Q2 2025 GoDaddy Inc Earnings Call
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Welcome to Godaddy second quarter 2025 earnings call. Thank you for joining us I'm Christina Center VP of Investor Relations and with me today are among battani, Chief Executive Officer, and Mark Mccaffrey, Chief Financial Officer following prepared remarks.
Marks we will open up the call for your questions if you'd like to ask a question on 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 measures 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 and investors don't go Daddy Dot.
Net or in today's earnings release on our form 8-K furnished with the SEC growth rates represents year over year comparisons unless otherwise noted.
The matters, we'll be discussing today include forward looking statements such as those related to future financial results and our strategies or objectives with respect to future operations. These forward looking statements are subject to risks and uncertainties that are discussed in detail in our periodic SEC filings.
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 August 7th 2025, 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 happy to introduce them on.
Good afternoon, and thank you all for joining us today I'd Godaddy, our mission is to empower entrepreneurs and Mako opportunity more inclusive for all we draw inspiration from the ingenuity of our customers who are the people building businesses chasing dreams and positively impacting their communities.
Our small business survey consistently shows.
Our a resilient group and <unk>.
Optimistic about their own businesses, even when navigating increased complexity. That's why we are committed to delivering the critical technology. They need combined with the human guidance that is empathetic accessible and grounded in their success.
Is this combination that helps our customers thrive and grow with confidence.
In the second quarter, our disciplined execution delivered strong results, reflecting the power of our strategy of attracting and retaining high intent customers, who generate high lifetime value for godaddy ANC bookings grew 12% against the toughest comparison for the year.
Normalized EBITDA margin expanded nearly 200 basis points, reflecting the operating leverage in our model. We made strong progress towards godaddy as financials Northstar of maximizing free cash flow with growth of 21%, reflecting that momentum we are raising our full year 2025 free cash flow guide.
<unk> to approximately $1 6 billion.
As a leader in bringing AI to micro businesses, we are energized by the transformative potential that agenda is unlocking for arrow and our customers. This is more than an evolution. It is a leap forward. This quarter, we began testing a new conversational experience that lays the foundation for something truly groundbreaking.
And agents that can intelligently complete complex multi step task for our customers freeing them to focus on what matters. Most building their dreams imagine a world where entrepreneurs can ask anything across the full spectrum of our offerings and receive instant contextual support seem.
Let's see connected to our export guys when they need a human touch brought to the customer experience as ask arrow. Its goal is to be a fully guided and proactive digital experience powered by <unk> AI and elevated by empathetic care. The short video you saw at the start of this call offers just to.
Glimpse into the future we are building for our customers behind the scenes our operations are undergoing a fundamental shift powered by AI across the company employees are embracing AI and agenda tools to accelerate the velocity of execution. In one recent example, too in terms of leverage our internal <unk>.
<unk> platform to build an agent that autonomously diagnosis anomalies in experiments, reducing a process that once took days to just minutes.
Engineering, two accounting AI and adjourn take AI is reshaping how work gets done by transforming rules unlocking efficiency and enabling our teams to focus on higher impact outcomes, we can't wait to bring all of this to life for you as well we look forward to sharing a deeper look at areas of <unk>.
<unk> capabilities at our Investor dinner later this year, what we are building is exciting and we are off to a great start.
As always I also wanted to share a bit more about our growth initiatives, starting with pricing and bundling with.
With half the year behind US we feel confident that this initiative is on track and delivering across both ANC and core platform for 2025.
At the same time, we are actively executing against our 2026 roadmap testing and scaling offerings that represent the next phase of this multi year journey. These new bundles are based on new partnership capabilities and the early results have been promising.
Icing and bundling is starting to benefit from our increased code writing velocity using AI as.
As an example, we recently concluded a test integrating our new partner product integral Daddy's technology stack over a matter of weeks rather than months.
Markedly nearly 100% of the code was generated by AI and guided by a senior engineer. This was work that would typically have required a small team for a few months.
While the exploration of AI driven coding is ongoing across many use cases. This example demonstrates the transformative potential of AI, driven coding and pricing and bundling scaling. This type of result across our teams would create a step function change in velocity, enabling us to test new bundles at a pace many times.
Faster than today.
Our next major initiative is seamless experience and ongoing large scale experimentation machine designed to enhance the entire customer journey from landing page and initial search all the way through to purchase and renewal. It is focused on improving discovery and reducing friction saving our customers time and.
Effort through this initiative, we boosted conversion rates strengthened attach and drove better renewal performance outcomes that our scale translate into meaningful financial impact now and in the future the.
The bookings generated from seamless experience have scaled in an impressive manner and this initiative has an equally strong roadmap as pricing and bundling and its impact and contribution is becoming increasingly comparable turning to our commerce initiative, we surpassed a significant milestone reaching more than 3 billion in <unk>.
