But they are in debt, they are in debt with their customers. What would be crazy is to recognise a 5 year service commitment as 1 year. This is no different from how the NYT, The Economist, National Geographic... account for the yearly subs. http://www.fasb.org/revenue_recognition.shtml
Imagine that GoDaddy is acquired by another company, and this other company wants to pivot GoDaddy's business into only hosting. The new owners need to recognise that there is cash in the balance sheet from domain registration services, a service that is yet to be offered. It could even be the case that that cash from domain registrations is no longer in the balance sheet, but has already been distributed as a dividend. If GoDaddy stops providing a service it has committed to, they have to pay back customers. Plain and simple. That to me is a liability, but it is not financial "leverage" or debt as you imply. This liability is noted as "Prepaid revenues" and hence not recognised as financial debt a.k.a leverage.
But they are in debt, they are in debt with their customers. What would be crazy is to recognise a 5 year service commitment as 1 year. This is no different from how the NYT, The Economist, National Geographic... account for the yearly subs. http://www.fasb.org/revenue_recognition.shtml
Imagine that GoDaddy is acquired by another company, and this other company wants to pivot GoDaddy's business into only hosting. The new owners need to recognise that there is cash in the balance sheet from domain registration services, a service that is yet to be offered. It could even be the case that that cash from domain registrations is no longer in the balance sheet, but has already been distributed as a dividend. If GoDaddy stops providing a service it has committed to, they have to pay back customers. Plain and simple. That to me is a liability, but it is not financial "leverage" or debt as you imply. This liability is noted as "Prepaid revenues" and hence not recognised as financial debt a.k.a leverage.