GoDaddy Inc. (GDDY) Earnings Call Transcript & Summary

Good afternoon. Welcome to GoDaddy. We're so excited to have you here today. We have many of the GoDaddy leaders that have exciting presentations and demos to show you today. Just a quick overview of the agenda. We've got our CEO, Aman Bhutani, that will go over our strategy. We've got Gourav Pani, who is our President of U.S. Independence that is going to take us through GoDaddy Airo. And then our President of Commerce, Kasturi Muduludo, is going to give us an update of Commerce. And then our International President, Laura Messerschmitt, is going to give us an update on our international business. And CMO, Fara Howard is going to go through our marketing updates. And then our President of Care, Demetria Elmore, is going to go through our updates in our care business. We're going to have a 30-minute break for everyone here to interact with our demos set up over here in the cafe. And then we will regroup and Roger Chen, our COO, will get us started on the updates to our strategies, and then we will cap off the presentations from Mark McCaffrey to talk about our financials and then a Q&A session afterwards. And as standard, we have forward-looking statements posted to the website. So thank you all for joining us. And without further ado, I'd like to welcome Aman Bhutani.

Thank you, Christie. Thank you, and thank you all for joining us today. I'm super excited to be here. I'm super happy to have all of you in the room, and thank you for joining us on the webcast as well. Let's get this started. As I look back at the 4 years at GoDaddy, it's been the story of 2 transformations and an outcome. My excitement about the company, our execution, our talent, is higher today than ever before. In fact, I'm an all-time high with what we're going to show you with our products today. These 2 transformations have allowed the company to create an outcome, an outcome we call profitable growth. When we think about GoDaddy, we are a platform, a software platform that customers engage with, and we make decisions based on evidence. What do those 2 things mean? We will unbox that for you today, right? As I think about the last 4 years, there is tremendous excitement in the company of these changes, and you will see from our leaders today how much progress we made. I am going to show you some sneak peeks of what's to come as well. There's a lot of great demos today coming. When I think about our customers, I can tell you the story of the business owner, entrepreneur here in Phoenix, who started a mobile bar business. Today, she has 12 employees. I met her yesterday. I can tell you about the 8-year-old who sells snacks during school lunch and she built a website with us. I can tell you about the non-profit entrepreneur in South Africa, who goes around giving soccer balls to kids, chasing smiles. And I can tell you about our customer in Santa Clara, who gave up putting a down-payment on a house to open her store. I just met her recently, and she is opening her second store. These are the people that we exist for. GoDaddy exists to support them. And GoDaddy exists to support this mission. This mission excites me today, inspires me today, the same way it did the day I joined the company. This mission is supported by 3 secular trends. We have entrepreneurship growing globally. We have internet usage growing to more and more use cases, and we have technology simplifying experiences in a manner never done before. GoDaddy is positioned in a differentiated manner on all of these three things. The domain name continues to be the early on-ramp for entrepreneurs. The first thing they think about is the name, the idea that they are after. And we show you today that we've reinvented that. Internet adoption as it goes to more use cases, GoDaddy has proven that we can attach more products to our customers to our base. So we're positioned really well for that. And with Airo, we've launched breakthrough technology that simplifies the experience for our customers in a manner that was thought impossible many years ago. All of these together, these secular tailwinds translate into a financial north star for the company. Our north star is increasing free cash flow per share over the long term. And when we bring it to the medium term, we think about driving free cash flow. In fact, we think about driving 4.5 billion-plus dollars of free cash flow, accumulated free cash flow over the next 3 years. That will grow 55% over the 3 years before that. And this is not new. If you take the 3 years before that [indiscernible] free cash flow on a cumulative 3-year basis at 50%. So we're actually accelerating the growth in the next period. What does that drive? That drives free cash flow per share. And if you look at our 20% free cash flow per share CAGR over the last few years, starting in 2020, in fact, we're going to accelerate that at 20% plus. Together, this forms a compelling package and it's based on a set or a plan of 68% annual growth for the company, revenue growth for the company, and approximately 33% margins for normalized EBITDA in 2026. To clarify, that is full year normalized EBITDA margin for 2026, approximately 36%. Together, that leads to the strong free cash flow and the free cash flow per share I talked about. Our strategy as a company is set up to deliver to these outcomes. It simply says that people bring their ideas to us, and we help them build their businesses digitally, an we create for them identity, presence and commerce, which are the key tools that they need. The Entrepreneur's Wheel represents their needs, their customer needs, and we've shown this before, and we are so excited to be able to offer great solutions on every piece of this wheel. We're partnering with our customers at every step right now. And we have significant competitive advantages as a business. We have a global brand presence that's unparalleled in terms of awareness. We have people who know the GoDaddy name in markets where we have never spent $1 in marketing, they know about us. In fact, they know that we are the leader in domain names. 60% of all traffic that comes to our site is just typed in effectively. And that's not just in the U.S., that's globally that we're talking about. The scale of our customer base, 21 million customers retained at 85%. It's a massive opportunity, and we are going to contextualize that today for you. We're building a seamless experience that allows us to attach more products. We're focused on 2-plus and moving from 2-plus to 3-plus products in the future. Now we have an integrated data and technology platform that we're going to share more on today that allows all of these things to happen. And that scale is truly unprecedented. We have 85 million domain names. We have 10 million mailboxes. We have a captive website solution, we're the leader host in WordPress and the list goes on. We're sophisticated hosting company, we're also a sophisticated payments company. And starting right in the beginning, our ethos of care, this idea of guiding our customers still remains core to the business. We offer best-in-class care with 65 transactional NPS and care still brings 9% of bookings to the business. We don't have a call center. We don't have call center agents. We're not in the business of customer support. We have guides. We have care. These people listen to the needs of the customer, help those customers solve their problems and then help those customers buy new products, delivering both top line for us and great NPS. So I talked about the power of our base, right? We're all familiar with hundreds of billions of TAM in our industry. That's not a new number. I don't have to give it to you. But if you look at the GoDaddy customer base of 21 million customers, the projected revenue from that base as things stand today, is about $12 billion. And that's over the next 3 years. But if you extend that to the lifetime of the customers, and you still assume the same thing, the same customers we have today retain on the same levels we have today and you attach to them more aggressively the stuff we're working on, more products with them, then over the lifetime of this base, that value becomes $90 billion. This is not a TAM that's available to others the same way that's available to us. These are our customers. These customers have relationships with us. They already love working with us. And what we have to do is give them more products, and we have done that successfully over the last few years. As we look at the next 3 years, we have initiatives, prioritized initiatives that act as drivers for both growth and margin. We have commerce, which we have talked about, that represents a very large opportunity for us over the long term. We're building a seamless experience, taking friction out of every piece, pushing attach, pushing upsell, allowing customers to making things easier for customers, and it leads to greater product engagement, which leads to greater monetization for us. And pricing and bundling continues to be a tremendous lever for the company. Given our breadth of products, we're able to combine products in unique ways, and we're just scratching the surface, of what dynamic pricing and dynamic bundling means for GoDaddy. We're also super focused on our cost structure, as we've talked about in the past, right? So our cost optimization efforts continue to reduce our overall cost, giving us great leverage in the business. We also have two programs that aren't sort of high confidence or in our numbers today. And those include Airo, which we're going to show you a lot about and product partnerships. As we look at the next 3 years, these are significant growth and margin levels that we think you'll see more of. Let's talk about the platform that supports all of this. The GoDaddy platform starts with the base with a private and public cloud, our data platform on top, an AI and machine learning piece, monetization platform, experimentation and then our products and seamless customer experience sit on top of it. Our goal here is very, very simple. The lower part of that platform, we optimize for velocity and savings. We won the fewest of those things running at the best scale, delivering the best set of capabilities. On the top half of that platform, we want we want to try as many shots on goal there as possible. We want to accelerate innovation. We want to accelerate growth. We want to measure things. We want teams to move quickly. The GoDaddy software platform has allowed us to move much, much faster because all of our teams work together to make this happen. This is an integrated unified platform for the company, right? Airo is an example of something that is built on the GoDaddy software platform. What does it lead to? Mind-blowing set of releases. This is just the releases for Airo in the month of February. Every week, there are multiple significant outcomes. None of these is a small chain. Everything above the line is something that customers observe. Everything below the line is a significant capability that was added. By the time we finish this presentation and we take a sigh of relief tomorrow and they say, we did a good job, more Airo capability would have been launched literally. There might be a moment today where we're doing a live demo and we notice something that's new because the team has launched something new. We based this off on an idea we call the innovation methods and our leaders optimize with this in mind. There are things that should be magical and humans should do them. We don't know how they're done, but those people do a great job. But at scale, those things become structured and process drives them. As we get better, we automate those things and they're powered by machine. But in the best case, they're powered by data in AI and they become magical again, but powered by AI. An example of that is pricing. We've been doing pricing. Every business has been doing pricing for a long time. Well, at scale with a lot of GoDaddy products. We have a team that does a really good job of pricing. And they may choose a pricing method like cost-plus pricing that drives growth, it will lead to some churn, and they measure and become methodical and structured in their approach. Well, today GoDaddy and over the last more than a year, we do value-based pricing, which means that we use data in AI models where there are hundreds of features that drive how pricing should be done for any individual customer. When you add to that ability, the ability to dynamically package, we're talking about a future where GoDaddy can start to put personalized offers in front of customers. This gives us efficiency at scale and differentiation at scale as a company. The innovation method saves our customers time and money. And what does it look like? We're the leader in domains and we've reinvented how customers are searching for domains. On the left here, you have how a customer may search for a domain today and this customer is building a vegan cosmetics business. And they may try these names, and I'll show you the results. Well, today with the Airo-powered search, the customer goes in and literally types out a long description of what their business is about. And the results are completely different. The AI domain search produces the results never found before, and customers are delighted by this, they are looking at these results, and they couldn't have thought of these words to search for their domain, and so it brings forward names that otherwise are never going to be used, right? This is a significant change, and you can find it on our homepage as the AI search. The day is not far that every search, every domain search on GoDaddy will be an AI domain search. We talked about logos in November at our Investor Dinner, and we showed you a few logos. And logos are powered by humans and they're magical. People draw these out. They do a great job, right? There's some back and forth with the person, may cost a few hundred dollars to do. Well, with our new premium logo solution, you can have multiple drafts in seconds. And what do those logos look like? They look amazing. These are all real logos, that search description for the domain search was a real search for a customer. These are all logos that were build in the first few days of logos being created. Customers are going in, typing in long descriptions, we guide them through [indiscernible] with the type of logo they should have, and then image is generated specifically for them. Let's talk about websites. Websites are build by people and of course, by humans, and doing yourself makes things easier, but there is still a lot of work on the customer [indiscernible]. Well, we're now building multiple versions of the websites with Airo instantly. You buy a domain, you can choose, will just generate actually 10 different or various different versions for you, and then you can actually choose a theme and 8 or 10 new versions will get created instantly for you, right? Taking it really to the magical AI level. We're also going a step further and this feature, we have not talked about externally yet, but we're going to show you a live demo of this today. This is a feature in Managed WordPress. It's called Insights. And what it does is that it shows the customer the top 5 things they can improve in their website. It may be to improve SEO, it may be to improve page load time, but here are the things you can do to make things better, right? What we found is that customers see this and they love it, they copy it right away and they go and make the change. So we added an Airo button to it, which does the changes for them. You'll be able to go and try this yourself. If you have a Managed WordPress site with GoDaddy, it will give you the Insights, you click the button, it will take you to Managed WordPress and make the changes for you, you don't even have to go and change it yourself. For Commerce, we're talking about people going in and putting in all their catalog. It takes a long time, most customers won't do it. We're going to show you today our customers taking pictures of whiteboards and being able to turn it into their catalogs. We're going to demo that for you today. As we think about each piece of the Entrepreneur's Wheel, the simple message for me is that the domain is no longer just a domain name. When you start a relationship with the GoDaddy with buying a domain name, all these services are going to automatically be created for you. And for those of you that have seen the experience, we talked about it as cards that as we talked about it as Airo cards. When we talked about 8 cards in November. And today, we already have a 9th, which is a Commerce card, we're going to show you today, and we're already testing the 10th card because we're going to add more and more capabilities that come to life with the domain name and we'll engage the customer. Customer will be able to discover them, they'll engage with the products. And then as they engage, we'll monetize them. With that, I'd like to bring up Gourav Pani to talk about GoDaddy Airo, because I know a lot of folks want to see what GoDaddy Airo looks like, just a couple of months in, Gourav, thanks for joining us. Here we go. Well, I know you have a great set of demos and a fantastic presentation for us. But what we're not talking about in the presentation, which somebody asked me outside and I want you to touch on. What does the team feel like building Airo? What does it feel like to build it?

