What's your business model?

110799

How does GoDaddy make money?

GoDaddy, which filed to go public this year, made over $1.1B in revenue but still had a net loss

Innovation series by Steven Loeb
October 11, 2014
Short URL: http://vator.tv/n/39a7

Let's be honest here: for a long time, if you asked the majority of people what GoDaddy actually did, they would not have been able to tell you. The truth is that most of them probably only know Go Daddy for their infamous, and usually somewhat inappropriate, Super Bowl commercials, such as the one with that red faced nerd making out with the super model from a few years ago. (Here's a refresher in case you forgot)

The Web-hosting and domain registration giants has recently been in the process of turning around that image, going through a rebranding campaign that it obviously hopes will help the world take it more seriously. That has also coincided with the hiring of its new CEO, Blake Irving, at the beginning of this year.

So how does the company, which filed to go public in June, make money? By selling products in three separate categories:

  • Domains

Domains revenue consists of domain name registrations and renewals, domain privacy, domain application fees, domain back-orders, aftermarket sales, fee surcharges paid to ICANN, advertising on “parked pages” and other domain related products.

The company charges difference prices for different types of domians. For example, ".com" and ".co" cost $12.99 a year, while ".org" costs $8.99 and ".info" is $2.99.

Other products include auctions, which costs $4.99 a year; premium DNS hosting for $2.39 a month; and private registration, which costs $7.99 a year per domain.

In all, the domain revenue stream took in $671.6 million in 2013.

  • Hosting and presence

Hosting and presence revenue consists of website hosting products, website building products, an online shopping cart, search engine optimization and SSL certificates for encrypting data between the online browser and the SSL certificate owner’s server.

Products include Web hosting, which starts at $3.49 a month and goes up to $7.49 a month; private servers, which can cost between $24.99 a month to $149.99 a month; a dedicated IP, for $5.99 a month; and a quick shopping cart for between $4.99 and $24.99 a month.

Hosting and presence products made $380.7 million in 2013.

  • Business Applications

Business applications revenue primarily includes e-mail accounts, online calendar, online data storage, email marketing and enrollment fees paid by resellers.

Products include Microsoft Office 365 from GoDaddy, which starts at $3.99 a month, up to $8.99 per month; e-mail marketing for between $9.99 and $19.99 a month; and online bookkeeping for $8.34 per month.

Business applications only brought in $78 million in revenue last year.

2013 revenue

In all, GoDaddy brought in a total of over $1.1 billion in revenue, but it wound up in the red with a net loss of nearly $200 million, That number was down from a loss of $279 million in 2012.

The biggest drain on the company is cost of revenue, which made up $473 million of those losses. The other big hit came from technology and development, which cost $208 million.

Scottsdale, Arizona-basec Go Daddy was founded in 1997 and currently has 11 million customers. In 2011, the company was purchased by KKR, Silver Lake and Technology Crossover Ventures. Since then, the company has also embarked on international growth, including expansion into India. Go Daddy also has facilities in Arizona, California, Colorado, Iowa, Toronto, Amsterdam and Singapore.

It had 11,584 customers at the end of 2013, which it defines as those that have an active subscription. A single user may be counted as a customer more than once if the user maintains active  subscriptions in multiple accounts.

(Image source: recode.net)


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