Q1 2022 GoDaddy Inc Earnings Call
Today's call. Please use the raise hand feature in the webinar to be added to the queue.
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 a or our gross merchandise volume or G. M D and net debt of.
A discussion of why we use non-GAAP financial measures and reconciliations of our non-GAAP financial measures to their GAAP equivalents may be found in the presentation posted to our Investor Relations site at investors Godaddy net or on our form 8-K filed with the SEC with today's earnings release.
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.
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 from those contained in forward looking statements any forward looking statements that we make on this call are based on assumptions as of today may four 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.
I'd Godaddy, our mission is to empower entrepreneurs everywhere, making opportunity inclusive for all with the secular trends of entrepreneurship, coupled with accelerating online presence and commerce. We believe godaddy his role is to help our micro and small business customers.
Vantage is the largest opportunity in front of them the combination of the Internet and commerce.
We do this by helping customers establish and maintain their digital identity, our tools help customers extend their web presence to social media and marketplaces and into the in store experience, giving them ubiquitous presence and.
And we are bringing them to the world of connected commerce by enabling every surface for them with Commerce. This mission has never been more important and godaddy is combination of assets makes us a unique and differentiated player in the market.
Together digital identity ubiquitous presence and connected commerce form.
Proprietors wheel, representing our customers' needs and how we meet and exceed them.
We shared this new framing for godaddy at our Investor Day in February .
Also presented a three year plan and we are off to a good start.
In the first quarter of 2022 revenue grew 11% year over year and normalized EBITDA grew faster up 18% year over year, while we all face of fluid macro environment. We are focused on what we can control and delivering on expectations for our customers.
And shareholders.
We are keeping a close eye on the war in Ukraine, the financial impact of the war on our business are limited, but we remain critically concern for the safety of our contractors in the area.
A prolonged war will likely mean, a bigger disruption in the work and delays in some product releases and rollout as we ramp resources in other areas.
We are also closely monitoring the uneven demand patterns as a result of the ongoing COVID-19, pandemic and inflation and the strength of the U S. Dollar is leading to FX headwinds across industries.
Our business model is durable and offers us opportunities to adapt and be nimble. Our leadership team is focused on our three year plan and mitigating short term headwinds.
Over the last several years, we have strengthened the quality of our revenue by delivering on our strategy to attract customers with higher lifetime value.
Through disciplined execution, we have improved our renewal experience and as a result, we have continued to drive modest improvements in our already high retention rates.
An important data point that I am happy to share is that the 15 month renewal rate from the 2020 cohort of customers continues to be strong our commitment to our strategy is clearly highlighted in the consistency of our priorities our three strategic priorities have been.
And continue to be first driving commerce through presence second delivering for godaddy pros.
Third innovating in domains, we covered our priorities in detail at Investor Day. So I will provide brief comments on each of these today on our first priority. We have delivered many product launches in the last couple of months, but the one I want to highlight is the launch of a new hire.
Tier commerce plus plan the new offering includes increased customer value in the form of simplified taxes unlimited product listings and higher limits on many features.
From marketplace orders E mail campaigns that day to day as early and encouraging 80% of sales in this new tier are from new purchases I'm looking across our commerce lens, 70% of customers are now choosing godaddy payments up from the 60% we shared in February .
Annualized <unk> across the godaddy ecosystem grew 20% year over year to 24 billion, primarily driven by offline point of sale for Godaddy pros. Our focus continues to be to create best in class presence and commerce offerings and tooling for our managed Wordpress.
We continue to add more users to the hub and our teams are working hard to increase rates of engagement or integration of Paisley continues at a good pace and we are excited about upcoming releases, which include our commerce offering and a new onboarding flow for managed Wordpress.
Im looking forward to sharing more about these new capabilities once they are launched.
On innovation and domains in February we shared that we are going to bring to market an innovative new product called payable domains I am happy to share that we have started to test payable domains with a small percentage of customers in the U S. It is too early to comment on how customers will.
Receive and adopt this product, but we are eager to experiment with it as quickly as possible in closing I want to remind you that godaddy has built a durable business with a history of solid performance in all kinds of economic environments by accelerating the rate of experimentation and innovation.