Great question. The level of energy and the engagement that we see from our people, we have never seen it before. It is like we have unlocked our smart engineers to use the skills that have been given to them in their academics, added a flavor of generative AI on top and they're all blossoming. And that, to me, it just fills me with joy thinking of how our engineers are becoming better and better every day. We are actively engaging to make our integrated platform better for our customers so they can grow their business. As a result, we grow GoDaddy and that grows shareholder value. Our seamless and integrated experience that we have built with GoDaddy Airo, tries to solve 2 key problems for customers. One, it saves them time and money. And two, it helps our customers get more customers. That is the very "embodiment of our strategy". And when I think about Airo, there is a 3-step process that we go through to surprise and delight our customers. Step number 1 is discovery. We want our features to be available and discoverable at the right time for a customer in their journey. That takes a lot of work in thinking about the user experience and that is integral to how we're building Airo. The second is driving engagement. And to drive engagement, we reduce the cognitive load on customers by injecting in content using generative AI. And the third, most importantly, is monetization because when customers get value, they get to convert and that conversion drives monetization for GoDaddy. And speaking of monetization, we have talked about one way of monetizing Airo thus far in our previous earnings calls. We talked about Attach Bundling, and that is very much the primary use case. I'm here to tell you that we're going to introduce a second monetization methodology using Airo. It is a premium Airo experience with the best of generative AI that is available for our customers to use, and we believe that is a whole new way in which customers are going to use Airo. I have with me helping me with demos [indiscernible] our VP of User Experience. We're going to be doing 6 different demos here. They are live demos. Some of them have never been seen by any of our customers. You're going to be the first people outside of the company to go see this. And what's important to note here is the audience that has been exposed to this, all of our demos is much smaller. So before we jump in, I want you to remember 2 numbers. One is 21 million. And the second one is 85 million. 21 million customers and 85 million domains under management. And before I'm done today, I'm going to give you a date when we start rolling out our Airo features to our existing base of customers. So let's get started. We're going to start off on the identity part of the Entrepreneur's Wheel with domains. Now when we demoed this to you, some of you in November, we shared a single placement in our domain search results page where a customer could come in and type in free form. Since then, we have introduced this feature not just on the domain search results globally, but we have also brought it into the homepage. And you can see I have a small clothing and shoe store in downtown Chicago, we cater to a [indiscernible] but have something cool for just about anyone. Mike is one of those people who doesn't know what to name his business and look at the results that he gets back. This type of capability has generated 5% higher engagement on our domain search results. Why is that important? It is the most optimized part of our website. godaddy.com has been optimizing the domain search for years. And as a result, we saw more domain units sold per customer. We saw more conversions. All our core metrics have gone up. And that tells me one and only one thing that's really, really important. Every day, more businesses, more ideas are coming to life on GoDaddy. And every time an idea comes to life on Go Daddy, it doesn't come to life somewhere else. And we have a machine to attach to that domain faster and better than anyone else. Just staying with the identity heart of our Wheel is logos. Now last time when we demoed to you, we shared a free logo experience, and that still exists. The free experience is still there. This is the first of our Airo premium experiences. And here's why this is really, really interesting. This is actually a conversational way of building a logo. Previously, everything was fairly automated, a few different steps. These types of logos are now going to be available as an on-ramp to acquire new customers. Why is that interesting? In our research, looking at Google search data what we found was that after domains, logo was the largest intent that customers used when they were trying to start a business. Now typically, customers who are trying to build logos either offering a free service or if it's a paid service, they don't have much to attach to it. Now you've seen us already demonstrate for you when someone buys a paid domain, all the things that we can attach to it. Now imagine the possibility when someone pays for a logo and we're able to attach many things to it, including a domain. That's the opportunity. That's how we're thinking about it. It is going to be a new on-ramp and along with that, an attached flywheel that allows us to drive even more growth. Moving on to the presence part of the Entrepreneur's Wheel, what we have demoed in the past is a very simple coming soon page and a simple website. That's what we had before. And I'm here to show you something very different. We have done something that was thought to be impossible before. We have created multiple bespoke websites for the same customer using generative AI. And it's a true story. Friday, when we were doing a walk-through this demo, I had seen it on Thursday, and there were like 2 versions of the website. On Friday, there were 13. And I was shocked -- I was genuinely shocked and Mark McCaffrey was like, is that part of the script? I was like, no, no, really, like I haven't seen it in 24 hours, we went from 2 to 13. But then we got feedback from users interacting. 13 seem like a lot. So now you scaled it back down to 8. And it's the 8 best out of 13. But the matter point being, we have the ability to generate completely bespoke websites. No 2 websites look the same, completely different sentiment, different images, different color, different text, all generated on the fly at every single thing done in a matter of moments. Again, every single one of these customers that go from free to paid is a 2-plus customer. And from a first cohort in Airo, what we saw was a 24% lift in published rate and a 12% lift in free to paid rate. And every single one of those people is a 2-plus customer that has a renewal rate well above 85%, which is the aggregate. Moving on, this is my favorite demo that you haven't heard of before. Aman alluded to it. This is what we call Airo Insights. It was built by our WordPress team and what they have done is they have taken a website, inspected it all the way down at its code level to find opportunities for the developer to change the website, make it better. One, all the insights are in front of the customer for free. That button is sitting there for free. We fully intend to put some of the Insights for free and the rest behind the paywall and that button behind the paywall. Yet another Airo premium feature. Here's why this is interesting. I'm showing this to you on WordPress but how it's been built. This has been built in a way in which we can inspect any website built on any platform. I'll repeat that. Any website, any platform. However, that easy button, that button that implements the change, that is only going to be available for developers, designers to use when they host their websites on Managed WordPress and soon to be Websites + Marketing. Whether it's one website, 100 websites or hundreds of websites, these can be optimized at the speed of machines. And that is a differentiator. Moving on from the inspection, the Airo Inspector to payable domains Pay Links, and you've heard about this before as a product, but what we have done is we've introduced it as a brand-new card for our customers. And what we saw was really amazing. 18% Pay Link activation rate lift. We've had this feature before, but by putting it in Airo and making it really, really easy for customers to use, the activation rates, that's a massive lift. You've never seen that before with this product. And while the product is free, we do charge a 2.3% commission on every payment process. And everybody, when you read blogs and you talk to people and they say, "Oh, is this web presence Q-commerce enabled or not? Well, this changes the entire conversation. You don't have to have presence. You're ready to collect money the moment you buy a domain, and you're activated. So you can provide a service and start collecting money even before your website is ready, even before you've decided what the website is going to look like. And that's powerful. So now to the reveal. March 31 of 2024, we're going to start rolling out Airo features to our base, our base of 21 million customers with 85 million domains under management. It's not that far away. March 31, we're at March 6. And we're really excited about this. We're really excited because we feel once these features are released at scale, their impact is going to be amazing. But wait, I have one more demo, and this demo is yet another Commerce feature. This is about catalog management in our Websites + Marketing product. Now what Mike is going to show you, I don't think we've shown it to anyone before. We are going to use images, just images, and upload it and it's going to automatically use generative AI, vision API, generative capabilities to identify the name of the product, the description and the price. All done. All you did was upload the images. This is the power that we're about to unlock for so many of our customers. I want to take this next moment to introduce you to Kasturi Muduludo, the President of GoDaddy Commerce.

Thank you, Gourav.

Kasturi, we've talked about identity, we've talked about presence and a little bit of Commerce. Are you ready to wow this audience with more for Commerce.

You bet.

Thank you. Thank you, everyone.

Thank you, Gourav. Gourav showed us first-hand that creating identity and presence are simpler than ever before. I'm psyched to show you how we plan to reimagine commerce for millions of small businesses. And as we go through the process, I first want to introduce you to the problems that small businesses have. Look at how Airo can transform their experience and then outline our monetization strategy. Let's get started. I want to introduce you to Kiki. A driven passionate small business owner who runs a coffee shop in Palo Alto. Let me just [indiscernible]. Every day, she is running around baking cookies, brewing coffee, ringing orders, cleaning the floors. Let's just say the day-to-day is hectic and leaves her with no time to think about how she can run her business more efficiently and grow her business. And that is true not only for Kiki but millions of small businesses everywhere. I want to take 3 concrete pain points and see how we can transform that experience with Airo. First, managing real-time inventory. Kiki can eyeball it and tally inventory at the end of the day or week, but she doesn't know which exact product she's selling the most in real time. What does this mean? Sometimes, she runs sort of a product, say, chocolate chip cookies and misses out on the sales. And of course, also leaves the customer disappointed. Second problem, online partnering. Today's customers, you and I, we expect the convenience to be able to order online and pick up in the store. But Kiki's customers have to drive in, place an order and wait for the order. Third, tip management and the likes of tip management. Kiki just has a number of tedious chores. She has to look up the sales that she has and then figure out what were the tips she owes to her morning shift employees. What can GoDaddy Airo do to truly change how Kiki runs her business? How can we help her sell more and save her time? Let's jump into a few demos and check out what's in Beta as of yesterday. We will start by solving for the first problem, which is Inventory Management. And I'm excited to share that we have an innovative solution for a very hard problem. And I'm guessing we're able to project the screen now, right? We'll give it a minute. What you will see is Kiki and millions of small businesses can simply and quickly create a digital catalog by taking a picture of their blackboard menu. The very first time, all it takes is taking a picture and uploading it. It typically takes days, if not weeks, to create a digital catalog. And in the process, they might even lose interest in doing so. Airo is a game changer. It scans the entire menu and digitizes it within seconds. And just like that, it's done. Kiki is now checking to see if Airo has got all the products right. Let's do a couple of quick checks. It's got Americano at $1.75 and chocolate chip cookies at $2. Kiki is impressed with Airo's precision. Every product perfectly captured. Great. Now next time Kiki bakes the next batch of cookies, how does she update inventory. She can, of course, manually enter it and update the inventory, but we can do something better. She has the convenience of simply talking to Airo, and ask Airo to update inventory, if she has her hands full and is baking the next batch of cookies. Let's take a look. And with this part of the demo, if we all are working on our laptops, since Kiki and millions of small businesses work with the smart terminals, we're going to show you a bunch of Airo experiences on a smart terminal. Let's give it a look. So we see the smart terminal right here. This is the merchant pacing screen. Set the chocolate chip inventory as $20. Kiki's always in control. And with that simple voice instruction, she could update inventory. Now that Kiki has all her digital products digitized as well as has inventory, as her customers walk into the store, she can confidently ring orders knowing that her stock levels are always up-to-date. Let's move on and solve for the second problem, online ordering. Now that Kiki can quickly and easily create a digital catalog, the very first step to be able to sell online, all it takes is a couple of clicks. She just has to configure a couple of settings and within no time publish her online ordering page. The first of the customers are checking out her online ordering page and looks like they're ordering her popular chocolate chip cookies and quite a few of them, 5 of them. And as they go through the checkout, they can leave Kiki a tip, a nice, healthy tip and pick options like Google Pay for speedy checkout. They are informed that their payment is successful and can pick up their cookies in just a few minutes. Now back at the store, Kiki is informed that she has a new online order and she starts working on the online order effortlessly alongside her in-store orders. And when the customer walks in, she marks it as picked up, and that's how seamlessly she can start selling online alongside her in-store purchases. Wow, just like that, Kiki is now selling online. Let's move on to the third problem. The likes of determining tips, we can make it a breeze. Kiki can always ask Airo for whether it is sales or tips or many more insights are always accessible, not only on her smart terminal but also on our commerce home web interface. Let's give it a look. Show me my tips for the day. As you can see, our smart terminals have just gotten smarter. I have one more exciting update to share with you today. You are all familiar with that dual-screen smart terminal. We are launching our single-screen smart terminal. It's Flex, and whenever we can switch back, I'd like to show a quick view of what the Flex looks like in a 360 view as well. We're excited about this launch. It has the same smarts as Airo, and it comes in a form factor that conveniently fits in Kiki's apron. So she can take orders by the table side and have the customers pay at the table. We're launching this at a price point of $275. And this is a very competitive price point and we are looking forward to making it that much more accessible for our customers. Great. That's what Kiki can do today. Let me give you a preview of what we are cooking up for Kiki next. From a road map perspective, if Kiki can simply take a picture of her catalog and create a digital catalog out of it or even take a picture of one item like Gourav showed. Next, we will take it up a notch. And when she creates a digital catalog by simply taking a picture of a blackboard menu, we're also going to suggest images and if the prices looks too low or too high, we're going to suggest that she takes another look at those price points. Second, we saw how Kiki can conveniently talk to Airo and update inventory today. Next, she can use the mobile app and turn streaming on, walk it out the store and update inventory. And that I know will be really cool. Next, we already showed that you can with just a couple of clicks, launch your online ordering page. Next, we'll help Kiki generate more food traffic by having her take help with Airo and run flash sales and the likes of it. I'm sure you will agree that these are a lot of exciting updates that I shared since we met last November. That's the power of being a true software platform. We own every single layer of the stack, starting from the hardware to the operating system that runs on it to all of the digital assets to be able to publish an online ordering page within minutes. And that's what helps us speedily deliver some of the exciting experiences that we saw today. I can talk about this all day long, but let me shift gears and tell you a little bit about how we plan to monetize on this. As you can tell, Airo in Commerce is a true game changer. We can save our customers significant amount of time and help them sell more. And we believe this opportunity is compelling and presents itself as a brand new SaaS opportunity. We showed you that we can attach payments into our existing base. We grew our [indiscernible] by an impressive 125% last year. And I'll tell you what. We have $1 trillion worth of GPV that we can attach our payments and commerce offering to. Our customers told us that they trust us not only with domains, but also with presence and as we offered payments in commerce with payments and commerce as well. Let me sum it up. We are reimagining commerce for millions of small businesses by democratizing omni-commerce and making it more accessible than ever before. With that, I'm going to introduce you to Laura, our President of GoDaddy international to show you how we plan to take the power of Airo globally?

