GoDaddy Inc. (NYSE:GDDY) Q3 2023 Earnings Call Transcript

And it’s a little bit different in the U.K. where the overall number for positivity is a bit lower. And even though they continue to be positive about their business, their view of the economy has declined much faster. So there’s some consistency across the markets, but the numbers are different with the U.S. micro business owners feeling generally more positive about their business than the U.K., for example. Hopefully, that make it a bit of color, John and it’s helpful. And I’ll turn it to Mark.

Mark McCaffrey: Yes, thanks. And I think when you look at the difference between the create and grow ARR and the overall ARR, the subscription business is productivity. So it doesn’t take much of a, I would say, a lead to say, yes, it is growing at a good pace on an ARR basis and adding to our subscription.

Unidentified Analyst: Thank you.

Christie Masoner: Our next question comes from the line of Naved Khan from B. Riley. Naved, please go ahead.

Naved Khan: Hi, thanks. Can you hear me okay?

Aman Bhutani: Yes, hi Naved.

Naved Khan: So just on your last answer, Mark, on the sort of the 9% growth in create and grow. I’m wondering how fast website plus marketing is growing in terms of ARR. Any color or commentary there? And then, Aman, maybe you can give us some color on payable domains, how that grew in the quarter and your thoughts there?

Mark McCaffrey: We don’t break it down by product specifically, but I will add color to say we’re seeing strength across the board in not only create and grow but applications and commerce. So I would say we’re really happy with the attach, the momentum in the market. The A&C bookings are really outpacing revenue at this point. So I would say strength across the board.

Aman Bhutani: Yes. And on payable domain, we continued to perform and contribute to the GPV growth that we’re seeing, but in line sort of with what we’ve seen in the past. Q3 overall was a stronger quarter for GPV. And as we look forward to Q4, we’re excited to see what’s to come.

Naved Khan: Thank you guys.

Aman Bhutani: Thank you, Naved.

Christie Masoner: Our next question comes from the line of Ella Smith from JPMorgan. Ella, please go ahead.

Ella Smith: Hi, team. Thanks for taking my question. Aman and Mark, could you please update us on the hosting business? If domains were up 4% in the quarter, does that imply that hosting was down high single digits in the quarter?

Mark McCaffrey: We’re seeing about 150 basis points of headwind related to the hosting business and the divestitures and the migration. Aftermarket is also included in the core platform number, just to keep in mind. While we’re going to have some headwinds related to some of those actions we took in the first half of the year, we’re seeing the core GoDaddy hosting platform stable, right? We’re seeing high retention rates. We’re seeing a lot of cash flow generation. We’re even seeing that the few little churn that we have within the core GoDaddy hosting stack is going to other areas of our platform right now and attaching products. So I would say we’re continuing to work through the integration, divestitures, the compares around it. We’ll have some headwinds moving into next year related to that part of it, but we’re happy with GoDaddy’s core hosting strength right now being stable and primarily close to flat.

Ella Smith: Got it. Makes sense. And for my follow-up, I think Aman just said that GMV was 38 billion in the quarter. What about GPV? And I was hoping you can remind us around your strategy to refer customers to GoDaddy Payments.

Aman Bhutani: Yes. I had said 36 billion. And GPV is on track, very similar to last quarter to double year-over-year. There’s no change in sort of the trajectory there. Like I just noted, it was actually a strong quarter for GPV, and we’re looking forward to Q4. In terms of attaching GoDaddy Payments to our base, new — or let me handle both new customers coming in, for example, the websites plus marketing attaching GoDaddy Payments at very, very high rates and us attaching to the base has continued to grow. And the biggest contributor to the GPV growth continues to be us converting existing GoDaddy customers to GoDaddy Omnicommerce solution.

Ella Smith: Great. Thank you so much.

Aman Bhutani: Thanks, Ella.

Mark McCaffrey: Thanks, Ella.

Christie Masoner: Our next question comes from the line of Ygal Arounian from Citi. Ygal, please go ahead.

Ygal Arounian: Hey, good afternoon guys. First question, so you’ve had an activist investor get a little bit more active and vocal about their views and just want to maybe get — give you an opportunity to respond or make any comments on that or anything you’d like to share. And then second, you mentioned strength in domains, including pricing. So is that on the pricing front? Is it raising the annual price for domain registrations? And with the strength you’re seeing in domains, relative to what we’re seeing in terms of dot-com and dot-net growth, which has been challenged and kind of flat, what are you seeing? What are the differences? Is it growth in different TLDs? Is it more — especially the ones that you hold at your registry business, too? Maybe just a little bit of insight on what you’re seeing in the domain world.

Aman Bhutani: Thanks, Ygal. We talk to our investors regularly, and what we learned is that they’re looking for more information from us in a couple of areas. They’re looking for our plan to drive further margin expansion, and they’re looking for our path to faster growth in A&C. And what you saw in our prepared comments today is that we shared more details on both of those areas. We as a team are focused on the results we’re delivering, and all of our forward commentary is everything that we’re doing to drive value for shareholders. So our broader view is that we listen to a lot of — we’re engaged with our investors all the time. We’re listening to them, and we’re sharing back information on the things that we feel they’re asking us for.

And then on the domain side, I’ll turn it to Mark, but just to quickly remind you, although we don’t break out dot-com, dot-net or any specific TLD, our registry business continues to do well. It’s continued to sort of perform at a great rate. And we do offer, as you know, a very large number, TLDs over 400. So our business, our base is different. And also our reach internationally is significantly different than many other players. But I’ll turn it to Mark to see what he’d add.

Mark McCaffrey: I think that covered a lot of it, Aman. I would say we’re seeing strength in the demand end of it. We’re seeing — we took pricing action. No doubt that’s contributing to the overall 8% bookings growth that we’re seeing in domains coming out of the quarter. So a lot of strength there. We’re a little different than some of the other players. So we have a little bit more breadth of what we offer, and we’re seeing strength in some TLDs. And probably our geographic regions, as others have pointed out, there are weaknesses in certain areas that we’re just not as exposed to.

Ygal Arounian: Great, thanks.