GoDaddy Inc at Citi Global TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ygal Arounian - Citi - Analyst : But just to start, Aman, great to have you here. I'm going to tee it off with, last year, Mark sat here in this seat, emphatically talked about the margin profile, 26% normalized EBITDA margins being the floor, expanding from there. The growth accelerating from 3% to 7%; you've clearly executed on that. Your margins are now 29% targeted, 33% midterm. Bookings are pacing ahead of that 7% revenue target and shares have doubled. So a great year for you guys. And if we sat here again next year and look back and had a repeat performance and stock doubled again, what would be the drivers of that? And what's the next leg of the story for GoDaddy here?

Question: Ygal Arounian - Citi - Analyst : Great. We'll get into all that stuff. I want to start, maybe at a higher level, in more of a cultural one. At your Investor Day, you talked about changing the culture to be more of a software engineering one. That's something that before you joined, maybe it wasn't in place as much. How is that shift? Can you talk about that cultural shift, what it's like now, and how that's enabled all these things you're talking about?

Question: Ygal Arounian - Citi - Analyst : Great. That's really helpful. And maybe just to translate that into actual product, since the last time you spoke publicly, you guys launched AI-powered digital marketing tools. And that seems to be a separate product priced separately on top of the website bundle. Can you talk about that, your expectations around that attach, and how you view that product?

Question: Ygal Arounian - Citi - Analyst : Got it. Okay. Let's stick on the customer -- just the customer in general. So you've had about 21 million customers since 2021. We get that question a lot, why there hasn't been more growth in the customer count. I know there's been some divestitures and that's impacted some of it. But with -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 12:20PM, GDDY.N - GoDaddy Inc at Citi Global TMT Conference let's just think about with all the new products, how the customer journey has evolved for you guys. Like you said, the domain has been the core part of the business, the top of the funnel. How's that evolving and how do you think about the right kind of growth profile for your customer base?

Question: Ygal Arounian - Citi - Analyst : Got it. So as you're evolving here, and the strategy is to drive greater attach and greater lifetime value, are you seeing any evidence so far that AI and the product set is doing that? And maybe another way to also think about it is how customers can scale on your platform, and it feels like there's more capabilities and there's a maybe higher ceiling for the type of customer that can grow and scale with you over time versus moving off to something else.

Question: Ygal Arounian - Citi - Analyst : Got it. So with Airo, again, you mentioned it's on your financials. It's still early. You're starting to see some signs of conversion on the monetization side. Again, if we sat back here the next year, you said Airo would be one of the things you'd be looking for. So what does that conversion or monetization look like? You talked about the free-to-pay, but you also talked about the nine cards. Where do you think about the strategy around the monetization for Airo more broadly?

Question: Ygal Arounian - Citi - Analyst : Okay, great. So you mentioned commerce. Let's dig into commerce a little bit more. And that's been a big initiative for you, I remember, since you joined to build out the commerce side and you've done a lot there. I think commerce grew over 50% year over year in 2Q. Can you talk about the growth drivers there? What's driving that up 50%, whether it's payments and GPV or new products?

Question: Ygal Arounian - Citi - Analyst : Okay. I think one of the questions we get a lot is on your commerce mix. I know you talked about your core customer being that kind of microbusiness. What's the mix between, let's say, physical commerce, services? What's the kind of broad range of the type of customer that you're servicing, particularly around the commerce point?

Question: Ygal Arounian - Citi - Analyst : Got it. And at the Investor Day, you showcased a lot of commerce capabilities with Airo. How much of Airo is expected to be the driver of commerce growth?

Question: Ygal Arounian - Citi - Analyst : Got it. So it's all upside?

Question: Ygal Arounian - Citi - Analyst : Got it. Okay. So all this boils down to -- or most of it, I guess, boils down to the applications of commerce segment. We're seeing results there went from mid double digits, bookings growth accelerated to mid-20s in 2Q. We've got some tougher comps in the back half and we'll talk about that. But within that acceleration, there are a number of components and you talked about them. But pricing and bundling are two of those. Can we just talk about the components of the A&C segment? You also mentioned they're all growing double digits, but any more insight into that? And then want to dig into the bundling and pricing strategy, too.

Question: Ygal Arounian - Citi - Analyst : Got it. So 5 points harder on the second half collectively. Okay, got it. That's good to know because that's been a big question coming out of earnings. The same acceleration and the concern from investors as we get to the tougher comps, bookings could slow on that. You're not giving guidance for the second half on bookings. But what you're saying is there's -- a lot of these initiatives are still really early. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 12:20PM, GDDY.N - GoDaddy Inc at Citi Global TMT Conference

Question: Ygal Arounian - Citi - Analyst : Got it. Okay. Maybe just to dig into the pricing and bundling a little bit more. What you've talked about so far, again, it's early, but it was just on the productivity side. And it was -- I think you guys described it as email or attaching security to email. Is that really all that it's been on the bundling side or is there more? Can you talk about what might be next, maybe on the commerce side, or anything else you could share on that?

Question: Ygal Arounian - Citi - Analyst : This is for next year. It's a public forum.

Question: Ygal Arounian - Citi - Analyst : Okay. Great. And again, Airo, that's not really a contributor now and can start to kick in over time later this year, next year, on the bundling side, too, or is that mostly a conversion factor?

Question: Ygal Arounian - Citi - Analyst : Is that global? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 12:20PM, GDDY.N - GoDaddy Inc at Citi Global TMT Conference

Question: Ygal Arounian - Citi - Analyst : Okay. Maybe shifting on the care side and operational efficiency with GenAI, you guys have talked about GABI as an assistant to your care team, and your care team has always been very critical to you. Can you talk about the efficiencies that you're driving there and how that's helping, whether it's the margins or the top line?

Question: Ygal Arounian - Citi - Analyst : Okay, great. We'll come back to the margins, just on product a little bit more. Your Managed WordPress products have been maybe a little under the radar. Last few quarters, we've talked so much about Airo. Can you give us an update on what's going on with Managed WordPress? Does Airo help that there too? Is the professional side benefiting from a lot of these products as well?

Question: Ygal Arounian - Citi - Analyst : On that point, does it become competitive then with your own website builder if you're making WordPress so much easier? Is that not how you look at it?

Question: Ygal Arounian - Citi - Analyst : Got it. Okay. I think I'd be reluctant to not hit on domains a little bit more given it's legacy business and such a big part of the business overall. What's your philosophy around that? How should we think about that? I think both for you guys, but in general, across the domain world, the total domain growth has been a little bit lower over the last 1.5 years, still growing, but has been a little bit lower than it's been historically. How do you think about volume? And then there's been a lot of discussion around pricing. How do you think about both of those for your domain business and as an on-ramp to the rest of the business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 12:20PM, GDDY.N - GoDaddy Inc at Citi Global TMT Conference

Question: Ygal Arounian - Citi - Analyst : Got it. Great. We could open up to Q&A. There's 3.5 minutes left. If anyone has any questions, otherwise, I could keep going. All right. Still early. If anyone thinks of something, just raise your hand. So maybe we'll shift to the last few minutes, margins and capital allocation. Let's start with margins. So again, you've -- last year, they were 26%; you're targeting 33%. Can you talk about the drivers of that maybe from here going forward? You've talked about as applications commerce gets bigger, that's a higher-margin business. We've also seen a lot of leverage around the cost base. Just how do we think about the progression of margins from here to your target?

Question: Ygal Arounian - Citi - Analyst : Thanks a lot. And that's all our time.