As GoDaddy moves toward an initial public offering, the company faces a vexing problem: So many potential investors still think of it only as that place with the notoriously risqué ads where they can buy domain names.
Yet with each amended prospectus, it is trying to change that impression.
On Thursday, GoDaddy published its latest I.P.O. document with second-quarter numbers, showing that its newer businesses are slowly making up more of its revenue. Newer offerings — Web hosting products and various business applications — grew more quickly than its core domain registrar business.
The applications unit, which includes specialized Microsoft Office 365 offerings, grew nearly 11 percent from the first quarter, more than doubling the domain business.
Over all, the two newer business account for about 44 percent of the company’s total sales, up from 40 percent at the end of last year.
That could be important for the prospects of GoDaddy as it prepares to become a public company and entice prospective investors. Its majority owners for the past three years — the private equity firms Silver Lake, Kohlberg Kravis Roberts and Technology Crossover Ventures — are hoping to take advantage of relatively buoyant stock markets that have supported a wave of I.P.O.s this year, particularly those of companies owned by private equity shops.
Under the investment firms’ ownership, GoDaddy has moved to become less dependent on the business that made it a multibillion-dollar enterprise. Led by Blake Irving, a former Yahoo executive, the company has sought to do more than reserve and manage customers’ Internet domain names; it has embarked on what it calls a strategy that encompasses everything customers want to do with their online property, including building websites and managing their social media presences.
(That’s on top of a shift in the company’s advertising. Goodbye, controversial ads featuring scantily clad women known as “GoDaddy Girls.” Hello, Jean-Claude Van Damme doing a split while playing bongo drums.)
Emphasizing those services, the company argues in its prospectus that it’s more and more a software services company for 12 million customers and not just a place to reserve a dot-com domain.
That effort has helped to increase sales: As of the six months that ended June 30, the company reported $658.7 million in revenue, up 22 percent from the same time a year ago. And adjusted earnings before interest, taxes, depreciation and amortization for the first half of 2014, which also excludes a number of other noncash charges, rose 26 percent to $143.5 million.
Using generally accepted accounting principles, the picture for GoDaddy looks less attractive. The company reported nearly $89 million in losses for the first half, up slightly from the same time last year.
And the company carries roughly $1.4 billion in long-term debt, including borrowings taken on during its leveraged buyout and from earlier this year, when it paid a $350 million dividend to its private equity owners.
But management would probably argue that the company generates significant cash flow that can easily cover interest payments. GoDaddy reported $113.4 million in unlevered free cash flow for the first half of the year, while its interest expenses amounted to $38.2 million.
Thursday’s amended prospectus didn’t disclose some major elements of the forthcoming I.P.O., including how much money GoDaddy plans to raise, on which exchange it will trade or what its new stock ticker symbol will be.