GoDaddy Stock

Welcome to GoDaddy's Third Quarter 2026 Earnings Call. Thank you for joining us. I'm Christie Masoner, VP of Investor Relations, and with me today are Aman Bhutani, Chief Executive Officer; and Mark McCaffrey, Chief Financial Officer. [Operator Instructions] On today's call, we'll be referencing both GAAP and non-GAAP financial measures and other operating and business metrics.

A discussion of why we use non-GAAP financial measures and reconciliations of our non-GAAP financial measures to their GAAP equivalents may be found in the presentation posted on our Investor Relations site at investors.godaddy.net or in today's earnings release on our Form 8-K furnished with the SEC.

Growth rates represent year-over-year comparisons unless otherwise noted. The matters we'll be discussing today include forward-looking statements such as those related to future financial results and our strategies or objectives with respect to future operations.

These forward-looking statements are subject to risks and uncertainties that are discussed in detail in our periodic SEC filings. Actual results may differ materially from those contained in forward-looking statements.

Any forward-looking statement that we make on this call are based on assumptions as of today, October 29, 2026, and except to the extent required by law, we undertake no obligation to update these statements because of new information or future events.

With that, I'm pleased to introduce them on.

Good afternoon, and thank you for joining us. At GoDaddy, our purpose is to make opportunity more inclusive for all. And our strategy is to become the Agentic operating system for micro and small businesses, creating customer value and transitioning it to shareholder value over time has been our formula for success. .

Airo is at the heart of meeting this moment, and we are transforming GoDaddy to stay ahead of what comes next, evolving our customer experience and building the foundation for long-term growth. We are early in this journey, and the meaningful growth in Airo's adoption over the last 2 quarters has validated our strategy.

In Q3, we delivered bookings growth of 6% and expanded normalized EBITDA margin to over 33%, reflecting continued operational execution and structural leverage we achieved from the strategy we launched at our 2024 Investor Day. We are excited to announce that Airo's annualized bookings run rate more than doubled to over $100 million, up from $50 million last quarter and $10 million the quarter before.

Even more encouraging, Airo incrementally contributed to our bookings growth this quarter as its bookings more than offset the impacts of migration of our legacy website products. Looking forward, we are excited to share more about our vision for the next several years with you at our investor night on December 1 in Tempe, where we will lay out where we are driving this business and how we will continue to deliver value for our customers and our shareholders.

This is a pivotal moment for our industry and for GoDaddy to help entrepreneurs succeed online. Small businesses everywhere are experimenting with AI tools, and we are bringing more capabilities and customers to aero as fast as possible. This year, we made a strategic decision to make Airo our flagship website product. replacing websites plus marketing.

Over time, Airo will become the operating system, bringing together all the products that GoDaddy offers. And in late Q3, Airo became the default option in the domains path. With that change, we are stepping up marketing, shifting plan spend and investing in brand awareness with the incremental spend in Q4, offset by efficiencies elsewhere in the business.

We have also deployed significant internal resources behind Airo as it performs more marketing and commerce jobs for our customers. We priced Airo for broad adoption for both new and existing customers in a competitive agent first and AI native market, we are using our advantage of scale to quickly get our product in front of customers.

As Airo is scaling, we are encouraged by the free-to-paid conversion rate and customer satisfaction as well as attach rates for new and existing customers that are on par with our legacy websites plus marketing product.

There is a lot more to do, and we are excited to keep going. Turning to what we see in the broader environment. In Q3, Google quickly pivoted towards AI mode for the bulk of search in our space.

Based on early data we observed, we believe the impact to our traffic has been small which speaks to the resilience of our direct traffic and brand. The more important development is where new demand in our space is coming from.

We believe AI quoting tools are driving strong growth in our industry, and we believe a broader set of customers, including developers, are driving that growth. new cohorts are increasingly starting inside coding assistance, command line tools and agent interfaces and they buy differently.

As this new demand grows, we are also seeing sharper discounting across the industry on products like domains, along with freemium offers on hosting. We have moved quickly to launch and expand a suite of Asian friendly APIs and domains, hosting, professional e-mail and commerce, understanding that pricing is a critical component of going to market.

As we move into 2027, we will lean into testing new bundles with competitive offers that will deliver more value. we will test these new bundles as part of our pricing and bundling program, which we have had success with over the last several years.

We also expect these new bundles to show up favorably in LLM and AI agents, we are working to improve how we appear in these channels to attract more of the traffic that comes from them. We have continued to focus on high-intent customers.

This is an ongoing effort, and we are driving incremental progress. As the Agentic Open Web unfolds, we continue to see a long-term opportunity for GoDaddy to play a foundational role with agent named service serving as a core component of the infrastructure needed to support an increasingly Agentic world.

Earlier this month, we joined Infoblox, Google and Cloudflare to demonstrate chain of trust and open architecture developed in collaboration with the Singapore government and informed by its AI governance framework. For the first time, agents on different platforms that had never worked together, completed a simulated live purchase on the open Internet using A&S, ARD and other open Internet standards.

The system verified agent identities and permissions in an auditable pathway while also blocking imposter agents before they could transact. This demonstration shows the integral role that identity agent name service and GoDaddy will play in an a genic open Internet. We are transforming GoDaddy for in a genic world.

And this quarter, we made real progress. Aero is doing more of the work for business owners. Our expanded suite of APIs is making GoDaddy available in the tools where people now build, while our work on identity and discovery is laying the groundwork for businesses to be found and trusted as agents take on more of the customer jobs to be done.

Together, we believe these efforts will continue to make GoDaddy's offering more valuable and mission-critical for our customers. With that, here's Mark.

Thanks, and good afternoon, everyone. We are transforming GoDaddy with the same financial rigor that has long defined us, and our third quarter results reflect that focus. We delivered revenue above the high end of our guide and expanded our normalized EBITDA margin by approximately 120 basis points.

We generated free cash flow of $481 million, with trailing 12-month free cash flow of $1.8 billion and fully diluted shares outstanding of $123 million. Taken together, these show strong continued progress toward our North Star.

Total bookings grew 6% to $1.4 billion in line with revenue growth. Applications and commerce grew 8%, up from 7% in the second quarter. Arrow adoption drove incremental bookings this quarter while productivity grew on targeted pricing actions taken earlier this year, partially offset by lower unit volume as customers renewed e-mail accounts with fewer seats.

Airo unit growth acceleration was led by our starter tier as many existing presence customers migrated to annual Airo plans. Higher unit volume and token credits more than offset the lower price point of this entry-level tier. That growth came largely before we introduced Airo in the domains purchase path our largest funnel in late Q3.

Core platform grew 4%, driven by an increased volume of high-value transactions and strength in new primary domain registrations and renewals across many of our TLDs. Total revenue for the quarter grew 6% to $1.3 billion, and ARR grew 5% to $4.5 billion with international revenue up 3% to $436 million.

Our applications and Commerce segment grew 9% to $524 million on continued growth in productivity and commerce, partially offset by the ongoing transition of customers to Airo from websites plus marketing that we began in the first quarter. Segment EBITDA margin expanded roughly 120 basis points to 47%.

Core platform grew 4% to $818 million on a strong aftermarket of becoming a tough compare, driven by increased volume of high-value transactions. Segment EBITDA margin was flat at 33%. Underpinning everything we are doing is the resilience and durability of our model. Once customers are with GoDaddy, they tend to stay and do more with us.

More than half of our customers have at least 2 paid products, and retention rates remain above 85% and continue to improve. For Airo customers, more than 70% have at least 2 paid products. With ARPU reaching $253 and more customers spending over $500 annually, we are now using Airo to attract and retain high intent customers and help them adopt more of our products.

Our experience shows that customers spending over $500 annually with 2 or more paid products have nearly perfect retention. As Airo helps us build more of these relationships, we see an opportunity to strengthen retention and customer lifetime value over the long term.

And the strength of our model allows us to pursue these opportunities while still returning capital to shareholders. Normalized EBITDA grew 10% to $449 million with margin expanding approximately 120 basis points to 33%, reflecting revenue growth and continued expense discipline.

Free cash flow grew 9% to $481 million with normalized EBITDA converting to free cash flow at better than a 1:1 ratio. Our healthy balance sheet gives us flexibility to move quickly as the market evolves. We ended the quarter with $1.1 billion in cash and total liquidity of $2.3 billion.

Net debt was $2.7 billion, representing net leverage of 1.4x on a trailing 12-month basis, well within our target range. We also continued our responsible and prudent capital allocation program, repurchasing 5 million shares for $477 million from the third quarter.

Year-to-date through October '26, we repurchased $1.4 billion, reducing our fully diluted shares outstanding by 12%. Turning to our outlook. For the full year, we expect to finish toward the higher end of our $5.215 billion to $5.255 billion revenue range, helped by outperformance in the aftermarket in the first 3 quarters.

We expect A&C revenue growth of approximately 10% and core platform revenue growth of approximately 4% for the full year. For the fourth quarter, absent any impact of FX, we expect bookings growth to accelerate and be slightly ahead of revenue growth. Driven by the increasing units from adoption of Airo within our A&C segment.

We are reaffirming our normalized EBITDA margin target of over 33% for the year, reflecting more than 100 basis points of expansion on continued operating leverage and AI-driven productivity alongside continued investment in AI products, platform, marketing and compute.

We are reaffirming our full year free cash flow target of approximately $1.8 billion with a normalized EBITDA conversion ratio of greater than 1:1. On capital allocation, we operate within a disciplined returns-based framework. We remain focused on allocating capital to its highest value users with a priority on driving long-term shareholder returns.

Taken together, our free cash flow and approach to capital allocation keeps us on track to deliver on our free cash flow North Star of a 3-year CAGR of over 25% and well ahead of the 20% target we set at our last Investor Day.

Finally, we look forward to hosting many of you at our investor night on December 1, 2026, at our Tempe, Arizona headquarters. Registration for the. Please contact our Investor Relations team at investors.godaddy.com to request a link for registration.

We will use the evening to give you a more comprehensive view of our strategy how we plan to invest behind it and what we expect it to deliver for our customers and our shareholders.

With that, I will hand the call back over to our VP of Investor Relations, Christie Masoner, to open up the call for Q&A.

Thanks, Mark. [Operator Instructions] Our first question comes from the line of Ken Wong at Oppenheimer.

Aman, great to hear that Airo is incrementally contributing to bookings that seems to have come a lot faster than we would have expected. I would love to see if you can maybe unpack that a little bit.

How much of that is perhaps customers coming in at a higher total contract value, so that being additive versus how much of it is potential new business that's coming through the doors because of the Airo funnel, the marketing spend put behind it. But just love to understand some of the moving pieces there.

Thanks, Ken. Super excited about Airo being incremental to bookings. And yes, it has come sooner than we expected 2 arrows just growing very, very fast, and customers love the product and are adopting it at higher rates than we expected. Just overall, and Mike touched on this, and I'm sure he'll jump in as well. .

Overall, Airo is priced very competitively, and we worked hard to improve the attach with Airo as well. So overall, we actually have to sell more units and attach it better to domains and other products.

You get it to be incremental because it's cannibalizing websites plus marketing. And in the past, we've also talked about our do-it-for-you offering that it cannibalizes. So we're super excited about being incremental, but it's actually had to jump a couple of significant hoops we get there.

As an example, we added it to the domains path late in the quarter. And overall, it's attaching already better than website plus marketing and the domain path, which is fantastic. We actually wanted to attach better and better and better, so we can bring more traffic into that path, have really strong attach rates and then open up all kinds of jobs to be done with Airo. Mark .

Yes. And I'll just add a great Aman is that we're excited about the volume excited that it's incremental. So it's adding more than we're losing in our websites and marketing and other presence products. So it's a great place to be. .

Almost all of it is attributable to the migration of existing customers as we just launched it into the main purchase path. So that didn't contribute too much this quarter. And the exciting part is we're seeing them come in at the lower starter tier, but they're attaching more credit packs.

And that attach is really propelling us to get to a better place and get to that incrementality faster than we thought. So more to come as obviously, we've rolled it out now, but really excited about the momentum of Airo right now in the marketplace.

Got it. And then on the other side of the growth, how should we be thinking about potential margin pressures? I did notice gross margins down ticked, is there further erosion that we should be thinking about?

Yes, Ken, there's no doubt that Airo from a gross margin perspective, has less of a gross margin than some of our internally developed software products like websites as marketing.

So there will be pressure on the gross margin itself. But we think our operational efficiencies up and down the rest of the P&L will more than offset that and allow us to continue to expand our normalized EBITDA into the future.

Obviously, we have an Investor Day coming up, so we'll talk a little bit more about what those moving parts are -- but yes, the gross margin is going to see a little deterioration as we move forward.

Our next question comes from the line of Vik Kesavabhotla from Baird.

Okay. Great. I wanted to follow up on some of your comments regarding the impact to the industry as more traffic originates from AI environments. Can you elaborate more on some of the steps that you're taking to adapt to that trend.

I know you expanded the suite of APIs this year. What are some of the early observations that you're seeing from your efforts there? And then you also referenced testing some new pricing and bundling activity in 2027.

It'd be great if you could talk more about some of the opportunities that you see and how you plan to approach that process.

Yes. Thanks, Vik. On the AI traffic with L&Ms, we're engaged with all of the L&M companies. And there's a lot of history with GoDaddy that we're working through with them. But over the last quarter, we did see a jump in our traffic coming from LMs.

And it was on a small base, but it was a good result based on the efforts we have made -- we still have a long ways to go, and we think these new bundles that we mentioned will continue to help in that area. But this is an ongoing activity with us, and we just want to keep improving on it as much as we can.

In terms of the new bundles, we're taking pricing and bundling into sort of what it's going to be in the future. And with the way LLM are indexing and taking behavior, we think by introducing new value into our bundles, we'll get more traffic and better visibility in the VMs. And that's what we're going after.

We'll be testing these bundles at near the end of this year, into early next year. And our expectation is that together with our efforts on improving some of the existing and adding the new and we'll continue to make improvements with these new sources of traffic.

And just very quickly on the APIs. Yes, those are targeted towards the agent builders and sort of the CLI and the new you can almost call it a new channel of traffic where customers are engaging differently and they're buying different way.

And our APIs are very new, but we're excited about having expanded that quickly. And we're sort of working that track as well to get our APIs better integrated into the tools that are out there so we can attract that traffic as well.

Okay. Great. And then separately, I also wanted to ask about the A&C segment. Mark, I think on the last call, you said that you expected A&C bookings to remain in kind of the high single-digit range for the remainder of the year. .

Obviously, it looks like it was about 8% in the third quarter. Is that still your expectation for fourth quarter? And anything else we should keep in mind as we think about bookings for the rest of this year?

Yes. Generally, we're on pace. And obviously, a lot has to do with the momentum of Airo into the domain purchase path. But from what we're seeing right now, we feel really good about the bookings being slightly ahead of our revenue coming out of the year.

And obviously, we'll talk about 2027 as we get closer. But right now, we're seeing that trend. We feel good and we feel good about the contribution of Airo, and we feel that's improving quarter-to-quarter.

Our next question comes from the line of Mark Zgutowicz from StoneX.

Thanks, Christie. Just curious on the -- by Airo cohort. I'm curious what percent of users convert to paid, repurchase credits and renew .

Yes. What we see with Airo, and I'll give you color from sort of new customers that are not ready customers at all an existing, I'll give you a little bit of color separately. What we're seeing is that the free-to-paid conversion rate continues to be very healthy with Airo.

And that's 1 of the 2 key indicators we're looking at in terms of how we're positioning it, how we're pricing it and how customers are doing that free first build and then getting into pay. And that number has remained very stable and healthy even as we've added more and more traffic to it, whether it's adding the traffic in the domains path or other sources or directly from channels, we've seen continued stability in that metric, which is fantastic.

The other piece is we continue to have a really good reaction from customers in terms of how -- in terms of customer satisfaction. And that continues to tell us that it's a good indicator for what renewal we might expect that they're able to build, they're able to get to the outcome they're looking for, and they give it a good score.

