Q4 2021 GoDaddy Inc Earnings Call

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Good afternoon, and thank you for joining us for Godaddy fourth quarter and full year 2021 earnings call I'm Christie Masoner senior director of Investor Relations and with me today are Amman, Giussani, Chief Executive Officer, and Mark Mccaffrey's, Chief Financial Officer following prepared.

Speaker 1: Good afternoon and thank you for joining us for GoDaddy's fourth quarter and full year 2021 earnings call. I'm Christy Masoner, senior director 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. If you would like to ask a question on today's call, please use the raise hand feature in the webinar to be added to the queue.

Our remarks, we will open up the call for your questions. If you would like to ask a question on today's call. Please use the raise hand feature in the webinar to be added to the queue.

Speaker 1: On today's call we'll be referencing both GAAP and non-GAAP financial results and operating metrics such as total bookings, unlevered free cash flow, normalized EBITDA, annualized recurring revenue or ARR, gross merchandise volume or GMV, and net debt. A discussion of why we use non-GAAP financial measures and reconciliations of our non-GAAP financial measures to their GAAPa coblents may be found in the presentation posted to investors.godot.net or on our form 8k filed with the SEC with today's earnings release.

On today's call, we'll be referencing both GAAP and non-GAAP financial results and operating metrics such as total bookings unlevered free cash flow normalized EBITDA annualized recurring revenue or <unk> or gross merchandise volume or G. M D and net debt a discussion of why we use non-GAAP financial measures and reconciliations of our non-GAAP financial measures to their GAAP or core.

<unk> may be found in the presentation posted to the investors don't go Daddy Dot net or on our form 8-K filed with the SEC with today's earnings release the.

Speaker 1: The matters we'll be discussing today include forward-looking statements, which include those related to our future financial results, our strategies or objectives with respect to future operations, including our approach to capital allocation, new product introductions and innovations, and our ability to integrate acquisitions and achieve desired synergies.

The matters, we'll be discussing today include forward looking statements, which include those related to our future financial results our strategies, our objectives with respect to future operations, including our approach to capital allocation, new product introductions, and innovations and our ability to integrate acquisitions and achieve desired synergies.

Speaker 1: These forward-looking statements are subject to risks and uncertainties that are discussed in detail in our documents filed with the SEC. Actual results may differ materially from those contained in the forward-looking statements. Any forward-looking statements that we make on this call are based on assumptions as of today, February 10, 2022, and except the extent required by law, we undertake no obligation to update these statements as a result of new information or future events. With that, here's a quick overview of the documents filed by the SEC.

These forward looking statements are subject to risks and uncertainties that are discussed in detail in our documents filed with the SEC actual results may differ materially from those contained in the forward looking statements.

Any forward looking statements that we make on this call are based on assumptions as of today February 10, 2022, and except to the extent required by law. We undertake no obligation to update these statements as a result of new information or future events with that here's a month.

Thank you Christie and thank you all for joining us today.

Speaker 2: Thank you, Christy, and thank you all for joining us today. At GoDaddy, we remain laser focused on helping micro and small business owners succeed and grow their businesses. Our customers continue to show resilience and creativity through the pandemic, and our Q4 financial results were a strong end to a strong year.

Godaddy, we remain laser focused on helping micro and small business owners succeed and grow their businesses.

Our customers continue to show resilience and creativity through the pandemic.

Our Q4 financial results were a strong end to a strong year.

Speaker 2: As we look back at 2021, I am excited by the unyielding acceleration in the pace of execution.

As we look back at 2021, I am excited by the on yielding acceleration in the pace of execution.

Speaker 2: best demonstrated by the integration of point and the launch of the omni commerce offering.

Best demonstrated by the integration of point and the launch of the Omni commerce offering.

Speaker 2: And we have a deep trust with our 21 million customers, evidenced by the 65 plus NPS we have in care. And that in Q4, more than 60% of customers in the commerce tier of Websites Plus Marketing chose GoDaddy payments over other established providers.

We have a deep trust with our 21 million customers evidenced by the 65, plus NPS, we having care.

And that in Q4 more than 60% of customers in the commerce tier of websites plus marketing chose godaddy payments over other established providers.

We delivered strong growth in bookings revenue and Unlevered free cash flow in 2021.

Speaker 2: We delivered strong growth in bookings, revenue and unlevered fee cash flow in 2021. With Q4 being GoDaddy's first quarter of $1 billion in revenue, we ended the year with a significant outperformance in aftermarket driven by sustained market demand.

With Q4 being Godaddy is first quarter of $1 billion in revenue.

We ended the year with a significant outperformance in aftermarket.

Given by sustained market demand.

We continue to drive broad based strength in our creative growth suite of products with <unk> for them growing 19% year over year and today, we announced a $3 billion share buyback program that Mark will cover in his section.

Speaker 2: We continue to drive broad-based trends in our create and grow suite of products, with ARR for them growing 19% year over year. And today, we announced a $3 billion share buyback program that Mark will cover in his section.

While we delivered strong financial results omicron impacted our customers and our employees in the U S. The impact started to show late in the quarter as customer demand softened a little bit.

Speaker 2: While we delivered strong financial results, Omicron impacted our customers and our employees. In the U.S., the impact started to show late in the quarter as customer demand softened a little bit and more and more employees were out sick due to the pandemic.

More and more employees were out sick due to the pandemic as.

As you might expect the biggest operational impact of the higher absentee rates were in our care organization as omicron cases around the world have come down we have seen better staffing in care and expect the impact of army crop to be limited to Q1 2022.

Speaker 2: As you might expect, the biggest operational impact of the higher absentee rates were in our care organization. As Omicron cases around the world have come down, we have seen better staffing in care and expect the impact of Omicron to be limited to Q1 2022.

Speaker 2: Early this year, we named Roger Chen as our Chief Operating Officer. Roger has been with GoDaddy for over six and a half years and led teams to strong financial results by focusing on operational excellence. He started with GoDaddy with the expansion of our international footprint and most recently has been leading our domains business. Roger is excited to meet you at our investor day tomorrow.

Early this year, we named Roger Chan as our Chief operating Officer.

Roger has been with godaddy for over six and a half years and led teams to strong financial results by focusing on operational excellence.

Started with godaddy with the expansion of our international footprint and most recently has been leading our domains business.

Roger is excited to meet you at our Investor Day Tomorrow.

Speaker 2: With Roger's appointment, I'm happy to share that we have a well-rounded and complete executive leadership team in place, and we are excited about the large opportunity in front of GoDaddy and confident in our ability to execute to it. As always, I will cover progress on our top three priorities today.

With Roger the appointment I am happy to share that we have a well rounded and complete executive leadership team in place and we are excited about the large opportunity in front of godaddy and confident in our ability to execute to it as always I will cover progress on our top three priorities.

Today.

Our top priority continues to be driving success in commerce through presence.

Speaker 2: Our top priority continues to be driving success in commerce through presence.

Speaker 2: A year into the point acquisition, we have made remarkable progress with the integration. Kudos to all the teams involved.

A year into the point acquisition, we have made remarkable progress with the integration kudos to all the teams involved.

Speaker 2: We completed several product launches for Websites Plus Marketing and Manage WordPress, launching GoDaddy Payments mid-year and the OmniCommerce product launch in September .

We completed several product launches for websites plus marketing and managed Wordpress launching godaddy payments midyear and we omni commerce product launched in September .

Speaker 2: We also recently launched a higher end commerce queue, which is currently being tested with a percentage of US customers. We doubled the size of our commerce team and we intend to continue the rapid pace of product launches in 2022 as well.

<unk> also recently launched a higher end commerce, SKU, which is currently being tested with a percentage of U S customers.

We doubled the size of our commerce team and we intend to continue the rapid pace of product launches in 2022 as well.

Speaker 2: With the launch of our OmniCommerce offering in September , we took a giant step forward in our ability to serve our customers with a seamlessly intuitive experience.

With the launch of our omni commerce offering in September we took a giant step forward in our ability to serve our customers with a seamlessly intuitive experience.

Speaker 2: our customers need is to sell anything, anywhere.

Our customers need to sell anything anywhere.

Speaker 2: and we are all in the early stages of the merging of the offline and online commerce experience and we call this connected commerce.

And we are all in the early stages of the merging of the offline and online commerce experience and we call. This connected commerce.

Speaker 2: We're pleased to share that right out of the gate we're seeing some good early signs. Since the launch we have sold over a thousand point of sale devices and have received tens of thousands of GoDaddy payments applications from customers.

We're pleased to share that right out of the gate, we're seeing some good early signs.

Since the launch we have sold over a 1000 point of sale devices and have received tens of thousands of godaddy payments applications from customers.

Speaker 2: Most promising is that customers are choosing GoDaddy payments. In websites plus marketing's commerce tier, more than 60% of customers are choosing GoDaddy payments. And in managed WordPress, where customers have over 140 choices, nearly a quarter of customers are already choosing GoDaddy payments.

Most promising is that customers are choosing godaddy payments in websites plus marketing commerce here more than 60% of customers are choosing godaddy payments and in managed Wordpress, where customers have over 140 choices nearly a quarter of customers are already <unk>.

Using godaddy payments.

We're pleased to already be at this level of attach.

Speaker 2: we're pleased to already be at this level of attack.

Speaker 2: We have also rapidly expanded our partnerships with Google, Facebook, and Instagram to increase our customers reach and boost their online profile.

We have also rapidly expanded our partnerships with Google Facebook and Instagram.

