What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-17 compared with 2021-02-19 · 220 added, 231 removed, 1002 unchanged (31% of the section changed)

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Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets

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Business Combination – Valuation of Acquired Intangible Asset

Description of the Matter As discussed in Note 3 of the consolidated financial statements, the Company completed the acquisition of the registry operations of Neustar Inc.

in August 2020 for purchase consideration consisting of $217.2 million in cash and the settlement of $19.4 million in pre-existing contractual relationships.

Description of the Matter As discussed in Note 3 of the consolidated financial statements, the Company completed the acquisition of Poynt Co.

in February 2021 for purchase consideration of $297.1 million.

The Company accounted for this transaction as a business combination.

Auditing management's accounting for the acquisition was complex due to the significant estimation uncertainty in determining the fair value of the acquired indefinite-lived contractual-based asset totaling $67.0 million.

The contractual-based intangible asset was valued using an income-based approach.

The fair value determinations of the asset acquired required management to make estimates and significant assumptions regarding the future cash flows of the intangible asset, including revenue growth rates, earnings metrics, economic life, and discount rate.

Auditing management's accounting for the acquisition was complex due to the significant estimation uncertainty in determining the fair value of the acquired finite-lived software and payments developed technology intangible asset totaling $37.3 million.

The software and payments intangible asset was valued using an income-based approach.

The fair value determination of the acquired intangible asset required management to make estimates and significant assumptions regarding the future cash flows of the intangible asset, including revenue growth rates, earnings metrics, a technological obsolescence curve, economic life, and discount rate.

These significant assumptions were forward-looking and could be affected by future market and economic conditions.

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Cash and cash equivalents $ 1,255.7 $ 765.2

Short-term investments — 23.6

Accounts and other receivables 63.6 41.8

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Long-term debt 24.1 24.3

Payable pursuant to tax receivable agreements 0.2 —

Total current liabilities 2,436.7 2,314.2

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Operating lease liabilities, net of current portion 142.7 166.7

Payable pursuant to tax receivable agreements, net of current portion — 175.3

Other long-term liabilities 77.7 56.6

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General and administrative 345.8 323.8 362.1

Restructuring charges 43.6 — —

Restructuring and other ( 0.3 ) 43.6 —

Depreciation and amortization 199.6 202.7 209.7

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Income (loss) before income taxes 253.6 ( 495.4 ) 126.4

Benefit for income taxes 1.3 12.0 9.0

Benefit (provision) for income taxes ( 10.8 ) 1.3 12.0

Net income (loss) 242.8 ( 494.1 ) 138.4

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Foreign exchange forward contracts gain (loss), net 16.3 ( 17.6 ) ( 2.7 )

Unrealized swap gain (loss), net (net of tax effect of $ 2.2 in 2020)

Unrealized swap gain (loss), net (1)

Change in foreign currency translation adjustment 45.9 ( 44.2 ) 37.7

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$ 335.7 $ ( 547.9 ) $ 172.0

(1) Amounts are net of the income tax effects reflected below:

Unrealized swap gain (loss), net $ 2.2 $ 2.2 $ —

See accompanying notes to consolidated financial statements.

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Balance at December 31, 2018

168,549 $ 0.2 6,254 $ — $ 699.8 $ 164.8 $ ( 72.1 ) $ 31.8 $ 824.5

Net income — — — — — 137.0 — 1.4 138.4

Equity-based compensation — — — — 125.5 — — — 125.5

Stock option and warrant exercises 4,782 0.1 — — 76.3 — — ( 9.2 ) 67.2

Equity-based compensation, including amounts capitalized — — — — 149.2 — — — 149.2

Repurchases of Class A common stock ( 7,125 ) — — — — ( 458.6 ) — — ( 458.6 )

Stock option exercises 3,976 — — — 74.9 — — ( 4.2 ) 70.7

Issuances of Class A common stock under employee stock purchase plan 508 — — — 28.5 — — — 28.5

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Change in foreign currency translation adjustment — — — — — — 37.7 — 37.7

Attribution of accumulated other comprehensive income (loss) — — — — — — ( 4.0 ) 4.0 —

Vesting of restricted stock units and other 2,195 — — — — 3.3 ( 0.8 ) 0.8 3.3

Adjustment to prior period non-controlling interests allocations — — — — 51.7 — ( 38.5 ) ( 13.2 ) —

Balance at December 31, 2019

Net income — — — — — 137.0 — 1.4 138.4

172,867 0.2 1,490 — 1,003.5 ( 153.5 ) ( 78.2 ) 10.1 782.1

Net income (loss) — — — — — ( 495.1 ) — 1.0 ( 494.1 )

Equity-based compensation, including amounts capitalized — — — — 193.9 — — — 193.9

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Issuances of Class A common stock under employee stock purchase plan 493 — — — 29.6 — — — 29.6

Exchanges of LLC units 4,764 — ( 4,764 ) — 9.1 — ( 2.6 ) ( 6.5 ) —

Tax receivable agreements liability arising from exchanges — — — — ( 9.7 ) — — — ( 9.7 )

Distributions to holders of LLC Units — — — — — — — ( 6.0 ) ( 6.0 )

Impact of derivatives, net — — — — — — ( 8.5 ) — ( 8.5 )

Change in foreign currency translation adjustment — — — — — — ( 44.2 ) — ( 44.2 )

Attribution of accumulated other comprehensive income (loss) — — — — — — ( 0.8 ) 0.8 —

Vesting of restricted stock units and other 3,170 — ( 802 ) — 2.2 ( 0.6 ) ( 0.1 ) ( 2.1 ) ( 0.6 )

Adjustment to prior period non-controlling interests allocations — — — — 51.7 — ( 38.5 ) ( 13.2 ) —

Balance at December 31, 2020

169,157 0.2 688 — 1,308.8 ( 1,190.9 ) ( 131.0 ) 1.1 ( 11.8 )

Consolidated Statements of Stockholders' Equity (Deficit) (continued)

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Shares Amount Shares Amount

Net income (loss) — — — — — ( 495.1 ) — 1.0 ( 494.1 )

Net income — — — — — 242.3 — 0.5 242.8

Equity-based compensation, including amounts capitalized — — — — 211.9 — — — 211.9

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Issuances of Class A common stock under employee stock purchase plan 489 — — — 30.7 — — — 30.7

Exchanges of LLC units 802 — ( 802 ) — 2.2 — ( 2.2 ) —

Distributions to holders of LLC Units — — — — — — — ( 6.0 ) ( 6.0 )

Impact of derivatives, net — — — — — — 47.0 — 47.0

Change in foreign currency translation adjustment — — — — — — 45.9 — 45.9

Attribution of accumulated other comprehensive income (loss) — — — — — — ( 0.1 ) 0.1 —

Vesting of restricted stock units and other 3,013 — ( 368 ) — ( 0.1 ) — ( 0.5 ) 0.6 —

Balance at December 31, 2021

166,901 $ 0.2 320 $ — $ 1,594.7 $ ( 1,474.6 ) $ ( 38.6 ) $ 1.5 $ 83.2

See accompanying notes to consolidated financial statements.

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Equity-based compensation 207.9 191.5 147.0

Non-cash restructuring charges 29.0 — —

Non-cash restructuring and other charges 15.1 29.0 —

Loss on debt extinguishment — — 14.8

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Changes in operating assets and liabilities, net of amounts acquired:

Registry deposits ( 2.7 ) 1.1 6.2

Prepaid domain name registry fees ( 37.8 ) ( 17.5 ) ( 15.1 )

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Purchases of property and equipment ( 51.1 ) ( 66.5 ) ( 87.6 )

Purchases of equity investments ( 40.0 ) — —

Other investing activities, net 25.3 0.2 1.5

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Cash and cash equivalents, end of period $ 1,255.7 $ 765.2 $ 1,062.8

GoDaddy, Inc.

Consolidated Statements of Cash Flows (continued)

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Commitments and Contingencies

Restructuring Charges

Restructuring and Other

Defined Contribution Plan

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Accumulated Other Comprehensive Loss

Subsequent Events

Organization and Background

Description of Business

We deliver simple, easy-to-use cloud-based products and outcome-driven, personalized guidance, which enables our customers to establish a digital presence, connect with their customers and manage their presence.