And in terms of adding other products, what we are seeing is that when a new customer comes to Airo and to be very clear, there is some -- that's not a GoDaddy customer. They actually add a second product, 70% of the time, which compares to our average at a little over half.

So Airo is actually really doing a great job for the customer we're looking for, which is the high intent customer, the customer that's going to have 2 products, 3 products and so on. So we're pretty excited that even a lot of what we've done so far is with existing customers, the new we have is actually performing better than our average.

That's a hole. And Mark, if I could ask a quick follow-up to an earlier question on the gross margin headwinds. Is that still predominantly inference costs? Or is there still like WM migration or product mix pressuring there?

And how does that I guess, alleviate itself and when is there an open weight model benefit at some point that you're going to comp positively against? I'm just trying to get a sense of on the inference side when that maybe subsides.

Yes. And speaking specifically to A&C and Airo, obviously, our margin itself is pressured by other products like aftermarket, which we've called out before. But when it comes to Airo keep in mind a couple of mechanical things when it comes to bookings and revenue, while a lot of those costs are built into the entrances of the token use that revenue on the subscription is recognized over time. .

So while it will improve over time, and we feel good about that improvement starting to show up as we go through it's still not going to be at the margins that are things like what cycles marketing was at. So there will be some of that downward pressure as we go forward.

So we feel good about margin, where it's going. It's positive, it's contributing. Having said that, it will get better over time. And I'll let Aman handle the inference part of this because I know it's something we look at a lot.

Yes. So I think I've probably touched on this before. At GoDaddy, we are a scale hosting player. We do have some of our own data centers as well. And we do have actually GPs are deployed and right now, we are testing models that are open weight models in our data centers.

So what we've been seeing in the market is that the frontier models, they've introduced sort of cheaper pricing they're encouraging people to use it. And for Airo, we build the technology so Airo can switch between these models and use whichever makes the most sense. So what you're going to see from us over the next 3, 6, 9 months is that we're going to deliver the best value for our customers at a cost that we think delivers good margin for us and leads to a price that our customers can afford.

And within that mix, we will have all of the options, which include routing to different models for different queries using open rate versus strong year models and a couple of other things that we're very focused on in terms of what we can do internally.

With our data centers, right, that doesn't require us to go out to third party. So there's 3 or 4 levers there that we intend to use to sort of balance this equation. And we intend to do it incrementally to keep driving growth of a and keep managing its margin.

And Mark, just coming back, these are the costs associated with that. There's no other migration costs or anything along those lines associated with that.

Our next question comes from the line of Jamesmichael Sherman-Lewis.

Hopefully, you can hear me. Two for me, if I may. First, on the developer platform, could you touch on the adoption trends you're seeing with that? And how we should think about these new customer entry points at GoDaddy evolving into next year? And then following up on that, given this more competitive domain discounting environment, should we expect any changes to your promotional intensity towards acquiring these new customers?

Yes, sure. On the developer platform, it's all very, very new. We really want to get to situation where our APIs have the competitive differentiator in terms of the breadth of products that we offer. So we just got to the point where we've got domains.

We've got hosting. We've got commerce enabled as well and professional e-mail. Those things together when the mine bundled, we think that's differentiated. But we're still very, very early and folks are just starting to realize that GoDaddy has this offering.

And we have work to do in terms of go-to-market and linking it into all of the tools that people are using. But we're very excited. It started out really well. We've done a bunch of testing, experimentation on it.

We work with customers. There is a good ecosystem developing there. And again, always a lot more to do, but what we like where we're going. And on the second part of the question, while we see domain intensity in terms of discounting and such, we have a long history of testing pricing of testing, merchandising.

And we tend to look at these things with a very data-focused way, right? We collect multiple data points, not in terms of just what the conversion is or units is or what bookings are, but also what kind of behavior those customers have in terms of attach or second or third actions that they might take, which in some cases might take 14 days or 30 days or so on.

So I feel very good about our ability to continue to focus on that high-intent customers given the data we have. And if in the short term, there are some tactical decisions that are made because of what I would call, short-term dynamics. I think we have the ability to test into those and really compete where we need to compete.

But overall, our strategy is based on the same ethos that we have had for a long time. test into these items, understand the data and continue to look for that lifetime value that we know only exists when the customer has high intent when they do multiple things with us, and then they stay with us a long time and that turns customer value into shareholder value.

Our next question comes from the line of Alexei Gogolev from JPMorgan.

Sorry about that, Christie. Mark, so you talked about starter tier growth plus higher attach of credit tax driving incrementally. Can you maybe share what percent of Airo bookings credits versus subscription today? And whether credit attach is primarily from existing customer migrations or new customers coming through the domains out?

Yes. Alexei, thanks. And I would say it's roughly 2/3 subscription, 1/3 credit packs is contributing, and it's primarily coming from the migration as we launched the arrow in the domain purchase path late in the quarter. in and of itself.

So that's a pretty good breakdown of how it's coming in right now. Now remember, you have to have a subscription to get to the credit back. So it's natural that it would have a ratio of about that.

I think the only thing to add, Alexei, is as we look at open weight models and multiple sources of finding efficiency and the agents themselves improve and the LLM improve as well.

This is a pretty dynamic space. So we watch it pretty carefully to see how it's shifting, how customers are using these credits and what value are they getting with them. So I would expect this space to still be dynamic given how early we are in the AI wave.

And you said that LM originated traffic increased in 3Q, but from a smaller base, can you size that channel in a way that's useful, maybe like a share of traffic or a share of new customer adds and call out what specifically drove the improvement. Was it bundles or SEO or maybe API distribution?

Yes. Its a number of small improvements Alexei that we are focused on in terms of improvement. Some of it relates to what we control, some of it relates to things on the Internet or how we work with partners. So we have a hit list of things that we're going through.

What's encouraging for us is that as we got through some of the items on the list, we actually saw a jump it. Again, it's on a small base. It's too small to parse out. right? But we are encouraged by that, [indiscernible] because it shows where our efforts are working. And also keep in mind, right, that a significant percentage of our traffic like the majority of our traffic comes to us directly, right?

It's based on our brand. It's based on sort of the awareness GoDaddy has and the customer base we have and so on. So that's still the sort of larger area of focus for us.

Our next question comes from the line of Arjun Bhatia from William Blair.

I'm Willow on for Arjun. Aman, you commented there are more jobs done with Arrow on the GoDaddy platform. I'm curious to hear what are you seeing in terms of early repeat consumptive behavior related to Arrow are customers already coming back to buy market packs, given there are more opportunities to use these credits .

Yes. What we're seeing is that the sort of power type curve where a percentage of customers are using a lot of credit packs. Right? But most customers tend to use credit back to get to a certain point and then they sort of turn more into a subscription-type model.

Now all those customers or with those customers where we think there's a ton of opportunity because if those -- if we can help those customers discover that if they build a website, Aero can help them do marketing or here can help them respond to their customers or communicate with their customers, those are all incremental opportunities that we're looking at because with Airo, we already have a product that's does a great job.

Customers like it. It's price, it'll be very competitive. So we're getting good energy into the product. And now we can truly work on the engagement and get people to do more and more and more with it. So I'm pretty excited about actually being able to move that needle with a large group of customers.

And there's 2 paths once they enter the Arrow platform, right? And that's why we're seeing a lot of the starter. Once you get through your credit back, you have the option to buy more or you could upgrade to the higher level tier and pay a higher subscription and get that access to those credit packs at a higher level as you move forward.

So again, we're giving the customers a couple of different paths to grow. and the initial engagement showing that they're doing both.

Our next question comes from the line of Kishan Patel from Raymond James.

This is Kishan Patel on for Josh Beck. Where are you seeing the strongest early demand across the expanded suite of Agentic APIs? And how are you thinking about the agent hosting opportunity?

Yes. So I think it's just very early for us to sort of comment on where we see the most. We're excited to have the product. The API is out there, and we're excited to have the breadth of the product. Again, we have more to do there. In terms of the Agentic hosting, we think there's a good opportunity for GoDaddy, GoDaddy actually recently launched NGS hosting, which is very much sort of the new style hosting with very simple experience, very competitive in terms of what it offers customers and we're seeing good adoption with those customers, but most of that adoption is still coming from the web for us.

Only a small percentage of it is coming from API, then we think that's mostly a discovery issue. It's not an issue in terms of product we have on the API. But people just don't know yet that oral has these APIs and this capability and we have work to do to get there.

Our next question comes from the line of Robert Coolbrith from Evercore.

I hope you can hear me. So just -- I'm probably asking the same question in a different way, but just wondering, as users maybe get even users are migrating get past that initial sort of maybe heavy build phase. Just wondering the subscription itself was a multiproduct attached, setting aside the consumption of credit packs, is that enough to be sort of at equalization with WAM from a TLB perspective?

Is it significantly lower, potentially higher. Just wanted to see if you have any early proof points of your base or talk us through that a bit. And then I wanted to ask, as we're seeing early proliferation of consumer agents, we're doing a lot of subscription audits and things of that nature, if you've seen any change in behaviors, whatsoever people coming in and maybe questioning how many domains they own or whether they want to have auto renewal on or things like that. So I just wanted to ask on that, too.

Yes. On the first one, as we think about websites plus marketing, I would just share the context that the optimization of websites plus marketing across the different plans that exists has been done over -- over multiple years. And what each of those plans have and how upsell happens into those plans or other products are attached into those plans, those went through multiple optimization cycles, right?

So for Airo, while it's very early, it's already doing a very good job of attaching with like aero selling to more customers, and it's doing a good job attaching other products now.

So it was able to keep up just by selling them more basically versus WAM, which is highly optimized. But when we look at it long term, we see those similar opportunities of multiple cycles of optimization that Aero can go through, which can deliver some of those same things that you're talking about in the future, where it becomes more and more about stepping customers grew the value that they get and being able to optimize the monetization of those pieces.

So while we're not up that path, if you're talking -- I think you're talking about already, we are on the first few steps, and we know where the stair case is, if you will, right? So that sort of -- that should cover the first question. On the second question, we don't yet see a similar type of concern of agents coming in and doing things.

I don't know Mark will comment on that a little bit, perhaps. But the domain names tend to be things that people are really attached to, right? People don't typically give up their domain if they think that, that idea has any more value for them.

And it's typically one of the smaller purchases a customer is doing across their ecosystem of purchases, right? Very often what customers are paying for a domain for a year is less than what they are paying every month for other subscriptions that they have. So I'm not sure that we have yet seen the type of behavior that you're talking about.

Yes. I would even add a step further -- if anything, we're seeing stronger retention rates and included in that is the retention improving around our domains over the last couple of years.

We haven't seen anything that looks as a headwind to that improvement. Again, it's a result of going after the high intent customers. We did call out that e-mail renewals, we are seeing some seat reductions there. But there's no indication that that's agent driven versus just customers needing less seats with their e-mails right now for the micro business.

Our next question comes from the line of Naved Khan from B. Riley.

Okay. So I just wanted to clarify something first. I think 1 thing just on bookings growth, I think you spoke about how Q4 bookings should be slightly ahead of revenue. And I think it was in the context of overall revenue. How should we be thinking about A&C I think NCS said revenue should be around roughly 10%.

So just to help us think through A&C booking. And why shouldn't the A&C bookings accelerate if Airo is deployed on a broader scale. That's part one of the question. And the second thing I wanted to ask is just launch of, say, other agents like Meta just launched beta business agents. And how do you sort of think about GoDaddy sort of Agentic offering working in conjunction with those that are available through these large platforms such as Meta.

Thanks, Naved. I'll take the first part on that one. Yes, the comment that we would be slightly ahead on bookings to revenue was for the full year, but we attributed to the momentum in Airo adoption, which is obviously A&C related. So we do expect to see bookings ahead of revenue in A&C in and of itself.

Again, we just launched Airo into the domain purchase path. So we have some data points. But yes, this will be the first quarter we'll be able to observe that momentum and see how it's attaching. Early signs are great. but we'll keep everybody updated. We like where the fourth quarter is going, and we like this trajectory. But yes, it's early in the journey right now.

And on Agent like news. I think we'll see how these agents are positioned and what jobs to be done these agents do and how far they go in terms of being able to do certain things. Airo is very targeted towards our customer Aero has built in things like hosting and payments and a number of jobs to be done that Airo can natively handle.

And we think there's an advantage to an agent that has all of those items built in and being able to produce an outcome fairly easily customers. But it's a brave new world. It's kind of like going -- like the start of the Internet again, there's lots of new things, lots of new business models, lots of technology and customer adoption to think about.

I don't know if you got my comment at the beginning of the prepared remarks, I said -- we have a thesis or other pieces that all software is going to get rewritten with the agent at the heart of every software like it's not about putting agents on top of software.

It's about having agents at the core of software. And I think we're going to see consumer behavior evolve and we're going to see these technologies come in. And a year from now, we'll be looking back at much of this and say, wow, we got how much it's changed.

So I think we're pretty excited about where we are with Airo. Clearly, customers love it, share the data points. Clearly, it's adding value for customers. So we're going to keep pushing as hard as we can and moving as quickly as we can. And I'm sure there will be competition in all sorts of ways.

Our next question comes from the line of Jack Halpert on for Deepak Macaba at Cantor Fitzgerald.

Also I've got 2 for me. Just one on customers. I think you talked about customers spending over $500 a year with 2 or more products have nearly perfect retention. I think you said that before. .

Is there a way to frame kind of what share of your kind of 20.5 million customers sit in that cohort today and maybe how fast it's growing? I think in the past, maybe in 4Q, it was you said around 10%, but just curious the trends there.

And then the second one, just on kind of operating expenses. Can you talk about how you guys are leveraging AI internally for efficiencies? Do you view that as like a key lever to offset spend in planned marketing behind Arrow? And if not, maybe like kind of what are the other levers that you have to sort of offset that like you talked about in the prepared remarks.

I'll start with the -- yes, it's about 10% customer group, $500 plus. It is improving, but I think 10% is a good base point as we move forward around that number. And then you want to?

Yes. When we look at the use of AI internally and our OpEx spend, it comes back to some of the things that we talked about for Aero as well. Of course, AI adoption has moved very quickly at GoDaddy a large majority of our software is now written with AI tools and where they are and we have paths to being able to make it more and more efficient, right? We have the ability to route to different models.

We have the ability to run it in models in our own data centers. As I said, we are testing actively with open weight models for Aero. And our priority has always been to put Airo fit with to create the best experience for our customers. But all of those capabilities are going to trickle down, I would say, over the next 3 to 6 months. into our operations as well. And very likely, you will see go ready employees using more and more and more tokens, but at the same or lower cost.

Our next question comes from the line of Brent Thill from Jefferies.

This is John in for Brent Thill. I had 2 questions and 1 was similar to not 1 earlier, but maybe a different way, but the A&C revenue, given you expect faster bookings, I mean does that mean we should expect the E&C revenues to rebound after we end this year? And then second question is the international growth was a little bit weaker than U.S. Was there anything to explain that?

On the A&C revenue, obviously, we are excited about the bookings trajectory of what we're seeing related to Arrow and momentum around it. Just a reminder, we're now adding different elements and levers into our revenue models today.

So the timing of that revenue may shift from period to period, depending on things like the usage of the tokens the subscriptions when they start. So again, we're in a good spot. We like the momentum the electric trajectory. On the international growth, nothing to call out. I think in prior quarters, we've had aftermarket transactions that were international this quarter. Most of the aftermarket transactions were domestic in the U.S. So that just explains the variation there.

Our next question comes from the line of Chris Zhang from UBS. We will move on to Elizabeth Porter from Morgan Stanley. Elizabeth

Yes. Thanks so much for the question. I wanted to ask around domain pricing. And I believe we have a Verisign price increase coming soon. And just given the industry has been more competitive or sensitive to prices recently. How are you thinking about working through the latest Verisign price increase? .

Thanks Elizabeth. So even if we look back the last few years, we tend to take price based on our pricing and bundling initiative versus when partner may take pricing.

So you'll actually see that we're looking at our overall set of metrics, whether it be bookings or retention rate or actually a slew of other metrics to take a price increase versus now. And that includes competitive behavior as well.

