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GoDaddy(GDDY) - 2024 Q4 - Earnings Call Transcript
GDDYGoDaddy(GDDY)2025-02-14 12:28
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Financial Data and Key Metrics Changes - GoDaddy reported total revenue growth of 8% for the full year 2024, reaching 4.6billion,withnormalizedEBITDAmarginexpandingto314.6 billion, with normalized EBITDA margin expanding to 31%, an increase of nearly 400 basis points year-over-year [26][28][19] - Free cash flow grew 25% to 1.4 billion, exceeding guidance, while unlevered free cash flow for the year increased 20% to 1.5billion[29][19]−InQ42024,totalrevenuewas1.5 billion [29][19] - In Q4 2024, total revenue was 1.2 billion, exceeding guidance, with normalized EBITDA margin expanding to 32% [21][22] Business Line Data and Key Metrics Changes - Applications and commerce (A&C) segment revenue grew 17% to 441million,drivenbystrongperformanceacrossproductsincludingwebsiteplusmarketingandmanagedWordPress[22][23]−Coreplatformsegmentrevenuegrew4441 million, driven by strong performance across products including website plus marketing and managed WordPress [22][23] - Core platform segment revenue grew 4% to 751 million, with bookings also increasing by 4% [23][24] - A&C bookings grew 17%, while core platform bookings rose 4% [22][23] Market Data and Key Metrics Changes - Annualized gross payment volume (GPV) increased 55% to 2.6billion,indicatingstronggrowthinthecommerceinitiative[10]−ThecompanyexpectsrevenuegrowthintheUStooutpaceinternationalgrowthbyapproximately200basispointsduetocurrencyheadwinds[36]CompanyStrategyandDevelopmentDirection−GoDaddy′sstrategyfocusesoncreatingcustomervalueandtransformingitintoshareholdervaluethroughbetterconversion,attach,andretention[3]−Thecompanyistargetingsignificantcontributionstogrowthfrompricingandbundlinginitiativesin2025,particularlyinpresenceproductsandspecificcustomerpopulationswithinthehostingbusiness[7][48]−TheAeroinitiativeisseenasakeydriveroffuturegrowth,withplanstoenhancecustomerexperienceandengagementthroughAIandnewproductofferings[12][18]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinreturningtocustomergrowthin2025,drivenbyhigh−valuecustomeracquisitionandimprovedretentionrates[32][56]−ThecompanyanticipatesmodestfinancialbenefitsfromtheAeroexperienceinthenearterm,withafocusonlong−termgrowth[38]−Managementhighlightedtheimportanceofmaintainingoperationaldisciplinewhilepursuinginnovationandcustomerengagement[40][41]OtherImportantInformation−GoDaddyexited2024with2.6 billion, indicating strong growth in the commerce initiative [10] - The company expects revenue growth in the US to outpace international growth by approximately 200 basis points due to currency headwinds [36] Company Strategy and Development Direction - GoDaddy's strategy focuses on creating customer value and transforming it into shareholder value through better conversion, attach, and retention [3] - The company is targeting significant contributions to growth from pricing and bundling initiatives in 2025, particularly in presence products and specific customer populations within the hosting business [7][48] - The Aero initiative is seen as a key driver of future growth, with plans to enhance customer experience and engagement through AI and new product offerings [12][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to customer growth in 2025, driven by high-value customer acquisition and improved retention rates [32][56] - The company anticipates modest financial benefits from the Aero experience in the near term, with a focus on long-term growth [38] - Management highlighted the importance of maintaining operational discipline while pursuing innovation and customer engagement [40][41] Other Important Information - GoDaddy exited 2024 with 1.1 billion in cash and total liquidity of 2.1billion,withnetdebtat2.1 billion, with net debt at 2.8 billion [33] - The company plans to maintain a disciplined approach to capital allocation, including covering dilution from share-based compensation through buybacks [44][45] Q&A Session Summary Question: Can you elaborate on the pricing and bundling strategy for 2025? - Management indicated that the focus will be on presence products and specific customer cohorts, emphasizing a customer cohort-based approach rather than a product-centric one [48][52] Question: What are the drivers for returning to customer growth in 2025? - Management highlighted the focus on high-quality customers and the positive signs from the Aero initiative, which is expected to improve customer engagement and retention [56][58] Question: Are there any one-off headwinds impacting revenue growth? - Management acknowledged that while bookings momentum is strong, there are transactional aspects that could impact revenue recognition, particularly in the aftermarket business [66][134] Question: What is the expected impact of the Aero initiative on monetization? - Management noted that Aero is entering the monetization phase earlier than planned, with positive metrics on customer engagement and retention [78][81] Question: How does the company view the growth potential of GPV? - Management expressed optimism about GPV growth, indicating that there is still significant room for penetration within the customer base [85][86] Question: What are the expectations for EBITDA margin in 2025? - Management projected a normalized EBITDA margin expansion of approximately 100 basis points, with continued focus on A&C growth contributing to this [41][157]