<unk> gross payments volume on continued strong conversion of our existing base of customers a clear signal that our strategy is resonating equally exciting are focused on delivering powerful high value tools is gaining traction.
Our newly launched <unk> favor a credit card surcharge in feature back and reduce effective rates from merchants by more than 50% is demonstrating promising early momentum with attach rates climbing last but never leased Aero discovery and engagement continues to grow and we expect it to increasingly shape and monitor.
Our future customer cohorts and our strongest cohorts are ahead of us, notably Errol cohorts consistently outperformed non aero cohorts across key metrics, including average order size multi product attach rates and renewals serving as a catalyst for the growth in higher lifetime value.
<unk>.
These gains are compounding, creating long term leverage in our model. We are deeply focused on areas continued evolution into a true differentiator that accelerates customer success and drive sustained value across the entire godaddy ecosystem in closing we are proud of the progress we made in the second quarter.
As we push our strategy forward, making meaningful progress towards our three year targets outlined at our Investor day in 2024, our results reflect the impact of disciplined execution and the growing traction behind our priorities of expanding high intent customers, capturing more wallet share and driving greater.
Our lifetime value as.
As we enter the second half our teams are focused our path forward is clear and our business is well positioned to accelerate the pace of innovation that delivers long term value to our customers and shareholders with that here's mark.
Thanks, <unk> good afternoon, everyone and thank you for joining us.
Q2 was another strong quarter for godaddy underscoring the resilience of our customers and the mission critical solutions that differentiate us in the market. We delivered ANC revenue growth of 14% expanded normalized EBITDA margins to 31% and we grew free cash flow to 392 million.
Our consistent performance reinforces the strength of our strategy and the discipline of our execution as we progressed toward our north star of maximizing free cash flow over the long term.
Total revenue grew 8% to $1 $2 billion on both a reported and constant currency basis, surpassing the high end of our guided range annual recurring revenue grew 9% to $4 $2 billion.
And international revenue grew 11% for our high margin ANC segment, we drove 14% growth in revenue to $464 million in line with our guided range ANC is now approaching an annualized run rate of approximately $2 billion nearly double.
Over the past four years on the ongoing adoption of our subscription solutions.
ANC revenue now accounts for 38% of total revenue.
Which is an all time high up from 36% at the same time last year.
<unk> EBITDA margin expanded nearly a 100 basis points to 44%.
Our core platform segment delivered revenue growth of 5% to $754 million exceeding our guide. These results were driven by growth in primary domains up 7% about units and pricing and bundling initiatives alongside continued momentum in aftermarket, which also grew 7%.
Segment, EBITDA margin expanded by over 200 basis points to 33% moving to profitability normalized EBITDA grew 15% to $382 million delivering an expanded margin of 31% up nearly 200 basis points and in line with our guide for the quarter the expanse.
<unk> was driven by sustained operational discipline with leverage gains reflected across our P&L total bookings grew 7% on a reported and constant currency basis to $1 3 billion against the toughest compare of the year.
Within that agency bookings grew 12% and core platform bookings grew 3% as a reminder, bookings primarily represents cash collected during the period importantly, free cash flow grew an impressive 21% to $392 million reinforcing the strengthening of our customer cohorts and the.
And conversion of normalized EBITDA to free cash flow at a ratio that is now greater than one to one.
Our go to market strategy is focused on attracting high intent customers, who adopt multiple products and generate high lifetime value over the past year cohorts that spend over $500 annually grew meaningfully.
And that momentum carried through into Q2. This group now represents nearly 9% of our total base and Arrow is playing a pivotal role in its evolution by intelligently guiding their journey. These customers are expanding average order size and fueling go daddy's impressive total ARPA growth up 10% to $230.
What's more this cohort demonstrates near perfect retention the combination of rising <unk> and exceptional retention clearly illustrates the durable pathway, we build toward a growing base of sticky higher lifetime value customers on total customers, we have largely moved beyond the impacts of eliminate.
<unk> deep discounts and divestitures that said, we continue to see some residual pressure from migrations as they move through their initial renewal cycles. Excluding this remaining headwind customer count has grown in each of the last two months.
As these pressures subside and we benefit from strong conversion of higher intent cohorts, we expect a return to customer growth. Later this year. This momentum underscores the effectiveness of our strategy and the long term value creation embedded in our integrated platform on.
On the balance sheet, we exited the quarter with $1.1 billion in cash and total liquidity of $2 $1 billion net.
Net debt was 2.8 billion, representing a net leverage of one six times on a trailing 12 month basis year to date through August 6th we have repurchased approximately $900 million of our outstanding shares.
