GDDY - Earnings call 4 2023

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Christie Masoner

Good afternoon, and thank you for joining us for GoDaddy's Fourth Quarter and Annual 2023 Earnings Call. I'm Christie Masoner, VP of Investor Relations. And with me today are Aman Bhutani, Chief Executive Officer; and Mark McCaffrey, Chief Financial Officer.

Following prepared remarks, we will open up the call for your questions. [Operator Instructions] On today's call, we'll be referencing both GAAP and non-GAAP financial measures and other operating and business metrics. posted we financial financial equivalents in measures found the why of and may today's of Relations the in non-GAAP Investor SEC. our our to presentation furnished earnings discussion release use investors.godaddy.net Form measures non-GAAP reconciliations be site on A at our X-K or at to their GAAP Growth rates presented represent year-over-year comparisons unless otherwise noted.

based to those future Any we or today, forward-looking events. we'll statements statements to statements. such our related of in these results respect contained except to Actual we forward-looking February objectives information forward-looking forward-looking discussing strategies XX, as may from of detail XXXX, make filings. obligation our future include financial the operations. today be no in and are statements The law, risks matters assumptions that call by results on because These extent and required new in and as that future materially with are differ update are to to undertake SEC statements on those subject periodic uncertainties this or discussed

With that, introduce Aman. to I'm pleased

Amanpal Bhutani

Good entrepreneurs for and make to GoDaddy, is our more thank empower today. for you mission us afternoon, joining inclusive all. At opportunity and all

value, Our and cash flow resulting long-term driving strategy per shareholder creating centers in on customer share growth, profitable compounding free value.

Commerce Our focus remains segment. & in expansion and Applications on margin our growth

financial and experience. technology launch capabilities Innovation to a for technology stack, GoDaddy am results. year with us, operational pivotal compelling Airo us was our as I our enabling XXXX unified together we and accelerated a into our brought pleased

and investment margin cost management. XX% per of XXX increase free a flow share. We points, increased margin resulting increase cash Full our year in also in drove we ahead EBITDA flow EBITDA free balanced structure in normalized approximately XX% in a basis cash normalized guidance and growth XXXX as

XX% Commerce momentum into & drove segment, in our QX, continued In January. bookings this and we growth high-margin Applications

costs margin normalized optimizing Commerce business approximately Applications the and a & driving our growth combination to has Our EBITDA of XX%. positioned of with focus on well XXXX in exit

soon. dinner investor At and showcase teams on presence, GoDaddy showcased upcoming and well how provide more a since what's we the now sneak software March as then. expands customers delivers showcased, entire of the features Investor GoDaddy's of as experience experience the our our the peek unlocking be intuitive across into will manner. At we X, have Day enablement coming also platform these Commerce new Airo Wheel, a in launched for a for seamless capabilities Airo fully seamless our power November, in even identity and Airo capabilities Entrepreneur's will which

the our last efforts quarters, marketing spend to G&A few continued covered and we expenses. our optimize Over

similar the unification efforts In our to multiple footprint care stack and areas and of in led material a and as technology technology and simplification had associated have well. development We development, with in it. technology and reduction of server costs our

and technology and chat together, automation are Airo in operating We our scale continued our rollout both benefits globally. care, shifted also we talent and room the customer of and benefited for access of tasks towards capital the our as through preferences the our global of And these expenses. GoDaddy with for asynchronous harvesting expanded items leverage to care In guides. investments

margin and bolsters both is our ability expected and of opportunities. our revenue Additionally, to our benefit to faster software data the drive platform power GoDaddy from decision-making

in more Tempe. share our leverage Investor by about to care Day excited opportunities in are We driven and technology continued innovation at our

high-margin start, domains demos an as for been our created Application March. our us of productivity our to benefits engagement time. us deliver expanded like new drive has in experience segment, set in to high-priority to over drive surfaces, & initiative I and over improve focus time. initiatives, to continue To always, bundling customer my keep will higher Airo we Airo but automated would since also cover we this expect plan innovation Commerce our that I comments a will brief part attach. we of has to allowing As to here This key and primarily share experiences

is control customer to I'm iterative On attach I the Airo for shifting part significant take Airo, the improvement exposed not monetization its increased towards outperform customers performance like since Airo have those higher higher-margin at update typically on experience. the the The GoDaddy and group many particularly This an than test the to in was rates experiment, to experience that monetized control to were in cohort were experience because a changes due share encouraging that customers of Airo launch. of and products. happy group. controlled the that mix higher-priced months first

the initial With result, we GoDaddy out Airo in U.S. this more promising have rolled to customers

also international launched few in We tests ago. have markets a days

engage and leading Our higher opportunities. Airo discover rates, customers to monetization more greater even them goal for is to more at products help

