Q1 2023 GoDaddy Inc Earnings Call
Good afternoon, and thank you for joining us for Godaddy first quarter 2023 earnings call I'm Christie Masoner head of Investor Relations and with me today are mine Brittani, Chief Executive Officer, and Mark Mccaffrey, Chief Financial Officer.
Following prepared remarks, we will open up the call for your questions if you'd like to ask a question on today's call. Please use the Raytheon 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 other operating and business metrics 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 don't go Daddy Dot net.
Sure in today's earnings release on our form 8-K furnished with the SEC.
Growth rates represent year over year comparisons unless otherwise noted.
The matters, we'll be discussing today include forward looking statements, which include those related to 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.
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 forward looking statements.
Any forward looking statements that we make on this call are based on assumptions as of today may four 2023, and except to the extent required by law. We undertake no obligation to update these statements because of new information or future events with that I'm pleased to introduce Omar. Thank.
Thank you Christine good afternoon, and thank you for joining us today Godaddy mission as stated empower entrepreneurs.
Opportunity more inclusive for all.
Learn from our customers every day.
We are a resilient group and they value what godaddy brings to them, while many worried about a recession. Our venture forward service found that our customers are noticeably more optimistic today about the future of their business than they were six months ago.
One customer we showcased in the past is the furlough cheesecake founded by two sisters impacted by our government furlough.
<unk> interviewed one of them commented with partners like Godaddy, we can manage our business from anywhere Godaddy helped us launch our business quickly from idea to up and running in one week because they have the tools in place.
Godaddy has unique combination of seamless intuitive technology and best in class human and digital guidance creates the ease of use that our customers want and need so they can focus on their business. This combination continues to differentiate us in the marketplace, helping us drive profit.
We'll drill and superb cash flow.
21 million customers that have a high retention rate of 85%.
In Q1, we drove double digit growth of 12% and our applications and commerce segment supported by 10% IRR growth cannot create and grow products. Additionally, we surpassed $1 billion.
<unk> DPP four godaddy payments.
One area, we continue to watch carefully.
Aftermarket business, we face tough compares last quarter and a continued unevenness and flow of large deals that we believe is impacted by broader macro headwinds overall.
Overall, we are pleased with our Q1 results.
Courage by the positive momentum over the quarter, especially in our subscription and commerce businesses.
Our strategic priorities remain consistent and our teams continue to launch experiments and new experiences at a fast pace as always I will review each of our priorities.
For our first priority driving commerce through presence, we are happy to share that we gain exciting traction in our commerce offerings, we had our best quarter, yet attracting sellers more than we anticipated and rapidly crossed over the $1 billion of annualized <unk> the largest off.
<unk> for US remains our existing base of 21 million customers and many sellers that are already a part of it the.
The efficient motion of selling into our existing customer base was the primary contributor to <unk> growth.
It remains our focus as we work to scale this sales team.
Adopting our Congress product paves, the way for customers to deepen the relationship with us which results in higher retention and increased lifetime value.
Last month, we also launched apples contactless tap to pay technology within our godaddy have as you know tap to pay allows our customers to accept all types of contactless in person payments with only an iPhone just by tapping the credit card mobile wallet or watch we work directly with <unk>.
Apples to integrate this technology natively, creating a seamless best in class low friction sign up experience for our customers.
We also made several other improvements to make websites plus marketing a more robust solution for sellers, including improved pay buttons and new reports for merchants to help them prepare their taxes and understand their fees and payouts. Our teams are also excited about how generative AI can add ease of use.
Customers buy auto populating content for them and helping them create natural language E mail chat and text messages to engage with their customers.
High powered tools are showing up across multiple experiences at Godaddy. For example, we built instant video features in our studios' Hap and use cases like auto generating product descriptions are coming soon.
As always we are focused on both technology tools and guidance for our customers as our customers start exploring generative AI, we want to help them by launching a growing area of resources. So our small business owners and begin harnessing its power to save time and grow their sales.
For example, we now provide an essential small business guide and library. We are also working to bring these capabilities together in a manner that even the smallest businesses can benefit from instantaneously accessing vast amounts of data and transforming it into something meaningful for them.
Business websites plus marketing continues to be rated as the highest performing website builder. According to Google for web titles and it is taking share in the marketplace. The team continues to focus on making it easy for customers to build high performance web sites quickly.
