GoDaddy Inc. (GDDY)

By both methods, the value today (DCF $264 · Multiples $213) exceeds the market price ($102).

Today — with margin of safety: at $102 trades ~52.1% below its value discounted to today (~$213) — the wide discount we require (≥38%, equivalent to a ~15% annual return); the risk is covered by the margin, not the rate.

At 5 years — Muy infravalorado: the target price ($266) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years comfortably exceeds the risk-free rate (4.5%) — and the discount reaches the required margin of safety.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($102) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-12.7%/year) than we project (5.2%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$0.7 bn of owner earnings in year 5 (vs ~$1.7 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). Cash accumulates the retained surplus —what is not returned as dividend or buyback—, so that EV falls and multiples compress going forward. The valuation is done on EV/NOPAT (NOPAT = EBIT × (1 − tasa efectiva)). In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Year 0 = TTM to 30-Jun-2026 (US$5,104.1M). The year-1 path starts from the FY2026 revenue guidance reaffirmed in the release of 30-Jul-2026 (US$5,215-5,255bn, midpoint +5.7% versus FY2025), not from the higher historical trajectory (TTM +7.4%): the company itself points to deceleration toward year 5 (~4.5%), consistent with a mature domains and web hosting business (Core, ~62% of revenue) and an applications and commerce segment (A&C, ~38%) that keeps growing in the low double digits but weighs progressively less on the base. The operating margin starts at 24.8% (TTM) and converges to 28.5% by year 5 in the base case, consistent with the NEBITDA margin target of over 33% reaffirmed in the guidance. It is valued on EV/NOPAT: stock-based compensation is already expensed within GAAP operating income (broken out line by line in the income statement), so reported EBIT already nets it — no separate cash flow metric is needed to avoid double-counting it. Capex is tiny against depreciation and amortization (US$25.9M TTM versus US$92.7M), so it is treated as 100% maintenance (`maintPct: 1`). Share repurchases are the dominant capital allocation (US$1,633.8M over the last twelve months, no dividend) and are modeled with an explicit share path (`sharesPath`), the same one for all three scenarios (§6), funded with operating cash and not with new debt (long-term debt stays at US$3.76bn). The path is anchored to the net reduction revealed by the shares outstanding series —8.7% a year— and decays to 5.9% by year 5. The same dollars would retire 14.0% at today's price (US$89.09), but the base case takes the price to US$225, so the average buyback price over the horizon sits well above the current one: that is the price-aware adjustment of §6, and it is why the path does not extrapolate the full capacity of the flow. The exit multiple is deliberately set close to today's entry multiple (current EV/NOPAT ~13.2x) in the base case, without crediting a re-rating: the base case return comes from NOPAT growth and share repurchases, not from multiple expansion.

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $266 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $102, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $266 in 5 years and a required return of 4.5% annually, the maximum to pay today is $213. Against the current market price ($102), the margin of safety is 52.1% (trades below the maximum → there is margin) and the total return at that price would be 21.1% annually.

• Entry multiple. Trades at ~13× EBIT, below the mature-software reference band.
• EBIT return. ~8.9% on enterprise value at market price, near the 10% bar without crediting future improvements.
• Exit multiple sensitivity. Five-year value materially depends on the exit multiple chosen, deliberately conservative against the reference band.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✓ ROIC exceeds the cost of capital (~10%)
• ✓ CFROIC backs up the ROIC (122%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• Cash generation. Owner-FCF of US$1,401M over the trailing twelve months, with consistent conversion year to year.
• Return on capital. 41.4%, well above the 10% bar, though on a reduced capital base from buyback.
• Capital intensity. Capex of just 0.5% of revenue; genuinely capital-light business.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

GoDaddy's growth is explained more by average revenue per user (ARPU) than by net customer additions: the base of 20.4 million customers is essentially stable, while ARPU rose from US$220 to US$250 over eighteen months from cross-selling Applications and Commerce products (website builders, marketing, email, payments) to customers who arrived for a domain. Annualized recurring revenue (ARR) growing faster than ARPU confirms the mix is shifting to higher-value subscriptions.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Guided deceleration. 2026 guidance (+5.7% at midpoint) is lower than trailing twelve-month growth (+7.4%).
• Applications and Commerce engine. Grew 14.3% in 2025 and gaining weight in the mix, offsetting Core Platform maturity.
• Core Platform maturity. Volume of domains under administration remained essentially flat in 2025.

