GoDaddy Inc. GDDY
GoDaddy is a high-quality infrastructure business trading at a wide FCF-multiple discount; committing to 40% growth-plus-profitability and buying back stock unlocks $170-$200+ per share.
Thesis
Starboard, a >6% holder since 2021, argues that GoDaddy remains materially undervalued at ~12.2x 2024E FCF versus a peer median of 17.4x and its own five-year average of 14.6x, despite recent share-price outperformance following higher Q4 FY2023 Adj. EBITDA margin guidance. The fix is not another aspirational revenue plan like the 2022 Investor Day but a credible combination of durable growth and meaningful margin expansion: at the March 2024 Investor Day, management should commit to at least 40% growth-plus-profitability for FY2025, publish a detailed cost-savings bridge (including Technology & Development), and set trackable KPIs for Payments & Commerce and Airo. With >$4bn of three-year FCF — nearly 30% of market cap — deployed into buybacks, FCF/share rises from >$9 in FY2024 to ~$14 by FY2026, implying ~$170 upside at the current multiple and $200+ on re-rating toward peers.
SCQA
GoDaddy is a high-quality, infrastructure-like tech platform in which Starboard has owned more than 6% since 2021, engaging privately for two years before a September 2023 public letter on costs, margins, and FCF.
Despite a recent bump after better Q4 FY23 margin guidance, GDDY still trades at 12.2x 2024E FCF versus peer median 17.4x and its own 14.6x five-year average, reflecting lost credibility from the missed 2022 Investor Day targets.
At the March 2024 Investor Day, commit to at least 40% growth-plus-profitability for FY2025, publish a discrete margin-expansion bridge and KPIs for Payments & Commerce and Airo, and keep buying back undervalued shares.
Execution plus buybacks drive FCF/share from >$9 in FY24 to ~$14 by FY26, lifting the share price from $108 to ~$170 at the current multiple and $200+ on re-rating to historical or peer multiples.
The three reasons
- 1
GDDY trades at 12.2x 2024E FCF vs. peer median 17.4x and own 5-yr avg 14.6x
- 2
Margin expansion can drive FCF/share from >$9 in FY24 to ~$14 by FY26
- 3
Three-year FCF of >$4bn equals ~30% of market cap — fuel for buybacks
Primary demands
- Commit at 2024 Investor Day to at least 40% growth-plus-profitability for FY2025
- Provide a detailed bridge of margin expansion with discrete cost-reduction targets (incl. Technology & Development)
- Publish specific, trackable KPIs for Payments & Commerce and Airo growth initiatives
- Avoid overly aggressive revenue guidance (do not repeat the 2022 Investor Day mistake)
- Continue and sustain the share repurchase program as the best use of capital
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Precedents cited
- GoDaddy's own 2022 Investor Day (cautionary precedent of aspirational guidance missed)
Notable slides (2)
Notes
Short four-page follow-up letter addressed to CEO Aman Bhutani and CFO Mark McCaffrey, cc'd to the Board. Signed by Peter A. Feld, Managing Member. Stake disclosed as 'more than 6%' — recorded as 6.0 (floor). References a prior September 2023 public letter plus two years of private dialogue, hence follow_up phase. Tone is notably collaborative for an activist letter: 'we remain open to working constructively' with no named villain and no CEO-quote contradiction. Two simple visuals: a peer FCF-multiple bar chart (p.2) and a three-bar upside scenario chart showing $108 → ~$170 → ~$200+ (p.3). Implicit precedent is GoDaddy's own missed 2022 Investor Day, cited as a warning against aspirational guidance.