guidance, collectability assessment, sales taxes and other similar taxes collected from customers, noncash consideration, contract modification and completed contracts at transition. These amendments are intended to address implementation issues raised by stakeholders and provide additional practical expedients to reduce the cost and complexity of applying the new standard.

The new standard permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method). The new standard is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted for annual reporting periods beginning after December 15, 2016. We will adopt the new standard effective January 1, 2018.

We have completed our initial assessment of the new standard and are in the process of further evaluating certain customer arrangements within each of our revenue streams to quantify potential impacts on the amount and timing of recognition for each performance obligation. Although we are still evaluating the potential impacts on our consolidated financial statements and internal accounting processes, we do not currently anticipate any changes to have a material impact. We currently plan to adopt the standard under the modified retrospective method. However, our final determination will depend on the results of our final assessment, which is expected to be completed by the third quarter of 2017.

Other Accounting Standards

In February 2016, the FASB issued new guidance related to accounting for leases. The new standard requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and the disclosure of key information about leasing arrangements. For leases with a term of 12 months or less, a lessee can make an accounting policy election by class of underlying asset to not recognize an asset and corresponding liability. We will adopt the new standard on January 1, 2019. In transition, lessees are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the expected impact of this standard.

In March 2016, the FASB issued new guidance changing the accounting for certain aspects of share-based payments to employees. The guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis and allows for an employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. In addition, the guidance requires recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid-in capital pools. We elected to continue to account for forfeitures on an estimated basis, and accordingly, our adoption of this guidance on January 1, 2017 did not have a material impact.

In June 2016, the FASB issued new guidance for the accounting for credit losses on instruments that will require us to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial instruments measured at amortized cost and also applies to some off-balance sheet credit exposures. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the timing of our adoption and the expected impact of this new guidance on our consolidated financial statements.

In October 2016, the FASB issued new guidance requiring us to recognize the income tax consequences of intra-entity assets transfers when the transfer occurs. Our adoption of this guidance on January 1, 2017 did not have a material impact.

In November 2016, the FASB issued new guidance requiring amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the amounts shown on the statement of cash flows. This new guidance is effective for us on January 1, 2018, and our adoption is not expected to have a material impact.

In January 2017, the FASB issued new guidance clarifying the definition of a business for determining whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The guidance provides a screen for an entity to use to determine when a set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the asset is not a business. If the screen is not met, the guidance requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. The guidance also removes the evaluation of whether a market participant could replace missing elements. This new guidance is effective for us on January 1, 2018, and our adoption is not expected to have a material impact.

In January 2017, the FASB issued new guidance simplifying the goodwill impairment test, eliminating the requirement for an entity to determine the fair value of its assets and liabilities (including unrecognized assets and liabilities) at the impairment testing date following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, an entity will be required to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will be required to recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the timing of our adoption and the expected impact of this new guidance.

Intangible Assets

Intangible assets, net are summarized as follows:



	March 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Domains Sold			Net Carrying Amount
Indefinite-lived intangible assets:
Trade names and branding	$	445.0	n/a			n/a			$	445.0
Domain portfolio	120.5		n/a			$	(15.9	)	104.6
Finite-lived intangible assets:
Customer-related	358.5		$	(245.9	)	n/a			112.6
Developed technology	94.8		(59.7		)	n/a			35.1
Trade names	11.1		(7.3		)	n/a			3.8
	$	1,029.9	$	(312.9	)	$	(15.9	)	$	701.1



	December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Domains Sold			Net Carrying Amount
Indefinite-lived intangible assets:
Trade names and branding	$	445.0	n/a			n/a			$	445.0
Domain portfolio	120.5		n/a			$	(14.4	)	106.1
Finite-lived intangible assets:
Customer-related	367.4		$	(245.4	)	n/a			122.0
Developed technology	226.0		(187.0		)	n/a			39.0
Trade names	11.9		(7.5		)	n/a			4.4
	$	1,170.8	$	(439.9	)	$	(14.4	)	$	716.5

Customer-related intangible assets, developed technology and trade names have weighted-average useful lives from the date of purchase of 100 months, 73 months and 58 months, respectively. Amortization expense was $13.9 million and $21.9 million for the three months ended March 31, 2017 and 2016, respectively. The weighted-average remaining amortization period for amortizable intangible assets was 42 months as of March 31, 2017.

Based on the balance of finite-lived intangible assets at March 31, 2017, expected future amortization expense is as follows:



Year Ending December 31:
2017 (remainder of)	$	43.5
2018	49.2
2019	30.0
2020	23.4
2021	2.6
Thereafter	2.8
	$	151.5

Equity-Based Compensation Plans

As of December 31, 2016, 12,579 shares of Class A common stock were available for issuance as future awards under the 2015 Equity Incentive Plan (the 2015 Plan). On January 1, 2017, an additional 6,684 shares were reserved for issuance pursuant to the automatic increase provisions of the 2015 Plan. As of March 31, 2017, 16,909 shares were available for issuance as future awards under the 2015 Plan.

As of December 31, 2016, 2,123 shares of Class A common stock were available for issuance under the 2015 Employee Stock Purchase Plan (the ESPP). On January 1, 2017, an additional 1,000 shares were reserved for issuance pursuant to the ESPP. As of March 31, 2017, 3,123 shares were available for issuance under the ESPP.

We grant options at exercise prices equal to the fair market value of our Class A common stock on the grant date. We grant both options and restricted stock units (RSUs) vesting solely upon the continued employment of the recipient as well as awards vesting upon the achievement of annual or cumulative financial-based targets coinciding with our fiscal year. We recognize the grant date fair value of equity-based awards as compensation expense over the required service period of each award, taking into account the probability of our achievement of associated performance targets.