We deliver simple, easy-to-use cloud-based products, outcome-driven, personalized guidance and ease and access to payment systems.

Our products enable our customers to establish a digital presence, connect with their customers and manage their presence.

We are the sole managing member of Desert Newco, LLC and its subsidiaries (Desert Newco), and as a result, we consolidate its financial results and report non-controlling interests representing the economic interests held by other members.

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Our more significant estimates include:

• the relative stand-alone selling price of the indicated performance obligations included in revenue arrangements with multiple performance obligations;

• the relative stand-alone selling price (SSP) of the indicated performance obligations included in revenue arrangements with multiple performance obligations;

• the estimated reserve for refunds;

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however, actual results may differ.

As of December 31, 2020, our chief operating decision maker function was comprised of our Chief Executive Officer who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance for the entire company.

As of December 31, 2021, our chief operating decision maker was our Chief Executive Officer who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance for the entire company.

Accordingly, we have a single operating and reportable segment.

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Amounts receivable for payment processor transactions totaled $ 24.2 million and $ 24.5 million at December 31, 2021 and 2020, respectively.

Short-Term Investments

Our short-term investments consist of various instruments with a remaining maturity in excess of 90 days at the date of acquisition, which are carried at fair value.

The estimated fair value of our short-term investments is determined based on quoted market prices and approximated historical cost.

We did not have any material realized or unrealized gains or losses on sales of short-term investments during any of the periods presented.

We classify our short-term investments as available-for-sale at the time of purchase and reevaluate such classification at each balance sheet date.

We may sell our short-term investments at any time for use in current operations or for other purposes, such as consideration for acquisitions, even if they have not yet reached maturity.

As a result, we classify our short-term investments, including investments with maturities beyond 12 months, as current assets.

Registry Deposits

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Depreciation and amortization expense related to property and equipment was $ 68.4 million, $ 73.4 million and $ 86.5 million during 2021, 2020 and 2019, respectively.

Capitalized Internal-Use Software Costs

Costs incurred to develop software for internal-use during the application development phase are capitalized and amortized over such software's estimated useful life.

Capitalized Software Costs

We capitalize and amortize certain implementation costs related to cloud computing arrangements as well as costs incurred to develop software for internal-use during the application development phase.

Costs related to the design or maintenance of internal-use software are included in technology and development expenses as incurred.

We capitalized $ 9.9 million and $ 13.4 million of such costs to property and equipment during 2020 and 2019, respectively.

We capitalized $ 23.9 million and $ 15.0 million of such costs during 2021 and 2020, respectively.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill represents the excess of the purchase price over the estimated fair value of net tangible and identifiable intangible assets acquired in business combinations.

Goodwill represents the excess of the purchase price over the estimated fair value of net tangible and identifiable intangible assets acquired in business acquisitions.

Indefinite-lived intangible assets consist of the GoDaddy trade names and branding, our domain portfolio and certain contractual-based assets.

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Debt Issuance Costs

We defer and amortize issuance costs, underwriting fees and related expenses incurred in connection with the issuance of debt instruments using the effective interest method over the terms of the respective instruments.

We capitalize issuance costs, underwriting fees and related expenses incurred in connection with the issuance of debt instruments and amortize such costs using the interest method over the terms of the respective instruments.

Debt issuance costs, other than those associated with our revolving credit loan, are reflected as a direct reduction of the carrying amount of the related debt liability.

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For each derivative instrument designated as a hedge, we formally document the related risk management strategy and objective, including identification of the hedging instrument, the hedged item and the risk of exposure, as well as how hedge effectiveness will be assessed prospectively and retrospectively over the instrument's term.

To assess effectiveness of our swap instruments, we use regression analysis performed utilizing the Hypothetical Derivative Method to compare the change in fair value of the derivative instrument designated as the hedging instrument to the change in the fair value of a similarly modeled hypothetical derivative using the same discount rate.

similarly modeled hypothetical derivative using the same discount rate.

Following our initial quantitative assessment, we may perform subsequent assessments on a qualitative basis unless facts and circumstances change such that we can no longer qualitatively assert that our hedges are highly effective.

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Assets and liabilities associated with finance leases are included in property and equipment, net, accrued expenses and other current liabilities and other long-term liabilities.

Prior to January 1, 2019, rent expense under operating leases was recognized on a straight-line basis over the lease term taking into consideration rent abatements, scheduled rent increases and any lease incentives.

Equity Investments

We hold investments in privately held equity securities, which are recorded in other assets and totaled $ 40.0 million at December 31, 2021.

These securities are recorded at cost and adjusted for observable transactions for same or similar investments of the same issuer or impairment.

Investment gains and losses are recorded in other income (expense), net.

Valuations of privately held securities are inherently complex and require judgment due to the lack of readily available observable market data.

A security's carrying value is not adjusted if there are no observable price changes in a same or similar security from the same issuer or if there are no identified events or changes in circumstances that may indicate impairment.

In determining the estimated fair value of our investments, we utilize the most recent data available to us.

We assess our investments for impairment at least quarterly using both qualitative and quantitative factors.

If an investment is considered impaired, we recognize an impairment loss and establish a new carrying value for the investment.

Our analysis did not indicate impairment of our investments as of December 31, 2021.

Foreign Currency

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Revenue is recognized net of allowances for returns and applicable transaction-based taxes collected from customers.

Our products are generally sold with a right of return within our policy, which are accounted for as variable consideration when estimating the amount of revenue to recognize.

Our products are generally sold with a right of return within our policy, which is accounted for as variable consideration when estimating the amount of revenue to recognize.

Refunds are estimated at contract inception using the expected value method based on historical refund experience and updated each reporting period as additional information becomes available and only to the extent it is probable a significant reversal of any incremental revenue will not occur.

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Consideration is recorded as deferred revenue when received, which is typically at the time of sale, and revenue, other than for aftermarket domain sales, is recognized ratably over the period in which the performance obligations are satisfied, which is generally over the contract term.

Aftermarket domain revenue is recognized at the time when ownership of the domain is transferred to the buyer.

Revenue from aftermarket domain sales is recognized at the time when ownership of the domain is transferred to the buyer.

Hosting and presence .

Hosting and presence revenue primarily consists of website hosting products, website building products, website security products and online visibility products.

Consideration is recorded as deferred revenue when received, which is typically at the time of sale, and revenue is recognized ratably over the period in which the performance obligations are satisfied, which is generally over the contract term.

Hosting and presence revenue primarily consists of website hosting products, website building products, website security products, online visibility products and commerce products.

Consideration is recorded as deferred revenue when received, which is typically at the time of sale, and revenue is primarily recognized ratably over the period in which the performance obligations are satisfied, which is generally over the contract term.

Business applications .

Business applications revenue primarily consists of third-party productivity applications, email accounts, email marketing tools and telephony solutions.

See Note 7 for additional information regarding our deferred revenue.

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domain registrations, website hosting products, website building products, website security products and other cloud-based products.

Judgment may be required in determining whether products are considered distinct performance obligations that should be accounted for separately or as one combined performance obligation.

Judgment may be required in determining whether products contain multiple distinct performance obligations that should each be accounted for separately or as one combined performance obligation.

Revenue is recognized ratably over the period in which the performance obligations are satisfied, which is generally over the contract term.

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We may also offer specific arrangements, such as our Websites + Marketing solution, in which we include promises to transfer multiple performance obligations in a single product offering.

For such arrangements, we allocate the transaction price to each of the underlying distinct performance obligations based on its relative stand-alone selling price (SSP), as described below.

For such arrangements, we allocate the transaction price to each of the underlying distinct performance obligations based on its relative SSP, as described below.

We have determined that generally each of our other products constitutes an individual product offering to our customers, and therefore have concluded that each is a single performance obligation.

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We sell our products directly to customers and also through a network of resellers.

In certain cases, we act as a reseller of products provided by others.

In certain cases, such as for aftermarket domain sales, we act as a reseller of products provided by others.

The determination of gross or net revenue recognition is reviewed on a product-by-product basis and is dependent on our determination as to whether we act as principal or agent in the transaction.

