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Why didn't I hear about this?

GoDaddy shares rise 31% on first day of trading
By Brian Womack April 1, 2015

GoDaddy had collected $460 million in its IPO. Photo: Spencer Platt / Getty Images / 2015 Getty Images Photo: Spencer Platt / Getty Images GoDaddy had collected $460 million in its IPO.
GoDaddy Inc. stock gained in its trading debut, after the company raised $460 million in a larger-than-expected initial public offering.

Shares of the 18-year-old company, which provides Internet domain-name registration and hosting, rose 31 percent to close at $26.15. GoDaddy sold 23 million shares for $20 each, after offering 22 million for as much as $19. At the IPO price, GoDaddy had a market value of just over $3 billion.

GoDaddy’s pitch to investors is that its customer base of small businesses seeking websites will keep growing. Revenue grew 23 percent in 2014, which was faster than rivals Endurance International Group Holdings and Germany’s United Internet.

“Most small businesses have fewer than five employees, and most small-business owners identify themselves as having little to no technology skills,” the company said in its IPO filing. “Our addressable market extends beyond small businesses and includes individuals and organizations, such as universities, charities and hobbyists.”

GoDaddy is backed by private-equity firms KKR, Silver Lake Management and Technology Crossover Ventures, which acquired a majority stake in 2011.

The firms put $859 million of equity in the purchase, according to Moody’s Investors Service. At the close Wednesday, the firms showed about a 195 percent unrealized gain on their investment. The gain included a dividend they received last year.

GoDaddy said in a regulatory filing that the three firms and Bob Parsons, founder and former chairman of GoDaddy, planned to buy up to $50 million worth of Class A shares in conjunction with the IPO.

The Arizona company was founded in 1997 by Parsons and raised its profile through Super Bowl commercials it started showing eight years later. The advertising campaigns have featured celebrities including race-car driver Danica Patrick and Israeli model Bar Refaeli.

Some of those campaigns have been criticized by women’s advocates as being tasteless. The company says that marketing has helped increase name recognition among consumers and will continue.

“We have invested, and expect to continue to invest, substantial resources to increase our brand awareness,” the company said in its IPO prospectus.

GoDaddy has almost 13 million customers, the document shows, and generates revenue from subscriptions of domain and hosting products. Sales jumped 23 percent last year to $1.39 billion. The net loss was $143 million in 2014.

At a $3 billion valuation, GoDaddy was trading at around 2.2 times those sales. Endurance trades at about 4 times sales, while United Internet is fetching closer to 3 times.

But the company faces challenges as technology changes, and more people are using smartphone apps to find online information.

“These evolving technologies and changes in customer behavior may have an adverse effect on our business and prospects,” the company said in a filing.

GoDaddy also is grappling with more competition. Google said last year it was testing a service that lets people use the Internet to find and register domain names. Other competitors for GoDaddy’s product lineup include Amazon.com Inc. and Microsoft.

GoDaddy, which still primarily helps small companies get domain names, has been investing in services such as hosting sites. The company had about 13 million customers at the end of last year, up from 8 million at the end of 2010, the filing said.