As cohort opportunities in being a also developers time and designers monitoring performance engagement our WordPress to monetization. Components tested Hub discovery, save and experience the are and of we Managed are Airo across result, closely our currently GoDaddy and experiences, effort. creating

and in We so customers the testing faster. experience are guides can also support Airo care, better our

coming new market. quickly approach that GoDaddy to Our platform to capabilities Airo are means

partnerships And can last and Commerce this these we year, For our half to will into functionality growth that Commerce, base. customer of example, we well. On test was sell largest year, the in our our payment Airo extend the proved solution over of as it year. GPV we will driver capabilities first the last

and grew exceeded XXXX In fact, annualized GPV XXX% year-over-year. expectations for our

which are strategy we set the ultimately doubling XXXX, is omni-commerce subscription last This and series selling aligned on value of enter a solution, driving higher-margin more experience creating business customer with points we our for that drives Commerce revenue. overall profitable that is proof of term, up of down the long Airo growth. the capability our the looking seamlessly Commerce with full our surfacing forward to As

expect our base by we digits. double scale to healthy customers to Commerce GPV takes growth and at of Commerce subscription stage GPV As revenue growing lower continue center takes priority, still

by In Applications expect closing, improvements rest impressive improvement in will as ability ahead & improving free metrics workforce talented am Behind drive to together a I result we is in our excited to at cash is XXXX, which margin Commerce, innovation. in flow ongoing share. these growth I look the and per of that committed

share day. to our every achieve doubling points improvements we our methodically on us every continues compounding launch our week, operational example, down For making of crystallize targets. new and track results and tests, proof confidence and the better broadly discipline organization, raise to across The forward path results

here's With that, Mark.

Mark McCaffrey

drove growth revenue XX% delivering In free XX.X% strides in the deliver are share margin per our platform made for all also flow significant for target, customers. double-digit for of and of ability Commerce our & us. our expansion efforts QX results our a These our XXXX, we in our unified $X.XX GoDaddy above Thanks, Aman. target year. to quarter, cash Hello, in everyone, and normalized full software thank you our sustained that reflected joining delivering above margin Applications EBITDA for the

QX results. with Beginning

we + billion, as last GPV In Our XXX last an grew of platform Commerce quarter points & segment XX% XXX more high-margin existing to last significant expanded drove revenue and points year. $XXX the increasing our basis to XX% since to performance delivered remains And million. we in to basis and GoDaddy up software X% conversion year's $X.X Create Applications billion, since our XX%, $X.X growth was to EBITDA doubling for than ARR margin Grow grew annualized $XXX customers Commerce, strong. of ARR & Applications Commerce million.

X%, XX%, grew increasing platform billion, year. ARR Core million last in Domains the prior revenue segment Domains X% quarter basis quarter growth in price grew XXX since was growth points the consistent and during was future fourth for X% in platform platform Bookings Domain basis and core since XXX indicator year. margin of continued for to by quarter, Growth strong providing to core a fourth points increases. leading $XXX EBITDA demand revenue. $X.X last the positive with on was and supported

and to increasing grew aftermarket million addition, In comps. on $XXX XX% volume easier

more that sellers to buyers is determine annual quarter-to-quarter As transactional relies valuation. to while to the third-party on it a due it other an predict and compared our is its to nature and difficult acceptable a aftermarket mutually fact businesses on reminder, basis, stable

the Our continuing a high GoDaddy the an taken our in unify strong decrease XX% as to generator stable, retention. we the portfolio were hosting we throughout hosting revenue remains the platform to and core over decreased efforts business. continue XXXX by with cash The years, business, of past in rationalize Bifurcating hosting partially offset deliberate GoDaddy's steps gains the software platform. remainder have several

long-term strategic to that We and the will platforms of our financial integrating continue not rationalizing this accretive business, components are platforms that model. are evaluate to

constant and QX in a to on constant growing reported $XXX revenue revenue currency X% International basis billion, reported topped on grew and $X.X basis. a currency X% million. Total

international and reminder, our a As regions. impacting our are migrations divestitures primarily

gains basis a divestiture billion, $X.X of quarter Grow XXX XXX grew + in X% offset to in & achieved to our in products. we was points due XXXX. and by of the bookings XX% $XXX platform the to margin half or grew in continued headwinds bookings expansion representing Applications up to the attach currency by ahead solutions QX continued categories. expansion strength QX revenue. Normalized constant grew Core and of increased grew nearly fourth all Subscription strong points on hosting. XXXX Commerce Domains, Create XX% leverage an subscription of driven spend QX productivity basis a migration bookings bookings over compared basis. EBITDA X% XX.X% second strong on performance X% The and margin a in across million,

with like shared margin Airo driving normalized approximately the last margin with we quarter, QX EBITDA saw to innovation, expect years continued in GoDaddy also out you while of XX% As we experience. continue expansion our XXXX

technology one the data thanks platform and ownership faster we experience includes to about Airo as market done to work to to through into more domain As the serves transactions. think accelerant is an products this that possible for this we unify our from bundle bring of the the seamless stack to And customers, on model as our our have platform. we software

we technology the by reduced data combined our XXXX X% restructuring throughout from as capital from during that, capital and efforts migrations, and our as expenditures. With center spending development and fourth the divestitures quarter, reduced well

was our completed continue work XXXX, We in will of dollars spend development this most technology and decline in compared XXXX in expect to absolute XXXX. as to that

free despite cash Moving Free year-over-year. cash free cash in cash a million, XX% interest flow flow grew to $XXX while XX% to XX% grew flow cash Unlevered to generation. $XXX on increase leverage XX% $X.XX expense which share interest share operating per growth in Applications to expense. & in Commerce, and increase improvements repurchases partially driven increased by offset cash by an throughout is per million XXXX, share,