Our commitment to a disciplined capital allocation framework is unchanged and share buybacks remain a key mechanism to return value to our shareholders as of the end of the quarter, our fully diluted shares outstanding was $142 million.
Looking ahead I am pleased to share that given the strength of our performance year to date, our increasing profitability to cash flow conversion and the proven durability of our business model, we are raising our full year free cash flow target to approximately $1 $6 billion representing.
Representing growth of over 18%. Additionally, we are raising our full year 2025 revenue outlook that we provided in February we now expect total revenue to be in the range of $4 89 to $4 94 billion.
Representing growth of 7% at the midpoint for the full year, we expect FX neutral bookings growth to be in line with our revenue growth for Q3, specifically we are targeting total revenue of one point to two to 1.24 billion also representing 7% growth at the midpoint of the range within total revenue.
For both Q3 and the full year, we expect applications in commerce revenue growth in the mid teens and core platform growth in the low single digits regarding our outlook I want to mention that beginning in the fourth quarter of this year Godaddy will no longer operate as the registry service provider for the Doc co top level domain.
As a result of this change we anticipate an approximate 50 basis point headwind to bookings and revenue primarily in the fourth quarter. Importantly, this transition does not affect our ability to execute our strategic initiatives or deliver on our 2025 and 2026 financial commitments.
Where the third quarter, we are projecting a normalized EBITDA margin of approximately 32% and we are reaffirming our full year margin expansion target of 100 basis points with continued sequential expansion each quarter. This year exiting 'twenty twenty-five at 33%, we expect normalized EBITDA.
To maintain greater than a one to one conversion to free cash flow for the full year, our capital allocation approach remains unchanged and we will continue to evaluate all opportunities. According to our rigorous returns based framework to maximize long term shareholder value in closing we remain more calm.
[noise] than ever in the strength of our model and our ability to execute toward our targets. Our second quarter results reflect godaddy solid foundation powered by disciplined operations consistent innovation and the growing impact of our strategic initiatives from enhancing and expanding AI powered experiences and solutions like <unk>.
Arrow to attracting higher value customers, we are driving sustainable and profitable growth across the business with nearly 30 years of consistent growth through a variety of macroeconomic backdrops godaddy is built for durability and long term value creation that strength is anchored by a high <unk>.
Quality recurring revenue base disciplined cost management robust free cash flow generation and a strong balance sheet. Looking ahead, we are fully committed to delivering on our investor day targets of $4 $5 billion plus in cumulative free cash flow generation, 6% to 8% annual.
New growth and expansion of our full year normalized EBITDA margin to 33% by 2026 with our continued momentum we remain excited about our path forward with that I'll hand, it back to Christy to open up the line for questions. Thank you.
Thanks, Mark as a reminder, if you'd like to ask a question. Please use the Raytheon feature at the bottom of the weather has seemed to be added to the queue. Our first question comes from the line of Miller on for RJ that yet at William Blair. Please go ahead.
Hi team thanks for taking our questions. So maybe we can start with that and see it grow.
Should we think about diesel in the quarter and does this continue through 2025, just trying to figure out there is a trough considering the arrow strategy is layering in which can help drive average order size and attach in the segment and then maybe just a follow up on what are you seeing in the latest cohort of customers.
As you experience Arrow is this helping with the multi product adoption.
Yes, Thanks will no trough right.
We're happy about the momentum of ANC.
And overall as a business, we think that the.
Bookings and revenue will be on par for the year absent any impact of that FX AMC now is that a run rate of about $2 billion for bookings and revenue were really proud of the momentum there and is growing business is at 38% of our total business today and we're looking at growing to about 40%. So we can be more.
Excited about the momentum with an ASC and.
It was a tough quarter compare considering the gross last year in AMC was upward of 24%.
And then below that the comps do get easier in the second half of the year for ANC growth. So.
You can keep that in mind.
Helpful. Thank you.
So on the I also wanted to ask a question on the cohorts related to Arrow and listen we're seeing these cohorts that are coming in and they're converting at higher rates.
Their average order size is being driven up it's driving our increase in <unk> and we have a near perfect retention rate with them. So the strategy is working we're getting to those high intent customers and we're really pleased with the momentum it's providing in the business not only in AMC, but also in our core platforms.
Yeah.
On the customer that are sort of over $500 customers, that's where earmarks near perfect retention, but thats being driven by the attach that facilitate so youre talking about into driving attached to that.
Average order size now we continue to see.
Cohorts.
On Ara cohorts every month.
That's great to hear thank you.
Thank you.
Our next question comes from the line of Josh <unk> from Raymond James. Please go ahead.
Thank you for taking the question I have.
A higher level question.
For a month, but.
When we think about the Gentex web and this kind of potential new front and how do you think.
<unk>.
