GDDYGoDaddy

We note your discussions of total and segment revenue provide the percentage growth in certain solutions; however, it is not clear how this growth impacted the quantitative change in the revenue line items. For example, you disclose that there was 20.3% growth in revenue related to your productivity applications; however, your current disclosure does not quantify how this growth contributed to the change in A&C

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revenue. Where a material change is attributed to two or more factors, including any offsetting factors, please revise to quantify the contribution of each factor. Refer to Item 303(a) of Regulation S-K. As part of your response, please provide us with proposed disclosure that is responsive to our concerns.

We acknowledge the Staff's comment and respectfully advise the Staff that in future filings we will include quantified disclosures, where available, for each material identified factor in instances where material changes in total and/or segment revenue are attributable to two or more factors. Below is an example of our proposed disclosure within Management’s Discussion and Analysis of Financial Condition and Result of Operations.

As Disclosed in our Form 10-K for the fiscal year ended December 31, 2024:

Total revenue increased 7.5%, due to the increases in our A&C and Core revenues, as

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described below:

A&C. The 15.6% increase in A&C revenue for the year ended December 31, 2024 was driven by: (i) 20.3% growth in revenue related to our productivity applications, most notably from our pricing and bundling initiatives; (ii) 8.7% growth in revenues due to continued customer adoption of our subscription-based products designed to establish and grow an online presence; and (iii) 40.1% growth in revenue related to our commerce solutions, as continued customer adoption has resulted in an increase in payment volume.

Core. The 3.4% increase in Core revenue for the year ended December 31, 2024 was driven by 7.1% growth in domain registration and add-on revenues and 5.0% growth in aftermarket revenues due to increasing sales volume. Partially offsetting these increases was an 11.6% decrease in hosting revenues primarily due to end-of-life and migration activities from certain products and disposition of certain hosting assets.

Proposed Illustrative Disclosure for Future Filings:

A&C. A&C revenue grew $222.6 million, or 15.6%, for the year ended December 31, 2024, driven by a [*] million increase in revenues from our productivity applications, which benefited from our pricing and bundling initiatives, and a [*] million increase in revenues from continued customer adoption of our subscription-based presence products and commerce solutions.

Core. The $96.5 million, or 3.4%, increase in Core revenue for the year ended December 31, 2024 was driven by growth in domain registration and add-on revenues as well as growth in aftermarket revenues due to increasing sales volume, contributing [*] million and [*] million of the increase, respectively. Partially offsetting these increases was a [*] million decrease in hosting revenues primarily due to end-of-life and migration activities from certain products and disposition of certain hosting assets.

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We note your disclosure of other segment items and that you do not disclose significant segment expenses. Please tell us how you considered ASC 280-10-50-26C and ASC 280-10-55-15G which requires that if an entity does not disclose significant expense categories and amounts it shall explain the nature of the expense information the chief operating decision maker uses to manage operations.

We acknowledge the Staff's comment and respectfully advise the Staff that the chief operating decision maker uses consolidated expense information to manage operations and is not regularly provided disaggregated expenses for each of the segments. In future filings, we will expand our disclosures to explain the nature of the expense information the chief operating decision maker uses to manage operations. Read in the reply ↗

Please tell us how the chief operating decision maker uses the reported measure of segment profit or loss in assessing segment performance and deciding how to allocate resources and tell us what consideration was given to disclosing such information. Refer to ASC 280-10-50-29(f).

We acknowledge the Staff's comment and respectfully advise the Staff that the chief operating decision maker uses Segment EBITDA, the reported measure of segment profit or loss in assessing segment performance and deciding how to allocate resources, by monitoring actual results versus the annual plan. This comparison is performed to make strategic decisions regarding segment profitability, resource allocation, pricing strategies and cost optimization.

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In future filings, we will expand our disclosures to clarify how the chief operating decision maker uses Segment EBITDA in assessing segment performance and deciding how to allocate resources.

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In connection with our response to the Staff's comments, we acknowledge that the Company and its management are responsible for the accuracy and adequacy of its disclosures, notwithstanding any review, comments, action or absence of action by the Staff.