On our second priority delivering for Godaddy proves our goal is to make them better serve their clients and grow their businesses godaddy pros value platform capabilities like performance availability and security, but also automation support ease of use and value added offers.
Our new manager will commerce store offerings replaced our old managed Wordpress commerce offering over the last few weeks with this new product in place we are bringing many more capabilities to the table and we will be able to test into higher priced skus.
On our hosting business, our focus is around stabilization and simplification.
As discussed previously we are on course to integrate brands more deeply which includes retiring the media temple brand with the final migration of customers to the godaddy full stack.
April we also signed an agreement to exit a couple of our smaller European brands.
Our goal remains to provide customers with a higher level of service at a lower cost to serve while sharpening our focus.
On our third priority innovation in domain.
We have continued to broaden our bundling offers for new and existing customers. While our initial focus was around bundling email we have increased experimentation velocity and are doing much more here, we are improving the onboarding flow for customers with the target of higher attach and encouraged by the results.
We have seen.
This matters, because we know that customers who activates.
Attach more products have higher retention rates.
And we continue to be excited about payable domains and have to clear insights since our launch.
First customers, who adopt this product are demonstrating their satisfaction by quickly doing a significant number of transactions through the default failing we provide.
Our initial efforts to drive more traffic to this product resulted in impressive early GPT.
Second we noticed that existing customers are more ready to use this product compared to potential customers, who are new to purchasing a domain. We are currently focused on creating more opportunities for both existing and new domain customers discover and utilized payroll domains.
Although there is still work to be done we strongly believe in the enormous potential of this offering.
On the aftermarket you will remember our list for sale feature that allows godaddy customers the list their domain in the aftermarket.
This quarter, we extended this capability to our registrar partners opening of channels to bring more inventory to the aftermarket.
<unk> also added new features to the customer experience for brokered aftermarket transactions, we built a new lead center, giving real time status updates to the leads being pursued on behalf of domain sellers. So they can have more visibility into progress on their transactions our aftermarket business continues to innovate.
And create value for our customers and all players in the industry.
At Godaddy, we are eager to help small businesses thrive this fuels us to create better products that deliver greater value for our customers, which drive our attractive financial model that then translates into sustained customer and shareholder value.
This is the simple approach of how we work to grow godaddy and differentiate our offerings.
We're proud of the consistency of our strong execution and our strategy, we have a great business with a loyal and growing customer base that continues to spend more time with us through our strong competitive advantages and attractive financial profile Godaddy is well positioned to continue.
To grow and deliver for all stakeholders in meaningful ways with that here's mark.
Thanks, everyone.
Before getting into the detailed results I wanted to summarize a few key points.
First.
We are making progress towards returning to double digit growth, while executing our three year plan to expand our operating margins and deliver on our free cash flow per share targets.
We are delivering on our applications and commerce segment growth through increases in new customers and the conversion of our existing customers to our payments platform in the U S.
Lastly, we are on target to complete our restructuring actions in the second quarter.
Driving better operating leverage in our core platform segment and improving our overall operating margin in the second half of the year.
With that.
Applications in Commerce revenue grew to $338 million.
Up 12%.
Exceeding our guide of 8% to 10%.
Additionally, the normalized EBITDA margin for applications in Commerce was 39%.
Taken together this highlights the impressive performance we are driving in this business.
Which delivered a RR for create and grow a $450 million up 10% and over $1 billion of GP.
This segment is our largest opportunity to drive growth through the attachment of our create and grow products commerce platform and productivity solutions for both new and existing customers.
<unk> for applications in Commerce grew 9% to more than one $3 billion annualized GMP across the godaddy ecosystem grew 18%.
Approximately $28 billion.
Our core platform segment, which includes domains hosting and security continues to serve as an important on ramp to our overall business.
Core platform revenue was $698 million with an <unk> of $2 2 billion and a strong normalized EBITDA margin of 27%.
Core platform revenue was supported by a 5% growth in domains from a combination of new customer adds attach and price increases on renewals.
This was offset by tough compares for our aftermarket business as well as the continued uneven flow of large transactions.
Additionally, there are modest impacts to our hosting revenue and customer count from migration of noncore hosting platforms being sunset.
Total revenue grew to 1.041 billion up 3% on a reported basis and 5% on a constant currency basis, reflecting a sequential lift from the Q4 growth rate.
