Q4 2020 GoDaddy Inc Earnings Call
<unk> experienced no.
No doubt commerce continues to be a giant opportunity for us.
Internally. We are also evolving we have made significant progress in implementing a broader experimentation program that allows us to more clearly measure the value, we're creating for customers and deliver functionality faster.
The discipline of measurement allows us to set more ambitious goals, while also giving us the confidence to achieve them. We are moving faster putting more product in the hands of more customers and winning the right to do more for them.
Our leadership team is also evolving.
1020 was a year of milestones and career defining achievement for many godaddy leaders.
After having truly accomplished herculean tasks, both in 2020 and over their respective careers, our chief legal officer nine month, Kelly and our Chief Financial Officer Ray Winborne have each expressed a desire to retire at some point this year.
They continue to be fully engaged with the company and will help with transition as we look to fill their incredibly big shoes, we have a strong leadership team with talented tenured folks and with continued leadership from nine nine Ray we expect a seamless transition.
We have strong internal candidates and we will be looking for external candidates for both roles as well.
With acceleration in the number and also in our internal operating rhythm I wanted to share of three priority areas, where godaddy will be bringing innovative solutions to our customers in 2021.
Our top priority is commerce and 'twenty 'twenty. One is the year, we will bring to market a holistic solution for everyday entrepreneurs that powers every facet of their online and offline commerce experience.
In 2020, we created strong customer value with our commerce tools and GMB for websites plus marketing and celebrate grew 75% year over year in 2021, Godaddy will extend our current offering with a focus on delivering omni commerce solutions earlier this week.
We closed on the point acquisition and as you know point extends our commerce offering with a set of products that span the full spectrum of commerce enablement.
<unk> brings us payment capabilities as the payment facilitator and bring immense value to our customers through its innovative point of sales terminal inventory management software loyalty management tools and more.
Point and godaddy customers are already seeing great success represented by the combined 23 billion in annualized <unk> that already flows through our platform as we integrate and build the godaddy commerce platform at scale will be back by the 6000.
On guide that are ready to provide guidance, we know our customers need to help drive focus and continued momentum in Congress. We have created a new commerce division within godaddy.
<unk> CEO of Osama barrier has joined Godaddy and will lead this new division reporting to me.
The next priority I want to share is about our pro customers. We already have a large group of designers and developers that are godaddy customers, but we know the opportunity is much much larger last.
Last year, our partners' team, whose sole focus is to create value per designers and developers went back to first principles deep research into the customer needs led to a new set of solutions organized in three pillars.
The first pillar is all about a seamless intuitive experience in the tools that we offer in January we launched the hub for Godaddy pros, where website designers and developers can perform their work in a simple intuitive way that saves them time and money the hub.
Bulk updates across hundreds of sites for Wordpress core plug ins and teams, allowing pros to rollout update, but better security new functionality and better availability.
What may have taken hours now takes seconds and even works on Wordpress sites not hosted by Godaddy Pros can also use the hubs built in project management tools and make it easier than ever to deliver customized sites for their clients the hub less pros manage all of the.
Are clients in one place and built in delegated access allows growth to collaborate with their clients more effectively to drive the results of their customers want to see.
The second pillar is all about care growth have told us that they value of the kind of guidance and care, we offer and they want us to do more we have extended our care to support growth for all of their wordpress sites not just the ones the host with US with additional care guide armed with a higher.
The level of training to support these pros we are ready for the unique needs of this customer population.
The third pillar brings it altogether through marketing with millions of pros out there. We have plan of marketing launched the tell them about the added value and capabilities. We are bringing forward. It all begins with the launch of the Godaddy Pro program signing up to be of Godaddy pool gets pros axa.
<unk> two exclusive discounts for the ourself and for their clients and direct access to the most advanced guide directly through the hub speaking their language exactly the way. They wanted Godaddy Pro is live in the U S. With its first marketing campaign and in April we will be hosting.
<unk>, our first virtual Godaddy Pro conference and we're just getting started look out for more benefits of being of Godaddy pro and its global launch.
The three pillars together embraced the needs of our pro customers and enhance our relationship with them beyond a strong managed wordpress offering overall our strategy is straightforward wordpress is the largest CMS in the world with the market share of over 60% and growing.
Growth no Wordpress and preferred Wordpress and our vision is all about making it seamless and intuitive while retaining all of its power and flexibility. We are not interested in forcing pros to use of different tool that sounds like a job for sisyphus.
While it is exciting to talk about new offerings like Commerce and Godaddy pro under these exciting new businesses in the solid foundation of our domains business and that is the third priority I want the top tier of L. Three.