The following table summarizes our option activity for the three months ended March 31, 2017:



	Number of Shares of Class A Common Stock (#)		Weighted- Average Grant- Date Fair Value ($)	Weighted- Average Exercise Price ($)
Outstanding at December 31, 2016	18,628			14.06
Granted	1,101		14.69	36.81
Exercised	(1,486	)		10.00
Forfeited	(423	)		19.10
Outstanding at March 31, 2017	17,820			15.69
Vested and exercisable at March 31, 2017	9,978			10.48

The following table summarizes our RSU activity for the three months ended March 31, 2017:



	Number of Shares of Class A Common Stock (#)		Weighted- Average Grant- Date Fair Value ($)
Outstanding at December 31, 2016	2,757
Granted	1,744		36.71
Vested	(446	)
Forfeited	(95	)
Outstanding at March 31, 2017	3,960

At March 31, 2017, total unrecognized compensation expense related to non-vested stock options and RSUs was $44.2 million and $87.5 million, respectively, with expected remaining weighted-average recognition periods of 2.2 years and 3.1 years, respectively. We currently believe the performance targets related to the vesting of performance awards will be achieved. If such targets are not achieved, or are subsequently determined to not be probable of being achieved, we will not recognize any compensation expense relating to performance awards not expected to vest, and will reverse any previously recognized expense on such awards.

The fair value of each ESPP share is estimated on the first day of each offering period using the Black-Scholes option pricing model, and is recognized as compensation expense on a straight-line basis over the term in which it is outstanding. As of March 31, 2017, $7.5 million has been withheld on behalf of employees for future purchases under the ESPP, which is included in accrued expenses and other current liabilities. At March 31, 2017, total unrecognized compensation expense related to ESPP shares was $0.8 million, which will be recognized during the second quarter of 2017.

Deferred Revenue

Deferred revenue consists of the following:



	March 31, 2017		December 31, 2016
Current:
Domains	$	563.9	$	531.2
Hosting and presence	392.9		370.8
Business applications	155.0		141.5
	$	1,111.8	$	1,043.5
Noncurrent:
Domains	$	325.0	$	311.1
Hosting and presence	170.4		163.4
Business applications	63.7		58.2
	$	559.1	$	532.7

Long-Term Debt

Long-term debt consists of the following:



	March 31, 2017			December 31, 2016
Term Loan (effective interest rate of 4.4% at March 31, 2017 and 4.9% at December 31, 2016)	1,072.5			1,072.5
Revolving Credit Loan	—			—
Total	1,072.5			1,072.5
Less: unamortized original issue discounts on long-term debt⁽¹⁾	(33.0		)	(30.5		)
Less: unamortized debt issuance costs⁽¹⁾	(2.1		)	(2.3		)
Less: current portion of long-term debt	(6.0		)	(4.0		)
	$	1,031.4		$	1,035.7


(1)	Original issue discounts and debt issuance costs are amortized to interest expense over the life of the related debt instruments using the effective interest method.

Term Loan and Revolving Credit Loan

Our amended and restated secured credit agreement (the Credit Facility) included a $1,100.0 million original balance term loan maturing on May 13, 2021 and an available $150.0 million revolving credit loan maturing on May 13, 2019.

On February 15, 2017, we refinanced the Credit Facility to provide for: i) a $1,072.5 million seven-year term loan (the Term Loan), ii) a second $1,425.0 million tranche (the Acquisition Term Loan), which was issued on April 3, 2017 upon the completion of our acquisition of HEG, and iii) a $150.0 million five-year revolving credit facility, which increased to $200.0 million upon the completion of our acquisition of HEG (the Revolving Credit Loan). See Note 13 for further information regarding our acquisition of HEG.

The refinanced Term Loan was issued at a 0.25% discount on the face of the note at original issue for net proceeds of $1,069.8 million and matures on February 15, 2024. Borrowings under the Term Loan bear interest at a rate equal to, at our option, either (a) LIBOR plus 2.50% per annum or (b) 1.50% 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%.

The refinanced Revolving Credit Loan matures on February 15, 2022 and bears interest at a rate equal to, at our option, either (a) LIBOR plus a margin ranging from 2.00% to 2.50% per annum or (b) the higher of (i) the Federal Funds Rate plus 0.5%, (ii) the Prime Rate or (iii) the one-month LIBOR rate plus 1.0% plus a margin ranging from 1.00% to 1.50% per annum, with the margins determined based on our first lien net leverage ratio. The refinanced Revolving Credit Loan also contains a financial covenant requiring us to maintain a maximum net leverage ratio of 5.75:1.00 at all times our usage exceeds 35.0% of the maximum capacity. The net leverage ratio is calculated as the ratio of first lien secured debt less cash and cash equivalents to consolidated EBITDA (as defined in the Credit Facility).

In evaluating the refinancing, we compared the net present value cash flows of the previous term loan and the refinanced Term Loan to determine whether the terms of the new debt and original instrument were "substantially different" on a creditor-by-creditor basis. Certain of the creditors in the loan syndication did not reinvest in the refinanced Term Loan, and we accounted for their proportionate share of the unamortized original issue discount and deferred financing costs as a $1.7 million loss on debt extinguishment. As the cash flows for all of the continuing creditors varied by less than 10% between the old and new instruments, we concluded that debt modification accounting was appropriate and fees paid to the lenders of $2.8 million were recorded as additional discount on the Term Loan. In addition, $3.2 million in fees paid to third parties were recorded as general and administrative expense.

At March 31, 2017, we had $150.0 million available for borrowing under the Revolving Credit Loan and were not in violation of any covenants of the Credit Facility.