at landed in net $X.X billion, the total We liquidity balance $X.X to Xx. exited basis investments our $X.X of near XX-month short-term Net with to year and targeted sheet. trailing range the Turning a billion and debt Xx of on below the of cash leverage X billion. and midpoint

billion basis annualized cash expense In outstanding the together million. January secure of to reduce repricing approximately rate expected interest XXXX, XXXX, with point reduction. adjustment, principal a July repriced to along XX This $X.X in $XX strategic are completed interest by we

current outstanding these since the Additionally, This million repurchased under ahead the XX%, X-year targeted retired. cumulative representing over fully schedule. totaled our reduced inception of billion, of XX.X by shares shares authorization our authorizations achieving shares our reduction $X.X diluted

over buybacks and capital value. our for ROI disciplined last driven this have impressive demonstrating the shareholder driving to dedication outlay, long-term years capital Our framework allocation X

$X.X a new financial Customer constant for platform the from paying our our Total X% as migrations to $XXX on of customers and ARPU X-plus remains These improvements give product X% churn on grew despite added in XX% high-quality billion. drove at are retention pricing results. with X% XX% XXX,XXX attach we flexibility. our Moving stickier than to least net and revenue us annual products. currency greater X to customers elevated basis grew greater we as ongoing divestitures. or customers

or billion. totaling revenue currency was Applications a $X.X bookings core & X% grew to X% $X.X constant X% XX% to International revenue $X.X Commerce grew platform billion. Total grew $X.X on basis billion. billion. And to flat, revenue

$X.X to over points prior basis for XX% an nearly representing Full XXX the XX% year margin expansion of normalized grew a billion, EBITDA year, year. the

$X.X grew of cash Lastly, year full X:X. to our billion, free XX% normalized for guide conversion billion, year the $X.X EBITDA flow XX% showing unlevered exceeding cash impressive both and and to nearly free flow to cash grew

Moving on our to outlook.

In year, over X% to For range $X.XX core representing range. revenue low $X.XX & basis midpoint and midpoint migrations projecting year, Applications revenue excluding of digits our at revenue mid-teens billion we be the of In the within expect for growth year. and total and billion, that low approximate of point full of full the the single of growth the projecting year. QX platform, we we XXX impact range. will would growth of the the X% the QX When in to are full of Commerce, are we growth the divestitures for to be lap at the

committed in As expected this we on to continue in XXXX, leverage opportunities year. XXXX GoDaddy and team have for model. to approximately XX% and We shared previously, maintaining within resulting deploying operational full is this margin commitment the entire trend our delivered in gain discipline to expect normalized the of EBITDA further

spend payments $X.X share cash year XX% full reduced We flow $XXX cash of In billion rate of capital for $X, approximately representing over at billion, XXXX, free are XXXX. interest of least and unlevered free of and of expect cash per XX% of of million, we least growth expenditures XXXX. targeting million $XX of representing the flow $X.X cash flow at free a

addition, we approximately expect tax payments of income million. $XX In

expect On GoDaddy, a priority shares we using balance for we've to has as in prudently disciplined we look with allocation to share our past Capital remaining for returns along be billion to return shareholders. drive under repurchases, sheet been and back our framework our managing applied continue buy will authorization our compounding quarters. capital $X.X that

For billion the growth nearly at representing $X.XXX targeting we to billion, QX revenue of are $X.XXX midpoint X% range. the of XXXX, total

of of related margin normalized the such heavy of launch renewal in As a Airo, certain will supports the spend QX, the our and marketing of reminder, spend that build course GoDaddy the our EBITDA cycle because over spend, our to XXXX. timing as

QX a nearly over normalized expansion a to expect basis we XXX XXXX. EBITDA XX%, As result, be representing point QX

increase expected XX% exit course as Over approximately the the year, which for averages is to margin approximately we normalized of the year. full XX% year, EBITDA to to the

continue to accomplishment of moving see own absolute compared proud We margins last record guidance on years. should over to of our increasing initial this basis X discipline an our are of and the Investors forward.

dedicated we a profitability. actively growth remain summary, improving In business through our durable line of top managing to combination and

balancing value confidence exciting an on framework, shareholders. disciplined path to focused see coupled our drive against flow, our creates when strategic our are ability free which, capital for to priorities. the strong and We execute our allocation cash X We our in strong with significant have

experience expanded Commerce. capabilities At demo of our Investor on Day March the GoDaddy will Airo X, we the and

provide levers, growth a and also will our of We long-term expectations discuss and profitability clear view and we opportunities. will

capital framework it We the and value allocation will create. will our share shareholder

initiatives, We effectively accountable understand business day are team. with by the We'll our need committed Q&A to business objectives. model end providing the against the information for you the value to hold us our our long-term hosted management and executing strategy and stated confidently,

the to hand over Relations, With that, of the Q&A. for Investor I'll Masoner, call call VP open to Christie

Christie Masoner

the Instructions] Our from [Operator question line comes Mark. Khan of from Riley. Thanks, B. first Naved

Naved Khan

Can you me? hear

Christie Masoner

can. We

Amanpal Bhutani

can. We

Naved Khan

Great. Okay.