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We note your customer retention rate for each of the five years ended December 31, 2023 was approximately 85%, which appears to indicate that it has decreased since prior periods when you disclosed it exceeded 85%. Similarly, the retention rate for customers who have been with you over three years as of 2023 was approximately 92% compared to disclosure in prior years that stated it was more than 93%.

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Please provide in your response the customer retention rates for each period in the respective threeand five-year periods. Also, tell us what consideration was given to disclosing the exact customer retention rate for each period and including a discussion of significant fluctuations between periods. Refer to SEC Release No. 33-10751.

We acknowledge the Staff’s comment and respectfully advise the Staff that we disclose customer retention as an approximate percentage in each of the five years ended December 31, 2023 as the exact customer retention rate upon which the disclosure was based has remained materially consistent as disclosed below. We have considered disclosing the exact customer retention rate for each period but decided that the fluctuation in customer retention over the five-year period was insignificant and is therefore appropriately described as “approximately 85%”.

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Additionally, we disclose an approximate amount over time to highlight the consistency of our retention rate as opposed to a precise amount each year which may inadvertently suggest that a higher level of precision is indicative of fundamental changes in our customer retention patterns. In future filings and to the extent any changes in our customer retention rate are material, we will consider the need to include further disclosure, if any, to provide adequate context for an investor to understand significant fluctuations in customer retention between periods.

Similarly, we disclose customer retention for customers who have been with us over three years as an approximate percentage. We have disclosed an approximate percentage for the last two years, which we determined to be more appropriate than disclosing the percentage in relation to another percentage (i.e. “more than”), and which is consistent with our disclosure of customer retention.

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We note fluctuations between periods in cost of revenue and other expense line items and Segment EBITDA are due to two or more factors, some of which are offsetting. We also note your reference to changes being due "primarily" to these factors. Where a material change is attributed to two or more factors, including any offsetting factors, revise to describe the contribution of each factor in quantified terms.

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Please also revise to use more definitive terminology, rather than general or vague terms such as "primarily," to describe each contributing factor. Refer to Item 303(b) of Regulation S-K and Section III.D of SEC Release No. 33-6835.

We acknowledge the Staff’s comment and respectfully advise the Staff that in future filings we will include quantified disclosures for each material identified factor in instances where material changes in cost of revenue and other expense line items and Segment EBITDA are attributable to two or more factors. Read in the reply ↗

We note your presentation of free cash flow per share throughout the 2023 Fourth Quarter Earnings Presentation on your website. Please revise to remove this presentation as non- GAAP liquidity measures that measure cash generated must not be presented on a per share basis. Refer to 100(b) of Regulation G.

We acknowledge the Staff’s comment and respectfully advise the Staff that we have removed the disclosure of free cash flow per share in our 2023 Fourth Quarter Earnings Presentation as posted on our website and we will also omit the disclosure of free cash flow per share in future quarterly results presentation materials. Read in the reply ↗

We also note disclosure of Total Liquidity in your earnings presentation on your website. Please revise to explain how Total Liquidity is determined. If Total Liquidity is a non- GAAP measure, revise to provide the disclosures required by Item 100(a) of Regulation G.

We acknowledge the Staff’s comment and respectfully advise the Staff that we have amended our 2023 Fourth Quarter Earnings Presentation as posted on our website to include the below disclosure to inform investors regarding how Total Liquidity is determined. We also advise the Staff that our calculation of Total Liquidity is not a non-GAAP measure.

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We will also include the revised disclosure in our future quarterly results presentation materials.

“Total liquidity is calculated as the sum of (i) cash and cash equivalents, (ii) short-term investments, and (iii) the amount available for borrowing under our revolving credit facility.”

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In connection with our response to the Staff’s comments, we acknowledge that the Company and its management are responsible for the accuracy and adequacy of its disclosures, notwithstanding any review, comments, action or absence of action by the Staff.