The estimated fair value of the Term Loan was $1,076.5 million at March 31, 2017 based on observable market prices for this loan, which is traded in a less active market and is therefore classified as a Level 2 fair value measurement.

Future Debt Maturities

Aggregate principal payments, exclusive of any unamortized original issue discounts and debt issuance costs, due on long-term debt as of March 31, 2017 are as follows:



Year Ending December 31:
2017 (remainder of)	$	8.0
2018	10.7
2019	10.7
2020	10.7
2021	10.7
Thereafter	1,021.7
	$	1,072.5

Commitments and Contingencies

Litigation

From time-to-time, we are a party to litigation and subject to claims incident to the ordinary course of business, including intellectual property claims, putative class actions, commercial and consumer protection claims, labor and employment claims, breach of contract claims and other asserted and unasserted claims. We investigate claims as they arise and accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. The amounts currently accrued for such matters are not material. While the results of such normal course claims and legal proceedings cannot be predicted with certainty, management does not believe, based on current knowledge and the likely timing of resolution of various matters, any additional reasonably possible potential losses above the amounts accrued for such matters would be material. Regardless of the outcome, legal proceedings may have an adverse effect on us because of defense costs, diversion of management resources and other factors.

Indemnifications

In the normal course of business, we have made indemnities under which we may be required to make payments in relation to certain transactions, including to our directors and officers to the maximum extent permitted under applicable state laws and indemnifications related to certain lease agreements. In addition, certain advertiser and reseller partner agreements contain indemnification provisions, which are generally consistent with those prevalent in the industry. We have not incurred material obligations under indemnification provisions historically, and do not expect to incur material obligations in the future. Accordingly, we have not recorded any liabilities related to such indemnities as of March 31, 2017 and December 31, 2016.

We include service level commitments to our customers guaranteeing certain levels of uptime reliability and performance for our hosting and premium DNS products. These guarantees permit those customers to receive credits in the event we fail to meet those levels, with exceptions for certain service interruptions including but not limited to periodic maintenance. We have not incurred any material costs as a result of such commitments during any of the periods presented, and have not recorded any liabilities related to such obligations as of March 31, 2017 and December 31, 2016.

Indirect Taxes

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

As of March 31, 2017 and December 31, 2016, our accrual for estimated indirect tax liabilities was $6.6 million and $6.1 million, respectively, reflecting our best estimate of the probable liability based on an analysis of our business activities, revenues subject to indirect taxes and applicable regulations. Although we believe our indirect tax estimates and associated reserves are reasonable, the final determination of indirect tax audits and any related litigation could be materially different than the amounts established for indirect tax contingencies.

Income Taxes

We are required to file federal and applicable state corporate income tax returns and recognize income taxes on pre-tax income. Desert Newco has been and will continue to be treated as a partnership for U.S. income tax purposes. As such, Desert Newco is considered a pass-through entity and generally does not pay income taxes on its taxable income in most jurisdictions. Instead, Desert Newco's members, of which we are one, are liable for federal and state income taxes based on their taxable income. Desert Newco is liable for income taxes in certain foreign jurisdictions, in those states not recognizing its pass-through status and for certain subsidiaries not taxed as pass-through entities. We have acquired the outstanding stock of various entities taxed as corporations, which are now owned 100% by us or our subsidiaries and are treated as an independent consolidated group for federal income tax purposes. Where required or allowed, these subsidiaries also file as a consolidated group for state income tax purposes. We anticipate this structure to remain in existence for the foreseeable future.

Our effective tax rate differs from statutory rates primarily due to Desert Newco's pass-through structure for U.S. income tax purposes, while being treated as taxable in certain states and various foreign jurisdictions as well as for certain subsidiaries. In all foreign jurisdictions where we conduct business, except Canada, we are subject to income tax in both the U.S. and the foreign jurisdictions.

Based on our limited operating history and future projections of taxable income, we believe there is significant uncertainty as to when we will be able to utilize our net operating losses (NOLs), credit carryforwards and other deferred tax assets (DTAs). Therefore, we have recorded a valuation allowance against the DTAs for which we have concluded it is more-likely-than-not they will not be realized.

Based on our analysis of tax positions taken on income tax returns filed, we have determined a liability related to uncertain income tax positions is not required. Although we believe the amounts reflected in our tax returns substantially comply with applicable federal, state and foreign tax regulations, the respective taxing authorities may take contrary positions based on their interpretation of the law. A tax position successfully challenged by a taxing authority could result in an adjustment to our provision or benefit for income taxes in the period in which a final determination is made.

Payable to Related Parties Pursuant to the TRAs

As of December 31, 2016, our liability under the TRAs was $202.6 million, representing approximately 85% of the calculated tax savings based on the portion of the original basis adjustments we anticipated being able to utilize in future years. During the three months ended March 31, 2017, we decreased this liability by $5.0 million primarily as a result of tax deductions related to employee stock option exercises which reduced our forecasted taxable income. As of March 31, 2017, the liability under the TRAs was $197.6 million.

The projection of future taxable income involves significant judgment. Actual taxable income may differ from our estimates, which could significantly impact the liability under the TRAs. We have determined it is more-likely-than-not we will be unable to utilize all of our DTAs subject to the TRAs; therefore, we have not recorded a liability under the TRAs related to the tax savings we may realize from the utilization of NOL carryforwards and the amortization related to basis adjustments under Code Section 754 created by exchanges of LLC Units. If utilization of these DTAs becomes more-likely-than-not in the future, at such time, we will record liabilities under the TRAs of up to an additional $169.7 million as a result of basis adjustments under Code Section 754 and up to an additional $157.0 million related to the utilization of NOL and credit carryforwards, which will be recorded through charges to our consolidated statement of operations. However, if the tax attributes are not utilized in future years, it is reasonably possible no amounts would be paid under the TRAs. In this scenario, the reduction of the liability under the TRAs would result in a benefit to our consolidated statement of operations.