<unk>, we have continued to improve the quality of our products and enter new markets, improving attach and <unk> and driving shareholder value. Our strength comes from our large customer base extraordinary customer and revenue retention the power of our existing cohorts the strong competitive.
<unk>, we have serving the micro and small business customer.
Clear three year plan in a disciplined leadership team and workforce committed to our mission.
With that here's mark thanks.
Thanks Omar.
Thank you everyone for joining us today.
We are excited to share our strong Q1 results, which highlight our execution towards the targets we shared at our recent Investor day.
Our results demonstrate our focus on delivering a balanced combination of durable top line growth.
<unk> ability at scale and robust cash flow.
And our performance shows go Daddy business resiliency.
We are pleased that we were able to deliver a strong first quarter, while we actively manage through the uncertain global macro environment in Q1 total revenue grew to $1 billion.
Which represents 12% growth year over year on a constant currency basis at 11% year over year on a reported basis.
Within total revenue international revenue grew 10% year over year on a constant currency basis as shared earlier. This year, we updated the lens by which we report the pillars of our revenue.
This change transitioned our reporting from three revenue segments into two new segments applications in commerce and core platform.
This gives us the framework.
Of how we will talk about our business and opportunities going forward applications ecommerce revenue, which include presence and application solutions grew 16% year over year.
Coming in at the high end of our guidance range from February .
Our presence products, such as websites plus marketing <unk>.
Tribute to this growth.
And as a man mentioned earlier, we drove great traction with the attach of our payment solution, which will show up in this line item as it becomes more meaningful.
The IRR for applications in Commerce grew 14% year over year to $1 2 billion.
<unk> from our create and grow group of products, which includes websites plus marketing managed wordpress celebrate and godaddy studio grew 13% year over year to $410 million.
Last week.
Annualized GMC across the Godaddy ecosystem was approximately 24 billion.
Growing 20% year over year, we achieved growth across all channels, primarily driven by offline point of sale.
Core platform revenue, which includes domains hosting and security products grew 9% year over year <unk>.
Delivering above our February guide with 40% of the increase driven by aftermarket.
<unk> core platform grew 5% year over year to $2 2 billion.
As a reminder, aftermarket performance does not impact our Q1 bookings were one $1 6 billion.
Growing over 7% on a constant currency basis, and 6% on a reported basis against tough comparisons from the strong year ago quarter.
Additionally.
Q1 bookings grew 10% sequentially.
Against our largest ever Q4 quarter.
Applications in Commerce bookings grew 9% year over year in.
And core platform bookings grew 5% year over year.
Normalized EBITDA grew 18% year over year to $226 million.
And a 23% margin representing over a point of margin expansion compared to the same period last year.
And bringing our normalized EBITDA margins within the 23% to 24% guide we outlined at Investor Day.
Our technology and development expenses increased as a percent of revenue this quarter as we focused on building, our commerce and innovation strategies.
Additionally.
We continued reopening offices in Q1, our G&A expenses also increased as a percentage of revenue.
While remaining below historical levels.
We drove leverage in our marketing spend based on continued execution of the formula outlined at Investor Day.
Additionally, during Q1, we faced inflation pressures.
Primarily in the form of increasing energy and cloud infrastructure expenses.
Currently we have a medium term contracts and FX hedges to mitigate some of the <unk> impacts.
We expect these inflation related impacts to continue throughout 2022, and we will monitor and proactively address our exposure in these areas.
Unlevered free cash flow for the quarter was $287 million growing 7% year over year driven by strong profitability.
Additionally, during the quarter, we began executing against our announced three.
$3 billion authorized share repurchase through an initial $750 million accelerated share repurchase or ASR is expected to be completed in may.
Through Q1, we repurchased an initial six 5 million shares reducing our total share count by 4% since year end.
Bringing our free cash flow per share to $5 25 on.
On a trailing 12 month basis versus prior year cash flow per share of $4 51 for an increase of 16% on.
On the balance sheet.
We finished Q1 with $743 million in cash.
And total liquidity of $1 3 billion.
Net debt stands at $3 2 billion.
At the midpoint of our targeted range of two to four times.