So I think, generally speaking, we are sort of quite on top of understanding how we want to handle that price increase, and we have a plan, and it's all already rolled up into what Mark talks about, and we usually come to that very early in the process when we come to know about it itself.

So we feel comfortable with our approach there, and we'll likely continue the same approach going into the next few years.

Yes. And I'll just add, just a reminder, the price increases are down on the renewals, not on the new and they show up over a period of time as people renew.

Great. And then just as a follow-up, I wanted to circle back on some of the OpEx efficiency that you guys are looking to deliver. And you have been pretty efficient business for a long time. So just wondering if you could put a finer point on where some of those incremental opportunities are.

Yes. I'll start. Eliza couple of years ago in our Investor Day, we talked about the tailwinds that we had around OpEx. The growth of A&C at higher margin profile, access to global talent and obviously, the efficiencies we got through some of the actions we had taken in 2023 and going into 2024. .

All those continue to provide us a tailwind as we go forward at different levels, but they continue to provide that tailwind and then on top of that now, you have the efficiencies around productivity gains within our operating expenses that are really starting to show up, I would say, up and down the P&L.

Now remember, when I talked about our 33% target a couple of years ago when we reaffirmed today, the productivity gains were not a part of that equation when we did that. So they are becoming incremental to our operating leverage as we speak here today. and also giving us an opportunity to make choices about where we invest those savings.

Aman talked about the arrow and the costs associated with Airo but it also comes into play around marketing, when we get the high marketing for Airo. And obviously, as we continue our innovation, our ability to make sure that we're seeing all the jobs to be done in creating that operating system that we want for the micro businesses.

So I'd love to call out one big item in our operating expense, but frankly, you could go from legal to accounting, the tax to HR to right down the line and you're seeing the productivity gains amongst the whole organization right now. .

Yes. I think an overly well, and we will definitely touch on this at the investor night as well. But 1 other item thing might just briefly touched on it, but I'll say a bit more is that the product evolution that we see with our strategy of the generic operating system should lead to efficiencies over time. Right?

As an example, with websites plus marketing, it's not that website plus marketing has completely gone away. It is still there. We have a lot of customers on websites plus marketing, but we have replaced it for the most part in new now. And customers that would have moved to an AI-based product, many of them are moving to Airo, right?

But being able to have a platform like Airo, where we can add the next job to be done, and the next thing and the next thing, the cost of us doing that is appreciably less than what it would be to add something new after website plus marketing.

And we'll talk a little bit more about that at the investor night. But those are some of the things outside of what you see as the core operations of the company, it's really the product strategy of the company is evolving as well.

And I would be remiss if I didn't talk about the productivity gains that we have in care as well. So I'll just add that to the list.

Your next question comes from the line of Ygal Arounian from Wedbush.

Maybe I'll -- I guess, sorry if this has been asked or you addressed on the call bouncing around, but a lot happening tonight. Just on the A&S, I know you mentioned it, but there's obviously a lot more happening in the agentive world still early but becoming more mature.

And security elements around that and domain is becoming more -- greater focus. And if you getting closer to being clear on the monetization opportunity. Are you seeing any early signs of that? Can you just give us an update on where you are and what we can expect to start to see it hit the financials?

Yes. We're pretty excited about the agent or hub. And really comes down on the entire is that we have to have the world has to say market agents as humans or machines. humans are [indiscernible] machines don't machine and you can pace so -- and our product process is behind Sea agents should have identity. We should be able to identify them. And the reason that's important is because identity builds trust and trust enables engagement.

It enables commerce and all the engagement in commerce create opportunity, right? And that opportunity can be a tailwind for every industry as agents become sort of the bigger and bigger part of the Internet. So we're still pretty excited about it. I talked about it a little bit. We just did a big demonstration of how agents could transact on the open web and have identity and be trusted as part of that demonstration, we also showed how 2 agents that have never engaged before and complete a transaction, but also log agents can be rejected because of how the open standards are evolving.

And we think that that's a tremendous opportunity. It is still a long-term play while we have some of the best companies in the world engaged on it. We continue to sort of wait for that moment where we can truly break through on it and make it very, very large.

So pretty excited about ANS, but it continues to be a long-term opportunity, and it's not in any of our numbers as they exist today, just FYI.

And then as a second on sort of the competitive pricing environment you guys are talking about here. I guess, a, do you think that there could be a prolonged pricing environment as the competitive ecosystem continues to evolve here?

And can you talk a little bit more about what you're seeing in the credit packs and particularly in the upgrade paths in terms of conversion, our customers less price sensitive at that point. What are you seeing when people are hitting in that wall? Is it too early to tell? Or just any early signals around that?

Yes. I think on discounting or pricing, I think what is going to happen is in every iteration of products being coming out to customers with new technology, you have to increase the value for customers and then find ways monetize that and create margin for shareholders and the company, right?

And I think we're going through that cycle. This is where we're pretty excited about some of the new bundles that we're going to test over the next 3 to 6 months because we think they address some of these exact things that we're talking about and have us be very, very competitive on them. And on the credit back, I don't know if -- there's more to be added versus what you already said, Mark?

No. No, there's nothing to call out at this juncture. I mean we're seeing healthy attach on the credit packs. We're seeing customers coming back for more. We're seeing power users of credit packs and then we're seeing regulator users. .

But it's too early to really say, hey, this is a pattern we can call out as permanent given the newness of the introduction?

Yes. I think the one comment I made is this is all very dynamic space with improvement in MLMs, improvement in agents, open weight models, like I would say this is a really a very dynamic thing and let's see how it progresses over time.

We will try again for [indiscernible] on from UBS. Are you there?

Yes, I'm here. Can you hear me now?

We can. Thank you.

I also have 2 questions, if I could. The first one, also on A&S just because the recent development in the market and also the chain of trust demonstration appears very fascinating. Just wanted to think more conceptually understanding that it's not in numbers. I don't think anyone is actually present for immediate direct monetization.

But thinking about the roll of ANS longer term, especially in the commerce transaction, I think there can be a lot of collaboration with what the card networks can -- are doing or can be doing and maybe there's some overlap.

But overall, I think it's more of a part of the ecosystem. But on the other hand, in terms of monetization, I feel like maybe more of the monetization is going to be done through the payments ecosystem with the benefit accruing to them with the Agentic network tokens and trusted agent particles by the card networks. So is it fair to understand that ANS is more of a longer-term indirect driver for domain subscription growth? Or is there any other scenario you could potentially monetize? And compared to this, what's the incremental investment you see made it in the years to come.

Yes, always super quick because they're almost at time. We do think A&S is a great tailwind for domains and continue to keep domains at the art and the A&S of the heart of the Agentic Open Web. You listed out a number of use cases.

We actually believe that there are many use cases in terms of A&S monetization, we are pursuing a couple of them. We're excited about them, but there's a lot to prove out with it, I would say, over the next few months and years. And I think you had a second question, if you want.

Incremental investment, and I'll just really quick use, we have built out the infrastructure around D&S and this will be on top of the D&S and an evolution of that structure. There probably is some stuff, but we are not there yet. Right? We still are looking for adoption.

We're still looking at how this would roll out and making sure people agree with the concept and where we're going. That's the most important part right now.

Second one, I'll be quick on the second one. I think for 70% of the Airo customers that have at least 2 paid products. Maybe can you just recap again, what kind of bring to life what the 70% looks like. And outside of the 70% are the customers mainly using just the domains plus like a free Airo? Or if you can just give us a sense of the products the customers are using or not using?

Yes. We're right at the end. I'll give you a couple of data points. The 70% is based on paid products. That doesn't include any free products within that metric. Most of the time, it relates to domain, then e-mail is probably the next place they go, and that seems to be the makeup of the attaches that exists today.

And just to clarify, all the is out of all Airo customers are -- so there is no domain on be here. We're taking a cohort of new Airo customers that don't have other products and what's the second product they attached. And that percentage is higher than our average which is another good reason to say Airo is very exciting.

That concludes our questions. I'll turn it back over to you, Aman, to close the call out.

Thank you all for joining. Very quickly, a big thanks to all GoDaddy employees, and we're looking forward to seeing many of our shareholders at our Investor night.

Great. Well, let's get started.

All right. We're on the clock.

Yes. Good morning. Thanks, everyone, for joining. It's my pleasure to host the CFO of GoDaddy, Mark McCaffrey; and Christie, Head of IR. Thanks so much for joining us.

Yes, and thanks for having us.

So Mark, GoDaddy is one of those rare Internet brands that almost everyone knows. At the same time, the business today is much broader than Internet domains.

Before we dive into the details, how would you frame where GoDaddy is today? And what are the top priorities, especially in an increasingly agentic Internet?

Yes. So a couple of things, right? I think everybody knows us, GoDaddy, who is the domain company -- or I should say, is a domain company. We created it many years ago and over a number of years, we've evolved.

Where we are today, when you hear us talk about GoDaddy, you're going to hear us talk about becoming the operating system for the entrepreneur, the micro business. So we want to give them the tools that allow them to create value in whatever endeavor they're going to do, whether that's transacting on the Internet, whether it's just sharing content on the Internet, whether it's sharing their love of life or hobby on the Internet in and of itself, we want to become the tool that they go to in order to make sure that happens. We call it the entrepreneurs wheel, where we have all the technology that fits the jobs they need to do, and we continue to do that now.

I would also point out, we have a very unique customer base, right? We are not looking for the enterprise or the developer. We focus on the entrepreneur and the micro business, the mom-and-pop shop. If you have two employees, that's probably within our sweet spot. Some may go as high as five. Some have two people working on it. And then they have their kids working on the endeavor when they come home from school at the end of the day.

So think about it. It's a very unique customer base. It's something we've done very well. It's a customer base we have a right to win with, and we have been winning with this customer base for a number of years. And as we enter the agentic world, which I'm sure we're going to talk a lot about, we've created tools, Airo. And just for clarification, A-I-R-O, it's how it is spelled, is the new tool we put into play to help that our customer base have that agentic-native experience to do whatever they need to do, create whatever they need to create.

So definitely got plenty of questions on AI. But before we do that, we'd love to talk a little more about the core customer base. So you have industry-leading growth retention, you've talked about the stickiness of the GoDaddy platform. What does drive that loyalty with small businesses?

Yes. There's a number of factors, right, where the technology -- and I always say you have to innovate around your customers' needs and the jobs they need to do, and you need to have that relationship with the customer. We have that relationship with the customer.

We have a care organization that is built for a number of years, but focuses specifically on making sure not only if they have questions, they're getting the best value they can out of the tools in and of itself. And our care organization helps them create that full picture of everything they can do. Whether it's starting with the domain name that meets their business need, whether it's creating -- helping them create the website, whether it's getting them attached to a professional e-mail, getting them transacted. Our care organization has allowed us to really understand those customers, those customer needs and make sure that we stay at the forefront of that customer base.

You mentioned Airo earlier, your AI layer. So that has now become a much bigger part of the GoDaddy story. Could you briefly explain exactly what it is? And what have you learned so far from customers using this product? How does it help drive customer engagement?

Yes. So I challenge everybody to go and try our Airo app builder. We launched it at the end of -- we couldn't be more happy. And quite frankly, I get more and more excited every time I use the Airo app builder myself to figure out how to get some function done whether within GoDaddy or outside of GoDaddy in my personal life.

Airo, when we came into the year, we were moving into an agentic world. We had multiple products on the road map. We were going to do a website developer. We were going to do an app builder. When we started to talk to our customers and started to engage with our customer base, they came back very, very distinctly and said, we want all the functionality you're talking about, but we want it in one space. And that's where the idea of Airo in and of itself was created to just put all the functionality and capabilities within that one spot they can interact with.

And again, the customer relationship was we tried everything with them, and they kept coming back to, we just want to interact with one platform that can get everything done. So Airo was, I would say, evolved from where we were 2 years ago. It was reborn and now has become an agentic AI experience and our customers love it.

Now I say that, we haven't even launched Airo in our domain purchase path yet. What we are seeing is our existing customers are switching to the Airo platform. So when they're coming up for renewals on their products, they are basically saying, "Hey, we just want to use this. Like this was good, but this is great, we can recreate everything that was over here, and then we can do more within that platform in and of itself. So we're going to switch over to this." And that's what you've seen happen in Q2. And that's when we call it the transformation of our customer base, we are meeting their needs and helping them convert over.

Now it does come with a little bit of -- and I acknowledge it, cannibalization, because people are renewing the new Airo SKU versus renewing some of the old stuff. But that trade-off on an LTV is well worth it for us because our customers are getting so much more value. And when you think about the opportunities it creates for us not only from a verticalization path down the road but also adding on products into one platform versus supporting products on multiple platforms. That's where the idea of becoming the full operating system for the entrepreneur starts to go.

So on that point, and you kind of touched on this, are you already seeing customers -- existing customers adopt product two and three more quickly through Airo?

Yes, we are. So one of the things that we've spent quite a bit of time talking about is Mark talked about the evolution of Airo in its inception, it was about being that vehicle that drives discovery and engagement into the rest of the product suite and then that turns into monetization through attach, that continues with the new version of Airo that is the agentic operating system for micro small businesses.

And part of the reason that we've been able to find success in there is because what we are driving in that experience for our customers is surfacing for them the things that give them value and showing them, here are all the jobs that we think that you need to do as a micro small business. And here are tools that are designed to help you execute one of those tasks. And that drives more and more attach. And what we've seen is that getting customers to that second product attached 30% faster than we were before Airo.

And when we look at the -- just the second product attach overall for the entire business, more than half of our customers have a second product, but customers on Airo, 70% of them have a second product attach. So this is building a better cohort of stronger, higher LTV customers for us.

Yes. And just to add, the underlying model of how we create LTV hasn't changed. When we see a customer go from one product to two products, we have 85% retention rates, which is fantastic in and of itself on average. But when we get to the second product, our retention rate is up. When we get to a third product, we pretty much have a customer for life. And that drives the LTV.

Airo kind of puts jet fuel on our ability to do that because it gets to that second, third product. You asked about the stickiness. That's the stickiness that we create when we start to fulfill the jobs to be done for our customers. It creates that flywheel of, yes, we get a product attach. That's great. But we also start to see the improvement in the retention. Our strategy is around those customers and those high-intent customers and those are the ones we continue to go after.

Applications & Commerce has become a bigger mix of the business. And I'm not sure investors fully appreciate what's part of that product group. How would you describe the value that you're delivering there? And why has that segment been able to grow faster than the overall business?

Yes. So it's the creation of the entrepreneur's wheel. And actually, it's the evolution of GoDaddy in and of itself. When you think about us in our Core Platform or segment, that is the domain. That's generally the entry point where a lot of our customers come to us. They're looking for a domain.

60% of our traffic comes organically directly to godaddy.com because people know we are the brand around where to get a domain. That is our Core Platform.

Now Applications & Commerce is the creation of the rest of the entrepreneurs wheel, where our product attach traditionally, have been websites that have been e-mail and in e-commerce. Now it's coming within the Airo platform in and of itself. But that second product, that third product attached generally is our A&C segment.

So in the past, we only operated in one segment. Our acquisition cost around the Core Platform in and of itself are very efficient because of our reputation in domain. Applications & Commerce became once you come to us and enter into our funnel, you don't have to go anywhere else to create that online presence, get an online e-mail. And then more recently, in the last couple of years, we've created commerce, where you can transact, we support the transaction we're a PayFac and will support this across one dashboard.

Again, it's the one-stop shop, where an entrepreneur, doesn't have to deal with multiple applications and make sure they're all interacting and has to deal with different vendors around it. They can just look at one dashboard, whether it's online, even off-line sales, if you have a brick-and-mortar, are all tied into one system.

Great. Let's talk about AI.

All right.

Our favorite topic. One of the big questions for GoDaddy's whether AI reinforces the domain funnel or changes the way small businesses get started. So as more activity moves into AI-driven workflows, how do you think about GoDaddy's role?

Yes. So AI is undeniably something that is lowering the barrier to entry into the space, which is fantastic, right? There is -- when you look at the history of time and even just the makeup of the economy at large, it's powered by small businesses, right?

