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GoDaddy IPO, Add $400 Million Please

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You probably have read that GoDaddy is going public in a $100 million IPO. I scratched my head. My first thought was $100 million can’t be right. After pawing through the 260-page SEC filing, my thoughts were confirmed. I also came up with some interesting facts about GoDaddy.

Let’s address that little $100 million headline that has been bandied about everywhere. The S1 does state that number, but it is only for the purpose of computing a registration fee. After all what would a company the size of GoDaddy do with a $100 million IPO. They could pay down debt from $1.1 billion to $1.0 billion so why go through the hassle. The IPO says nothing about price.
This IPO is for liquidity purposes. After the IPO, the current shareholders can exchange Class B shares for the newly and free trading Class A shares.

The goal in this IPO is to sell as many shares required to create a fluid vibrant market and at the highest price. Set a floor so as when the owners shares hit the street they can maximize returns.

In 2011 the boys over at KKR, Silver Lake and Technology Crossover Ventures made a $2.25 billion investment in GoDaddy and now own 176.3 million shares. This equals a break-even share price of $12.76. They don’t play to break-even. This pointed me in my direction.

Of course GoGaddy will do a bigger IPO. The owners combined have 255 million shares. That is a large number of shares to digest.
I can see a $300 million to $500 million GoDaddy offering. A strike price in the $30 to $40 range. Funds could pay down debt. Reducing debt by $500 million would reduce interest $35 million and bring the company to near profitability.

This transaction would only represent 5 percent of the new company and adds some 12 to 15 million shares. Which in retrospect seems light for the desired float, possibly increase the offering if the market takes a liking to the GoDaddy ticker symbol. Yes, they could push this to a billion dollar IPO. You can always pay down more debt.

This produces a $9 billion to $11 billion market-cap firm. For comparison EIG has a market cap of $1.77 billion with one-fifth the EBITDA as GoDaddy.

And now for some interesting numbers from the inside world down at GoDaddy Phoenix.

GoDaddy has:

  • 12 million customers, and in 2013, added more than 1.3 million customers.
  • The company serves 8.5 million websites across more than 37,000 servers around the world.
  • The company manages 57 million domains, equaling 21 percent of the world’s domains.
  • The company owns 127 issued patents and 176 pending patent applications.
  • 56.4 percent of revenues are from domain registration, 36.1 percent hosting and business apps account for 7.5 percent.
  • There are 2,900 people in it’s customer care organization.
  • The average revenue per customer unit is $105 per year.
  • Deferred revenues are $1.4 billion. $404 million are in asset reserve accounts.

Look me up at Hostingcon. If you have not registered, use code NCC2014 to save big bucks.

On to Miami, Tom

Find out more about Tom Millitzer: NCC International FB
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About the Author

My M&A firm has focused on the Hosting sector since 1997. I want you to fulfill your dreams. If you are building your company or exiting for success...I want help you grow rich. NCC has completed hundreds of assignments. We are international. If you are considering buying or selling in the hosting sector you need to know me. I do not bite.

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