What changed in this filing

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Item 1. Financial Statements

2023-10-26 compared with 2023-07-27 · 62 added, 36 removed, 263 unchanged (27% of the section changed)

3 unchanged sentences

(In millions, except par value)

September 30,

2023 December 31,

29 unchanged sentences

Issued shares:

354.8 at June 30, 2023 and 354.5 at December 31, 2022;

354.8 at September 30, 2023 and 354.5 at December 31, 2022;

Outstanding shares:

103.4 at June 30, 2023 and 105.3 at December 31, 2022

102.4 at September 30, 2023 and 105.3 at December 31, 2022

12,020.7 12,644.5

7 unchanged sentences

(In millions, except per share data)

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

11 unchanged sentences

Net income 188.5 169.5 552.9 494.3

Other comprehensive (loss) income ( 0.7 ) 0.1 ( 0.7 ) ( 0.1 )

Other comprehensive income (loss) 0.4 0.2 ( 0.3 ) 0.1

Comprehensive income $ 188.9 $ 169.7 $ 552.6 $ 494.4

9 unchanged sentences

(In millions)

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

13 unchanged sentences

Beginning balance ( 3.4 ) ( 2.9 ) ( 2.7 ) ( 2.8 )

Other comprehensive (loss) income ( 0.7 ) 0.1 ( 0.7 ) ( 0.1 )

Other comprehensive income (loss) 0.4 0.2 ( 0.3 ) 0.1

Balance, end of period ( 3.0 ) ( 2.7 ) ( 3.0 ) ( 2.7 )

4 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

14 unchanged sentences

Purchases of property and equipment ( 40.8 ) ( 19.7 )

Net cash provided by investing activities 11.5 579.4

Net cash (used in) provided by investing activities ( 201.5 ) 546.0

Cash flows from financing activities:

25 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:

June 30, December 31,

September 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 June 30, 2023 are scheduled to mature in less than one year.

All of the debt securities held as of September 30, 2023 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 June 30, 2023, the carrying value of these financial instruments approximated their fair value.

The aggregate fair value of the Company’s senior notes is $ 1.66 billion and $ 1.65 billion as of June 30, 2023 and December 31, 2022, respectively.

As of September 30, 2023, the carrying value of these financial instruments approximated their fair value.

The aggregate fair value of the Company’s senior notes is $ 1.62 billion and $ 1.65 billion as of September 30, 2023 and December 31, 2022, respectively.

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:

June 30, December 31,

September 30, December 31,

(In millions)

2 unchanged sentences

Accounts receivable, net 4.6 6.2

Taxes receivable 1.6 1.9

Unrealized gain on foreign currency forward contracts 4.5 0.2

Other 2.4 3.3

2 unchanged sentences

Other long-term assets consist of the following:

June 30, December 31,

September 30, December 31,

(In millions)

Long-term prepaid registry fees $ 8.7 $ 9.1

Operating lease right-of-use asset $ 8.8 $ 7.2

Long-term prepaid registry fees 8.6 9.1

Restricted cash 5.3 5.4

6 unchanged sentences

Accounts payable and accrued liabilities consist of the following:

June 30, December 31,

September 30, December 31,

(In millions)

6 unchanged sentences

Customer incentives payable 7.4 7.1

Current operating lease liabilities 5.6 5.5

Other accrued liabilities 2.6 3.5

2 unchanged sentences

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, 2022 was paid during the six months ended June 30, 2023.

Accrued employee incentive compensation as of December 31, 2022 was paid during the nine months ended September 30, 2023.

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.

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

Property Plant and Equipment, net

The following table presents the detail of property and equipment, net:

September 30, December 31,

(In millions)

Computer equipment and software $ 411.7 $ 402.7

Buildings and building improvements 260.2 257.5

Land 37.9 31.1

Office equipment and furniture 11.0 10.4

Capital work in progress 15.3 3.6

Leasehold improvements 1.6 1.5

Total cost 737.7 706.8

accumulated depreciation ( 499.5 ) ( 474.8 )

Total property and equipment, net $ 238.2 $ 232.0

In July 2023, the Company purchased a building in Reston, Virginia to be used as its future corporate headquarters for $ 19.8 million.