Thank you, Kasturi. Happy to be here. Thank you. Go ahead, get the slides up. Okay. Thank you. So I'm Laura Messerschmitt, and I've been with GoDaddy for quite a while, but I've been with our international business for 2 years. But my love for our international customers [indiscernible] has been long-standing before that. I'm a volunteer as a mentor to women from emerging markets who come to the U.S. through a program through the state department. And they come to develop their careers in technology. Many of the women are small business owners and they are GoDaddy customers. And no matter where they come from, if it's Sierra Leone, if it's Pakistan, if it's Egypt, they all tell me the same thing. They say that the financial independence that they get from running their own business is life-changing, not just for themselves, but for their families, for their communities, for their societies. And I am so proud that GoDaddy gets to play a part in that story, in their story. Now I started at GoDaddy in 2012. That was the same year that we launched our international business. We launched this office in India. It was so exciting. We were all thrilled to be going international for the first time. And now 11 years later, I get to stand here, and I get to tell you how much success we've had. Let me start with the numbers. We have 10 million small business customers outside of the U.S., anyone from [indiscernible] Kenya, who runs a web consulting business to a woman [indiscernible] in Australia, who owns a flower shop called "Blooms by the Bay". We have $1.4 billion in revenue. That's 1/3 of GoDaddy's total revenue, and we're everywhere in the world, 150-plus markets. And we're #1 in domains in the U.K. and in Canada. And just this last year, we became #1 in domains in Australia as well. So we're very proud of that. But we're not just a domains business. We've been working hard to attach applications and commerce to our international customer base. And to do that, we made some fundamental shifts in our business. We moved from local regional marketing to global campaigns at scale. Same message, same brand across the world. We move from having localized products that were bespoke by region to having a global software platform and harnessing the power of our software platform. But having still local touches so the customer would feel like it was theirs. And that's helped us move from being a domain heavy business to being a small business SaaS provider. I'm happy to report that in our top english markets, which are U.K., Canada and Australia, our attach rate for other products besides domains is growing at twice the rate of the growth rate of the U.S. and that our presence in productivity lines are growing at over 20% year-over-year. And now we're ready to launch Airo in our international markets. It's already live in Canada, and it's coming to the U.K. and Australia very shortly, followed by the rest of the English-speaking markets and then moving on to non-English speaking. Now let's say our friend Kiki, who owns the coffee shop in Palo Alto, wants to open a second coffee shop, and she's going to do it in Toronto. She's going to go ahead and type into our domain search. She'll press the button. And we'll see that the global power of our domain search and our AI search will also work for a customer in Canada or in the U.K. and Australia. And what you'll see is an experience that includes domain names. So it feels very local to her because she's launching in Canada. Now let me show you what a website looks like generated by Airo. On the left, you see one generated in the U.S. On the right, you see one in the U.K. And in the U.K., there's some small changes like it's a solicitor instead of lawyer. So again, it's the global power of our platform, but it feels local to that customer. Lastly, I'm going to show you our social media marketing tool in Australia. You can see this last week, we celebrated cleanup Australia Day. And my personal favorite international day of Awesomeness, I want to launch that in the U.S. Now for us, though, it's not just about the products. It's also about the business, and we've been reducing complexity, which will help us with our costs and also our speed to market. We've refined our international structure. So we now have 2 groups, One is our English speaking markets, which are the U.K., Canada and Australia, and then, one group that works on the rest of the world. What's exciting about the Rest of the World team is they're able to share learnings across their markets and the efficiency of our marketing has improved because of that. For every dollar we spend, we get 150% more traffic than we did in the past. We've also streamlined our operations. We have a common marketing across the world, common go-to-market, and we've consolidated godaddy.com to make it quicker for us to test. In fact, 93% quicker. We've also reduced our complexity currencies, which helps us with our risk. And we've made a model where we have flexible investments that are geared towards growth. So we launched in one market and then we roll quickly to global. And through that, we've actually tested Digital Care Only in some of our markets. And in those markets where we've launched that, the customers love it. So it not only helps with our cost structure, but we have a higher NPS for those transactions. It's very exciting. Now I'd love to tell you more about our customers, but rather than me telling you, I'm going to have them tell you. [Presentation]

I love that video every time, I get chills. Now there's one more thing I want to talk about before I leave you, which is something very important and near and dear to my heart, which is our opportunity in emerging markets. 85% of the world's population is in emerging markets. 85%. That is 6.7 billion people, 2.7 billion of those people haven't even come online yet and will be coming online. Now GoDaddy already has a business in these markets with $400 million in revenue in these markets. But we are going to continue to expand as we launch Airo to these markets. And when I think about what that means, I think about here in the U.S., how we talk about the American dream about how that's about pulling yourself up by your bootstraps and making something of yourself. But if we can actually launch Airo and other tools like that across all of these markets globally, we're not just making up the American dream, we're actually turning it into a global dream. And now I'm excited to welcome Fara Howard to come tell you about how we're going to do that.

Thanks so much, Laura. I'm Fara Howard and I'm the CMO at GoDaddy. Today, I have the honor of getting to talk to you about the GoDaddy brand. Now to be clear, a brand is built by more than marketing alone. It's a company-wide effort, and it's built on the back of really powerful products. Today, and back in November, you heard a lot about Airo. And Airo is built on our heritage and our history and will propel future profitable growth for us at GoDaddy. I'm excited to tell you more about that. But before I do, help with me in the time machine, let's go back to where we started. GoDaddy was actually born right down the street from here in Scottsdale, Arizona. At that point in time, we were called Jomax Technologies. We quickly changed our name to GoDaddy. And we have a lofty vision. Our goal to bring the Internet to the masses. And think back to 1997 and what you were doing. I don't imagine you're doing much on the Internet right then. Why? Because the Internet was regarded as an incredibly technical place, a hard-to-navigate place. Amazon was selling only books. Dell was selling computers, and they were the exception to the rule. Social media was yet to be born, 7 years later as a matter of fact. And at GoDaddy, our vision was that we could democratize the Internet. And we believe that we could do that by simplifying what it meant to buy a domain. Now in 1997 and all the way up into the early 2000s, buying a domain was a really complicated task. And in fact, our competitors were selling domains for 5 to 10x the price of GoDaddy. Our vision, create a lower-priced, easy-to-buy domain online. And in doing so, we made domains front and center. And from 2005 to 2015, we employed bold tactics. We built a partnership with Danica Patrick, NASCAR Superstar and we ran 11 Super Bowl Spots, and it worked. We became the #1 leader in the U.S. of domains, and GoDaddy took the show on the road, and we became a global presence as well. And our brand awareness soared. I joined GoDaddy in 2019, right when this chart begins. And what's most compelling on this chart is the steady, steadfast nature of our brand awareness. We have the highest brand awareness in our industry. And that has been consistent for a very long period of time and is a durable strength of ours. So when I joined in 2019, I had a different job. The Internet had changed a lot since 1997, and so did customers' needs. They needed Websites + Marketing because the website is not just presence. It's how you get customers. They needed to look incredibly professional when they talk to other customers. So they needed business mail, and we built a partnership with Microsoft and are the #1 seller of business e-mail globally. They needed commerce capabilities. And so we built commerce and payments with the best payment terms in the industry. So our job was to make certain that customers and prospects around the world knew the jobs that we could do for entrepreneurs. Our awareness held steady, as did our product awareness. Domains remain strong. Websites remain strong, and our e-commerce growth is growing and continues to do so. Now those strengths alone, our brand awareness are incredibly durable and powerful. But we have additional competitive strengths that you've heard about today. They're important enough to quickly restate them. We've got 85 million domains under management. We've got 21 million customers, and Airo is a seamless experience that solves critical customer needs. It saves some time and it gets some customers. And to be really clear, the most powerful and marketable products solve customers' problems in ways they never expected a product could. That's exactly what Airo does. And I am thrilled at the opportunity to get to bring this product to market. More on that in a minute. Now you'll hear in a bit from Demetria about Care, and Care is an incredibly differentiated strength of ours. When our customers call a GoDaddy guide, their lifetime value goes up. That's amazing. And this is a steadfast strength of ours. Any one of these strengths in its own right is incredibly powerful. But when you combine these strengths together, they create a unique and durable proposition for GoDaddy. And what it does for me as our CMO, it enables me to be incredibly efficient in how we go to market. GoDaddy has the lowest marketing spend with incredibly high returns. We have continued to optimize our spend and deliver phenomenal results. Now we do that because of what we're good at, what we just talked to you about but we're also good at other things. I'm going to talk to you about our strength in media. I'm going to talk to you about our strength and how we make creative, and then I'd be remiss if I didn't talk to you about godaddy.com. Specific to how we buy media, many of you I've talked to you in the past about search engine marketing. We're incredibly skilled in this arena. Several years ago, we built our own in-house algorithmic bidding model powered by ML because we wanted to ensure that the data we were getting from Google's algorithm was as accurate as possible. What we learned is by having 2 data sources, we improved our search engine marketing results by up to 3.5x. Now today, as I look back on the past year, we've continued to excel in search engine marketing. Our search engine spend went up double digits this past year, and our results double digits as well, but higher than our spend, meaning we're recouping even more returns in this incredibly important channel. Now let me be clear. Search engine marketing is not the only vehicle that we use to talk to our customers. You'll see us on television, you'll see us on nonlinear TV. You may see us out of home. You'll see us in your TikTok feed depending on how old you are or if you have kids, you'll see us on Instagram, you'll see us on search engine marketing. We use ML to make decisions around the mix of our media to tell us where to put our next dollar so that it is the most efficient. This capability has optimized our mix and our returns and then has enabled us to continue to be more efficient. So let's talk about creative, right? I am a creative, I work in the space, I have to spend at least 1 minute or 2 telling you about how we make the stories that we tell. You heard a little bit from Laura about scale. We have a global brand and we communicate consistently around the world. And let me be clear, different customers, different regions have different needs. We have to incorporate and be cognizant of global nuance to make certain that we resonate. And with those in mind, Laura and I partner closely together, and we build creative that scales around the world. It sounds easy, right? [indiscernible] Laura and that happens. It's incredibly difficult to do this, which is why you see so few brands build global creative. It's actually a strength of GoDaddy's, the way we work internally to solve problems faster for customers that enable us to get the scale. We also make our creative in-house. Yes, you heard that right. Our employees are creatives who know our strategy and our brand and our business. And as a result, we can create creative at significantly lower costs and have done that year-over-year. [Presentation]