Moving on to our outlook.
The solid start to our year and the predictability of our model.
Based on what we know now we are comfortable with our full year 2022 outlook.
Provided in February .
Having said that.
We are not immune to the current macroeconomic environment, which increases our short term exposure to foreign currency and customer demand fluctuations.
While the environment remains fluid.
We believe our predictable model allows us the flexibility to moderate our investments and leverage our operating expenses to seek to offset exposure to revenue from these factors.
We also remain committed to delivering the $6 plus free cash flow per share discussed in February .
For Q2.
We are targeting total revenue in the range of 1.01 billion to 1.02 billion.
Which would represent year over year growth of 9% at the midpoint.
Within that we expect applications in commerce revenue to grow between 14, and 16% in core platform revenue to grow between 5% and 7%.
For Q2, and full year bookings, we expect growth to be approximately two points below revenue, primarily driven by FX pressure.
We will continue investing in technology and development to drive our robust product launch momentum.
While balancing our goal for margin expansion through efficiencies in customer care and marketing.
Normalized EBITDA for Q2 is expected to be in the range of $232 million to $237 million.
Which would represent year over year growth of 18% at the midpoint.
Our capital allocation strategy also remains unchanged.
During the second and third quarter, we intend to fulfill our $1 billion buyback target for 2022.
Through an additional $250 million.
Share repurchases. Additionally, we will evaluate the impact of rising interest rates and explore refinancing our term loan and revolver with the intention of maintaining our leverage ratio of two to four times.
Before I close I want to reiterate that we remain laser focused on execution and we have a track record of consistency in difficult times, we are marching towards delivering the 10% top line CAGR.
16% normalized EBITDA, CAGR, and 20% or better free cash flow per share CAGR while.
Buying back $3 billion of our stock over the next three years that we described in detail in our Investor day.
We are balancing our near term and long term goals.
Emphasizing delivering strong results while at the same time investing in areas for future growth.
Godaddy leads and providing small business solutions a position that we built by understanding the needs of our more than 21 million customers.
While the current macro events present challenges.
<unk> resiliency comes from our long history of strong customer retention.
Power of our existing cohorts and the competitive advantages, we built as the champion for small businesses.
With that we'll have Christie masoner from our Investor Relations team open up the call for questions.
Thanks, Mark as a reminder, if you would like to ask a question. Please use the Raytheon feature at the bottom of the webinar seem to be added to the queue.
Our first question comes from the line of charter Yang from Barclays. Kevin. Please go ahead.
Great. Thanks, two if I may just first one any color on how customer growth has trended thus far in 'twenty two relative to the 3% growth last year amount I think you made some comments about on a 15 month basis for 2020 cohort is retaining at pretty healthy levels I'm, just trying to get a sense.
Kind of like in period demand from new customers have you seen any improvement in that cadence and then on international Reds declining a tad Q on Q were there any specific regions or countries, where you saw weakness in the quarter and did you see weakness specifically in Europe . Following the onset of the Russia, Ukraine conflict. Thanks.
Thanks Trevor.
On the <unk>.
<unk> 15 months retention rates and one of the reasons I wanted to share that metric of 2020 was a huge cohort for the company and I think.
This have been asking us investors have been asking us about retention rates on it and we're very excited to see that we've continued to attract a customer with Ohio via customer that wants to stay with us. So the strong retention rates were obviously very very important for us and in terms of the customer growth, we don't guide to.
Two customer growth, but definitely at the end of the year. It will be something that we'll be happy to talk about more and share with you.
In terms of international.
I am sure Mike mentioned, a thing or two but generally I would say, we'd see the same sort of macro environment.
And in Europe , as an example in Russia.
Did shut down our ratio upside and remove support for the ruble and that had an impact and maybe mark you want to comment on it I wouldn't call it any sort of material impact with perhaps Mike you want to comment on it.
Thanks, a lot and Trevor I think thats exactly right a moment. Thank you install the by liner we did shut down it didn't have a significant impact on us I would say, it's more of the macroeconomic trends that are impacting us throughout Europe , and there isn't a particular exposure to any region or country of business at this point to call out.