Revenue associated with sales through our network of resellers, for certain aftermarket domain sales and for third-party offerings is generally recorded on a gross basis as we have determined that we control the product before transferring it to our end customers.

Commissions paid to resellers are capitalized and amortized to cost of revenue consistent with the pattern of transfer of the products purchased.

Assets Recognized from Contract Costs

Commissions paid to our resellers represent an incremental cost of obtaining a contract with a customer.

We capitalize and amortize such amounts to cost of revenue consistent with the pattern of transfer of the product to which the asset relates.

Amounts capitalized and amortized were not material during any of the periods presented.

Fees paid to various registries at the inception of a domain registration or renewal represent costs to fulfill a contract.

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Advertising expenses were $ 378.3 million, $ 329.6 million and $ 260.0 million during 2021, 2020 and 2019, respectively.

Prepaid advertising, which is included within prepaid expenses and other current assets, was $ 9.3 million and $ 6.3 million at December 31, 2020 and 2019, respectively.

Customer Care

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General and Administrative

General and administrative expenses primarily consist of personnel costs for our administrative functions, professional service fees, office rent for all locations, all employee travel expenses, acquisition-related expenses and other general costs.

General and administrative expenses primarily consist of personnel costs for our administrative functions, professional service fees, office rent and facilities expenses for all locations, acquisition-related expenses and other general costs.

Equity-Based Compensation

We have granted stock options at exercise prices equal to the fair market value of our Class A common stock on the grant date.

We have granted both options and restricted stock units (RSUs) vesting solely upon the continued service of the recipient as well as performance-based awards (PSUs) with vesting based on either (i) our achievement of specified financial targets or (ii) our relative total stockholder return (TSR) as compared to a selected index of public internet companies.

We have granted both stock options and restricted stock units (RSUs) vesting solely upon the continued service of the recipient as well as performance-based awards (PSUs) with vesting based on either (i) our achievement of specified financial targets or (ii) our relative total stockholder return (TSR) as compared to a selected index of public Internet companies.

We recognize the accounting grant date fair value of equity-based awards as compensation expense over the required service period of each award, taking into account the probability of our achievement of associated performance targets.

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On the settlement date of each three-year performance period associated with our TSR-based PSU grants, and only if a participant remains a Service Provider (as defined in the 2015 Equity Incentive Plan) on such date, a participant will receive shares of our Class A common stock ranging from 0 % to 200 % of the originally granted PSUs based on our relative TSR as compared to the companies within the selected index.

Vesting of the PSUs is subject to the TSR market condition as well as approval of the performance by our board of directors following the end of each performance period.

Vesting of the PSUs is subject to the TSR market condition as well as approval of the performance by our board of directors (the Board) following the end of each performance period.

Equity-based awards are accounted for using the fair value method.

RSUs and PSUs are measured based on the fair market value of the underlying common stock on their respective accounting grant dates.

RSUs and financial-based PSUs are measured based on the fair market value of the underlying common stock on their respective accounting grant dates.

Grant date fair values for stock options are determined using the Black-Scholes option pricing model and a single option award approach.

The accounting grant date for PSUs is the date on which the applicable performance criteria are approved by our board of directors (the Board).

The accounting grant date for financial-based PSUs is the date on which the applicable performance criteria are approved by our Board.

The fair value of shares issued under our employee stock purchase plan is estimated on the first day of each offering period using the Black-Scholes option pricing model.

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2021 2020 2019

Expected term (in years) 6.0 6.1 6.1

Expected volatility 32.3 % 31.2 % 31.5 %

Risk-free interest rate 0.9 % 2.2 % 2.7 %

Expected term (in years) n/a 6.0 6.1

Expected volatility n/a 32.3 % 31.2 %

Risk-free interest rate n/a 0.9 % 2.2 %

We estimate the grant-date fair value of the TSR-based PSUs using a Monte Carlo simulation which requires assumptions for expected volatility, risk-free rate of return and dividend yield.

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We recognize DTAs to the extent we believe these assets are more-likely-than-not to be realized.

In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations.

In evaluating our ability to realize our DTAs, in full or in part, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, prudent and feasible tax planning strategies and recent results of operations.

We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more-likely-than-not the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions meeting the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

Interest and penalties related to income taxes are included in benefit (provision) for income taxes, and were not material during any of the periods presented.

Interest and penalties related to income taxes are included in benefit (provision) for income taxes.

Fair Value Measurements

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We hold certain assets required to be measured at fair value on a recurring basis.

These may include reverse repurchase agreements, commercial paper or other securities, which are classified as either cash and cash equivalents or short-term investments.

We classify these assets within Level 1 or Level 2 because we use either quoted market prices or alternative pricing sources utilizing market observable inputs to determine their fair value.

In addition, Level 2 assets and liabilities include derivative financial instruments associated with hedging activity, as further discussed in Note 10.

These include time deposits and money market funds, which we classify within Level 1 because we use quoted market prices to determine their fair value.

Level 2 assets and liabilities include derivative financial instruments associated with hedging activity, as further discussed in Note 10.

Derivative financial instruments are measured at fair value on the contract date and are subsequently remeasured each reporting period using inputs such as spot rates, discount rates and forward rates.

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however, the inputs used to calculate the fair value of the instruments are tied to active markets.

The following tables set forth assets and liabilities measured at fair value on a recurring basis:

The following tables set forth our material assets and liabilities measured and recorded at fair value on a recurring basis:

December 31, 2021

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Cash and cash equivalents:

Money market funds $ 98.0 $ — $ — $ 98.0

Total assets measured and recorded at fair value $ 98.0 $ — $ — $ 98.0

Time deposits and money market funds $ 178.1 $ — $ — $ 178.1

Derivative assets — 30.3 — 30.3

Total assets $ 178.1 $ 30.3 $ — $ 208.4

Derivative liabilities $ — $ 89.5 $ — $ 89.5

Total liabilities measured and recorded at fair value $ — $ 216.4 $ — $ 216.4

Total liabilities $ — $ 89.5 $ — $ 89.5

December 31, 2020

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Cash and cash equivalents:

Reverse repurchase agreements (1)

$ — $ 70.0 $ — $ 70.0

Commercial paper — 102.0 — 102.0

Money market funds $ 98.0 $ — $ — $ 98.0

Short-term investments:

Commercial paper and other 0.7 22.9 — 23.6

Total assets measured and recorded at fair value $ 444.7 $ 194.9 $ — $ 639.6

Total assets $ 98.0 $ — $ — $ 98.0

Derivative liabilities $ — $ 216.4 $ — $ 216.4

Total liabilities measured and recorded at fair value $ — $ 93.8 $ — $ 93.8

_________________________________

(1) Reverse repurchase agreements include a $ 70.0 million repurchase agreement with Morgan Stanley, callable with 31 days notice.

Total liabilities $ — $ 216.4 $ — $ 216.4

We have no other material assets or liabilities measured at fair value on a recurring basis.

Business Combinations

We determine whether substantially all of the fair value of assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets.

If this threshold is met, the single asset or group of assets, as applicable, is accounted for as an asset acquisition.

We include the results of operations of acquired businesses as of the respective acquisition dates.

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Contingent consideration is adjusted to fair value in subsequent periods as an increase or decrease in general and administrative expenses.

Acquisition-related costs are expensed as incurred.

Acquisition-related costs are charged to general and administrative expense as incurred.

Concentrations of Risks

Our financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents and short-term investments.

Our financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents.

Although we deposit cash with multiple banks, these deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits.

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We have internal procedures to restore products in the event of a service disruption or disaster at any of our data center facilities.

We serve our customers and users from data center facilities operated either by us or third parties, which are most significantly located in Arizona, California, Virginia, France, the Netherlands and Singapore.

Even with these procedures for disaster recovery in place, the availability of our products could be significantly interrupted during the implementation of restoration procedures.

We serve our customers and users from data center facilities operated either by us or third parties, which are most significantly located in Arizona, Virginia, France, the Netherlands and Singapore.

Even with these procedures for

disaster recovery in place, the availability of our products could be significantly interrupted during the implementation of restoration procedures.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued new guidance requiring all expected credit losses for financial instruments held at the reporting date to be measured based on historical experience, current conditions and reasonable supportable forecasts.