Related Party Transactions

Tax Distributions to Desert Newco's Owners

Desert Newco is subject to an operating agreement containing numerous provisions related to allocations of income and loss, as well as timing and amounts of distributions to its owners. This agreement also includes a provision requiring cash distributions enabling its owners to pay their taxes on income passing through from Desert Newco. These tax distributions are computed based on an assumed income tax rate equal to the sum of (i) the maximum marginal federal income tax rate applicable to an individual and (ii) 7%. The assumed income tax rate currently totals 46.6%, which will increase to 50.4% in certain cases when the tax on net investment income is applicable.

In addition, under the tax rules, Desert Newco is required to allocate taxable income disproportionately to its unit holders. Because tax distributions are determined based on the holder of LLC Units who is allocated the largest amount of cumulative taxable income for the current year on a per unit basis, but are made pro rata based on ownership, Desert Newco is required to make tax distributions that, in the aggregate, will likely exceed the amount of taxes Desert Newco would have otherwise paid.

As of December 31, 2016, our accrual for tax distributions related to estimated taxable income allocations to Desert Newco's owners for 2016, excluding us, was $10.0 million. In January 2017, we paid $7.0 million of such distributions based on ownership as of the payment date as follows: $2.8 million to YAM, $1.6 million to Silver Lake, $1.5 million to KKR, $0.8 million to TCV and $0.3 million to other Desert Newco owners. The remaining accrual was paid in April 2017 as follows: $1.2 million to YAM, $0.7 million to Silver Lake, $0.6 million to KKR, $0.4 million to TCV and $0.1 million to other Desert Newco owners.

An additional accrual for tax distributions was not required for the quarter ended March 31, 2017.

Other

In the ordinary course of business, we purchase and lease computer equipment, technology licensing and software maintenance and support from affiliates of Dell Inc. (Dell) of which Silver Lake and its affiliates have a significant ownership interest. During the three months ended March 31, 2017 and 2016, we paid $3.0 million and $4.0 million, respectively, to Dell.

Income (Loss) Per Share

Basic income (loss) per share is computed by dividing net income (loss) attributable to GoDaddy Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted income (loss) per share is computed giving effect to all potentially dilutive shares, including outstanding options, RSUs and ESPP shares. In periods when we have a net loss, potentially issuable shares are excluded from the calculation of earnings per share as their inclusion would have an antidilutive effect.

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share is as follows:



	Three Months Ended March 31,
	2017			2016
Numerator:
Net loss	$	(3.1	)	$	(18.3	)
Less: net loss attributable to non-controlling interests	(3.7		)	(7.8		)
Net income (loss) attributable to GoDaddy Inc.	$	0.6		$	(10.5	)
Denominator:
Weighted-average shares of Class A common stock outstanding—basic	89,600			67,834
Effect of dilutive securities:
Options and vesting LLC Units	9,705			—
RSUs and ESPP shares	937			—
Weighted-average shares of Class A Common stock outstanding—diluted	100,242			67,834

Net income (loss) per share of Class A common stock—basic	$	0.01		$	(0.15	)
Net income (loss) per share of Class A common stock—diluted	$	0.01		$	(0.15	)

The following number of weighted-average potentially dilutive shares were excluded from the calculation of diluted income (loss) per share because the effect of including such potentially dilutive shares would have been antidilutive:



	Three Months Ended March 31,
	2017	2016
Options and vesting LLC Units	—	16,302
RSUs and ESPP shares	—	80
	—	16,382

Shares of Class B common stock do not share in our earnings and are not participating securities. Accordingly, separate presentation of income (loss) per share of Class B common stock under the two-class method has not been presented. Each share of Class B common stock (together with a corresponding LLC Unit) is exchangeable for one share of Class A common stock. Total shares outstanding were as follows:



	March 31, 2017	December 31, 2016
Class A common stock	90,633	88,558
Class B common stock	78,410	78,554
	169,043	167,112

Geographic Information

Revenue by geography is based on the customer's billing address, and was as follows:



	Three Months Ended March 31,
	2017		2016
U.S.	$	355.4	$	318.9
International	134.3		114.8
	$	489.7	$	433.7

No individual international country represented more than 10% of total revenue in any period presented. Substantially all of our assets are located in the U.S.

Related Party Transactions

Payable to Related Parties Pursuant to the TRAs

As of December 31, 2016, our liability under the TRAs was $202.6 million, representing approximately 85% of the calculated tax savings based on the portion of the original basis adjustments we anticipated being able to utilize in future years. During the three months ended March 31, 2017, we decreased this liability by $5.0 million primarily as a result of tax deductions related to employee stock option exercises which reduced our forecasted taxable income. As of March 31, 2017, the liability under the TRAs was $197.6 million.

The projection of future taxable income involves significant judgment. Actual taxable income may differ from our estimates, which could significantly impact the liability under the TRAs. We have determined it is more-likely-than-not we will be unable to utilize all of our DTAs subject to the TRAs; therefore, we have not recorded a liability under the TRAs related to the tax savings we may realize from the utilization of NOL carryforwards and the amortization related to basis adjustments under Code Section 754 created by exchanges of LLC Units. If utilization of these DTAs becomes more-likely-than-not in the future, at such time, we will record liabilities under the TRAs of up to an additional $169.7 million as a result of basis adjustments under Code Section 754 and up to an additional $157.0 million related to the utilization of NOL and credit carryforwards, which will be recorded through charges to our consolidated statement of operations. However, if the tax attributes are not utilized in future years, it is reasonably possible no amounts would be paid under the TRAs. In this scenario, the reduction of the liability under the TRAs would result in a benefit to our consolidated statement of operations.

