S&P Revises Outlook on Go Daddy to 'Positive', Ratings Affirmed
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Standard & Poor's Ratings Services said today it revised its rating outlook on Scottsdale, Ariz.-headquartered Go Daddy Operating Co. LLC to positive from stable. We affirmed our 'B' corporate credit rating on the company.
"The outlook revision reflects the potential for an upgrade over the coming 12 months if the company's organic revenue and subscriber base continue to grow, its operating performance remains strong, and its credit measures continue to improve," said credit analyst Elton Cerda.
Our positive rating outlook reflects our view that Go Daddy should generate significant positive discretionary cash flow and gradually reduce its GAAP
leverage 2014, barring a releveraging transaction.
Upside scenario
Any upgrade would likely entail an improvement in the EBITDA margin as a result of market share gains in businesses other than domain name registration, and further success in upselling and cross-selling activity while maintaining consistent positive discretionary cash flow. Additional elements of an upgrade scenario likely would be the ratio of discretionary cash flow to debt approaching the mid-teens area on a sustainable basis.
Downside scenario
We could revise our outlook to stable if Go Daddy encounters tougher price competition or if market share losses begin, possibly as a result of increased competition, causing discretionary cash flow to drop below $50 million and leverage to trend higher.
"The outlook revision reflects the potential for an upgrade over the coming 12 months if the company's organic revenue and subscriber base continue to grow, its operating performance remains strong, and its credit measures continue to improve," said credit analyst Elton Cerda.
Our positive rating outlook reflects our view that Go Daddy should generate significant positive discretionary cash flow and gradually reduce its GAAP
leverage 2014, barring a releveraging transaction.
Upside scenario
Any upgrade would likely entail an improvement in the EBITDA margin as a result of market share gains in businesses other than domain name registration, and further success in upselling and cross-selling activity while maintaining consistent positive discretionary cash flow. Additional elements of an upgrade scenario likely would be the ratio of discretionary cash flow to debt approaching the mid-teens area on a sustainable basis.
Downside scenario
We could revise our outlook to stable if Go Daddy encounters tougher price competition or if market share losses begin, possibly as a result of increased competition, causing discretionary cash flow to drop below $50 million and leverage to trend higher.
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