This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial instruments measured at amortized cost and also applies to some off-balance sheet credit exposures.

Our adoption of this guidance on a modified retrospective basis on January 1, 2020 did not have a material impact as credit losses have not been, and are not expected to be, significant based on historical collection trends, the financial condition of payment partners and external market factors.

In August 2018, the FASB issued new guidance to modify or eliminate certain fair value disclosures and require additional disclosures for Level 3 measurements.

Our adoption of this guidance on January 1, 2020 did not have a material impact.

In August 2018, the FASB issued new guidance aligning the accounting for implementation costs incurred in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

We adopted this guidance on a prospective basis on January 1, 2020.

Amounts capitalized have not been material.

In December 2019, the FASB issued new guidance to simplify the accounting for income taxes primarily by eliminating certain exceptions allowable under the existing guidance related to the approach for intraperiod tax allocations, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

Our adoption of this guidance on January 1, 2020 did not have a material impact.

In March 2020, the FASB issued guidance providing temporary optional expedients and exceptions to ease the financial reporting burden of the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates.

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We continue to evaluate our contractual arrangements and hedging relationships that reference LIBOR.

In October 2021, the FASB issued final guidance changing the measurement of acquired liabilities from contracts with customers in a business combination.

The new guidance requires the recognition of contract liabilities at amounts generally consistent with those recorded by the acquiree immediately before the acquisition date.

Under existing guidance, contract liabilities are measured at fair value, which generally results in a reduction to acquired contract liabilities and therefore lower revenue recognized during the post-acquisition period.

We have elected to early adopt the new guidance as of January 1, 2022, which we will apply to future business acquisitions.

Business Acquisitions

2021 Acquisitions

In August 2020, we completed the acquisition of the registry operations of Neustar Inc.

for total purchase consideration consisting of $ 217.2 million in cash, of which $ 1.3 million will be paid in 2021, and the settlement of $ 19.4 million in pre-existing contractual relationships related to prepaid domain name registry fees.

This acquisition was completed to expand our domains offerings and capabilities on an established registry technology platform.

During 2020, we completed three other acquisitions for aggregate purchase consideration of $ 219.2 million in cash, of which $ 10.2 million is payable in future periods upon expiration of the respective contractual holdback periods.

The aggregate purchase price of these four acquisitions was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of each acquisition date, with the excess recorded to goodwill.

The recognition of goodwill, of which approximately $ 92.0 million is deductible for income tax purposes, was made based on strategic benefits we expect to realize from the acquisitions.

In February 2021, we completed the acquisition of Poynt Co.

(now known as GoDaddy Payments) for $ 297.1 million in cash consideration to expand our commerce capabilities.

GoDaddy Payments offers a suite of products allowing small businesses to sell and accept payments anywhere, including point-of-sale systems, payments, invoicing and transaction management.

At closing, we also paid an additional $ 29.4 million in cash that was recorded as compensation expense during the three months ended March 31, 2021.

The acquisition agreements also call for $ 45.0 million in additional compensatory cash payments subject to certain performance and employment conditions over the three year period following the closing date.

During 2021, we completed two other acquisitions for aggregate purchase consideration of $ 65.7 million in cash paid at closing and additional contingent earn-out payments of up to $ 18.5 million subject to the achievement of certain operational and financial milestones over the two year periods following the respective closing dates.

The aggregate purchase price of these three acquisitions was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of each acquisition date, with the excess recorded to goodwill.

The recognition of goodwill, none of which is deductible for income tax purposes, was made based on strategic benefits we expect to realize from the acquisitions.

During the measurement periods, which will not exceed one year from each closing, we will continue to obtain information, primarily related to income taxes, to assist us in finalizing the acquisition date fair values.

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Cash and cash equivalents 4.2

Domain portfolio indefinite-lived intangible assets 88.5

Contractual-based indefinite-lived intangible assets 67.0

Indefinite-lived intangibles assets 1.3

Finite-lived intangible assets 66.0

Deferred revenue ( 17.1 )

Other assets and liabilities, net ( 0.5 )

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Goodwill $ 310.3

The identified intangible assets, which were valued using income-based approaches, primarily consist of an indefinite-lived domain portfolio, contractual-based assets, developed technology and customer relationships.

The acquired finite-lived intangible assets have a total weighted-average amortization period of 5.5 years.

The identified finite-lived intangible assets, which were valued using either an income or cost-based approach, primarily consist of developed technology and customer relationships, and have a total weighted-average amortization period of 4.1 years.

Pro forma financial information is not presented because these acquisitions were not material to our financial statements, either individually or in the aggregate.

2018 Acquisition of Main Street Hub

In July 2018, we completed the acquisition of Main Street Hub, a social media and reputation management company, for total purchase consideration of $ 182.0 million, including contingent earn-out payments of up to a maximum of $ 50.0 million subject to the achievement of certain revenue and operational milestones.

The acquisition was completed to further our professional services strategy for our customers.

The contingent consideration was recorded at an estimated acquisition date fair value of $ 43.4 million.

The acquisition was not material to our results of operations.

The purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess recorded to goodwill.

The recognition of goodwill, none of which is deductible for income tax purposes, was made based on the strategic and synergistic benefits we expect to realize from the acquisition.

The following table summarizes the final estimated acquisition date fair values of the assets acquired and liabilities assumed:

2020 Acquisitions

In August 2020, we completed the acquisition of the registry operations of Neustar Inc.

for total purchase consideration consisting of $ 217.2 million in cash, of which $ 1.3 million was paid in 2021, and the settlement of $ 19.4 million in pre-existing contractual relationships related to prepaid domain name registry fees.

This acquisition was completed to expand our domains offerings and capabilities on an established registry technology platform.

We paid $ 7.2 million of these holdbacks in 2021.

The recognition of goodwill, of which approximately $ 92.0 million is deductible for income tax purposes, was made based on strategic benefits we expect to realize from the acquisitions.

The following table summarizes the final estimated acquisition date fair values of the aggregate assets acquired and liabilities assumed:

Total purchase consideration $ 455.8

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Cash and cash equivalents 4.5

Intangible assets, net 35.7

Domain portfolio indefinite-lived intangible assets 88.5

Contractual-based indefinite-lived intangible assets 67.0

Finite-lived intangible assets 96.2

Deferred revenue ( 17.1 )

Other assets and liabilities, net ( 20.6 )

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Goodwill $ 237.3

Identified finite-lived intangible assets, which were valued using income-based approaches, consist primarily of developed technology and customer relationships.

The acquired finite-lived intangible assets have a total weighted-average amortization period of 5.5 years.

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Impact of foreign currency translation ( 44.5 )

Other ( 1.4 )

Balance at December 31, 2021 $ 3,540.8

_________________________________

(1) Includes immaterial measurement period adjustments related to acquisitions completed in 2020.

Intangible assets, net are summarized as follows:

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Domain portfolio 250.3 n/a 250.3

Contractual-based assets 67.0 n/a 67.0

Finite-lived intangible assets:

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$ 1,914.3 $ ( 659.2 ) $ 1,255.1

In December 2020, we completed the purchase of a domain portfolio for $ 17.0 million in cash, of which $ 2.0 million will be paid in 2021.

During 2021, we purchased intangible assets for a total of $ 200.1 million in cash.

One of these purchases also includes a variable earn-out payment of up to $ 12.0 million based on the achievement of specified future performance conditions.

The variable earn-out will be recognized only if the future performance conditions are achieved.

These purchases primarily consisted of a number of top-level domains (TLDs), of which $ 186.8 million were recorded as indefinite-lived contractual-based intangible assets.

In December 2020, we completed the purchase of a domain portfolio for $ 17.0 million in cash, of which $ 2.0 million was paid in 2021.

Amortization expense was $ 127.9 million, $ 127.1 million and $ 119.5 million during 2021, 2020 and 2019, respectively.

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Holders of Class A and Class B common stock are entitled to one vote per share and, except as otherwise required, will vote together as a single class on all matters on which stockholders generally are entitled to vote.