Within total revenue International revenue grew 3% on a reported basis and 7% on a constant currency basis.
Q1 bookings grew faster than revenue at a rate of 4% on a reported basis.
And 5% on a constant currency basis totaling $1 2 billion.
Bookings growth on our subscription products outpaced the related revenue growth by approximately 100 basis points. Our durable model continues to generate cash flow through our strong customer relationships and cohort performance highlighted by our customer retention rate of 85% we.
Build on this strength through intentionally focusing our marketing on attracting high intent customers that stay with godaddy and spend more.
This quarter, we added a 100000 net new high quality customers despite headwinds from our migration efforts noted above.
<unk> grew 4% to $197 from $190 last year.
Normalized EBITDA grew 11% to $250 million with a margin of 24% representing approximately 160 basis points expansion. We expect to continue to drive operating leverage through strong execution and our restructuring efforts unlevered free cash flow for the <unk>.
<unk> totaled $304 million growing 6% driven by strong profitability.
While free cash flow remained flat at $259 million. Despite an increase in our cash interest expense due to the refinancing of our term debt in Q4 2022.
Free cash flow per share rose to $6 19.
On a trailing 12 month basis versus the prior year's cash flow per share of $5 25.
An 18% increase driven by execution operating leverage and share repurchases. Additionally in Q1, we.
We completed a $114 million of share buybacks repurchasing one 6 million shares.
This brings the cumulative share repurchase under our $3 billion authorization to $1 4 billion.
An 18 4 million shares reducing shares outstanding since inception by 11%.
We remain on target for our commitment to reduce our fully diluted shares outstanding by 15% to 20% over the three year period.
On the balance sheet, we finished Q1 with $892 million in cash and total liquidity of $1 9 billion.
Net debt stands at $3 billion with two seven times net leverage within our targeted range of two to four times.
Lastly, as noted above.
We signed an agreement to divest certain non core hosting assets, which is expected to close by Q3.
Our restructuring charge of $50 million in the quarter included $21 million of a noncash impairment charge for these assets.
Moving on to our outlook.
We are targeting Q2 total revenue in the range of 1.045 to 1.065 billion.
Representing growth of 4% at the midpoint.
With the current momentum we expect to exit the year at approximately 7% top line growth.
With a normalized EBITDA of 28%.
We expect applications and commerce segment growth to.
To be between eight and 10% for both Q2 and the full year.
Our platform.
We expect revenue growth.
1% to 3% in Q2 and accelerate in the back half of the year to deliver between two and 4% for the full year Q2 normalized EBITDA margin is expected to improve to approximately 25% with continued acceleration over the back half of the year to deliver full year normalized EBITDA margin of <unk>.
Approximately 26%.
Showing improved operating leverage from the actions previously discussed.
I would like to spend a moment bridging our expected 2023 revenue growth to what we believe our strategy of model can produce going forward.
Our current guidance for the full year is 5% revenue growth at the midpoint.
As a reminder.
This year's revenue growth rate includes approximately two points of FX pressure from last year's bookings and is also impacted by difficult compares in our app.
Aftermarket business and the divestiture of certain noncore revenue generating assets.
Looking ahead to next year and beyond absent those negative impacts and with the momentum we are driving through the strategic initiatives Amman spoke about earlier, including <unk> expansion.
Even with a continuation of the current macro environment. There is a path to returning to double digit top line growth, while remaining committed to delivering our margin expansion and free cash flow targets.
We remain disciplined in how and where we spend with a focus on controlling our costs optimizing our marketing spend monitoring head count and investing in innovation.
So that we can strength the right balance between capturing attractive opportunities with delivering value to our shareholders.
Please with an eye towards balanced long term growth and profitability.
In closing, we have strong confidence in our ability to execute and accelerate our growth.
We believe our competitive position and strategic advantages our diverse product offerings, our strong balance sheet and the consistent and predictable cash flow, we generate physician godaddy is a leader amongst its peers.
Our 21 million customers create the foundation for our resiliency, we remained focused on execution against our strategic priorities responsibly, managing our business and building deeper customer relationships as we partner alongside entrepreneurs on their journey.
With that we will have Christie masoner from our Investor Relations team open up the call for questions.