Our customers reach and boost their online profile.

Speaker 2: These integrations are making a real difference for our customers. Most of our customers double their website traffic when running a Facebook or Instagram ad. Additionally, GoDaddy Websites Plus marketing customers who added their stores to social media saw at least 2x increase in number of customers placing orders.

These integrations are making a real difference for our customers.

Most of our customers doubled their website traffic when running a facebook or Instagram AD. Additionally, godaddy websites plus marketing customers, who added their stores to social media. So at least two X increase in number of customers placing orders.

Speaker 2: Our customers' commerce needs are increasingly interconnected to the various different ways they show up.

Our customers commerce needs are increasingly interconnected to the various different ways They show up.

Speaker 2: Recognizing this customer need, we have expanded our focus from online presence to what we call ubiquitous presence, which we'll discuss in more detail tomorrow.

Recognizing this customer need we have expanded our focus from online presence to what we call ubiquitous presence, which we'll discuss in more detail tomorrow.

Speaker 2: We know how and where customers show up is important to the way they connect with their customers. GoDaddy has the solutions customers need.

We know how and where customers sure is important to the way they connect with their customers and godaddy has the solutions customers need.

Speaker 2: A third of our customers linked their websites to at least one social platform. And in Q4, we added the ability for customers to link their sites to three new social platforms, TikTok, Twitch, and Discord.

A third of our customers linked their websites to at least one social platform and in Q4, we added the ability for customers to link their sites to three new social platforms, Tictoc Twitch and this quarter.

Speaker 2: Since then, these new platforms account for 11% of all platforms that customers link from their websites with TikTok being the most popular. Another customer need is bio sites. Bio sites have become an essential tool for our social first customers. And we're excited to support them through the launch of social site, GoDaddy Studios, BioSite capability.

Since then these new platforms account for 11% of all platform that customers link from their websites, where tictoc being the most popular and other customer need is bio sites bio sites have become an essential tool for our social first customers and we're excited to support them.

Through the launch of social side Godaddy Studios bioscience capability.

Speaker 2: Consistent with our goal of meeting customers where they are, this tool empowers social first entrepreneurs to set up a fantastic social site with GoDaddy Studios with just a few clicks, helping them grow their business by driving traffic to their top content. Our customers' customers are reaching them through many channels, chat on website, SMS, Facebook Messenger and much more.

System with our goal of meeting customers, where they are this tool empowers social first entrepreneurs to setup, a fantastic social site with Godaddy studios with just a few clicks, helping them grow their business by driving traffic to their top content.

Our customers' customers are reaching them through many channels.

On website, SMS, Facebook messenger and much more.

Speaker 2: having to check and respond to these various different channels is cumbersome and time consuming.

Having to check and respond to these various different channels is cumbersome and time consuming.

Speaker 2: With the acquisition of re-MAZE, we quickly enabled a unified messaging inbox called Conversations in Websites Plus Marketing. It pulls in messages from a customer's website, Facebook Messenger, Instagram inbox, and Voice Line all into one convenient inbox.

With the acquisition of <unk>, we quickly enabled our unified messaging inbox called conversations in websites plus marketing.

It pulls and messages from our customers' website, Facebook messenger, Instagram Inbox and voice line all into one convenient inbox customers can easily access organized and respond to messages from multiple platform all in one place and <unk>.

Speaker 2: Customers can easily access, organize, and respond to messages from multiple platforms fall in one place and never miss a sales opportunity.

Nevertheless, our sales opportunity.

Speaker 2: This feature is also available via mobile app for convenient access to messages on the go.

This feature is also available via a mobile app for convenient access to messages on the globe.

This saves small business customers time, and they can quickly help their customers or enable automated chatbot that can help answer questions about order updates shipping and more.

Speaker 2: This saves small business customers time and they can quickly help their customers or enable automated chatbots that can help answer questions about order updates, shipping, and more. And customers are already showing that they love it. Usage for the conversations feature jumped immediately and we expect more and more websites plus marketing customers to use this feature over the next few months.

And customers are already showing that they love it usage for the conversations feature jumped immediately and we expect more and more websites plus marketing customers to use this feature over the next few months.

Our present solutions continue to be priced competitively, giving us short term pricing opportunity and with higher customer engagement with features like conversations we continue to build greater consumer surplus, which we expect will offer pricing opportunities in the future as well being.

Speaker 2: Our present solutions continue to be priced competitively, giving us short-term pricing opportunity and with higher customer engagement with features like conversations, we continue to build greater consumer surplus, which we expect will offer pricing opportunities in the future as well.

Speaker 2: The increased pace of execution here is also showing in our results. Across our create and grow products, websites plus marketing, Manage WordPress, Sellbright and GoDaddy Studios, ARR grew to $410 million in 2021, an increase of approximately 19% year over year.

Kris pace of execution here is also showing in our results across our create and grow products websites plus marketing managed wordpress celebrate and Godaddy studios.

<unk> grew to $410 million in 2021, an increase of approximately 19% year over year.

Speaker 2: We measure and share this metric as we believe it is indicative of future success in GoDaddy's high growth areas and where we are funding innovation and capturing higher value customers.

We measure and shared this metric as we believe it is indicative of future success in Golar is high growth areas, and where we are funding innovation and capturing higher value customers.

Speaker 2: Moving on to our second priority, GoDaddy Pros. As you are aware, we have a large number of pros over 1.5 million in our customer base, a majority of them in our hosting business. Pros widely prefer WordPress and we are committed to supporting them and supporting WordPress.

Moving onto our second priority Godaddy pros as you are aware, we have a large number of pros over $1 5 million in our customer base, a majority of them in our hosting business.

Rose widely preferred Wordpress, and we are committed to supporting them and supporting Wordpress.

Speaker 2: more deeply engaging our pro customer base continues to be one of the large opportunities in front of us. And we are working on exactly that.

More deeply engaging our pro customer base continues to be one of the large opportunities in front of us and we are working on exactly that.

Speaker 2: While we set and achieved an aggressive goal to register 300,000 pros in our Pro Hub, we quickly shifted our focus to a steady set of feature launches driving monthly active users, or MAU.

While we set and achieved an aggressive goal to registered 300000 pros in our pro hub, we quickly shifted our focus to a steady set of feature launches driving monthly active users or MAU.

Speaker 2: In Q4, we launched priority care ticketing, commission-based incentives, percent-based pricing for new reseller customers, client reports, and more in the hub.

In Q4, we launched priority care ticketing Commission based incentives.

<unk> based pricing for new reseller customers client reports and more in the hub.

Speaker 2: While it's early days on these new launches, all of these features demonstrate our commitment to provide a differentiated experience to our pro customers, increasing the value we create for them.

While it's early days on these new launches all of these features demonstrate our commitment to provide a differentiated experience to our pro customers increasing the value we create for them.

Speaker 2: Our Pro's customers use both managed WordPress and hosting products with us.

Our approach customers use both managed wordpress and hosting products with us.

Speaker 2: As pros show greater preference for managed WordPress, delivering the best experience across both is key to our relationship with them. In 2021, we started to upgrade the hosting platform to a new optimized configuration, which has started to show significant performance improvements.

As Bruce showed greater preference for managed Wordpress delivering the best experience across both is key to our relationship with them. In 2021, we started to upgrade the hosting platform to a new optimized configuration, which has started to show significant performance improvements.

<unk>.

Speaker 2: Notably, a 37% average improvement in server response time, improved NPS, and a resulting 6% increase in renewal rates over a couple of quarters.

Notably a 37% average improvement in silver response times.

Improved NPS and a resulting 6% increase in renewal rates over a couple of quarters.

Speaker 2: And with our continued efforts to integrate Paisley, we will provide them with the best managed WordPress offering for their customers as well.

And with our continued efforts to integrate Paisley, we will provide them with the best managed wordpress offering for their customers as well.

Speaker 2: Our third priority is innovating in domain. Our aftermarket business posted another remarkable quarter led by significant market demand as we exited the year, driving increases in both the volume and size of transactions.

Third priority is innovating and domain.

Our aftermarket business posted another remarkable quarter led by significant market demand as we exited the year driving increases in both the volume and size of transactions, whilst primary domain registrations growth remains solid godaddy registry successfully launched our.

Speaker 2: While primary domain registration's growth remains solid, GoDaddy registry successfully launched a reputation protection solution contributing to strong growth in the registry business.

<unk> protection solution contributing to strong growth in the registry business. We also extended our registry offerings by winning the bid to be the exclusive issuer of Dot TV TLD.

Speaker 2: We also extended our registry offering by winning the bid to be the exclusive issuer of.tv TLDs.

Speaker 2: The domains business continues to be one of our most valued assets as it often serves as our first introduction to our customers while providing a significant launching point to attach other products.

The domains business continues to be one of our most valued assets as it often serves as our first introduction to our customers, while providing a significant launching point to attach other products.

Speaker 2: We will share more on this at our investor day tomorrow.

We will share more on this at our Investor Day Tomorrow.

Speaker 2: Lastly, I wanted to highlight some key wins on the marketing front as a preview for some of the content in tomorrow's investor day.

Lastly, I wanted to highlight some key wins on the marketing front as a preview for some of the content in Tomorrow's Investor Day one.

Speaker 2: One of the areas of investment for us over the last year was the GoDaddy website.

One of the areas of investment for us over the last year was the godaddy website.

Speaker 2: The team had set its sights on conversion improvement as the goal, and by building and following a world-class experimentation-based software development approach, they realized meaningful incremental growth.