picture macro X So questions on One, the from just big environment. me. maybe

where in or of range gave do what end would high just low So encapsulate Just to that, you then for are come And relation us. your at see terms views the the of you the to just demand. on cause where that end? you of currently we that in versus in kind --

then question And billion around is valuation the had the allowance. in I other $X

I had think the valuation of you release sort a in allowance.

should or from the in 'XX. already shield, XXXX tax think until meaningful have amount you Is kind release? think How which of you of taxes I that? a or addition taxes protects paying about to So I this

Amanpal Bhutani

a the Why for the to comment on off Mark valuation range Thanks, kick I'll sort of the allowance. that Naved. and turn macro, I and don't with quick it

businesses, to And in see come a strong customers resilient door. group. through front continue On definitely, be continuing the the they're our to demand the and we micro big picture,

and spend, to their them continue prospects. I'll strong. to the very a very, customers adds bringing say we Of site. judicious would to finding customers Mark, about spend, course, optimize continue our it better about marketing new to bit be generally, feel I And turn and gross our little you. be But

Mark McCaffrey

absolutely. Yes, thanks, Naved. And

high single I be it's year, Easier growing as slightly there. we We've of business product. flat the a lot look momentum efforts range, flat it continued seems larger Seeing the is of would customers at seeing stage. to early of to the it the demand, but a mean, We're in Also, to digits, can helpful. looked vary comps Obviously, be second about really the we're in and funnel. On range. end but the subject bundling market Airo QX coming plus momentum that have at to in they're around but totally you're at transactions. business making. this come Aman the attaching a in aftermarket. looking but talked

we're Commerce, value we get upside in more our to conversion from payment of pricing existing customer base platform. always seeing There's our continued there. into as delivering

high feel call there's that momentum. that of how the see to We the different things and about like we are good the we is them range. we really forward. us put momentum can So things carrying many we and where today, end Obviously, as

price tax, -- sorry, the on the the On tax. on

up paid reminder, that XXXX savings we and the a from shareholders As our $XXX the million credits time. the of tax NOLs -- in time, that And was to a a built right? fee over buy period had back in that onetime that

ability now likely our release forward, the our coming of going when more say, that reserved than that I and a For you're to not you over, increased seeing benefit. what utilize you're on books, rules time what get period was that and because accounting reasons, asset accounting foreseeable of would our it's require profitability to

company will the doesn't future. saw a cash, not affect anything receive it lines. or those from EBITDA cash, the It's there. along that foreseeable in doesn't So taxes normalized you benefit affect is But

question answers there. that your hopefully, So

Christie Masoner

Research. line at Zach Morrissey of Wolfe next Our the comes question from

Zachary Morrissey

results it I least we rollout. seems the what are Airo. to results pretty how broad the the more expanding are Great. I encouraging, guess like Obviously, factors just at guess a think about early starting you're outlook with Application in rollout, do gating on is seeing this embedded & terms kind just And of the kind on in of early any of U.S., that Commerce the the today? in XXXX based of things? of how kind growth side

on get do obviously, of about strategic bit legacy kind then that came you making. weaker color comps of based I helpful but in kind the a the are kind decisions on be the XXXX as trajectory in would context and for How And through of of think core there. the embedded any some just hosting, outlook the growth we think platforms? we little year, guys easier the progress

Amanpal Bhutani

Thanks, super Zach. new in we're It's it the used experience adopted not to and the excited about On launch. you are actually Airo test. better customers launch a Airo, first experience who a certain often completely does and

So super encouraging results.

We our more customers. rolling to very, very customers. and with quickly That out actually starts Airo more of new are

that For November, that customers for doing after Very it we example, a bought enabled when and first customers a it we bought domain. in started for a quickly that, website. were we domain

And showing so up We've customers. launched more are Airo international, capabilities it for in too. more and more

course, to and of all into base where our us globe ton customers able them the new and lies offer base which to -- go as getting opportunity to a across capabilities. customers our be the these penetrate of swing well, Of to of is full for the starting then

turn with And progress. So Airo. the terms we as would guidance, We're more every happy say moving to quickly it Mark. super the are week, I'm in actually I can. team's as I'll customers seeing of

Mark McCaffrey

Yes.

core the days. will consolidated Aman based calling the for enabler mentioned, down still the we we attach, us think platform momentum now, road. software and saw retention. customers about the early an but engagement it Airo, as obviously, the it we see And better is of hear everything at of we're greater that X-plus in year. greater bundling, and And can days the But lot you to excitement. see encouraged we a right GoDaddy, early it's the metrics, look allow We're coming momentum we and products we for bundling When into front moving As faster. very on

XXX A couple and year our basis to the the legacy we've We there, points headwind On divestitures of on into move right? that the of coming hosting. things have migrations to related -- done. about

So that's built given. we've into the guide that

in by it's single-digit people the million-plus think going primary a we've be in its addition, couldn't grower. that the names we the We're -- We coming aftermarket. to it's through and fact In it's the out. how it platform to going flat they It's business. get allows encouraged market. really market to it's, seen you secondary a volume and do $XXX to in be moderated think that's get leveled growth But say, the

into the forecast. that built we've So

And growth. we've quarter X% saw Domains talked with We revenue bookings growth into about openly. X% coming the

of that of core getting to and the momentum about platform we've we them in, attach there's and a to that getting launched lot rates the in talk lot the do them So to Domains, demand think a has we quicker, model. those getting now people, with retention GoDaddy our in

Christie Masoner

question next from line of comes from Vikram Baird. Our Kesavabhotla the

Vikram Kesavabhotla

hear me? you Can

Christie Masoner

can. we Yes,

Amanpal Bhutani

Yes, Vikram.

