GoDaddy, the web hosting provider and domain registrar, plans to sell up to $100 million worth of shares in an IPO (Initial Public Offering).
The news was revealed yesterday when GoDaddy filed a prospectus with the Security and Exchange Commission where it listed $100 million as the target amount if hopes to raise. However, there are some reports that this number is just a placeholder, and that the exact amount it hopes to raise is not yet determined.
The last time GoDaddy filed for an IPO was back in 2006, but this was later abandoned due to the uncertain market, especially as GoDaddy was increasing its losses each year. This time may be different while GoDaddy is still making a loss, this is reducing amid rising revenue. In 2013, GoDaddy reported a $200 million loss on $1.13 revenue, much better than the $279 loss on $979 million revenue in 2012. The company currently has $133 million in cash, with just over a $1 billion of long-term debt.
If you have been following GoDaddy recently, you will know that they are starting to garner much praise in the hosting community for changes made in the company since Blake Irving took charge. They have abandoned their custom control panel and gone with industry-standard control panels such as cPanel and Plesk. They have launched great WordPress hosting and abandoned their sexy advert campaigns for the focus on Small Business. Not only that, but we are excited for what changes they will have in the future. Blake Irving in a recent Reddit AMA hinted at further changes to add different methods of support such as Live Chat, and they have partnered with Microsoft to bring cheaper Office tools to their customers.
What is quite interesting, is that the filing shows the original owner Bob Parsons still owns 28% of the Company, with companies KKR and Silver Lake each holding 28%, and Technology Crossover Ventures with just 12%. These firms came to the rescue of GoDaddy in 2011 when GoDaddy was sinking under the weight of its debt. As part of the announcement Bob Parsons will be stepping down as executive chairman. Despite making a loss each year, the investors have already taken some profit out of the company after a new $1.1 billion loan was taken out to give shareholders a $350 million dividend. Is this new IPO being pushed by the shareholders to get more of a return on their investment?
We honestly think GoDaddy has improved greatly in the services it provides over the last year, and we are excited to see where this new chapter may continue to lead.
One interesting point is that when the IPO was filed, various risk factors were revealed. GoDaddy said that there were risks involved in trying to tap into foreign markets, as well as security issues such as DDoS attacks and security breaches.
Update 1st April 2015 – IPO at $20 per share. Stock Soars 30%
GoDaddy successfully launched its initial day of trading on the 1st April 2015 rising 30% from its IPO of $20 per share. This is remarkable since they have not generated a profit since 2009, but still manage to value themselves at nearly $4 billion.
Despite the good start, there is much caution still present in the financial services industry due to the ongoing losses. James Gellert, CEO of Rapid Ratings, a firm that rates the financial health of public and private companies said that “I would say the caution flag is up”. As a result, they give GoDaddy a financial health rating of just 26 out of 100.