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You define segment normalized earnings before interest, taxes, depreciation and amortization (NEBITDA) as net income excluding depreciation and amortization, equitybased compensation expense, interest expense (net) and provision or benefit for income taxes, in addition to certain other adjustments. Please tell us whether you determine segment net income prior to making such adjustments to arrive at segment NEBITDA.

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In this regard, your disclosure that defines segment NEBITDA starting with net income implies that you may determine a segment measure of net income consistent with the measurement principles used in the consolidated financial statements. Refer to ASC 280-10-50-28. Additionally, disclosure that you believe segment NEBITDA is useful as it removes the impact of certain items that you believe do not directly reflect your segments’ core operations implies that segment NEBITDA is a non-GAAP financial measure. If segment NEBITDA is the only segment profit measure used by your chief operating decision maker, please exclude such disclosures from your financial statement footnote in future filings. Refer to Question 104.01 of the Non-GAAP Compliance and Disclosure Interpretations (C&DIs).

We acknowledge the Staff's comment and respectfully advise the Staff that, in future filings, we will refer to our measure of segment profitability as Segment EBITDA, which is the only segment profit measure used by our chief operating decision maker (CODM) in evaluating performance or making resource allocation decisions. We did not intend to imply that we determine a segment measure of net income or that Segment EBITDA is a non-GAAP financial measure.

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In future filings, we will amend our disclosure as follows:

"Our chief operating decision maker (CODM), which, as of September 30, 2022, was our Chief Executive Officer, evaluates the performance of and allocates resources to our segments based on each segment's revenue and earnings before interest, taxes, depreciation and amortization (Segment EBITDA). Segment EBITDA is defined as segment revenues less costs and operating expenses, excluding depreciation and amortization, interest expense (net), provision or benefit for income taxes, equity-based compensation expense, acquisition-related costs, restructuring-related expenses and certain other items."

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Please revise your segment tabular presentation to include a total of the segments' measures of profit or loss and reconcile this total to consolidated income before income taxes. Refer to ASC 280-10-50-32(f).

We acknowledge the Staff's comment and respectfully advise the Staff that in future filings we will revise our segment tabular presentation to include a total of the segments' measure of profit or loss, reconciled to consolidated income before income taxes.

Management's Discussion and Analysis of Financial Condition and Results of Operations Consolidated Third Quarter Financial Highlights, page 28 Read in the reply ↗

Your presentation of consolidated Normalized EBITDA constitutes a non-GAAP financial measure and should be accompanied by all of the disclosures required by Item 10(e) of Regulation S-K. Please revise to include a reconciliation in MD&A to the most directly comparable GAAP measure, consolidated net income, ensuring that the reconciliation begins with the consolidated GAAP measure.

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In this regard, referring to disclosure in the segment footnote is not appropriate. Also, revise to disclose why management believes the non-GAAP measure provides useful information to investors, ensuring that such disclosure does not imply that the non-GAAP presentation is more meaningful or accurate than the comparable GAAP measure. In this regard, your labeling of the measure as “normalized” and disclosure in your earnings release furnished on November 3, 2022 that inclusion or exclusion of certain items is necessary to “provide the most accurate measure of core operating results” implies the non-GAAP measure is more meaningful or accurate than the comparable GAAP measure. Refer to Item 10(e)(1)(i) of Regulation S-K.

We acknowledge the Staff's comment and respectfully advise the Staff that in future filings we will accompany our presentation of Normalized EBITDA with the disclosures required by Item 10(e) of Regulation S-K and will revise to include a reconciliation in MD&A of Normalized EBITDA to consolidated net income, which is the most directly comparable GAAP measure. We will begin the reconciliation with the consolidated GAAP measure and remove references to the segment footnote.

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In addition, we will revise our disclosures as presented below, to include why management believes Normalized EBITDA is useful information for investors:

"Normalized EBITDA (NEBITDA). NEBITDA is a supplemental measure of our operating performance used by management and investors to evaluate our business. We calculate NEBITDA as net income excluding depreciation and amortization, interest expense (net), provision or benefit for income taxes, equity-based compensation expense, acquisition-related costs, restructuring-related expenses and certain other items. We believe that the inclusion or exclusion of certain recurring and non-recurring items provides a supplementary measure of our core operating results and permits useful alternative period-over-period comparisons of our operations but should not be viewed as a substitute for comparable GAAP measures."