We are required to, at all times, maintain (i) a one-to-one ratio between the number of shares of Class A common stock outstanding and the number of LLC Units held by us and (ii) a one-to-one ratio between the number of shares of Class B common stock outstanding and the number of LLC Units held by Desert Newco's other owners.

Shares of Class B common stock are transferable only together with an equal number of LLC Units if we, at the election of an owner, exchange LLC Units for shares of Class A common stock.

Share Repurchase Programs

Our Board has approved certain share repurchase programs allowing us to purchase shares of our Class A common stock from time to time in open market purchases, block transactions and privately negotiated transactions, in accordance with applicable federal securities laws.

The programs have no time limits, do not obligate us to make any repurchases and may be modified, suspended or terminated by us at any time without prior notice.

Share Repurchases

Our Board authorized us to purchase up to $ 2,275.0 million of our Class A common stock from time to time in open market purchases, block transactions and privately negotiated transactions, in accordance with applicable federal securities laws.

This authorization has no time limits, does not obligate us to make any repurchases and may be modified, suspended or terminated by us at any time without prior notice.

The amount and timing of repurchases are subject to a variety of factors including liquidity, share price, market conditions and legal requirements.

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We have elected to record the excess of the repurchase price over par value as a charge to retained earnings (accumulated deficit).

As of December 31, 2020, we had the following approved share repurchase programs:

Board Approval Date Total Authorized Amount (1) ($)

Authorized Amount Remaining ($)

May 2020 500.0 500.0

October 2019 500.0 —

November 2018 500.0 —

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(1) The authorized amounts exclude commissions applicable to any repurchases.

Pursuant to these programs, we made the following open market repurchases of our Class A common stock:

As of December 31, 2021, we had $ 749.2 million of remaining authorization available for repurchases.

In August 2021, we entered into an accelerated share repurchase agreement (ASR) to repurchase shares of our Class A common stock in exchange for an up-front payment of $ 250.0 million.

The total number of shares ultimately delivered under the ASR, and therefore the average repurchase price paid per share, was determined based on the volume weighted-average price of our stock during the purchase period.

The shares received were retired at the time of delivery and the up-front payment was accounted for as a reduction in retained earnings.

The ASR is a forward contract indexed to our Class A common stock and met all of the applicable criteria for equity classification;

therefore, it was not accounted for as a derivative instrument.

The ASR was completed during 2021 and we repurchased a total of 3,425 shares of our Class A common stock at an average price of $ 72.99 per share under this arrangement.

Expenses incurred in connection with the ASR were recorded as a charge to retained earnings.

In addition to the ASR discussed above, we also made the following open market repurchases of our Class A common stock:

Year Ended December 31, Number of Shares Repurchased Aggregate Purchase Price (1)

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2019 7,125 $ 458.6

_________________________________

(1) The aggregate purchase price includes commissions paid in connection with the repurchases.

In January 2022, our Board approved the repurchase of up to an additional $ 2,251.0 million of our Class A common stock.

Such approval was in addition to the amount remaining available for repurchases under prior Board approvals, such that we have authority to repurchase up to $ 3,000.0 million of shares of our Class A common stock.

Under this authority, in February 2022, we entered into a new ASR to repurchase shares of our Class A common stock in exchange for an up-front payment of $ 750.0 million.

The counterparties to this ASR initially delivered 6,532 shares, which were immediately retired.

The total number of shares ultimately delivered under this ASR, and therefore the average repurchase price paid per share, will be determined based on the volume weighted-average price of our stock during the purchase period.

Equity-Based Compensation Plans

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Outstanding at December 31, 2020 3,428 42.79

Granted 154 22.33 68.05

Exercised ( 1,168 ) 36.72 51.0

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Outstanding at December 31, 2018 5,356

Granted 3,152

Financial-based PSUs 450

Vested ( 2,187 )

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Outstanding at December 31, 2019 (1)

Granted 3,057

TSR-based PSUs 414

Vested ( 2,368 )

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Outstanding at December 31, 2020 (1)

Granted 4,157

TSR-based PSUs 426

Vested ( 2,645 )

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RSUs 5,356 70.54

TSR-based PSUs 349 106.14

Financial-based PSUs granted for accounting purposes 223 66.97

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RSUs 6,058 77.37

TSR-based RSUs 349 106.14

TSR-based PSUs 558 107.05

Financial-based PSUs granted for accounting purposes 75 78.62

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Such amounts exclude PSUs not yet considered granted for accounting purposes.

2019 Error Correction

During 2019, we reversed $ 15.6 million of equity-based compensation expense as we determined that we had previously recognized such expense related to certain PSUs prior to the establishment of a grant date for accounting purposes.

We determined the amounts related to the prior periods were immaterial considering both quantitative and qualitative factors.

Deferred Revenue

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Accrued expenses and other current liabilities consisted of the following:

Derivative liabilities $ 216.4 $ 93.8

Accrued payroll and employee benefits $ 124.2 $ 114.8

Derivative liabilities 89.5 216.4

Current portion of operating lease liabilities 36.9 41.5

Tax-related accruals 35.6 38.6

Accrued marketing and advertising 29.9 14.7

Accrued legal and professional 24.4 28.7

Accrued acquisition-related expenses and acquisition consideration payable 24.5 9.4

Accrued legal and professional 23.2 24.4

Accrued marketing and advertising 22.9 29.9

Other 80.5 52.6

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February 15, 2024 $ 1,782.4 $ 1,807.4

2027 Term Loans (effective interest rate of 3.0 % at December 31, 2020)

2027 Term Loans (effective interest rate of 2.4 % at December 31, 2021 and 3.0 % at December 31, 2020)

August 10, 2027 738.8 746.2

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December 1, 2027 600.0 600.0

2029 Senior Notes (effective interest rate of 3.6 % at December 31, 2021)

March 1, 2029 800.0 —

February 15, 2024 — —

Total 3,921.2 3,153.6

unamortized original issue discount on long-term debt (1)

( 13.5 ) ( 13.2 )

unamortized debt issuance costs (1)

unamortized original issue discount and debt issuance costs (1)

( 38.9 ) ( 39.2 )

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_________________________________

(1) Original issue discount and debt issuance costs amortized to interest expense over the life of the related debt instruments using the interest method.

(1) Original issue discount and debt issuance costs are amortized to interest expense over the life of the related debt instruments using the interest method.

Credit Facility

Our secured credit agreement (the Credit Facility) includes our previously-issued term loans (the 2024 Term Loans), a new tranche of term loans issued in August 2020 (the 2027 Term Loans) and a revolving credit facility (the Revolver).

As further described below, in June 2019 we issued 5.25 % unsecured senior notes (the Senior Notes) in an aggregate principal amount of $ 600.0 million, the proceeds of which were used to prepay $ 600.0 million of the outstanding principal balance of the 2024 Term Loans.

The partial prepayment was made in accordance with the contractual terms of the Credit Facility and the terms of the remaining Term Loans were not modified.

As such, the prepayment was considered a partial extinguishment and we wrote off a proportionate amount of the unamortized debt issuance costs and original issue discount, recognizing a $ 14.5 million loss on debt extinguishment.

Concurrent with the issuance of the Senior Notes, we amended the Revolver to increase its borrowing capacity to $ 600.0 million and reduce its interest rate margins, as described below.

In addition, the amendment provided that compliance relating to our first lien secured leverage ratio occurs upon our usage exceeding 20 % of the Revolver, a reduction from the previous level of 35 %.

In connection with this amendment, we capitalized aggregate fees of $ 3.4 million as debt issuance costs.

In October 2019, we refinanced the 2024 Term Loans to lower the interest rate margins by 0.25 %.

The refinanced loans were issued at a 0.125 % discount at original issue, with no changes made to the maturity date or any other terms of the loans.

Fees incurred in connection with the refinancing were not material.

A portion of the term loans is hedged by interest rate swap agreements, as discussed in Note 10.

In August 2020, we amended the Credit Facility to allow for the issuance of the 2027 Term Loans in an aggregate principal amount of $ 750.0 million.

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The 2024 Term Loans bear interest at a rate equal to, at our option, either (a) LIBOR plus 1.75 % per annum or (b) 0.75 % per annum plus the highest of (i) the Federal Funds Rate plus 0.5 %, (ii) the Prime Rate or (iii) one-month LIBOR plus 1.0 %.