I'm proud to get to work with the team that can make beautiful, creative, this impactful that scales around the world. Now the majority of our traffic comes to godaddy.com. My team is responsible for godaddy.com, and we have reimagined this experience over the past several years. We've done this through robust experimentation. And in doing so, we've dramatically improved performance on godaddy.com, including driving incremental conversions. How have we done that? Again, hundreds of tests, but a handful of really important surface items that are worth talking about. We reinvented our homepage, in fact, if you go to our home page today, I'm pretty certain that you're going to see a lot of information about Airo because we know AI resonates with our customers. We've dramatically redesigned our navigation to make it easier for customers to find all the products and services that we offer. If you're a returning customer, you have a different experience when you come to godaddy.com, because we want you to be able to quickly get back to what you were doing last time you were here. And, what you're seeing right now behind me that plans and pricing page, we had a hypothesis that if we could make it easier for customers who came wanting to transact. If we put that plans and pricing page in front of them, they would convert at a higher rate. Lo and behold, a customer who goes through our plans and pricing page convert 6x higher than a customer who goes through a traditional path or ambles their way through godaddy.com. Now having a beautiful impactful site that drives conversion is critically important. But when it's bolstered by the fact that over 60% of your traffic comes direct, now that's a powerful statistic. Because people know our brand, they come to us and they come to a site that works that is designed for them and is getting better every day. All of these factors make our brand and our business and our marketing returns better, which is a great segue to the future. You've heard a lot about Airo today, and you'll hear more. Airo is powering our customers' future and doing so through powerful technology. Airo is poised to disrupt because of the capabilities that it ingests through 1.2 billion interactions and insights with customers every day at GoDaddy. Now we just brought this product to market, and when I say to market, I mean from a marketing standpoint, on February 26 in the United States. On February 29, we celebrated Leap Day because don't you all celebrate Leap Day. But truly, with an extra 24 hours and when all you need is a minute or 2 to build your business online with Airo, it was a perfect combination. The day after, we launched our marketing in Canada. So rather than me tell you about our marketing, let me show you. [Presentation]

GoDaddy is poised to deliver for so many of the reasons that I talked to you about today. But the most important reason is right behind me on the screen, our customers. We have 21 million customers today, and we learn from them and listen to them daily. Again, with 1.2 billion insights coming in daily, we utilize that information to make certain that we are hearing them, building experiences for them and growing their business as a result. We are able to power their future in ways our competitors cannot because of our competitive advantages. It's an incredibly exciting time to be at GoDaddy. Thanks for coming on this journey with us. At this point, I'm going to pass it over to my friend, Demetria to tell you more about Care.

Thank you. Hello, everyone. I'm Demetria Elmore, President of Care and Services. Let me tell you a little bit about why we are investing so much energy into our best-in-class care experience. We are all about nimbly and effectively navigating from the customer's question to understanding the goals they have for their business and helping them achieve their goals. Let me share a little of the secret sauce of our Care and Services excellence and how we know it makes a difference. One of the 5 core elements of our best-in-class service model is the concept of discovery. The art of answering the question, a customer did not know to ask. Through a series of experiments and rigorous analysis of data from each care interaction connected to discovery, we found that when we got it right, that is when we took the time to ask the question, a customer didn't think to ask, we had a 31% increase in average order size and sales. And that's just one of the key elements of our secret sauce. We continuously experiment with each element of our care model to up-level the quality of our human conversations, our automated checkouts and now GenAI. Let me read a love letter I received recently from one of our customers. It's one of the many positive stories we have to tell. I have never experienced such amazing polite professional and excellent customer service in my entire business career, which spans 35 years in both corporate America and self-employment. Hats off to GoDaddy for employing Claire. She is incredible in every way. First of all, thank you all for giving me the opportunity to shout-out Claire. I hope her team is giving her a big high-five right now. And secondly, I just love that this customer took the time. This is one of the many customers who take the time to tell us. That was amazing. You obviously care about my business. You raised the bar from my customer service expectations. In fact, you made my business better today. And that doesn't just feel good. It leads to better results. Through our emphasis on best-in-class care with data-backed decisions and process improvements, we reduced the overall cost of goods sold in our do-it-for-you business by over 700 basis points, and our care profit margin has increased over the past 2 years. We achieved this in part by listening to our customers and meeting them where they are. Customers told us they wanted more interactions via messaging. Well, now, nearly 40% of our care and services interactions are messaging. And not only do we do that, that results in decrease in our [indiscernible] costs, we still achieve the remarkable over 65 NPS from our care interactions. As a care and service organization, we are proud that our empathetic interactions drive upsell into additional products and offerings and results in 9% of the bookings for this business. That's over 400 million in bookings in just 2023 from upsell and cross-sell. We know that we are doing so in driving our 85% customer retention rate that is not insignificant. We recognized the value of keeping our customers with us. Now with the power of GenAI, we can improve our customer experience faster and smarter for both our customers and our guide. We are combining the excellence of our guides with GenAI expertise. We launched our GoDaddy Guide Assist Bot [indiscernible] earlier this year. The Guide Assist Bot is our real-time coach, conversational partner and assistant, who can help find the right resource at the stroke of a key. Let me show you the difference with [indiscernible]. [Video Presentation] This is the next generation of best-in-class care at GoDaddy. In our pilot, [indiscernible] helps selected guides get to relevant, accurate answers faster and shared insights they might have missed delivering on their own. This first [indiscernible] showed us that we can save 2 million minutes after just one test, we tested with 600 guides worldwide. We saw a double-digit engagement rate. And we noticed that 30% of our contacts will be shorter just by using [indiscernible] after this first test. Our global rollout is in progress as we speak. We have so many follow-up tests lined up to increase the number of use cases worldwide. Let me show you what it looks like for a guide behind the scenes in a real call scenario. We had one of our guides tell us about their experience, and we show you here. This is the process that a customer -- a guide would see when they put in -- my customer wants to set up outlook on their phone. They have a very conversational interaction with [indiscernible] simple, hey, I need some help. -- it's Office 365, [indiscernible] comes back with, well, here's what you should do. Have them download this app. It walks them through. It's very intuitive. And what's great about this is while [indiscernible] is looking for all this information and pulling it up quickly for the guide, the guide is able to use the art of discovery to ask the customer questions about their business to really engage in what are they trying to do? Where are they trying to go? All while this information is seamlessly being brought to their attention. And after all of these steps, we're good to go. Yes, we've now solved the problem. That's the first step of our customer service interactions. Now we have an opportunity for even more to get into a consultative conversation about their business and to truly offer the guidance that we're known for. This gives us that opportunity to have a conversation about their plumbing business. And the fact that they're not just doing e-mail, there's more that they want to do. They want to market. Well, great. Now [indiscernible] is suggesting that this customer could also get websites and marketing. Awesome. We just turned a basic customer service interaction into a true consultative sales opportunity. That's the power of [indiscernible]. And this is just a wonderful experience for us. Our guides love having [indiscernible] at their fingertips. It takes some of the anxiety out of being able to help a customer to the best of your ability. This is what one of our guides said after interacting with it for 3 weeks. As a new guide at GoDaddy, [indiscernible] has become my best friend. It's given me confidence in handling complex issues, and I can hear the customers' confidence in me increase. I can also see the increased confidence in my NPS scores. We have loyal dedicated guides who have been with GoDaddy, 5, 10, 15, 20 years. They've seen a lot, and it takes a lot to impress them. And even they are saying, "wow, this is amazing". This is music to my ears as a Care and Services leader because we're not forcing them to use a tool they don't want. We're actually helping them do their jobs easier and faster. They know the value and they are asking, "Hey, I want to be next" Please bring it my way. And this is just the beginning. We are intentionally and methodically rolling [indiscernible] out with a phased approach. We aren't just launching this because it's the latest tech buzz. We are focusing here because we see the value for our customers, the opportunity to expand what best-in-class really means and the opportunity to deliver profitable growth through continued and more efficient upsell. In fact, we just last week completed another experiment using [indiscernible] sent automated case notes to our guides. And we saw from that, a 7% decrease in the time that it took for them to be able to understand what a customer needed. That's another 1 million potential minutes for our business saved. And it's not just for our customers, it's also for our guides. It helps them move on to the next experience and to be able to get to the next customer faster and be able to help our guides with our guided chats as well as our guided voice conversations. We envision a not-too-distant future where we can use [indiscernible] created customer data to match their vertical-specific tendencies. We talked a lot about Airo earlier today. All of the data from Airo, all of those profiles and that information that we're getting about a customer like Kiki is getting pulled into our data platform. We're sharing information about our customers behind the scenes and we're sharing information about our customer service interactions and our sales interactions across our system so that we can learn from not just Kiki, but all the other coffee shop owners within the same vertical so that the next time a coffee shop owner wants to talk to us, we have information on our fingertips, and we can proactively share. Here's what we know works for someone like you. Here's what we know will help drive value for your business. It is an exciting time for us within GoDaddy Care and Services as we strengthen our unparalleled competitive advantage in Care. And we are thrilled to be at the forefront of GenAI innovation, yet again, impressing customers with our best-in-class guided experience. Thank you all. I'll turn it over to Christie.

Thank you. We are now going to head into the break over here in the cafe area. We've got a lot of exciting demos for you guys to check out. So please go ahead and join any area there, and it's going to give you the experience of what it's like to be a GoDaddy customer. You may start in a different area of the cafe, work your way around in any way possible. There's a lot of exciting stuff to see. Please plan to be back here at 5:00 p.m. Eastern. We'll see you soon. [Break]

All right, all right. I hope the folks in the room had an opportunity to look at some of the great demos there. We're ready to start again. I would love to now invite Roger Chen, our Chief Operating Officer, to come and talk to you about our operations. Roger, come on up. Thank you. I have a question for you as well, Roger. You've been here almost 9 years. And let's tee off the idea that in the last 4, what's been the biggest change from your perspective? I'll let you take it away.