Alright, Thank you both.
Our next question comes from the line of Clarke Jeffries from Piper Sandler Clark. Please go ahead.
Hello. Thank you for taking the question maybe addressing the previous question a different way on a product level.
Just wanted some qualitative thoughts on the macro impacts to domain demand and if there was any characterization you could offer between North America demand and international demand for domains.
I think as a follow up to that with a 40% increase driven by aftermarket was that in line with your expectations or above and as we settle into kind of cleaner compare is where do you think the growth contribution from aftermarket goes.
Yes, Thanks Clarke I can take the first and perhaps you can take with that.
The second.
In terms of the main demand Clark I would point to do the sort of core domain business for us, which is now much more than selling just specific to <unk>.
Sort of a set of <unk> across the world. We've also added to that capability of the secondary market. We then combine the primary market and the secondary market, we connected those fairly well youll remember products like this for sale.
From a year about a year and a half ago and then we've also added a corporate business in domains and we've added.
More recently, a registry business as well so we continue to be very happy with our overall domains business, but it's really the connected collection of diverse products that we have that are performing really well for us and then on the aftermarket and maybe mark I can point of view, yes, absolutely. Thanks collectors.
We couldn't be more happier and the momentum we have in the aftermarket and I think we've talked about it coming out of Q4.
And we continue to see strong volume growth in average prices going up and that's what we really track when we look at the momentum around there.
Hard to predict the larger transactions, but we still see them coming in.
And we still see the momentum.
Obviously quarter over quarter.
That created.
Within that market nothing to call out domestic versus or sorry, North America versus international.
It seems to be just.
Broad based momentum in that market and we continue to be pleased with the amount of transaction volume that is going through that right now.
Okay, and if I could squeeze one more in about just how the investment plan changes given the macro environment.
Just trying to get a sense of whether you see it as a net benefit to profitability or whether there'll be some offsetting cost. If you do have to rotate some of that kind of contractor.
Head count around.
Is it kind of a net benefit or a net headwind to profitability as we look to the year yes.
Yes, I think if you go specifically.
Specifically talking about sort of my comments around contractors in the Ukraine region.
It is an important but a small group of people for us so given our large base of engineers across the world and our ability to hire globally and we work with vendors around the world. We think overall, it's not a huge shift it is an important group of people.
Their safety is of Paramount importance to us, but I wouldn't over focus on it because of the size of the group is small.
Greg I'll, just add onto that the costs.
We don't look at it as a headwind.
Alright, perfect. Thank you very much.
Our next question comes from the line of <unk> from Wedbush. Please go ahead.
Hey, good afternoon guys.
Well I'll take the macro one again.
Maybe like.
Two sided.
So one of the things you are seeing around is just a lot of pressure on e-commerce of it sounded like from your comments.
In store Pos has been a big driver strengthen <unk> images.
Talk about the puts and takes on offline commerce that youre seeing and then when we have.
When we start to talk about recession.
Ultimately the impact to Smbs.
Who are usually typically more exposed comes up a lot. So.
Youre hearing from your SMB customers.
<unk> seen things like <unk>.
Improvements in renewals and things.
Things look pretty good but just the tone from your customers anything you are hearing there.
Thanks Nicole.
Bringing online and offline commerce together with what we call connected commerce is more important for our customers than ever before right they need to be able to quickly pivot to selling online or be able to bring those same capabilities in store very very quickly given our portfolio.
And given that we are still very early in the connected commerce space and the exposure we have to sort of <unk> generally small.
And our overall business and we're still growing in that area. We have lots of opportunity I feel very very very early in that field and in terms of.
Different economic impacts I would point to third data point I think we had a couple of years ago.
When we looked at the data on the cohort for 2008, you might remember we talked about the recession.
Great recession cohort will that cohort a couple of years ago had delivered $1 5 billion in revenue.
With godaddy and today it is up to $1 9 billion.
In terms of what that cohort of delivered in terms of revenue. So we look at that cohort and we see it performed very similar to other cohorts. So we look at our business and we said look we deliver a set of products at a price that deliver great value to our customers. This is essential to their future growth and yes in the short term things might move.