The team has set its sights on conversion improvement as the goal and by building and following a world class experimentation based software development approach they realize meaningful incremental growth.

Speaker 2: We know that once a customer gets to our site, that's only the beginning. And our teams continue to work on continued improvement in engagement and conversion.

We know that once a customer gets to our site. That's only the beginning and our teams continue to work on continued improvement in engagement and conversion.

Speaker 2: We've also been working hard at spending marketing dollars more efficiently. Over the last few months, with new leadership in place, we embarked on a journey to add advanced testing and measurement capabilities to make faster decisions on our marketing spend.

We've also been working hard at spending marketing dollars more efficiently.

Over the last few months with new leadership in place, we embarked on a journey to add advanced testing and measurement capabilities to make faster decisions on our marketing spend.

Strengthening our talent and execution in areas like data science has been key for us to be able to better discover opportunity for marketing efficiency and do the tests needed to understand instrumentality, even if it means turning off the channel for a couple of weeks.

Speaker 2: Strengthening our talent and execution in areas like data science has been key for us to be able to better discover opportunities for marketing efficiency and do the tests needed to understand incrementality, even if it means turning off a channel for a couple of weeks.

Speaker 2: Farah will cover this area tomorrow at our investor day, and I continue to be excited to leverage our marketing spend more effectively.

Ferro will cover this area tomorrow at our Investor day, and I continue to be excited to leverage our marketing spend more effectively.

I also wanted to take a moment to welcome you to our Investor Day Tomorrow, We will discuss our long term strategy innovation initiatives refreshed capital allocation strategy go forward revenue presentation and three year guide we are eager to spend additional time with all of you tomorrow.

Speaker 2: I also wanted to take a moment to welcome you to our investor day tomorrow. We will discuss our long-term strategy, innovation initiatives, refresh capital allocation strategy, go forward revenue presentation, and three-year guide. We are eager to spend additional time with all of you tomorrow.

In closing, we're pleased with the results this quarter and with Godaddy is progress against our key initiatives. We are delighted that the momentum in our biggest product release, yet and even more delighted that our customers are demonstrating an appetite for it through the early signals of adoption.

Speaker 2: In closing, we're pleased with the results this quarter and with GoDaddy's progress against our key initiatives. We're delighted that the momentum in our biggest product release yet and even more delighted that our customers are demonstrating an appetite for it through the early signals of adoption.

<unk>.

Speaker 2: We are committed to continuing our pace of innovation, bringing important innovative solutions to customers, driving progress across the entire industry, and delivering durable top line, profitable growth, robust cash flow with a focus on disciplined capital allocation. With that, here's Mark.

We are committed to continuing our pace of innovation.

Bringing important innovative solutions to customers driving progress across the entire industry and delivering durable top line profitable growth robust cash flow with a focus on disciplined capital allocation with that here's mark.

Speaker 3: Thanks, Eman, and hello. I am looking forward to connecting with everyone over the next few days.

Thanks, Omar and Hello.

Im looking forward to connecting everyone over the next few days.

Speaker 3: Today, I'll first touch on 2021 full year and fourth quarter financial results, as well as an outlook...

Today, I'll first touch on 2021 full year and fourth quarter financial results as.

As well as an outlook for 2022.

Tomorrow at our Investor day.

Speaker 3: Tomorrow, at our Investor Day, I'll provide additional long-term guidance and introduce our new revenue disclosures and metrics. With that, let's...

Provide additional long term guidance and introduce our new revenue disclosures etcetera.

With that let's move to our 2021 results.

Speaker 3: Total revenue for 2021 grew 15% year over year to $3.8 billion, exceeding our initial guidance on broad-based strength in new and renewal revenue, attached and outperformance in our aftermarket.

Total revenue for 2021 grew 15% year over year to $3 8 billion exceeding our initial guidance on broad based strength is new and renewal revenue.

Cash and outperformance in our aftermarket.

Speaker 3: ARPU increased 10% to 182, and we added 600,000 net new customers in 2021 with continued strong retention and renewal rates.

<unk> increased 10% to 182 and.

And we added 600000 net new customers in 2021.

Continued strong retention and renewal rates.

Moving on to our quarterly results.

Speaker 3: GoDaddy achieved a new quarterly revenue milestone of $1 billion, up 17% year-over-year, exceeding our guidance.

Godaddy achieved a new quarterly revenue milestone of $1 billion up 17% year over year exceeding our guidance.

Speaker 3: International revenue grew 13% on a reported basis with approximately one point of currency tailwind.

International.

<unk> revenue grew 13%.

On a reported basis was approximately one point of currency tailwind.

Q4 domains revenue increased 24% year over year to $497 million.

Speaker 3: Q4 domains revenue increased 24% year over year to 497 million.

Speaker 3: Aftermarket was the primary driver of the strength in domains, contributing nearly two-thirds of the growth in this line, with the remainder attributable to acceleration in GoDaddy Registry and continued strong new registrations and renewals.

Aftermarket was the primary driver of the strength in domains contributing nearly two thirds of the growth in this line.

With the remainder attributable to acceleration of Godaddy registry and continued strong new registrations and renewals.

Speaker 3: hosting and presence revenue grew 7% year over year to $330 million in the fourth quarter.

Hosting and presence revenue grew 7% year over year to $330 million in the fourth quarter.

Speaker 3: We continue to drive growth in our create and grow products with legacy hosting and security growing low single digits.

We continued to drive growth and create and grow products with legacy hosting and security growing low single digits.

Speaker 3: Q4 hosting and presence. Create and grow ARR surpassed 410 million, growing 19% year over year.

Q4 hosting and presence.

And growth.

<unk> surpassed 410 million growing 19% year over year.

Speaker 3: within that suite, Q4 websites plus marketing ARR grew 20% year over year.

Within that suite.

Q4 websites plus marketing <unk> grew 20% year over year.

Speaker 3: and more specifically, Websites Plus Marketing Commerce ARR Group 24%, demonstrating our commerce opportunity in Websites Plus Marketing.

And more specifically websites plus marketing commerce <unk> grew 24% debt.

Demonstrating our commerce opportunity and website Margaret.

Speaker 3: As commerce becomes more pronounced in our products, we'll continue to evolve this disclosure as we have multiple paths of growth for commerce in more products in our suite.

As commerce becomes more pronounced in our products will continue to evolve this disclosure.

As we have multiple paths for growth for commerce in more products in our suite.

Lastly.

Speaker 3: Annualized GMV across the GoDaddy ecosystem was approximately $26 billion in 2021, growing 21% year over year.

Annualized GMP across Godaddy ecosystem was approximately 26 billion in 2021 growing 21% year over year.

Speaker 3: business applications revenue increased 18% year over year to $192 million on continued strength in branded email and productivity solutions as customers continue to attach, add seats, and up-level their solution.

Business applications revenue increased 18% year over year to $192 million on continued strength in branded E mail and productivity solutions as customers continue to attach.

Add seats and up level solutions.

Speaker 3: bookings grew to 1.1 billion, improving 11% year-over-year on a reported and constant currency base.

Bookings grew to $1 1 billion, improving 11% year over year on a reported and constant currency basis.

Speaker 3: growth was broad-based with continued strength across product categories including strength in aftermarket.

Growth was broad based with continued strength across product categories.

<unk> strength in the aftermarket.

Speaker 3: Gross margin was down slightly in the low end of the mid 60s with a quarter. Product mix, particularly strengthened aftermarket, continues to drive the company's overall gross margin.

Gross margin was down slightly the low end of the mid.

<unk> for the quarter.

Mix, particularly strength in aftermarket.

News to drive the company's overall gross margin.

Speaker 3: investment in tech and dev was consistent with last quarter as we continue to accelerate our pace of innovation while maintaining fiscal discipline. We continue to get leverage in G&A as travel and other office expenses remain below historical level.

Investment in Tech and Dev was consistent with last quarter as we continue to accelerate our pace of innovation, while maintaining fiscal discipline.

Can you get leverage in G&A as travel and other office expenses remain below historical levels.

Speaker 3: One item to note is that during Q4 we continued the consolidation of our Arizona offices, resulting in a closure of one office and a 15 million one-time charge in our restructuring in other lines.

One item to note is.

Is that during Q4, we continued the consolidation of our Arizona offices, resulting in a closure of one office and a $15 million one time charge in our restructuring and other line.

Speaker 3: This offset the $15 million gain recognized last quarter from the sale of another Arizona office as we continue to simplify our physical footprint.

This offset the $15 million gain recognized last quarter from the sale of another Arizona office as we continue to simplify our physical footprint.

Speaker 3: As Amman noted earlier, we drove efficiency in our marketing spend, although our investment remains strong in Q4 and consistent with Q3.

As a bond noted earlier.

We drove efficiency in our marketing spend although our investment remains strong in Q4 and consistent with Q3.

Speaker 3: year over year saw a deceleration in our spend as we lacked the elevated investment we made in 2020 to capture the extraordinary demand.

Year over year saw a deceleration in our spend as we lapped the elevated investment we made in 2020 to capture the extraordinary demand.

Speaker 3: As we continue to refine our marketing return engine, we will remain focused, adjusting our marketing spend as macro environments fluctuate.

As we continue to refine our marketing return engine, we remained focused adjusting our marketing spend as macro environments fluctuate.