All right. Thanks, Aman, for the question. And my answer is fundamentally, we've changed the company into a platform and a system. Okay. I started at GoDaddy in 2015 leading our Asia business. As you know, Asia as a region is actually quite complex and so many dimensions. And so to make progress and achieve outcomes with little resources, we simplified by making a lot of hard trade-offs. And we have to focus on operationalizing our competitive advantages. As my role in the company grew, this idea of fewer things better became more and more evident to what we can do. And that's what I want to talk to you about today. Aman had this slide, he mentioned earlier that our two transformations and an outcome. And I want to share more color on the two transformations, this idea of GoDaddy software platform and a GoDaddy human system. On our scale, these are competitive advantages. Let me tell you more. This image, of course, is a simplification of all the technology that we have invested in over the last few years to create the GoDaddy software platform. We optimize the bottom layers here to drive for velocity and cost savings. And they accelerate the upper layers you see there for innovation and growth. We invested in common platforms to benefit from our scale and to deliver new capabilities efficiently across all our products. This allows us to accelerate in differentiated value creation for our customers. So let me remind you that there's no other company that has 85 million domains under management, is a private cloud hosting company with its own passive builder -- website builder, has 10 million mailboxes, is also a payment company and the technology to launch Airo all on one platform that work seamlessly with each other. So let's break this down. Let me start with the infrastructure layer, where we've made step function change in terms of our improvements. We rearchitected our private cloud and reduced the server count by more than 60% and cut our operating costs by half. Savings were realized through less hardware, licenses and lower energy costs. So historically, as you know, we have operated our own data center. And over the last few years, we started migration to the cloud in AWS. For a company of our scale, this was no small feat. We migrated around 300 complex, business-critical apps onto the cloud. And both these efforts resulted in an 80% reduction in our CapEx spend, translating to approximately $50 million and driving more free cash flow. As we progressed through the infrastructure layer, we completely redesigned our data platform. And I'm very excited about this. You see that 1.2 billion customer signals captured daily, 1.2 billion daily. That has connected all the key nodes across the company and shaping the foundation for our business decisions. This is a massive unlock for the company, enabling quicker, more impactful decision-making in terms of execution. With more and more people armed with insights, we operate with velocity. And we don't just seize the data signals into the platform. Our leaders now receive thousands of specific insights that tailor to their work streams, prompting them to take proactive actions, right? These insights could be as simple as sales fluctuation in a product or in a market, allowing them to act immediately. This approach embeds capability across our software platform. So let me continue with our experimentation platform. We consolidated our applications to use just 2 internal tools instead of more than 10. This gives us an advantage in terms of the richness of data that goes into the software platform. And our focus is to leverage all the traffic efficiently to test and validate hypotheses quickly. And in 2023, we tested over 2,000 hypotheses with 40% as winners, indicating significant potential for further experimentation. And these experiments at scale drives important KPIs and they contribute to the growth of our key results. Essentially, we can take more high-quality shots on goal, allowing us to innovate more rapidly than we had ever before. Next, let's talk about the monetization platform. This is very near and dear to my heart as the COO. Our new platform includes pricing capabilities and allows us for faster implementation with things like paywalls, product bundles, payment terms, payment plans. We're just beginning to explore dynamic pricing and flexible paywalls. And you heard a lot of ideas today. And we believe that's a significant opportunity in the coming years. Our focus on renewals is also key. We have continued to improve and continued to drive our 85% customer retention rate. On to AI, you heard a lot about this. Our AI and machine learning platform has been widely adopted across our applications with new applications utilizing powerful features every month. One notable example with significant outcome is that this platform has allowed us to reduce our marketing spend as a percentage of revenue by 500 basis points since 2021, contributing to our margin expansion. And we have over 50 models that predict and drive key business results, enabling optimal trade-offs in marketing and care initiatives. The next layer in the platform is our product and customer experience. Gourav and Kasturi have done a fantastic job showcasing our identity, presence and commerce products. Laura and Fara showed our site and product experience team are relentlessly focused on improving conversion by analyzing the traffic and renting experiments. They use these insights from our platform to retarget existing customers with their next purchase or next jobs to be done. We have created new components on our site to provide helpful recommendations, including a pricing page that converts at 6x compared to other plan pages. This provides further proof points to a seamless purchase experience for our customers. Finally, let's talk about Airo. GoDaddy Airo is the first solution built using the powerful GoDaddy software platform. And we have already launched 15 major releases in February alone. We're thrilled about the rapid pace of innovation, as you heard from Gourav. And that has been introduced to several English-speaking markets and will continue to expand. One important aspect to note regarding Airo is that its capabilities extend beyond the GoDaddy software platform. This is something relatively new for us and has significant potential, allowing us to provide insights for websites using any GoDaddy domain, not just our own website builder or Managed WordPress. And this type of extensibility creates untapped opportunities for collaboration with designers and developers in the future. All these components give GoDaddy a competitive edge, allowing our teams to be more agile and productive, fueling the development of exciting products and technologies like Airo in the future. Now let me talk about the second transformation, which is the idea of the GoDaddy human system. This is essential for our day-to-day operations, focusing on how to simplify. Our mantra is fewer things better. It's how we think, it's how we operate. And this drives continuous improvement or better every day. Let me share more about the technology and the operational expectations that support the system. First, it starts with ruthless prioritization. By being clear at the top of what is most important, we simplify greatly for our teams and reduce wasted activities. To ruthlessly prioritize, we must instrument the business. And that means quickly gathering signals and analyzing for intelligence on customer experience or other KPIs. And at GoDaddy, new initiatives such as Airo are not funded in advance. Teams must present proof points, often requiring tough trade-offs to enable the right talent to join forces and to create a successful innovative experience. This means introducing great ideas is simply not enough. These teams must put meaningful effort into that work before they get additional funding. So in the first cohort Airo, we saw the increase of 24% website published rates and 12% paid website rates. We, of course, were thrilled to see that, and so we continue to double down. Once instrumented, we have proof points. Then it allows us to delegate those decisions, both efficiently and at scale. At a company our size, decisions are made at different levels. And we want those who are closest to the data to make those decisions in a low-risk manner. So our data platform provides billions of data points that can help people make those decisions. And we're seeing this real time on Airo, where a team, not Aman or Gourav or myself, are deciding that experimentation scope. And this is accelerating our execution. Delegated decisions give us scale and velocity. But it also means those decisions are distributed. So we need OpMechs for cross-functional teams to stay aligned and act fast, for example, more efficient meetings that prioritize conciseness and focus on addressing specific obstacles and pathways to success. We value candor, we celebrate learnings and identify areas for improvement with precision and speed. So another prime example is our culture of experimentation, where each is reviewed and assigned a badge by our analytics team to ensure we hold the bar high on quality while velocity increases. This badging standard is shared across hundreds of teams to ensure that alignment is across the company. So this follows the GoDaddy way by using proven methods for gathering feedback on validated metrics and iterating rapidly to improve outcomes. These OpMechs not only unlock the data-driven actions, but they also create a driven, accountable team. A driven and accountable team is a group of people who know they have a high bar. And they reach and go beyond that bar daily and repeatedly. And then we raise the bar of expectation again as we must be better every day. We'll make mistakes because we're all human. But as long as we're open about them, we're going to improve. And I already talked about the 40% experimentation win rate, which constantly reinforces the idea that failure is simply a step towards success. And this allows people to go after stretch targets, which is what we want. And they openly report on them. Because even if they're behind, they know that they have the autonomy and the psychological safety to actually be ambitious and do more. So people who embrace this culture, they are very motivated. Many teams across the company made extraordinary efforts to meet the aggressive timelines of Airo. And they love it because they became a part of something bigger. Our morale is sky high and we are hitting our stride. We're transparent with our team about these high expectations. And they're accountable for measurable key results. So this brings us back full circle. As we evolve, our talent has had to evolve with us. And we raise the bar for our leaders. We set measurable and transparent expectations for our vice presidents and what that title means for GoDaddy. VPs at GoDaddy are accountable for changing the climate, not just report the weather. And their runway is time-boxed. And today, we're just about half of the VPs compared to a few years ago. And while their responsibilities have broadened, we have also attracted a lot of great talent from best companies in the world. Approximately 60% have been hired in the last 4 years. And this group of passionate leaders will continue to ruthlessly prioritize for our execution, for velocity and for impact. This is core to the GoDaddy human system, an operational commitment to drive long-term profitable growth. In summary, it all comes back to fewer things better, brought to life through an integrated GoDaddy software platform plus the GoDaddy human system that includes ruthless prioritization, a culture of experimentation, a driven and accountable management team. And from the perspective of product, marketing and operations, we're well positioned for future growth. These transformations are driving our profit growth. And here's Mark, our CFO, to tell you more about it.

