Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GoDaddy Inc (GDDY, Financial) reported a 35% growth in free cash flow, demonstrating strong financial performance.
- Applications and commerce bookings grew by 24%, with normalized EBITDA margin expanding by over 400 basis points.
- The company successfully rolled out GoDaddy Airo, an AI-powered experience, to over 1 million new customers, enhancing customer engagement.
- GoDaddy Inc (GDDY) achieved a 7% increase in total revenue, reaching $1.1 billion, exceeding the high end of their guided range.
- The company maintained a strong customer retention rate of 85%, with over 50% of customers using two or more products.
Negative Points
- Customer count slightly declined to 20.9 million, impacted by proactive divestiture and migration efforts.
- Domains under management were overstated by approximately 1.4 million domains, primarily related to European TLDs.
- The company faces expected headwinds from divestitures, impacting revenue by approximately 100 basis points.
- Despite strong bookings, the translation to revenue growth may be delayed due to the mix of transaction and subscription revenues.
- GoDaddy Inc (GDDY) anticipates tougher comps in the second half of the year, which may impact growth momentum.
Q & A Highlights
Q: Can you unpack the major drivers behind the A&C bookings growth and any considerations for future comps?
A: Amanpal Bhutani, CEO: We're excited about the 24% growth in A&C bookings, driven by pricing, bundling, seamless experience improvements, and commerce. These capabilities are being applied across our product suite, benefiting both new and existing customers. Mark McCaffrey, CFO: We saw double-digit growth across all product groups within A&C. The easier comp in Q2 provided some benefit, but the overall momentum remains strong.
Q: What are the early standouts from Airo's adoption, and how should we think about its future ramp-up?
A: Amanpal Bhutani, CEO: New customers are engaging with Airo rapidly, with over 1 million discovering it and 0.5 million actively engaging. We're seeing strong engagement, particularly with website capabilities. The focus is on discovery, engagement, and monetization, with promising early results. The rollout to existing customers will follow a similar pattern.
Q: Is the strength in aftermarket becoming more durable or broad-based, and what's the outlook for the rest of the year?
A: Mark McCaffrey, CFO: We're seeing overall strength in aftermarket volume, with larger transactions returning in the first half of the year. However, these are harder to predict, and our guidance remains cautious. We expect the platform to grow in low single digits over time, with potential volatility from larger transactions.
Q: Can you discuss the drivers behind the raised free cash flow guidance?
A: Mark McCaffrey, CFO: The increase is due to strong bookings, normalized EBITDA, and interest savings from debt repricing. It's a combination of better momentum across the board, translating into higher free cash flow and unlevered free cash flow.
Q: How should we think about GABI's role in customer service and its potential impact on revenue?
A: Amanpal Bhutani, CEO: GABI aims to enhance customer experience and efficiency, partnering with guides to explore more with customers. It supports both service and sales, driving 9% of bookings. GABI's access to data helps improve customer interactions, potentially turning customer service into a revenue center.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