Speaker 3: Our growth and investment in the fourth quarter resulted in normalized EBITDA of $254 million, representing growth of 29% year-over-year from continued profitability, disciplined hiring, and leveraging Opex as we continue to benefit from work at home and decreased travel. Our Unlevered Free Cash Law for the quarter was $203 million, growing 12% year-over-year.

Our growth and investments in the fourth quarter resulted in normalized EBITDA of 254 million.

Representing growth of 29% year over year from continued profitability disciplined hiring and leveraging opex as we continue to benefit from work at home and decreased travel.

Unlevered free cash flow for the quarter was $203 million growing 12% year over year.

Full year Unlevered free cash flow grew 16% year over year to $960 million in line with our guidance.

Speaker 3: full year on levered free cash flow grew 16% year over year to 960 million in line with our guidance.

Speaker 3: Positive working capital impacts, as well as reduced capital expenditures for corporate real estate and infrastructure, was offset by the lower margin profile of our top-line outperformance.

Positive working capital impacts as well as reduced capital expenditures for corporate real estate and infrastructure was offset by the lower margin profile of our top line outperformance.

Speaker 3: on the balance sheet. We exited the year with $1.3 billion in cash and total liquidity of nearly $1.9 billion.

On the balance sheet.

Exist the year with $1 3 billion in cash and total liquidity of nearly $1 9 billion.

Speaker 3: Net debt landed at $2.7 billion, below three times net leverage on a trailing 12-month basis, and near the midpoint of our targeted range of two to four times.

Net debt landed at $2 7 billion below three times net leverage on a trailing 12 month basis and near the midpoint of our targeted range of two to four times.

The strength and resilience of our current business model fueled a strong balance sheet, enabling us to address our capital allocation priorities.

Speaker 3: The strength and resilience of our recurring business model have fueled a strong balance sheet enabling us to address our capital allocation priority.

In 2021, we completed six acquisitions and repurchased nearly 4% of our outstanding equity.

Speaker 3: in 2021 we completed six acquisitions and repurchased nearly four percent of our outstanding equity.

Speaker 3: In addition, today, we announced our intent to buy back $3 billion of shares in 2024.

In addition, today, we announced our intent to buy back $3 billion of shares through 2024.

Speaker 3: This represents utilization of approximately 80% of our projected free cash flow over the next three years.

This represents the utilization of approximately 80% of our projected free cash flow over the next three years.

And is expected to drive a material reduction in our share count.

Speaker 3: and is expected to drive a material reduction in our share count. We also announced we expect to launch a $750 million ASR this quarter, which shows our commitment to aggressive use of the new $3 billion repurchase authorization.

We also announced we expect to launch a $750 million ASR this quarter, which shows our commitment to aggressive use of this new 3 billion repurchase authorization.

Speaker 3: We are committed to increasing the value we create for shareholders by growing our free cash flow and reducing our share count over time. Now, I'd like to provide our outlook for 2022.

We are committed to increasing the value we create for shareholders by growing our free cash flow and reducing our share count over time.

Now.

I'd like to provide our outlook for 2022.

Speaker 3: We expect total annual revenue to be within a range of $4.14 to $4.16 billion, which represents year-over-year growth of 9% at the midpoint of the range.

We expect total annual revenue to be within a range of 414 to one.

$6 billion.

This represents year over year growth of 9% at the midpoint of the range.

Speaker 3: In Q1 2022, we are targeting total revenue of $985 to $990 million.

In Q1, 2022, we are targeting total revenue of 985% to $990 million.

Speaker 3: This represents 10% growth at the midpoint of the range.

This represents 10% growth at the midpoint of the range.

We expect 2022, Unlevered free cash flow of approximately $1 1 billion or 15% growth versus 2021.

Speaker 3: We expect 2022 unlevered free cash flow of approximately 1.1 billion or 15% growth versus 2021.

Speaker 3: We expect capital expenditures of approximately $65 million, income tax payments of approximately $20 million, and cash interest payments of approximately $120 million.

We expect capital expenditures of approximately $65 million.

Income tax payments of approximately $20 million and cash interest payments of approximately $120 million.

The global pandemic has affected a lot of businesses and ssds.

Speaker 3: The global pandemic has affected a lot of businesses and SMBs, the timeline of which has varied by market geography and customer type.

Timeline of which has varied by market geography customer type.

Speaker 3: Because of this variability, forward-looking guidance based on the compare years that were impacted or benefited by COVID can be challenging.

Because of this variability.

Looking guidance based on prior years that were impacted or benefited by COVID-19 can be challenging.

Speaker 3: As such, it's important to call out that guidance we're providing today shows continued business momentum, yet comes off a strong year of outperformance in 2021, which makes for tough...

As such it is important to call out that guidance. We're providing today shows continued business momentum yet comes off a strong year of outperformance in 2021.

Which makes for tough comps in the near term.

Speaker 3: Tomorrow at Investor Day, we will discuss both the year growth targets and levers which provide a better picture of the potential we see and the shareholder value it will create.

Tomorrow at Investor Day.

We will discuss multiyear growth targets and levers, which provide a better picture of the potential we see in the shareholder value it will create.

Speaker 3: We are committed to providing the information you need to model the business confidently, value the business effectively, and hold us accountable for executing against our stated objectives.

We are committed to providing the information you need to model the business confidently value the business effectively.

And hold us accountable for executing against our stated objectives.

Speaker 3: In addition to incremental disclosures and metrics, we will spend our time with you tomorrow discussing the company's long-term strategy.

In addition to incremental disclosures and metrics.

And our time with you tomorrow discussing the company's long term strategy.

Key innovation initiatives.

Speaker 3: an updated capital allocation strategy, and as I mentioned, a multi-year outlook. We'll end the day with Q&A hosted by our management team.

An updated capital allocation strategy.

And as I mentioned, a multiyear outlook.

We will end the day with Q&A hosted by our management team.

Given we have Investor day Tomorrow, we ask that you limit questions today to our 2021 results.

Speaker 3: Given we have Investor Day tomorrow, we ask that you limit questions today to our 2021 results and the information we've provided in our prepared remarks.

And the information we provided in our prepared remarks.

Speaker 3: We have ample information to share with you tomorrow, and we will have time to go into more details then.

We have ample information to share with you tomorrow and we will have time to go into more details then.

Speaker 3: With that, I'll hand the call over to Kristi Meissner, who will be leading the Q&A.

With that I'll hand, the call over to Christie Masoner will be leading the Q&A.

Speaker 1: Thanks, Mark. As a reminder, if you'd like to ask a question, please use the Raise Hand feature at the bottom of the webinar screen to be added to the queue. Our first question comes from the line of Trevor Young from Barclays. Trevor, please go ahead.

Thanks, Mark as a reminder, if you'd like to ask a question. Please use the Raytheon feature at the bottom of the webinar. So we added to the queue.

Our first question comes from the line of Trevor Young from Barclays Capital. Please go ahead.

Great. Thanks.

Speaker 4: Great. Thanks. Um, first on domains in four Q obviously sizable outperformance relative to the commentary last quarter, which I think was pointing to low double digit growth.

First on domains and <unk>, obviously sizable outperformance relative to the commentary last quarter, which I think was pointing to low double digit growth what drove the strength in aftermarket I think the expectation was that there were some tail winds that started in <unk> 'twenty from new inventory out lock that were sort of expected to abate and then specifics.

Speaker 4: What drove the strength in Aftermarket as I think the expectation was that there were some tailwinds that started in 4Q of 20 from new inventory unlock that were sort of expected to abate. And then specifically within core and domains, was there better retention or an uptick in new registrations or was most of the incremental growth there from the reputation protection solution service that you launched? Thank you.

Within core and domains was there a better retention or an uptick of new registrations or was most of the incremental growth there from the reputation protection solution service that you launched thank you.

Speaker 3: Thanks, Trevor. Good to see you. Good to hear from you. Just just real quick on the outperformance and looking at aftermarket. You couldn't be more excited at the momentum we're seeing in the marketplace today around our aftermarket.

Thanks Trevor.

Good to hear from you.

Just real quick on the outperformance in looking at aftermarket could not be more excited at the momentum we're seeing in the marketplace today around our aftermarket.

Speaker 3: As we exited the year, we saw an uptick in both volume and average deal size, and we exited with deals that were pacing at a great momentum.

As we as we exited the year, we saw an uptick in both volume and average deal size, we exited with with deals that were pacing at a great momentum.

Speaker 3: Just a reminder, it's a transactional business. So the sales cycle is short on those, so our visibility out in any period can be limited. But we're gonna talk about it a little bit more tomorrow, but we couldn't be more excited at the momentum as we continue to see the momentum as we continue to see.

Just a reminder, it's a transactional business some of the sales cycle is short on those so our visibility out in a longer period.

The limited.

But we're going to talk about it a little bit more tomorrow, but we could be more excited at the momentum as we continue to see.

Speaker 3: great demand in the market related to the platform.

Demand in the market related to the platform.

Speaker 3: On domains, we saw strength across the board. Customer retention rates remained strong. We also had added benefit from the registry items that we noted. So, you know, when I look at it across the quarter, it's broad-based, clearly driven by aftermarket was the big pickup, but we saw strength across the board.

On demand, we saw strength across the board customer retention rates remain strong.

We also had added benefit from the registry items that we noted so so.

When I look at it across the quarter, it's broad based.

Clearly driven by aftermarket was the big pickup, but we saw strength across the board.

Speaker 4: That's really helpful. And just a quick follow up, if I may, on the 3% customer growth throughout the year, can you just talk about how that trended in 4Q versus earlier in the year? I think I'm on noted some maybe softness later in the quarter related to Omicron. And then have you seen that improvement in customer demand, you know, kind of uptick?