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We note your disclosure that the increases in total revenue were driven by growth in total customers and average revenue per user (ARPU) as well as contributions from recent acquisitions, partially offset by adverse movements in foreign currency exchange rates against the U.S. dollar. We further note that you disclose total customers and ARPU in your December 31, 2021 Form 10-K.

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Please explain to us why you do not disclose the total customers and ARPU in your 2022 Forms 10-Q. Additionally, in future filings where a material change in revenues is attributed to two or more factors, including any offsetting factors, the contribution of each identified factor should be described in quantified terms. Refer to Item 303 of Regulation S-K and SEC Release No. 33-10751.

We acknowledge the Staff's comment and respectfully advise the Staff that we do not disclose total customers and related ARPU on a quarterly basis in our Forms 10-Q as we believe annual measurements provide more meaningful insight into the impact any changes in these items have on our results. Additionally, annual disclosure aligns with the current practice of similar companies within our industry.

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While customer count is certainly a factor in our growth trends, it is not always a primary driver; go-to market and experimentation strategies we utilize at different periods in time may cause short-term changes in customer count that will not necessarily translate into sustained revenue growth. Further, as not all customers are equal contributors to our growth, disclosing customers by quarter could disproportionately impact the perceived importance of the growth of one customer versus another, particularly as customers with lower-dollar contributions may be concentrated in a given quarter based on the timing of go-to-market promotions. We believe that annual disclosure of total customers mitigates potential quarter-over-quarter volatility and aligns with our average subscription term of approximately one year. Calculation of our ARPU measure utilizes customer count, and as such, we believe it is most meaningful to disclose these measures together and on an annual basis.

In future filings, we will include quantified disclosures for each material identified factor in instances where material changes in revenues are attributable to two or more factors.

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We note that in your recent earnings releases and calls you disclose annualized recurring revenue (ARR) for each of your reportable segments as well as gross merchandise volume (GMV) in relation to commerce offerings. Please tell us what consideration was given to disclosing ARR and GMV in your filings.

We acknowledge the Staff's comment and respectfully advise the Staff that ARR is an operating metric calculated by annualizing quarterly recurring revenue, net of refunds, from new and renewed subscription-based services. ARR excludes revenue that is non-recurring, such as domain aftermarket, domain transfers, one-time set-up or migration fees and non-recurring professional website services fees.

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We believe ARR is a useful metric in illustrating the scale of certain of our products as well as facilitating comparisons to other companies in our industry, and as such, we intend to include disclosure of ARR in future filings.

GMV is a business metric that annualizes the total quarterly dollar value of orders facilitated by our customers through the use of our commerce platforms. We do not consider GMV to be necessary to an understanding of our financial condition or results of operations as we do not earn revenue based on the volume of such orders. However, we do believe that GMV provides investors with supplemental insight into the utilization of our commerce offerings by our customers.

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Your disclosure that total bookings representing "total sales" in a given period, excluding refunds suggests that this is a non-GAAP revenue measure. Please revise your disclosure regarding this operating metric to clarify what it represents, such as booked or billed contract value, rather than refer to "total sales."

We acknowledge the Staff's comment and respectfully advise the Staff that, in future filings, we will revise our disclosure of total bookings as follows so as to not imply that it is a non-GAAP revenue measure:

"Total bookings is an operating metric representing the total value of customer contracts entered into during the period, excluding refunds.

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We believe total bookings provides additional insight into the performance of our business and the effectiveness of our marketing efforts since we typically collect payment at the inception of a customer contract but recognize revenue ratably over the term of the contract."

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We note that you refer to Applications & commerce NEBITDA and Core platform NEBITDA as non-GAAP measures; however these are not non-GAAP measures and should not be labeled as such. Refer to Question 104.01 of the Non-GAAP C&DIs.

