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.

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On to Miami, Tom

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