Move up and down a bit but those cohorts over time continue to perform very very well and maybe I'll turn it to that a couple of them will come with for that.
Great.
Think in these times, what we're hearing is that being a one stop shop for our customer base with two entrepreneurs and very small businesses becomes an opportunity.
They're focusing on their business and their ability to really count on us to help make their.
Go to market easier seems to be something that is resonating with them.
And a reminder, we generate about 85% of our revenue coming from our existing 21 million customers.
Ability to give them relevant products.
In the market.
Is just a huge upside for us and we look at it as a very much of a positive going forward.
Thanks, that's really helpful.
Maybe you could.
Just talk about commerce, plus a little bit and expand on that.
Sounds it seems like a really interesting product.
Is that.
It is going up a little bit more of market or is that still a product that's both of them.
More focused on your micro SMB core customer.
And anything you could share about.
Price points.
Details around that would be super helpful. Thank you.
Sure.
The target customer like we shared on Investor day.
We have lots of customers in our base that sell up to $1 million.
Up to a million dollars of <unk> and as we have shared with you we want them to be able to serve their needs are they are they are our customers already and we don't need to do that much more to serve them well and we have talked about launching in Q1, our new higher end SKU. That's the commerce plus SKU is happy to send you the details offline.
The price points and how far it's launched and stuff like that but you can literally go to the U S. S items be it you will see a 100% of the time.
Absolutely available to customers and we're very excited about 80% of the sales that we've seen in it.
In that SKU have been new purchases, which means customers are willing to pay more for the greater value that we provided them and it's definitely played a little bit of a part visible in the overall customers adopting godaddy payments because now 70% of customers in our commerce skus on adopting godaddy payments, which was 60% in February that we shared with you.
Great. Thanks, so much I'll definitely check that out on the site.
Thank you.
Our next question comes from the line of Mark <unk> from benchmark.
Mark. Please go ahead.
Mark I believe you're muted.
Apologize for that.
Just wanted to drop maybe on a couple of those last questions on the new customer side of Commerce, plus which you highlighted I was just curious if you could maybe refresh us again on your go to market and sort of where.
Perhaps those new customers are coming from.
And then.
As it relates to.
Youre GMB growth.
Obviously, you noted mainly coming from Pls I'm, just trying to get a sense of sustainability of that 20% growth.
And if that sort of.
Corresponds to the CAGR that you're sort of talking about for applications in commerce three year CAGR in the high teens, if that would sort of.
Parallel that.
Of that growth.
Thats It for me thanks.
Thanks, Mark on the <unk>.
New promise plus plan in terms of go to market approach, it's Super New product. We just launched it this last quarter and most of the customer base is coming in through the web.
So that's where we've done the majority of the testing no doubt we have a huge competitive advantage in the care organization in the ability of the care organization to be able to have a fantastic relationship with our customers to be able to upsell customers, but that is.
That is part of this year is a priority for us to be able to get.
Market motion really swinging in terms of in terms of commerce, but we are excited to have the product launch we're excited to have customers like it. We're excited that that we can go Daddy payments. So thats been fantastic for us in terms of <unk> growth.
We just feel we're so early in the payments space and we have such a large customer base with this need.
Of course, it's hard to sort of a crystal ball.
Talk about specifics in terms of the number of the long term when we feel we're very very early and there's just so much more for.
For us to take the massive Tam, we're positioned really well, we're putting out great innovative products in the market in terms of what we're doing with reflects less marketing in my prepared comments I mentioned, the new commerce SKU coming Wordpress, we have favorable domains out there and how testing in the U S. So we're really lighting up all of our services with commerce. So we feel.
Earlier.
Super Thanks, very much I appreciate it.
Our next question comes from the line of Aaron Kessler from Raymond James Aaron. Please go ahead.
Hey, Amit Great can you hear me.
Yes, great.
We've been working on our cloud transition for a couple of years now can you talk about maybe where you are on that and then any.
Any impact Youre seeing from overall labor costs, obviously, a question perhaps on a lot of our conference calls as well and finally, just in terms of the lower year over year marketing spend nice leverage there.