• Market leadership in domains. ~21% global share and 20.4 million paying customers with retention exceeding 90% at three years.
• Revenue recurrence. More than 89% of 2025 revenue came from customers already recurring in the prior year.
• Competitive intensity. Fragmented market with well-funded rivals (Wix, Squarespace, Shopify, Cloudflare) willing to compete on price.
• Risk of technology substitution. The company itself recognizes the risk that users migrate to social media or artificial intelligence interfaces instead of an owned website.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• !Leverage (net debt / EBITDA)Net debt / EBITDA 1.9x
• ✓Interest coverage (EBIT / interest)8.4x
• –Liquidity (current ratio)no data
• ✓Cash quality (CFROIC vs ROIC)CFROIC backs 122% of ROIC
• ✓Value creation (ROIC − 10% bar)+31pp
• ✓Malinvestment test (capex vs incremental ROIC)Capex/D&A 0.3x — no over-investment
• ✓Float / working capitalFrees up cash $0.2 bn (float / negative WC)
• !Dilution (SBC % of revenue + shares)SBC 5.9% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Financial leverage. Total debt of US$3,774.4M against shareholders' equity of just US$6.7M from years of buyback.
• Debt stability. Total debt remained essentially stable between December 2025 and June 2026.
• Cash position. US$1,155.5M in cash and equivalents at close of second quarter 2026.

How cash comes in and how it is deployed. In green, the business's own cash (the owner-FCF it generates and reinvests); in gray, the float and credit — customer and funding money, which is not the shareholder's.

Capital allocation is nearly entirely oriented to share buyback (90% of cash use), financed from owner-FCF and without dividend. Maintenance capex is minimal (0.5% of revenue) and merger and acquisition activity is limited to minor technology integrations, not transformative operations.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Capital allocation. Concentrated in share buyback (90% of cash use), financed from owner-FCF and without new debt.
• Ownership structure. No control shareholder identified; ownership dominated by passive institutional investors (Vanguard, BlackRock).
• Declared financial discipline. The earnings release emphasizes a 'disciplined operating model' in the face of artificial intelligence investment.

• Motivated seller from unmet expectations: two consecutive rounds of more moderate growth guidance (February and July 2026) produced the stock's decline, though guided growth (+6% FY2026) remains positive and second-quarter earnings per share beat consensus.
• Missing buyers from sector narrative: the market is discounting the risk of owned-domain substitution by artificial intelligence and social media more severely than current operating evidence suggests (stable retention, expanding ARPU).
• Financial leverage (total debt against shareholders' equity nearly zero from years of buyback) likely commands a risk premium that the market is pricing into the multiple, beyond growth risk.

No isolated event (litigation, rejected acquisition) posterior to the 10-K was identified: the price decline reflects revenue deceleration guided by the company itself, explicitly declared over two consecutive quarters.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at +9%/year (+51% total): the margin of safety protects the downside. The bull (+25%/year, +211% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Technology substitution. Declared risk that users migrate to social media or artificial intelligence instead of an owned website.
• External infrastructure dependence. A substantial portion of the platform runs on Amazon Web Services without full redundancy.
• Buyback pace vs. cash flow. Trailing twelve-month buyback (US$1,633.8M) exceeded owner-FCF from the same period (US$1,401M).
• Currency and geopolitical exposure. 33% of revenue is international, with regulatory and currency risks declared by the company.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  A narrow moat and ROIC 41% above the 10% bar, with a +52% margin → a quality business at a good price.

• Peter Lynch Growth at a reasonable price (GARP)

  A stalwart growing 5% at a multiple/growth of 2.4 → expensive for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Earnings yield 8% (EBIT/EV) + ROIC 41% → brushes the Magic Formula.

• Howard Marks Perception vs reality + cycle

  The price discounts -13% vs our 5%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor +9%/yr, bull-scenario ceiling +25%/yr over 5y and a +52% margin → capital protected, asymmetry in your favor.

• Pat Dorsey Moat strength (Five Rules)

  A narrow moat, stable; sources: intangibles, efficient scale, cost advantage, switching costs → partially passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -13%, within what we project (5%) — the story squares with the numbers.