Related Party Transactions

Tax Distributions to Desert Newco's Owners

Desert Newco is subject to an operating agreement containing numerous provisions related to allocations of income and loss, as well as timing and amounts of distributions to its owners. This agreement also includes a provision requiring cash distributions enabling its owners to pay their taxes on income passing through from Desert Newco. These tax distributions are computed based on an assumed income tax rate equal to the sum of (i) the maximum marginal federal income tax rate applicable to an individual and (ii) 7%. The assumed income tax rate currently totals 46.6%, which will increase to 50.4% in certain cases when the tax on net investment income is applicable.

In addition, under the tax rules, Desert Newco is required to allocate taxable income disproportionately to its unit holders. Because tax distributions are determined based on the holder of LLC Units who is allocated the largest amount of cumulative taxable income for the current year on a per unit basis, but are made pro rata based on ownership, Desert Newco is required to make tax distributions that, in the aggregate, will likely exceed the amount of taxes Desert Newco would have otherwise paid.

As of December 31, 2016, our accrual for tax distributions related to estimated taxable income allocations to Desert Newco's owners for 2016, excluding us, was $10.0 million. In January 2017, we paid $7.0 million of such distributions based on ownership as of the payment date as follows: $2.8 million to YAM, $1.6 million to Silver Lake, $1.5 million to KKR, $0.8 million to TCV and $0.3 million to other Desert Newco owners. The remaining accrual was paid in April 2017 as follows: $1.2 million to YAM, $0.7 million to Silver Lake, $0.6 million to KKR, $0.4 million to TCV and $0.1 million to other Desert Newco owners.

An additional accrual for tax distributions was not required for the quarter ended March 31, 2017.

Other

In the ordinary course of business, we purchase and lease computer equipment, technology licensing and software maintenance and support from affiliates of Dell Inc. (Dell) of which Silver Lake and its affiliates have a significant ownership interest. During the three months ended March 31, 2017 and 2016, we paid $3.0 million and $4.0 million, respectively, to Dell.

Subsequent Events

Acquisition of Host Europe Holdings Limited

On April 3, 2017, we completed the previously-announced acquisition of HEG. Pursuant to the terms of the purchase agreement, we purchased all of the outstanding shares of HEG and certain loan notes issued by Host Europe Finance Co. Ltd. for EUR 1.7 billion (approximately $1.9 billion). We funded the acquisition with the proceeds from the Acquisition Term Loan and the Bridge Loan, both of which are described below.

The purchase price will be allocated to the tangible and intangible assets acquired and liabilities assumed based on their fair values at the acquisition date. We are currently preparing the valuations and other procedures necessary to determine the purchase price allocation, and will record our initial fair value estimates during the three months ending June 30, 2017.

HEG is a United Kingdom-based provider of domains, web hosting, applications hosting and managed hosting services to small and medium-sized customers throughout Europe. We believe the acquisition of HEG will accelerate our expansion in Europe through the delivery of a broader range of cloud-based products, built on a single global technology platform, and supported by a high level of customer care to help small businesses and web designers succeed online.

The acquisition includes HEG's PlusServer brand, an entity serving larger, more mature companies, which requires a dedicated field sales force and account management. Because its business model differs from ours, we plan to sell the PlusServer business.

Acquisition Term Loan and Revolving Credit Facility Increase

As discussed in Note 6, we refinanced our existing Credit Facility in February 2017. Pursuant to the terms of the amended credit agreement, we drew down the $1,425.0 million Acquisition Term Loan in connection with the completion of the HEG acquisition. The Acquisition Term Loan was issued at a 0.25% discount on the face of the note at original issue for net proceeds of $1,421.4 million. The Acquisition Term Loan has the same maturity date and interest rate as the refinanced Term Loan. We also incurred fees of $22.7 million, which will be recorded as deferred financing costs and will be amortized to interest expense over the term of the debt.

The refinancing also provided for an increase in the availability under our Revolving Credit Loan to $200.0 million upon the completion of the HEG acquisition.

On April 3, 2017, we entered into two swap arrangements. In connection with the closing of the Acquisition Term Loan, we entered into a five-year interest rate swap arrangement to effectively convert $1,325.4 million of the variable rate debt to fixed. The objective of the swap is to manage the variability of cash flows in the interest payments related to the portion of the variable-rate debt designated as being hedged. Additionally, in order to manage variability due to movements in foreign currency rates, we entered into a five-year cross-currency swap arrangement with a notional amount of $1,325.4 million to convert EUR cash flows into U.S. dollars. Both the interest rate swap and the cross-currency swap will be designated as cash flow hedges.

Bridge Loan

On April 3, 2017, we entered into a credit agreement, pursuant to which we borrowed an aggregate principal amount of EUR 500 million (approximately $533.0 million) (the Bridge Loan) in connection with the HEG acquisition. The Bridge Loan was issued at a 0.25% discount at original issue for net proceeds of EUR 498.8 million (approximately $531.7 million). It matures on April 3, 2018, but may be extended at our sole discretion to April 3, 2019, subject to the payment of a fee equal to 0.50% of the aggregate amount of the Bridge Loan outstanding as of the initial maturity date. The Bridge Loan bears interest at a rate per annum of EURIBOR (not less than 1.0%) plus 2.75%. If the Bridge Loan remains outstanding following the initial maturity date, the Bridge Loan will accrue interest at a rate per annum of EURIBOR (not less than 1.0% plus 3.5%). We also incurred fees of EUR 6.3 million (approximately $6.7 million), which will be recorded as deferred financing costs and will be amortized to interest expense over the term of the debt.