Based on a valuation of the property, $ 13.0 million of the total purchase price was allocated to the building which is included in capital work in progress in the table above due to ongoing construction.

The remaining $ 6.8 million was allocated to land.

Long-term Tax and Other Liabilities

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

June 30, December 31,

September 30, December 31,

(In millions)

2 unchanged sentences

Long-term tax and other liabilities $ 45.4 $ 62.1

Long-term tax liabilities as of June 30, 2023 reflects a $ 19.3 million reclassification to current liabilities of the next installment of the transition tax liability on accumulated foreign earnings resulting from the 2017 Tax Cuts and Jobs Act.

Long-term tax liabilities as of September 30, 2023 reflects a $ 19.3 million reclassification to current liabilities of the next installment of the transition tax liability on accumulated foreign earnings resulting from the 2017 Tax Cuts and Jobs Act.

Share Repurchases

Effective October 27, 2022, our Board of Directors authorized the repurchase of our common stock in the amount of $ 803.0 million in addition to the $ 197.0 million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $ 1.00 billion under the program.

Effective July 27, 2023, the Company’s Board of Directors authorized the repurchase of its common stock in the amount of $ 1.14 billion, in addition to the $ 356.1 million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $ 1.50 billion under the program.

The program has no expiration date.

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

As of June 30, 2023 there was approximately $ 418.9 million remaining available for repurchases under the program.

As of September 30, 2023 there was approximately $ 1.34 billion remaining available for repurchases under the program.

The Company’s share repurchases are as following.

Amounts may not add up due to rounding:

Three Months Ended June 30, 2023 Six Months Ended June 30, 2023

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Shares Total Costs Average Price Shares Total Costs Average Price

5 unchanged sentences

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022.

In the first half of 2023, the Company reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in Accounts payable and accrued liabilities on our Condensed Consolidated Balance Sheet as of June 30, 2023.

In the nine months ended September 30, 2023, the Company reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in

Accounts payable and accrued liabilities on our Condensed Consolidated Balance Sheet as of September 30, 2023.

The share repurchase and authorization amounts disclosed in this Form 10-Q exclude the excise tax.

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

10 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

11 unchanged sentences

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, 2023 was primarily driven by amounts billed in the six months ended June 30, 2023 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 $ 576.6 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, 2023 represents our aggregate remaining performance obligations.

The increase in the deferred revenues balance for the nine months ended September 30, 2023 was primarily driven by amounts billed in the nine months ended September 30, 2023 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 $ 755.4 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 September 30, 2023 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

7 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

5 unchanged sentences

Non-operating Income, Net

Non-operating income, net, primarily consists of interest income from the Company’s surplus cash balances and marketable securities.

Interest income was $ 11.5 million and $ 22.2 million during the three and six months ended June 30, 2023, respectively, compared to $ 1.5 million and $ 1.8 million during the same periods in 2022.

The increase in interest income in the first half of 2023 reflects higher interest rates on the Company’s investments in debt securities.

The following table presents the components of Non-operating income, net:

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

(In millions)

Interest income $ 11.6 $ 4.6 $ 33.8 $ 6.4

Other, net 1.5 0.3 3.3 0.4

Total non-operating income, net $ 13.1 $ 4.9 $ 37.1 $ 6.8

Interest income is earned principally from the Company’s surplus cash balances and marketable securities.

The increase in interest income during the three and nine months ended September 30, 2023 reflects higher interest rates on the Company’s investments in debt securities.

The increase in other non-operating income, net, during the three and nine months ended September 30, 2023 primarily reflects net gains and losses from the Company’s foreign currency exposure and related hedges.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

2 unchanged sentences

Effective tax rate 24 % 24 % 24 % 24 %

The effective tax rate for each of the periods in the table above differed from the statutory federal rate of 21 %, due to state income taxes and U.S.

The effective tax rate for each of the periods in the table above was higher than the statutory federal rate of 21 %, due to state income taxes and U.S.

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

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