GoDaddy Inc.GDDY
GoDaddy Inc. Income Taxes Disclosure
Income Taxes
Overview
On December 11, 2023, we completed a series of transactions (the DNC Restructure) designed to simplify our then-existing capital structure, commonly referred to as an "Up-C" structure, and provide us with additional strategic flexibility. Completion of these transactions resulted in Desert Newco becoming a wholly-owned subsidiary of GoDaddy Inc. Subsequent to the DNC Restructure, on January 1, 2024, Desert Newco was converted from a partnership to a disregarded entity and as a result we are now treated as a consolidated C corporation group for U.S. income tax purposes.
On July 4, 2025, the U.S. enacted H.R. 1 (One Big Beautiful Bill Act, or The Act). The Act includes, among other provisions, changes to the U.S. corporate income tax system including allowing immediate expensing of qualifying research and development expenses and permanently extending certain provisions within the Tax Cuts and Jobs Act. The provisions which became effective beginning July 1, 2025 have been incorporated into our results for the year ended December 31, 2025.
Benefit (Provision) for Income Taxes
Our benefit (provision) for income taxes includes U.S. federal, state and foreign income taxes. The domestic and foreign components of our income (loss) before income taxes were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. | $ | 984.6 | $ | 829.0 | $ | 477.2 | |||||||||||
| Foreign | 35.4 | (63.6) | (73.4) | ||||||||||||||
| Income before income taxes | $ | 1,020.0 | $ | 765.4 | $ | 403.8 | |||||||||||
Our benefit (provision) for income taxes was as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
Federal | $ | — | $ | 0.3 | $ | (0.8) | |||||||||||
State | (2.9) | 0.1 | (5.4) | ||||||||||||||
Foreign | 15.5 | (18.9) | (14.9) | ||||||||||||||
| 12.6 | (18.5) | (21.1) | |||||||||||||||
| Deferred: | |||||||||||||||||
Federal | (152.0) | 145.1 | 860.5 | ||||||||||||||
State | (14.5) | 18.5 | 116.3 | ||||||||||||||
Foreign | 8.9 | 26.4 | 16.1 | ||||||||||||||
| (157.6) | 190.0 | 992.9 | |||||||||||||||
| Benefit (provision) for income taxes | $ | (145.0) | $ | 171.5 | $ | 971.8 | |||||||||||
The following table presents a reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to our income before income taxes:
| Year Ended December 31, 2025 | |||||||||||
| Amount | % of Income Before Income Taxes | ||||||||||
| U.S. federal statutory tax rate | $ | (214.2) | 21.0 | % | |||||||
State and local income taxes, net(1) | (11.7) | 1.1 | % | ||||||||
| Tax credits: | |||||||||||
| Research and development tax credits | 33.3 | (3.3) | % | ||||||||
| Changes in unrecognized tax benefits | 11.0 | (1.1) | % | ||||||||
| Nontaxable or nondeductible items: | |||||||||||
| Tax effect of equity-based compensation | 48.2 | (4.7) | % | ||||||||
| Other nontaxable or nondeductible items | (6.8) | 0.7 | % | ||||||||
| Other | (4.8) | 0.5 | % | ||||||||
| Effective tax rate | $ | (145.0) | 14.2 | % | |||||||
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(1)State taxes in California, New York, Florida, Illinois, and Virginia made up the majority of the tax effect in this category.
We generated an income tax provision of $145.0 million in 2025 as compared to an income tax benefit of $171.5 million in 2024, primarily attributable to the effects of the DNC Restructure. Our 2025 effective tax rate is primarily driven by current year earnings taxed at our federal and state tax rate, offset by a benefit for current year research and development credits and excess tax benefits related to stock-based compensation.
A reconciliation of the statutory U.S. federal income tax rate to our effective income tax rate was as follows:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Expected provision at U.S. federal statutory tax rate | $ | (160.7) | $ | (84.8) | |||||||
| Effect of investment in Desert Newco | — | 22.7 | |||||||||
| Research and development credits | 46.1 | 33.1 | |||||||||
| Effect of changes in tax rates and apportionment | — | (97.1) | |||||||||
| Uncertain tax positions | (6.8) | (17.1) | |||||||||
| State taxes, net of federal benefit | (19.1) | (1.6) | |||||||||
| Equity-based compensation | 43.3 | — | |||||||||
| Effect of DNC Restructure | 267.4 | — | |||||||||
| Other | (13.3) | (5.8) | |||||||||
| Effect of changes in valuation allowances | 14.6 | 1,122.4 | |||||||||
| Benefit (provision) for income taxes | $ | 171.5 | $ | 971.8 | |||||||
We generated an income tax benefit of $171.5 million in 2024 primarily driven by an income tax benefit of $267.4 million recognized as a result of the DNC Restructure, current year research and development credits and excess tax benefits related to stock-based compensation, partially offset by the provision for income taxes based on current year earnings. We generated an income tax benefit of $971.8 million in 2023 primarily attributable to releasing the majority of the valuation allowance on our U.S. DTAs.
