GoDaddy GDDY
GoDaddy missed its 2022 Investor Day commitments as Tech & Development costs ballooned; cutting costs to hit 33%+ EBITDA margins re-rates FCF/share to $10+ and closes the peer-multiple gap.
Thesis
Starboard argues GoDaddy, a $14 billion domains/hosting/web-presence leader with 21 million customers (3-5x its nearest peers), is underperforming because Tech & Development expense has ballooned to ~21% of revenue while revenue growth slowed to 3-7% — causing GDDY to miss its 2022 Investor Day revenue, EBITDA and free cash flow targets and trail tech peers by 37% YTD. The fix is margin expansion: rationalize Tech & Development, trim G&A, customer care and marketing, and let operating leverage push Adjusted EBITDA margins from ~26% in 2023 to 33%+ exiting 2024, lifting growth+profitability from 31% to 40% — in line with scaled recurring-revenue technology peers. Execution would drive FCF per share from $7.25 to $10+ and enable a multiple re-rating from 11x toward the 17.7x peer median. The deck pairs GoDaddy with value-creation ideas on News Corp (separate Digital Real Estate, ~50% SOTP upside) and Fortrea (CRO margin catch-up, up to ~144% upside).
SCQA
GoDaddy is the dominant $14 billion small-business web-presence platform with 21 million customers — 3-5x Wix, Ionos or Squarespace — generating ~$4.1 billion of recurring revenue across domains, hosting, web presence and applications/commerce.
Tech & Development expense has risen to ~21% of revenue while revenue growth decelerated to 3-7%; GoDaddy is on track to miss its 2022 Investor Day revenue, EBITDA and FCF targets and has underperformed tech peers by 37% YTD.
Rationalize Tech & Development, G&A, customer care and marketing so Adjusted EBITDA margins expand from ~26% in 2023 to 33%+ exiting 2024, lifting growth+profitability from 31% to 40% — in line with scaled recurring-revenue technology peers.
Free cash flow per share re-rates from $7.25 to $10+ and the multiple re-rates from 11x toward the ~17.7x peer median, closing GoDaddy's valuation discount to predictable-growth technology peers.
The three reasons
- 1
GoDaddy tracking to miss 2024 Investor Day targets by >$500M revenue, >$100M EBITDA, >$150M FCF
- 2
Tech & Development expense now ~21% of revenue while revenue growth collapsed to 3-7%
- 3
GDDY trades 11x FCF vs. 17.7x peer median — 33%+ EBITDA margins would lift FCF/share to $10+
Primary demands
- Rationalize Tech & Development spending, which has grown to ~21% of revenue while revenue growth slowed
- Reduce G&A, customer care and marketing & advertising expenses to expand margins
- Target Adjusted EBITDA margins of 33%+ exiting 2024 (from ~26% in 2023)
- Lift growth + profitability from 31% to 40% to match scaled recurring-revenue tech peers
- (News Corp) Separate the Digital Real Estate assets to unlock $7B+ of trapped SOTP value
- (Fortrea) Execute CEO Tom Pike's margin plan to close ~500bp gap to peer median
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Precedents cited
- Starboard's 2022 Wix, Splunk and Salesforce conference ideas (+12% / +100% / +39% returns)
- Tom Pike's IQVIA (Quintiles) margin turnaround — +425bp EBITDA margins, +48% TSR outperformance
- The New York Times Company trading at >15x NTM EBITDA as valuation anchor for Dow Jones
- CRO precedent transactions (Thermo Fisher/PPD, EQT/Parexel, ICON/PRA) at 13-25x EBITDA
Notable slides (6)
Notes
Multi-idea conference deck delivered at 13D Monitor's 2023 Active-Passive Investor Summit (October 2023). Covers three Starboard ideas in sequence: (1) GoDaddy — margin expansion / Tech & Development cost rationalization — the primary target per the filename; (2) News Corp — sum-of-parts thesis arguing separation of Digital Real Estate assets unlocks ~50% upside to ~$33/share, with ex-REA business trading at just 4x EBITDA vs. NYT >15x; (3) Fortrea — recently-spun LabCorp CRO with margins ~500bp below peer median, CEO Tom Pike cited as IQVIA margin-turnaround precedent, 60-144% upside. Deck opens with a recap of last year's Wix/Splunk/Salesforce ideas as track-record proof (playbook signal). Document is watermarked 'www.10XEBITDA.com' throughout and has 13D Monitor website screenshots standing in for redacted visuals on pp. 11-14 — suggests this is a publicly-scraped version, not the original Starboard file. Stake size not disclosed in the deck; Starboard's GoDaddy 13D was filed December 2021 per footnote. No named author; firm-credited only. No CEO villain-naming — critique stays impersonal and performance-focused. Fortrea section does include a positive verbatim quote from CEO Tom Pike on margin plans.