GoDaddy(GDDY) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics - Full year normalized EBITDA margin increased approximately 200 basis points, resulting in a 12% increase in free cash flow and a 21% increase in free cash flow per share [5] - Q4 normalized EBITDA grew 22% to $324 million, representing a 29.5$1.3 billion and free cash flow grew 12% to $1.1 billion [23] - Q4 Applications and Commerce revenue grew 13$377 million with an expanded segment EBITDA margin of 44% [14] - Annualized GPV for 2023 grew 125% year-over-year, reaching $1.7 billion [12] Business Line Data and Key Metrics - Applications and Commerce segment bookings grew 16$723 million in Q4, with domain bookings growth of 7% [15] - Hosting revenue decreased by 11% in Q4 due to ongoing integration efforts [16] - Aftermarket revenue grew 14% to $118 million in Q4 [16] Market Data and Key Metrics - International revenue grew 4$354 million in Q4 [17] - Total revenue in Q4 grew 6% to $1.1 billion, with international revenue contributing$354 million [17] Company Strategy and Industry Competition - The company's strategy focuses on margin expansion and growth in the Applications and Commerce segment, with a goal to exit 2024 with a normalized EBITDA margin of approximately 31% [6] - GoDaddy Airo, a unified technology stack, has been launched to enhance customer experience and drive higher monetization rates [6][9] - The company is focusing on bundling products to drive higher attach rates, particularly in the high-margin Applications and Commerce segment [8] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about the company's ability to drive margin improvement and growth in Applications and Commerce, which is expected to result in significant improvements in free cash flow per share [13] - The company expects total revenue for 2024 to be within a range of $4.48 billion to$4.56 billion, representing growth of over 6% at the midpoint [23] - Management anticipates continued margin expansion, targeting a normalized EBITDA margin of approximately 29% for the full year 2024 [24] Other Important Information - The company refinanced $1.8 billion of outstanding principal in January 2024, securing a 50 basis point interest rate reduction, which is expected to reduce annualized cash interest expense by approximately$22 million [21] - Cumulative shares repurchased under current authorizations totaled $2.6 billion, reducing fully diluted shares outstanding by over 20$1.4 billion authorization, with a focus on disciplined capital allocation [47] Question: Payments Penetration and Growth - GoDaddy Payments is in early stages of customer penetration, with existing customers expected to drive growth in 2024 [51] Question: Airo Monetization and Pricing Flexibility - Airo is being tested in international markets, with potential for new monetization methods such as premium logo-building services [56][57] Question: Customer Growth and Intent - The company is focusing on high-intent customers, with gross customer ads higher in 2023 than 2022, despite divestitures impacting low-intent customers [67][68] Question: Margin Expansion Drivers - Margin expansion is driven by reduced technology and development spend, automation in care, and growth in the high-margin Applications and Commerce segment [63] Question: Revenue Upside and Margin Flow - Management balances growth and profitability, with a focus on driving free cash flow and free cash flow per share [82][83] Question: Airo Rollout Quantification - Hundreds of thousands of customers have already experienced Airo, with aggressive rollout plans for new and existing customers [87] Question: Divestiture Margin Benefits - Divestitures benefit normalized EBITDA and reduce CapEx spend, contributing to free cash flow growth [92] Question: A&C Margin Profile - Applications and Commerce products, particularly Websites + Marketing and Managed WordPress, are high-margin and growing double-digits [96][98] Question: GoDaddy Payments Strategy - GoDaddy Payments targets micro-sellers, with plans to expand capabilities and focus on omni-commerce solutions [100]