What changed in this filing

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Item 1. Financial Statements

2022-07-28 compared with 2022-04-28 · 54 added, 37 removed, 236 unchanged (28% of the section changed)

34 unchanged sentences

Issued shares:

354.4 at March 31, 2022 and 354.2 at December 31, 2021;

354.4 at June 30, 2022 and 354.2 at December 31, 2021;

Outstanding shares:

109.8 at March 31, 2022 and 110.5 at December 31, 2021

107.8 at June 30, 2022 and 110.5 at December 31, 2021

13,100.9 13,620.1

7 unchanged sentences

(In millions, except per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Revenues $ 351.9 $ 329.4 $ 698.8 $ 653.0

6 unchanged sentences

Interest expense ( 18.9 ) ( 23.1 ) ( 37.7 ) ( 45.6 )

Non-operating income, net 0.3 0.4

Non-operating income (loss), net 1.6 ( 2.0 ) 1.9 ( 1.6 )

Income before income taxes 218.7 187.9 425.0 376.2

1 unchanged sentence

Net income 167.3 147.7 324.8 298.1

Other comprehensive loss ( 0.2 ) —

Other comprehensive income (loss) 0.1 ( 0.1 ) ( 0.1 ) ( 0.1 )

Comprehensive income $ 167.4 $ 147.6 $ 324.7 $ 298.0

9 unchanged sentences

(In millions)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Total stockholders’ deficit, beginning of period $ ( 1,285.1 ) $ ( 1,403.8 ) $ ( 1,260.5 ) $ ( 1,390.2 )

11 unchanged sentences

Beginning balance ( 3.0 ) ( 2.8 ) ( 2.8 ) ( 2.8 )

Other comprehensive loss ( 0.2 ) —

Other comprehensive income (loss) 0.1 ( 0.1 ) ( 0.1 ) ( 0.1 )

Balance, end of period ( 2.9 ) ( 2.9 ) ( 2.9 ) ( 2.9 )

4 unchanged sentences

(In millions)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

18 unchanged sentences

Proceeds from employee stock purchase plan 8.2 8.1

Repayment of borrowings — ( 750.0 )

Proceeds from senior note issuance, net of issuance costs — 742.3

Net cash used in financing activities ( 547.9 ) ( 360.8 )

22 unchanged sentences

The following table summarizes the Company’s cash, cash equivalents, and marketable securities and the fair value categorization of the financial instruments measured at fair value on a recurring basis:

March 31, December 31,

June 30, December 31,

(In millions)

11 unchanged sentences

The gross and net unrealized gains and losses included in the fair value of the debt securities were not significant for the periods presented.

All of the debt securities held as of March 31, 2022 are scheduled to mature in less than one year.

All of the debt securities held as of June 30, 2022 are scheduled to mature in less than one year.

Fair Value Measurements

6 unchanged sentences

The Company’s other financial instruments include cash, accounts receivable, restricted cash, and accounts payable.

As of March 31, 2022, the carrying value of these financial instruments approximated their fair value.

The fair values of the senior notes due 2025, 2027, and 2031 were $ 524.8 million, $ 562.0 million, and $ 688.3 million, respectively, as of March 31, 2022.

As of June 30, 2022, the carrying value of these financial instruments approximated their fair value.

The fair values of the senior notes due 2025, 2027, and 2031 were $ 505.4 million, $ 538.8 million, and $ 604.3 million, respectively, as of June 30, 2022.

The fair values of these debt instruments are based on available market information from public data sources and are classified as Level 2.

2 unchanged sentences

Other current assets consist of the following:

March 31, December 31,

June 30, December 31,

(In millions)

1 unchanged sentence

Prepaid registry fees 24.6 24.2

Accounts receivable, net 5.2 5.3

Taxes receivable 6.3 7.7

Accounts receivable, net 4.3 5.3

Other 0.8 0.9

2 unchanged sentences

Other long-term assets consist of the following:

March 31, December 31,

June 30, December 31,

(In millions)

Long-term prepaid expenses $ 8.8 $ 11.0

Long-term prepaid registry fees 8.6 8.7

Operating lease right-of-use asset $ 8.7 $ 8.4

Long-term prepaid registry fees 8.3 8.7

Long-term prepaid expenses 7.5 11.0

Restricted cash 5.3 5.3

3 unchanged sentences

com domain name registrations and renewals which are deferred and amortized over the domain name registration term.

The amount of prepaid registry fees as of March 31, 2022 reflects amortization of $ 9.8 million during the three months ended March 31, 2022 which was recorded in Cost of Revenues.

The amount of prepaid registry fees as of June 30, 2022 reflects amortization of $ 9.9 million and $ 19.7 million during the three and six months ended June 30, 2022 which was recorded in Cost of Revenues.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following:

March 31, December 31,

June 30, December 31,

(In millions)

Accounts payable and accrued expenses $ 8.9 $ 9.0

Taxes payable 66.1 26.8

Customer deposits 60.4 77.3

Accrued employee compensation 40.5 58.5

Taxes payable 25.5 26.8

Interest payable 19.5 19.5

3 unchanged sentences

Total accounts payable and accrued liabilities $ 184.3 $ 226.6

Taxes payable reflects amounts accrued for the income tax provision and payments made during the period.

This balance fluctuates from period to period due to the timing of income tax payments in the Company’s major tax jurisdictions.

The balance of Customer deposits varies from period to period due to the timing of payments from certain large customers.

Accrued employee compensation primarily consists of liabilities for employee leave, salaries, payroll taxes, employee contributions to the employee stock purchase plan, and incentive compensation.