That's really helpful and just a quick follow up if I may on the.

3% customer growth throughout the year can you just talk about how that trended in <unk> versus earlier in the year.

Noted some maybe softness later in the quarter related Omicron, and then have you seen that improvement in customer demand kind of uptick.

Yes, I'm happy to jump in on that Trevor yesterday noted in the prepared remarks omicron did have a slight demand impact and.

Speaker 2: Yeah, I'm happy to jump in on that, Trevor. Yes, as I noted in the prepared remarks, Omicron did have a slight demand impact.

Speaker 2: And it has continued going into January as well. But as I said, you know, we expect that to sort of be limited to Q1 of 2022 in terms of impact. Just reflecting on the full year of 2021, as you might expect, sort of the growth was based, was a reflection of the sort of outperformance in 2022, in 2020, given just the huge cohort we had of 1.4 million customers in 2020. Great, thank you.

And it has continued going into January as well, but as I said, we expect that.

Sort of be limited to Q1 of 2022 incomes in terms of impact.

Reflecting on the full year of 2021, as you might expect sort of a.

Growth was there was a reflection of the sort of outperformance in 2022 2020.

Given this huge cohort we added one 4 million customers and new customers in 2020.

Great. Thank you both thank you.

Speaker 1: Our next question comes from the line of Clark Jeffries from Piper Sandler.

Our next question comes from the line of Clarke Jeffries.

From Piper Sandler. Please go ahead.

Speaker 3: Hi, thank you for taking the question. First one is just maybe a reflection on what's resonating most with those customers that are adopting GoDaddy payments. A little surprised to see, you know, nearly 25% of managed WordPress customers convert. Just wondering if you had any kind of insights on one, what was the reason for them choosing GoDaddy? And what method was the sort of outreach or communication with those customers to kind of prompt the conversion?

Hi, Thank you for taking the question first one is just maybe a reflection on what's resonating most with customers that are adopting godaddy payments a little surprise to see nearly 25% of managed wordpress customers convert.

Just wondering if you had any kind of insights on what was the reason for them choosing godaddy and what Matt said was sort of outreach for communication with those customers to confront the conversion yes.

Speaker 2: Yeah, thanks, Clark. Just to clarify, you know, when we talk about managed WordPress customers and 25%, if the customer is sort of signing up for commerce tier and 25% of them are choosing GoDaddy payments over the 140 options they have in managed WordPress today, and we're super excited about it. And in terms of what's driving that, you know, we continue to have a team that is focused on sort of surfacing GoDaddy payments, making sure customers

Yes, Thanks Clarke just to clarify when we talk about managed wordpress customers and 25% of the customer sort of signing up for commerce, tiara and 25% of them are chosen godaddy payments over the 140 options behalf and managed Wordpress and we're super excited about it and in terms of what's driving that.

Continue to have a team that is focused on.

For a surf singular repayments, making sure our customers see it they understand what we're offering and of course, we have really competitive pricing in the market. We think we're at a price point that is attractive for our customers that allows us to reach customers in a manner that sort of breakthrough the other players and thats been helpful for us.

Speaker 2: They understand what we're offering and of course, you know, we have.

Speaker 2: really competitive pricing in the market. We think we're at a price point that is attractive for our customers, that allows us to reach customers in a manner that sort of breaks through the other players and that's been helpful for us.

Speaker 3: Great. And then maybe one follow up, you know, certainly encouraging to see the appetite to invest in the commerce effort, both on the product side and the people side.

Great and then maybe one follow up.

Certainly encouraging to see the appetite to invest in e-commerce effort, both on the product side and the people side.

Speaker 3: I was particularly interested in the testing of a higher end skew for the commerce tier. I was wondering if you could help frame the slave of the market that you see as the opportunity for that higher end solution, maybe bracket where you would like to go with that skew.

I was particularly interested in the in the testing of a higher end SKU for the commerce tier.

I'm wondering if you could help frame the slate the market that you see as the opportunity for that higher end solution, maybe bracket, where you would like to go with that scale.

Speaker 2: Yeah, we'll actually, Clark, cover it quite in quite a lot of detail tomorrow. So I won't sort of cover it all today. But just as we talked about it a little bit, you know, we're bringing a lot more value to the table with the integration of point. You know, a customer with GoDaddy now cannot only sell sort of in the online store, sell on the major platforms or on social media and in their physical store. We have a number of things like the Commerce Hub that bring it all together and make it very, very simple. So what we're doing is packaging up the best of that into a higher end SKU. It's actually now available in the US. If you go to the website, you may not see it, but if you try a few times, you will, because it's sort of being A-B tested right now to see, you know, what sort of adoption we get for that higher end SKU. But I will touch on more sort of related to commerce, you know, and why we're so excited about connected commerce tomorrow.

Yes, it will actually cloud cover it quite in quite a lot of detail tomorrow. So I won't sort of covered it all forever just as we've talked about it a little bit and we're bringing a lot more value to the payroll with the integration of point.

Customer with Godaddy now can not only sell sort of in the online store. So on the major platforms around social media and in their physical store, but we have a number of things like commerce hub that bring it all together and make it very very simple. So what we're doing is packaging up the best of that into a higher end skus. It's actually now available in the U S.

If you go to the website you may not see it but if you try a few times, we will because it's sort of being a REIT after right now.

What sort of adoption, we get for that higher end SKU, but I will touch on more sort of related to commerce.

Why we are so excited about connected commerce tomorrow.

Speaker 5: Looking forward to it. Thanks.

Looking forward to it thanks.

Speaker 1: Our next question comes from the line of Jan Lee from Evercore ISI. Jan, please go ahead.

Our next question comes from the line of Jan <unk> from Evercore ISI. Please go ahead.

Speaker 6: Great, thank you guys. Just the, I guess, follow up on the Q1 outlook, where you said that you expect the omnic crime impact to be limited to Q1. If you can talk a little bit more about what gives you confidence about that projection, is there anything that you're seeing that is pointing the right direction? And if there's any color around the segment growth assumptions, if you can share, and where we could see upside to that for your guide. Thank you.

Great. Thank you guys I'll just.

I guess follow up on the.

Kind of the.

Q1.

Outlook, where you said that you expect the army prime actually eliminate Jawad can you talk a little bit more about what gives you confidence.

About that projection is there anything that you saw that kind of is pointing the right direction and it's there.

There is any color around the segment growth yourself, Charles if you can share and where we could see upside to that.

Full year guide thank you.

Speaker 2: Yeah, thanks, Jen. Let me take the first part now. I'll turn second over to Mark. On Omicron, what the data we're looking at is both sort of across the world, the number of cases, and you know, first charts as well as we do, and a little bit of our experience over the last two years where, if you remember a couple years ago as COVID started for a couple of quarters, we had talked about the COVID arc, where as we saw cases increase, we saw sort of shifts in customer behavior.

Yeah. Thanks, Dan Let me take the first part now I'll turn the second over to Mark.

Omicron work the data we're looking at is both sort of across the world.

A number of cases.

First charts as well as we do and a little bit of our experience over the last two years.

If you remember a couple of years ago as Covid started for a couple of quarters. We have talked about the cover to arc, whereas we saw cases increase we saw sort of shifts in customer behavior and demand and we're seeing we think we're seeing something similar here.

Speaker 2: and demand and we think we're seeing something similar here where you know with the rise of Omicron we see it in our own employee base too especially with care employees and as cases have come down our expectation is that things will sort of get back to normal if you will and Mark I'll turn the

With the rise of Omicron, we see it in our own employee base too, especially with care employees and as cases have come down our expectation is that things will sort of get back to normal if you will.

And Mark I'll turn the second part over to you.

Speaker 4: Yeah, thanks, Iman. I'll ask it, you know, we're going to talk a lot about segments tomorrow and some of our repositioning of our product pillars, so hang on tight with that question if that's okay. I don't want to give away the lead story tomorrow.

Thanks, Bob.

I'll ask that we're going to talk a lot about segments tomorrow and some of our weaker.

Positioning of our product pillars, so hang on tight with that question. If that's okay. I don't want to give away the STAAR tomorrow.

Speaker 4: Having said that on the upside, right, we could have been more thrilled with the upside we saw in the market around the aftermarket. And, you know, as I mentioned previously, it is a transactional business with a short sales cycle, and we're seeing great momentum in both volume and average deal size. Because it's transactional, it can provide some upside going forward. Now, we don't have line of sight to that, and that's generally how we guide. But in answer to your question, we're excited about the upside there.

Having said that on the upside it could have been more thrilled with the upside we saw in the market around aftermarket.

So as I mentioned previously the transactional business with a short sales cycle and also great momentum in both volume and average deal size.

Because it is transactional it can provide some upside going forward now we don't have line of sight to that and that's generally how we guide but in answer to your question. We're excited about the upside there.

Speaker 6: Great. If I may just a quick follow up on just the marketing. It looks like there's a little bit of marketing leverage this quarter. I know you guys talked about and probably we'll talk more about the marketing efficiency efforts. Is that mostly what's driving the leverage this quarter? Or if you can talk through the marketing spend environment, the CAC trend for Q4 and maybe Q1.

Okay. If I may just a quick follow up on just marketing it looks like there's a little bit of <unk>.

Operating leverage this quarter I know you guys talked about and probably will talk more about the marketing efficiency efforts is that mostly what's driving the leverage this quarter or if you can talk to the marketing spend environment. The CAC trend for our Q4 number one.