Vikram Kesavabhotla

that range wanted appreciate to guess to to of Commerce up segment color, I mid-teens I the the on 'XX. talk just support you fiscal what the segment. in growth the & in just about that you curious that, if drivers Mark, are outside going But follow of could on primary Airo. low Applications first provided I

repurchases. to wanted also I separately, then ask about share the And

allocation plan of and cadence going in any repurchases of you you color around priorities going And it You terms us just framework remaining I of the there. your the maybe mentioned guess forward. broader could I'll billion. forward? also leave And capital could $X.X if remind the offer

Mark McCaffrey

we're it Vikram. On we've demand than product seeing faster much and the this seen. ever we seeing to about third move then faster second ever a to seen. much had product is that And than Thanks, Yes. we're drivers, we lot, growth the now A&C, talk the

segment our as in So That's up shows well. higher that our growth. A&C profitability

the within our So But those leverage increased it's of lot model. are profitability and driving a our drivers.

get once in coming up life. a We've we of If to customers, product, XX%, It's to the but average from there. Outside our to it is up Airo, customers get that the about it is customer product. we significantly. with goes moving for It's customers third retention talked that product, a goes customers second intent, second the bundling. almost

So the are seeing that those and now, compounding. right in are that the A&C driving momentum things we're

in demand, is that nice So I price, everything there. attach, would driving say between growth

it On little a Investor our there's still to more about no -- at to shareholders. the talk return more share Day, little But a a repurchases, been capital of broadly. change. portfolio part We'll we our it's big

We have and go. decisions disciplined $X.X We'll look our at billion what on based make in on left quarter-to-quarter our framework it we authorization. there, we see we'll out as

about a little bit will March. talk the Day more to get in when We Investor it we

Amanpal Bhutani

Vikram, And different it then maybe, just from looking at a lens.

You asked A&C. about

A&C, you the components look XX% products of the part every really right as significant that part we now, in So double bookings to of bookings right? business talked propelling that's and we getting A&C or digits A&C that every growth growing about. If it of is sell at that

Christie Masoner

from of comes line question Blair. William the Pfau Matt next Our from

Matthew Pfau

idea least where payments. start you customer to penetrating on And existing are off terms base your at about could asking at of an base. or give perhaps the wanted addressable you I just us customer in

expect go biggest driver we to of or be existing growth again? As existing 'XX, into -- the do you customers converting

Amanpal Bhutani

Matt. Thanks, Yes.

the lot well. of as access within still next -- our very the to do it to our in are driver already. in We a of payments of base. early stages be largest XXXX intent to comfortable customer we in We continue growth that customers have We very Commerce very, base penetrating feel expect

going we We've growth. selling as healthy what We're some solution. prepared I And ready. very great some more expect go expand of We're great in we're going we to omni-commerce are to the products, customers. offerings. So comments, got these to said my after

it of in You'll see well. as much March

with go payment well. going broader good we these that core functionality, will feel our the But So offering growing keep to we're to customers. really

Matthew Pfau

that for A&C, just XX% the then guiding Is and to up else guidance difference? growth follow for of low to the that And or something payments the there QX, bookings discrepancy QX. in mid-teens in on you're What's drives there? Great.

Mark McCaffrey

look would I Remember, at we Matt. and overall have business business. Thanks, a the going momentum it's the subscription not in.

hardware have We transactional, shipments have we well. and as

timing take going we into and out. we take we into they're So orders account, those think of that account and the when

there a to will related and always be So a between that. discrepancy bit revenue little bookings of

Amanpal Bhutani

Yes.

show -- to always it XX% like Mark what little up, of is going and to lag Just a is you'll about sure, bookings, talked make said, it's Revenue we course. right? is bit, see

Christie Masoner

of question next Mark from Evercore ISI. comes the from Our Mahaney line

Jian Li

Jian Mark Mahaney. This is Li for

a that Just Airo like which product right monetization now? markets on you you maybe are potential are question from apart may testing us on Can first, attach, give again. other the driving just like what be for international also you color more And opportunities exploring Airo?

And second then greater kind you you of question flexibility. gives mentioned attach is pricing the greater

full Like ARPU year can like action into drivers is think about baked ARPU? So we pricing? up How between this attach your you about outlook? talk should growth year just growing versus price taking potentially

Amanpal Bhutani

Yes.

first. plan international rollout is our English, typical English markets, the large always On markets

there's -- all is to for there. testing So is tickets to go approach across of that's that should and we're our Airo capability tail a our great now. the us that long a markets are view But those absolute markets,

that. about excited super So

of a share you product looking In Day, little I'll is we're lever at just attach other as monetization methods. we're give also bit of we'll means, first course, the But an attach product monetization looking our And terms Investor example. for and new for.