Thanks, Mark as a reminder, if you'd like to ask a question. Please use the Raytheon feature at the bottom of the webinar screen to be added to the queue.
Our first question comes from the line of Matt Pfau from William Blair.
Please go ahead.
Okay, great. Thanks for taking my questions first I wanted to understand the potential acceleration next year, a little bit better. So if we look at the business.
Absent those three headwinds that you cited do we need an acceleration in that business in order to get to double digits or is just a normalization of those three headwinds sort of enough to get us there.
Hey, Thanks, Matt I'll handle the first part of that.
It sounds like you have a second question too.
So on the bridge, we do see I would say easier comps on things like aftermarket coming into the second half of the year, which will start to start to serve as a tailwind. So some normalizing the core platform segment growth.
Obviously is in the cards as the turnaround at the easier comparison and that after the domains is growing at a good pace.
Obviously, we're taking some actions on hosting which will act as a headwind in.
In the back half of the year will turn into a tailwind as well next year or so so it's a lot of positive momentum obviously applications in commerce continues to be the higher growing segment for us.
A lot of traction on commerce.
I know, we've talked about the four pillars, there and them being in the market and we're really happy with the performance of those so.
The ability to bridge to what we see a path to that double digit growth we've talked about.
We think it starts to take that momentum in 2024.
Yes, maybe I'll just.
And Mark Matt.
We see of course, the headwinds go away, but we also have good momentum in the business.
I already mentioned the growth Nancy but also the domains business has done well and demand has been better.
Moving so we sort.
Sort of encouraged by the momentum and that's what we're really talking about.
Okay.
Great and then just wanted to ask a follow up on gross margins.
<unk> in the quarter I'm guessing that's probably due to payment. So is that true and how should we think about that trend throughout the year as presumably payments continues to gain traction.
No doubt about that we've talked about that.
Product mix will impact our gross margin and we're focusing on the operating margin as we run the business and expansion of that.
But as we get into more of a transactional businesses. We can continue to say.
<unk>.
Pressure on the gross margin, but be in that 60, low 60 mid $60 range.
Is it scale it becomes more accretive obviously, we get the leverage on the operating margin and it will help us.
Deliver on a normalized EBITDA.
Great. Thanks, I appreciate it thanks, Mike.
Yeah.
Our next question comes from the line of Trevor Yang from Barclays.
Go ahead.
Great. Thanks, just first one mark on the <unk> segment results Corp platform a bit below guide an AMC a bit ahead on each of these could you maybe speak to which areas drove relative under our outperformance specific versus your expectations.
And then on repurchases in the quarter a bit below run rate over the prior three quarters and a bit below what you would expect given the $1 billion guide.
Realized capital allocation strategy was reiterated here, but just wondering if there was something that gave you pause on those repurchases such as macro or just a conscious effort to kind of bolster cash on hand, a bit any color there would be appreciated.
Yes, Thanks, Trevor on core platform aftermarket in the larger transactions continues to be the area that is.
Uneven for us becoming difficult to predict we saw some strength as we were exiting the quarter, but continues to be uneven in that but that pretty much drove our underperformance a moderate impact from some of the actions we were taking on integrating the noncore hosting platforms, but I would say aftermarket was probably the area.
Putting us below the original range on on Uh Huh.
The application of Commerce.
<unk> is.
Is ahead of what we do.
At a great rate, we're seeing a lot of conversion of our existing customer base, which is driving the GPA.
Including new customers signing on so so we're really pleased with the momentum there really pleased with the attach we're getting around the web sites related to our commerce Skus. So all that has got great momentum in the quarter. We also saw the benefit though the stickiness.
Our customers and applications with commerce or adding more than one product.
The retention rates are improving.
We've always seen that.
In trend and now we're seeing it more in Q1 with commerce and with that we're showing less refunds.
For us in the quarter as well that we didn't have to we're seeing that sticking to start to take place.
So we're seeing between the two segments I would say is.
We're integrating the core hosting assets, we are seeing some headwinds around retention.
What I would say customers with more in the area of one product, but we are seeing a pickup in AMC.
Customers with multiple products and multiple services, which is helping us on capital allocation alright.
Almost forgot there was two parts of that.
The thing to call out we are ahead of schedule at the end of the year, we came into the year.
With the 1 billion target that Hasnt changed there hasnt been any changes to our capital allocation strategy I would still put a narrow target of $1 billion for the year.