One.

Speaker 2: Yeah, let me touch on sort of the approach to marketing overall, Jan, and then maybe perhaps Mark can just touch on the leverage sort of across the other line items. Our approach to marketing over the last couple of years has been that when the demand was high, we wanted to make sure we lean into that demand. We wanted to make sure that customer, we've maintained our share of voice and customers knew that GoDaddy had entered into commerce. And we'll actually share more on that topic with you tomorrow as well. But as demand came down, we wanted to sort of, you know,

Yes, let me touch on sort of the approach to marketing overall, Jan and then perhaps Mark can you just touch on the lever.

Leverage sort of across the other line items.

Our approach to marketing over the last couple of years has been that when the demand was high we wanted to make sure we lean into that demand. We wanted to make sure that customer we've maintained our share of voice in customers near that godaddy have entered into ecommerce and will actually share more on that topic with you tomorrow as well, but as demand came down we wanted to sort of.

Bring the spend down with it but not too fast we didn't want to drag them down for godaddy.

Speaker 2: bring the spend down with it, but not too fast. We didn't want to drag them down for GoDaddy. So you saw us sort of bring that spend down as the demand came down. And in terms of leverage on the line items, I don't know, Mark, if you could just talk about that for a moment.

You saw a sort of bring that demand the spend down as the demand came down.

And in terms of leverage on other line items I don't know Mark if you could just talk about that for a moment.

Speaker 4: Yeah, and you know, the great thing about our model and our durable revenue and our ability to generate cash is we can do so with great attach, increasing our poo and get better leverage because our business is sticky.

Yes.

The great thing about our model and our durable revenue at <unk>.

<unk> generate cash as we can do so with great attach increasing <unk> and get better leverage because our business is sticky and will continue to see that in marketing we continue to see that in care as our relationships grow our ability to upsell and cross sell just getting easier and we get better leverage out of it on top of that.

Speaker 4: And we continue to see that in marketing. We continue to see that in care. As our relationships grow, our ability to upsell and cross-sell just get easier, and we get better leverage out of it. On top of that, we will continue to get leverage out of G&A. We look to simplify our footprint. We're investing a lot in moving to the cloud.

We will continue to get leverage out of G&A, we would look to simplify our footprint, we're investing a lot and move into the cloud.

Speaker 4: So again, the thing I love about our operating model is it's flexible, it's agile, and it creates a lot of leverage for us to both.

Again, the thing I love about our operating model is flexible with agile in that Chris.

Chris a lot of leverage for us to both.

Speaker 4: return cash to our shareholders as well as invest in durable growth.

Return cash to our shareholders as well as invest in durable growth.

Awesome. Thank you guys.

Sure.

Speaker 1: Our next question comes from the line of Ival Aronian from Weiswüch. Ival, please go ahead.

Our next question comes from the line of <unk> from Wedbush. Please go ahead.

Hey, good afternoon, guys I.

I guess.

Speaker 4: Eman, you mentioned getting back to normal after COVID. So even after kind of the Omicron wave,

You mentioned getting back to normal after COVID-19 .

So even after kind of the omicron wave.

Speaker 4: or outside of that, there's been investor concern just in the space broadly about demand, that demand has been pulled forward, that overall demand levels are not just this year, but over the coming years might be different. We've seen the new business application numbers come back down to normal.

Outside of that there's been.

Investor concern just in the space broadly.

About demand the demand has been pulled forward.

Overall demand levels over not just this year, but over the coming years.

Might be different we've seen kind of the new business application numbers come back down to normal.

Speaker 4: Whether it's framed within the outlook or just kind of overall, how do you see the normal? What is the new normal? What should we expect? I'm sure we'll talk to you tomorrow. It's kind of hard to parse out the long term from this, but maybe within the guidance and then have one.

Whether it's framed within the outlook or just kind of overall, how do you see the normal what is the new normal or what should we expect I am sure will turn up tomorrow, it's kind of hard to parse out the long term from this but maybe brand within the guidance and then have.

Speaker 2: Yeah, I'll let Mark touch on the guidance, but Igal, you asked a very hard question. And as you framed it yourself, no crystal ball to really be able to say.

Yes, I'll, let mark touch on the guidance, but you asked a very hard question.

As you framed it yourself no crystal ball to really be able to say.

Speaker 2: You know how the demand looks or how the pandemic continues to impact demand or small businesses. I think the way we're looking at it is that if 2020 was just a unique year, it was it was very, very different. And for multiple quarters, seasonality disappeared from the business and every quarter was was a bit different and very hard to look at.

However, demand looks or how the pandemic continues to impact demand or a small businesses I think the way we're looking at it is that two.

2020 was just unique here.

Very very different model for multiple quarters seasonality disappear from the business and every quarter was was a bit different and very hard to look at now with 10.

Speaker 2: Now we tend to see more and more data points with what I'll call normal seasonality is back in the business. And of course, it's going to be very hard to sort of see demand at the 2020 levels as

More and more data points with what I'll call normal seasonality is back into the business and of course, it's going to be very hard to sort of see demand at the 2020 levels.

Speaker 2: a lot of companies saw. But when I say normal, what I mean is the normal seasonality pattern, you know, a bit more predictable demand that we are used to expecting in our business.

And a lot of companies saw but.

The way when I say normal what I mean is the normal seasonality pattern.

A bit more predictable demand that we have.

Expecting in our business.

Mortgages.

Speaker 4: Okay. And then on the follow up, I just want to make sure I understand the payments adoption correctly. So are you saying it's 60% of new commerce subs that are taking GoDaddy payments? How should we think about that on renewals and kind of what you know what the pace of overall adoption has been or what it can be?

Okay and then.

On the follow up.

I just wanted to make sure I understand the payments adoption correctly. So are you, saying, it's 60% of new commerce subs that are taking godaddy payments.

How should we think about that on renewals and kind of what.

What the pace of overall adoption has been or what it can be yes.

Speaker 2: Yeah, we should absolutely see those as new customers coming to GoDaddy, going through websites plus marketing or manage WordPress and the rate at which

We should absolutely see those new customers coming to godaddy going through websites, plus marketing or managed wordpress and the rate at which they're adopting godaddy payments.

Speaker 2: They're adopting GoDaddy payments, right? But we, it's too early to talk about our existing base. We do think we have an amazing product, GoDaddy payments. We have great pricing, a great brand, and there's an opportunity with our existing customers, but it's too early to talk about the renewal cycle or things like that. We're, you know, literally almost like six months into GoDaddy payments. So it's very, very early.

But we it's too early to talk about our existing base. We do think we have an amazing cloud godaddy payments, we have great pricing a great brand and there is an opportunity with our existing customers, but it's too early to talk about renewal cycle of things like that.

Almost six months into godaddy payments, so it's very very early.

Speaker 4: Okay, we should think in another six months is the kind of first new big renewal cycle where people might start picking up GoDaddy payments with previous customers.

Okay. So we should think in another six months is the kind of first.

Baked renewal cycle, where people might start picking up.

Godaddy quarters previous customers.

Speaker 2: When we do have more on it, I think I will definitely share a little bit with you. Got you. Thanks guys, we look forward to hearing more tomorrow.

But when we do have more analytical we'll definitely share a little bit with you.

Got you. Thanks, guys will look forward to hearing whatsoever.

Speaker 1: Our next question comes from the line of Elizabeth Elliot from Morgan Stanley . Elizabeth, please go ahead.

Our next question comes from the line of Elisabeth Elliot from Morgan Stanley . Please.

Please go ahead.

Speaker 7: Hi, thank you so much and congrats on the strong quarter. I don't want to dig in on the monetization per user. We got the customer count for the first time in a year and overall ARPU growth was pretty impressive. So I wanted to get some color. What type of uplift you're seeing in spend per customer and any trends to call out in the behavior of how new customers are landing versus the existing customer base expanding.

Hi, Thank you for lines and congrats on the strong quarter I don't wanted to dig in on the monetization per user we got the customer count for the first time in a year overall ARPA growth was pretty impressive. So I wanted to give some color what type of uplift you're seeing on spend per customer and any trends to call out in the behavior of how new <unk>.

Customers are landing versus today in the existing customer base expanding.

Speaker 2: I'm happy to jump in first on that, Elizabeth. When we think about

Yes, I'm happy to jump in first Elizabeth.

When we think about overall customer just to take the last part of your question.

Speaker 2: overall customer just to take the last part of your question. You know, new customers, we continue to see, you know, if you take the sort of two year cycle instead of the one year cycle.

New customers. We've continued to see if you take the sort of two year cycle instead of a one year cycle I would say, we see very consistent pattern with new customers and we're particularly happy with our <unk> growth.

Speaker 2: I would say we see very consistent patterns with new customers. And we're particularly happy with the R-FOO growth. It is a bit accelerated versus previous years, and we're very happy to see it. Our goal, of course, is to continue to maintain that type of R-FOO growth. That's why we have the higher price products, the greater offering with commerce. And we will touch on this tomorrow as well.

<unk> a bit.

Accelerated versus previous years.

We're very happy to see our goal of course is to continue to maintain that type of ARPA growth Thats why we have the higher priced products.

Greater offering with commerce, and we will touch on this tomorrow as well.

Speaker 2: show you again the lifetime value of the customer as we attach more products with them, especially as we get into commerce and how that opens up a bit more of the time for GoDaddy.