I guess, how much of an impact does that have on kind of gross adds or customer adds from that lower marketing spend or have you been able to find more efficient sources I think you've mentioned that.
Investor day as well thank you.
Yes, Thanks, Aaron let me take the cloud and marketing and Mark maybe you can comment on labor cost.
In terms of our transition to cloud we continue to be very happy with our applications moving to the cloud we're seeing higher productivity, we're seeing better responsiveness, we measure our applications with the Google tools.
<unk> very very well.
Both sort of in the U S and globally. So we're very excited about that the transaction is going to plan nothing significant to call out there in terms of our marketing dollars I think over the last year, we've been very open about sharing with you our philosophy around like well.
While making sure that we lean into the demand when we see it and then as we see sort of changes in Nevada pattern, we manage our marketing dollars.
I don't want to manage them to aggressively because we don't want to pull demand down just for godaddy, but we do want to follow all of the demand patterns and what we're doing is that we're coupling that with investments in data science and better better data and better technology, that's allowing us to make that measure of that marketing spend better and butter embryo and be more.
Efficient with it and Mike I'll turn it to you for the labor cost comment.
Thanks Aaron.
On labor costs, we have been in a hyper competitive environment for talent here for a number of years.
We have been constantly looking at how do we attract talent, but yet.
Others in place to moderate the cost buildup appropriately and that Hasnt changed and were not seeing anything.
That would cause us to think that that's going to be.
What we haven't built into our guide already.
And we continue to look for opportunities to diversify the locations of our employees going forward to make sure we can maintain that into our three year outlook.
Alright, thank you.
Our next question comes from Elizabeth <unk> from Morgan Stanley . Please go ahead.
First as I believe you're on mute.
Oh, hi, Thank you so much our next question on the competitive landscape. So back in March Google announced that Theyre going <unk> with dark domains product after being named Jeff for multiple years. So just wanted to get your view on it.
Changes in the competitive landscape.
Thanks Elizabeth.
Specific to Google, we've been competing with Google on domains for I think seven years or more.
The removal of sort of the beta.
Logo, if you will but it doesn't change.
Create any fundamental change in the industry from my view competing with the Mega Tech players as a fact of life or every pet business. So I feel we've been competing with them and sort of not much has changed with this with this little change from them.
Great and then on.
On the payment side, great to see that that adoption kind of ticked up to 70% from from 16 and I believe that's just new customers that are going into commerce.
Wanted to see if there had been any changes of legacy customers kind of moving over to godaddy payments from our prior provider just given the competitive kind of pricing that you guys offer with that product.
Yes, I think a majority of what we've talked about is new customers going through the site in terms of our legacy customers. We continue to feel that is a big opportunity for godaddy.
Anecdotally, we do see a set of customers that are attracted so we know that our pricing makes sense, we know that.
This is something we can scale, but that's part of this year's priority for us to get the go to market motions.
Scale across the company. So that we can go after not just the new with the legacy customers as well, but it's just that it's still work in progress.
Thank you.
Thank you.
Our next question comes from the line of Brent Thill from Jefferies. Please.
Please go ahead.
Thanks, Good afternoon.
Just a couple on financially the bookings growth trailed revenue this quarter I guess is that more just the comp or was there anything on the internal execution that you'd call out that that caused that.
Okay.
I'll jump into that one can add color.
You hit it right on the head there.
We're comping to a tougher quarter last year.
We did talk about January at Investor day, and some of the impacts in the market and we've seen positive momentum coming out of the quarter, which gives us a lot of comfort as we get into the rest of the year. We're excited about it. So there's nothing in particular call out that we have been having already mentioned.
And we also are very happy that coming off a great Q4 bookings growth was pretty strong. So we like the momentum we like the the.
Opportunities out there in the market right now.
Obviously, it's an interesting time, but that we continue to manage through it.
Yes.
Feel good about where we think we're going to end up for the year and the quarter Q2.
And maybe just a quick follow up obviously the elephant in the room, everyone is watching as the interest rates and what that does to the small business segment and I'm curious.
How youre thinking about this.
What happens not maybe this quarter next quarter, but over the next year, how how do you think you can kind of deep more insulated or or not I'm curious how you think think through this as that rolls through.
