Investment Thesis
GoDaddy demonstrates strong operational profitability with 24.5% operating margins and exceptional free cash flow generation of $467M (36.9% FCF margin), indicating a fundamentally sound business model. However, severe balance sheet deterioration—extreme leverage at 15.86x Debt/Equity, insufficient liquidity at 0.67x current ratio, and declining net income despite 8.3% revenue growth—presents material financial risk that neutralizes operational strengths.
Strengths
- Exceptional free cash flow of $467M with 36.9% FCF margin and minimal capital intensity ($4.6M CapEx) demonstrates capital-efficient business model
- Strong operating margins at 24.5% with solid revenue growth of 8.3% YoY indicating pricing power and operational efficiency
- Substantial operating cash flow of $471.5M relative to net income provides high-quality earnings cushion
Risks
- Extreme financial leverage with 15.86x Debt/Equity ratio and $3.8B long-term debt against $237.3M equity creates acute refinancing and solvency risk
- Inadequate liquidity with current ratio and quick ratio both at 0.67x (below 1.0 safety threshold) signals short-term financial stress
- Net income declining 6.6% YoY while revenue grows 8.3% indicates margin compression and operational headwinds masking by debt structure
Key Metrics to Watch
- Debt-to-Equity ratio trend and debt reduction trajectory relative to FCF generation
- Current ratio and cash burn rate to assess liquidity runway and refinancing needs
- Operating margin stability and net income recovery relative to revenue growth
Financial Metrics
Revenue
1.3B
Net Income
214.6M
EPS (Diluted)
$1.60
Free Cash Flow
466.9M
Total Assets
8.2B
Cash
1.3B
Profitability Ratios
Gross Margin
N/A
Operating Margin
24.5%
Net Margin
16.9%
ROE
90.4%
ROA
2.6%
FCF Margin
36.9%
Balance Sheet & Liquidity
Current Ratio
0.67x
Quick Ratio
0.67x
Debt/Equity
15.86x
Debt/Assets
0.0%
Interest Coverage
7.52x
Long-term Debt
3.8B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T17:43:09.804122 |
Data as of: 2026-03-31 |
Powered by Claude AI