Kind of making sure that the website ecosystem and App ecosystem remains relevant I think some ways investors want to make it.
A little bit cut and dry like it's either the gentex web or something else, but just kind of.
Big picture a high level like how do you see this affecting the way that consumers are gathering information and what does this mean for godaddy.
Yes, Thank you Josh.
Thank you.
A huge proponent and very bullish on AI generative AI and <unk> AI as well and I think these new capabilities give companies like ours that have access to over 20 million customers brand awareness across the world the ability to provide.
A whole set of <unk>.
Products to our customers, but woven together in a manner that simpler for them to use it more simple than they have ever seen before and we have been a leader and innovator in the AI space for micro businesses from the very beginning I personally am super involved with and have been for years at the company with how we work with AI and now.
How we work with <unk> and how it's transforming our customer experience and Youll see that with ask Eric you were able to cash stable video at the beginning of this call. We are bringing forward new interaction pattern for arrow, which just makes it even more.
Easy seamless so the conversation with the customer and we're even working to bring in sort of AI and human expertise together. So it seamless between between the two for me.
When I think about godaddy there are two areas of opportunity. One is what we can do for our customers, which is make things much much easier for them, which leads to attaching more products, which leads to us being able to cross.
Explore them to higher Skus and so on we're also internally the company transforming where every role in the company is empowered with AI and those rules evolve and change and sure for now there's a lot of exploration and utilization of AI and agenda is growing but as those two curves cross I think.
What youre going to see a step function opportunity for companies like ours to be more efficient and provide great products to our customer then we will actually show you. Some of this at the Investor dinner.
Later this year, so I'm super excited to sort of bring it all to life.
Super Super exciting.
Wanted to also ask just on the pricing.
Kind of learning curve from Arrow, all access and certainly the Aero plus logo maker, you've seemingly been a lot of testing.
Do you feel like you.
Kind of got that at a at a point where this is.
Somewhat of a stable pricing pattern moving forward is it still in heavy experimentation just kind of curious on on the learnings and how thats influencing where the pricing can go.
Yeah, you saw us test all access, but you're also seeing different forms of ERO plus share question. The different experiments on the site. It's still all very very early there are some paths, where we're having great success in introducing Europa and comms customers intuitively understand it and brokerage.
On other pads, what we're finding is more education as acquired sort of more easing into the passenger quite so well.
It's still very new and just launched in Q1 sales continue to see us testing it but overall, we're very excited about where arrow is in terms of creating a higher average order size to attach when it's getting engagement into multiple products with us how it is helping us reach sort of that higher end customers filling a broader set of intense for them and we can see that.
That naturally leads to Aero plus overtime. So yes continue to be super excited about that.
Super helpful. Thanks, Tim.
Thank you.
Our next question comes from the line of Trevor Young from Barclays. Please go ahead.
Great. Thanks first one for me on the Dot Com registry each change I appreciate the colors <unk>.
<unk> that for US is there a change here and thinking on whether you want to be a registry versus a registrar or is this just a one off related to that specific country code and then mark on the <unk> EBITDA margin in full year margin unchanged. It implies diminished margin improvement in the back half versus about two points in the front half are there some cost blaring.
Here that we need to be mindful of or some mixed differential or anything like that and then bridging that to the raised free cash flow guide is there something working capital wise that we need to be mindful of I think I heard you say that youre now expecting greater than one to one EBITDA to free cash flow conversion. So just hoping you can unpack that thank you alright, no problem Trevor no change in our.
This was a one off situation where went out to rebid.
And the profitability.
Metrics that were needed to continue in this relationship just werent there for us So I would say, it's more on the strategy of ours.
Profitable growth and making sure we stay disciplined to our framework versus a change in philosophy.
On the on the diminished margin expansion no nothing really to call out here.
We are doing well, we're expanding sequentially quarterly we're on target for 33 exit.
Our comparisons for the margins last year in the second half a little harder than they were in the first half.
There's nothing to call out expense wise and on the free cash flow, it's being driven by our strong bookings in the cohorts coming in remember bookings as the look at the beginning of our free cash flow of the top line of our free cash flow and we're seeing a lot of strength at the at the top of the funnel related to the cohorts were bringing in are coming in higher average order.
Size better retention and that's helping us on our free cash flow so positive momentum in the business and operations as the driver nothing to really call out on working capital are unique expenses in the second half.
Great. Thank you Mark.
Our next question comes from the line of the Crown castle's about last name Baird. Please go ahead.
Hey can you hear me okay.
Hey, Nick.
Okay great.
Thanks for taking the questions. My first one is on ask Arrow I. Appreciate the video that you showed at the top of the call and all the commentary around the opportunity from agenda tools I'm. Just wondering if you could talk more about how youre thinking about the timeline for bringing these solutions to market across your customer base and just about some of the initial feedback has been from the tests that you've been running so far.