Great. Thanks, Mark well thanks Robert.
Our next question comes from the line of John <unk> from Jefferies on for Ron Paul Cheng. Please go ahead.
John Hi, John I think you saw me then.
Okay I think it was.
Hello, Neil Thank you very much.
Yeah.
So good sequential improvement in <unk> from Q4 from 76 1 billion one ring.
In terms of the driver was there anything besides I guess the existing base.
Converting pretty well.
For existing customers.
Those be switching from other payment solutions.
So how do you convince them to do so and then pricing.
Yeah, John Thanks for that question.
Mark has talked about the pivot or the revenue for Congress and we actually saw goodness across all of them, but selling into our existing base of customers was the largest driver of this acceleration and growth and we continue to be very excited about it.
How that sales cycle works.
Our customers have a fantastic relationship with godaddy and we're bringing not just sort of the surprise and delight element of Hey, you have a solution to godaddy and we have more to offer we also have great pricing for them. So when you put together.
The relationship all the basket of sort of one stop shop, and the pricing that leads to them switching over from from other folks and this is the.
Of course, we're excited about payroll demands on bad debt, it's part of the reseller that inspires everyone every piece help but the prime focus for us is selling into our base. We're seeing goodness that we're going to keep attacking that from what we can say it seems to be a bit of a unique competitive advantage for godaddy because of the relationships. We have so we absolutely.
Continuing on path on that.
Great. Thank you and maybe one follow up on the JV was flat quarter to quarter I don't know if there was one.
Versus your expectation and whether you expect at any <unk>.
Seasonality just increase from continued adoption.
Yes.
We have a whole if I remember.
The broader set of customers. We have also inherited from point and it tends to follow seasonality.
Of the business.
Q4 versus Q1, and nothing new to report there.
Thank you.
Thanks, Rob.
Our next question comes from the line of Clarke Jeffries from Piper Sandler. Please go ahead.
Hello, Thank you for taking the question.
First one I think it is for Mark.
I was hoping you could maybe give us some color on that exit rate of 28% EBIT margin, how we might be able to think about that between the two segments.
Kind of putting the disclosure you gave on AMC.
Core platform and overhead.
Yes.
Thanks, Clark, so so yes, 28% and we've talked about the actions were taken in the first half that will help benefit as we get through the second half of the year and how obviously exit the year at a strong run rate there are 7% and 28% of normalized EBITDA margins.
It's a good way to look at it as we're going through.
The core platform actions that we've taken around the restructuring.
Integration of those platforms into the Godaddy technology stack.
There is going to be some pressure on our retention rates that we're seeing customers that.
Don't have a higher propensity to spend with us.
Or are making that decision as we were doing the transfer over to the godaddy stack on the flip side the.
Being on the Godaddy stock and having applications commerce commerce, and our ability for our care guides to engage our customer at a better level.
Is really showing that we're getting more customers signing on to more than one product right, now, which which again pushes our retention rates higher.
Which is our RPC higher we're seeing a lot of benefit of that.
AMC comes at a higher margin.
So we're in essence, gaining more customers at the higher margin level, while while were seeing pressure on our core platform.
Are the lower margin or lower calorie customers I would say and.
And therefore, we're seeing the benefit of the mix start to improve and help us get momentum into the future years.
Into 2024, so hopefully that helps kind of how we're looking at it.
Yes, maybe just very quickly, Florida, if I can add if you look at items like marketing spend.
I've talked about it a lot over the last couple of years, but we continue to sort of make.
Make our ability to measure return on AD spend better and better.
And what we're seeing is good growth.
<unk> got good demand coming to the site and the lowest marketing spend sort of as a percentage of revenue that we've had in a while so obviously that continues to help us as well are from sort of the actions that mark talked about which are more on the people side.
Perfect and then just one follow up I know you've mentioned a couple of times the aftermarket.
I was just kind of want to be clear on the.
Compared to the guide for core platform.
<unk> is where the results came in compared to the guide maybe either at the mid point of the low point completely describable by aftermarket or were there any other factors maybe accelerated movement in the hosting segment.
That might have also been a contributor there that helped helping to clarify that would be great. Yes.
Yes.
You just called it I think the primarily primary driver was aftermarket.
And the.
The continued absence of the large transactions just as a reminder, we don't set the prices in the aftermarket that's a buyer and seller agreement.
