GoDaddy(GDDY) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue in Q2 was $1 billion, growing 9% on a reported basis and 10% on a constant currency basis [27] - Normalized EBITDA grew 30% to$ 258 million, with a margin of 25% representing over four points of margin expansion [30] - Unlevered free cash flow for the quarter totaled $274 million, growing 16% driven by strong profitability [31] - Free cash flow per share rose to$ 5.67 on a trailing 12-month basis, a 19% increase from the prior year [32] Business Line Data and Key Metrics Changes - Applications and Commerce revenue grew 15%, driven by strength in Create and Grow products and Email attach [27] - Annualized GMV across the GoDaddy ecosystem was approximately $28 billion, growing 12% [28] - Core platform revenue grew 7%, primarily due to strength in domain registration, aftermarket, and security [28] Market Data and Key Metrics Changes - International revenue grew 4% on a reported basis and 7% on a constant currency basis [27] - The company noted greater pressure for European customers due to macroeconomic factors [48] Company Strategy and Development Direction - The strategic priorities include driving Commerce through presence, delivering for GoDaddy Pros, and innovating in Domains [9] - The company is focused on attracting high-value customers, maintaining customer retention rates above 85% [7][15] - GoDaddy is committed to disciplined marketing spend aligned with demand signals to create balance across all business components [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing operational and strategic goals for the second half of 2022 despite macroeconomic challenges [33] - The adverse FX impact for the full year is expected to be approximately$ 35 million, leading to a revised revenue outlook of $4.1 billion to$ 4.13 billion [34] - Management remains focused on delivering strong financial results and maintaining a strong balance sheet [38] Other Important Information - The company completed $1 billion of share buybacks, reducing the fully diluted share count by approximately 8% since year-end [31] - GoDaddy's technology and development expenses increased as a percent of revenue to advance commerce and innovation strategies [30] Q&A Session Summary Question: What drove the sequential uptick in gross margin? - The change was primarily based on product mix, with FX impact being nominal [42] Question: Are the price increases just for new customers versus existing subscribers? - Price testing is nuanced based on geography and customer expectations, with increases potentially affecting both new and existing customers [43] Question: Are there certain areas where macro impacts are more pronounced? - Greater pressure is observed for European customers due to inflation and other macro factors [48] Question: How does the company view marketing spend in relation to demand? - Marketing spend is adjusted based on demand signals, with a focus on efficiency and optimization [50] Question: What characteristics define subscribers that are successfully upselling products? - The core funnel involves customers starting with domain purchases and attaching additional services, with a focus on intent-driven marketing [74]