We acknowledge the Staff's comment and respectfully advise the Staff that, in future filings, we will refer to these measures as Applications & Commerce Segment EBITDA and Core Platform Segment EBITDA, and they will not be labeled as non-GAAP measures. Read in the reply ↗

Please revise to begin your Reconciliation of Non-GAAP Financial Measures with GAAP results rather than non-GAAP results. In this regard, you should reconcile from Net Income to Total NEBITDA. See Question 102.10 of the Non-GAAP C&DIs.

We acknowledge the Staff's comment and respectfully advise the Staff that, in future filings, we will revise all of our reconciliations to begin with the GAAP result, including to revise our reconciliation of Total NEBITDA to begin with the GAAP result of Net Income or Loss. Read in the reply ↗

As noted in the comment above, your labeling of the measure as “normalized” and the disclosure that inclusion or exclusion of certain items is necessary to “provide the most meaningful or accurate than the comparable GAAP measure. Please revise accordingly.

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In closing, we remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.

We acknowledge the Staff's comment and respectfully advise the Staff that, in future filings, we will revise our description of the NEBITDA measure as follows so as not to imply that it is more meaningful or accurate than the comparable GAAP measure:

"Normalized EBITDA (NEBITDA). NEBITDA is a supplemental measure of our operating performance used by management and investors to evaluate our business.

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We calculate NEBITDA as net income excluding depreciation and amortization, interest expense (net), provision or benefit for income taxes, equity-based compensation expense, acquisition-related costs, restructuring-related expenses and certain other items. We believe that the inclusion or exclusion of certain recurring and non-recurring items provides a supplementary measure of our core operating results and permits useful alternative period-over-period comparisons of our operations but should not be viewed as a substitute for comparable GAAP measures."

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In connection with our response to the Staff's comments, we acknowledge that the Company and its management are responsible for the accuracy and adequacy of its disclosures, notwithstanding any review, comments, action or absence of action by the Staff.

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We note your disclosures regarding the agreement in principle to settle the class action complaint. Please describe for us the terms, obligations and rights associated with the proposed settlement and describe your proposed accounting for each of the elements of the settlement. As part of your response, explain your basis for only accruing $18 million of the $35 million settlement.

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Also, explain why the amounts related to class members who elect to receive credits for future purchases will be classified as an offset to revenue and why these amounts will be recorded in the future as purchases are made. We refer you to ASC 450-20-25-2.

The Company acknowledges the Staff's comment and respectfully advises the Staff that, in determining the appropriate accounting for the proposed settlement, we considered the guidance in Accounting Standards Codification (ASC) Topic 450-20, Loss Contingencies.

On June 20, 2016, Jason Bennett (the "Plaintiff"), individually and on behalf of all others similarly situated, filed a complaint against the Company in the United States District Court, S.D.

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Alabama, Southern Division, alleging violations of the Telephone Consumer Protection Act of 1991 (the "TCPA") stemming from telephone calls we made to certain customers beginning in November 2014. In June 2019, we entered mediation discussions and reached an agreement in principle to settle the complaint, subject to the execution of a written settlement agreement and Court approval.

Under the terms of the proposed settlement, we would make available to all individuals who received certain communications from us between November 2014 and December 2016 a total of up to $35 million to primarily pay: (i) class members, at their election, either a one-time cash payment of $35 or a single-use voucher of $150 to be used for future purchases of products from us, (ii) notice and administration costs in connection with the settlement, and (iii) attorneys' fees and expenses to legal counsel representing the class. Vouchers issued in connection with the settlement will expire one year from issuance, except in the state of California. If submitted claims are higher than anticipated, class members will receive a pro rata distribution of available funds up to the maximum total liability of $35 million (inclusive of legal fees and administrative expenses). If approved by the Court, we would receive a full release from the settlement class (other than from those class members who timely elect to opt out of the settlement) concerning the claims asserted, or that could have been asserted, with respect to the claims released in the settlement agreement.