is for builds done in you a Airo your see to and for it logo. where, new things and more One has domain GoDaddy test of builds paywall able edit we you to it it buy new that can you or we're logo gives there offering and before. that logo want you be premium services to Airo, monetization never the test we are ability a as to that building the a But offer method that going around it. And

then example in So of testing. one part, I'll the Mark. And think terms to it of second I our turn the types that's teams one of of things are

Mark McCaffrey

Yes.

software plan that's them, of platform bundles, So and within the you about about forward XX value today. customers, so anything how bundling we creates on XX our we elasticity that a our doing of pricing-wise, getting a Airo, excited guidance altogether. they're built pricing we interactions million We're the the our get sit happening just around around million data into within of as know, products, and here out going attach opportunity which with And seeing is lot with driving. they're lot value

we we've do to rest of in So go our we year, continue as as there But go forward. within a and there's for think forward. opportunity we usually now, we and guide actions the out right as the we'll of pricing lot update built evaluate

Christie Masoner

from line Piper of comes Sandler. question the next Clarke Our at Jefferies

Clarke Jeffries

for Two basis Mark. bookings, some when those Domains to just revenue One there's strength wanted year, clarification the is the It's mentioned calendar a we'll or X% on ask headwind revenue see then a off trough from I headwind or during bps intra-quarter trends, of color like peak XXX the questions and seems X% of XXXX. any you Based divestitures. it there. but full of point for XXX sort on follow-up. just more

Mark McCaffrey

will second primarily some in in first I Yes. half, half. the with it in would half the Clarke, be primarily but say the first

Clarke Jeffries

dev but XXXX, a discussion expansion And good to Perfect. reflecting bps for happened that next of reduce around what we've spend. in dollars year, the for then XXX and and tech advertising intent right. All did fall, marketing EBITDA on margin had

bps, growth would frame or advertising So be marketing mix tech think dev great. anything and the 'XX that for shift and calendar could driver incremental reduction in of about XXX percent when of dollar revenue A&C, you you of around way any

Mark McCaffrey

A&C we're AWS XXXX, it I Clarke. at are the you if Thanks, we're access reduced margins just AI is and naturally segment. it take part leverage based. forward. And of at more a leveraging A&C right? to where the as from software picture, profitable Therefore, again. all QX that in a will products spend, more go leverage the There workforces of way grows QX then on going It's helps have use We're some And It's as we'll We're growing getting of help kick our global we get our we is our starts That to in, to XXXX care look P&L picture, for and also look bigger the us where things data the We're and just get reducing natural of centers. right? cloud. T&D exiting of will bigger the becomes Yes. dependency be that leverage it all to at the gets you organization automation, related the together. of X-plus expand in a through that natural that.

looking So that's Hopefully, I'm kind helpful. the levers at. those are of

Christie Masoner

Our line Citigroup. from from next Arounian Ygal question of comes the

Ygal Arounian

couple And I guess for the a even what us impact been there to customer it's that, growth Is historically years. over hosting from to divestitures? growth on if any normalize the maybe past at for we what customer want been look of understand second. the customers we to I focus help versus has way

growth let's strong about the X%. a talked continued -- customer funnel, call sorry. You top line historically, The anywhere at top of X% around it's been or X%, it, to from

when convert fill or guys you're customer Are you or flattish thinking do right on digit you digit in that versus growth are gap, can that single X? back growth next it in to looking single the of to more And you smaller number to now? year customer easily? subset How lower might think get the about customers ARPU focused a

Mark McCaffrey

Yes.

When level continuing. out value at themselves for at give all product, we adds something said consistent I'll talked we've us. strong therefore customers color demand XXXX second of the look for that some we've intent gross generate to seen they is for into Ygal. generate we so come about within always continuing value that into our targeting What you, business and that funnel, add 'XX and are a and higher So we've that do customers, coming the year when that

higher 'XX divestitures, the adds, come we right? is With in XXXX, it increase was which they through an generally the only not customers. customers, losing that, put we're that intentful in bundling, seeing adds customer seeing customer with you the more And but so that are we momentum A&C. there. to in consistent than materialize those are perspective, in it and are also And customers from low intent gross seeing quarter-to-quarter we're stable. gross were seeing growth we're the seeing And We're see more

done for weren't a years. product, things, on they were So doing single things maybe haven't

we've at basis. something we add to there and that that net Obviously, is through work of continues customer in 'XX. So that a and we on done portfolios, in a our continue look working trade-off are lot be as our divestitures

for So we're abate higher the demand the that 'XX, to in seeing customer continue and we'll demand funnel the But that in going portfolio of and the to that intent begin stable front will forward. done we've bringing that work now. review our it is has in

Ygal Arounian

GMV continues type really bring That's -- GPV your the of helpful. bit growth driver any by, then And around GMV, qualify Just give whether I on don't business customers strong. there really more a know, onto drivers more segment that. way little platform. or payment be the also help Great. to color and I or understand Is product? to Okay. it's to of

Amanpal Bhutani

extent, of categories, call partnerships Nothing GMV have, we the are tend know that focus in them, in is sort often product some very lot how talk what our A Our system very verticals they well of that we works provide competitive results. it they've there, to about. And macro the the that Ygal. is about really a so follows, customers got significant that them up out is to for big right? you to Yes, shows through right? to doing, with right? and big a It sell in much and the

Mark McCaffrey

that's targeting monetize what we're GPV base, is we help that's because and on what payments. And customer focus I'll we to just what our the within add, grow

Christie Masoner

comes question line Ken the of from from Oppenheimer. Our next Wong

Hoi-Fung Wong

XX% Perfect. I on exit just margin. want of maybe to up circle that kind

in launch for QX spend and costs. renewals mentioned You heavier

expect there back-end would that we that given or track be just product more are you XX%, to some fairly to loaded investments upfront? As linear

Mark McCaffrey

Yes.

about I'll with average. and you XX% we roll exit color our timing talked out. because other is being spend We then And giving So XX% renewals certain expenses. our how related it the and XX% around, to strategy expect say, in of the QX to

ladder do, will So believe like year, saw it we -- last we we do think up.