A portion of these loans are hedged by an interest rate swap, as discussed in Note 10.

The 2027 Term Loans bear interest at a rate equal to, at our option, either (a) LIBOR plus 2.50 % per annum or (b) 1.5 % per annum plus the highest of (i) the Federal Funds Rate plus 0.5 %, (ii) the Prime Rate or (iii) one-month LIBOR plus 1.0 %.

These loans are hedged by an interest rate swap, as discussed in Note 10.

In March 2021, we refinanced the 2027 Term Loans to lower the interest rate margins by 0.5 % with no changes made to the maturity date or any other terms.

Following this refinancing, the 2027 Term Loans bear interest at a rate equal to, at our option, either (a) LIBOR plus 2.0 % per annum or (b) 1.0 % per annum plus the highest of (i) the Federal Funds Rate plus 0.5 %, (ii) the Prime Rate or (iii) one-month LIBOR plus 1.0 %.

Fees incurred in connection with the refinancing were not material.

The Revolver bears interest at a rate equal to, at our option, either (a) LIBOR plus a margin ranging from 1.25 % to 1.75 % per annum or (b) the higher of (i) the Federal Funds Rate plus 0.5 %, (ii) the Prime Rate or (iii) the one-month LIBOR rate plus 1.0 % plus a margin ranging from 0.25 % to 0.75 % per annum, with the margins determined based on our first lien secured leverage ratio.

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• we are restricted by certain covenants, including, among other things, limitations on our ability to incur additional indebtedness, sell assets, incur additional liens, make certain fundamental changes, pay distributions and make certain investments;

• we are required to maintain certain financial ratios;

• all obligations are unconditionally guaranteed by all of our material domestic subsidiaries and is secured by substantially all of our and such subsidiaries real and personal property.

• with respect to the Revolver, we are required to maintain certain financial ratios when its usage exceeds 20.0 % of the maximum capacity;

• subject to certain exceptions and exclusions, all obligations are unconditionally guaranteed by all of our wholly-owned, material domestic subsidiaries and are secured by substantially all of our and such subsidiaries real and personal property.

At December 31, 2021, we had $ 600.0 million available for borrowing under the Revolver and were not in violation of any covenants of the Credit Facility.

In June 2019, we issued the 2027 Senior Notes in an aggregate principal amount of $ 600.0 million in a private placement offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

The Senior Notes were issued at par and bear interest at 5.25 % per annum, with interest payable semiannually on June 1 and December 1, commencing on December 1, 2019.

The aggregate principal amount outstanding is payable at maturity on December 1, 2027, subject to earlier repurchase or optional redemption as described below.

As described above, the proceeds from the issuance of the Senior Notes were used to prepay $ 600.0 million in aggregate principal amount of our existing Term Loans.

In conjunction with the issuance of the Senior Notes, we capitalized $ 9.7 million in debt issuance costs.

The 2027 Senior Notes were issued at par and bear interest at 5.25 % per annum, with interest payable semiannually on June 1 and December 1.

The aggregate principal amount outstanding is payable at maturity, subject to earlier repurchase or optional redemption as described below.

The 2027 Senior Notes are redeemable at our option, in whole or in part, at any time prior to June 1, 2022 at a redemption price equal to 100.0 % of the principal amount, plus accrued and unpaid interest, plus an applicable premium equal to the greater of 1.0 % and the remaining scheduled payments of interest discounted to a present value amount.

In the event of an equity offering prior to June 1, 2022, the 2027 Senior Notes may be partially redeemed with the net cash proceeds of such offering at our option at an amount equal to 105.25 % of the principal amount, plus accrued and unpaid interest.

On and after June 1, 2022, we may redeem the Senior Notes, in whole or in part, at an amount equal to 102.625 % of the principal amount, decreasing to 101.75 % at June 1, 2023, 100.875 % at June 1, 2024 and 100.0 % thereafter, plus accrued and unpaid interest.

On and after June 1, 2022, we may redeem the 2027 Senior Notes, in whole or in part, at an amount equal to 102.625 % of the principal amount, decreasing to 101.75 % at June 1, 2023, 100.875 % at June 1, 2024 and 100.0 % at June 1, 2025, plus accrued and unpaid interest.

Upon the occurrence of a change of control, we are required to offer to repurchase the 2027 Senior Notes from the holders at a price equal to 101.0 % of the principal amount, plus accrued and unpaid interest.

Significant terms of the Senior Notes are as follows:

In February 2021, we issued the 2029 Senior Notes in an aggregate principal amount of $ 800.0 million in a private placement offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

The 2029 Senior Notes were issued at par and bear interest at 3.5 % per annum, payable annually on March 1 and September 1, commencing on September 1, 2021.

The aggregate principal is payable at maturity, subject to earlier to earlier repurchase or optional redemption as described below.

In conjunction with the issuance of the 2029 Senior Notes, we capitalized $ 9.0 million in debt issuance costs.

The 2029 Senior Notes are redeemable at our option, in whole or in part, any time prior to March 1, 2024 at a redemption price equal to 100.0 % of the principal amount, plus accrued and unpaid interest, plus an applicable premium equal to the greater of 1.0 % or the remaining scheduled payments of interest discounted to a present value amount.

In the event of an equity offering prior to March 1, 2024, the 2029 Senior Notes may be partially redeemed with the net cash proceeds of such offering at our option at an amount equal to 103.5 % of the principal amount, plus accrued and unpaid interest.

On and after March 1, 2024, we may redeem the 2029 Senior Notes, in whole or in part, at an amount equal to 101.75 % of the principal amount, decreasing to 100.875 % at March 1, 2025 and 100.0 % at March 1, 2026, plus accrued and unpaid interest.

Upon the occurrence of a change of control, we are required to offer to repurchase the Senior Notes from the holders at a price equal to 101.0 % of the principal amount, plus accrued and unpaid interest.

Significant terms of the 2027 Senior Notes and 2029 Senior Notes are as follows:

• they are subordinated to our existing secured debt, including the Credit Facility, and any future secured debt we may issue;

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• certain covenants may be suspended if we are able to obtain and maintain investment grade ratings and no event of default has occurred.

At December 31, 2020, we were not in violation of any covenants of the Senior Notes.

The estimated fair values of the 2024 Term Loans, 2027 Term Loans and the Senior Notes were $ 1,804.0 million, $ 750.4 million and $ 633.8 million, respectively, at December 31, 2020 based on observable market prices for these loans, which are traded in less active markets and therefore classified as Level 2 fair value measurements.

At December 31, 2021, we were not in violation of any covenants of the 2027 Senior Notes or the 2029 Senior Notes.

The estimated fair values of our long-term debt instruments are based on observable market prices for these loans, which are traded in less active markets and therefore classified as Level 2 fair value measurements, and were as follows as of December 31, 2021:

2024 Term Loans $ 1,773.5

2027 Term Loans $ 734.2

2027 Senior Notes $ 621.8

2029 Senior Notes $ 794.8

Future Debt Maturities

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(1) The amounts reflected in other income (expense), net include $( 101.8 ) million, $ 119.3 million and $( 28.7 ) million reclassified from AOCI to offset the earnings impact of the remeasurement of the Euro-denominated intercompany loan hedged by the cross-currency swap during 2021, 2020 and 2019, respectively.

As of December 31, 2020, we estimate that approximately $ 9.8 million of net deferred losses related to our cash flow hedges will be recognized in earnings over the next 12 months.

As of December 31, 2021, we estimate that $ 9.3 million of net deferred losses related to our cash flow hedges will be recognized in earnings over the next 12 months.

No amounts were excluded from our effectiveness testing during any of the periods presented.

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Interest Rate Swap Contracts

In April 2017, we entered into a five-year pay-fixed rate, receive-floating rate interest rate swap arrangement to effectively convert a portion of the variable-rate debt to fixed.

This arrangement, which matures on April 3, 2022, had an amortizing notional amount of $ 1,325.4 million at inception and swaps the variable interest rate on our LIBOR-based borrowings for a fixed rate of 5.44 %.