Pursuant to the terms of the Bridge Loan, if we sell or otherwise dispose of the PlusServer business, we must prepay the Bridge Loan with an amount equal to 100% of the net cash proceeds from that sale or disposition.

All obligations under the Bridge Loan are guaranteed by the assets of substantially all of our domestic subsidiaries.

Other Acquisition

In April 2017, we completed an acquisition for cash of $54.7 million, including $9.0 million payable in future periods upon expiration of the contractual holdback period, and additional contingent earn-out payments of up to $30.0 million subject to the achievement of certain performance milestones and revenue targets.

Secondary Offering and LLC Unit Repurchase

On May 4, 2017, we priced an underwritten public offering in which the Sponsors and YAM expect to sell an aggregate of 24,000 shares of our Class A common stock at a public offering price of $38.50 per share. We will not receive any of the proceeds from the shares sold by the selling stockholders; however, we expect to receive $3.7 million in proceeds from our sale of 100 additional shares of Class A common stock in the offering. The offering is expected to include the exchange of 14,214 LLC Units (together with the corresponding shares of Class B common stock) for Class A common stock by the selling stockholders, which will result in a material increase to the TRA liability during the three months ending June 30, 2017. The selling stockholders have also granted the underwriters an option to purchase up to an additional 3,615 shares of Class A common stock within 30 days of the completion of the offering. Substantially concurrent with the completion of the offering, we intend to repurchase an aggregate of $275.0 million of LLC Units from the Sponsors and YAM at the same per share price, net of discounts and commissions, paid by the underwriters to the selling stockholders.

Summary of Significant Accounting Policies (Policies)

Basis of Presentation

Our condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP), and include our accounts and the accounts of our subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

A consolidated statement of comprehensive income (loss) is not presented because we had no material components of other comprehensive income (loss) during any of the periods presented.

Our interim condensed consolidated financial statements are unaudited. These financial statements have been prepared in accordance with GAAP, and in our opinion, include all adjustments of a normal recurring nature necessary for the fair presentation of the interim periods presented. The results for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for any subsequent quarter or for the year ending December 31, 2017.

These financial statements should be read in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016, (the 2016 Form 10-K).

Prior Period Reclassifications

Reclassifications of certain immaterial prior period amounts have been made to conform to the current period presentation.

Use of Estimates

GAAP requires us to make estimates and assumptions affecting amounts reported in our financial statements. Our more significant estimates include:


•	the determination of the best estimate of selling price of the deliverables included in multiple-deliverable revenue arrangements;


•	the fair value of assets acquired and liabilities assumed in business acquisitions;


•	the assessment of recoverability of long-lived assets, including property and equipment, goodwill and intangible assets;


•	the estimated reserve for refunds;


•	the estimated useful lives of intangible and depreciable assets;


•	the grant date fair value of equity-based awards;


•	the recognition, measurement and valuation of current and deferred income taxes;


•	the recognition and measurement of amounts payable under TRAs;


•	the recognition and measurement of amounts payable as tax distributions to Desert Newco's owners; and


•	the recognition and measurement of loss contingencies, indirect tax liabilities and certain accrued liabilities.

We periodically evaluate these estimates and adjust prospectively, if necessary. We believe our estimates and assumptions are reasonable; however, actual results may differ from our estimates.

Segments and Reporting Unit

Segment and Reporting Unit

Our chief operating decision maker function is comprised of our Chief Executive Officer and Chief Operating Officer who collectively review financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance for the entire company. Accordingly, we have a single operating segment and reporting unit.

Derivative Financial Instruments

We enter into foreign exchange forward contracts with financial institutions to hedge certain forecasted sales transactions denominated in currencies other than the U.S. dollar. We designate these forward contracts as cash flow hedges, which are recognized as either assets or liabilities at fair value. We do not hold or issue derivative instruments for speculative or trading purposes. At March 31, 2017, the total notional amount of such contracts was $83.2 million, all having remaining maturities of nine months or less.

We reflect unrealized gains or losses on the effective portion of a cash flow hedge as a component of accumulated other comprehensive income. Gains and losses, once realized, are recorded as a component of accumulated other comprehensive income and are amortized to revenue over the same period in which the underlying hedged amounts are recognized. Any ineffective portion of gains or losses are recorded as other income (expense), net and were immaterial during all periods presented. At inception, and each period, we evaluate the effectiveness of

Fair Value Measurements

We hold certain assets required to be measured at fair value on a recurring basis. These may include reverse repurchase agreements, commercial paper or other securities, which are classified as either cash and cash equivalents or short-term investments. We classify these assets within Level 1 or Level 2 because we use either quoted market prices or alternative pricing sources utilizing market observable inputs to determine their fair value,

Recent Accounting Pronouncements

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard on revenue recognition from contracts with customers. The new standard requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount reflecting the consideration to which the entity expects to be entitled to in exchange for those goods or services. The FASB has recently issued several amendments to the new standard, including clarification on identifying performance obligations, principal-versus-agent implementation guidance, collectability assessment, sales taxes and other similar taxes collected from customers, noncash consideration, contract modification and completed contracts at transition. These amendments are intended to address implementation issues raised by stakeholders and provide additional practical expedients to reduce the cost and complexity of applying the new standard.

The new standard permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method). The new standard is effective for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted for annual reporting periods beginning after December 15, 2016. We will adopt the new standard effective January 1, 2018.

