Reglikedomain industry desk

To push GoDaddy to expand margins — Starboard continues

To push GoDaddy to expand margins — Starboard continues

Investor demands attainable growth targets with improved margins.

Chart showing moderate growth, high recurring revenue technology firms and price divided by their 2024 estimated free cash flow. It shows GoDaddy at 12.2x, below many other firms.

Activist investor Starboard has sent another letter (pdf) to GoDaddy’s (NYSE: GDDY) management and board, pushing the firm to hit growth and margin targets.

The investor first revealed a 6.5% stake in GoDaddy in 2021. Last year, it sent an open letter to the firm admonishing it for missing revenue growth targets and demanding that it make significant cost cuts.

In the letter, Starboard pats GoDaddy on the back for recent performance but states it’s closely watching the Q4 earnings call and March’s Investor Day.

It wants GoDaddy to target a 40% growth-plus-profitability measure for 2025, which it states is in-line with peers. At the same time, it doesn’t want to see a repeat of last year’s Investor Day, in which it set growth targets that it missed. (The letter referred to 2022’s Investor Day, but the letter it sent last year was regarding 2023 Investor Day targets, so it’s unclear which year it’s referring to. To be fair to GoDaddy, it was very difficult to forecast growth coming out of the pandemic, which saw unprecedented demand for websites and domain names.)

Starboard continues to push for margin expansion and cost-cutting.

Finally, Starboard recommends that GoDaddy continue to plow free cash flows back into share repurchases of GoDaddy’s “undervalued shares”.

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