We haven't I as gotten the trajectory into we to But the exact think numbers yet. put We'll provide year. you there. more a that around color can further get on

we'll were Now the to and similar expect this there expenses that timing it that, be of some to talk be to year than other would But through we marketing might through happen. saw what year. laddering if you up I that

Hoi-Fung Wong

on quick that and perhaps optimization some Day. Got a ones those you efforts guys it. talk at are new And guys then will side. forward the follow-up you just Obviously, continue will push Investor about that on to

plans launch much the are to Investor guess, how baked look outlook, post we yet in there? Day? already As optimization at is Or those incremental I

Amanpal Bhutani

constantly opportunities. we When everything optimization think is is about are in of sight have But to the already. Yes. line and fact it, we guiding evaluating new guidance we to the

need teams and Our bring new to they we're disciplined they very them have looking quarter, approach opportunities, forward And with do those to evaluating points achieve to able be and moving every at what forward those ideas. and proof a to targets.

And anything would we tell absolutely were if you more. to evolve,

it couple have thing. that's great momentum, our over continue great doing a that to just just discipline. is compounds, We record And and that of track continue of the last And a years. goal that

Christie Masoner

Porter Our Morgan next line the question Elizabeth comes from from of Stanley.

Elizabeth Elliott

guide I bit point X like to aftermarket But feels disclosure just 'XX divestitures walk of in the pricing. of the couple on versus of appreciate it's QX, was X%. for around rate I fiscal the it easing as about the there's from on the X% whether hoping little more migrations. exit a benefits and a clarity get well,

in to how the just that that on just of momentum the year. the get exiting given taking -- of some changes a business -- And so and bookings QX on the relative love to the seen that underlying momentum you're we've view better bookings I'd sense growth

Mark McCaffrey

Yes. Elizabeth. Thanks,

bookings. headwinds There further the we divestiture some the to of A&C, Just seeing a about activity. are color. the we've things the We little related We're other in talked momentum and talked there for nonstrategic assuming hosting their to flat assets integrated. We're evaluate haven't the the prospects. in we or down long-term still year that for they're exist as that acquired built to been continue about

Things change. basis, a maybe for growth But think is we're momentum no long-term in will on in the be aftermarket, quarter-to-quarter, up. being could assuming to it. there flat from some There that market. will grown there continued that slightly -- we year, market That measure the be way but that coming like again, volatility

still It's difficult at we're see growing as but Domains. in we a base, steady will a and be growth something It that think point-wise. good that demand on it we big increase is Still in. always big percentage coming

high the the middle range. this. the of year, up for all you a of we continue and put into the the there put we range, we'll X% end So that you think monitor and the for when there's headwinds good at know part is of first the to And opportunities point

Elizabeth Elliott

a then the that think have when about tend made you And aggressively the through lot have just far? holistically, we the take address kind potentially margin opportunities any of upside to to and the into is that likely When Great. like more follow-up. just given side to Or would as thus revenue more business, improvements a just already business a you of on margin on you upside, more guys given of ahead? flow look

Amanpal Bhutani

process the and of growth which products balance depends on project mix targets. of is where as pretty Again, our disciplined terms But of Elizabeth. guys goal the proof of and It we on invest have to exceed profitability. very looking down hard investments. there, sort well. on we points to double be think kind multiple scenarios call a also with changes, regular If on transparent our to, product I basis, teams on in how bringing a it's we're in something generally, you

able us. So be that you'll journey on be to with

Mark McCaffrey

Aman growth the think I the and profitability. balance perfect. We And put it

at go that can ways and into the Our free constantly for to cash model. do flow looking us be flow evaluate we to to opportunity accretive that that to goal we'll ways long-term We're free cash per future. what share. ultimately and the the drive is the creates And constantly

Christie Masoner

of for the on from at next Brent question line Thill John Byun comes Our Jefferies.

