Josh Beck: Okay. That’s super helpful. And maybe just kind of a follow-on to that last point. When you look at the existing base and you think about the conversion opportunities, should we be looking at really when these customers come up for renewal with their existing payment provider that’s an opportunity for you. Is there maybe a chance to put some type of firmer pressure on them to really incentivize them to move over? Just help us understand how you’re helping promote that conversion.
Aman Bhutani: Yes. There are some customer-side events, for example, like you said a customer coming up on a renewal. That may create an opportunity. But what we really lead with is that we have a relationship with these customers. GoDaddy has 65-plus transactions in NPS and in Care. Our customers are used to having a great relationship with us. So when we engage them number one, they’re open to the idea of GoDaddy offering them GoDaddy Payments. The second pillar of what we approached them with is that we offer them the one-stop shop. They have other relationships with GoDaddy, and we can introduce one bill, one partner to work with. We can make it easier and that’s attractive to our customers, because a lot of them start by saying, oh I didn’t even realize that you had payments, oh it’s pretty great, oh I like the way this works, oh this works seamlessly with all my other stuff I do with GoDaddy.
So that’s a win for us too. And then you’ve got pricing that’s the best value in the market today, which comes in as a third pillar of that sales pitch. And what we continuously are finding is that that works. That encourages our customers who have great relationships with us who run micro businesses adopt GoDaddy Payments and that’s what’s been driving our GPV growth.
Josh Beck: Super helpful. Thank you, Aman.
Aman Bhutani: Thank you.
Christie Masoner: Our next question comes from the line of Vikram Kesavabhotla from Baird. Vik, please go ahead.
Vikram Kesavabhotla: Hey can you hear me?
Mark McCaffrey: Yeah. Hey Vik.
Vikram Kesavabhotla: Great. Thanks for taking the questions. My first question is for Aman. I think you mentioned in your prepared remarks that GABI has now been rolled out to the entire care team. Just curious what the early data points have been there in terms of the impact that’s having on efficiency. I know at the Investor Day you talked about the potential for that to reduce time and interactions for the team. Just curious what you’re seeing so far there and what the early reception has been from the care team? And then my second question is for Mark. It looks like you exceeded the first quarter guidance on EBITDA margin. Just wondering, if you could talk more about some of the drivers of the outperformance there and how much of that was specific to the quarter versus factors that could ultimately benefit the balance of the year? And I’ll leave it there. Thanks.
Aman Bhutani: Vikram a quick word on GABI. I’m super excited for what GABI offers us over the long-term. Being able to bring the massive amount of data that only GoDaddy has working with 21 million paying customers and many more over the years using AI to bring it together and putting it on the fingertips of every guide in the company that’s a powerful combination. And where we are is the tool is rolled out. The guides are starting to use it. There is of course always a little bit of time for adoption and training for people learning, how to use even a new tool that’s GenAI powered. But super excited about it, I mentioned a couple of use cases that are already live with GABI where GABI’s able to do the summaries or just start to take on tasks that otherwise guides would have had to do sort of start to move up from guides doing that to automation and GABI taking care of that.
So there’s lots of use cases we have in mind. We have a fantastic roadmap over the next couple of years in front of us. And yeah pretty excited about it.
Mark McCaffrey: And Vik on the normalized EBITDA margin I would say quarter-to-quarter you may see some fluctuations depending on the timing of spend. Overall, if you look at Q1, we’ve always said accelerated A&C will be a tailwind to our ability to expand our margins over time. And with the pacing you saw in Q1, we saw some of the benefit of that. For the year, we’re on track for the 31% to exit and we feel good about that and we’re on track for the 29% for the entire year. And obviously we’ve talked about our ability to expand that going out. And all those — all that framework remains in place and we continue to see the benefit of the A&C tailwind related to that.
Vikram Kesavabhotla: Great. Thank you.
Christie Masoner: Our next question comes from the line of Aaron Kessler from Seaport. Aaron, please go ahead.
Aaron Kessler: Maybe I’m mute, great. Maybe just first on any update just on macro just what trends are you seeing there? And I know customers are flat of year-over-year. I assume there was maybe some disposition impact on that, if you can just talk on that? And then also the if you may to that point trends in gross adds that you’re seeing along with that? Thank you.