We we kind of.
Facilitate the transaction between two so we're still seeing that.
That disconnect in the market related to the buyer and seller, agreeing, which which shows up in the larger transactions. So its primary primarily because of the core platform and lifting the guide.
There is a little bit on the hosting no doubt I don't want to say, it's 100% because there is some as we were migrating some of the noncore assets.
Godaddy technology stack, we have seen some pressure there, but I would say aftermarket was primer.
Alright, perfect. Thank you very much.
Our next question comes from the line of Aaron Kessler from Raymond James Aaron. Please go ahead.
Great. Thank you a couple of questions. Maybe just first of all the macro I mean outside of aftermarket maybe top top tier the top of the funnel traffic, you're seeing kind of gross up a death sentence.
And then just how should we think maybe about the <unk> outlook for 2003 should we think about similar to Q1 and just maybe talk about the adoption of higher cancellations that you're seeing as well. Thank you.
Yeah. Thanks, Eric maybe I'll just take the top of the funnel of markets do you want to touch on our book So.
I started to say earlier top of the funnel I think we see good demand.
But we see good gross adds.
We're pretty happy with what we're seeing and as we've talked about it last quarter as well a bit the momentum seemed to improve through the quarter.
And our customers.
By nature tend to be resilient and tends to be a creative group. So when we survey them like I talked about as well, but it does seem to be showing up in the numbers.
Good extend as well so we remain optimistic about the rest of the year and of course, we'll keep you updated on it.
Yes.
I'll start with.
We don't guide towards <unk>, but.
Looking at the outlook for the year, when we think about our goal to attract customers with a higher intent to spend with us.
Our goal is to raise that our crew number.
We're seeing around the commerce.
Is obviously, giving us that momentum that we believe will be able to continue to drive that Q4 to Q1 is a normal pattern for us I know, we haven't gone into quarterly disclosures of our pool in a while.
Based on our billing cycles and.
Bookings happening what's happening earlier in the process.
And in the year that revenue from the bookings will flow through to our <unk> as it rolls out in our subscription business. So it will be a natural benefit that we will start to see so we're.
We're excited about attracting more customers with higher intent, we're seeing that especially in the commerce area, which showed up in Q1. The momentum there has been really really good and we continue to be driving towards adding out of <unk> as we go throughout the year and we can make those two thoughts together with bookings growing faster than <unk>.
Revenue both of those pieces basically come together.
Yeah.
Okay, great. Thank you.
Yeah.
Our next question comes from the line of Elizabeth quarter from Morgan Stanley . Please go ahead.
Great.
On the line from the line. Thank you for taking my question.
I wanted to ask on the.
The regional banking crisis, we've already seen it from other senior loan Officer survey has been appointed the type of requirements to get logs are important at this financing channel for your target customer base are you seeing any impact today and what is incorporated into your outlook.
I think from two views one from our customers.
The challenges in the financial banking, Greg who have not had a significant impact for our customers.
Remind you that many of our customers the micro businesses and they don't even have access to it.
Service of our capital and they really are.
Very creative group.
Our business as a whole obviously, we're not.
Dependent on SBB or sort of <unk>.
Risks that come close to the regional banks I don't know, Mike If you would add.
Yes.
Good inquiry, when you think about <unk> at $197.
The cost of that to our customers and the value that we provide to them and their business not a real impact there.
Even when you talk about the FDIC limits and all of that in the micro businesses and entrepreneurs.
We think our customers are optimistic and we're seeing them eager to sell in the marketplace, but we're not seeing any limitations based on the back of price.
Great. Thank you for the question.
Our next question comes from the line of Mark <unk>.
From the benchmark company. Please go ahead.
Thank you good.
Good evening.
Just a couple of quick ones.
AMC revenue.
For this year it looks like.
Potentially yes modest sequentially decline if you look on a two year stack basis.
Throughout the year, so I'm, just curious with new products coming to the market in the infancy there.
That might be attributed to and related if you could maybe speak to the attachment rates you're seeing early on with your omni commerce rollout and weather.
There are any.
Initial demand signals that you'd like to share and then last on the two <unk> and an annual revenue.
Growth guides.
If there is any material contribution from payables.
<unk> domains and then.
And also from.
Well thank you.