And usually, the thing that keeps people away from starting their business, it feels like it's hard to do that. It feels like it's hard to get an online presence, build an audience. And when our tools and capabilities help, in addition to AI itself, lower that barrier to entry and get more ideas to market, these are the customers, the customers that are coming in as micro-small businesses. Those are who our customers are that we serve that we've been talking about today.

So our tools and services not only help them name their business, but build out their business. And in the day 0 things that need to happen for getting the domain and building the website, but also the day 1 through day Infinity of running your business day to day in that agentic operating system, so AI is definitely changing the landscape, and we find it as an opportunity for us to continue to engage with more ideas to market and help more small businesses thrive.

So if AI makes it easier to start a business or start a new project where you might need a website, are you seeing any of that show up in demand today? How do you separate that from the normal demand trend line?

Yes. I think that's true. I mean the more ideas manifests itself across many different points that I think a lot of people here observe, you see more domains are being registered. You see even small business starts continues to go up. So these are all the types of customers that we serve.

And these micro business, like Mark talked about, these are our bread and butter. We know and understand these types of customers, and we cater to getting them started and being there in the support capability in the vector of care, right? And that matters to micro small businesses who usually aren't technically savvy, but they need assistance along the way. So this is where GoDaddy service shines. So all of these external factors are showing us that more ideas are coming to market. And then these are the customers that we typically serve and this is benefiting the tailwind for GoDaddy and the opportunity for us to continue to have that durable and sustainable growth well into the future.

You've talked about Agent Name Service, ANS, there's DNS and then there's ANS as part of this infrastructure for agentic internet. So for investors who are less familiar with ANS, what is the problem this is trying to solve? And why is GoDaddy well positioned to compete here?

I'll start. We're trying to prevent the Wild West of agents. We'll give a little background for those of you who may not have been around our story for a long time.

But DNS is basically the infrastructure that the Internet operates on. It's been around. It's established its well-known protocols. Think about it from the idea that when you go to a website, you want to know that you're going to the website you want to go to, whether it's your bank, whether it's a vendor you're working with. It's all there because the DNS infrastructure has put in place the protocols that allow you to trust that where you're going and specifically where you're going, where you're transacting as a human is specifically where you want to transact.

And it's that registry part of that.

It's that registry part of the business. Now you think about that world and where we're entering today where agents are going to be doing things on behalf of us, right? And you think about the infrastructure needed now to take the volume of what had been human interaction now will be agentic interaction.

And you think about the ability to trust the agents you're dealing with in the authentication, are they the real agents that you want to be dealing with. If your agents talking to a bank's agent, how do you know that banking agent has been authorized to speak on behalf of the bank or transact on behalf of the bank? That is an infrastructure today that theoretically does not exist.

ANS is the extension of that infrastructure. What ANS does is expand the DNS infrastructure into the agentic world. ANS is based on the premise that the Internet will remain open to everybody. Small businesses can operate. They can have their own agents. They can be trusted in their own agents because the protocols are in place in order to make that happen.

Now ANS is not a, I would say, GoDaddy monopoly. We're not here to try to make sure that everybody comes to our infrastructure and we're owning ANS. ANS is open to everybody. And ANS will allow us to move into the agentic world faster because if you're talking about building an infrastructure today that is different and not built on DNS, that is going to take a long time to figure out.

Like DNS didn't just wake up overnight and get created in and of itself. It took the agreement years ago that the Internet was going to be open and everybody would support that open environment.

As we talk about ANS today, it's the extension of this. It's basically saying, let's use the existing infrastructure and build it out into the agentic world so that when agents are now working on behalf of us, we can have those agents registered and they can be trusted. And if someone tries to duplicate or shift an agent for whatever evil purposes they may have out there, there is protocols within the system that will allow you to identify it. That may not be the agent that you thought it was or you have an agent visiting your website that is trying to do something that you don't plan on it doing.

So that's the idea of ANS. What we are out there doing is talking about this. We are talking to other technology companies. We're starting to get agreement from other technology companies that this is the path to go down, and we will continue to talk about that. From -- obviously, we're in a good space because obviously, we supported DNS for a number of years.

But having said that, the most important thing for us is that everybody understand the protocols that need to be in place around the agentic world, everybody support it and the Internet remain open to everybody to transact, do whatever they need to do on.

So this has been contributed to the Linux Foundation being codeveloped with companies like Cisco, Salesforce. Is there an opportunity for GoDaddy to capture economic value as part of this identity layer?

Yes, absolutely. So you brought up two different things there. You're referencing the ARD, which is the way to discover agents. So Mark was talking about ANS, so the need in the marketplace to register domains to understand the provenance -- or sorry, register agents and understand the provenance of agents.

And then there's the discovery component, and that's what you're referencing with all those companies that we worked with. So once they exist in the marketplace, then you need to find the right agents that you'd like to interact with.

And the Linux Foundation is us contributing the reference implementation for this is how you would use in the Agentic Name System, it's how you would use if somebody wanted to become a registrar, this is how you would carry out those tasks and this is essentially the instruction manual for how this system and infrastructure works.

And to your point, GoDaddy is uniquely positioned to be able to monetize it from the perspective that we obviously have a lot of experience and understanding of the DNS and the infrastructure there and the security that, that needs. And the way that the uptime that's required for these types of things. So all of that type of stuff, we are obviously experts in, right? We've been doing -- operating the DNS for 30 years. So extending that out to ANS in time once it becomes a standard that becomes widely adopted, then you could come to GoDaddy to register your agent, and we would monetize that.

You mentioned earlier that 60% of domain demand is generated directly. And we've also kind of talked about how these third-party search engines or LLMs are increasingly becoming part of the go-to-market motion and you're rebuilding the API for developers and finding ways for AI systems to show up more in searches.

So are you seeing any early signs or green shoots from this demand starting to translate to GoDaddy? Or do you think the majority is still going to be generated from first-party demand generation.

Well, that's the traffic stat that you're referring to. So we get more than 60% of our traffic is direct organic traffic, and Mark had already mentioned that before. LLMs are obviously becoming an increasingly important way that people are interfacing with the Internet. And that traffic certainly matters to us. And what we have been doing is putting work streams against increasing the traffic from LLM and increasing the sentiment of how GoDaddy shows up in there, and we're particularly focused in what we're showing up for in the LLMs.

So we're not interested in necessarily showing up as the cheapest domain. We're not trying to attract the lowest intent customer. We're trying to show up in ways that I want to build my online business. I want to run my online business or have an operating system for it. So that's -- we're really interested in building out that. So those motions that we've been doing on those work streams has been garnering more and more traffic over time for us and better sentiment in the ways that we want to show up in LLM.

So this is something that we're pretty excited about and continue to build to drive those outcomes. And it's not dissimilar to the early days of SEO, right? Back then, the SEO was a black box of how do you show up well for that -- and everyone figures it out, the algorithm changes, and you go back to the drawing board and fix it and figure out better ways to show up. That's sort of the era that we're in right now for LLM.

Yes. And I just want to reinforce a point that Christie made because it's an important one for us. What you show up for in the conversation on LLMs is extremely important. We -- our strategy is around the high intent customer that wants to be doing something online and will attach more product and drive more LTV.

We don't necessarily want to be the cheap player out there or the domain cheap player out there. So how you position yourself within the LLM is extremely important. And there are conversations you want to be in and you have to optimize for because you want that customer and then there are conversations, it's okay. It's not going to drive our LTV equation down the road.

This is something that will continue to evolve. LLMs are becoming increasingly important to how traffic is developed. We're blessed with a great brand that brings 60% of the domains to us already. But we do have to continue to monitor that 40%. There are multiple different areas that generate traffic still, whether it's search, whether it's things like YouTube, those are all important, but LLMs are becoming an increasingly larger part of that and understanding the traffic and the dynamics around it is something we will continue to do, right?

One of the things that stood out to me about GoDaddy is the margin profile. How do you decide how much to invest behind AI and Airo without compromising this margin and free cash flow profile that's made it to date so attractive to investors?

We talked about this a couple of years ago, and we used the term ruthless prioritization, and it's still very much intact within our organization. We are very focused on creating value for our customers. And everything has to start and focus on what problem are we trying to solve for our customer, and can we create the technology around that job to be done by them.

There are plenty of efforts. If you don't have prioritization, people love to create technology or investment stuff, but not knowing what problem they're trying to solve. We are laser-focused on that problem that needs to be solved.

We also know that we are very fortunate. We're in a position of strength. We have an amazingly strong balance sheet. We generate a lot of free cash flow. Our margin profile is very efficient where our normalized EBITDA turns into free cash flow at a rate slightly better than 1:1. These are all by design so that we can invest in innovation around our customer needs.

And again, we're not trying to appease developers or enterprises. We're focused on our customer needs and fulfilling that and at the same time, maintain our margin profile because, hey, we've been -- we've improved our normalized EBITDA margin by 1,000 basis points over the last 5 years.

This is something we do very well because we've established the protocols in place to make sure that we are getting and going into areas that have the right ROI and just not investing in things for the sake of investing.

Again, I give credit to my CEO, don't tell him I said this, but I'll give him credit. His demeanor around the customer and understanding that customer and prioritizing that customer need is amazing within an organization.

As a CFO, it creates that great opportunity that is when you're prioritizing in that manner and you're making decisions in that manner that you can do it within a framework of growing your normalized EBITDA margins, expanding them, but at the same time, investing around that innovation that meets that customer needs.

It boils down to discipline, really, just being strongly disciplined.

One of the key themes going into the conference has been around how AI changes cost structures, including companies using open- versus closed-sourced models. And as you scale AI across the product and internally, how do you think about the impact on margins over time? Is AI ultimately margin accretive, dilutive or neutral for GoDaddy?

Yes. So I'll start. I'm not giving any kind of forward-looking guidance today. So I just want to be clear. But our strategy around normalized EBITDA and our ability to expand that even as our product mix will change going forward, we feel really good about that because of the efficiencies that we are gaining within our organization around the use of AI internally.

Now a couple of years ago, when I put out there, we're going to target 33% normalized EBITDA margins for 2026, which we're on track for. I talked about the tailwinds that would get us there. I talked about the simplification of our technology stack that would create efficiencies within our organization. I talked about our access to global resources, which we were putting in play because of our infrastructure.

And I talked about A&C in and of itself that the growing tailwind around a highly profitable segment was going to overall increase our margin profile within that.

Now when I said that, I talked about those tailwinds a couple of years ago, we weren't at the point of understanding the efficiencies that could gain around deploying AI within the organization. And now as we sit here today, and I'm coming on that last year, I really sit there and think about, hey, those tailwinds that I talked about a couple of years ago, they're still intact. They still are allowing us to become more and more profitable every day. But now you can layer on the efficiencies that you can see within AI.

No doubt, engineering is getting more efficient. I mean the ability to code and launch products into the entrepreneurs wheel for us is becoming a lot more streamlined. Airo is an example of how we pivoted very quickly to launch something at the beginning of the year because we heard our customers speaking very loudly. Engineers were able to do that internally because of that efficiency.

Care organization, our resolution rates on our care organization are going to levels that we never thought were possible at this point. So our ability to get that efficiency around the care organization is becoming more and more, the more that we use AI to help solve problems for our customers.

And quite frankly, our -- even our G&A, we're seeing AI efficiencies across people creating applications internally to do tasks that were formerly done manually. And the funny part is we're actually using our Airo tool to create those applications internally as well. So the efficiencies we're getting from using our own tools in order to do that, they're showing up as we sit here today.

So when I think about the future, and I'll talk about the future as we get to our Investor Night, one night only, that we'll talk about the ability to continue this track record. When I put the 33% out there, these things didn't really exist. People knew someday it would come, but I don't think anybody was anticipating that the benefit of this would start to show up in the P&L as fast as it's starting to show up to the...

Yes. It allows us flexibility to continue to invest, too, in the things that drive top line and the continued innovation in our products like Airo as well. So we're able -- to your question, is it negative, positive or neutral, it's sort of neutral from the perspective that it drives like investment in innovation, but it also drives efficiency in our operations as well.

So it sounds like you're not seeing any headwinds or near-term headwinds from token costs; quite the opposite, actually, it seems like you're becoming more efficient.

Yes. We're becoming more efficient. And again, we're very pragmatic, and we do things with purpose. The way we've set up our token usage with our customers is designed so we have the flexibility to understand and control the cost on one end but understand the customer dynamics of how they're going to use it and make sure that those two match up, all right?

Again, having a technology stack consolidated into one infrastructure that allows you to understand the flow of the technology, not only through our own data sources, which is fairly large, as we've talked about before, but understand what LLM can be used to complete what tasks on behalf of our customers and make sure that matches up to the pricing of the tokens they're using, we've created the dynamic knowing that we have variability on both ends.

So as token cost usage, I think the growing theory is it will get more inexpensive, but we don't know as we sit here today. We have the ability to monitor how that delivers value to our customers and make sure it's aligned with what the customers are paying GoDaddy for that value. And at the same time, if it shifts, we have the ability to shift in either direction. So we feel good that we've set it up in a manner that we can control on both ends.

Looking forward and without any -- providing any guidance, but when you look at the opportunities to invest, how do you think about investing organically versus doing M&A, especially as the market evolves so quickly?

Yes. So we're, again, fortunate coming back to our balance sheet. We have a lot of liquidity. And quite frankly, we get a lot of inbound phone calls and stuff.

Our criteria around how we look at M&A has not changed. It has to be strategic. It has to be something that is financially accretive, and it has to be something that we consolidate -- can consolidate and integrate into our technology stack.

Now while there's opportunities out there, the one thing AI has created is the ability to build a lot of things on your own today. So we've done -- we feel very good about our ability to innovate. And all that is doing is raising the bar to what M&A might look like or what M&A might work for us in the future.

Again, it's always something we feel fortunate we have a seat at the table, but we think our ability to look at things pragmatically and make sure that they would fit within the criteria we put there, that remains intact. That will not change for us.

So it seems like AI is actually changing the M&A philosophy in a way because products are becoming easier to build, you can do more in-house, is that...

That's right. The bar is raised, right? I think the build-buy evaluation and the ROI on those two in and of itself, that computation remains intact. So that hasn't changed. But when you apply the efficiency of building something versus buying something in the marketplace, the input and output on that can change dramatically in this environment, and we know that.

And we've seen how we've been able to launch things like Airo. We didn't hire any engineers to build Airo for us, right? We did that internally with our existing engineering group because the talent already existed within the organization to launch this stuff very quickly.

Our ability to test into market and experiment around things, that's a culture that has existed for years for us. So we understand what works with our customers, what doesn't work, how it can be financially accretive if we were to build something versus how we buy it.

And coming back to your original conversation about how do we remain focused, that's the strategy. You have to align around the strategy. I'll keep coming back to, we focus on our customers. We have a unique customer base. We have a right to win with our customer base. We're not developing for anything else. We're developing for our customers and what they need and that strategy that has pushed us forward for 30 years, and we will continue to push that forward because we have a right to win with this customer base.

Without front-running the investor night coming up later this year, what do you think are going to be some of the key questions from investors at the event?

Cash flow.

Yes, free cash flow, free cash flow per share, that will be a big question, I'm assuming. We've done great under our -- expanding our free cash flow per share.

2 years ago, we said it would be a CAGR of 20%. Now we've upped that to what we'll do at least 25% CAGR for the 3-year period. We're on a great track record. Even though we're going through this transformation, we talked about coming out of Q2. We remained and held firm that we would generate the $1.8 billion of free cash flow that we talked about at the beginning of the year before all this transformation was put into place.

The question will come is, does the free cash flow per share remain our North Star. So I'm going to front run this a little bit. Our North Star will not change when we get to December 1 and talk about this. Free cash flow continues to be the driver of how we make decisions and look at ROI because we've created an efficient operation that allows us to innovate around our customers and our customer needs, return capital to our shareholders and also take advantage of our balance sheet when the market gets a little weird around stock prices.