And then my second question is on the customer count I. Appreciate all the color on some of the underlying trends there, but on a headline basis. They still expect to return to growth later this year and I'm wondering if you can put a finer point on the timeline there if that's going to happen in the third quarter or the fourth quarter and what youre seeing at the top of the funnel or our other signs that give you confidence that you'll return.
The growth this year and I'll leave it there thanks.
Thanks, Nick let me start with ask here is actually already being tested on a few pages on the site. So what happened is we replaced that with a button at the bottom where customers can ask questions with ask Carol and initial tests have shown that customers actually look like.
On that button it attracts the attention and it opened up a model and a conversational experience for them, where they can do a few thing.
Now having this initial success with the user interaction pattern seems good and is testing, we're going to layer in more and more <unk> capabilities into <unk> over the next quarter. So it's very much right in front of us.
The next few months and the idea is to keep bringing in more and more capabilities as we see what customers are exploring and what sort of works well I think folks probably understand this AI capabilities.
Non deterministic thats, a probabilistic modeling work and so you have to test. It you have to see that the customer is getting the.
Fantastic interaction and then you sort of roll it out and handle more and more use cases.
Timna I will say what to ask here, we are talking about a real set of agents that actually fine and resolve issues or new sales or all of that on the customer's behalf. We're not talking about an agent that says if you want to do this you can find it here we're talking about.
Very real.
AIA Gentex.
Technology that really simplify that for our customer.
Yes.
Vic on the customer count.
Our strategy is around going after these high intent customers and we're seeing improved customer count around those that are spending more than $500 with us.
And these this cohort is having meaningful contribution to our growth. We're seeing like we said the higher average order size near perfect retention, where it is.
Working exactly the way we wanted to if not a little ahead of schedule.
The total customer count, yes, we are seeing some tail off effect of the migrations as we get through the renewal cycle. Now. A reminder, these are mostly one product customers a lot of time, there low cost means we expect to see it through the rest of the year, we're seeing positive signals in the last couple of months, but nothing to call out on the exact timing of when we will say it's positive but.
Our focus is on that high intent customers thats going to spend more than $500 with us.
Okay, great. Thank you.
Our next question is from the line of 10 months from Oppenheimer. Please go ahead.
Fantastic. Thanks for taking my question I guess my question is kind of emerging Vixen, Josh is a little bit.
This is probably less of a headwind for you guys versus your peers, but are you guys seeing any change in terms of the top of funnel are you seeing any change in share shift in terms of potentially AI, Bob coding tools and or maybe taken some share on your your web presence.
<unk> products.
Color there would be great demand.
Yes, so look I'm super excited about AI and agenda capabilities, making it easier for customers, whether that's to find domains will build websites or any of the features that we talk about the main point I would make is one we're not seeing any direct sort of issue. Our strategy is to attract the high intent customers. We're seeing strong top of the funnel we're seeing.
Better sort of year over year conversion of those customers and we're seeing higher attach higher average order size. So that's what the metrics are saying, but it's fine.
Wanted to sort of look forward. The next year or next two years, maybe the context I would share is that I've been involved deeply into this sort of within our with our teams for many years now and the things that are possible today.
I don't think we would've also also.
We're looking at things today, and saying Hey, Xyz is now mean, that's not in my mind Thats not the case at all we are at the beginning of this new way of working which is going to be powered by AI and theres going to be a lot of movements over the next two to three years as the AI capability improves as it scales.
Get sort of.
Put into every piece of how we work and to me that's a massive opportunity right.
Multiple companies going to use it absolutely, but godaddy has and Tastic brand awareness globally, we have a big customer base, we have a lot of customers coming to us new customers coming to us every year and we have the opportunity to both build these tools ourselves because of how our technology capability with software development.
Home has improved but we also have the ability to use our balance sheet and financial position. If we want to really provide the best for our customers and Thats I think a great opportunity for the company.
Got it understood I appreciate the insights there.
And then maybe somewhat building on that.
Do you feel.
Indeed.
The value or the or having the starting point at the domain does that strategic value increase going forward.
Yes, maybe a little high level, and maybe a little far out, but I am sure something you guys have noodle down internally.
We love our position.
The worlds largest domain registrar, we love our position in the world.
<unk> think of domain names because every idea when people have the idea of the first thing to think about Oh My God, Let me protect the name of that idea and they do that by buying a domain name that gives us access to those customers when their ideas start in fact, we see so many ideas that never start because customers search for things.
They may not even become our customers what we're gathering that data all the time and given our large scale, we get to see search traffic or what people are searching more than probably anybody else.
No.
Our four model of starting with the domain and making that funnel stronger has been a tremendous advantage over the last one.
