GoDaddy Inc at RBC Capital Markets Technology, Internet, Media & Telecommunications Conference Transcript

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

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : All right. Well, good of you to make the trip. Thanks for being here. So I have my list of questions. We always say if anybody has a question, feel free to raise your hand, and we'll get you a mic and get that to Mark. But I think starting out, you guys just printed, maybe always good to just take a minute or 2 and just talk us through the print. And particularly, what are the kind of 1 or 2 items you're feeling in terms of questions from investors following the earnings last week.

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : Yes, nice to -- good to hear. Yes, so in terms of -- let's just start out with the macro question, obviously.

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : (inaudible) times. It's going to happen in '24. No, I'm just kidding. Let's assume kind of a stable environment into next year. And obviously, just the uncertainties that investors tend to price in, talk about this -- the business' resilience, the durability under kind of these, I don't want to call them tough times, but certainly uncertainties.

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : Yes, yes. You can't lose with the under pitch.

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : Maybe just a follow-up on the funnel. You mentioned you're seeing kind of good trends, better trends, et cetera. I think others in your space have spoken to some ongoing softness, maybe a little bit of directional improvement. Where is the difference do you think, from your perspective?

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : Yes. Yes. Got it. And how do we think about the churn on that front? Because I know there were the new business formations right, skyrocketed during COVID, they're still pretty elevated though. In fact, they're still above pre-COVID levels, I think. What's the churn characteristics, though, on the new business formation that we think we're seeing these days?

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : Got it. Okay. Let's talk about apps and commerce...

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : On apps and Commerce, obviously, that's kind of the big focus point of the business growing really well. And you talked about having the funnel for new subscribers. On the ARPU side, though, you're also seeing a nice accretive mix shift there. Can you kind of walk us through like a typical customer's journey, if you can, that's driving some of that? Is it just new customers signing up and they're going all in on commerce and payments? Or is it -- you're seeing people sort of dip their toe in the water, smaller business and they expand, Walk us through kind of what you're seeing there?

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : it actually happens.

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : Got it. And when you think about the growth algorithm, for apps in commerce between kind of some of that ARPU mix shift and then just subs, are they kind of equal contributors, is one greater than the other as you think about the next few years?

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : Got it. Okay. And then maybe just a finer point on the domains business as kind of that distribution point. You guys, I think, talked to having a structural advantage with that and separate from just top of funnel. Talk about how you guys think about that structural advantage? Like why -- what specifically happens that drives that from your perspective?

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : Got it. Okay. And on domains, one more there. I mean, I think it's pretty well known that markets fairly mature. You guys have been able to grow actually fairly well, high singles, low doubles somewhere in there. I know there's been some volatility in there, here and there. But how have you guys been able to do that? How durable do you think that model is going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 14, 2023 / 3:40PM, GDDY.N - GoDaddy Inc at RBC Capital Markets Technology, Internet, Media & Telecommunications Conference

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : And then let's talk margins a little bit. Yes, margins. You guys came out with obviously some pretty strong results, raised the outlook both for this year and kind of in the next and exit rates and all that. On the Tech and Dev costs, in particular, product development, R&D, what were you able to identify that stuck out to be able to execute on some of those cost reductions? And in particular, you did it very fast, right? Like last quarter, 2 quarters ago, we weren't necessarily talking about, this all of a sudden, it's on the table. It's in play for next year. How did you do that? And what did you identify there?

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : Sounds good. I have to -- I'm a channel [treks] guy. I have to ask you, it's a quick channel check, right? So almost ask you to take your CFO hat off, all right. So everybody saved money on cloud, right, over the last year, optimization, rationalization I think Amazon's CEO used the word attenuate in the last quarter, meaning those optimizations are kind of bottoming after we all looked it up in the dictionary.

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : Yes, exactly. So I guess you just spoke about seeing sort of further optimization. But I think setting aside some of the company-specific stuff that you guys are running your own play, just industry-wise, do you think some of these optimizations that companies made, do you think there's more to go in '24, meaning do you think there's further opportunities to identify? Or was '23 kind of like this big rationalization year and we're kind of at a new baseline, and then it's back to normal. What would you say?

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : 13 words or less?

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : Yes. Got it. Okay. And then just one more. From a margin standpoint, you've spoken to kind of the longer term, obviously, giving people a little bit of a sort of early expectations there. Aman's talked about kind of being a 10% grower. That's kind of where he views the business from a normalized growth perspective. Anything to read into those margin comments? And I assume, obviously, there's been no deviation there. But maybe give us a little bit more on why 10% is the right number?

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : Got it. Okay. Any last questions? I get -- 2 more lightning round questions if nothing -- these really -- oh yes. Unidentified Analyst The commerce business is accelerating. Can you talk about the competitive dynamics there? Are you thinking about share away with someone? Or is it kind of a net new product for customers?

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : All right. One last true lighting around 10 words or less, most interesting Gen AI use case, like something you can actually do with it. hopefully generate some revenue. Most interesting Gen AI use case that you see that no one is talking about.

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : That was way more than 10 words.

Question: Bradley D. Erickson - RBC Capital Markets, Research Division - Analyst : So Mark, thanks so much for being here. Appreciate it.