In April 2017, we entered into a five-year pay-fixed rate, receive-floating rate interest rate swap arrangement to effectively convert a portion of the variable-rate borrowings under the 2024 Term Loans to a fixed rate of 5.44 %.

This arrangement, which matures on April 3, 2022, had an amortizing notional amount of $ 1,325.4 million at inception.

In August 2020, in conjunction with the issuance of the 2027 Term Loans discussed in Note 9, we entered into seven-year pay-fixed rate, receive-floating rate interest rate swap arrangements to effectively convert the variable one-month LIBOR interest rate on the 2027 Term Loans borrowings to a fixed rate of 0.705 %.

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As of December 31, 2021, operating leases have a remaining weighted average lease term of 7.4 years and our operating lease liabilities were measured using a weighted average discount rate of 5.0 %.

Finance leases are immaterial.

The components of operating lease expense were as follows:

Year Ended December 31,

2021 2020 2019

Operating lease costs $ 48.2 $ 53.2 $ 55.6

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Net lease costs $ 54.3 $ 59.4 $ 61.4

Total rent expense related to operating leases was $ 38.3 million during 2018.

We recognized an impairment of our operating lease assets during 2020, as discussed in Note 13.

We recognized impairment charges related to certain operating lease assets during 2021 and 2020, as discussed in Note 13.

Maturities of operating lease liabilities as of December 31, 2021 were as follows:

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On September 23, 2019, the parties fully executed a written settlement agreement.

On December 16, 2019, we amended the settlement agreement to include two additional putative class action cases, which also alleged violations of the TCPA:

On December 16, 2019, we amended the settlement agreement to include two additional putative class

action cases, which also alleged violations of the TCPA:

John Herrick v.

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Court (the Court) to refine the class definition, resulting in a reduction in the total number of class members from the original estimated class.

Accordingly, we recorded a $ 2.9 million reduction of our estimated loss provision to general and administrative expense during the three months ended March 31, 2020.

On May 14, 2020, the Court granted approval of the plaintiffs' unopposed motion for preliminary certification of the settlement class, subject to the parties' execution of an amended settlement agreement to remove John Herrick as a class representative.

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Additionally, the actual number of claims made by class members through the October 7, 2020 deadline was lower than our original estimates.

Based primarily on these two factors, we recorded a $ 4.8 million reduction of our estimated loss provision to general and administrative expense during the three months ended September 30, 2020.

On December 23, 2020, the Court issued a final judgment and order approving the class settlement, which further reduced the attorneys' fees to be paid to legal counsel representing the class and denied plaintiffs' request for an incentive payment.

Additionally, the actual notice and administration costs associated with the settlement were lower than originally estimated.

On January 19, 2021, a single objector to the settlement filed a notice of appeal to the 11th Circuit Court of Appeals.

As a result of these developments, we recorded a $ 2.3 million reduction to general and administrative expense during the three months ended December 31, 2020, lowering our estimated loss provision for this settlement to $ 8.1 million at December 31, 2020.

The timing of the payments to be made under the final settlement agreement is pending resolution of the appeal.

Additionally, the actual notice and administration costs were lower than originally estimated.

As a result of the above developments, during 2020, we recorded a cumulative $ 10.0 million reduction to general and administrative expense, lowering our estimated loss provision for this settlement to $ 8.1 million as of December 31, 2020.

On January 19, 2021, a single objector to the settlement filed a notice of appeal to the 11th Circuit Court of Appeals, which remains pending as of the date of this filing.

We made no changes to our estimated loss provision for this settlement during 2021.

The timing of any settlement payments is pending resolution of the appeal.

We have denied and continue to deny the allegations in the complaint.

Nothing in the final settlement agreement shall be deemed to assign or reflect any admission of fault, wrongdoing or liability, or of the appropriateness of a class action in such litigation.

We received a full release from the settlement class (other than from those class members who timely elected to opt out of the settlement) concerning the claims asserted, or that could have been asserted, with respect to the claims released in the final settlement agreement.

We received a full release from the settlement class concerning the claims asserted, or that could have been asserted, with respect to the claims released in the final settlement agreement.

Our legal fees associated with this matter have been recorded to general and administrative expense as incurred and were not material.

The amounts currently accrued for other matters are not material.

While the results of such normal course claims and legal proceedings, regardless of the underlying nature of the claims, cannot be predicted with certainty, management does not believe, based on current knowledge and the likely timing of resolution of various matters, any additional reasonably possible potential losses above the amounts accrued for such matters would be material.

While the results of such normal course claims and legal proceedings, regardless of the underlying nature of the claims, cannot be predicted with certainty, management believes, based on current knowledge and the likely timing of resolution of various matters, any additional reasonably possible potential losses above the amounts accrued for such matters would not be material.

Regardless of the outcome, claims and legal proceedings may have an adverse effect on us because of defense costs, diversion of management resources and other factors.

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Although we believe our indirect tax estimates and associated liabilities are reasonable, the final determination of indirect tax audits, litigation or settlements could be materially different than the amounts established for indirect tax contingencies.

Restructuring Charges

Restructuring and Other

In June 2020, we announced a restructuring plan related to our outbound sales and operations and recorded $ 43.6 million of pre-tax restructuring charges during 2020.

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and (iii) $ 1.1 million of accelerated depreciation and operating lease assets amortization related to the office closures.

We do not expect to record any additional charges related to the restructuring plan.

Cash payments of $ 14.4 million related to the restructuring were made during 2020, and no material amounts remain as of December 31, 2020.

Cash payments of $ 14.4 million related to the restructuring were made during 2020.

Restructuring and other during 2021 includes (i) the $ 15.4 million gain on sale of the land and buildings of our former corporate headquarters and (ii) a $ 15.1 million charge due to the impairment of certain operating lease assets and related leasehold improvements associated with the decision to close one of our leased offices.

Defined Contribution Plan

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Despite its partnership treatment, Desert Newco is liable for income taxes in certain foreign jurisdictions in which it operates, in those states not recognizing its pass-through status and for certain of its subsidiaries not taxed as pass-through entities.

We have acquired the outstanding stock of various domestic and foreign entities taxed as corporations, which are now wholly-owned by us or our subsidiaries.

acquired the outstanding stock of various domestic and foreign entities taxed as corporations, which are now wholly-owned by us or our subsidiaries.

Where required or allowed, these subsidiaries also file and pay tax as a consolidated group for U.S.

federal and state income tax purposes and internationally, primarily within the U.K., Germany and India.

federal and state income tax purposes and internationally, primarily within the United Kingdom (UK), Germany and India.

We anticipate this structure to remain in existence for the foreseeable future.

Benefit for Income Taxes

Our benefit for income taxes includes U.S.

Benefit (Provision) for Income Taxes

Our benefit (provision) for income taxes includes U.S.

federal, state and foreign income taxes.

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Income (loss) before income taxes $ 253.6 $ ( 495.4 ) $ 126.4

Our benefit for income taxes was as follows:

Our benefit (provision) for income taxes was as follows:

Year Ended December 31,

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16.8 25.1 21.1

Benefit for income taxes $ 1.3 $ 12.0 $ 9.0

Benefit (provision) for income taxes $ ( 10.8 ) $ 1.3 $ 12.0

A reconciliation of the statutory U.S.

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2021 2020 2019

Expected provision at U.S.

Expected benefit (provision) at U.S.

federal statutory tax rate $ ( 53.3 ) $ 104.0 $ ( 26.5 )

Research and development credits 75.0 — —

State taxes, net of federal benefit 44.9 ( 1.2 ) 2.1

Effect of investment in Desert Newco ( 50.4 ) 10.4 7.1

Research and development credits 21.9 75.0 —

TRA liability adjustment — ( 5.3 ) 1.7

Foreign earnings ( 0.9 ) ( 5.4 ) 2.1

Effect of changes in tax rates ( 3.6 ) — —

Uncertain tax positions ( 10.7 ) ( 5.6 ) —

State taxes, net of federal benefit ( 31.5 ) 44.9 ( 1.2 )

Other 3.8 0.9 ( 4.3 )

Effect of changes in valuation allowances 113.9 ( 217.6 ) 33.1

Benefit for income taxes $ 1.3 $ 12.0 $ 9.0

Our effective tax rate is driven by changes in valuation allowances based on current year earnings and the impact of foreign earnings primarily related to the U.K., Germany and India jurisdictions.