For years, we have outgrown the domains industry with innovative ideas and execution in both the primary and secondary market.
That growth isn't going away anytime soon recently, we added godaddy corporate domains, and Godaddy registry, which promise to offer new and existing customers with innovative solutions, but that isn't all.
Our fine team has really stepped up their experimentation velocity. These are the folks that run the search algorithm on godaddy Dot com. We are building, an adaptive user experience, which leverages multiple inputs, including the customer's profile. The query its context. The available result, and also available add on.
To make sure customers see the options and bundles that will create the most value.
Our aftermarket is also seeing tailwind from the digital transformation of small business more businesses coming online is resulting in more customers leveraging our domain broker service to help them secure the perfect name for their online presence, even if someone else already owns the assets are new live.
Per sales tool has also seen an incredible first inning. This tool lets customers with unused domain names list them in our aftermarket and in just three months, we have seen over 350000 domains get listed.
The outcome here is the continued acceleration in this business as more customers are match with better offerings and are exposed to attach opportunities as well.
Most of the financial impact of this accelerating innovation in domains is still to come and we are confident that the outperformance. We have seen this category will continue well beyond 2021 at our scale innovation like this not only drives growth, but also helps them on exciting new initiatives across the business.
I look forward to sharing more on the three priorities I just went through as the year progresses before I wrap up I know that many of you are eager to hear about the results of our websites plus marketing premium offering in less than a year. It has shown itself to be in the area of real promise for godaddy beginning in the spring of <unk>.
<unk> thousand 20, we conducted a small scale experiment presenting our freemium offering to a limited number of visitors.
Over the course of the year, we steadily increased the number of U S. Based visitors that would see this offering to approximately 50% and we are pleased with the results we've seen along the way.
The sign ups and solid conversion rates that we're happy to note are higher than what we have seen elsewhere in the industry. There is certainly more to be done and this is an exciting outcome as we work to make premium of tailwind to our business for years to come.
Looking at 2021, while there are many unknowns and many things we plan to accomplish we continue to see evidence in our business that support aggressive forward momentum.
As Ray will share through focused execution Godaddy delivered a strong result in 2020 in the face of many challenges are.
Our core strategy of creating value for customers and converting it to shareholder value over time is working well.
Evolving as a company and are in a fantastic spot as we enter into 2021 with that here's ray.
Hey, Thanks, Omar I'll touch on the fourth quarter financial results on our outlook for 2021, despite the operational challenges caused by the pandemic. We delivered a strong performance in 2020, we added one 4 million net new customers nearly double the number of added in 2019. This was complemented by a decrease in our already low.
Low customer churn rates, and resiliency and subscription renewal rates as our products and services became even more valuable to our customers.
Full year revenue grew 11% year over year, while on a love of free cash flow was up 12%, even as we invested more in marketing the capture higher demand in the market. We also took advantage of the opportunities created by the uncertainty deploying $1 8 billion of capital, adding capabilities for customers and creating value for shareholders.
Turning to the fourth quarter results. We saw continued acceleration of the top on bookings grew to 943 million rising 13% year over year on a reported and constant currency basis as FX had little impact on the quarter.
Growth was broad based with the continued strength across product categories.
Revenue came in at $874 million outperforming expectations and growing 12% year over year.
Business applications was again, our fastest growing product line, increasing 20% year over year on continued strength in branded E mail and productivity solutions.
Domains of accelerated to 14% growth as new registrations renewals in aftermarket sales remained strong along with a modest contribution from Godaddy registry.
And finally hosting and presence grew over 5% in the fourth quarter, we continue to see terrific growth on our website creation platform products, though the strength was tempered somewhat by the headwinds from the Godaddy social service due to the elimination of the outbound sales motion in June.
The key metrics underlying our growth of remain consistently strong ARPA rose to $166 up 5% year over year, while the customer base grew 7%.
All of our free cash flow for the quarter was $181 million and $825 million for the full year. This reflected good operating leverage on the P&L as well as reduced capital expenditures for corporate real estate and infrastructure as we transition more workloads to the cloud.
Gross margin remained in the mid sixties in the quarter consistent with our expectations.
We continue to ramp investment in marketing to capture increasing demand, resulting in a $40 million year over year increase of marketing expense.
As we mentioned last quarter, we've been able to elevate investment while remaining within our targeted return metrics, even as we saw increased competition on performance advertising channels.