Sang-Jin Byun

year out done I if it might guess, be going more wonder of do you in U.S. then the any in half. like Kind by of guess, Airo. and or for pretty wondering, is I think using be the is some way had how to still to back and 'XX, just you users still much end guiding But way it? second quantify X still if to it where have Or the back in about maybe, in of phase. And it XXX the it I I sort legacy mean I might -- at reorganize I quantify for left? the I be question. second broadly of your questions. given the X% basis you there's guess, this 'XX guidance the, of hosting will you to headwinds, of Or point? about XXX some think to going points had the rolled might abating with, a One, there's

Amanpal Bhutani

Yes.

experience. to things you John. we of We to had today, give looking Investor me forward with already are disclose don't but It's X in X, order going just But the with customers of about our a first Day. of you. Airo number of magnitude, of weeks, seen to Airo, one start the share thousands hundreds sort talking are have the Let we this at to

about. not talking and customers So small stretch that customers, this that's rollout was a the by any I'm purchasing imagination, new just of

the to by end of expect And of the about year. where sort get you talked we

lines more for than aggressive are time Our that. Airo much

more our difference within looking headwind, at existing end make to much expect turn for it with I'll Airo be a a there. very real can and of And of next XXX new our large by Mark customers customers seeing the Airo starting to engage are few bps. we year, months. percentage And how the We the how to the

Mark McCaffrey

Yes.

to in going still related to take or any to strategic our we'll may So 'XX headwind and work We're not aren't to and we accretive need long did caused 'XX. term lot XXX our that of things points we a portfolio, be and basis that actions that to that be to things XXXX, model. evaluate continuing both

decisions optimize, business long-term the and So I say evaluate the say wouldn't done. for make I we we're can. continue to best we'll would

Christie Masoner

next Our UBS. line from of from Chris question comes Kuntarich the

Christopher Kuntarich

that talk something kind Maybe products Airo maybe flow about the Analyst flow? Commerce key the you're it we're are Is going about just Commerce Or be at versus you Airo not an just one thinking learning just about really When flow? the clarification. talking flow current about existing versus more the being included Airo is what Day, would first today there can that we existing thinking the be should of flow else, we're about as products a be to payments?

Amanpal Bhutani

at them. Yes. capabilities customer lay Wheel, in mostly November if What identity right, the you in around look launch needs Entrepreneur's you was Airo saw on we and the And presence identity and our us products. Commerce presence out that's and

hardware, Airo to hardware for going to we're that sneak is of piece the does like What customer show with at that you web, will capabilities example, a core Day on. the mostly capability how layered versus Investor transaction Airo, and a peek seeing Commerce on about and capability you're Airo of how is work identity payments the presence, with but talk Commerce holding and which but management on translate on functionality a a -- all taking today, and web where includes when into we catalogs inventory not just

Christopher Kuntarich

year us full to Got guide? that it. about the versus deliver color just margin helpful. divestiture the from benefit help Very Any And follow-up they the on divestitures. one think

Mark McCaffrey

related these basis, with it the also will on spend a go-forward acquiring reduces quantified out divestiture because of we One, Yes. keep longer I numbers. the centers a in to no mind, go us it exact areas. in need But entity. but also on to CapEx haven't benefits obviously helps normalized and that data EBITDA lot X is our

and So generating cash X free growth forward. our around flow triangulate cash helping our we going flow are there free benefits Both see.

Christie Masoner

comes line on the at of Alexei Gogolev next JPMorgan. Smith from Ella for Our question

Eleanor Smith

products has the to the in drove you It the margin the that remind are can segment. products what margin the If profiles had margin us so, price wide? expansion like A&C seems expansion? Is spread with most of the do -- highest-margin what A&C A&C the of highest

Mark McCaffrey

gross that's higher-margin us. detail a that margin certain helpful don't lower. level. if some hopefully, in give into I are, of a itself that and gotten We little -- high for are areas a you. There from we've you is before, know, then Ella, I'll A&C And so Yes. business for perspective,

transaction we have For software but where it coupled they that and are drive fee, example, up. subscriptions payments the with

element I So bundling what's from to a line. I customer is which, prices driving EBITDA the look it, But increased pricing demand go say we also we a perspective, are as as at of as when see to product, A&C, at when it, growth that products. get they you look to it when we second no there we look increase from well. normalized accretive that well aspect the have across there the in the it a of as -- margin would doubt, that on certain very at is

a it's mix. say would I So good

now. into of X that's growth But the We down to all haven't Y. in times right gotten A&C breaking contributing

Amanpal Bhutani

maybe the add of to we some data shared. have And

website products, plus products, website WordPress, Managed our highest-margin Our digits. double and they're marketing, growing

obviously, goodness the in segment. that's driving So A&C

Eleanor Smith

speak would Great. adopting Payments? GoDaddy And are and profile customer please your the for those who about my second describe can you question, GoDaddy Also, Payments there? latest of strategies how you

Amanpal Bhutani

the product and now much a Payments what The of within $XX,XXX, a over customer towards. micro And started customer million. year very the built million $XXX,XXX target $X GoDaddy million, $X We overall we've That's year. $X profile sort is for a the with is squarely That's who seller the sells targeted selling up people GoDaddy customer. market.

going to product really and just that customers, selling most that just locks It's XXXX. broadening excited solution getting our more So our that retention long we're We're Mark broader third adding go-to-market. that's for term. -- in about. to the like said, in happy tuning keep to with We're suite omni-commerce what And that view product we're very growing. the capabilities the

Christie Masoner

look Instructions] of over to top hour, back like more doesn't It questions. the [Operator the any it at Aman. going I'm We're so to hand have we

Amanpal Bhutani

you Christie, seeing forward it. Investor all you, you excited our looking to Thank thank about We're We're us. at for and joining Day.

cool show, hopefully, and able lot you're to We have make it. a stuff you. to of Thank

GoDaddy (GDDY) 13 Feb 242023 Q4 Earnings call transcript