30 years and as we look forward, it's only becoming stronger because we've taken the domain name and we work to reinvent it to say if and you start with the domain with Arrow Youre going to get all these other things too. So we're not just starting with the domain youre, starting almost with sort of a set of set of things that startup business almost like a business in a box.
With a domain name.
Fantastic. Thanks, a lot guys. Thank you.
Our next question comes from the line of Eagle Iranian kind of Citi. Please go ahead.
Our pipeline Hey, good afternoon, guys. Thanks for taking my question.
Maybe one just on Aero and.
And conversion and monetization updates.
When you first of all that rollout aero kind of the bid.
Feature was.
The initial landing page when you register for a domain.
Is the expectation that the Atlanta Pedro retire.
Tomorrow, I mean, it sounds like Youre, making progress there 500 odd customers, but are you seeing better conversion those those landing pages turn into real estates in more products being attached can you just update us on on that flow and how that's been trending.
Yes.
The percentage of customers that end up.
Website product with us.
And for that more and more over the last year has become through arrow.
Actually for a few quarters, we shared that data, but now it just sort of gone up and up and up where customers come in they start with a domain name we build on the <unk> side.
What percentage of customers take that they love it and that makes it easier for us to upsell the payer to website and more and more of that being website is driven by AI.
The whole site has just created for the customer, which which basically disrupts this whole idea that customers come in and they have to build a website using an editor and a template and its more about now you've got the domain name from that name we have done a good job of understanding what your ideas about and we can give you seven eight options if you pick one.
Those are options that tells us very clearly what it is that you're in and now we have a one well.
But we can take all of that information and of course, the information we have many other customers and turn that into a paid product appear web site for you. So that's the path, we're going down and it's just more and more customers and with a paid product going through the app.
Taking a step up right. If you think about volume for us being stronger retention rates better attach new customers coming in and buying and converting higher.
It is doing really really well for us the other side of the equation is the pricing and bundling, giving more value and getting price for it. If you look at those as the two drivers of the price element plus the volume element. They are contributing equally now to our growth.
And that puts us in a really good spot going forward pricing for value, but yet also getting the stronger attach retention and new customers coming in and converting at a higher rate.
Great that kind of segways into my second question Mark.
I'm pressing unbundling.
Can you just kind of shifting from a product to a cohort lens how's that going.
Any learnings or maybe on the trajectory of pricing and bundling and the opportunity going forward. Thanks.
Yes, the shift to taking the customer cohort has been fantastic.
We have approached it from the customer lands and the biggest impact or the biggest thing Thats opened up for US is when we're able to look at the full relationship with the customer and really help our renewal rates overall, because we wanted to help our customers succeed and we don't want to take price if thats going to leave them with the part we want to help them along we want to get them.
That will make them successful and once they are successful of course, we participate in their success and that's what value based off where does for them.
And just to entertain or Jack you have more scale.
Jumping in but.
The great part about this cohort that we're seeing it now contribute to both ANC and core platform and we saw some of that growth start to show up in the the main element of growth.
The core platform, because we were bundling the domain with certain things. So again those cohorts are really starting to work and I know, we're talking that we're thinking about next year already yes, exactly what I was going to add is that both for pricing and bundling and seamless experience. We feel very good about the roadmap in front of us because right now we are testing the bundle.
Those that are going to go live in Q4, this year or Q1 of next year that are going to be the pricing and bundling initiatives next year. So we go into this tool into experimentation with a lot of confidence and the same is true for seamless experience with it is a program that is literally based on thousands of tests run that improve the customer is.
<unk> said, many many many nodes, allowing us to estimate any different experiences and we are getting better and better at that and Thats something I called out in my prepared remarks.
If you look at the return coming from these programs both of these programs are starting to contribute.
Sort of in a similar manner and have great roadmaps in front of them.
Great. Thank you guys.
Thanks, Joe.
Our next question comes from the line of Brad Erickson from RBC. Please go ahead.
Hey, guys. Thanks, maybe I'll just follow on to that last one.
I think security was a pretty big driver for you on the pricing and bundling last year.
As you are doing all these tests so you're talking about the Q4 launch any way to think about kind of sizing the magnitude of impact that it had been.
And I think it showed up in the P&L all fairly well from the security side. So just how to think about that as as you roll. These products out over the next 12 to 18 months.
Yes, probably turn to Mark a little bit, but my guess is a little early to talk about what the specific bundles would be for 2026.
As we've evolved this capability, we're a little careful about how much detail, we publicly talked about the specific bundles because they can tend to be quite unique two cohorts of customers, but I think we'll talk about 2026, when we got to it.
About 20 rigs coming back too.
Okay.
When we look out at two.
The contribution across.