On the balance sheet, we finished the year with 765 million of cash and total liquidity of nearly $1 4 billion net debt landed at $2 4 billion, putting net leverage at two six times on a trailing 12 month basis illustrating our ability to deleverage quickly.
The strength and resilience of our recurring business model of his fueled a strong balance sheet, enabling us to execute across our capital allocation priorities.
During 2020, we completed four acquisitions repurchased nearly 6% of our outstanding equity at average prices substantially below todays stock price and settle the TRA at an attractive valuation removing an overhang toning the stop.
All proof points that we have the flexibility to take advantage of opportunity as it arises.
Rest assured we will continue to be prudent allocators of capital and the pursuit of long term growth and levered free cash flow per share.
As we look to the future continued growth in cash flow on a strong balance sheet will provide us with the flexibility to deploy roughly $5 billion in capital through 2023.
Moving on to our outlook for 'twenty 'twenty, one we expect to deliver revenue of approximately $3 7 billion representing growth of 12% versus 2012.
From a product category of perspective, we expect double digit growth in domains high single digit growth in hosting and presence and high teens growth in business applications. This guidance includes 20 million of revenue we expect from the recent acquisition of point.
As for Q1, we started the year off on pace and expect to deliver revenue of $885 million, representing 12% growth versus last year.
We expect 2021, unlevered free cash flow of approximately $945 million or 15% growth versus 2012.
This guidance reflects continued investment in marketing and product plus $20 million and net dilution from point as we build out our capabilities in commerce this year.
Finally, I'd like to provide some additional modeling points for the full year 2021, we expect bookings to grow on a rate similar to revenue of normalized EBITDA margin to be roughly flat as compared to 2020.
We expect capital expenditures of approximately $65 million income tax payments of $25 million in cash interest payments of $100 million based on current debt outstanding in todays forward rate expectations.
We announced my retirement today and I want to thank all of you who've been along for the Ray I've had an incredibly rewarding careers. So blessed to have been able to top it off here at godaddy.
It's been my privilege to serve with the Amazing group of people dedicated to such a noble mission.
We navigated a lot of change as godaddy has evolved into a truly customer centric company obsessed with creating value for customers employees and shareholders.
This last year was challenging for a lot of people, but also very rewarding as I've been able to witness our leadership team taking bold decisive as strategically sound actions. The helped our customers employees through an incredibly turbulent year escorts on extra planning to be deeply engaged on the search for a successor and I'll stay on the ensure a smooth transition.
Look forward to speaking with all of you begin next quarter with that well have Christie masoner from IR team open up the call for questions.
Thanks Ray as a reminder, if you'd like to ask a question. Please on the Raytheon feature at the bottom of the webinar screening to the Arab parochial on.
The Airlines our first question comes from the line of Ron Josey from.
Brian. Please go ahead.
Great. Thanks, Christine Ray Congrats on the decision, we'll Miss you, though we have a few quarters of teams and happy new year I wanted to ask two questions maybe amount on commerce that was the first pillar of that you mentioned as a focus area with point now websites and marketing adoption of the millions I think new ESG templates, I think I heard of 23 billion of <unk>.
7 billion of which the websites marketing I just can you talk to us a little more how you view E commerce unfolding across godaddy going forward the tools of peer to peer appear to be in place you've got the scale. So what's next and then.
Ray just real quick on the guidance with EBITDA flat year over year and I'm, assuming that's the continued investments in marketing and product is that the way to think about it. Thank you.
Brian Thanks for the question and yes, Commerce continues to be our number one priority and Youre right you laid it out really well you know with the websites plus marketing in place celebrate also growing quickly, which you didn't mention.
Also of huge opportunity for us in the commerce space, we haven't talked about that much but you know about the Skyboard acquisition that is helping us bring a program that we call the new rule.
We'll talk about any of the future as well so yeah all of those things coming together point, adding those core capabilities as the payments facilitator of invoicing point of sale and the idea is to bring all of those pieces together and continue the pace of acceleration. If you just look at G. M V for websites plus marketing and celebrate the number of annualized number we gave.
Last quarter was much lower than the one you're seeing today and that itself represents sort of quarter over quarter acceleration.
Hey, Ron It's Ray I appreciate the kind of words first but the normalized to March on a normalized EBITDA margin, we're holding that flat year over year, which we're pretty pleased with given the investment we're going to put in place of Bolton products point will be a big piece of that.
<unk> mentioned on the call comments that we got net dilution of about $20 million.
<unk> Commerce anymore will continue to invest more in marketing this year as well so those of the two big drivers on.
On normalized EBITDA margin.
That's great. Thanks, guys appreciate it.