How are you all doing out there? Good? I get to bring it home here. So first, I would like to start, as I always do, by thanking all of you, our investors, for your thoughtful feedback. I really do appreciate it. I love the communication. And please keep it coming. Hopefully, you've enjoyed the presentation today. They've given you a great idea of the road ahead of GoDaddy and the opportunity. And just a quick summary, right? We heard Aman start the day today by laying out our mission to empower entrepreneurs and make opportunity more inclusive for all. We do this by delivering compelling solutions that seamlessly connect our customers' identity and presence with their commerce to help them grow their business. We are driven by doing the right things for our customers, which result in increased customer success, loyalty and retention, which in turn leads to profitable growth for GoDaddy. Laura, Gourav, Kasturi, all demonstrated GoDaddy's innovative technology in action, which sets out to increase the discovery and engagement of our products as we start to leverage Airo as a key point of differentiation. Fara highlighted the strength of the GoDaddy brand and the incredible evolution of what GoDaddy means to our customers with Demetria spotlighting why care is a core competitive advantage. And lastly, you just heard Roger talk about our experimentation engine, which is driving our decision-making and leverages the strength of our brand, our technology, our scale and our care. So now the part you've all been waiting for, here we go, I'll cover GoDaddy's durable financial principles. We have a track record of driving sustainable, profitable growth. And we generate impressive free cash flow. This results in a strong balance sheet, which we intend to use to increase shareholder value through a prudent and returns-based capital allocation strategy. The value we provide to our customers directly translates into increased customer lifetime value and revenue growth. The operational decisions we make translate into margin expansion and free cash flow growth. We have continued to be focused on that next lever, growing our free cash flow per share. Our North Star is increasing free cash flow per share over the long term. And we will do this with a combination of top line growth, margin expansion and disciplined capital allocation. Over the next 3 years, GoDaddy expects to drive a significant increase in free cash flow per share, growing at a CAGR of 20% or more through 2026. There are multiple ways we can get there. But as I often say, we model what we can see in front of us. And based on our line of sight today, we see this path of achievement as follows. We expect to drive 6% to 8% top line growth, fueled by our accelerating Applications & Commerce segment. We will drive a full year normalized EBITDA margin expansion of approximately 33% by 2026 through continued operational discipline. And we will generate $4.5 billion-plus in free cash flow over the next 3 years, $4.5 billion in free cash flow, plus. We have a proven ability to drive strong free cash flow over 3 years. Cumulative free cash flow grew by more than 50% from 2021 to 2023. And we are on track to grow it in excess of 55% from 2024 to 2026. To put the trajectory of our financial model in perspective, it's helpful to take a step back and appreciate the expansion of our normalized EBITDA margin from 22% in 2020 to 27% in 2023, driving an impressive free cash flow CAGR of 13% over the same period. As we look forward, our Applications & Commerce segment, which includes all of the exciting innovation you heard today, grows at a faster rate and generates a higher normalized EBITDA margin than our overall business. As a result, this continuous shift towards our higher-margin A&C segment will be a tailwind to our profitability as this business operates at a 40%-plus segment margin and at a high cash conversion, allowing us to get to the $4.5 billion or more that I talked about in free cash flow by 2026, cumulative free cash flow. How do we achieve this? Put simply, we have retooled our marketing efforts, you heard about it today, and our customer onboarding process to attract and convert high-intent customers. All customers are not created equal. And everything we have laid out today, starting with our marketing message that Fara outlined all the way through to how our customers experience our products, matters as we build a bigger base of these types of customers. We are already known as the global leader in identity solutions with domains. Our opportunity is keep more wallet share of these customers by attaching into our A&C products, which can result in a lifetime value of greater than 83x compared to a customer with just a domain. This right here is the reason we are focused on driving attach and Airo only accelerates these efforts. Our promise to our customers is to deliver solutions that enable them to start and grow their business. Customers that succeed with us, stay with us. This is why we aim to do right by our customers. GoDaddy is already enjoying an impressive overall retention rate of 85%. Part of the reason we are successful in maintaining this year in and year out is due to our growing base of customers that have been with us for 3-plus years and the customers that have 2-plus products. As you can see, the retention profile of these customers far exceeds the average of 85%. And we're seeing the impact of the efforts to accelerate this population of customers today. Our customers are now attaching to a second product at a rate that is almost 25% faster, 25% faster than 4 years ago. This means we're getting to that 83x faster than ever before. Our loyal base of 21 million customers generate 85% of our revenue. In fact, we think -- we expect $12 billion of revenue will be generated from this customer base over the next 3 years. If we look at the addressable market within our existing customer base, moving all of our customers to 3-plus products would generate a lifetime value in excess of $90 billion. This underscores the durability and sustainability of our model over time and combined with the increasing attach we are driving that highlights our strong foundation with opportunity for continued growth, even within our customer base. All of this is showing up in our consistent, progressive ARPU growth. Looking ahead, we see ample opportunities for further gains in ARPU by continuing to attract these high-intent customers that join GoDaddy through our core platform business, the domains, and drive momentum in our Applications & Commerce segment. In addition, coupled with the strong demand we've been seeing, we will continue to grow our monetization capabilities as well as utilize pricing as an opportunity in line with the considerable value we are delivering to our customers through our innovative solutions. These efforts are driving strong momentum in Applications & Commerce, which includes presence, productivity and commerce. This segment has grown at a 3-year revenue CAGR of 16% with sustained double-digit bookings growth across all major product categories. In Q4, we continue to see our bookings grow by 16% as our customers are attaching GoDaddy's more profitable software solutions at an even faster rate. Segment EBITDA for A&C has grown at a CAGR of 19% with full year EBITDA margins of 42% for 2023. This is an expansion of 400 basis points since 2020. As this high-margin segment continues its impressive growth and it becomes a larger part of our business, as I said before, this will serve as a tailwind to our normalized EBITDA margin expansion. And our core platform segment includes our domains, aftermarket and hosting and security business. This is a $2.8 billion segment and has grown at a 6% CAGR, underpinned by the strong, stable mid- to high single-digit growth in domains and has been a robust customer acquisition channel and source of cash flow generation for our overall business. We have driven margin expansion in this segment as well with a full year margin of 29%, a 300 basis points expansion over the last 4 years. Normalized EBITDA for this segment has grown at a 9% CAGR. Now moving on to our aftermarket. Our aftermarket platform provides our customers the ability to buy or sell previously registered domains. Our platform facilitates the sale and transfer and has grown into a $400 million-plus business. We are excited that the trend we are observing now is increasing volume, which is offsetting the high valuation sales from previous periods. Now overall, since transaction values are determined by a third-party buyer and seller, we assume this business is going to be flat to low single-digit growth over the long term. But recognize, there may be upside related to the timing of larger transactions, which we've talked about are very hard for us to predict. Moving on to hosting and security. Over the course of 2023, GoDaddy began a strategic rationalization of this business. Our goal here is to narrow our investments to the consolidated GoDaddy software platform. This will generate high free cash flow conversion over time. This means we are taking short-term proactive measures to divest end-of-life and migrate several components of this business. Our rationalization efforts have impacted approximately 800,000 customers and resulted in revenue headwinds of approximately 100 basis points expected in 2024 that will moderate to flat by 2026. The remaining brand integration and divestiture opportunity is approximately $50 million. We will continue to evaluate our hosting and security platform to ensure we are making optimal decisions to drive our growth and our free cash flow over the long term. Once completed, we expect the overall hosting and security business to be flat with strong retention, high margin and significant free cash flow. Moving from our top line to our margins. Let me start by saying margin expansion is not new for us. We have a track record of driving 100 to 200 basis points every year since 2020. And in Q4 2023, we exited a rate of 29.5%. We also recently guided to a full year margin of 29% for 2024, and we're not done here. We expect to continue to drive full year margin expansion to approximately 33% by 2026. And as Roger mentioned previously, our GoDaddy software platform is an important leverage. I would like to give a few more details on technology and development in our model related to this. Our optimized technology platform will drive future margin expansion. As I have shared before in recent years, our product development spend is focused on building our commerce platform, creating innovative experiences like Airo and developing the seamless software platform to be able to deliver these solutions and go to market faster. The simplified technology platform means we will have less infrastructure to support in terms of headcount, licenses and maintenance. In fact, our efforts over the past year have allowed us to exit five data centers. And we reduced our server count by over 60%. In addition, we're continuing our migration to the cloud which has significantly reduced our CapEx needs. And while CapEx doesn't hit the P&L, it does help our free cash flow going forward. As a result of our strong balance sheet, our disciplined capital allocation framework remains intact. Capital return has been and will continue to be a big part of the GoDaddy story. And we are focused on continuing our successful share repurchase program, which drives high ROI for free cash flow deployment. Our repurchases to date completed for an average price of $74.99 per share and represented a gross reduction of 20% of our fully diluted shares outstanding. We still have $1.4 billion remaining under the current authorization. And we plan to continue the disciplined buyback program to further reduce our fully diluted shares outstanding. Moving forward, subject to market conditions and other factors, our intent is to be in the market every quarter. And at a minimum, we expect the repurchases to offset dilution from share-based compensation over the 3-year period. Now when evaluating the deployment of excess capital in the future, we will continue to use our North Star as our guide to optimize shareholder return, utilizing a rigorous ROI-based framework to evaluate all potential investments. Now under this framework, we will consider strategic, high-return opportunities, which potentially can include incremental buybacks, delevering our balance sheet and M&A opportunities that meet our framework of being strategic, easy-to-integrate and accretive to cash flow per share over the long term. Now let's talk about our North Star, increasing free cash flow per share over the long term. We achieved this through durable revenue growth, margin expansion and our disciplined capital allocation framework. This has long been a pillar of our successful model and a key driver of the value creation flywheel. We expect to generate more than $4.5 billion in cumulative free cash flow, more than $4.5 billion over the next 3 years. Coupled with the capital return strategy we've laid out today, which focuses on buyback, we expect to drive free cash flow per share CAGR of 20%-plus through 2026. Now GoDaddy's flexible business model has many levers, allowing us to pursue opportunities as they arise as well as scale back when necessary to adapt to the current environment. We remain laser-focused on execution to deliver our profitability and cash flow top goals last year. In spite of the events that affected our top line, we are on track to meet or exceed those targets we laid out at our Investor Day. On profitability, we targeted normalized EBITDA margins ranging from 24% to 26%. We delivered margins of 25% in 2022, 27% in 2023 and are on track to deliver 29% in 2024, demonstrating progressive expansion every single year. And our operating model is in service of our North Star. We've had an impressive year-over-year growth in free cash flow and free cash flow per share, meeting or exceeding guidance in each year. As we have noted, one of the best attributes of our business is how it can deliver strong, predictable cash flow and are constantly balancing growth and profitability with an eye towards expanding our free cash flow over the long term. Our record of accomplishment shows that even in a more challenging economy, we can quickly pivot to optimize to this outcome. And we are on track to meet the cumulative unlevered free cash flow of $3.8 billion we targeted at our last Investor Day. Now we just walked you through a track record of delivering. And our current projections show that we are about to do it again. As we look to the future, I want to reiterate that when it comes to guidance, we model what we can see before us, focusing on where we are confident in each component and also noting where we may have potential drivers of upside. Excluding divestitures, we expect revenue growth of approximately 6% to 8% on an annual basis. We expect low to mid-teens growth in our Applications & Commerce over the next 3 years as new customers attach, existing customers that are in our base convert and our commerce solution continues to ramp. We expect the historical trend of single -- sorry, stable mid- to high single-digit growth in our domain business to continue from strong demand and pricing opportunities. Now drivers of upside towards the high end of our range, acceleration of A&C momentum, increases in the rate of attach and conversion through our bundling efforts, additional pricing options and large aftermarket transactions that are hard to predict. Now to briefly summarize the modeling framework for our profitability algorithm and operating leverage, we will continue to balance our portfolio to optimize for future revenue growth and profitability. We will prudently invest in new initiatives that will result in expanded profitability as they scale. We expect to drive margin expansion from leaning in on our highly profitable A&C segment. And we expect to continue to simplify our infrastructure footprint while accessing a broader global talent pool. Wrapping up, I'd like to leave you with a few key takeaways from the day. Our seamless software platform enables us to provide a complete and integrated software solution to every one of our customers. The work we have put in, realizing this one-stop shop vision, allows us to deliver innovative solutions that are driving attach, conversion and retention while also maintaining operating discipline. We have a commitment to profitable growth, robust free cash flow and disciplined capital allocation. Our North Star is increasing free cash flow per share over the long term. And we expect to grow at a CAGR of 20% or more through 2026. I want to thank you for your time today. And with that, back to Aman.

Thank you, Mark. Thank you very much. We're now going to set up for Q&A. So just a quick 5-minute bio break. If somebody needs a quick bio break, that would be great. We're going to get the chairs up, ask the leaders to come up. And in 5 minutes, we'll start the Q&A. Awesome, thank you. [Break]

Please go ahead.

Thanks. All right. So just first, the obligatory one, I think just on -- for Mark, on the guidance and on that outlook. We're talking about a number of exciting features here that are new. What's factored in from Airo and the upsell and cross-sell as you think about that outlook and what's not factored in like -- what drives upside? And then second, hopefully, a more interesting question, just -- maybe on the Airo premium and as you think about the balance of monetizing AI, what -- how do you think about what's included in the package and what's not and how you're upselling? And how you kind of cross complement those 2 things?

Yes. So I'll take the first part and then maybe Gourav, you can take the second part there. Just on the guidance, right? And like I've said, we put it where -- with what we see in front of us. Airo is very exciting. We've seen a lot of bundling activity coming out of the year. We're seeing a lot of 2-plus attached strong demand, right? We talked about 2023 demand being strong. We saw the same signals going into 2024. We feel really good about the demand and the attach and the bundling capabilities. But Airo, we're seeing some exciting data points, but it is new. And so when we're building into the guidance, we look at it from what we can see in the results and the data points we can rely on with confidence. Now well, I'm pretty excited about Airo. And I think it's going to be a great accelerator to these 2 plus, 3 plus metrics that we've shown, but it is really early stage, and we still want to see how our customers engage with it, how fast it goes, how it drives that 25% improvement in the second plus attach we've talked about. So I would go with right now, we're seeing momentum from our bundling efforts last year, and we're looking to see what Airo drives going into the future, but I haven't built that into the guide.

And to address your question about how do we decide what's premium and what's not. I'd start by saying there are 4 key problems that entrepreneurs tell us in our surveys that they want us to help them solve. Number one is marketing; number two is access to capital; number three is figuring out what's the next step that they should take in their business; and number four is building a most compelling online presence. What's important is when we think about the premium features, we're not necessarily looking at people who are start establishing the businesses for the very first time. We're thinking about customers who are ready to grow their business beyond the foundational level. So it's really important to understand when we look at features or capabilities customers want in different stages in their journey, we're looking at people that have gotten past their initial phases of setup when we think about premium features.

I think another way, Gourav, to just think about it is that with an Airo premium launch, we want to expose customers to the features, right? We want them to try the logo maker and then maybe they get a few free and then they have to pay beyond it. And we can AB test all of these things, right? We don't have to go in with a fixed idea. We can start with a hypothesis and test across it and not basically optimize for engagement or monetization whichever makes the most sense.

Okay. Great. So you talked a lot today about pricing. You've always done a lot of different experiments, AB with pricing and free versus not free. What's different now, and then why is now also the right time to try to make a move towards personalized or customized pricing per customer?

Yes. It's a really important time for us to move to value-based pricing because we are now able to more dynamically create packages that are unique for customers. If you look at the Airo experience, a customer that buys a domain, some of them may build this logo, some may go into websites, some may want the Pay Link or Payable Domains capability. And we want to be able to flexibly monetize those bundles dynamically. We don't want to have sort of static pricing across those. So that's the sort of thesis behind -- the timing is fantastic for bundling for dynamic bundling and dynamic pricing.

Yes. And just to add to that, the integrated stack now exists where we have the signals from the customers across all the products to see where they're engaging, which allows us a lot more insights. I think Roger, you talked about the $1.2 billion signals. That's an important factor when trying to see where our customers are driving value, and that allows us that pricing flexibility that we can get to now. We may need some more microphones.

So you're really specific about the improvements that AI brought with to sales and marketing. I think you talked about 500 bps of improvement since '21. Curious if you look at that shifting to tech and dev and perhaps looking forward at your roughly 500 bps EBITDA improvement, how much of tech and dev is reflected in that improvement?

And I want to make sure I get the question right. So apologies, is the question on the sales and marketing 500 bps or transferring that over to the tech and dev?

Yes, transferring over to tech and dev.

So when I look at our margin improvement going out over the 3-year process, there's probably a couple of things that come into play. Number one, I talked about the tailwind related to A&C and the momentum, you figure that, that's 100 to 150 basis points. So you think about our ability to access, I would say, global talent and really improve our infrastructure around our tech and dev and where we deliver it from, that's probably 100 to 150 basis points, sorry, got me thinking any time to rest here. And then probably another 100 basis points come out of things that I would say are around G&A and other areas of improvement we're looking at. So it's across the board. Some of that will move from tech and dev to marketing and to other areas based on where we see those efficiencies, but that's how I roughly line it up.

