DCF Studio

    GDDY · NYQ · Technology

    GoDaddy Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 84.89

    Market price

    USD 97.46

    Implied upside

    -12.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedReported capital expenditure averages 1.09% of revenue against depreciation and amortisation of 3.52%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 3.52% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 84.89-12.9%
    Exit multiple
    USD 95.72-1.8%
    Market price
    USD 97.46

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 5.3bnUSD 5.6bnUSD 6.0bnUSD 6.4bnUSD 6.8bn+6.6%
    EBITUSD 936.1mUSD 997.6mUSD 1.1bnUSD 1.1bnUSD 1.2bn+6.6%
    NOPATUSD 864.8mUSD 921.6mUSD 982.1mUSD 1.0bnUSD 1.1bn+6.6%
    Add depreciation & amortisationUSD 185.9mUSD 198.1mUSD 211.2mUSD 225.0mUSD 239.8m+6.6%
    Less capital expenditureUSD -185.9mUSD -198.1mUSD -211.2mUSD -225.0mUSD -239.8m+6.6%
    Less increase in working capitalUSD 88.6mUSD 94.4mUSD 100.6mUSD 107.2mUSD 114.2m-6.6%
    Free cashflow to firmUSD 953.4mUSD 1.0bnUSD 1.1bnUSD 1.2bnUSD 1.2bn+6.6%
    Discount factor0.95810.87960.80750.74130.6806-
    Present valueUSD 913.5mUSD 893.7mUSD 874.3mUSD 855.3mUSD 836.8m-2.2%
    Present Value Of The ForecastUSD 4.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.960Reported 0.940, pulled toward 1.0 (Blume)
    Cost of equity10.28%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 12.3bn76.2% of capital
    Total debtUSD 3.9bn23.8% of capital, book value as a proxy
    Tax rate7.6%Effective, capped at statutory
    WACC8.93%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 84.89

    70% of EV

    Forecast FCFF, final year
    USD 1.2bn
    Capex at depreciation, working capital in reinvestment
    USD 1.1bn
    Less reinvestment at g/ROIC (14.5% of NOPAT)
    USD -162.1m
    Capitalised
    USD 953.2m
    ROIC (reported)
    17.2%
    Terminal value, undiscounted
    USD 15.2bn
    Terminal value, discounted
    USD 10.3bn
    Enterprise value
    USD 14.7bn
    Less net debt
    USD 2.8bn
    Equity value
    USD 11.9bn

    Exit at 12.1x EBITDA

    Value per shareUSD 95.72

    73% of EV

    Terminal value, undiscounted
    USD 17.4bn
    Terminal value, discounted
    USD 11.9bn
    Enterprise value
    USD 16.2bn
    Less net debt
    USD 2.8bn
    Equity value
    USD 13.5bn

    Spread between methods: 12%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.93%112.93120.10128.86139.80153.89
    7.93%93.1397.59102.85109.13116.80
    8.93%78.6581.5584.8988.7593.31
    9.93%67.5869.5371.7374.2277.08
    10.93%58.8560.1961.6763.3265.17

    Outlined: this model. Green text: above today's price of 97.46. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year6.6%9.1%+2.5pp
    EBIT margin17.7%19.9%+2.2pp
    Discount rate8.9%8.2%-0.7pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.