In 2024, we expect capital expenditures of $35 million and cash interest payments of $155 million, representing reduced spend of 11% over 2023. In addition, we expect income tax payments of approximately $30 million. On share repurchases, we expect to buy back shares under our remaining $1.4 billion authorization using our disciplined capital allocation framework that we’ve applied in past quarters. Capital return has been and will continue to be a priority for GoDaddy, along with prudently managing our balance sheet, as we look to drive compounding returns for our shareholders. For Q1 2024, we are targeting total revenue of $1.085 billion to $1.105 billion, representing nearly 6% growth at the midpoint of the range. As a reminder, because of the timing of certain marketing spend, such as the spend that support our heavy renewal cycle in Q1 and the spend related to our launch of GoDaddy Airo, our normalized EBITDA margin will build over the course of 2024.
As a result, we expect Q1 normalized EBITDA to be 27%, representing a nearly 300 basis point expansion over Q1, 2023. Over the course of the year, normalized EBITDA margin is expected to increase to approximately 31% as we exit the year, which averages to approximately 29% for the full year. We are proud of our record of accomplishment of increasing margins on an absolute basis and compared to our own initial guidance over the last three years. Investors should continue to see this discipline moving forward. In summary, we remain dedicated to actively managing our business through a combination of durable top line growth and improving profitability. We are focused on balancing the two to drive our strong free cash flow, which, when coupled with our disciplined capital allocation framework, creates significant value for our shareholders.
We see an exciting path and have strong confidence in our ability to execute against our strategic priorities. At our Investor Day on March 6th, we will demo the expanded capabilities of GoDaddy Airo and Commerce. We will also discuss long-term growth and profitability expectations and levers we will provide a clear view of our opportunities. We will share our capital allocation framework and the shareholder value it will create. We are committed to providing the information you need to understand our long-term strategy and initiatives, model the business confidently, value the business effectively, and hold us accountable for executing against our stated objectives. We’ll end the day with Q&A, hosted by our management team. With that, I’ll hand the call over to Christie Masoner, VP of Investor Relations, to open the call for Q&A.
A – Christie Masoner: Thanks Mark. [Operator Instructions] Our first question comes from the line of Naved Khan from B. Riley. Naved, please go ahead.
Naved Khan: Yeah. Hi. Can you hear me?
Christie Masoner: We can.
Aman Bhutani: We can.
Naved Khan: Okay, great. So, two questions from me. One, maybe just on the big picture macro environment, just your views on where we are currently in terms of demand. And then in relation to that, where do you see or what would cause you to come in at the high-end of the range if you just gave versus at the low-end? So just kind of encapsulate that for us. And then the other question I had is around the billion-dollar in valuation allowance. I think you had a sort of a release in the valuation allowance. You already have a tax shield, which I think kind of protects you from paying taxes or meaningful amount of taxes until 2030 or 2031. Is this in addition to that? How should I think about the release?
Aman Bhutani: Thanks Naved. Why don’t I kick that off with a quick comment on the macro and I’ll turn it to Mark for sort of the range and the valuation allowance. On the big picture, our customers continue to be the micro businesses and they’re resilient crew and definitely we see strong demand continuing to come in through the front door. Of course, we continue to optimize our spend, marketing spend and be very, very judicious about finding new customers and bringing them to the site. But gross ads continue to be strong. And generally, I would say, our customers feel a little bit better about their prospects. Mark, I’ll turn it to you.
Mark McCaffrey: Yeah, absolutely. And thanks Naved. On the high end of the range, I mean, you’re really looking at the market around, aftermarket. We have — we’ve looked at it as a flat business to slightly growing single digits, but it’s always subject to larger transactions, easier comps in Q4 this year. But it seems to be a flat business, but can vary in the range. Also, we have to look at the bundling efforts we’re making. Airo is early stage. We’re seeing customers come in the funnel. Aman said that, talked about the demand, but they’re coming in and attaching that 2+ product. We’re seeing a lot of momentum there. Obviously, continued momentum would be helpful. Commerce, we’re seeing continued conversion of our existing customer base to our payment platform.
There’s always upside from pricing as we get into more value delivering in there. So, there’s many different things that can put us to the high-end of the range. We like the momentum. Obviously, we call things as we see them today, and we feel really good about where we are and how that momentum is carrying forward. On the price — on that – sorry — on the tax, as a reminder, we paid a one-time $850 million fee in 2020 to buy the tax savings from our shareholders back in that time, right? And that was the NOLs and the credits that had built up over a period of time. For accounting reasons, that was reserved on our books and what you’re seeing now because of our increased profitability and our ability to utilize that asset over what I would say a foreseeable period of time coming forward.
Accounting rules require you release that when it’s more likely than not you’re going to get the benefit. So you saw that there. It’s not cash. It doesn’t affect cash, doesn’t affect normalized EBITDA or anything along those lines, but it is a benefit the company will receive from taxes in the foreseeable future. So hopefully that answered your question there.
Naved Khan: It does. Thanks guys.
Christie Masoner: Our next question comes from the line of Zach Morrissey at Wolfe Research. Zach, please go ahead.