<unk> again, the lifetime value of that customer as we attach more products with them, especially as we get into commerce, and how that opens up a bit more of the Tam for godaddy.

Speaker 4: And I'll just add to that, Elizabeth, good to talk to you again. Is you couldn't be more thrilled with the customer ads and the ARPU and the momentum. Really excited to just show him the durability of the model, the strength of it going forward. And the predictability of the revenue and the cash flow that we'll have into the future to invest and return to shareholders.

And I'll just add to that Elizabeth.

Let's start again.

Couldn't be more thrilled with the customer at <unk> and the momentum.

Really excited is just showing the durability of the model the strength of it going forward.

The predictability of the revenue and the cash flow that will have into the future to invest and return to shareholders.

Speaker 7: Got it. Thanks so much. And then I wanted to put follow up on, um, on the con that you highlighted that headwind kind of limited to more Q1, any color on, you know, if you guys saw that on the current impact of the Q1 guidance or any other headwind tailwinds, like FX to call up to the growth in Q1.

Got it. Thanks, so much and then my quick follow up on Omnipod.

Delighted that have been kind of limited some of our Q1 any color on you guys signed.

Impact from the Q1 guidance or any other headwinds like FX to call up two days from Q1.

Speaker 2: And nothing more to add on the omicron piece, Elizabeth, versus what I just already shared in terms of what we see in the cases, what we see in our employee base. We have the benefit of having a very large care organization that gets a lot of calls from customers. So we get a little bit, if you will, color on how people are feeling or doing.

Nothing more to add on the army Con piece Elizabeth versus what I've just already shared in terms of what we're seeing in the case than what we see in our employee base.

We have the benefit of having a very large care organization that gets a lot of calls from customers. So we get a little bit if you will color on how people are feeling or doing.

Speaker 2: So that's what our estimate is based on. And in terms of effects, maybe Mark, you could weigh in on that. Yeah, absolutely. And I think we're comfortable with the guidance that we're giving out here.

So that's what our estimate is based on and in terms of FX, maybe Mark you could weigh in on that yes, absolutely and I think we're comfortable with the guidance that we're giving out here.

Speaker 4: You know, we've seen the Omnicrom hit in January with our care, like Eman mentioned.

<unk> seen.

On the comp hit in January with a carrier like <unk> mentioned.

Speaker 4: We think it's limited. Obviously, we can't predict any other variants or other things happening out there for the quarter. But I think we're very comfortable right now that we're picking Q1.

We think its limited obviously, we can't predict any other variance or other things happening out there for the quarter, but I think we're very comfortable right now with where we're at in Q1.

Got it thank you so much.

Speaker 1: Our next question comes from the line of Brent Thill from Jefferies. Brent, please go ahead.

Our next question comes from the line of Brent Thill from Jefferies. Please go ahead.

Speaker 8: Thanks. Just on use of capital, you're committing to a fairly large buyback in the ASR. I guess when you think about just the overall ability to do tactical M&A, can you give us a sense of is the buyback the way given how significant that commitment is or are you leaving yourself in a wiggle room to...

Thanks, just on use.

Use of capital you are committing to a fairly large buyback and the ASR.

I guess when you think about just the overall <unk>.

<unk>.

Do tactical M&A.

Can you give us a sense of is the buyback.

Given how.

That commitment is are you, leaving yourself enough wiggle room to.

Speaker 8: to do some talk in M&A going forward. Hey Brent.

Two.

Did you have some tuck in M&A going forward.

Hey, Brent.

Speaker 4: Perfect question, right? I would say we're going to get into the capital allocation strategy tomorrow. But one of the great things about our model just leading up to tomorrow is we have the ability to generate a lot of cash because of our predictability and durability, but also look at other items that can accelerate growth and grow our business over the long term. So as I think I said in Q3, very much an and versus an or for us and looking forward to getting the details of how we're thinking about that moving forward tomorrow.

Perfect question right.

I would say, we're going to get into the capital allocation strategy Tomorrow.

But one of the great things about our model just leading up through <unk> as we have the ability to generate a lot of cash because of our predictability and durability.

But also look at other items that can accelerate growth and grow our business over the long term. So as I think I said in Q3 were very much in the end versus in order for us and looking forward to getting the details of how we're thinking about that moving forward tomorrow.

Speaker 8: Great. And, and Aman, when you think about some of the new product features, there's, you've, you've given, you have, there's a lot of great innovation. I guess when you think about kind of the, the one of the two areas that you're most excited by, can you just give us your sense? We understand you love all your products equally, but one or two standing out to you.

Great.

When you think about some of the new product features.

You have given.

There's a lot of great innovation I guess, when you think about kind of the one or two areas that you're most excited by.

Can you just give us your sense, we understand you're you love all your products equally but one or two standing out to you.

Speaker 2: Yeah, I'm particularly excited about our top priority, which is commerce and bringing commerce to every surface that we have, Brent. And you will see that tomorrow I have picked at least one idea that I'm particularly excited about, so I go into a bit of detail. I won't showcase it now, but suffice to say that just bringing commerce to every surface of the company is what I'm most excited about.

I'm, particularly excited about our top priority, which is commerce and bring in commerce to every surface that we have brand.

You will see that tomorrow I have picked up.

At least one idea that I'm, particularly excited about sorry go into greater detail. So I wont showcase it now but.

<unk> to say that just bringing commerce service surface of the company is what I'm most excited about.

Alright. Thanks.

You bet.

Speaker 1: Our next question comes from the line of Sterling Audi from JP Morgan. Sterling, please go ahead.

Our next question comes from the line of Sterling Auty from Jpmorgan. Sir. Please go ahead.

Speaker 7: Hi, this is Drew on for Sterling revisiting the omni commerce solution. I was wondering if you could speak to the trend you're seeing in customer behavior more specifically in the split between shopping in store versus online.

Hi, This is Joe on for Sterling revisiting the omni Commerce solution I was wondering if you could speak to the trend youre seeing in customer behavior and more specifically in the split between shopping in store versus online.

Speaker 2: Yeah, thanks, Drew. It's a bit too early to be giving out numbers on the Omni-commerce solution. We did share that we shipped, you know, got over a thousand orders for point sales. So definitely customers are starting to realize that we have this solution and that they're excited to adopt it. But it's too early to be talking about it later in terms of what we're seeing. We need a few more quarters of data in before we talk about that.

Yes. Thanks.

Too early to be giving out numbers on the omni commerce solution, we did share that we shipped.

<unk> got over 1000 orders for <unk> sales are definitely customers.

We're starting to realize.

We have the solution that they are excited.

Adopted but it's too early to be talking about flavor in terms of what we're seeing we need a few more quarters of data and before we talk about that.

Okay got it. Thank you. Thank you.

Speaker 1: Our next question comes to the line of Deepak Mahavanan from Walth Research. Deepak, please go ahead.

Our next question comes from the line of Deepak mass volume from Wolfe Research. Please go ahead.

Alright.

Okay.

Oh, Yes can you hear me okay.

Alright, Okay, sorry about that.

Speaker 9: So hey, just a couple of questions and apologies if this was already addressed. On that 40 million outperformance on the aftermarket side in domain.

Hey, just a couple of questions and apologies. If this was already addressed on that 40 million outperformance on the aftermarket side and demand was the contribution to fourth quarter bookings were roughly the same cost.

Speaker 9: Was the contribution to fourth quarter bookings roughly the same? Because, I mean, if I exclude that, it seems like the bookings were up like 7%. Is that math accurate? Can you help with what are the factors of deceleration if that's accurate? And then also related to that on the first quarter guide, how should we think about this aftermarket contribution and that you have factored into revenues and then also maybe some color on bookings would be great.

I exclude that it seems like the bookings were up like 7% is that math accurate can you help with.

What's the what are the factors of deceleration.

Accurate and then also related to that on the first quarter guide how should we think about this aftermarket contribution that you have factored into revenues and then also maybe some color on bookings would be great.

Speaker 4: Yeah, a couple things. Hey, Dabek, how you doing? On just on the aftermarket part of it, and I'll try to bridge this from Q4 to Q1.

Yes, a couple of things like the back are you doing.

On.

Just on the aftermarket part of it and I'll try to bridge. This from Q4 Q1.

Speaker 4: It's a transactional business, so it impacts both bookings and revenue when it's recorded, but does not impact deferred revenue at the end of any given period.

Transactional business, so it impacts both bookings and revenue Winglets recorded but does not impact deferred revenue at the end of any given period. So.

Speaker 4: It can provide upside in any given quarter but does not have a what I'd call a deferred revenue impact in future periods. So our visibility into any given quarter could provide variability.

It can provide upside in any given quarter, but does not have a what I would call.

Deferred revenue impact in future periods, so our visibility into any given quarter could provide variability on the deferred revenue.

Speaker 4: On the deferred revenue, I would say we're coming off of 2020 cohorts that were very large and we're coming into 2021 cohorts that are a little smaller. So we're seeing the deferred revenue balances come down based on that trend. But that's generally what you're seeing out there.

I would say, we're coming off of 2020 cohorts that were very large and we're coming into 2021 cohorts that are a little smaller so we're seeing the deferred revenue balances come down.

Based on that trend, but.

That's generally what youre seeing out there.

Speaker 9: Got it if I can just follow up on that. So should we expect this trend to also continue in 2022?

Got it if I can just follow up on that so should we expect this trend to also continue in 2022.

Speaker 4: So Deepak, I would say we're seeing great momentum in 2022 when it relates to continuing to grow our business and provide...

So deepak.