Our cohorts how much is being driven by the volume element and the improvement in the AML the attraction converts versus how much is being driven by.
Okay.
And that element of it and are now starting to even.
Keeping a pretty good idea that.
Yes.
To contribute.
Between them.
Got it thanks.
Thank you.
Our next question comes from the line of Al.
Alex Levine on for Mexico, It sounds benchmark Alex. Please go ahead.
Hi, guys. Thanks for taking questions.
Okay.
Okay.
Okay.
Sorry, I'll take from marketing suite our airplanes.
To that.
Martin complete and Aeroplan is still pretty new products. So while we're very happy attached.
Products and we continue to put them in front of more and more customers overall.
Small parts of them Mark if you want to.
I'll just talk about Arrow ended up itself, we couldnt be more happy at how the strategy is working and what we're seeing at the top of the funnel and the increased conversion and the ability to get to the average order size in the near perfect retention that we're getting from that cohort that is coming in Aero plus that is still in the early stage and things like that will contribute.
Okay.
So overall right now we're just seeing the experience driving that strong behavior at the top of the funnel, we see steady traffic, we see higher convert we see better attack, we see higher average order size and thats because the aero experiences taking our customers on that journey of what they need much faster much better.
And that cohort is becoming very strong in our customer base right now, it's reached 9% or about 9% and.
And we continue to see that contributing more and more of our overall growth.
Got it. Thank you that's helpful. And then just one last one on high picture question.
As you think about <unk> and the opportunity that this may catalyze an upmarket push for you guys.
Perhaps something like an MCP broader integrations there just curious if you could elaborate on that perhaps some of the milestones we should expect in the next 12 months in terms of Egencia monetization.
I think over the next 12 months you can expect to see godaddy that is completely enabled.
AI, where <unk> agent agent technology, our MCP.
Other evolving technology.
Asking me about these I'm sure you know the new standards coming out sort of every few weeks and we expect to keep pace with them, we expect to be able to enable that godaddy platform for our customers and for our partners.
In a very significant way using agenda here.
Very helpful. Thank you guys.
Kevin.
Our next question comes from the line of novel <unk> kind of B Riley. Please go ahead.
Yeah.
Hi can you hear me.
Hey, David.
Okay.
No.
Maybe just on the commentary you had around the REIT shaver and delivers up to 50% savings.
Just wondering.
Oh, how sustainable is the promo.
What kind of economics.
Are you can you can expect out of that.
Any color would be it would be helpful and then.
On Aero.
How much of the floor at the top of the funnel is exposed to air today I think sometime back you mentioned more than half the people will see it but.
Any update on that would be great. Thank you.
Yeah happy to provide that on the rate table product.
The way it works is that when the merchants adopt they're able to reduce their.
The fees they pay by about half so there clearly is.
I would say a threshold like it's not a promo that we're offering it's actually a product feature that helps them reduce their costs. So so we expect it's adoption to grow in the new cohorts, where we put it forward in the new sales customers are adopting and very very fast, but they can understand it they like it makes sense I need that I want that.
<unk> and in the existing base that we have.
Also run a campaign to get existing customers commerce customers.
To turn it on now this is all part of a broader strategy at godaddy.
<unk> the economics to improve the SaaS component of our commerce and payments offerings of course, we've continued to do well on <unk>, but we have put our energy towards the SaaS products. So we can have a more wholesome offering or a customer than our core strategy is still the same.
We're enjoying the low CAC to go to our own customers.
Continue to have fantastic leads so we know our strategy is working and we are slowly expanding our sales force to be able to go after more and more customers that are in our base or as we have a bigger set.
Set of features that go across both payments, but also the SaaS offering in terms of arrow practically all customers announced new customers, especially on the top of the funnel are starting to see arrow in our in Aero when Mark talks about the Aero and non Aero cohort is very much talking about those customers coming in.
And being exposed to arrow and it has become more nuanced customers now have more choices on how they use arrow and that's only developing well because we're able to better segment customers that maybe just want to buy a domain because they want to add to their portfolio and don't want arrow, but others that one arrow and hence we were able to push them through a different path and sort of.
More more engagement across more products so.
In terms of the rollout you can expect.
Two.
Alright short period of time basically every customer is going to be able to Sierra will continue to work on are deeply engaged and will continue to work on things like ask Arrow, we're engaged in a different way in a conversational style and therefore, we think differently for existing customers as an example, and there's no doubt that.
Now that all our customers off the top of the funnel or are exposed to arrow that is helping grow that customer base that is spending more than $500 with us because it is getting them to that attach that average order size is higher so it's having a real meaningful impact on our model and that continues to be a bigger part of our customer base.
Yeah.
Thank you.
Hey, Ken.