Aman Bhutani: Thanks Aaron. On the macro, I think the word we internally feel represents a best is a steadiness to the macro. And I think that’s been a positive for us. We had and we talked about it in 2023 strong gross adds and customers coming — continuing to come in at the top of the funnel. And of course, some divestitures and integrations as an offset to that for the company which I look at that as a short-term gain. But good strong gross adds coming in. The steadiness in the macro we believe will continue to power that. And again, continuing to have a lot of firepower in terms of really efficient marketing at our disposal. Our marketing is getting better and better. It’s driven with data and lots of opportunities for us to continue to explore to put more dollars at play and get really efficient returns on them.
Aaron Kessler: Great. Thank you.
Christie Masoner: Our next question comes from the line of Jian Li from Evercore. Jian, please go ahead.
Jian Li: Thank you, guys for taking the question. So I want to kind of go back to Airo. First maybe just to it sounds like Airo’s still in the early days of monetization. Are you baking in any kind of contribution to revenue and/or any contribution to bookings for this quarter for that matter? So if you can kind of talk about the contribution here. And also I think in the Investor Day, you sort of alluded to Airo being applicable broadly across DIY and Pro users. So I’m just wondering, if there is any product features for Airo that you’re building specifically for the pros or agency community?
Mark McCaffrey: Yes. Thanks, Jian. And I’ll start with the first part and Aman will probably answer the second part there. The way we’re looking at Airo right now, we are in the discovery and the engagement phase. We haven’t hit the monetization phase. We’re very early on. We’re looking at all the statistics. We’re looking at the level of engagement around it, but nothing has been built into our bookings or revenue for that matter in our model today.
Aman Bhutani: Yes. And I think the way you might think about it a lot of value is being created for customers with Airo because they’re getting a bundling bundled experience that’s seamless that’s connected. And some of that monetization opportunity we have talked about like Airo Premium and pay walls, but there’s also a monetization opportunity that would happen at renewals, but that would be a year out from the time the customer bought the domain. So just, Jian keep that in mind as well. On your question on Airo features for Pro, the feature that I’m personally very excited about is Airo Insights which is the capability where Airo assess an existing website and give super actionable advice to Pros and how to improve that website.
We have a version of that that’s going to be able to work for customers too. But that product from the first day from the ground up it was built for Pros. Its first implementation is with WordPress and it’s a fantastic product. Like we get great engagement from pros on it. Again as with all Airo products that is still at the discovery and engagement phase. We have not added monetization yet. But this year we expect to test a number of monetized methods for Airo Insights as well.
Jian Li: Great. Wonderful. And then just a quick follow-up on the GPV strengths that you’re seeing. If you can parse it out a little bit is that more customer attached growing? Is it more just the growing GPV per customer? And it’s coming from WordPress marketing? Or more on the managed WordPress side? If you can just talk about also the growth of these two segments separately as well. Thanks.
Aman Bhutani: Thanks Jian. The biggest piece of the driver for the GPV growth is actually converting our customers in the base. And a lot of that has to do with a broader solution than just the online solution, right? We have our hardware. We own the full stack from the hardware to the operating system on it to the applications on top of it. And what we’re taking really is sort of this omnicommerce solution that we’re trying to bundle in different ways and target to the customers that we have. So that’s actually the biggest driver of the GPV. And it’s a fantastic driver for GPV, right? We want to be in-store with the customer and online. We don’t want to be just online with the customer. We want to sort of have access to all of their business. And that’s what we’re doing with the base of our customers. And very often it starts with a sale of a piece of a hardware and that’s a great start.
Mark McCaffrey: And like we’ve always said, the biggest opportunity in front of us for commerce is converting our existing customer base. That’s where we’re seeing the growth in the GPV today.
Jian Li: Thanks.
Mark McCaffrey: Thanks, Jian.
Christie Masoner: Our next question comes from the line of Elizabeth Porter from Morgan Stanley. Please go ahead.
Elizabeth Porter: Hi, thank you so much. I wanted to ask again on Airo. We’re clearly seeing the benefit with more attach and ARPU, but I wanted to better understand how Airo might be changing any sort of top-of-funnel demand. You noted some stronger gross customer adds. And then second, what is the potential implication on improving customer growth after some muted growth over the last couple of years? Thank you.
Aman Bhutani: Yeah. On Airo changing the top of the funnel, we’re excited about being able to market the GoDaddy brand as a provider of not just this expansive set of products and capabilities, but the provider that can bring you those capabilities in a seamless intuitive almost magical manner. So Airo is not just an experience for our customers not just a platform that GoDaddy has, it’s something we’re taking into our marketing and looking at ways to really dive into customer perception. And if the customer thinks about GoDaddy and thinks about domains Airo is going to help the customer think about GoDaddy and think about a lot of things together. So that is the largest piece of shifting the top of the funnel with Airo Elizabeth if that makes sense is really taking the go-to-market plan for Airo into every bit of our marketing into every channel that we have and making that really, really successful.