Our next question comes from the line of E call Iranian from Wedbush. Please go ahead.
It all plays on the it yourself.
Hey, guys.
The questions in the.
Of course, the sentiment on Ray congrats.
Certainly Miss you on pick shoes to fill.
Hum.
I guess a couple of questions. So on the first if we could just.
Now I'm on you gave some good commentary around pro hub.
If you could talk about the go to market strategy.
The I guess marketing around that and how the how the sale of sales and customer service team will kind of help helped drive that that initiative.
Can you also talk about how many pros versus DIY errors are using your services today, that's the kind of maybe a little bit more of just big picture around how that evolves and then.
Domains.
Outperform then he talked a little bit about some of what's driving that.
So today, just how is the new star acquisition.
The synergies you're seeing there how much of that contribute and can you talk about some of the things that you put in place specifically from that acquisition.
How that can add to growth.
In the coming years.
Yes, thanks ago happy to take that on pros, let's let's start with the number of Skus I think that was sort of in the middle of your question, we have about one and a half million pros as part of our 21 million customers. So we already have a lot of pros that engage with us.
You know on a daily basis, but we know that the opportunity is much much larger and what the pro hub is about is it was about going to the protein what do you guys need in terms of the interface and then building that in a manner that works best for them and the go to market strategy around it.
Theres of Godaddy Pro program that is all about pro signing up and getting benefits benefits that overtime.
Grow and Theres, a marketing campaign now in place in the U S that is getting the word out to say hey here is all of these new things as the new experience, where you can do a whole lot of you've got project management tools, we got care with the click through messaging there are guides in the background, where there are more guide the number you have higher level of training and they can execute on more asks from.
The pros than ever before because we've sort of opened up the aperture of what they can do so it's the combination of both of them or all of those things that we're really excited about and then in terms of sales and marketing no doubt care will continue to play a role there, but this is not an outbound motion and on what we're really seeing is that pros want to engage with us.
On the web they want to engage with care through messaging they want to move things quickly. They don't even want to wait two minutes for a patient load. They don't want to spend hours updating their sites. They want it done in one click and those of the type of capabilities. We're opening up here and then on domains.
Ray will take the sort of contribution from Neustar would just remind you and I still super early for us with new start the innovation that we plan to bring to the table is all about having the full stack being able to innovate on the registry side and the registrar side and bring new offerings and I've talked about that a little bit in the past so I'll turn it to ray to just.
About synergies and contributions as you asked yes non hit it on the head. This was more about the strategy and vertical position on on domains. This is the future benefit to us.
We get more control over the Dominion cost, which is one of our largest cost from the P&L can you give a contribution to the topline of gout the.
The purchase accounting.
The impacts from Neustar, absolutely new of the impacts on the top line.
If you're looking year over year 21 contribution inorganic contributions from new start is going to be roughly half of point on the top line.
Yes.
Great.
I appreciate it.
Our next question comes from the line of Joseph <unk> from Oppenheimer and company. Please.
Please go ahead.
Thanks.
And kind of what I asked of the acquisition.
And then leverage.
So first you know.
Point without at the very strategic acquisition, but not particularly expensive.
If we think relative to the amount of free cash flow you guys generate a year.
You know if we think about kind of you our acquisition pipeline would you say more of the acquisitions of look like coin tied or are you potentially looking at some things that might be bigger and then if if not bigger.
Again, given the amount of free cash flow you generate.
How the.
The company just very well positioned you are seeing very good customer retention why not leverage up particularly in this environment is probably the number one question, we get investors why not run this business at three and a half the four times leverage.
And just accelerate kind of the free cash flow per share of return to shareholders. Thanks.
Thanks, Jason maybe I'll start on or it can come on at the end of that.
One I love the idea that you know the you agree that point of the strategically important acquisition of <unk> and it wasn't very expensive those are great acquisitions, I love them, but to answer. Your question. We are looking on the whole spectrum. The race and we absolutely agree the M&A of a core part of our strategy of semi DNS and the company's DNA.
The good at it we've done it before but you know as we're out there looking at the assets as you know, it's a competitive or sort of difficult time in the marketplace and we're trying to make sure that the assets. We look at truly form part of the advantage we want to create because at the end of the day. What we're looking to have is that simple intuitive experience right there isn't.
Millions of things that I talk about Ray I'm talking about ease of use I'm talking about saving people time I'm talking about products interfaces that truly are magical that lead to high NPS and all the acquisitions are doing or looking at bigger or small half the fit into that fold. So.