Maybe I'll sneak one more in here, which is around like what do you think is going to be the key driver of free cash flow per share? Is it going to be revenue growth, margins, share buyback?

Yes, yes, yes. Those are levers, right? The North Star free cash flow per share, the three that you just described, those are three levers available to us to continue to drive that. And so all of those matter.

She said that very, very specifically. That is right.

And we're out of time.

Perfect. Well, we can leave it here. Thank you so much.

Thank you.

Joining us is Mark McCaffrey, Chief Financial Officer; and Christie Masoner, Head of Investor Relations. Thank you both for being here today.

Well, thank you for having us.

Let's dive right in, if we can.

Absolutely.

Starting with Airo. Mark, Airo launched just months ago. In that short window you've already folded in, GoDaddy payments, customer communications, commerce and other capabilities. As you keep expanding what Airo can do, how do you decide what gets built into it? How do you expect these Airo integrations to evolve the GoDaddy platform over time?

Yes. So we couldn't be more excited about Airo. Now just a reminder, A-i-r-o, Airo. We launched it a couple of years ago as a platform. And now we're revamping it as a product, and we're going to market with it. And I couldn't be more happy with the success. Q1, we launched, we disclosed run rate then and now we've seen it gone up to $50 million as we came out of Q2.

And the premise here is meeting our customer where they want to be using technology today. Now remember, our customers are a unique group. They're the sole entrepreneur, the micro business, the mom-and-pop shop, they're not always technology savvy. So when they decide they want to engage with technology in a certain way. And we see our ability to meet that job to be done, how they want to do things. It's on us to start to give them that. And that's what Airo represented. And the native exchange with Airo is exactly what they need. We introduced it into our existing customer base. We saw some of our customers who had been customers of Websites + Marketing now shifting now shifting over to use Airo as their primary operating system in running their business because the capabilities are so much more.

Now when we look at capabilities versus product road map, we look at value. What are the value -- what is the value our customers are going to get out of it. What are the product attach motions that will come out of it. And we haven't changed the basic attach of a domain, attach of an e-mail, attach of commerce like you mentioned, and while commerce is a great example of a capability being folded in, the attach around the transaction revenue continues to be something that will act as an LTV driver for us in the future. So for us, it's looking at where the customer is going to get the value, what are the core competencies that we will put into Airo over time. And what are the product attaches the jobs to be done, the presence that they want to have in the different areas that we can put into Airo and create that LTV.

Now remember, our product motion hasn't changed, how our model works. When we get to that first product, it's 1x. When we get to a second product, our retention rates go up significantly from the great 85% we have overall. When we get to a third product, we generally have a customer for life. And so those touch points within Airo and the ability to attach is what drives the LTV equation, we'll continue to drive our LTV equation going into the future.

Great. I want to unpack that just a little bit more. Scale largely organically to date.

Yes.

Can you help us understand both the drivers so far in terms of new versus existing? I know you touched on that, but also potentially marketing as a lever in the future?

Yes. So primarily now we've -- and this is a little different for us. Usually, we launch things first into our new customer channel and then we go into an existing customer base. But we found that our existing customers were really attracted to the ease of use of Airo to manage their business. So we launched it within our Care organization. We saw customers converting over existing customers. And that's primarily what you're seeing today. We do see some natural traffic coming directly to airo.ai. But that's more people that are organically coming on their own. We have not put Airo into our domain purchase path. That is coming. It's imminent. We're testing into market right now. That will be the new customer, right? And that will be the new customer that is coming in with that high intent that we now will have Airo as a primary attach motion within that purchase path.

That's a big deal for us. I mean the domain funnel continues to be our largest top-of-funnel. And putting something in there that attaches will be a big driver. Now as far as marketing is concerned, we talked about coming out of the call that we are pushing marketing into the second half. And we're doing that because we feel that we need the domain purchase path set up and ready to go to get the appropriate ROI on those marketing dollars as we put that into the market. Now remember, when we're dealing with our renewal base, that's not necessarily a marketing push in and of itself. That is driven a lot by the Care organization and the renewal cycle, so they're existing customers. Marketing for us will primarily go in the second half into that new customer attach as we launch this in the domain purchase path.

Helpful, it makes a lot of sense. I wanted to talk a little bit more about the domain purchase path. What are you seeing in these early tests, whether in conversion, LTV attach or otherwise, to give you conviction in potentially embedding Airo into the domain purchase path? And how would you compare the experience to, call it, the existing Websites + Marketing?

Yes. So first, what we saw in Q2 gives us a lot of confidence that we're meeting our customers where they want to be using technology today. And remember, when we came out of Q1, we were focusing on developing 2 products and putting them into market by this year. One was the website development tool, AI driven, and the other was the app builder, right, both AI driven. When we put both in front of our customers early on, it was pretty clear they wanted to use the app builder. And the few differences between the 2, they wanted into 1 product, and that's what Airo is today, that 1 product. And the amount of engagement we're seeing in our existing customer base really tells us it is meeting their needs. So that gives us confidence that once we launch this into the domain purchase path that we will be able to see them engaging, activating, signing on, buying new products, utilizing those capabilities to create value within what they're doing.

Now the experiments are ongoing. So more to come as we get through the quarter, obviously, but right now, we're moving fast. We've seen the market. We know our customer. And remember, I keep coming back to our customers, the mom-and-pop shop. We're not creating Airo for the developer community or the enterprise, right? We are creating Airo to meet our customer needs and create value for them at the price points that they can basically absorb. And it's working.

Helpful. Shifting gears a little bit. Could we talk Airo unit economics? You've said Airo has been gross margin positive since day 1 by routing different tasks to different models based on cost and complexity as leading foundation model inference costs grow? And as you also expand capabilities, how do you maintain margin discipline?

Yes. So this is -- you use the exact word discipline, right? We do everything with purpose. We look at everything. We make sure that we maintain optionality -- so there is no doubt we are taking advantage of our technology stack and the data that we've talked about for years that creates a competitive advantage for us. So naturally, we have the ability to achieve some of the outcomes for our customers using our own technology. Now to the extent LLMs come into play. We -- because we use 1 choke point around our technology stack we have the ability to direct how those LLMs are used and how they're delivering the outcome to the customers and at what rate they're delivering the outcome to those customers.

So in essence, we've provided for flexibility on both ends for us that we can control the outcome and the cost end of it, depending on where we want to send it. And that ability is designed so that we can evaluate as we go on how those costs are evolving. We all know the LLM costs are going to evolve over time. There is a school of thought out there that they will go down, but we never know. But we have the ability to control both ends of it, therefore, to remain in our gross margin profile that we will need to continue to drive our normalized EBITDA expansion into the future.

Helpful. Any insight into the mix of frontier models versus conventional open weight models?

Yes. No mix. We haven't really gotten into that, but all I can come back to say is we've intentionally designed how we are going to market with Airo and the token usage so that we can maintain flexibility and handle the dynamics and make the decisions based on what works for our customers and for us going forward.

Great. Let's shift gears to the developer platform. That was pretty big news this quarter. Lets developers an AI agent search by configured domains entirely through APIs without visiting godaddy.com potentially. How do you maintain your ownership of the customer relationship and drive attach rates with the customer funnel moves towards LLMs?

Yes. So we talked about this and we did the press release for that the week before earnings. And essentially, what it does is expands the surface area, which we can reach and expand our services to customers. So that, to your point, we don't -- they don't have to come to godaddy.com to buy our things. And when we talked about at that time, it was this is the first place that we're starting.

So we're starting with that domain relationship. And it is still a customer of ours. We still maintain that relationship even if they purchase through that API in that interface. And we'll continue to expand the products and services that we offer on to those types of APIs, but there will still be on our platform and on our -- their sign-in will still be with GoDaddy even if they do that initial purchase through those APIs. So we expect that, that customer relationship stays the same and their purchase path will continue to evolve and the things that they can purchase through API will expand over time, too. But ultimately, the point there is adding another surface area to reach customers and to get new and different traffic into the GoDaddy platform.

Great. I wanted to talk a little bit about this transition for Airo, broadening, absorbing capabilities that today live in separately priced products. Like the traditional Do It For You services, template-based website builders kind of a shift to monetize through a mix of subscriptions and token usage potentially as Airo scales. What trends are you seeing in engagement in free-to-paid conversion that maybe give you confidence that the combined offering can drive higher LTV than the separate products that it replaces?

Yes. So what we're seeing initially is customers are attaching in the Airo cohort at a faster rate than we've seen previously. We're also seeing that the overall if you look at our customer base on a broad basis, I think it's over 50% have a second product. In the Airo cohort, it's over 70%, right? So we're seeing the behaviors around their ability to attach within their activity that really excites us. And again, it only propels that LTV model as we continue to go. It drives that retention rate up, obviously drives our LTV in effect, higher over a period of time. Now it does change how some of the bookings translates into revenue. We are taking on somewhat of a new aspect with tokens and that becomes a usage model. But this isn't something that's necessarily new for us. We've gone from subscription. We have transaction around aftermarket. We have transaction around commerce. Now we're going to usage.

So again, it creates a different dynamic but something that we've done before with other products, and we feel fully capable of being able to project out. Now the token usage is probably the most exciting part we've seen here because as customers have engaged with Airo, their use of tokens we can see going up, right? I have to tell you, it's pretty exciting, the Airo product. I've used it on a couple of things myself. And what you find is you maybe come in thinking about a website, but then you start to think about the other applications you can build within Airo and put them into play to create value from them. And when you start to do that, the token usage goes up. And the way the system is designed today is you basically get a certain amount of tokens per month.

When you reach capacity within that month, right, you have the option to go up a tier and go to the next SKU level or you can just purchase tokens outright. The next month, it starts over. So if you don't use them in the first month and second month, you start all over again and you're in the same dynamic. So that ability to create really drives that token usage and as customers continue to get value and they start to deploy this within their environments. We think that, that is going to continue to propel not only the subscription but grow the token usage based going forward.

As we think about the financial implications of absorbing these capabilities, how do you think about the time line for A&C booking growth to potentially reaccelerate or even surpass revenue growth? And just what that maybe lag looks like?

Yes. So no doubt, we are moving fast here. And quite frankly, we're moving aggressively. We've seen something in our customer base that we want to take advantage of and we believe we are in a unique position to take advantage of that. And with that, that is some of the things we talked about in the transformation that we announced coming out of Q2. We are doing it from a position of strength. And that's the way we continue to look at it.

Now I'd also add that despite the fact that we are seeing this overlapping period, I never moved off my free cash flow promise of $1.8 billion. And I say that because, again, we've seen something in how our customer wants to engage in technology and get value, and we're taking advantage of it. Now for the time line, we've talked about the second half of the year. Obviously, we'll talk about 2027 as we get closer we see Airo continuing to contribute to the overall bookings number. It was not an insignificant contribution in Q2. I didn't say an exact number, but it wasn't something that was insignificant and continues to grow. We've talked about that in the run rate. The one thing that we'll see is when we launch it into the main purchase path, what that does to the time line as to how long it will take to replace some of the other products we've built into it, like Websites + Marketing like [ DIFM ], which we've talked about, and what will that time line look like.

What we feel really good about it is we have the ability to control all the levers as we go through this to maintain that, hey, we're doing great on our free cash flow per share. We're over delivering what we promised a couple of years ago. And that during this period of time, we'll continue to grow that Airo base, and that Airo base will continue to drive that LTV. And not only will it give us more opportunities going forward, you talk about the ability to go into verticalization offerings within Airo itself. You have the jobs to be done and the adding of more products, whether they're through partnerships or our own product development. It really opens up the door to become that operating system for the entrepreneur for the micro business, and we're excited at where that's going for us.

Speaking of opening the ecosystem, today's APIs are largely focused on domain life cycle. You said over time, you see opportunity to expand that same approach across more of the platform. So can you just talk a little bit about how you see those AI systems interacting with a broader set of GoDaddy capabilities over time, both the access points, but also kind of broader usage?

Yes. I think that when we're talking about the LLM like visibility and sentiment, it's something that increasingly becomes more popular and more important over time. GoDaddy benefits from having the strongest brand awareness in the space. So we get a very large amount of our traffic over 60% that is sort of organic and direct navigation to GoDaddy. So in the period of time that LLMs have started to gain importance, that hasn't really had an impact on our traffic terribly much. But that being said, over time, that will become more and more important. And so we have work streams focused on essentially understanding that traffic and how that sort of comes to us and how we can drive better sentiment across that space. And -- it was kind of reminiscent of the early days of SEO, right? It was a -- when Google first started, the SEO was a black box and nobody knew how to figure it out.

And once everyone figured it out, it changed. And so then everyone refigures it out, right? I think that we're in a very similar situation with LLMs, right is a new black box that we're all trying to sort of figure out. And I don't think that anyone has the silver bullet per se, but we're all working towards making sure that we are showing up, getting better traffic and getting better sentiment and finding improvements over time -- we've already started these efforts a while ago, and we've been measuring how we show up on both of those measurement factors, and we've been showing improvement over our efforts for the last several months.

And this is very important. How you show up and why you show up is very important in this aspect. Our strategy is around high-intent customers. We want to be attracting whether it's through organic to our website or through an LLM or any other search engine out there. We want the right customer. We're not a deep discounter. We're not looking for the cheapest domain out there. We want the customer who's going to come in with the idea that they're going to create something with a domain or anything else they're looking for and really wants to move to the operating system that will provide them value. And that's what we're spending a lot of time on. LLMs, they're not going away. We all know that. They will become increasingly important and how you show up and why you're showing up becomes increasingly important, and that's something we're laser-focused on.

And that's something we've been getting quite a bit of questions about and because of the different pricing models of competitors in this space. And I think it's important to understand and acknowledge like what Mark was just saying. It's the high intent customer that's looking for how to build a micro small business and how to run their business on a day-to-day basis and have all the end-to-end connected applications that they need to have not just day 0 success but day 1 through day Infinity of starting their business and growing their business and managing their business over time. And those are the areas that we're putting a lot of effort towards showing up better in LLMs.

How do we think about where your customer acquisition channels evolve to, I mean, domains, as you pointed out, are still the biggest customer acquisition engine. We've seen an acceleration in registrations this year in part supported by that $4.99 .COM promotion. Beyond pricing, what do you see as the real levers in terms of attracting these new customers through the domain funnel?

Yes. So listen, again, we -- 60% of our traffic comes to us because of our brand. And that is something we've built over years. It's a huge asset, huge advantage for us. Making sure we get to that high intent customer becomes a very important aspect of that. So we are very particular in the type of traffic where those things like the $4.99 offers show up when they show up. I think while we put the $4.99 offer there, a lot of people lost the fact that it's only for 1 domain for a new customer because we don't want people coming in and doing multiple domains with it, obviously, we want somebody who has that high intent. So that continues to be a straightforward, very applicable strategy for us that has continued to work. I mean remember, 2 years ago, we stopped doing the discounting at the top of the funnel in a significant way.

Deep discounting.

Deep discounting. And what we have today is we're seeing almost 2 years later, the stronger retention rates showing up into the cohorts that started to come into our funnel after we stop doing that. And so that becomes to us something that has worked time and time again, and we'll continue to focus, whether the traffic changes from LLM to search or other channels because there are other channels that are still very, very good out there. And it will also work within our 60% which come to us just because our brand and domains and our brand around businesses and entrepreneurs are so strong.

And on top of that, too, there's obviously a change in a shift over the last several number of years that is about putting the marketing message out there that is for those high-intent customers that are looking to do more that want to have that full stack of solutions and when we can market to those customers and in the onboarding path, drive better attach and conversion and activation of additional products, we're building a better base of customers. And we already have 20 million customers that are a part of the GoDaddy space, which is massive. And now we have more than half of those customers that have at least 2 products with us and have a higher LTV and a higher retention profile.

This is -- we continue to drive towards that because those are the profitable customers that drive long-term profitability, long-term cash flow generation. So that's -- it starts with the marketing message. It starts with the brand. It starts with getting those high-intent customers and really looking to drive the growth of those types of customers.

And let's not forget about our Care organization, which has been instrumental to us being able to have the right to win in this market.