Okay. So I'm going to handle there was a few things in there mark so I'm going to I'm going to try to go through them sequentially.
I Miss anything please.
<unk> pointed out.
<unk> revenue guide, we are really excited about the 12% in Q1, showing great momentum coming into the year, we talked about at the first quarter in which we had all four pillars and market.
And that we've been engaging our customers converting our.
Our existing customer base in the U S.
Unbelievable attraction and we're also seeing play out is that the stickiness of going from the 1% to two to three products is playing out and is improving.
I want to say, improving our refunds, but lowering our refunds to our customers. So we saw a benefit of that in Q1. We are a list early stage, though so we it's one quarter end.
We like the momentum we will see how it rolls out throughout the year, but we feel excited about the ability to.
We will continue that momentum throughout the year and into 2024.
Well I think on the attach of the omni commerce.
You want to talk maybe I'll just talk about attach more broadly real quick and then getting the omni commerce as well.
We talked about bundling, a little bit and as Mark said bundling of a great opportunity for us to bring two plus products to our customers and it helps obviously not just the average order size, but it helps with the retention rates customer.
Engage with those with more than one product and repayment of higher rates and Thats an area of focus for us and we're pretty excited about where we're going.
Only conversation we've had great success selling into our base, but it is still very very early days very similar to your question about payable the remainder are super excited about them on the payroll domain. We have some early results there.
Sort of I indicated.
There's more to do with all of these things we're very early in the process. We're very excited about the opportunity in the future and overall.
Tackle these products to our existing customers continues to be good.
I think in terms of sharing specific numbers on that.
We want to have it reach certain milestones. So we can share more with you.
And on the World pay.
We had talked about that last quarter, we're really excited about the world pay agreement.
There are selling our product in the market we have.
I'd say hard launch in the second half of the year.
<unk> impact this year, we're planning on but going into next year. It should have some great momentum.
Okay, great. Thanks, guys I appreciate it.
Thanks.
Our next question comes from the line of Eval Iranian from Citi. Please go ahead.
Hey, good afternoon, everyone.
So I wanted to.
Ask about AI.
Apologize if this has been asked.
But I know you mentioned some of the general comp library and things, we're doing on that front, but.
Yes.
And certainly recently, but really all over the past couple of months Theres been a greater dialogue about.
Generative AI disrupting the web builder business.
Once again your thoughts on that.
How you're approaching it and how you think about maybe not just in the near term, but over the long term as well.
Well thanks for that question I know it hasnt been asked yet.
So let me just take a moment and take a step back talk about the long term.
Give you a couple of examples of how we're thinking about it in the immediate term.
Obviously like many other folks we want a future where AI.
<unk> is a positive contributor to humanity and society as a whole and we're absolutely sort of aligned with that view of the world, where we see opportunities and some of them are a little way the way. Some of them are sooner is that AI create moments of delight and surprise for customers. It allows.
US to create a new set of tools that allow customers to get more value faster easier. So they can focus on the things that they need to do.
Their business and they have to worry less about the mechanics of the things that technology can take care of and that is the history.
<unk> seen on tools may allow people to do things that they otherwise would have had a hard time doing AI for us and in our business and our industry. I think is going to provide another set of new tools for our customers in terms of how our customers think about this I happen to sit on flight yesterday for two hour than the state Mexico.
All of our customers that customer actually you our entire solution from godaddy studio to the website to the point of to the hardware device in their store and we had great conversation for two hours and I asked him about AI, what he feels of the micro business owner and his point was very very simple actually aligns with our company.
Of course, I want AI to help my message of customer or prompt me and tell me.
What the customer is asking about so I can help my customer, but my business.
On the personal relationship I have and this isn't a topic I have with our customers.
And I don't want to machine talking to our customers the different happens in our business because of the owner himself. His wife was the creative.
Person behind that business. They are the ones that make the difference so they want to hold that interaction and then.
AI as a tool and frankly, if godaddy can make it easier by using AI tools to make it easier for them to engage with their customers. They are all for that but at the end of the day. It is about tools and not about replacing what they actually do for them. If you translate that into our business.
Well, one a large part of our business domains hosting email and other sort of non related to AI in the same way when it comes to content creation. When it comes to web site, where we see for the foreseeable future as great opportunities to create new set of capabilities for customers that allow micro businesses to compete with large.