I wouldn't have any one thing that we're not interested in large acquisition. We absolutely are we're just we've got a formula we're working at and should the opportunities appear you'll find us out of the table and Ray alternative for levering up in such yeah, Jason when I think about leverage rate. We've we've had of targeted two to four times leverage since we've been public and.
We've been at the very top of that range when the opportunity presented itself.
Been more about balancing our capital allocation priorities.
So every flavor of or in 2020, right. We leaned in the marketing put a lot of money in the organic growth because of the opportunity presented itself. We closed on four acquisitions last year, we bought back stock and we also settled the TRA. So we're really using that cash flow of the incredibly strong and consistent cash.
Flow that you talked about to drive significant returns for the company.
And if we do see the opportunity to launch point.
And at <unk>.
Hesitant to take up leverage the photons.
Thank you and Ray will allow emissions from fun, but I found actually of that at least from a quarter with you.
Thanks, Jason I appreciate the man.
Our next question comes from the line of true laser from J P. Morgan share. Please go ahead.
Okay.
Hey, this is true on the first Sterling. Thanks for taking my question I was wondering if you could provide some more color on how much of it for 2021 revenue growth is coming from the acquisition.
Hey, Joe It's Ray.
When you look at the inorganic contribution on an incremental basis in 'twenty one.
About a point range $20 million or so thats coming from point of just mentioned on.
I think it was the golf question earlier.
The new store is about another half of point there. So those of the two days that are contributing on it.
It's around that.
One point contribution.
Got it. Thank you you bet.
Our next question comes from the line of Mark Jones from <unk> next please go ahead.
All of the core classic.
Well.
For the average.
The rollout of the law.
Visitor flow.
Okay.
To go into the fall off of.
All of the types of.
As of the pool of also over another.
All of our convertible.
Portfolio.
So kind of set up of sites.
Both of the prototypes.
Okay.
And Nick why wasn't the question wasn't totally clear of what I think I caught most of it.
On premium.
We're seeing as the customers do come in and then the metrics. We're looking at include seven day of conversion and 90 day conversion rate there isn't necessarily a fixed number of where everyone kind of makes the decision on <unk> you continue to see sort of the tail of people converting over time, both of the seven day and 90 day, especially as we got in the later in the year on.
The 90 day converted we started the have a few cohorts that were reasonable size and we continued the sort of see.
Stable conversion in that 90 day around which is which is what we talked about in.
In terms of and I didn't fully cash as part of your question, but I think the objective of premium for US is to open up the aperture to allow our customers without friction to try our products, where we fundamentally believe that whether you look at websites plus marketing more celebrate which we also turned premium.
Last year the.
Value that customers get compared to the price of the charge really theres, a tremendous amount of value and we want to remove any hesitation customers half of trying to use those products. These products of build from the ground up to the exact needs of our customers on if we feel we open up the aperture get more customers to try it that over time, it's just going to build a greater and greater.
Battery that leaves the better financial outcomes over time.
One follow up on the overall, we laid out.
Whoa, Whoa Whoa Whoa whoa.
For the wall.
When you step out of the thought.
The pipeline at all.
The proposal.
Or you're right out of water.
Yeah, our priorities on the M&A are aligned with our broader priorities as a company on it.
And those priorities are simply are you know we are the leader in dream and we absolutely have some amount of attention there, we're making great progress and create and that's fantastic, but we're putting disproportionate about of time and energy resources into growth and that's what our M&A team that is how our M&A team is priority of prioritizing as well because actually create and grow off of.
Are more and more working together and that's a massive opportunity on and when we talk about our $180 billion Tam.
On a huge percentage of that is within the growth rates of that that's where the majority of our energy is.
Okay.
Our next question comes from the line of a flow from Raymond Zone. Aaron. Please go ahead.
And if there is the.
Maybe on Q4 net sub growth I think I saw the one 4 million or so for the year any color on Q4 net sales of maybe the linearity of the quarter.
And then all sorts of MAA for Ray.
Congrats on just taken some time off here and then the cloud transition maybe any updates on that and how it moving this incremental cost was kind of a dual sourcing right now as wealth can lay that out. Thank you.
Hey, Erinn I'll take both of those market come over from something.
When you look at Q4 customer growth.
Still see a record type levels the.
Momentum has been good and momentum is carried on into January so nothing nothing different than the trajectory that we've seen at this point.
Cloud you saw some of the impact of cloud in 2020.
<unk> up or manifesting itself in lower capital expenditures.
