GoDaddy Inc. GDDY
GoDaddy has missed its 2022 Investor Day targets as Tech & Dev expenses ballooned; cutting costs to a 40% growth+profitability exit rate and adding a Starboard director unlocks a ~40% valuation re-rating.
Thesis
Starboard, owning 7.8% of GoDaddy as its third-largest shareholder, argues that management has fallen well short of the 10% revenue / 15% Adj. EBITDA / 20% FCF-per-share CAGR targets laid out at the 2022 Investor Day, with 2024 consensus implying shortfalls of roughly $500M revenue, $100M EBITDA and $150M FCF. The core issue is a deteriorating growth+profitability metric, expected at ~31% in 2023 versus 38% in 2021 and below peers Wix and Squarespace, driven largely by Technology & Development expenses that grew at a 16% CAGR against 11% revenue growth and now consume 20.9% of revenue. Starboard wants GoDaddy to commit to a 40%+ growth+profitability exit rate in 2024 through aggressive cost rationalization, lifting Adjusted EBITDA above $1.5B. At 11x FCF versus peers at 17.9x, closing the gap — or pursuing a sale if the Board refuses engagement — offers substantial upside.
SCQA
GoDaddy is a high-quality, infrastructure-like one-stop shop for micro and small businesses seeking a web presence; Starboard, owning 7.8%, is the third-largest shareholder and has engaged privately with the Board for 18 months.
GoDaddy has missed its 2022 Investor Day targets on revenue, EBITDA and FCF while Technology & Development expenses ballooned to 20.9% of revenue, dragging the growth+profitability metric to a multi-year low of ~31% versus peers.
Commit to a 40%+ growth+profitability exit rate in 2024 via aggressive Technology & Development cost cuts, add a Starboard representative to the Board, and keep a sale of the Company on the table if targets are missed.
Closing the ~40% FCF multiple discount — from today's 11x toward the peer median of 17.9x (with a pro forma multiple of just 7x) — implies material re-rating and significant shareholder value creation.
The three reasons
- 1
2024 consensus implies GoDaddy will miss Investor Day targets by >$500M revenue, >$100M EBITDA, >$150M FCF
- 2
Tech & Development expenses grew at 16% CAGR vs. 11% revenue CAGR, ballooning to 20.9% of revenue
- 3
GDDY trades at 11x 2023E FCF versus peer median 17.9x — an almost 40% discount
Primary demands
- Commit to a 40%+ growth+profitability metric (revenue growth + Adj. EBITDA margin) exit rate by end of 2024
- Rationalize Technology & Development expenses, which have grown faster than revenue and reached 20.9% of revenue
- Grant Starboard direct board representation after 18 months of rejected private requests
- Remain open to alternative value creation, including a potential sale of the Company, if targets are missed
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Notable slides (5)
Notes
Public escalation letter after 18 months of private engagement; Starboard discloses 7.8% stake as third-largest shareholder. Core rhetorical device is 'promised vs. delivered' (Investor Day targets vs. 2023/2024 consensus) combined with peer-gap framing on the growth+profitability metric. Signed by Peter A. Feld, Managing Member. Letter format with embedded institutional charts — not a full deck. No explicit precedents cited; alludes generically to Starboard's 'long history of investing in the technology sector'. Sale-of-company floated as fallback, not primary demand.