Benefit (provision) for income taxes $ ( 10.8 ) $ 1.3 $ 12.0

Deferred Taxes

5 unchanged sentences

Operating lease liabilities 19.4 22.7

TRA liability — 24.4

Other 6.1 4.7

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Net DTLs $ ( 70.0 ) $ ( 86.8 )

As a result of the organizational transactions completed prior to our initial public offering (IPO), we acquired LLC Units and recognized a DTA for the difference between the financial reporting and tax basis of our investment in Desert Newco.

During 2019, the DTAs associated with our investment increased $ 113.7 million due to exchanges of LLC Units and stock option exercises, and we recorded additional DTAs of $ 94.4 million as a result of our portion of Desert Newco's tax losses.

During 2020, the DTAs associated with our investment increased $ 130.5 million due to exchanges of LLC Units and stock option exercises, and we recorded additional DTAs of $ 70.0 million as a result of our portion of Desert Newco's tax losses.

On March 11, 2021, the U.S.

federal government enacted the Coronavirus Aid, Relief and Economic Security Act (the CARES Act) and on December 21, 2020 enacted the Consolidated Appropriations Act, 2021, neither of which had a material impact on our benefit for income taxes.

During 2020, we completed a research and development (R&D) tax credit study for the 2017, 2018 and 2019 tax years, which resulted in a total tax credit of $ 79.6 million.

However, we do not have sufficient tax liability to utilize the majority of these tax credits;

therefore, we have established tax credit carryforwards of $ 77.8 million.

We generated additional R&D tax credits in 2020 and expect to do so on a go forward basis.

federal government enacted the American Rescue Plan Act of 2021, which did not have a material impact on our provision for income taxes.

On June 10, 2021, the UK enacted legislation increasing its corporate income tax rate to 25%, beginning in April 2023, which did not have a material impact on our provision for income taxes.

In determining the need for a valuation allowance, we prepare quarterly estimates using historical and forecasted future operating results, based upon approved business plans, including a review of the eligible carryforward periods and tax planning strategies.

Based primarily on the negative evidence outweighing the positive evidence as of December 31, 2020, including our three year cumulative GAAP loss, our historical tax losses and the difficulty in forecasting excess tax benefits related to equity-based compensation, we believe there is uncertainty as to when we will be able to utilize certain of our NOLs, credit carryforwards and other DTAs.

Based primarily on the negative evidence outweighing the positive evidence as of December 31, 2021, including our three year cumulative, consolidated GAAP loss, our historical tax losses and the difficulty in forecasting excess tax benefits related to equity-based compensation, we believe there is uncertainty as to when we will be able to utilize certain of our net operating losses (NOLs), credit carryforwards and other DTAs.

Therefore, we have recorded a valuation allowance against the DTAs for which we have concluded it is more-likely-than-not they will not be realized.

Should our operating results continue to improve and projections show utilization of the tax attributes, we would consider that as significant positive evidence and our future reassessment would likely result in the determination that a valuation allowance is no longer required.

We believe sufficient positive evidence may arise in 2021 such that we would release substantially all of the federal and state valuation allowance.

If this were to occur, it would result in a reversal of substantially all of the valuation allowance with a corresponding non-cash income tax benefit, thereby increasing the total DTAs.

Should our operating results continue to improve and projections show continued utilization of the tax attributes, we would consider that as significant positive evidence and our future reassessment may result in the determination that all or a portion of the valuation allowance is no longer required.

If this were to occur, any reversal of the valuation allowance would result in a corresponding non-cash income tax benefit, thereby increasing total DTAs.

As of December 31, 2021, we had U.S.

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Gross NOLs, Credits and Incentives Portion Subject to a Valuation Allowance

Federal NOLs and credits $ 2,112.3 $ 2,112.3

State NOLs, credits and incentives 2,586.4 2,586.4

Foreign NOLs 36.0 23.9

Total NOLs, credits and incentives $ 4,734.7 $ 4,722.6

Federal $ 2,375.9 2,369.1

State 2,788.3 2,788.2

Foreign 42.5 35.9

$ 5,206.7 $ 5,193.2

As of December 31, 2021, we have provided income taxes on the earnings of foreign subsidiaries, except to the extent such earnings are considered indefinitely reinvested.

2 unchanged sentences

Our liability for unrecognized tax benefits was as follows:

(revised) (1)

Balance at beginning of period $ 51.8 $ 8.4

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Balance at end of period $ 120.7 $ 51.8

_________________________________

(1) The amounts for 2020 were revised to exclude interest and penalties, which are required to be excluded from the liability for unrecognized tax benefits.

The total amount of gross unrecognized tax benefits was $ 120.7 million as of December 31, 2021, of which $ 30.5 million, if fully recognized, would decrease our effective tax rate.

We recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense.

No material amounts were recognized during any of the periods presented.

Other long-term liabilities includes accrued interest and penalties related to unrecognized tax benefits of $ 19.0 million and $ 14.9 million as of December 31, 2021 and 2020, respectively.

We do not expect a significant decrease in our liability for unrecognized tax benefits in the next 12 months.

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Payable Pursuant to the TRAs

Concurrent with the completion of our IPO, we became a party to five TRAs with our pre-IPO owners.

Concurrent with the completion of our initial public offering (IPO), we became a party to five TRAs with our pre-IPO owners.

Under the TRAs, we were generally required to pay to such owners approximately 85 % of the amount of calculated tax savings, if any, we were deemed to realize based on the relevant tax benefits allocated to us as a result of our acquisition of their LLC Units in the pre-IPO organizational transactions or from subsequent exchanges of their LLC Units (together with the corresponding shares of Class B common stock) for shares of our Class A common stock.

2 unchanged sentences

We recorded a charge of $ 674.7 million to our statements of operations during 2020 to adjust the liability under the TRAs from $ 175.3 million to the aggregate settlement amount.

No amounts remain payable under the TRAs as of December 31, 2021.

As a result of the TRA Settlement Agreements, we retained all of the future cash tax savings from the utilization of the tax attributes we acquired as a result of acquisitions or exchanges of LLC Units subject to the TRAs.

1 unchanged sentence

Unutilized deductions related to these items are converted to NOL carryforwards.

Upon execution of the TRA Settlement Agreements, we generated approximately $ 180.0 million in additional DTAs.

However, given that the negative evidence, including cumulative tax losses in recent years, continues to outweigh the positive evidence, we recorded a full valuation allowance against these DTAs.

Upon execution of the TRA Settlement Agreements, we generated approximately $ 180.0 million in additional DTAs, which were reduced by a full valuation allowance.

See Note 15 for additional discussion of the valuation allowances associated with our DTAs.

42 unchanged sentences

Property and equipment, net by geography was as follows:

Year Ended December 31,

France 23.8 27.0

9 unchanged sentences

Amounts reclassified from AOCI — ( 114.4 ) ( 114.4 )

Other comprehensive income (loss) - 2019 37.7 ( 1.9 ) 35.8

Other comprehensive loss - 2020 ( 44.2 ) ( 8.5 ) ( 52.7 )

$ ( 98.8 ) $ ( 32.8 ) ( 131.6 )

5 unchanged sentences

Amounts reclassified from AOCI — 84.0 84.0

Other comprehensive income (loss) - 2020 ( 44.2 ) ( 8.5 ) ( 52.7 )

Other comprehensive income - 2021 45.9 47.0 92.9

$ ( 52.9 ) $ 14.2 ( 38.7 )

5 unchanged sentences

See Note 10 for the effect on net income of amounts reclassified from AOCI related to our cash flow hedging instruments.

The income tax impact associated with these reclassified amounts was not material in any period presented.

Subsequent Events

In February 2021, we acquired Poynt Co.

for $ 329.2 million in cash paid at closing and an additional $ 45.0 million in deferred cash payments subject to certain performance and employment conditions over the three years subsequent to the closing date.

Poynt offers a suite of products allowing small businesses to sell and accept payments anywhere, including point-of-sale systems, payments, invoicing and transaction management.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data