I would say, we're seeing great momentum in 2022.

Relates to continuing to grow our business and provide.

Speaker 4: know, durable revenue. We are excited about the momentum of the aftermarket, but it's still early stage for us to see that momentum and the variability we'll have from quarter to quarter. We are extraordinarily excited at the volume of the transactions going up, the average yield size going up.

Durable revenue.

We are excited about the momentum of the aftermarket but.

It's still early stage for us to see that momentum.

And the variability will have from quarter to quarter. We are extraordinarily excited at the volume of the transactions going up the average deal size going up so we expect some momentum, but like I said it can it can vary from quarter to quarter.

Speaker 4: So we expect some momentum, but like I said, it can vary from quarter to quarter.

Got it okay. Thank you so much.

Speaker 1: Our next question comes to the line of Matt Fowle from William Blair. Matt, please go ahead.

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

Speaker 5: Hey guys, thanks for taking my questions. First I wanted to ask for 2022 if it'd be possible to give us some direction on how you're thinking about the growth by your three different revenue line items.

Hey, guys. Thanks for taking my questions first wanted to ask for.

For 2022.

If it'd be possible, if you could give us some direction on how youre thinking about the growth by your three different revenue line items.

Speaker 4: Hey Matt, I'm going to give you the classic, hey can we wait till tomorrow? We're disclosing some new information on how we're going to be describing our revenue pillars going forward and I think that'll be able to answer your questions.

Hey, Matt.

I'm going to give you the classic Hey can we wait till tomorrow, we're disclosing some new information on how we're going to be describing a revenue pillars going forward and I think that'll that'll be able to answer your questions.

Speaker 5: Okay, great. And then to follow up on some of the previous questions about ARPU and customer growth, if we look prior to the pandemic, your overall revenue growth was kind of split evenly between customer growth and ARPU. And then obviously the last two years have been non-normal. How are you thinking about the split between those two drivers as we move forward here?

Okay great.

Great and then to follow up on some of the previous questions about <unk> and customer growth.

If we look prior to the pandemic at your overall revenue growth was kind of split evenly between customer growth and <unk> and then obviously the last two years have been non normal.

How are you thinking about the split between those two drivers.

As we move forward here.

Speaker 4: Matt, the way I think about it and Iman can add on to me, the way I think about it is we have great opportunities going forward coming out of the pandemic both to attract new customers as well as upsell our existing customer base. And while we don't get into which one is going to provide more, we think both create an exceptional opportunity for us to continue to grow the business at a durable rate which we've shown over time we can do.

But the way I think about it.

Ron can add onto the way I think about it is we have great opportunities going forward coming out of the pandemic both to attract new customers as well as up sell our existing customer base.

And while we don't get into which one is going to provide more we think both creative.

<unk> opportunity for us to continue to grow the business at a durable rate, which we've shown over time, we can do.

Got it thanks, a lot guys I appreciate it.

Speaker 1: Our next question comes from the line of Navid Khan from Truist. Navid, please go ahead.

Our next question comes from the line of novel constant Euro David. Please go ahead.

Yes, Hi can you hear me yes.

Speaker 2: Great. Yeah, so I just wanted to touch on the inflationary environment, Leanne.

Okay, Yes.

<unk>.

Wanted to touch on the inflationary environment.

Speaker 2: and how you are thinking about the pressures on your P&L as well as your ability to pass it on to your customer base. And then secondarily, just on e-commerce, I think...

And how are things how you are thinking about.

Pressures on Europe .

As well as any ability to perhaps add ons.

Your customer base.

And then secondarily just on e-commerce .

I think.

Speaker 2: Last year, I think you spoke about maybe a quarter of your new customer kind of

Last year.

Ammonia.

About maybe a quarter of your new customer kind of.

Speaker 2: customers being ecommerce customers. Is that still the case? Is that mix holding up or has it has it kind of come back down to two more normal drivers or maybe even gone up?

Customers being e-commerce customers.

That's still the case is that next following up.

Has it kind of come back down to more normal levels.

And even gone up.

Speaker 4: I'll take the first part of that and maybe, Aman, you can take the second part of that, you know, the inflationary comment.

I'll take the first part of that and maybe among you can you can take the second part of that.

The inflationary comment.

Speaker 4: You know, obviously we're living in interesting times with inflation and we saw a lot in the press today. You know, the fallback I always look at is, hey, we have a very durable model that has been around for a while and we've seen the ups and the downs and we've been able to continue to...

Obviously, we're living in interesting times with inflation, we saw on the press today.

The fallback I always look at it as hey, we have a very durable model that is.

It around for a while and we've seen the ups and downs and we've been able to continue to.

Speaker 4: generate growth, continue to move forward.

Generate growth continue to move forward.

So.

Speaker 4: we'll see what the ultimate impact in the macro environment is around inflation, but we're confident that we can continue to meet our strategic objectives going forward.

We will see what the ultimate impact in the macro environment is around inflation, but we're confident that we can continue to meet.

To meet our strategic objectives going forward example, I always use the use or like to use I.

Speaker 4: example I always used to use or like to use. I think in 2008, our cohort has generated $1.9 billion over the period of time, which is which is fantastic when you think about that, you know, looking back at what that type of macro environment was. So we believe our model remains

I think in 2008, our cohort.

Generated $1 $9 billion over over the period of time, which is which is fantastic when you think about that.

Looking back at what that type of macro environment was so we believe our model remains durable.

Speaker 10: And now that on the websites plus marketing e-commerce customers, I think that's the data point you were referencing. We did share today that websites from marketing had grown 20%, but the commerce skew had been growing 24%.

And now on the websites plus marketing and e-commerce .

Customers I think thats. The data point, you are referencing weighted share today that websites plus marketing had grown 20%, but the commerce SKU had been growing 24%. So we continue to see more customers in and that was <unk>. So we continue to see more and more attention in the commerce SKU and as I've shared.

Speaker 10: So we continue to see more customers in, and that was ARR numbers. So we continue to see more and more attention in the commerce queue. And as I shared earlier, we're actually launching a higher end commerce queue and it's testing in the US now. So in terms of that, in terms of the overall business, commerce is becoming a bigger part of our website for the marketing business.

Earlier, we're actually launching a higher end commerce SKU and it's testing in the U S. Now so in terms of that in terms of the overall business commerce is becoming a bigger part of our websites plus marketing business.

Thank you.

Speaker 1: Our next question comes to the line of Sunil Rajapal from Varenberg Capital Markets. Sunil, please go ahead.

Our next question comes from the line of Danielle Raj swap on Danbury capital markets. Danielle. Please go ahead.

Speaker 11: Hi, sorry, can you hear me? We can. All right. Can you shed some light on what is impacting the gross margins this quarter? And secondly, what does the management think about the recent announcement from Apple turning their handsets into payment terminals?

Hi, sorry can you hear me, we can alright.

Alright.

Can you shed some light on what is impacting gross margins this quarter and secondly.

What does the management think about the recent announcement from Apple turning their handsets until payment on the notes.

Yes.

Speaker 4: I'll take the first part of that and maybe take the second part of that. Sunil, again, could you talk to you? You know, the gross margin this quarter was impacted by aftermarket. It's a lower gross margin point than some of our other products. So the outperformance impacted our gross margin. We still feel very confident in our operating margin and our ability to grow normalized EBITDA, given the leverage that those models actually allow provide for us.

I'll take the first part of that in mind, let me take the second part of that.

Sunil Guernica departure.

The gross margin this quarter was impacted by aftermarket and lower gross margin point.

And then some of our other products so the outperformance impacted our gross margin.

We still feel very confident in our operating margin and our ability to grow normalized EBITDA given.

Given the leverage that those models that actually allow provide for us.

Speaker 4: But that is, and the aftermarket did provide some downward pressure on a gross margin.

But that is.

The aftermarket.

I'll provide some downward pressure on our gross margin.

Speaker 10: And on the Apple announcement, again, I'll touch on this tomorrow, but we have a firm belief that the commerce use cases are going to appear on every surface that exists and be tightly coupled to every product that's out there that way it makes sense. So I actually touch on it tomorrow a bit to share how at GoDaddy we believe that commerce use cases are just going to be omnipresent on everything we do. So no surprise that Apple is sort of bringing forward capability that allows folks to...

Thank you.

<unk> on the Apple announcement.

I'll touch on this tomorrow, but we have a firm belief that the commerce use cases are going to appear on every surface that exist in the <unk>.

Tightly coupled to every product that's out there that where it makes sense so actually touch on it tomorrow there to share how at Godaddy. We believe that commerce use cases are just going to be omnipresent on everything we do so no surprise that Apple is sort of bringing forward capability that allows folks to sort of tap and pay just with the with the <unk>.

Speaker 10: sort of tap and pay just with the iPhone.

IPhone.

Alright, thank you.

Speaker 1: All right, at this time, I'll turn the call back over to Amman. Amman, please share some closing remarks.

Alright at this time I will turn the call back over to Tom on cash flow.

Speaker 10: Thank you, Christy, and thank you all for joining us. We look forward to spending more time with you tomorrow at our investor day. And I'll just end by thanking all the GoDaddy employees all over the world for another great quarter and all the hard work they put in coming in every day with everything else going on. Thank you very much.

Thank you Christie and thank you all for joining US we look forward to spending more time with you tomorrow at our Investor Day, and I'll just end by thanking all the godaddy employees all over the world for another great quarter and all the hard work they put them coming in every day with everything else going on thank you very much.

Okay.