In terms of customer growth, yes, we absolutely see in the medium and long term a growing customer base or GoDaddy. We see that as a key sort of point of growth. We have the brand awareness globally that is fantastic. Like it’s unparalleled. We have amazing products to bring to them. We have plenty of firepower in our P&L to be able to reach those customers, right? So we absolutely believe there are a lot more customers for GoDaddy to reach and add to that $21 million every year.
Mark McCaffrey: Yeah. And we continue to be impacted by the divestitures and migrations that we’ve talked about. A lot of that’s peaking in Q2 as some of these are starting to lap, but will abate over time. And as I always say in these scenarios while we’re attracting more of the customers with a higher intent that are attaching to that second product and they’re engaging on the bundles and is very, very happy with on the back end we’re losing what I call low-calorie customers that weren’t really in there with any intent. So we’re happy with the model. It should start to abate over time and then we’ll keep everybody posted on a quarterly basis.
Elizabeth Porter: Great. That makes a lot of sense. And then a follow-up on the margin side of the equation. There’s the kind of mix shift to ANC also leverage as revenue growth reaccelerates and you guys are taking also some specific kind of cost actions to manage expenses. So just wondering if there’s any way to like stack rank some of these drivers as it relates to the margin expansion that you guys have in the outlook?
Mark McCaffrey: Yeah. Elizabeth, I look at it in three buckets. We have the what I would say the tailwind related to AMC growing at a higher profit point, which continues to be I would say a big driver. The other big driver is our access to global talent pools now is our international base grows our ability to move into markets that are more cost effective is helping us. And then I would say the third probably not as big as the other two, but the third continues to be our infrastructure simplification. And that is just getting more efficient reducing the amount of locations we have getting out of leases that type of environment. So those three buckets are the big contributors to how we continue to expand our margin and that will continue as we go into the outer years.
Elizabeth Porter: Great. Thank you.
Mark McCaffrey: You’re welcome.
Christie Masoner: Our next question comes from the line of Trevor Young at Barclays. Trevor, please go ahead.
Trevor Young: Great. Thanks. On aftermarket second consecutive quarter here of double-digit growth, but meanwhile it looks like your full year expectations there are still kind of in low single-digit territory. What’s driving that outsized growth right now? It looks like ATVs are up almost 20% on the year plus the benefit of easier compares. Just trying to understand if something has structurally changed in demand for that business. What’s causing that resurgence? And relatedly what would cause it to slow from here?
Mark McCaffrey: Thanks, Trevor. And we definitely have seen a pick up, what I would say in the average transaction value. And in Q1 we saw the return of the larger transactions that have been missing in the prior periods. Again, we don’t build that into the model because they come in on the short term and they can create some volatility. But we were — we did see the benefit of that and the 12% growth in aftermarket this quarter. From a steady-state point of view, we still think this is a business that is going to be low single-digit growth. We’re continuing to see the volume at the lower end grow. We’re continuing to see good average transaction value with the lower end grow. But we definitely saw the benefit in Q1 of some of those larger transactions. But like we’ve said we don’t build that into the model and we only build in what we can see right in front of us.
Trevor Young: That makes sense. And just a quick follow-up on the Heart Internet sale. How much of a drag will that be on hosting revs? And was that previously contemplated in the 2024 guide?
Mark McCaffrey: Yes, I think the best way to say that we previously contemplated that when we were talking about our guide for this year. We hadn’t closed it and announced it but we’re far enough along we built it into the model.
Trevor Young: Okay. And anything on sizing the drag?
Mark McCaffrey: We look at it as overall. The divestitures are about 100 basis points for the year with that peaking in the second quarter and abating through the rest of the year.
Trevor Young: Okay, great. Thank you, Mark.
Christie Masoner: Our next question comes from the line of John Byun from Jefferies. John, please go ahead.
John Byun: Yes, just unmuted. Thank you. This is John Byun for Brent Thill. You pushed through the price increases on productivity and now on payments. I’m just wondering how much pricing power is left especially given it seems a lot of SMBs is still somewhat struggling? And then on that last point I know there was a question earlier on macro, but anything you could share on the health of the SMBs? Anything different this Q1 versus last quarter? I don’t know if there’s any change whether better or worse in terms of the SMB health and sentiment? Thank you.