In determining our best estimate of the potential settlement loss in accordance with the provisions of ASC 450, we consulted with our legal counsel and analyzed a range of potential outcomes. Using input from similar class action settlements, we determined that the most likely outcome was that the significant majority of the estimated claimants would elect the cash payment. The estimated cash settlements, when combined with approximately $11.5 million of attorneys' fees and expenses to legal counsel representing the class and administrative expenses, make up the $18.1 million accrual we recorded during the second quarter of 2019 for this matter. We also calculated the estimated fair value of the total vouchers expected to be claimed and determined such value to be immaterial. Accordingly, we did not record an accrual related to the vouchers.

We respectfully advise the Staff that the disclosure in our Form 10-Q stating "settlement credits used for future purchases of products will result in reduced revenue in the periods in which they are utilized" was not intended to imply that the utilization of such vouchers would be recorded as an offset to revenue in future periods. Our disclosure was intended to signal that the bookings and revenue we will earn from certain future sales will be less than otherwise expected due to utilization of the vouchers.

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Please help us better understand the nature of the goods and services transferred to your customers in your domain name registration business. Tell us which services you have combined with others for the purposes of determining your performance obligations and which services you have treated as a separate performance obligation. Refer to ASC 60610-25-21 and ASC 606-10-50-12 (c).

The Company acknowledges the Staff’s comment and respectfully advises the Staff that, in determining the services transferred to our customers in a domain name registration, we considered the nature of our promise to customers, the customers’ perspectives and expectations and the terms of our customer contracts.

Domain name industry background

There are three primary participants in the domain name registration process: the registry, registrar and registrant.

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The following information breaks down each role and how they work with one another:

A domain name registry is an organization that manages top-level domain names (“TLDs”), such as .com and .net, or country-code top-level domain names (“ccTLDs”), such as .us and .ca. Registries create domain name extensions, set the rules for that domain name and work with registrars to sell the right to utilize domain names to the public. Registries do not sell domain name registration services directly to registrants.

U.S. Securities and Exchange Commission

A registrar is an accredited organization, such as GoDaddy, that sells the right to utilize domain names to the public. Registrars have the ability to register domain names, including TLDs or ccTLDs, and are responsible for maintaining and providing updates to the Domain Name System (“DNS”). DNS translates easier to remember domain names into their underlying unique Internet Protocol (“IP”) addresses. An IP address is a numeric identifier that points all internet traffic to exactly where the content associated with the domain name lives, and is required in order for third parties to access the underlying content connected to a domain name.

A registrant is the person or company who registers a domain name. Registrants can manage their domain name’s settings through their registrar. When changes are made to the domain, their registrar will send the information to the registry to be updated and saved in the registry’s database. Registrants are bound by their contract with the registrar.

Domain name registrations may also be sold by a reseller. Resellers are not accredited, they are organizations that sell domain name registrations and other services provided by an accredited registrar. Resellers do not have any responsibility for maintaining or providing updates to the DNS associated with the domain names they sell. Registrars remain the responsible and accountable party for all domain name registrations sold by their resellers.

GoDaddy analysis

GoDaddy is a domain name registrar. For each domain registration service we provide, we have one performance obligation to our customers that consists of two promises: 1) to ensure the exclusive use of the domain name during the applicable registration term by registering the domain name with the registry and 2) to ensure the domain name is accessible and appropriately directed on the Internet by providing DNS services. DNS services include maintaining and updating our domain name servers to establish records linking the domain name to its underlying IP address, publishing information about the domain name and resolving queries to direct third parties to the content associated with the domain name. After the domain registration service contract term expires, the domain name can no longer be accessed or used, unless the registration is renewed.

In determining our performance obligation associated with the domain name registration service, we considered the following guidance:

ASC 606-10-25-19, which states:

A good or service that is promised to a customer is distinct if both of the following criteria are met:

a.

The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (that is, the good or service is capable of being distinct).

b.

The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the promise to transfer the good or service is distinct within the context of the contract).

ASC 606-10-25-21, which states:

In assessing whether an entity’s promises to transfer goods or services to the customer are separately identifiable in accordance with paragraph 606-10-25-19(b), the objective is to determine whether the nature of the promise, within the context of the contract, is to transfer each of those goods or services individually or, instead, to transfer a combined item or items to which the promised goods or services are inputs.