Our businesses in a manner that has not been seen before and that's what we're focused on and we're very excited about achieving that.
Okay. That's really helpful. I think I think some of the ways.
<unk>.
It's been depicted about how AI disrupt business models will be a little bit too simplistic.
Good to hear that from you.
I think you also mentioned taking share within the website builder space then.
Can you guys give your overall customer count, but not but.
Specific customer count on websites plus marketing.
Managed wordpress, so once maybe shift can elaborate on that point.
A little bit more and get a little bit more color. Thanks sure as you know websites plus marketing allows customers the best way the simplest way to build a high performing website given the domains funnel that we have a lot of customer that we see are sort of.
Folks with new ideas, it's their dream they wanted to hit the market and websites plus marketing utilize them just a great great way to start.
We do look at share numbers internally and we as you know.
No. There is no sort of public way to look at websites share, but we do spend time and energy understanding the count of websites what are sharing it and it is across all our presence products and that's what we tried to share with you to say that we see us taking share out of the product presence products, we have actually websites plus marketing continues.
Can be doing the best and we continue to keep it very focused on the customer. It serves well we are not distracted about that product serving everybody has a target customer segment is doing a fantastic job and of course, there is more to be done and we can talk about that separately, but I'm very happy that websites <unk> marketing.
Thanks, Joe.
Great So just to be clear you're.
When you are talking about taking share or are you, including wordpress on that or not.
We have overall taken share as well in the in the website's paper I didn't break it down.
By each of the presence products we have.
But amongst occur.
Across the products the prime that took the most share was websites plus marketing.
Thank you.
Thank you.
Our next question comes from the line of Ella Smith from Morningstar. Please go ahead.
Hi, This is <unk> from JP Morgan.
First question is I was wondering if you could speak more about your partnerships recently announced partnerships, specifically with Apple and Microsoft teams.
Would appreciate if you could talk more about the tap to pay partnership because that seems like a pretty unique opportunity. Thank you yes.
Super excited about the tap to pay opportunity or not obviously, but I think all of you know well what the functionality offers I think what godaddy has to bring a bit special is that we work with apple directly to create a truly seamless experience I would love to in a different setting showcased that for our analysts and customers on a bus or something that you can.
Actually see how much easier it is when godaddy creates that what we call the seamless and intuitive experience and our goal really is to.
Have a set of services or experiences for our customers that are also easy to use of the customer doesn't hesitate to use it.
As you know our customers the micro business and there is a cost for them to take on something new right because they need to put energy into growing their business and not trying to launch new technology. So when we lower the friction borrowing will make it easy for them. The adoption is much much faster and that's the early signal with tap to pay is all that godaddy margins.
Are just very very quickly adopting tap the band is actually much more we're going to give them with tap to pay.
Microsoft teams. The idea there is that we want to be able to serve our customers through any of the sort of services that they use to engage their customers. This is a new opportunity, it's something that we're exploring and I'm curious about where as you well know Microsoft teams is grown and sort of has.
A large user base and what we're really offering the payments capability within teams and it extends our existing sort of beautiful relationship with Microsoft through the productivity products already.
Great. That's super helpful. Thank you and as a quick follow up I know in the last question, we spoke at length about that.
The impact of AI to the right side of the business and you did say that you don't see much impact to the core platform side of the business, but I just want to confirm that do you think that there is even on the backend any opportunity for AI disruption to domains and hosting or is that just not as relevant at this juncture.
Actually over the last couple of years I've talked about it a little bit of a let me update some of my <unk>.
Comments.
And godaddy, we've been using AI to provide customers with better domain names and we are putting more energy into that over the last two or three of that was actually one of the things we had mentioned.
When we had foreseen the acceleration of the aftermarket that we were actually using machine learning models to find better names for customers that were available whether they were available in the primary market or the secondary market. So there is an impact of AI into our core business, but that impact. So far has been a positive one one that creates tool.
<unk> that allows customers to find better things than at least so far we have not found any reason for those technologies to be negative.
A negative impact to us.
Perfect. Thank you so much.
Thank you.
This concludes our Q&A I'll turn it back over to online. Thank you Christine just a quick shout out to all godaddy employees for another solid quarter.
We're super excited about the execution of the company were clear in our strategy and it takes all of us to get it there and we appreciate you taking the time today.
Two joined this call and ask those two questions. Thank you.