As we have continued to move workloads into the cloud that is putting pressure on the tech and Dev line. That's one of the investments, we're making there, but if you recall back when we signed our contract with AWS, we were going to manage this thing to a cash basis and that's what we're continuing to do and that's one of the reasons, we use unload the free cash flow as our key metric there.
Because the balance from normalized EBITDA down there obviously includes the capex versus the Opex Chuck on the P&L got it great. Thank you.
Yes.
Our next question comes from the line of Michael but the direct from Rosenblatt Securities Mark. Please go ahead.
Thank you.
Just a follow up on on your premium content or comment is it safe to say that the 90 day conversion.
You hope to do hope to improve upon and if so what potentially or the the missing pieces, there and point can help.
And then I appreciated the the commentary in your.
The presentation highlighting returns on your marketing spend last year, just curious how those compared to the prior year and as you look into 'twenty one.
Sort of what.
Considerations, you are making in terms of absolute or relative spend.
And how point.
Perhaps fits into that picture.
Yeah, let me take premium and a little bit on the marketing spend on perhaps ray wants the coming on that is low.
On premium actually go back to the comments Marc in the.
The prepared comments.
What we're seeing in terms of conversion is of rate that's higher than what we see in the industry. So of course, it's still early in the journey for us, but that's that's really good debt, that's really comforting sort of.
What's the bed of certain set of the concerns that people may have had but when I look at being able to improve conversion over time, absolutely. We have people dedicated to doing that but for me. The biggest thing is I want to get it out broader and broader and broader right I'd like to have it at 100 per cent of the U S. Soon I'd like to go global with it.
And the that's where I'm really pushing the team because we know that at the end of the day, it's about attracting more people to our products and getting them to use our products because once they use our products people see the we have something differentiated to offer that it works in a manner that they didn't fully understand that godaddy would have that offering and then in terms of mark.
Sitting in a range, we can talk a little bit about.
The numbers on the unit economics, and how we've continued to sort of maintain our benchmarks in months to breakeven, but I'd like to give you a little context of how I think about the marketing spend and the approach. There is day is one of.
That you want to spend up in marketing and as you spend up you have to continually improve your measurement your ability to bid you know your ability to sort of get into more and more channels and as you do that and you improve your internal capabilities. The market better you can then spend even more on marketing and I've talked about sort of this idea of.
Improvement in growth and improvement in spend in the past and it's something that I have experience with a net I'm pretty pleased with what I'm seeing in terms of godaddy in 2020 on what we have forecasted for 2021.
Yeah, I think if you look at what we've been spending on marketing, it's roughly 13% of revenue in 2020.
But it's disciplined right. We're disciplined on the approach we are disciplined on the execution of delivering the P&L.
The P&L in totality, yes, we've got a really good track record of <unk>.
Resting in marketing over time with good returns on non mentioned the strong unit economics that we've got.
And we're always challenging of the team the stretch and look at the next marginal customer at unacceptable return because it is all about balance, but when we do see that we extend the payback period.
And.
That does create more risk.
Our higher risk profile for us because it does hit the bottom line on the short term, but for the right <unk>, we're willing to do that.
You might have noticed in the slides that we put out with the earnings we put a new slide in fall of marketing.
Where the different law.
Lens on how we see the returns.
Don't take a look at that but.
In summary, we did.
Roughly 85 cents of incremental bookings and 45 and incremental gross profit in 2020 per every dollar that we spend on marketing and advertising.
When you compare that against others in the industry.
That's going to kind of kind of shaped up pretty darn well.
Okay. Thanks much.
Our next question comes from the line of Brent Thill from Jefferies. Please go ahead.
Frank Please on the it yourself.
Yeah.
Okay.
This is John Byun on behalf of Brent Thill. Thank you.
When you look at the the newer products are websites plus marketing and match work right.
One way to think about what the relative size and growth rates are between the approval.
Yeah, we gave you.
Kind of a view into those website creation of products last quarter with an IRR of $350 million growing in the high <unk> and we have continued to see strong growth on both of those metrics.
Okay.
Yeah.
That's helpful.
The differentiation between the two at all I don't know if it's the <unk>.
Indication between the core and DIY it on.
Both are growing strongly.
We've put a lot more shoulder and the websites of marketing recently, we heard demands comments earlier, one of the themes with point the theres going to help US there is continuing to push on commerce, which will stretch into the managed wordpress.
And we will commerce offering as well.
Great. Thanks.
Net.
Our next question comes from the line of novel Kang from true Novack. Please go ahead.
Okay.
Yeah. Thanks.
A couple of questions if I may.
In terms of the share.
Outlook, what are you baking in in terms of.