Accrued employee incentive compensation as of December 31, 2021 was paid during the three months ended March 31, 2022.

Interest payable varies at each period-end based on the payment due dates for each senior note issuance.

Accrued employee incentive compensation as of December 31, 2021 was paid during the six months ended June 30, 2022.

Customer incentives payable includes amounts related to rebates payable to registrars.

These amounts may vary from period to period due to the timing of payments and the amount of rebates earned.

Long-term Tax and Other Liabilities

Long-term tax and other liabilities consist of the following:

June 30, December 31,

(In millions)

Long-term tax liabilities $ 62.6 $ 76.1

Long-term operating lease liabilities 2.2 2.5

Long-term tax and other liabilities $ 64.8 $ 78.6

Long-term tax liabilities as of June 30, 2022 reflects a $ 14.5 million reclassification from long-term to current of the next installment of the transition tax liability on accumulated foreign earnings resulting from the 2017 Tax Cuts and Jobs Act.

Stockholders’ Deficit

2 unchanged sentences

Purchases made under the program could be effected through open market transactions, block purchases, accelerated share repurchase agreements or other negotiated transactions.

During the three months ended March 31, 2022, the Company repurchased 0.9 million shares of its common stock at an average stock price of $ 218.50 .

The aggregate cost of the repurchases in the three months ended March 31, 2022 was $ 195.5 million.

As of March 31, 2022, there was $ 892.6 million remaining available for future share repurchases under the share repurchase program.

During the three months ended March 31, 2022, the Company placed less than 0.1 million shares, at an average stock price of $ 214.35 , and for an aggregate cost of $ 9.1 million, into treasury stock for purposes related to tax withholding upon vesting of Restricted Stock Units (“RSUs”).

During the three and six months ended June 30, 2022, the Company repurchased 2.0 million shares and 2.9 million shares of its common stock, respectively, at an average stock price of $ 176.51 and $ 189.58 , respectively.

The aggregate cost of the repurchases in the three and six months ended June 30, 2022 was $ 349.5 million and $ 545.0 million, respectively.

As of June 30, 2022, there was $ 543.1 million remaining available for future share repurchases under the share repurchase program.

During the six months ended June 30, 2022, the Company placed less than 0.1 million shares, at an average stock price of $ 203.78 , and for an aggregate cost of $ 11.2 million, into treasury stock for purposes related to tax withholding upon vesting of Restricted Stock Units (“RSUs”).

Since inception, the Company has repurchased 246.6 million shares of its common stock for an aggregate cost of $ 12.26 billion, which is presented as a reduction of Additional paid-in capital.

1 unchanged sentence

The following table presents the computation of weighted-average shares used in the calculation of basic and diluted earnings per share:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(In millions)

3 unchanged sentences

Shares used to compute diluted earnings per share 108.8 112.5 109.6 112.9

The calculation of diluted weighted average shares outstanding excludes performance-based RSUs granted by the Company for which the relevant performance criteria have not been achieved.

The calculation of diluted weighted average shares outstanding excludes performance-based RSUs granted by the Company for which the relevant performance criteria have not been achieved and any awards that are antidilutive.

The number of potential shares excluded from the calculation was not significant in any period presented.

3 unchanged sentences

The following table presents our revenues disaggregated by geography, based on the billing addresses of our customers:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(In millions)

9 unchanged sentences

Deferred Revenues

As payment for domain name registrations and renewals are due in advance of our performance, we record these amounts as deferred revenues.

The increase in the deferred revenues balance for the three months ended March 31, 2022 was primarily driven by amounts billed in the three months ended March 31, 2022 for domain name registrations and renewals to be recognized as revenues in future periods, offset by refunds for domain name renewals deleted during the 45-day grace period, and $ 309.1 million of revenues recognized that were included in the deferred revenues balance at the beginning of the period.

The balance of deferred revenues as of March 31, 2022 represents our aggregate remaining performance obligations.

As payments for domain name registrations and renewals are due in advance of our performance, we record these amounts as deferred revenues.

The increase in the deferred revenues balance for the six months ended June 30, 2022 was primarily driven by amounts billed in the six months ended June 30, 2022 for domain name registrations and renewals to be recognized as revenues in future periods, offset by refunds for domain name renewals deleted during the 45-day grace period, and $ 549.5 million of revenues recognized that were included in the deferred revenues balance at the beginning of the period.

The balance of deferred revenues as of June 30, 2022 represents our aggregate remaining performance obligations.

Amounts included in current deferred revenues are all expected to be recognized in revenues within 12 months, except for a portion of deferred revenues that relates to domain name renewals that are deleted in the 45-day grace period following the transaction.

3 unchanged sentences

The following table presents the classification of stock-based compensation:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(In millions)

6 unchanged sentences

The following table presents the nature of the Company’s total stock-based compensation:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(In millions)

1 unchanged sentence

Performance-based RSUs 2.5 2.9 5.7 5.4

ESPP 1.0 1.0 2.1 2.1

Total stock-based compensation $ 14.2 $ 14.1 $ 28.7 $ 27.4

The following table presents Income tax expense and the effective tax rate:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

(Dollars in millions)

3 unchanged sentences

taxes on foreign earnings, net of foreign tax credits, offset by a lower foreign effective tax rate.

The effective tax rate in the three and six months ended June 30, 2022 reflects an increased foreign effective tax rate primarily as a result of the transfer of intellectual property between certain non-U.S.

subsidiaries that took place in the fourth quarter of 2021.

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-Q

Item 1. Financial Statements