Matthew Pfau: Hey, great. Thanks. Just wanted to follow-up on the acceleration that you’re seeing in your applications and commerce bookings. Maybe just some more details on what exactly is driving that because there are other businesses that serve SMBs that are seeing pressure with SMB spending, but it seems like you’re seeing improvements. So trying to figure out what the disconnect is there? Thanks.
Aman Bhutani: Yes. So when we look at our customers and we survey our customers sort of every six months or so, what we noticed is that they’re resilient group. And even though they may have sort of greater negativity about the overall economy, they are much more positive about their business and bringing everything to the table. And the way they look at our products, whether it’s domains or websites or the productivity solutions, specifically e-mail, as sort of low-cost offerings that create a lot of value for them. So there’s a lot of consumer surplus for them in the offerings that we bring to them. And the thing that’s driving our sort of faster growth in applications is commerce. Number one, as I talked about in my prepared remarks, we’ve unlocked some new bundling capabilities for both domains and productivity, and that’s creating some new bundles, which are being accepted really well by customers.
So we’re super excited about that. And then in the presence bucket, I talked a little bit about our investments in Managed WordPress over the last couple of years, and that product has really come a long way and is now competitive with the best in the world. And we’re seeing fast bookings growth on that double-digit bookings growth. And once we have the bookings in that, we know it’s going to transition to revenue, and that’s going to help accelerate Q4 and 2024 as well. And the third piece of application and commerce is commerce. And as Mark noted and I noted, GPV is still on track to double year-over-year. Our customers in our base are adopting that, and commerce continues to grow quite well. So you’ve got kind of all three parts of the segment really firing, and that’s leading to the accelerating growth.
Mark McCaffrey: And I’ll just add, the strong demand we’re seeing really has been at a higher level than we’ve seen and consistent level. We’ve talked about it in prior quarters. We’re continuing to see that same demand. And the customers are coming in with higher intent. So they’re getting to that second product to get into their third product a lot quicker. So from a micro business perspective, we’re seeing a lot of demand and attachment that is really pushing our model that we’ve talked about in the past.
Matthew Pfau: Great, thank you. Appreciate for taking my questions.
Mark McCaffrey: No problem, thanks Matt.
Christie Masoner: Our next question is from the line of Chris Kuntarich from UBS. Chris, please go ahead.
Christopher Kuntarich: Hi, thanks for taking my questions. Maybe two, if I can. Just going back to that comment on 50% of customers now have two-plus products. I guess how should we be thinking about that versus last year and maybe versus kind of pre-COVID and really kind of how we should be thinking about where that goes in ’24 and ’25. Should we be thinking about more like that number jumping to 75%? Or is it more the idea that 50% of customers are going to three products? Just curious on kind of how that attach scales over time.
Mark McCaffrey: Yes. And thanks, Chris. Good question, right? We’ve never talked about that in the past. So it’s the first time we’re bringing that number out, and I don’t want to go back because again, it’s something we’re tracking a little bit more closely now. But for us, when we get to that second product it really drives not only more efficiency within our operating model and drive our margins to a higher place. It really gets into strengthening our retention rates. It really gets into driving our ARPU. So there’s a lot of metrics that are driven off that second attach, and even more, they get driven off those third attached. I always say, our average is around 85% retention. But when that customer gets to that second product, it goes up significantly higher from there.
And if it gets to a third product, it’s almost a customer for life, right? So it’s really all about driving an LTV. We’ll continue to provide guidance on that as we go forward as to how we’re tracking towards them in a general basis, but it comes back to the what we’re seeing now is not only strong demand but strong attach and more intent to do something with the domain name to the second product than we’ve seen before. And I know, Aman, you’re excited about some of the bundling capabilities here, too.
Aman Bhutani: Yes, a couple of things I’d love to mention quickly is the first the bundling capabilities I talked about today. They’re really going to help move the two-plus products number. And I think we’ve shared this number with you, and I think you’re going to see it grow nicely. But the second thing, that’s not the only thing we have in play. One of the great opportunities for GoDaddy is that we have a lot of customers coming through the domains funnel. And a lot of them aren’t fully aware of the full suite of products that GoDaddy has. And that’s where we’re launching GoDaddy Airo, which is when a customer buys a domain name, they get a basic website created for them using gen AI and automation. They get a set of social posts that they can use right away.
They get an AI-generated logo that they can use right away and actually a few other things that just come to them with the domain name. And one of the things we’re most excited about launching this capability is that it will explore our domain customers to the full suite of offering that we have for them, and it will really propel two-plus products, which then leads to the numbers Mark is talking about, the higher LTV that comes with it. And that’s obviously a path that we’re pressing on pretty hard.
Christopher Kuntarich: Got it. Very helpful. And maybe just one quick follow-up. I didn’t see a GMV number in the release. Just curious. I think that’s been growing two for the last two quarters. Just curious what that GMV number was and just kind of how you guys are seeing strength of overall consumer and SMB.
Aman Bhutani: Yes. The GMV number continues to grow and is about 36 billion right now. So I think it will be in our 10-K. It should be there.
Christopher Kuntarich: Okay, got it. Thank you.
Christie Masoner: Our next question comes from the line of Brent Thill from Jefferies. Brent, please go ahead.
Unidentified Analyst: This is John for Brent Thill. Thanks. Just wanted to go back at a higher level in terms of macro. Obviously, someone else has asked as well in terms of the small business and the consumer health. But just wanted to see what you’re seeing there. I don’t know if there’s any notable trend throughout the quarter by month and what you’re seeing so far this quarter? And then second, in the ARR growth numbers that you mentioned, create and grow was 9% [indiscernible] I’m wondering. Does that mean productivity or commerce maybe is growing noticeably faster? Just want to see what those components are? Thank you.
Aman Bhutani: Yes, John, let me take the first part. Mark can take the second. Based on our surveys, what we see for the micro businesses — and I can give you two data points, one for the U.S. and one for the U.K. So you can get some idea of how it’s different in different parts of the world. Generally, the question of how positive are they about growing their own business is this year a little bit up to flattish, right? They feel optimistic — I think part of it is they have to feel optimistic. They have to show up every day and make it happen. So they have that positivity about themselves and their businesses. But if we look year-over-year on how they feel about the broader economy, that has gone down. So just to summarize in the U.S., positive on the overall economy, but almost equally positive, if not a bit higher on their own business.