Our next question comes from the line of Elizabeth Garner from Morgan Stanley. Please go ahead.
Great. Thank you so much.
A question, but maybe from a bit of a different angle and more often hearing about how it's harder for businesses to get that one take talented.
Ill becomes more challenging.
Just kind of two questions here first how it go Daddy managing down impact by ICL ICL now you guys had a big brand recognition might not be as impactful, but just curious how diversified of traffic any changes that you're making to your marketing strategy and then second what's the opportunity for godaddy to help customers navigate this new world.
There are five specific.
Products.
To capitalize on thank you.
Yes of course.
<unk> is a large brand and we do quite well in <unk> and we are engaged in the work to get sort of a similar capability with the AI.
Hello, Ms as well so all of that makes sense and of course, everyone can see that Google has evolved.
Search traffic is evolving, but so far godaddy has been able to compensate for those changes given our strategy and our approach. We have continued to diversify our channels and how we bring customers to us we've continued to improve the efficiency of how.
We reach customers on health and we have improved our conversion rates. So all of those offsets for us any changes that happen today, but we fundamentally believe that given our position as the world evolves, we will have an opportunity to be a leader in the new space as well, so that's where we're focused and in terms of our customers.
The products were most excited about and we do that just a little bit in that video early on in this call is the ability for our customers to have an agent in actually new Seo optimization and other optimizations on their website on a continuous basis.
We see internal projects that are doing things like that we have a pretty interesting experiment running that though the completely autonomous Lee and.
Measures.
So these are sort of new technologies.
Using <unk> and we think we'll be able to bring those to bear for our customers and for the customer of the interaction is going to be probably as simple as asking arrow.
<unk> says hey, I could help you with this and the customer basically and start to say, yes and sign up for it and then the agent is able to do the rest.
Great and then maybe just a quick follow up on on the Afghan just missed surface area of what you can go after and supporting small businesses is very significant.
You think about the expansion of capabilities are there certain areas of workflows and you are highly focused on near term are there any other areas that could be surprising to investors that you can start to address.
Are there any areas or at least kind of alfresco. When you guys are trying to come up with this.
Yes, so the.
The customer jobs to be done done that we're very focused on are are the entrepreneurs, we are which we have talked about.
Many times one <unk>.
The technology transformation, we're going internally for AI is that it.
It allows us to bring all of our capabilities together in a bay conversational expands for our customers and the second piece, which I also talked about briefly in the prepared remarks that what we're seeing is the integrations, we do with our partners Genentech coding our coding done with AI is very very that's a very good use case for it for various reasons.
And as we scale that that's where the surprise and delight element is going to come from where godaddy is going to likely be able to bring in more partners faster and be able to test them much faster and bring those experiences to our customers.
That area has gone phenomenally evolve over the next I want us to fix I don't even want to say 12 months I think in the next six months, we'll probably see a lot of changes in and Youll see it.
Partners on the site that do different things and of course, we'll talk about it with you we will talk about it on these earnings calls and talk about where do we see the best results.
Great. Thank.
Thank you.
But.
Our next question comes from the line of John <unk> from Jefferies. John. Please go ahead.
I think we might have lost John that was the.
That was the last question so over to you Oh never mind he came back.
John go ahead.
Can you hear me okay.
Okay.
Thank you very much search engine for Brent Thill.
Two questions actually on the core platform it looks like you've seen maybe some renewed relative strength there.
Especially domains, even the primary not just the aftermarket being up.
I would say mid to high single digits.
And I'm wondering is that something that can be sustainable as you kind of alluded to are helping there and then on the dock currency did impact.
Basis points.
Should we assume that continues to kind of next year as well.
Couple of things I'll start with the core platform.
We're seeing the benefit.
Pick up in the aftermarket no doubt we saw activity in some of the larger transactions returned in the first half of the year, but we're also seeing the benefit of the impact.
Going back to pricing and bundling.
And we talked about it at the beginning of the year, we're starting to see that flow through again I would say there is it sustainable.
Sustainable pricing and bundling ended up itself will continue to look and test into it but we're really happy with the momentum and the and the.
Added lift not only it's giving to our volume in domains, but also our ability to get value from those the main sales ended up itself again, increasing the top of the funnel and that conversion part of it is really really working.
Darko.
Lesser extent.
We will see an outsized impact I mean, the whole thing is immaterial in and of itself, but we wanted to call it out for the fourth quarter.
It'll be a very small impact into next year. It doesn't change our ability to meet what we put out there is as milestones for 2026.
Okay. Thank you.
I'll now turn the call over to Atlanta closes out. Thank you Christy and thank you all for joining us as always a fantastic. Thank you to all godaddy team members across the World. We're Super excited about the products. We're building the customers we have.
The best is still in front of us. Thank you very much.