Go Daddy 2015 Annual Report Download - page 61

Table of Contents
Adjusted EBITDA . Adjusted EBITDA is a measure of our performance aligning our bookings and operating expenditures, and is the primary metric
management uses to evaluate the profitability of our business. We calculate adjusted EBITDA as net loss excluding depreciation and amortization, interest expense
(net), provision (benefit) for income taxes and adjustments to the TRA liability, equity-based compensation expense, change in deferred revenue including the
impact of realized gains or losses from the hedging of bookings in foreign currencies, change in prepaid and accrued registry costs, acquisition and sponsor-related
costs and a non-recurring reserve for sales taxes. Acquisition and sponsor-related costs include (i) retention and acquisition-specific employee costs,
(ii) acquisition-related professional fees, (iii) adjustments to the fair value of contingent consideration, (iv) costs incurred under the transaction and monitoring fee
agreement with the Sponsors, which was terminated in connection with the IPO, (v) costs incurred under the executive chairman services agreement, which was
terminated in connection with the IPO, (vi) costs associated with consulting services provided by KKR Capstone and (vii) the loss incurred on the extinguishment
of the $300.0 million senior note. As a result of our business model, we typically collect payment at the time of sale and generally recognize revenue ratably over
the term of our customer contracts. At the time of a domain sale, we also incur the obligation for the domain name registry fees associated with the customer
contract. As a result, sales to customers increase our deferred revenue and prepaid and accrued registry costs. We therefore adjust net loss for changes in deferred
revenue and changes in the associated prepaid and accrued registry costs to facilitate a better comparison of our performance from period to period.
Reconciliation of Non-GAAP Financial Measures
Our non-GAAP financial measures have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our
results under GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. First, total
bookings and adjusted EBITDA are not substitutes for total revenue and net loss, respectively. Second, these non-GAAP financial measures may not provide
information directly comparable to measures provided by other companies in our industry, as those other companies may calculate their non-GAAP financial
measures differently, particularly related to adjustments for acquisition accounting and non-recurring expenses. Third, adjusted EBITDA excludes certain recurring
expenses that have been and will continue to be significant expenses of our business.
The following tables reconcile the most directly comparable GAAP financial measure to each of these non-GAAP financial measures.
Year Ended December 31,
2015 (1)
2014 (1)
2013 (1)
2012 (1)
2011 (1)
Total bookings: (unaudited; in millions)
Total revenue $ 1,607.3
$ 1,387.3
$ 1,130.8
$ 910.9
$ 894.3
Change in deferred revenue (2) 165.9
166.4
169.1
252.4
161.1
Net refunds 137.8
116.2
96.1
80.3
69.5
Other 3.2
5.3
1.9
6.0
(0.1)
Total bookings $ 1,914.2 $ 1,675.2 $ 1,397.9 $ 1,249.6
$ 1,124.8
____________
(1) The year ended December 31, 2011 represents the combined periods of January 1, 2011 through December 16, 2011 (Predecessor) and December 17, 2011 through December 31, 2011
(Successor). All periods ending after December 31, 2011 represent the Successor’s operations.
(2) This amount also includes the impact of realized gains or losses from the hedging of bookings in foreign currencies.
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