Okay. Great. And then just a quick follow-up on the pricing and maybe throwing premium in there with the macro environment. First, if you look at since you last reported, sort of any changes in the macro environment and how you think about introducing premium versus pricing in this type of environment, is there -- are there any thoughts there either near term or how you anticipate that through the rest of the year?

Yes. As Mark said, we came out of the year with strong momentum, good demand, and it's continued into 2024. So we like the environment right now. In terms of introducing a premium offering right now, we have a lot of signal about which customers are using how many products. And as we -- as you saw in the demos, we're exposing more and more customers to these new features. And the premium modeling and the paywalls, they're not static. They're very dynamic paywalls, right? So it really depends on whatever interaction we see, we can sort of move the meter up or move the meter down depending on what objective function we're optimizing for.

All right. This is John Byun from Jefferies on behalf of Brent Thill. Two questions for -- maybe this might be for Mark or Roger. On Airo, just wondering how you're managing the COGS of generative AI inferencing since you have 21 million customers and many millions coming to your traffic directly quite often. So that could quite add up. And then second, maybe for Aman, I guess you joined maybe a little over 4 years now. I want to ask, what do you think is the biggest progress you've made since you first arrived the biggest difference that you think that you noticed. And then what's your vision, I guess, maybe for the next 4 years? What could be the biggest reach item that you're shooting for?

Yes. Maybe have Gourav take the question around generative AI costs and then I can take the rest.

AI costs, we use a single platform for the entire company to use as a gateway to go to any AI provider. And as a result, what happens is we have absolute control over what costs are incurred all the way down to every API call. In fact, every API request that goes through the platform, the response includes the cost of that API call. And that is tracked all the way from individual API call to the workloads within a team level all the way to one of our teams. So we know exactly what costs we incur on a daily basis. Actually, you can see it on an hourly basis. This is a learning that we have had from when companies first went to the cloud, and there was a lack of discipline in how companies went to cloud and spend money. That mistake will never get repeated again for any company that goes into AI sensibly, and that's exactly what we're doing.

Yes. Just to add to that, right? Because we have that visibility, when we're doing the experimentation that's included as part of our consideration on calling a test, depending on what objective function that we're going after. And so that type of data point and proof point helps us and our teams make that decision.

And I think if looking back to your second question, over the last 4 years, the 2 biggest transformations for the company is how we structured the day to day, right? The first transformation being evolving the software platform at GoDaddy, so that we could flexibly sell whatever product we want and engage customers in many different ways and really accelerate the pace of innovation at the company. And we showed you that today, and we've been talking about it for the last few quarters. And the second is really instrumenting the business, making decisions on data, which, again, we're talking about here. At our company, we're not worried about AI cost because anyone can have access to that data and not only can they get the cost, they can get it at a very fine grain as Gourav and Roger said, and they can attribute it directly to an application to a team to a set of decisions that were made to use it. In fact, our core team can even downgrade an application and say, "Hey, you're using too expensive an API call. We're not even going to come talk to you, we're going to downgrade your call to a cheaper version because of the way we've built the platform, right?" For me, this -- these 2 transformations have really changed our ability to not only accelerate innovation, but to make decisions much, much faster and in a more federated manner. As I look at the next, let's say, 3 years instead of 4 since we're talking about a 3-year horizon, it really is getting to GoDaddy's potential where not only do we have this amazing relationship with our customers. And yes, we do domains. And yes, we do websites and many other products. But we're actually able to help customers through their entire life cycle, right? For a very long time, we have brought customers to the Internet and allowed other folks to offer other services. Well, that is no longer the case. Given our software platform now, we're going to be able to innovate and we are innovating at a much faster pace. So you're going to see more and more products coming on GoDaddy, being tested on GoDaddy, being bundled with third-party offerings on the GoDaddy platform because the platform includes components that can reach out into other ecosystem, drag it into our platform and make it seamless at the same time.

Ken Wong from Oppenheimer. Mark, or maybe this actually could go to Aman as well. But just philosophically, as we think about that long-term target and just how you guys manage the business, are you guys operating to a margin target, a profitability metric or more simply put, like if there's upside to that 6% to 8%. Does that go to the bottom line? Or will you kind of try to push it, lean into growth?

Yes. I would take it as look at our North Star free cash flow per share. We're trying to optimize our free cash flow per share over the long term. So we're constantly balancing between what is a reasonable growth based on the profitability it is driving and making sure that's in balance in order to get that end equation. So I would say simply put, we will continue to balance that. We're always looking for the free cash flow and the free cash flow optimization at the end and to be able to not only do that in the 3-year period, but do that over a long-term period of time.

Got it. Got it. And then Demetria, just maybe quickly as you think about GABI and the potential, like that on one hand, you said -- you mentioned there's a lot of potential kind of revenue upside in terms of moving customers through the workflows quicker with the human touch. But on the other hand, we all see the anecdotes out there in terms of the efficiencies that can be based on the customer support side. How are you thinking about the balance between those 2?

Great question. We do both. We are a truly care-oriented organization. And we recognize we're not a call center. We do consultative sales. We make sure that we are giving our customers the best care experience, and we're consulting them on how to grow their business at the same time. And that requires a balance between human-guided conversations, automated chatbots and the tooling underneath that feeds both. So we're really excited for the opportunity, and we're continuing to learn and grow into it.

On capital allocation, a couple of years ago, you gave some pretty specific framework around 80% of free cash flow, $3 billion over 3 years. This time, it was different and offsetting dilution, I think, is a little less than half of the free cash flow. Can you just talk about the -- any change in philosophy? Any change in guidance methodology tied to that?

No change in methodology. We are continuing the same disciplined approach and looking at it on -- thank you. Looking at it on a quarterly basis to make sure what the ROI is. Thank you. We have a lot of free cash flow. That gives us a lot of choices to look at allocations and getting to that highest return. And as we sit here today, the ROI on buybacks is our strongest lever, right? And we'll continue to evaluate that as we go over the next 3 years.

It's Vik Kesavabhotla with Baird. Obviously, it seems like a lot has evolved here with the Airo experience and continues to evolve in real time. When you think about rolling this out to the existing customer base, what are the steps that you're going to take to help educate them about all the new capabilities that exist that they may not have been used to before? And then maybe as a follow-up to that, for Mark, just you highlighted the opportunity within the existing installed base. How should we think about the cadence of net customer additions over the next few years in relation to the 6% to 8% growth target?

Sure.

I can talk about the education piece for a moment, and Gaurav, feel free to jump in as well. Talked a little bit about this on the break. The fact that we have 21 million customers and 60%-plus coming directly to godaddy.com, godaddy.com is an incredibly valuable resource for us to educate. And we've been doing ongoing experimentation over the past several months on really honing the language so people understand what Airo is and why it matters to them. We'll use godaddy.com, we'll use surface areas like Venture Home, which is ultimately the customers, their homepage and expose Airo to them there. We'll use e-mail marketing and owned channels, absolutely. And then we know that our existing customers will get exposed to some of our broad-reach advertising as well. And so that should create a virtuous loop. But we expect to be able to use our own properties a great deal. And I'd be remiss if I didn't say that Demetria's team in Care will do a fantastic job as well. When customers come in asking for help, I'm certain that Care will be directing them to Airo as well because there's big upside for the business growth.

From a customer standpoint, and I always like to talk about it from an ARPU standpoint, adding customers is one thing, but aiding customers with high intent is our goal. We want those customers that move from that first product to the second product to the third product. And that's when we say we're seeing strong demand, but not only are we seeing strong demand at the top of the funnel, we're seeing strong demand with higher-intent customers, which gets us excited. That's an important part of our growth algorithm going forward. Obviously, as bookings come in, it amortizes to revenue over a period of time. And then you also look at our opportunity within our existing base, the 90 billion-plus is a pretty significant opportunity for us. And that's really using the effort and the relationship with the customers and providing them those solutions that get them to sell more, a combination of awareness, engagement, but at the end of the day, what you're seeing is what I've always said is if you innovate and have a good relationship with your customers, you're going to have multiple pads of opportunity to increase across the board.

And I think I'd just add that all of our marketing is going out to everybody, right? We're not just marketing to our customers, right? So when we're -- as we're launching these capabilities and the advertising go out, it is raising questions for people out there to say, "Hey, I didn't realize GoDaddy had X, right?" So Airo is not just about attaching to existing customers or about increasing attach for new customers coming in. It's about attracting people to GoDaddy with an exciting story with things that they may not associate with GoDaddy today.

Yes. And just to add to the X, I'm sorry, this is a big topic for me. So what we've really been excited about and really to highlight Kasturi's efforts of even in our existing customer base, adding commerce, and the success we've had converting over that customer base. Like that is a prime opportunity and an example of if you have a good value proposition, customers will switch over to your products even in cases like that, right? So Kasturi has done a fantastic job of putting that in play. And that gives us a lot of encouragement of we have a playbook that can engage our existing customer base today.

I have 2 questions. The first is about your Domains business. So historically, it's mostly grown due to price and somewhat due to volume. And I was curious what your volume versus price expectations are for the Domains revenue forecast? And what would support the higher price considering your sizable market share?

I'll take the first part, and Aman, you can add to that. Well, not getting into the specifics how much is volume versus price, I'll come back to 2 things. One, we do take pricing on debates. No doubt about it. It gives us some flexibility obviously, we pass on some price increases that we know about in any current year. Having said that, what's really exciting is people are -- we're known for Domains. So the demand we're seeing at the top of the funnel is really, coming back to what Aman said, the game has changed with Domains. So you can now add functionality to them. You can have your website, Airo is a perfect example of that. So I would say that it comes back to the formula of combination of we're seeing great demand. We have pricing flexibility within the Domains itself. But the real value that's being provided is getting that new demand to that second plus product quicker and faster than we've ever seen before. And that really is the part that generates that LTV over time because I can't say it enough, that 85%, which I think is fantastic to begin with, only goes up once we get to that second product in that demand. So a combination of all of it really drives our growth going forward.

And I think in terms of our leadership in Domains and not just pricing but sort of all aspects of that business. Our goal very much is to reinvent the idea of the Domain, right? That's what -- the slide that says, a Domain is not a Domain anymore, because what we want our customers to have is that when they buy the Domain name, it just automatically starts their business. It gives birth to their idea, right? And of course, Airo does a big part of that, but we can extend this idea further and further and further, right? And there are lots of use cases that customers don't even think about when they're buying the Domain name. But if we put it in front of them at the right time, it clicks magically for them. So really, the strategy here is to broaden the offering get more engagement. And then as I said, price based on value-based pricing, price based on dynamic bundles versus just individual products in the company.

Got it. That's really helpful. And for my second question, I want to ask about future hosting divestitures beyond what you've already announced, how much more do you think might be to come?

Yes. So I put that number up there, so everybody was aware. The $50 million is the remaining noncore GoDaddy hosting assets that we have out there in separate platforms. We will evaluate those, there's nothing in -- that we can talk about right now one way or another. But that's the remaining what's out there right now for us.

Aman, does Airo make you rethink what you might want to include in the platform going forward? Just specifically, whether we're reaching a point where a number of the features that you've added over the last few years are ready for prime time. And so you might look to other categories to add to the platform, thinking about commerce point-of-sale that demo today are at a different level of feature functionality than they were a few years ago?

Yes. Let me make sure I understand the question, but commerce already with Kasturi's presentation uses a lot of the GoDaddy software platform and huge capabilities with the Airo as well. So my view is that we're absolutely already adding new use cases to the platform, right? When we all met in November when we did the investor dinner, you saw Airo only for identity and presence and not even the number of use cases you saw today, right? And it's less than 3 months, and we're talking -- we're in beta as of yesterday with a lot of the commerce feature add that you saw today. And it's all built on the same stack. It's moving quickly. It has very similar principles. It also has components that can reach outside the platform, right? So it is definitely a starting point for us adding a broader suite of products.

And then, Mark, I just wanted to ask about, if you could help with the shape of the cumulative free cash flow. Do you expect that to be largely linear? And then maybe some additional detail on the free cash flow conversion. Just thinking about the improvement in free cash flow versus the EBITDA margin. I know you briefly mentioned A&C as being accretive to that, but any kind of detail you could...