Potential synergies from clients integration integration, maybe later on in the year and to your E Commerce.
Stoppages and then another question just guidance on the data as well.
How should we think about the the drag from the social on outbound.
For this year and.
Is that material.
EBITDA then can you just called it out.
Yes.
Yes.
When you think about synergies.
We are giving you guys some guidance around the top line and the bottom line and it's going to be an investment year for point of.
As we integrate it into our offering will be spending money on marketing spending money on products as well as experimenting across the on site with that.
That will be dilutive to the tune of $20 million in 'twenty, one on social thing about that being a headwind through the first half and less so on the back post our decision too.
Check out the outbound calling motion so first quarter will be the highest edwin.
And then it starts to diminish as we move through the back half.
Got it and then let me just a quick clarification on the on the Sam on the synergy comment Ray.
So the the Caribbean kind of gave us at the time of acquisition having it.
On $150 million in bookings by two.
Then in 'twenty three.
Should we expect any kind of revenue synergies to emerge in the theater at on or not.
Yeah Youll see some of it is this year is going to be a lot more focused on getting it to market right payments will be first but it's certainly not going to be linear.
Next year of 2022 will be more of the go to market strategy and starting to drive revenue and then our expectation is we'll start to scale in year three.
That number that we put out there of $115 23 as should be a conservative number of based off of what we're looking at.
And that's true Thank you Ray you.
You bet.
Our next question comes from the line of Clarke Jeffries from Piper Sandler.
Sandler Clark. Please go ahead.
Hi, This is clarke on for Brent. Thanks for taking the question I wanted to circle back to the domains growth 14% of another.
Quarter of acceleration.
Just wanted to dig in there of what is driving that growth is that all of the primary market and if so.
I see the dot com and Dot net registrations came down in Q4, but still at elevated levels. I guess, what is giving you the confidence for that guidance of double digit growth per domain in 2021 and will there be any contribution from the new products of corporate domains or anything like that the rollout being offset.
Yes, it will be a real.
Pleased with the performance of domains closing out 2020 was really solid growth and then obviously you saw the guide into 2021, continuing the she gets strength and it is broad based that's the beauty of the business I.
I mentioned earlier, we own dream, the dream phase of the customer journey.
So its strength across primary registrations and renewals have been strong.
Aftermarket that is really doing well as we continue to improve the customer experience, but also the merchandising on front of site.
And the last there is a modest contribution from registry that I mentioned earlier, roughly a half a point on total revenue in 2021.
Got it thank you and another point is close with.
Was wondering if you could frame the journey of debt.
Sorry.
Could you frame the journey for that company and become the payment facilitator and how how much of the offering their own payment solution versus the third party processor in the will you aggressively moved to the internal solution for sort of digital only commerce.
Yeah, when we look at point Clark.
Obviously point today has sort of a go to market strategy that is through a channel of distribution channel, but when you see point and godaddy together, obviously with Godaddy brand and 21 million customers and lots of folks being attracted to us with the websites plus marketing managed wordpress, which include sort of commerce on boats.
Right.
What we're excited about is bringing those pieces together and using the capabilities Godaddy has and we have multiple capabilities backlog, we have the opportunity to go direct to customers right because people know godaddy they come into the sales path the notice of the capabilities of the wear and it seamless it's integrated.
Of that work Super while we also work like I said with the one and a half million designers and developers right as we make the world Congress the cause and wordpress ecosystem the easier for them to use and we integrate these capabilities of payments and others into that experience. We think there is of great channel there for us to work with customers that we already have that.
Work with other folks and give them the right incentives the to sort of continue to fuel that pipeline and then we always have cure rate. We continue to have folks that callers messages and although again, we believe lessened the outbound motion. So we're not talking about that about doing that but we do have a huge amount of inbound.
<unk>.
Coming to us and that'll continue to be.
Average of growth for us as well so even on the incremental effort of the investment that we're putting in here. We think it's a fantastic rate and in terms of I think of your question around using our internal systems point of already a payment facilitator. So we will be doing this ourselves right. It will not be that part will not be with the third party.
Mr. Seth Thank you very much.
As a reminder, if you'd like to ask the question. Please use the Raytheon feature of the bottom of the webinar scaling to the added to the queue. Our next question comes from the line of thank all Iranians.
Please go ahead again.
Hey, Thanks for taking one more.
I wanted to come back to the commerce.
And just ask.
With the point of acquisition.
Maybe with some of what you're doing around pro hub in the the greater focus just around commerce over the past year end and into the next year you guys have always talked about your core customer is being the micro business.