We have completed our initial assessment of the new standard and are in the process of further evaluating certain customer arrangements within each of our revenue streams to quantify potential impacts on the amount and timing of recognition for each performance obligation. Although we are still evaluating the potential impacts on our consolidated financial statements and internal accounting processes, we do not currently anticipate any changes to have a material impact. We currently plan to adopt the standard under the modified retrospective method. However, our final determination will depend on the results of our final assessment, which is expected to be completed by the third quarter of 2017.

Other Accounting Standards

In February 2016, the FASB issued new guidance related to accounting for leases. The new standard requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and the disclosure of key information about leasing arrangements. For leases with a term of 12 months or less, a lessee can make an accounting policy election by class of underlying asset to not recognize an asset and corresponding liability. We will adopt the new standard on January 1, 2019. In transition, lessees are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the expected impact of this standard.

In March 2016, the FASB issued new guidance changing the accounting for certain aspects of share-based payments to employees. The guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis and allows for an employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. In addition, the guidance requires recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid-in capital pools. We elected to continue to account for forfeitures on an estimated basis, and accordingly, our adoption of this guidance on January 1, 2017 did not have a material impact.

In June 2016, the FASB issued new guidance for the accounting for credit losses on instruments that will require us to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial instruments measured at amortized cost and also applies to some off-balance sheet credit exposures. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the timing of our adoption and the expected impact of this new guidance on our consolidated financial statements.

In October 2016, the FASB issued new guidance requiring us to recognize the income tax consequences of intra-entity assets transfers when the transfer occurs. Our adoption of this guidance on January 1, 2017 did not have a material impact.

In November 2016, the FASB issued new guidance requiring amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the amounts shown on the statement of cash flows. This new guidance is effective for us on January 1, 2018, and our adoption is not expected to have a material impact.

In January 2017, the FASB issued new guidance clarifying the definition of a business for determining whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The guidance provides a screen for an entity to use to determine when a set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the asset is not a business. If the screen is not met, the guidance requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. The guidance also removes the evaluation of whether a market participant could replace missing elements. This new guidance is effective for us on January 1, 2018, and our adoption is not expected to have a material impact.

In January 2017, the FASB issued new guidance simplifying the goodwill impairment test, eliminating the requirement for an entity to determine the fair value of its assets and liabilities (including unrecognized assets and liabilities) at the impairment testing date following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, an entity will be required to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will be required to recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The guidance is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the timing of our adoption and the expected impact of this new guidance.

Summary of Significant Accounting Policies (Tables)

Fair Value, Assets Measured on Recurring Basis

We classify these assets within Level 1 or Level 2 because we use either quoted market prices or alternative pricing sources utilizing market observable inputs to determine their fair value, as follows:



	March 31, 2017
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Reverse repurchase agreements⁽¹⁾	$	—	$	135.0	$	—	$	135.0
Commercial paper	—		85.0		—		85.0
Short-term investments:
Certificates of deposit and time deposits	12.4		—		—		12.4
Total assets measured and recorded at fair value	$	12.4	$	220.0	$	—	$	232.4


(1)	Reverse repurchase agreements include an $80.0 million repurchase agreement with Morgan Stanley, callable with 31 days notice, and a $55.0 million one-week repurchase agreement with Wells Fargo.



	December 31, 2016
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Reverse repurchase agreements⁽¹⁾	$	—	$	130.0	$	—	$	130.0
Commercial paper	—		55.9		—		55.9
Short-term investments:
Certificates of deposit and time deposits	6.6		—		—		6.6
Total assets measured and recorded at fair value	$	6.6	$	185.9	$	—	$	192.5


(1)	Reverse repurchase agreements include an $80.0 million repurchase agreement with Morgan Stanley, callable with 31 days notice, and a $50.0 million one-week repurchase agreement with Wells Fargo.

Intangible Assets (Tables)

Schedule of Indefinite-Lived Intangible Assets

Intangible assets, net are summarized as follows:



	March 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Domains Sold			Net Carrying Amount
Indefinite-lived intangible assets:
Trade names and branding	$	445.0	n/a			n/a			$	445.0
Domain portfolio	120.5		n/a			$	(15.9	)	104.6
Finite-lived intangible assets:
Customer-related	358.5		$	(245.9	)	n/a			112.6
Developed technology	94.8		(59.7		)	n/a			35.1
Trade names	11.1		(7.3		)	n/a			3.8
	$	1,029.9	$	(312.9	)	$	(15.9	)	$	701.1



	December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Domains Sold			Net Carrying Amount
Indefinite-lived intangible assets:
Trade names and branding	$	445.0	n/a			n/a			$	445.0
Domain portfolio	120.5		n/a			$	(14.4	)	106.1
Finite-lived intangible assets:
Customer-related	367.4		$	(245.4	)	n/a			122.0
Developed technology	226.0		(187.0		)	n/a			39.0
Trade names	11.9		(7.5		)	n/a			4.4
	$	1,170.8	$	(439.9	)	$	(14.4	)	$	716.5

Schedule of Finite-Lived Intangible Assets

Intangible assets, net are summarized as follows:



	March 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Domains Sold			Net Carrying Amount
Indefinite-lived intangible assets:
Trade names and branding	$	445.0	n/a			n/a			$	445.0
Domain portfolio	120.5		n/a			$	(15.9	)	104.6
Finite-lived intangible assets:
Customer-related	358.5		$	(245.9	)	n/a			112.6
Developed technology	94.8		(59.7		)	n/a			35.1
Trade names	11.1		(7.3		)	n/a			3.8
	$	1,029.9	$	(312.9	)	$	(15.9	)	$	701.1