Yes. Absolutely. And while it's not quite exact, we are generally at a one-for-one basis between normalized EBITDA and free cash flow being generated. So when you think about the 3-year period, think about it on that basis. Again, it's not perfect, but it kind of lines up to where we are today. So as we accelerate things like A&C at higher normalized EBITDA rates that gives a boost to our free cash flow generation over that period of time.

Great. Zach from Wolfe. First one for Mark. Just you showed kind of your report card from the 2022 Analyst Day targets. And despite kind of the softness on the top line, you're still able to meet or exceed the kind of bottom line targets. As we think about kind of the 2024 to '26 targets you laid out, are we kind of more dependent on the top line coming through to reach these? Or do you still see kind of runway on the efficiency side of things or other kind of levers to drive the kind of bottom line targets regardless of what top line comes through?

Yes. So there's multiple different levers that come into play when us getting to those margins. And A&C at a higher margin, growing at a faster rate, definitely provides that tailwind that helps us get to that improved normalized EBITDA. But there are other things, right, reduction in data centers. We've talked about those. Those have happened over the last few periods. They'll start to take full effect going forward. Getting more head count on a global talent pool basis, that continues to be a driver of efficiency within our model. So there are a lot of things we've put in play that are now gathering momentum, that will help us get from where we are today to that 33% we talked about for 2026. And we feel pretty good about the motions we're doing.

Perfect. And then I think Gourav and Roger, I think you guys were the ones that referenced the fact that Airo has the capabilities of inspecting websites off the GoDaddy platform. Is the primary benefit of that just kind of learning, iterating and driving the learning engine of Airo and enhancing the capabilities of that? Or can you just maybe elaborate on kind of the opportunity of kind of what the off-platform learnings can mean?

Our end goal is to grow our business. And in order to grow our business, we have to grow our base, in order to grow our base, we have to learn. And the more signal we collect, the faster we learn, but the end state is always to grow our business.

Yes. I mean the extensibility of that capability is something that we have not done before. And so I think the fact that we have this capability and thinking about how to learn more about it based on data and usage and engagement is a very powerful formula for us going forward. But we haven't really spent as much energy into that part because we're just -- the team is just going so fast right now. I think if you talked to Gourav, the -- there's so many experiences being run and the teams are able to actually execute those with very good telemetry into the experiment. That excites us about how fast we can go here. And once we get more data, I mentioned the 1.2 billion customer signals that we capture daily. That number is just going to go up. And I think there's going to be really good things that come out of that. So...

This is Jian with Evercore. First, just to clarify, the rollout of Airo to existing customer base, is that baked into your guide? And how should we think about just like the ramp-up? I mean, obviously, it's a very large base. Like, should we expect it to be like needle moving like pretty immediately? Or like this year or next year? And maybe another on marketing, why wouldn't you want to lean into marketing, just given so much product innovations this year? Like -- maybe like talk about like how much are you willing to like stretch your CAC, for example?

Okay. I'll take the first part, oh...

Okay. You too should take it, but maybe I'll put a sort of line in the sand on it, Jian. The simple answer of going into the base and how quickly it will do what, the answer is we don't know. Because we've never done it before and nobody else has either, right? These are completely new capabilities. There's nothing similar to that exist. Nobody else has 20 million customers, right? This is all completely new. What we do know is that we're excited about what we've built. We're excited about the engagement we're getting from new customers, and we see these use cases apply to the base as well. As we go into the base, we'll talk to you about it. But I'll turn it to you guys.

Yes. No, I think you kind of handled it there. We're extremely excited about all of it. But there's no data points to say this is going to contribute this to our growth rate in the next 2 years because I keep coming back to -- we guide based on what we see in front of us. We think this can be an accelerator to our bundling efforts, but we still need those data points to come back, both at the front of the funnel and also within our existing customer base to start to see how much of an accelerator that will be over time.

And thanks for the question from a marketing standpoint. To be clear, we are investing in Airo. Our marketing messages in the U.S. and Canada are heavily focused on Airo because Airo encapsulates the Domain and so much more. So the fact that it's grounded in our business model, and now it's enhanced by AI, we're actually able to use both the investments that we had made prior and the channels that we've made in the past. And really push Airo to the front of that storytelling. All the other factors that we talked about today are brand awareness, our direct traffic enable us to talk about Airo on owned surfaces too, for free. And so when you look at those 2 components together, Airo really being our broad-based messaging and then leveraging our own channels and our direct traffic, we believe that we've got the right balance in play.

Chris Kuntarich from UBS. Just maybe one question around the dynamic pricing. Can you talk a bit about how that lets you experiment and engage with the partner channels more potentially?

Yes. We haven't talked very specifically about the partner channel. Our initial focus is with the independents, but there's no doubt that there will be opportunities for us to access the partner channel like that as well, right? At the end of the day, the more products we have, the more dynamic the bundles, the more different things customers are using, the more we can have smaller cohorts and sort of pricing that's directly attached to it. But nothing specific on the partner channel today.

Aaron Kessler at Seaport. A couple of questions. Maybe just first, how are you thinking about U.S. versus international growth or maybe higher ARPU regions versus more developing regions and kind of which regions are you kind of thinking have the most potential? And then secondly, for Aman, just kind of how do you think the product competes or is positioning in the market now versus when you joined as well?

I can take this one. I think with our move towards -- from regional into more global view, we can actually have a diversity of risk and we can actually look across our base. We do see that there's a difference between developed markets and emerging markets and how the customers behave. We're excited that our developed English markets, in particular, are looking more and more like the economics of the U.S., and we're excited to continue that with the launch of Airo. But what's exciting is that Airo is also launching in our emerging markets, plus with our ability to test and really test quickly with all the data points we have. In our emerging markets, we're finding that we can run test quickly and get data points to actually help us drive both new customers as well as our ARPU and our attach. So we're excited about that.

And I think our customers have given us the best signal for the improvement in our products, Aaron, right? We see that in the retention rates from our customers. And we see that in every day, we get the calls into Care and Demetria can talk about it, the more our products can do, the more our customers want to work with us. And I'm very proud of the innovation at the company. And I'm very proud of the team at GoDaddy for doing the things they're doing. We have, as Roger said, very high expectations of our teams. And people have risen to meet and exceed those expectations, and that's the result that you see on the screens today.

Just to add one other negative information. When we launched Airo first, it was early November. And since then, all the way till the massive launches that we've done in February, we've been tracking the call volume, call propensity to Care, and there has been 0 spike. Typically, when you do that much for such a new feature coming into the marketplace, there's definitely some spike in calls, for us, null.

The idea being it just works for people. Let's save that part too.

Mark, I just wanted to follow up on one question on the capital allocation strategy. The third bullet on there was evaluating acquisitions that meet the M&A framework. Could you just remind us of what that framework is? And if you were to make any acquisitions, what guidelines would that have to meet?

Absolutely. And this has remained consistent for us from last Investor Day. We look at it under 3 criteria. It has to fit our strategy, right? And we've gone through our strategy today pretty thoroughly. So it has to be in line with that. We have to be able to integrate it in a reasonable period of time very efficiently. And that's something Aman and I believe in wholeheartedly. And then it has to be accretive to our free cash flow per share, our North Star over the long term. So when we evaluate the 3 of those, those are the things we apply to it. Now as a company that generates a lot of free cash flow and has a strong balance sheet, needless to say, things come our way. But we do apply those criteria very, very disciplined. We believe we have a great software platform right now. We've built it largely internally. We believe we're seeing great results of it. So there's nothing that we can say is missing. Having said that, we'll continue to evaluate things as they come up.

Mark, it's Zgutowicz again, just if I could squeeze one more in.

Absolutely.

Just to, I guess, clarify, when you talk about Airo, it's early and we're not expecting too much. Does that mean you're not expecting in your guide for this year any improvement driven from Airo? Or is that -- and how do you think about Airo in terms of your long-term top line guide? Just wanted to maybe clarify that.

Absolutely. So what we have coming out of 2023 is a lot of great data points about the momentum of our demand, strong attach, the retention rates that we see continuing to improve that we've used to build our model to get to where our guide is today. Now Airo being very, very new, we don't have the data points yet today to say, hey, those data points we know are going to now accelerate. Now we're excited. Don't get me wrong. We really are excited about Airo and the potential of it. But coming back to our philosophical view, we do not guide to things we don't have data points in order to do. We have not built that in today. And listen, as we have those data points and we start to look out there, we'll obviously be transparent and update everybody based on what we're seeing in front of us.

All right. One last question, that's coming...

All right. I think, Jian....

All right. We got already one.

Jian, go ahead.

I guess this is on? Yes. Well, thanks for squeezing me in. So like kind of -- I want to ask a GPV question. So you have Payable Domains, all these kind of getting more front and center thanks to Airo. How should we think about -- I mean, $1 trillion GPV is a large number, obviously. Like how should we think about like the sustainability of GPV growth? What are you thinking for the next couple of years? Just like if you can rip on that.

Yes. Absolutely. So we are excited about the momentum that we have in attaching payments into our base. When we grew our AGPV by impressive 125% last year, it was all attaching into our existing base, and that $1 trillion is essentially the entire addressable GPV that we have, if we were to switch them from an existing processes that they use today. So the way we think of it is we will continue to invest and attach payments as well as some of the new SaaS offerings that we saw today, which are even higher margin. And so we will continue to attach and our customers, quite honestly, showed us that they trust us with payments in addition to Domain and presence. And we are just getting started, right? If you think of the $1 trillion, we love looking at the total addressable base of GPV, with that 21 million customers. A 5% attach, we've shown that we can attach e-mail, a 5% attach would be over $1 billion of additional bookings. So we are excited about the momentum and we'll keep going.

Yes. So your mic was cutting out, so I think they wanted to pass the mic to you. And I guess, Jian, just at a higher level, there is a set of proof points we're gathering for commerce. One of those proof points was how quickly can we grow GPV and how well can we attach to the base. A year, 15 months ago, that was a bit more open question. People had different hypothesis. Today, there is no argument in the company, right? We know that we can -- if we just focus on payments, we can grow payments very, very fast. And that would -- maybe that would be similar to some other players. But we actually have a broader opportunity. We have the opportunity to go to those customers and get them to take commerce, which includes payments, right? And that's the motion that Kasturi wants to optimize this year because we don't want to -- we have a base of customers, and we don't want to hit them twice. We want to go to them with an even expanded solution and have that better offering. Looks like -- Ygal, you have another question.

Yes, one more clarification question. Again, tied to the outlook. But on the dynamic pricing and the bundling, are your customers seeing that at all right now? Is that happening? And if they are, like what percent of incoming new customers are seeing it? And is that factored into the outlook at all, like an uplift from that?

Yes. Let's talk about value-based pricing, dynamic price means a number of different things. Our customers, many of them are starting to see value-based pricing. They're absolutely seeing it over the last few months, and we see good results as a result of that. It is a combination of pricing and bundling. They work together, and then we attribute sort of -- not down to every individual customer, but sort of much finer grain cohorts of customers. And whatever momentum we have coming into the year is, of course, in the guide, as Mark talked about, because we see that and we see the numbers, but there's so much more that we can do.

One of the questions that has come in over the module online. Can you please give us more insight into the innovation pipeline over the coming years?

Yes. We gave a little bit of a sneak peek of some of the things like, I think, Kasturi talked about some items and Gourav did too. We have a very exciting road map beyond this as well. If you look at the path we're on, we're basically taking all kinds of friction away from the customer. If it gives the customer a moment of hesitation that they might stop and say, "Oh, this is hard. I'm going to go do something else." We're trying to take that moment of friction away and just get them to convert very, very quickly, right? Across our products, you see that -- those pillars, you see discovery, you see sort of engagement and activation and monetization. And our teams are focused on that. In terms of the areas where we are innovating, they're around the entrepreneurs wheel, right? It's very clear to our teams what the area of priorities are, and they can innovate very quickly. For example, just 3 months ago, you saw our logo maker. That was great. And a lot of people in this room were here, and they commented how fantastic it was, and the premium logo maker is just much, much better because once we know how to do something, we can [Audio Gap]

We just wanted to remind everybody with -- the demos are still over there in the cafe. So you'd like to experience them some more. Please go ahead. And we have cocktails out on the patio. So if anyone would like to grab a drink before they head out, we'd love to chat. Thank you.