Zach Morrissey: Great. Thank you. I guess just starting with Airo, obviously, it seems — early results are pretty encouraging, expanding the rollout. I guess, how do we think about like what are the gating factors to a more broad rollout, at least in the U.S., just based on the early results that you’re seeing today. And kind of how is this embedded in the kind of 2024 outlook in terms of any kind of growth on the Application/Commerce side of things? And then on the legacy hosting, obviously, that came in a little bit weaker just based on some of the strategic decisions you guys are making. How do we think about the trajectory kind of embedded in the 2024 growth outlook for core platforms? I think comps get easier as we kind of progress through the year, but any kind of color and context would be helpful there.
Aman Bhutani: Thanks Zach. On Airo, we’re super excited about the Airo launch. It’s not often new launch, a completely new experience and customers, who are used to a certain experience adopt it and it actually does better in the first test. So super encouraging results. We are actually rolling out Airo very, very quickly to more and more cohort of customers that starts with new customers. For example, when we first started in November, we were doing it for customers that bought a domain. Very quickly after that, we enabled it for customers that bought a domain and a website. And so, more and more Airo capabilities are showing up to more customers. We launched it in international too. Of course, the full swing is getting it to all of our new customers across the globe and then starting to penetrate the base as well, which where a ton of opportunity lies for us to be able to go to our basic customers and offer them these capabilities.
So, I would say every week more customers are seeing Airo. We’re actually moving as quickly as we can. I’m super happy with the team’s progress. And in terms of the guidance, I’ll turn it to Mark.
Mark McCaffrey: Yeah. As Aman mentioned, you can hear the excitement. We’re very encouraged about the momentum and the engagement metrics, but it is still early days. When we consolidated the core software platform for GoDaddy, we saw bundling and customers move into 2+ products a lot faster. And obviously Airo, we look at as an enabler of that down the road and we think it’ll allow for greater bundling, greater catch, better retention. But right now it’s early days and we’re calling everything we see in front of us based on the momentum we see coming into the year. On the — move on to the legacy hosting, a couple of things there, right? We have about 100 basis points of headwind coming into the year related to our divestitures and migrations that we’ve done.
So that’s built into the guide that we’ve given. In addition, we’ve seen aftermarket. We think it’s going to be a flat to single digit grower, it’s a $400 million plus business. We’re really encouraged by the volume that’s coming through the platform and the fact that it allows people to get names and in a secondary market, they couldn’t get in the primary market. But we think it’s going to be — it’s — how do you say, moderated in its growth and it’s leveled out. So, we’ve built that into the forecast. And we’ve talked about domains openly. We saw 4% revenue growth coming out of the quarter, but 7% bookings growth. So, we think there’s a lot of momentum in the domains. And a lot of that has to do with the core GoDaddy platform now that we’ve launched and getting people the demand in, getting them to attach quicker, getting them to those retention rates we talk about in our model.
Zach Morrissey: Thank you.
Christie Masoner: Our next question comes from a line of Vikram Kesavabhotla from Baird. Vik, please go ahead.
Vikram Kesavabhotla: Hey, can you hear me?
Christie Masoner: Yes, we can.
Aman Bhutani: Hey, Vikram.
Vikram Kesavabhotla: Yeah. I just wanted to follow-up first on the Applications and Commerce segment. Appreciate the color, Mark, you just provided on Airo. But I guess outside of that, curious if you could talk about what the primary drivers of growth in that segment are going to be to support the low to mid-teens range in fiscal ’24. And then separately, I also wanted to ask about the share repurchases. You mentioned the plan around the remaining $1.4 billion. I guess any color you could offer in terms of the cadence of repurchases going forward. And maybe if you could also just remind us of your broader capital allocation priorities and framework going forward and leave it there. Thanks.
Mark McCaffrey: Yeah. Thanks Vikram. On A&C, the growth drivers, and we talk about this a lot, is we’re seeing the demand move to that second product much faster than we had ever seen. And then now we’re seeing it to the third product much faster than we’ve ever seen. So that shows up in our A&C growth. That’s our higher profitability segment as well. So, it’s driving a lot of our increased profitability and leverage within our model. But those are the drivers. Outside of Airo, it is the bundling. It’s the customers, customers coming in with intent, customers moving to that second product. We’ve talked about once we get to the second product, our average retention is 85%, but it goes up from there. If we get customers to a third product, it goes up significantly.
It’s almost a customer for life. So, those are the things that are driving the momentum in A&C right now, and we’re seeing that compounding. So, I would say between price, demand, attach, everything is driving that nice growth in there. On the share of purchases, there’s been no change. We’ll talk about it a little more on Investor Day, a little more broadly, but it’s still a big part of our portfolio to return capital to our shareholders. We have 1.4 left on our authorization. We’ll look at it in our discipline framework, quarter to quarter, based on what we see out there, and we’ll make decisions as we go. We will talk about it a little bit more when we get to the Investor Day in March.
Aman Bhutani: And then maybe, Vik, just looking at it from a different lens, you asked about A&C. If you look at it as the components of the products that we sell in A&C, every part of A&C, or every significant part of A&C, is growing booking double-digits right now. Right? So that’s really propelling that business and getting to that 16% bookings growth we talked about.
Vikram Kesavabhotla: Okay, great. Thank you.
Aman Bhutani: Thank you.
Christie Masoner: Our next question comes from the line of Matt Pfau from William Blair. Matt, please go ahead.