Great. I want to take a few minutes to open for audience questions, if there are any. Otherwise, I can keep going here.

There a couple of months ago you're talking about agents that persist right? And that it would need DNS. Okay. Can you just talk about that, how that would affect you? Is that real?

Yes. So our belief, and we've talked about this under our ANS strategy that ultimately, the DNS infrastructure will be the driver for the Agentic traffic that happens within this environment. Cloudflare said it, we have said it. I think a multiple others have said it now. And the idea being -- right now, there's no governing authority on who gets to use what agent, what agent gets to perform what tasks that ultimately, that will be required in order for us to get the trust and surety around interacting or having agents interact on our behalf.

DNS is a proven time and time again infrastructure that already exists has already been out there for a number of years building the ANS infrastructure as an extension of the DNS infrastructure. We all believe is the natural evolution of how the Agentic world will start to evolve. And I think multiple technology companies have now taken the position that, that DNS infrastructure can act as a base. Now if you think about the alternatives, which I think is important to look well, if that's not it, how does this work? It would take years to create an infrastructure that could take or handle the Agentic traffic that we are anticipating, and someone would have to build that from the scratch. And that's why I think we're all getting to that position that the DNS infrastructure is important.

Now as the largest player yes, that is an advantage to us, no doubt. But it is almost like open source, right? It is an advantage to anyone who wants to play within the Agentic naming game as we go forward. And we just want to make sure that everybody has the assurance, the trust, the idea that the Internet needs to remain open and needs to be free for everybody to use to transact on and do whatever endeavor seek to do out there. The idea being, if you're a micro business as an entrepreneur, you have the right to be on there transacting. You have the right to be able to do it in a manner that you compete with other players out there and that no one is controlling the volume, the value, what you're trying to do, what you're trying to create out there. And again, I think many companies, including ourselves, are actively promoting that as we sit here today.

You also developed the Agentic Resource Discovery this past quarter, ARD. That paired with the ANS and to your point, domain is becoming this trust and discovery layer for the Agentic web. How do you think about GoDaddy's role here, maybe the domain front but also maybe on a monetization angle over time?

Yes. So I mean -- and we also talked to about giving the reference implementation to Linux, and that's sort of the instruction manual for everyone who wants to participate in this part of the infrastructure of the Internet. And you can think about it over time. We're still at the point in which we're getting to that tipping point of adoption for broad adoption across the space. It's not there yet, but once it sort of does get there, and we've seen a number of companies like Mark said, that are embracing this as the right open source solution for how to handle the billions of Agentic traffic that's going to crawl around the Internet.

But the monetization path, you can think of it somewhat similar to how domains exist right now, right? There's going to be a set of registrars that will give out the -- yes, this is the agent that for claims that it is, and you can understand the prominence of this agent. You can understand where this agent is connected to or who owns it, similar to how you can do that with domains now on DNS. And so the monetization would probably work pretty similar to domains, but more to come on that front.

Okay. Fair enough.

Right now, the most important thing is the adoption of this and everybody moving in the same direction. So there's not conflicting kind of kind of thoughts or theories about how this should work.

Great. Let's move on to the financials. Everybody's favorite, you CFO. So reaffirmed guidance for the $1.8 billion free cash per share CAGR tracking above 25%. As Airo scales and the revenue mix shifts more towards maybe subscriptions and tokens, how should investors think about free cash flow margins longer-term?

Yes. So again, more to come as we start to look at 2027, but our North Star remains the same, and we'll have an Investor Day investor event on December 1, Investor night on December 1. And we'll go through what that means for the future and how this will all roll out on a long-term basis. But there's a couple of things that I think I've already said and I'll say again, is our North Star around free cash flow per share will remain our North Star, right? That is what we strive. That's how we drive value, that's how we return value to our shareholders.

Our capital allocation framework that we put in place has worked extremely well. We grew free cash flow per share at 28% for the quarter, and that was through a combination of not only hitting our free cash flow targets, but also being aggressive in our buybacks during the quarter. And we love our ability to use those levers to drive that number up as well as return value back to our shareholders.

Makes sense. On the investor right, any kind of preview of what kinds of announcements we can expect?

If I said anything, then people wouldn't show up -- but...

To get there, Michael.

We'll have some good dinner we've done an investor dinner now annually during the same time period. This will be an expanded preview, not only of what we're looking at from the product standpoint and our strategy, but also what that means to our financials and what people should expect to see. I will say that no doubt, the world is going to change the geography of how things are showing up. But the underlying premise of combining growth and expansion of our normalized EBITDA margins to drive that free cash flow and ultimately execute our capital allocation strategy remains intact, although some of the moving parts within each of those categories may change.

Great. Any other questions from the audience? Perfect. On the subject of profitability, Airo, Care, improving resolution rates by about 50% in initial tests. Beyond AI improving kind of the underlying economics of queries of consumption. How do you think about AI improving broader organizational profitability?

Yes. So no doubt. When I talked several years ago in our Investor Day, I laid out the framework of how we were going to expand our normalized EBITDA margins. I pointed at 3 things. We were simplifying our infrastructure. We were creating one technology stack. We're expanding our global footprint for people right, which was going to give us a tailwind. And also, as A&C, which is a higher profit point for us was growing and becoming a bigger part of the pie. Those 3 were adding to our ability as a company to expand our normalized EBITDA margin.

So here we are today, we targeted 33% for 2026. We're still firm on delivering that for 2026. But now the world has changed. When I put those levers out there, we weren't anticipating the productivity gains we could see from the use of AI internally. And we are seeing those productivity gains. There is no doubt they're starting to show up in our P&L and giving us a little bit more flexibility as to where we want to invest versus where we want to expand our margins and continue that journey. An example, you brought up Care no doubt, Care is getting better at resolving things faster. Care AI, we're using it in more places within our Care organization.

Technology, engineering, coding. Our engineers are getting better and faster, putting capabilities and products into market. Airo is a perfect example of that. We moved very fast to get that into market, and we continue to iterate but we're doing that at a more efficient basis because our engineers are just becoming faster.

And then quite frankly, G&A, right? There are so many things out there that AI is helping. I'm sure other organizations are seeing the benefit. We definitely are. But whether it was reliance on third parties to do certain tasks. Now we can bring in-house at a much better economic point than in the past, whether it's just getting the integrations between systems and sometimes even -- we've built our own internal applications, and we've deployed them using our own Airo technology now that has allowed us to get better and reduce manual tasks that we would have in the past had to rely on people within an organization or a contractor.

So all that was never anticipated when we were putting out the 33% target. So when I look to the future, and again, we'll talk about it more as we get through the year. I become very excited about our ability to lever those productivity gains to make sure, #1, we're innovating for our customers to continue the LTV that we've been driving for almost 30 years now and return the value to our shareholders by that -- I always say our normalized EBITDA to free cash flow conversion is pretty much at 1:1, if not a little better. Those are by design and those allow us a lot of flexibility as we move forward. And again, it's coming from multiple different areas within the organization.

Great. 1 or 2, I think, final questions we can fit in. Any other questions from the audience? Perfect. Quick obligatory question on the competitive landscape. I understand you have a very unique customer set. Any changes in competitive intensity overall?

No, listen, we continue to make sure we remain laser-focused on our customers. We have a right to win in this customer base. We are positioning ourselves as the operating system for the entrepreneur. That allows us -- and I've talked about a little bit future capabilities around verticalization products and adding products into that mix as well as their jobs to be done and expand. But we've always felt like we know this customer, we own this relationship. Now competitors can be doing stuff. I'm not saying we are acting blindly, but we also know when it comes to building tools that create value for our customers, we're better than everybody else.

Great. One last 1 then on the long-term strategy. What gets you most excited about our product road map, your product road map at GoDaddy. And if we were to sit back here a year from now, what 2 to 3 things would you like to be most proud of?

Yes. So I am not an engineer or a product developer myself, but what I've been able to do on the Airo app builder, our Airo product today is blowing me away. I have created even internal things that I've launched in my household, my wife is very happy I'm doing this, right, because it allows us to actually exchange data between us so we can get to simple things and decision-making that we're making on a long-term basis.

But the ability for Airo to change the landscape excites me. And when you're in there using the technology, your mind starts to really -- well, what if I use it for this? What if I use it for this? Can I create this? And as a non-engineered product developer, when I start creating applications and launching them and then giving them to my wife and my kids and say, "Hey, use this is how we're going to do this in our household, it really starts to sit there and tell me the sky is the limit, like what -- this is exciting.

This is a game changer. It's the operating system, not only for the entrepreneur, but the operating system for the household at the end of the day because people can do multiple different things within this application. So again, you asked me what excited me. I can keep going. I would start to describe all the applications I've actually built. I half joke, my wife is excited about half of them. There's probably half of them that she's not excited about because I'm having too much fun with it. But I really think Airo is a game changer. And I can't wait to see people engage it and really realize that the technology is unbelievable.

Perfect. I think that's a good place to wrap unless there are any final questions. Thank you so much. Mark and Christie for being here.

Thank you.

Thank you very much.

Good afternoon, everyone. Welcome to the Oppenheimer Technology Conference. I'm Ken Wong, software analyst at Oppenheimer. Very pleased to have with us the GoDaddy team, Mark McCaffrey, CFO; and Christie Masoner, Head of IR. Welcome.

Thanks, Ken.

And for everyone in attendance, this is a fireside chat format. I will run through a slew of questions. We will hold some time at the end for some questions. You can shoot those into the Summitcast portal. I already see some of you guys have queued up, so that's fantastic. And then I will run through those questions and then circle back to some of my own if there's additional time. So with that, Mark, welcome. I think most of the audience is aware of GoDaddy, but to the extent that we have some newcomers, just maybe a quick background on GoDaddy, what you guys do.

Yes. So to put it simply, we are where people come to start their ideas, right? We allow people to launch Idea and create a presence, most often with -- starting with a domain name, but then it include things like website, e-mails, commerce and basically gives them the ability to whatever their passion is, whatever their side hustle is, whatever their dream is, get it online, get it up and running and get them making money now. Now it's not always about making money. Sometimes it's best sharing content, sometimes there's other avenues that it will take.

But we focus on the micro businesses and the micro businesses to us are the small end of small businesses. So it could be a 1-person shop, it could be 2 or 3 people. But at the high end of our, I would say, target audiences somewhere around 7 to 10 employees, and I do say that's the high end. And I say that to differentiate us. We have over 20 million customers. 20 million. We've been around for 30 years. We know this customer base very well. This is not the enterprise. This is the 1- or 2-seat type environment. This is the underdog who's trying to compete with much bigger players out there and trying to do that not only through offering products and services in the local market, but also trying to extend that out to other markets that are now available and may not have been available in the past.

So it has a tendency to be a very passionate customer group of, very, I would say, resilient. I like to use the word gritty at times, but Christie always corrects me that I shouldn't call our customers gritty. It has a different connotation to it. The way we make money, it's about the LTV equation, we always talk about. We have a strong brand in the domains. It's the top of the funnel. When our customers attached to that second product, we have a strong overall retention rate of 85% for our customer base, which is fantastic. But when our customers get to a second product, we even go up higher than that. They get to a third product. We have a customer almost for life. That LTV equation, the slide we've shared in the past if you're just a domain holder with us, it's 1x. If you get all the way to commerce, that LTV equation goes to 83x.

And we will be having an investor event on December 1 here, and we're going to be sharing the new metrics and what that looks like for the LTV equation. But the underlying durability of the model and our ability to generate free cash flow and continue to compound on that free cash flow, those underlying principles still remain intact even as we're transforming the company to our new Airo Agentic AI platform. So I'll stop there. I can keep going, obviously, but I do conscious of questions.

Yes, I'll just add to the competitive advantages, of course, that we have is we're one of the most trusted brands in small businesses with the highest brand awareness for over 3 decades like Mark said with a breadth of customers, a distribution advantage, a broad set of solutions that help micro small businesses get started and converse with their customers, sell to their customers, collect payment and a care organization that knows our customers and small businesses better than anyone. And you've heard us talk a lot about Airo, which is our Agentic operating system for small businesses. It's the centerpiece of our largest initiative as we transition into an AI first platform.

Fantastic. And that's a perfect segue into my next question. So the business is transitioning, all of tech seems to be transitioning. You guys have Airo front and center. Would love kind of a quick primer kind of what is Airo? How is that differentiated from what you guys are offering today and kind of why you feel comfortable that is the future of GoDaddy?

Yes. So Ken, I would say where we're going is more of an immersive experience with our customers. We're meeting them where they want to engage with technology. And I think the world has to acknowledge not only our customer base but customers across the macro environment are changing how they engage with technology today. And we're meeting them not only where they are. We're getting to know where they want to be. And that technology is what we call Airo. Now Airo has matured. It started off as an AI platform in and of itself that brought a discovery and engagement to the customers at a certain pace. Now this is an interaction where customers can interact within the Airo engine, decide what they want, edit, make changes. It's basically typing in a real time, drawing on not only our technology in 30 years of history and data that we have, but also drawing on the LLMs that we provide them in order to do that.

When you think about it, it is our customer base isn't sitting there saying, oh my god, I want to use AI. They're sitting there saying, I want this faster. I want this easier. I want this better. I want it smoother, I want it at better price points for the value that I'm getting, and I want to be able to compete more effectively. And that's what Airo brings to them. Now we just launched in the second quarter. Within weeks, we saw an annual run rate of $10 million and then within 1 quarter, that number has jumped up to $50 million. Now it doesn't come, I would say, without a transition phase because as we are moving everybody to this Airo platform, in this Airo immersive experience, there are historical products that are not going to be as attractive to our customers going forward.

The example we used was Dify. No longer are people going to spend a few thousand dollars to have you do their website for them, why? Because Airo can do it right on the spot for them. Now that customer is going to now do different things through the Airo platform over time, which will drive LTV over time, but the immediate bookings we used to get around Dify in and of itself upfront will start to go away, will start to narrow. It doesn't mean it's going to go away entirely overnight, but it will definitely narrow as people get more comfortable with the Airo platform.

So we're okay with the trade-off. We're doing it from a position of strength. Our technology is, we think, second to none. It really meets our customer base and the ease of use around what our customer needs are. And we're doing it in a manner that we can control the outcomes and control what the customer how they're going to use it, how they're going to attach incremental products going forward, what will be included in the capabilities of Airo in and of itself. How we're going to sell them tokens, what are going to be the price on those tokens, how -- what are going to be the cost on those tokens and quite frankly, even the limitation on those tokens because you want to be able to limit, put expiry dates on when people can and can't use those in order to make sure you're not creating a downstream impact that you can't control.

So when I put out there, things like hey, we're going to see certain shifts in our product base around A&C and even domains to a certain extent. We do it but we do it with the comfort of saying, hey, we're still going to -- we're still going to meet our $1.8 billion free cash flow target, we're growing free cash flow per share at a higher CAGR than originally anticipated a couple of years ago. We had said 20%. Now we're heading towards 25% or better percent. We're still expanding our margins because we put a lot of things in effect a couple of years ago around getting better leverage from our operating model that are now paying even more dividends in this current environment. And we feel really good about our ability to continue to expand margins even into the future while investing in new AI environment.

Got it. Lots coming out there. On this AI disruption, you mentioned, yes, maybe hits A&C bookings a little bit. I think in 2Q, we saw a bit of a deceleration from what you saw in Q1. I guess I would love to unpack like some of the moving pieces there, how much of that was the kind of this transition? And how much of it may or may not have been any underlying weakness to the extent it was or wasn't. Would just love a sense of kind of what happened in Q2 and how you think that plays out as we head into the back half?

Yes. So what we saw in Q2 was our customers' engagement around Airo was great, quite frankly, it was higher than we expected. And when we put choices in front of them, whether the continuation of the existing websites, those marketing product, testing a new website developer with them or allowing them to use Airo, it was pretty clear that they wanted to use Airo. The feedback we got was -- we don't need multiple products. They don't need multiple products. Airo is an engagement tool that allows them to do everything they need to do, why don't you just build underlying fundamental technology into Airo itself. An example would be, we weren't going to give edit capability in Airo, that was going to be a website development functionality that we were giving.