Yeah, Brent I'll take it on two ends one us internally and to customer demand and demand may have some comments on the customer end of it.
One on our end we're.
I think its in our prepared remarks, a slide here, we're up 13% variable interest rate right. Now so we think the impact for us in the quarter in a year with minimal.
Obviously, we will as we mentioned, we'll look to refinance our term loan and.
Our Walter as it makes sense, we will do so but we think those are the things within our control when it comes to our customer base.
It's hard to predict the overall impact of inflation, but we believe because our products help them.
New business and our ability to be a one stop shop helps them ultimately it'd be more efficient in the marketplace and focus on growing their business that we are an additive tool for them versus.
Something they will have to choose between but yes.
It's hard it's hard to look at the overall impact on the three new year's.
And I'm on I don't know if you want to add to that at all.
Maybe just to say Brian appreciate the long term view on the question. My view is that we have the secular trend around entrepreneurship around the internet commerce on the Internet.
<unk> really well this is a critical need for micro and small businesses. So the.
The Tam is large godaddy is positioning us very very good it's mission critical to customers.
In a difficult time customers don't give up their website or they don't give up their domain name or lots of them don't do that so from my perspective, if times are tough for our customers that's actually opportunity for godaddy to do more for them. That's the opportunity Godaddy has to help them understand how they can navigate those times butter and as I shared about.
And sort of the 2008 cohort, we can end up with fantastic customers in all kinds of economic environments.
Thank you. Thank you.
Our next question comes from the line of Danielle Radical Hoffmann Bahrenburg Danielle. Please go ahead.
Hi can you please comment about.
Overhead expense since the line seems to have gone up.
Quite a bit this quarter.
And.
So.
Second question will be on the.
Payments up front.
Want to understand a little bit more I know you commented earlier about.
You are still in the early phase of deployment in terms of the payment opportunity.
But have you thought about what would be the potential opportunity from a payable domains and how that could potentially accelerate your revenue stream going forward. Thank you.
I'll hit the first part of that and model that we can handle the second.
No I assume youre talking about the G&A line and say overhead.
<unk> represents.
We started reopening our offices in Q1.
Small small uptick as we got ready for that.
It's still below historical levels, and we expect it to be enrollment going forward, we're comfortable with where we are in a normalized EBITDA.
Margins that we put out there in the guide and also for our three year plan, but the specific increase was related to opening the offices in Q1.
Right.
Neil unfavorable domain.
My excitement about that product sort of macdonough during investor day.
You will notice how excited I get about it.
My view is it's a fundamentally new idea nobody else is selling that product, we have tremendous scale to bring that to market.
But we have to.
Work with customers to understand to help them understand what the new product.
And that's what we're going through and Thats what were testing we have great estimates on what we think it can be.
And really why we're talking about it and we're excited about it and we'll keep you informed on how it progresses youll be able to see it on the side youll be able to see us doing more and more with it.
Sure. Thank you and maybe if I could just follow up you talked about.
Inflationary pressures in terms of the <unk>.
Cloud infrastructure costs going up.
How should we be thinking about those costs.
Is there I mean.
Do you think it will incrementally polls pressure on margin pushing margins towards the.
Low end of the items.
And so when we look at the infrastructure cloud costs, we're still in the process of moving to the cloud I think we've talked about that more impact on our tech and Dev one.
And we still look at it as an opportunity to moderate our cost as well as reduced our capital expenditures going forward.
Everything that we're looking at today. We've included in the guide not only for the year before our three year plan and we feel comfortable with our normalized EBITDA margins, where they are obviously lots of puts and takes but we're comfortable where we are in built in what we can see today.
Thank you very much.
As a reminder, if you'd like to ask a question. Please use the range 10 states or at the bottom of the webinar screen. Our next question comes from the line of <unk> Khan from choice Kelvin. Please go ahead.
David I think you're on mute.
I will turn the call back over to Oman Amman for closing remarks.
Thank you Christie and thank you all for joining US today I'll end the call by thanking all the godaddy team members, who have been doing a tremendous job getting off these results and all the good work, we do for our customers as well and May the fourth be with you.
Yeah.