Deferred Taxes
The components of our deferred taxes were as follows:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| DTAs: | |||||||||||
| Net operating losses | $ | 571.2 | $ | 507.3 | |||||||
| Goodwill | 192.7 | 288.6 | |||||||||
| Tax credits | 243.0 | 216.5 | |||||||||
| Deferred revenue | 196.6 | 176.7 | |||||||||
| Identified intangibles | 81.6 | 114.0 | |||||||||
| Capitalized research & development costs | 24.3 | 112.9 | |||||||||
| Deferred interest | 39.2 | 63.4 | |||||||||
| Operating lease liabilities | 19.6 | 24.6 | |||||||||
| Unrealized gains and losses | 4.4 | — | |||||||||
| Other | 37.5 | 42.2 | |||||||||
| Valuation allowance | (172.0) | (161.6) | |||||||||
| Total DTAs | 1,238.1 | 1,384.6 | |||||||||
| DTLs: | |||||||||||
| Deferred cost revenue | (167.6) | (157.6) | |||||||||
| Unrealized gains and losses | — | (40.9) | |||||||||
| Operating lease assets | (11.9) | (13.9) | |||||||||
| Other | (10.7) | (10.9) | |||||||||
| Total DTLs | (190.2) | (223.3) | |||||||||
| Net DTAs | $ | 1,047.9 | $ | 1,161.3 | |||||||
We monitor the realizability of our DTAs considering all relevant factors at each reporting period. As of December 31, 2025, based on the relevant weight of positive and negative evidence, including our ability to forecast future operating results, historical tax losses and our ability to utilize DTAs within the requisite carryforward periods, we do not maintain a valuation allowance on the majority of our U.S. federal and state DTAs. We maintain valuation allowances on certain U.S. federal, state and foreign carryforwards as we concluded they are not more likely than not to be realized.
As of December 31, 2025, we had U.S. federal, state and foreign gross net operating losses (NOLs) and tax credits, a portion of which will begin to expire in 2030, as follows:
| Gross NOLs and Tax Credits | Portion Subject to a Valuation Allowance | ||||||||||
| Federal | $ | 2,429.7 | $ | 99.9 | |||||||
| State | 2,841.9 | 1,929.9 | |||||||||
| Foreign | 60.7 | 46.9 | |||||||||
| $ | 5,332.3 | $ | 2,076.7 | ||||||||
Uncertain Tax Positions
Our liability for unrecognized tax benefits was as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Balance at beginning of period | $ | 182.8 | $ | 165.7 | |||||||
| Gross increases - tax positions in prior period | 5.5 | 6.6 | |||||||||
| Gross increases - tax positions in current period | 16.8 | 23.1 | |||||||||
| Gross decreases - tax positions in prior period | (29.1) | (12.6) | |||||||||
| Balance at end of period | $ | 176.0 | $ | 182.8 | |||||||
The total amount of gross unrecognized tax benefits was $176.0 million as of December 31, 2025, of which $113.5 million, if fully recognized, would decrease our effective tax rate.
During 2025, we recognized a $34.6 million income tax benefit related to the recognition of an uncertain tax position in a foreign jurisdiction as a result of a favorable tax court ruling.
We have filed all income tax returns for years through 2024, other than for Germany and the Netherlands. These returns are subject to examination by the taxing authorities in the respective jurisdictions, generally for three or four years after they were filed. Although we believe the amounts reflected in our tax returns substantially comply with applicable U.S. federal, state and foreign tax regulations, the respective taxing authorities may take contrary positions based on their interpretation of the law. A tax position successfully challenged by a taxing authority could result in an adjustment to our benefit for income taxes in the period in which a final determination is made.
Cash Taxes
Cash paid for income taxes was as follows:
| Year Ended December 31, 2025 | |||||
| Federal | $ | 1.5 | |||
| State | 5.1 | ||||
| Foreign: | |||||
| Netherlands | 8.3 | ||||
| India | (6.9) | ||||
| All other foreign jurisdictions | 8.5 | ||||
| Total payments (refunds) | $ | 16.5 | |||
Cash paid for income taxes was $19.1 million and $10.6 million for the years ended December 31, 2024 and 2023, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Mar 3, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.