And after the feedback, we just moved that functionality into Airo itself, so they could edit their websites on the fly if they needed to and that was, again, listening to their feedback. That immediate shift caused things like Websites + Marketing, Managed WordPress, some of the underlying things to slow down in our growth, while Airo continued to pick up. Now to be clear, Airo is a meaningful contributor to our Q2 results. I haven't given a number, but it wasn't an insignificant number. It wasn't enough to overcome some of the slowdowns we saw in the other products just yet. But we are seeing through the increasing engagement around Airo, that point in time will come. It just wasn't going to be when we first launched Airo in and of itself because of the immediate shift over. And we're excited, right? So when we look at the rest of the year, I gave some nods out there to where I thought the growth rate would generally fall for A&C going forward. The confidence there is we still have a few steps here that we're launching. We're testing into market now Airo in the domain purchase path.

I mean, that is our biggest funnel, right? That is our powerhouse funnel of how we convert our customers, not only convert them, but attach and putting Airo into that purchase path is a huge deal for us. So we're testing that right now. We're adding commerce functionality in the third quarter as well. We are finding that there's going to be a trade-off on the subscriptions around our commerce offerings. But putting the basic functionality into Airo itself and allowing people to transact immediately takes away the choice of which payment provider they're going to be used because it is just given to them.

And I'd rather have -- instead of getting 1 customer out of 3 on our payment platform, our view is we'll now have 3 out of 3 because that is just base core functionality within Airo itself. And the LTV equation starts to work better if I have 3 versus 3 customers over the long term transacting and using us as their payment provider versus that one, right? So again, these are subtle shifts, but they are big shifts, and we're pretty excited about how this Airo is engaging and how the customers are engaging in it.

And then one quick clarification. We're talking about -- and we talked about in the calls that it was the Websites + Marketing and the Dify, that -- so the do-it-for-you, not Managed WordPress, it's the do-it-for-you, that is. So there's one quick correction on that. But we have a lot of acronyms here, so sometimes it's hard to keep them straight.

That's okay. I enjoy Alphabet too. And so through this transition, as you guys have alluded to, there's some of the core that's getting moved into Airo. So that's naturally impacting bookings. I guess for investors, when we think about like the Airo opportunity, I assume it's fair that you think you'll capture more customer wallet from an Airo customer than a GoDaddy customer. Any color you can provide in kind of why you feel that way, what you're seeing in the underlying customer attach again, probably too early for retention, right, because you guys just launched it. But any data points that you can offer would be fantastic.

Yes. I think the data point we put out there, Ken, was 70% of our customers that are engaging in Airo have a second product today, which is much higher than the non-Airo cohorts from beforehand now. Over 50% of our customers have a second product overall. So when I say 70% of the Airo cohorts are coming in with the second product, it's an indicator they're getting to that second product much faster. And to put that shed light on that as well is -- and that's not having it in the domain purchase path right now. So these are customers that are either coming in for renewals and now renewing and adding products and they're doing it through Airo or there are customers coming directly to Airo for the first time, and they're adding that second product as they're engaging within the product itself.

The customer satisfaction with Airo is significantly going up, right? Again, for a product that was just launched several weeks ago, the feedback we're getting from the customers and our ability to tweak, adjust and make modifications but also see the satisfaction around it go up is tremendous. And listen, overall, even the 5x which is a combination of both subscription and tokens. And I will say, well, it's too early for renewals. We are seeing a good chunk of the population come back in and get more tokens. So they're continuing to build on it. They're continuing to engage in the platform, and they're continuing to hate to use the term, burn through their tokens, they're doing it pretty fast, right, which is great, which means they're getting use out of it. They're getting value enough that they want to come back and get more.

One thing that I'll add to it is while this is a new product and a new experience, and our customers are obviously flocking to it and really enjoy it. I think it's important to understand that we have a long history of understanding customer behavior of this type of customer. So when we see metrics like better attach and better engagement and better activation, we know that, that translates into strong retention. So even though it's a new product, all of those customer behavior characteristics really matter to inform how we feel the health of this product is performing.

Understood. Yes. I guess it aligns with your earlier comment that a single solution customer has x renewal rate, which is really high and then with that second product, which 70% of customers are already attaching arguably should give you that elevated retention rate. And since we're on this line of questioning -- a question just popped up, which kind of fits perfectly. Do your initial test of putting Airo into the domain purchase path show a significant uplift in Airo attach rate versus prior customer cohorts? Yes, I realize it's early, but any color that you might be able to shed?

Yes. It's too early to give any data points because we're literally just testing it into market today. I will say from our path past test, though, when we put a website developer -- development tool in front of them, the new Websites + Marketing and Airo, people overwhelmingly selected Airo and got to that second attached product a lot faster within that platform. So that's a little bit of pretesting in the domain funnel in and of itself, but we have enough data points from the previous launch that we feel really good that the Airo attach once in the demand path will perform. And obviously, we have high expectations given the launch of Airo itself in Q2 and what we saw.

Yes. And one of the things that Aman talked about even on our call recently was that the tests are performing well. And we had originally talked about getting Airo fully baked into the domains purchase path before year-end. He thinks that and he had said this on the call that it's possible that it goes earlier than that because of the success we're seeing. And like Mark talked about, people choosing that Airo over Websites + Marketing.

Understood. That's great to hear. And I feel like I could probably spend the whole call on Airo, but I want to make sure we attack a few other talking points as well. Another source of confusion and you mentioned earlier that maybe you could see some impact on the domain hosting business. But again, we will be within the range of outcomes, moving stuff to Airo. Is like what's happening with API domain, how LLM interact with GoDaddy? And admittedly, like I probably kind of was misinformed on this as well. Could you educate the audience on the situation and how GoDaddy is attacking this opportunity kind of good or bad?

Yes. So LLMs are obviously becoming a larger surface for creating software and business, right? That's undeniable. And so we've -- and I think it's stepping back. GoDaddy has had a long history of developing and using APIs too. And a lot of people don't know this, we used to serve the back end for a lot of really large tech companies out there for domains. So we have a lot of experience in doing APIs. So what this does is having those APIs that surface on LLMs. It just broadens the surface area at which we can attract more in different customers as they're engaging in different places to start over time. So it's just -- it's a broadening of the funnel for lack of a better phrase. So it's extending the discovery of our products and more surfaces.

Got it. And so as we think about the results of the first half, there was no erosion in terms of, hey, customers that would have gone to GoDaddy, all of a sudden got rerouted somewhere else. You guys see this as sort of just a new channel that you guys hopefully can optimize to have the same type of leadership position you have with your current channels?

Yes, I would say that's generally the right way to think about it. And I think it's important to remember for folks here is that GoDaddy already has the strongest brand awareness and what that translates for us is really strong direct navigation to godaddy.com anyway. So we're talking about a small percentage of the traffic that comes to GoDaddy is non-direct navigation. And so that now we're solving for the smaller piece of how customers find us, and it's a smaller piece of the smaller piece, right? So it's just continuing to ensure that much like and people have heard me say this already before, much like we are creating pathways for our customers to be in all the places that matter, we, too, want to be in all the places that matter for our products.

Ken, we don't want to walk -- anybody walk away saying this isn't an area that has to be focused on. LLM traffic is evolving. It's changing. You can solve for it 1 day and then 2 days later, it's changing again, right? So our ability to do this just like when search first came out in and of itself. You have to stay on top of the process of optimizing for it, and you have to keep your eye on the ball or else you can fall behind it. And this is something we've been doing for years upon years. So we feel really good that we have the ability in the internal mechanisms to continue to make sure that we're focused on the LLMs. Again, we have the luxury of a strengthened brand that is out there around domains in and of itself, and that allows us to continue to focus on make sure we're growing this channel.

And -- the last thing I'll add too on there is that this particular API that we had press release, of course, it's a developer platform that makes it LLM friendly for better discoverability and it's -- right now, it's starting in that domain life cycle piece, that will eventually extend across our entire platform so that the entirety of our suite can be found and discovered better.

Got it. Got it. So it will be more than a potential benefit to your core hosting business, eventually it could also benefit your A&C piece as well?

That's right.

Perfect. See another question from the audience here is what is the strategy that GoDaddy has for hiring? Are you focused to hire any workforce in the coming years? And what are your plans regarding Airo hiring? Yes, sort of all-in-one hiring specific question.

Yes. We're -- thanks, Ken. The phrase I would use is we have a pretty good, steady, capable workforce. One of the comments I put out there during earnings was one of the sources of leverage is we have a headcount today that is really fit for purpose within our operations. And we launched Airo with our current engineering headcount. We're seeing its efficiencies and productivity across our workforce, which we are allowing us to grow the business, but at the same time, invest in human capital in a manner that is intensive to our operations in and of itself. Quite frankly, we probably will see some benefits of keeping it flat, including the cost level of that going forward.

But there is no, I would say, need for investment around specific talent in order to make Airo capable in the marketplace. We have that talent. We launched Airo in and of itself a few years back with a few people with an idea, and now we're continuing to optimize around the agentic version of that. And it's the same people who have been working on it for years and continuing to modify, enhance and launch the different functionality and capabilities into it. So I feel really good about where we are today on that front. And there's nothing to call out to say, yes, we have to go do his or do this to make this all happen in the future.

Understood. All right. Shifting back a little bit on the operations side of things. We touched on second half. You guys are projecting for A&C acceleration. I guess how much of that do you feel is kind of much more mechanical. I believe coming out of Q4, there was a little bit, hey, we got to treat some dials around duration, promo activity. But as we start to see an improvement in the back half, it'd be a little more mechanical versus execution. You guys have obviously kind of implemented some new strategies around Airo, like how should we think about the balance of what needs to happen to get you to some of those targets.

Yes. So I feel really good about the transition that we're going through right now and laid out the impact for the remainder of 2026. Obviously, everybody wants to know what that means for 2027, and we'll have more data points to share as we get through Q3 and then ultimately our investor event, which will share some color around what -- how we think this is all going to roll out. But when you look at the transition in and of itself, if you look at the jump of Airo, 10x to 50 -- sorry, 5x, $10 million to $50 million, and the continued progression in the marketplace, you look at the underlying shift of that contributing more to our growth algorithm as we go forward, even in the transition as other products wane like we suggested, Dify and Websites + Marketing amongst a couple.

And we feel good about our ability to do that in a manner that we're sticking with our $1.8 billion of free cash flow target. We're sticking with 33%. Obviously, we're exceeding on our free cash flow per share. I can't say that enough. We grew at 28% in the second quarter. Even as we started that transition, we were able to grow at 28%. And when we feel really good that we are hearing what our customers are telling us and we are meeting their needs. And our relationship with our customers continues to grow and be strong. And as their needs change in the next 6 months we'll continue to shift.

The one thing I would ask everybody just to realize the world is shifting, how people engage with technology is changing. It is changing rapidly, right? Even as you go quarter-to-quarter, you see expectations amongst customers changing. But even doing so and being able to keep our framework and structure intact as we continue to grow the company, create value, meet our customers' needs. That, to us, is what we're doing, and that's what we feel really good about right now as we get through the back half of the year. Airo is meeting its needs. We'll continue to shift our customer. We'll launch it in the domain path. We're going to launch commerce capabilities into it. These are all things that -- we know we're coming. But even within those scenarios, we know what we've done already allows us to continue the momentum throughout 2026 and meet our underlying framework.

Got it. appreciate all of that. And then maybe stepping back to the topic that you are out of Q4, Q1, you guys made some tweaks to the go-to-market. You guys introduced some promo pricing. You guys were willing to kind of shift to annual customers. What are you seeing there? Do you still feel that, that cohort will be of equal quality as the customers you guys were bringing in prior to making some of those go-to-market tweaks.

Yes. So we saw the underlying data and again, some of this will start to lap within the fourth quarter in and of itself to when we went into market big with the $4.99. But the behavior we've seen in that underlying cohort has remained consistent throughout the period. Now we tweaked it a little bit. You can still get the $4.99 offer out there. It is only for new customers on their first purchase. It is not for every domain you buy out there. It has attracted a customer that had a certain element of high intent that we wanted. So we feel really good about it. Obviously, we have to get to the renewal rates in the fourth quarter in and of itself to prove that out, but we feel good the underlying data is supporting that.

We also feel good the tweaks we made to the program in Q1 to make sure that people had the option of the 3-year versus the 1 year was more present and get it balanced between the 1- and the 3-year terms, not over shifting as we launched this in Q4. And we feel good that we have the right balance of those customers today that the ones who want the 3-year term, which is similar pricing to the 1-year term just over a longer period of time. And so we're not making trade-offs within customer base because we were pushing one offer versus the other too hard. So we feel good about that balance being achieved. And obviously, we'll start to lap some of this in the fourth quarter, and we'll talk about that more as we get there.

Got it. And earlier you touched on as you guys kind of make this push for Airo, like you guys are able to maintain your operating framework. Again, I think one concern we hear from investors is the underlying AI costs, we hear from various tech partners is like that's higher than a traditional SaaS business. How are you guys thinking about the potential margin pressures that you guys will see and your ability to continue to deliver the consistent leverage you guys have shown these last few years?

I'll start with the idea and we've been doing this for a long time. We have the infrastructure in place to monitor, analyze and understand how all of this data and technology passes not only from the LLMs but through our system and ultimately to our customer, and our ability to match how the customer is engaging with those costs within our system and the value they're getting is aligned. So we're not linked into one LLM, we have relationships with all of them. Not every task has to be completed by a certain LLM. Certain tasks could be more complex, that requires different pricing or different token usage and certain can be done easily with a lesser token and that's just an example of how we monitor it.

So we feel we're in a great spot that pay, yes, the landscape of how the cost will show up in the P&L is going to shift. In December, I'll walk to people through what the future looks like, right? The margins are going to be a little bit different. But the underlying premise of getting leverage throughout the entire P&L exist, exists because our ability to look at our customer usage, match that up to the cost that's being incurred and then match that up to how we're pricing the subscriptions, the tokens, the product add-ons, the capabilities in and of itself. All works within the framework of, again, being able to grow customers, being able to attach products, being able to drive LTV, being able to drive profitability, being able to convert profitability to free cash flow on a little better than a one-to-one basis. And then obviously, using that with our capital allocation strategy that we put forth to drive the free cash flow per share.

So all of that remains intact. Some of the levers may shift within that and we'll get out and let everybody know as we get through 2027, what that will look like. 2026, I feel really good about the premises we put out there, right? Even with the growing Airo product, I've said we'll generally be around 64% gross margin, give or take, 100 basis points depending on product mix. I still think that remains intact. We're still seeing A&C grow to be a bigger part of our business. With that, it becomes -- it's at a higher segment margin, which drives some tailwinds to our ability to grow. 33%, obviously, we've put a stake in the ground that we will be there for the year. And we're continuing to invest in Airo as we're doing that. So we feel good that we have flexibility to even do things that allow us to optimize for the funnel and make sure we're getting to the right customers and being able to look at this from the long-term value without having to make short-term sacrifices.

Understood. And then kind of lost in all of that, I'm sure you guys are utilizing AI internally quite a lot. You mentioned the Care organization. But where are we on that particular journey in terms of trying to drive efficiencies within GoDaddy with your own internal use cases of Airo or other AI capabilities?

Yes. So actually, I get pretty excited when I start to talk about this because it's fun to watch it evolve in your day-to-day work. You're seeing the efficiencies start to show up. Care is an easy one, right? We've been talking about Care for years and their ability to use Agentic capabilities, it just gets better and better. Things that were done by agents or Care people in the past now can be done by agents in and of itself, resolution times are going down because we're getting to problem solving faster. We're not sacrificing the customer engagement metrics that we've talked about for years and their satisfaction rates were hanging tight with where they are.

So it's just working, right? And even our ability to get live agents, human interaction trained to be where they are is getting better because of the Agentic capabilities within the organization gets them to be smarter, faster, better. You apply that to a more streamlined technology stack, okay, you have another level of efficiency that we've talked about for years because you're not maintaining multiple different technology stacks, now you're maintaining one, and the familiarity with that one and the interoperability of that one is a lot easier to maintain going forward.