Does this change that at all or is it still kind of the same type of business, but those that are more focused on commerce.
Where do you see.
Whats becoming.
Maybe I won't call it crowded but.
The more crowded.
Commerce.
Software.
Arena, where do you guys see yourselves kind of competing the most thanks.
So we are still laser focused on our customer segment. This these are the micro businesses or the small of the small businesses folks that have 20 employees of less 10 employees or less and in 2020. They have had to pivot online very very quickly.
I need to explain that the I think you guys know that very very well, but let me tell you just just a small story we did of <unk>.
We have of customer in the UK day.
Make vegan pies and the places called Magpie and they just have a fantastic product and we got the northern we love the loved the folks that run Mac book and our marketing team decided to have to showcase them in one of our marketing campaign checkout the AD it's phenomenal.
All of here was what I imagine one of the local <unk>.
The place where people in the same neighborhood probably came to them in bulk buys from them. All the day. They went live in our advertising now theyre shipping buys all over the U K.
By definition. They are now of company that is online and we think that opportunity exists for every micro business right.
The Internet is the great equalizer it allows customers to reach these micro businesses and with the tool said with the guidance, we offer and cure. These micro businesses can absolutely provide the experienced of their customers that is professional that does the job in a manner that leaves their customers impressed so to your question of how do we focus on.
Sure.
The customer segment, absolutely we're building all of our products ground up for those for those customers.
And all of those customers are going online in our research the clearly show that day, one commerce and they want it online because any one of them can be like Mike Lang.
Very helpful. On thanks for taken the other question thanks ago.
Our next question comes from the line of James well James. Please go ahead.
Yeah.
Hey, guys. This is actually Trevor on from the Barclays team.
Hosting and presence guidance for the full year is high single digits. While on <unk> is mid single digit implying an acceleration throughout the year is that just a matter of the the tougher comp in <unk> or the abating impact from the social and outbound as the year progresses. Thanks Trevor.
Trevor on its Ray you answered your question of exactly that it's the last year pre COVID-19 social was growing.
And then second quarter, we started seeing the impact on and obviously beginning in early July we took out the.
We have been on calling motion so that's towards the progression youll see as you move through 2021, but the implication in that guide is that we.
We will see high single digits in that line item this year.
So could you exit the year of double digit rates.
Good yes.
Thank you.
Yes.
Yeah.
Yes.
Our next question comes from the line of Chris carriage from Deutsche Bank. Please go ahead.
Hi, Thanks for taking my question.
Just going back to the question before last.
You had.
Talked about really how are you guys. Just core focus is still on the businesses of the 10 to 20 employees on the micro SMB segment, how do you think about driving more value in the product to the lower end specifically on the E commerce product side versus driving value at the higher end.
Just sort of the ones of the.
The sites plus marketing subscriptions, how do you think about driving pricing leverage and value to those customers differently that is.
Yeah, Chris these customers.
We can definitely differentiate certain items and say look here of certain features that are better for these customers create more value and we are we of tiers that different customers can adopt but I'd like to just bring it back to the idea that most of these customers are going online and doing commerce online in the significant way for the first.
Time.
Even the base set of features they need those to be Super simple and what they really need is when they're confused the call someone and to get it to work just the just the way they want it.
We've given the example in the past and I'll share a little bit of an update on it we talked about how for the super small customers.
The templates that create a one page commerce site. When we created the first one and just took off it became the biggest thing right. We have now added more templates and we find all of our customers sort of going towards those temporary because even ray I hate to call them bigger customers, but you know even customers that have 20 employees are learning their way.
Through E Commerce, and you know immediately they want a set of things, where they're having trouble managing their inventory and they are calling us theyre, having trouble taking there what theyre doing in the store to online and they need help and where there are they are they want to manage between the online in store and what they are selling on the major platforms and is.
That feedback that we're taking the saying okay. Clearly these customers need the same thing, which is day one from one place to be able to sell in their store sell on their website and sell on any platform and hence you saw the point acquisition is bringing together of websites plus marketing celebrate that were already on and the point capabilities, because we know that it works across.
The spectrum of customers, we have and it's not really about truly separating out the value of sort of the top end of that or the bottom end of that.
Thank you everyone for joining us today, I'll turn the call over to him on for some closing remarks.
Thank you Christie I'll, just end of where the thank you to all godaddy employees all around the world Twenty-twenty brought many challenges for many of us out of personal level and I feel like every person leaned in to produce these fantastic results. Thank you all again for joining us and I look forward to talking to you next quarter.