Furthermore, the Basis for Conclusions of ASU 2016-10, which states:

If two or more promises are capable of being distinct because the customer can derive some measure of benefit from each one individually, but the customer’s ability to derive the intended benefit from the contract significantly depends on the entity transferring all of those goods or services, those promises would need to be combined into a single performance obligation because they are not separately identifiable in the context of the contract.

In applying the above guidance, we determined the promises to our customers are capable of being distinct as they are capable of providing some measure of benefit to the customer either on their own or together with other resources that are readily available to the customer. However, we have determined the promises to our customers do not meet the criterion of being distinct within the context of our contracts. Our primary promises of the exclusive use of the domain over the registration term and the ability to access the content associated with this domain online are the inputs to a combined benefit (that is, a functional and recognized domain name on the Internet). We would not be able to fulfill our promises for the domain registration service by transferring each of the services individually as our customers could not obtain the intended benefit from the contract without us fulfilling both promises.

The domain name registration and DNS services work together and are highly interdependent and interrelated, pursuant to ASC 606-10-25-21(c). For each domain a customer registers and connects to the Internet, the integrated DNS services we provide and maintain are required for the domain name to properly link to its underlying content. Our customers would not benefit from exclusive rights to a domain name without users of the Internet being directed to the domain name through our DNS services, nor would our customers benefit from our DNS services without exclusive rights to a domain name. Accordingly, we concluded that each domain registration represents one service offering and is a single performance obligation to our customer.

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You disclose that revenue is recognized over the period which the performance obligations are satisfied. For domain name registration, please provide us with your analysis as to how you determined that domain name registration revenue should be recognized over time. Refer to ASC 606-10-25-27.

The Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company considered ASC 606-10-25-23 through 25-30 and determined that our domain name registration services performance obligation is satisfied over time, as services are provided over the registration contract term, as described in our response to Comment 1. Pursuant to ASC 606-10-25-27(a), a customer simultaneously receives and consumes the benefits provided by our performance as we provide the domain registration service.

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Accordingly, revenue associated with domain name registration service is deferred and recognized ratably over the contract term, which is consistent with the pattern in which our customers receive and consume the benefits.

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Regarding the assets recognized from the costs to obtain a contract, please disclose the amount of related amortization expense recognized during the period. Refer to ASC 34040-50-3(b).

The Company acknowledges the Staff’s comment and respectfully advises the Staff that assets recognized from the incremental costs of obtaining a contract with a customer, along with the resulting amortization expense, were immaterial during the quarter ended March 31, 2018. In future filings, we will include disclosure of such amounts, if material. Read in the reply ↗

We note your response to prior comment 1. Please revise to describe the nature of the services provided for your domain registry services performance obligation and the judgments and assumptions made in concluding that this represents a single performance obligation. Refer to ASC 606-10-50-12.

The Company acknowledges the Staff’s comment and respectfully advises the Staff that we will include such disclosure in future filings, beginning with our Form 10-Q for the quarterly period ended June 30, 2018. Read in the reply ↗

We note your response to prior comment 3. Please tell us the amount of amortization expense related to prepaid domain registry fees for the quarter ended March 31, 2018 and whether you believe such fees are contract fulfillment costs. If so, disclose the amount of amortization expense recognized during the period. Refer to ASC 340-40-25-5 and ASC 340-40-50-3(b).

The Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company considered ASC 340-40-25-5 through 25-7 and ASC 340-40-50-3(b). We determined that the fees we pay to registries for each annual increment of domain name registrations and renewals are contract fulfillment costs.

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Accordingly, such fees are capitalized as prepaid domain name registry fees and are amortized to cost of revenue over the corresponding domain name registration service contract term in accordance with ASC 340-40-35-1.

During the three months ended March 31, 2018, amortization of prepaid domain name registry fees of approximately $145 million was recognized in cost of revenue. We will include disclosure of amortization recognized on contract fulfillment costs in future filings, beginning with our Form 10-Q for the quarterly period ended June 30, 2018.

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