	December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Domains Sold			Net Carrying Amount
Indefinite-lived intangible assets:
Trade names and branding	$	445.0	n/a			n/a			$	445.0
Domain portfolio	120.5		n/a			$	(14.4	)	106.1
Finite-lived intangible assets:
Customer-related	367.4		$	(245.4	)	n/a			122.0
Developed technology	226.0		(187.0		)	n/a			39.0
Trade names	11.9		(7.5		)	n/a			4.4
	$	1,170.8	$	(439.9	)	$	(14.4	)	$	716.5

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Based on the balance of finite-lived intangible assets at March 31, 2017, expected future amortization expense is as follows:



Year Ending December 31:
2017 (remainder of)	$	43.5
2018	49.2
2019	30.0
2020	23.4
2021	2.6
Thereafter	2.8
	$	151.5

Equity-Based Compensation Plans (Tables)

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award

The following table summarizes our option activity for the three months ended March 31, 2017:



	Number of Shares of Class A Common Stock (#)		Weighted- Average Grant- Date Fair Value ($)	Weighted- Average Exercise Price ($)
Outstanding at December 31, 2016	18,628			14.06
Granted	1,101		14.69	36.81
Exercised	(1,486	)		10.00
Forfeited	(423	)		19.10
Outstanding at March 31, 2017	17,820			15.69
Vested and exercisable at March 31, 2017	9,978			10.48

The following table summarizes our RSU activity for the three months ended March 31, 2017:



	Number of Shares of Class A Common Stock (#)		Weighted- Average Grant- Date Fair Value ($)
Outstanding at December 31, 2016	2,757
Granted	1,744		36.71
Vested	(446	)
Forfeited	(95	)
Outstanding at March 31, 2017	3,960

Deferred Revenue (Tables)

Deferred Revenue, by Arrangement

Deferred revenue consists of the following:



	March 31, 2017		December 31, 2016
Current:
Domains	$	563.9	$	531.2
Hosting and presence	392.9		370.8
Business applications	155.0		141.5
	$	1,111.8	$	1,043.5
Noncurrent:
Domains	$	325.0	$	311.1
Hosting and presence	170.4		163.4
Business applications	63.7		58.2
	$	559.1	$	532.7

Long-Term Debt (Tables)

Schedule of Long-term Debt Instruments

Long-term debt consists of the following:



	March 31, 2017			December 31, 2016
Term Loan (effective interest rate of 4.4% at March 31, 2017 and 4.9% at December 31, 2016)	1,072.5			1,072.5
Revolving Credit Loan	—			—
Total	1,072.5			1,072.5
Less: unamortized original issue discounts on long-term debt⁽¹⁾	(33.0		)	(30.5		)
Less: unamortized debt issuance costs⁽¹⁾	(2.1		)	(2.3		)
Less: current portion of long-term debt	(6.0		)	(4.0		)
	$	1,031.4		$	1,035.7


(1)	Original issue discounts and debt issuance costs are amortized to interest expense over the life of the related debt instruments using the effective interest method.

Schedule of Maturities of Long-term Debt

Aggregate principal payments, exclusive of any unamortized original issue discounts and debt issuance costs, due on long-term debt as of March 31, 2017 are as follows:



Year Ending December 31:
2017 (remainder of)	$	8.0
2018	10.7
2019	10.7
2020	10.7
2021	10.7
Thereafter	1,021.7
	$	1,072.5

Income (Loss) Per Share (Tables)

Schedule of Earnings Per Share, Basic and Diluted

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share is as follows:



	Three Months Ended March 31,
	2017			2016
Numerator:
Net loss	$	(3.1	)	$	(18.3	)
Less: net loss attributable to non-controlling interests	(3.7		)	(7.8		)
Net income (loss) attributable to GoDaddy Inc.	$	0.6		$	(10.5	)
Denominator:
Weighted-average shares of Class A common stock outstanding—basic	89,600			67,834
Effect of dilutive securities:
Options and vesting LLC Units	9,705			—
RSUs and ESPP shares	937			—
Weighted-average shares of Class A Common stock outstanding—diluted	100,242			67,834

Net income (loss) per share of Class A common stock—basic	$	0.01		$	(0.15	)
Net income (loss) per share of Class A common stock—diluted	$	0.01		$	(0.15	)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following number of weighted-average potentially dilutive shares were excluded from the calculation of diluted income (loss) per share because the effect of including such potentially dilutive shares would have been antidilutive:



	Three Months Ended March 31,
	2017	2016
Options and vesting LLC Units	—	16,302
RSUs and ESPP shares	—	80
	—	16,382

Schedule of Stock by Class

Total shares outstanding were as follows:



	March 31, 2017	December 31, 2016
Class A common stock	90,633	88,558
Class B common stock	78,410	78,554
	169,043	167,112

Geographic Information (Tables)

Revenue from External Customers by Geographic Areas

Revenue by geography is based on the customer's billing address, and was as follows:



	Three Months Ended March 31,
	2017		2016
U.S.	$	355.4	$	318.9
International	134.3		114.8
	$	489.7	$	433.7

Organization and Background (Details)

3 Months Ended

0 Months Ended

Mar. 31, 2017

segment

Mar. 31, 2017

Desert Newco, LLC

Class of Stock [Line Items]

LLC units held (as a percent)

54.00%

Number of reporting units

1

Number of operating segments

1

Summary of Significant Accounting Policies (Details) (Cash Flow Hedging, Designated as Hedging Instrument, Foreign Exchange Forward Contract, USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Cash Flow Hedging |
Designated as Hedging Instrument |
Foreign Exchange Forward Contract

Derivative [Line Items]

Derivative notional amount

$ 83.2

Derivative remaining maturity

9 months

Summary of Significant Accounting Policies Fair Value Measurements (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

12 Months Ended

Mar. 31, 2017

Dec. 31, 2016

Morgan Stanley