And then you flip it over the technology stack in and of itself, we're getting more productivity from our engineering teams, right? They're launching and getting code into production from test to production a lot faster than they ever did. So we're seeing our ability to even meet the customer needs around Airo in the technology stack, create the capabilities that they're looking for. It's faster. It's just faster to launch than it has ever been and watching the engineers to be able to code at that level today is just amazing. And then I have to throw in G&A, right? Of course, right? You look whether it's legal, whether it's my finance team, we literally are doing things much faster and integrating agents that used to take hours of time of work now is taking minutes to deploying these agents to do it and not sacrificing the quality of the accuracy of everything we're doing.

And then we really start seeing some cost savings as the reliance on third parties. Whether you now can create the technology yourself to do it, you don't have to go buy it from somebody else. People can keep right some of this into the system themselves right now, which is just amazing when you think about it.

BPO, you don't need people processing as many transactions out there. So the need for these BPOs is going down, and that's a huge cost savings for all of us. And then quite frankly, there are things you used to have to rely on third parties for expertise. You don't need to rely on them anymore because a lot of the expertise can be taken in-house because it's just readily available. So you're seeing the efficiencies around this today. And that's why I feel really good about, hey, we -- it's impacting our P&L today. A lot of these things didn't exist when I put out our investment thesis several years ago.

And now as we get through the last year of that investment thesis, now we're seeing the benefit of the incremental ability to do that. And again, as I always say, I feel good because we're -- we can turn -- if we want to put some more marketing behind Airo, we can do it within the framework we've already said it's not something that breaks the thesis in and of itself. It gives us options to optimize for going into the future and going into 2027.

Got it. Super helpful, Mark. In our last minute, we'd just love to touch on capital allocation. You guys have the CAGR on free cash flow per share has been well above expectations. Some of that was driven by big buybacks you guys have been doing. How do you guys see the right framework there? Do you guys continue to lean in? Do you guys shift those priorities elsewhere now?

Yes. So no changes, right? We feel really good about our execution of our capital allocation strategy. As I always say, don't look at any given quarter as a particular trend. Look at how we've executed over the last 4 years. How we've reduced our share count significantly and how we've deployed that free cash flow to the best of our ability, looking at what's in front of us at any given moment, we are prudent. We are responsible with how we do it. Buybacks are still the key metric we use for returning value to our shareholders, but we will always evaluate to make sure we're getting the right ROI, the right return for any investment, whether it's buybacks or anything else we're doing out there.

And again, I always come back to -- if you want to get an idea of what we're going to be like in the future, just look at what we did in the past because we feel really good about how we've executed that program.

Understood. Mark, Christie, thank you so much for all your time today. I think we are right at the time slot, so no one has to gank us off. To the audience, thank you for your participation. And yes, enjoy the rest of your day.

All right.

Thank you.

Thanks, Ken.

Thank you.

Welcome to GoDaddy's Second Quarter 2026 Earnings Call. Thank you for joining us. I'm Christie Masoner, VP of Investor Relations. And with me today are Aman Bhutani, Chief Executive Officer; and Mark McCaffrey, Chief Financial Officer. Following prepared remarks, we will open up the call for your questions. [Operator Instructions]

On today's call, we'll be referencing both GAAP and non-GAAP financial measures and other operating and business metrics. A discussion of why we use non-GAAP financial measures and reconciliations of our non-GAAP financial measures to their GAAP equivalents may be found in the presentation posted to our Investor Relations site at investors.godaddy.net or in today's earnings release on our Form 8-K furnished with the SEC.

Growth rates represent year-over-year comparisons unless otherwise noted. The matters we'll be discussing today include forward-looking statements, such as those related to future financial results and our strategies or objectives with respect to future operations. These forward-looking statements are subject to risks and uncertainties that are discussed in detail in our periodic SEC filings.

Actual results may differ materially from those contained in forward-looking statements. Any forward-looking statements that we make on this call are based on assumptions as of today, July 30, 2026, and except to the extent required by law, we undertake no obligation to update these statements because of new information or future events.

With that, I'm happy to introduce Aman.

Good afternoon, and thank you for joining us. At GoDaddy, our purpose is to make opportunity more inclusive for all. Our strategy is to serve our customers' needs across the entpreneur's wheel and AI is fundamentally changing how our customers create and grow their businesses and how we execute on our strategy. We have built and positioned Airo as an genetic operating system for small businesses. Airo is central piece of GoDaddy's largest initiative, our AI transformation. The AI transformation will enable us to continue to build on our significant at record of delivering value for both our customers and shareholders.

When we introduced Airo almost 3 years ago, it was an AI-powered experience that helped our customers discover, engage and adopt more of our products. Last quarter, Airo AI Builder took a significant step beyond that as a distinct genetic experience. Today, we have unified Airo and Airo AI builder into a single platform as an genic operating system for small businesses simply called Airo. Airo can build out the comprehensive experience of whatever a small business needs to operate from storefronts and booking systems to client portals. And it helps our customers run their businesses day to day, everything our customers relied on before lives inside the singular immersive AI experience.

Airo for small businesses is our biggest focus and source of excitement and customers are loving it. I work directly with Airo customers every week, and their response tells me we are building exactly what they need to succeed. Customers are choosing Airo at a rate exceeding our expectations. Annualized bookings run rate has increased 5x to $50 million versus the $10 million we shared just 1 quarter ago, and engagement continues to build among our high-intent customers. The momentum behind Airo is undeniable. And just as important, the quality has improved as we have scaled. Nearly all of this growth has been organic, demonstrating strong customer interest even before we have meaningfully leaned into marketing.

Customer satisfaction also remains high, giving us confidence heading into the second half of the year. We are actively testing Airo in the domains purchase path which is a high bar since it is our largest funnel and one that has been optimized for conversion and attach with our existing products for years. With a number of enhancements already underway, we expect to scale marketing and deliver continued strong traction for Airo. The world is evolving quickly, and we are meeting the moment.

Small businesses are engaging with technology in entirely new ways, and we are transforming our experience to meet them where they are going. That requires making deliberate choices about where we invest our time, talent and capital, recognizing the investments carry different return profiles. Our priority is to build the best end-to-end AI operating system for our customers.

As part of that shift, we are deemphasizing a few products as stand-alone offerings and bringing their capabilities into Airo, simplifying the experience and enabling customers to build and manage increasingly sophisticated web experiences themselves. More broadly, as AI reshapes how small businesses create and manage their online presence we expect the need for traditional products like do-it-for-you services and template-based website builders to narrow and evolve over time.

As the transformation unfolds, GoDaddy is well positioned with an earned right to win, grounded in a value creation strategy that remains consistent. Building a business online takes more than a layer of AI it takes secure hosting payments, customer engagement tools and dozens of other jobs, more small businesses lack the time or expertise to stitch together themselves. We have built one of the most trusted brands in small businesses over nearly 3 decades backed by more than 20 million customers, a strong distribution advantage, a broad set of solutions, deep technology expertise and a care organization that knows our comers and the needs of small businesses better than anyone.

Our AI transformation is how we are putting those trends to work. Our vision for Airo is to deliver all of that as one integrated immersive experience, and that completeness is what differentiates GoDaddy. We remain focused on generating profitable growth by attracting high-intent customers who adopt more of our technology and, in turn, drive higher lifetime value. The mechanisms may evolve through AI or pricing or merchandising or other means, but the model remains remarkably durable. In addition to Airo, there are 3 other connected work streams in the AI transformation at GoDaddy, and I'm excited to briefly touch on these today.

First, we are reinventing our own operations to be AI native to improve customer outcomes and increase the speed of innovation. In care, Airo continues to improve resolution rates across both chat and voice with the 24-hour repeat contact rate for customers served by our voice bot dropping by over 16 percentage points in Q2. This allows our care teams to focus their expertise on more complex needs and on guiding customers as they build their businesses.

We are also using Airo to power processes internally at GoDaddy, giving us the opportunity to test new capabilities and rapidly improve the product through everyday use. That same rigor extends to how we fund this work. Scaling Airo at this space comes with investment and managing it carefully matters as does the innovation itself. We anticipated the rise in AI compute costs and took actions early to offset them, giving us room within our financial framework to support both greater AI usage and increased marketing behind Airo. We continuously test across multiple models to make sure we are creating the expected customer experience while using the most effective and efficient option for each job. That discipline gives us confidence in our ability to manage compute and token costs as Airo scales over the long term.

The second and newest work stream in the AI transformation is doubling down on GoDaddy APIs being better designed for consumption by agents, including LLMs. This quarter, we launched the GoDaddy developer platform, a new generation of domain APIs that allow developers and AI systems to search, purchase, configure and manage domains directly within the tools where they are already working. LLMs are increasingly becoming a large surface for creating software and businesses, and this enables our platform to be equally accessible to both people and AI.

This is our first step. Today, these APIs focus on the domain life cycle. But over time, we see the opportunity to expand this approach across more of our platform, making it easier for AI systems to securely interact with a broader set of GoDaddy capabilities, including hosting and commerce.

On ANS, our third work stream intended to help shape the infrastructure of the Agentic web, we achieved strong new alliances this quarter. identity and discovery are essential layers of the open Agentic web and domains are the natural foundation for both as the web moves towards an Agentic future. To that end, GoDaddy enhanced the agent name service standard, launched it in production and this quarter, announced our intent to contribute it to the Linux Foundation.

On Discovery, we codeveloped the genic resource discovery specification or ARD alongside many of the world's leading technology and AI companies. ARD helps solve agent discovery, making it possible to locate tools, skills, agents and other resources instantly. Together, ANS and ARD point to the same conclusion. domains are and will remain a trusted foundation, identity and discovery in an AI-driven Internet. And that trust enhances and extends the value and demand for domains well into the future. Our Q2 financial performance and the work we have shared today showcases a company executing on both the business we have today and the business we are building for the future. We stay focused on the fundamentals and what we can control.

Our core initiatives, pricing and bundling, seamless experience and commerce continue to perform well, strengthening our high-intent customer base and reinforcing the durability of our model. At the same time, the momentum in Airo has given us greater confidence in the role GoDaddy will play as AI reshapes how small businesses are created and grown. We will host an investor night in December, which will give us the opportunity to connect the AI transformation work underway across the company with the value it can create for our customers and our shareholders. There is much more ahead, and we look forward to sharing it with you.

With that, here's Mark.

Thanks, and good afternoon, everyone. We are advancing our AI transformation while maintaining the financial rigor that has long defined GoDaddy. Our second quarter results build on our track record of focused execution. We delivered revenue above the midpoint of our guide and expanded our normalized EBITDA margin by over 200 basis points. We generated strong free cash flow of $443 million, with trailing 12-month free cash flow of $1.73 billion.

We continued our responsible and prudent capital allocation program, repurchasing $852 million as of July 29, reducing our fully diluted shares outstanding by another 7% this year to 127 million shares.

Total revenue for the quarter grew 7% to $1.3 billion, and ARR grew 6% to $4.4 billion. International revenue grew 8% to $427 million. Our Applications & Commerce segment grew revenue at 11% to $515 million. Growth continued to be supported by customer adoption of our solutions. Segment EBITDA margin expanded roughly 250 basis points to 46.8%. Core platform grew 4% to $783 million on strength in primary domain registrations and renewals led by both dot-com and higher-priced non-dotcom TLDs alongside a strong aftermarket quarter driven by higher volume. Segment EBITDA margin expanded to 33.4%.

Total bookings grew 6% to $1.4 billion. Core platform bookings grew 5%, representing acceleration from Q1 as we move past the peak of our promotional offer. Applications and commerce bookings grew 7%. These are solid results against a dynamic environment with AI driving rapid changes to customer expectations and engagement patterns. While our ANC bookings from traditional products is moderating during this period of transition, we are moving quickly to anticipate and meet these changing expectations.

Moving forward, we expect Airo's scope to broaden, taking on capabilities that today live in separately priced products such as traditional do-it-for-you services and template-based website builders. We view this as a deliberate trade-off as Airo monetized through a mix of subscription and token usage continues to scale. We are encouraged by what we are already seeing, higher engagement and stronger free-to-paid conversion rates on Airo. Over time, we expect this combined offering to be even more valuable than the separately priced products that our customers engage with today.

Through this transformation, as always, we will remain disciplined in how we invest in growth, ensuring that we earn attractive returns as we drive growth. This approach positions us to continue generating strong free cash flow and shareholder value well into the future. Underpinning our transformation is the durability of our model. Where high-intent customers who adopt more of our solutions retain at higher rates and ultimately generate greater lifetime value.

Our distribution network has long been a key advantage engaging our customers. Once customers are within the GoDaddy ecosystem, we can surface the best next product at the right moment, shortening the time it takes customers to engage, publish, and derive incremental value with more of the platform. These underlying fundamentals are continuing to strengthen alongside our transformation. More than 50% of our customers have at least 2 paid products with us and that percentage continues to grow with the adoption of Airo. What's even more encouraging is that over 70% of our customers who have used Airo this year have 2 or more products, which is higher than our non-aero cohorts.

Retention continues to improve above an already enviable 85%, ARPU increased 9% to $250 a and the number of customers spending more than $500 annually continues to become a larger part of our customer base. This is what a durable self-funding model looks like, expanding margins and strong cash conversion, funding our AI transformation while still returning capital to shareholders. Normalized EBITDA grew 14% to $434 million with margin expanding more than 200 basis points to 33.4%.

Free cash flow grew 13% to $443 million with normalized EBITDA continuing to convert to free cash flow at better than 1:1. Our strong free cash flow, low leverage and high liquidity provide us the flexibility to keep investing in our AI transformation while aggressively returning capital to shareholders. We ended the quarter with $1.2 billion in cash and total liquidity of $2.2 billion. Net debt was $2.7 billion, representing a net leverage of 1.4x on a trailing 12-month basis and well within our target range.

During the second quarter, we repurchased 6.6 million shares for $554 million. Year-to-date, through July 29, we have repurchased almost 10 million shares for $852 million, reducing fully diluted shares outstanding by 7% since the beginning of the year.

Turning to our outlook. We are narrowing our full year 2026 revenue guidance to a range of $5.215 billion to $5.255 billion, representing 6% growth at the midpoint. As a reminder, the full year guide absorbs just over 200 basis points of cumulative impact from the Dako registry contract expiration and our consistent exclusion of high-value aftermarket transactions. For Q3, we are targeting total revenue within a range of $1.315 billion to $1.335 billion, representing 5% growth at the midpoint. The third quarter represents our toughest compare on strong aftermarket performance last year.

For both the third quarter and the full year, we expect ANC revenue growth in the low double digits and core platform growth in the low single digits. Absent any FX impact, we expect bookings and revenue growth rates to be at or above parity for the remainder of the year. We are projecting a normalized EBITDA margin of approximately 33% for Q3 and reaffirm our full year margin target of over 33%, reflecting continued operating leverage and AI-driven productivity alongside rising investments in AI products, platform, marketing and compute.

Q2 normalized EBITDA benefited from the timing shifts of certain costs some of which we expect to be incurred in the second half of the year. We reaffirm our full year free cash flow target of approximately $1.8 billion with normalized EBITDA conversion greater than 1:1. On capital allocation, we operate within a disciplined returns-based framework and have deployed greater than 95% of our free cash flow over the last 4 years toward share repurchases. Our continued commitment to returning capital reflects our confidence in the strength of our cash flow and the long-term value we are creating.

We remain focused on allocating capital to the highest value users with a priority on driving long-term shareholder returns. Taken together, the combination of our free cash flow with our approach to capital allocation puts us on track to deliver on our North Star a 3-year CAGR of over 25%, well ahead of the 20% target we set at our last Investor Day.

Finally, I would like to formally invite you to our Investor night on December 1, 2026, at our Tempe, Arizona headquarters. We will expand the programming of our typical investor dinner and use that evening to provide a more comprehensive view of our strategy, how the work streams you heard about today come together and what they mean for our customers, our business and our shareholders. As the world is evolving, we are launching the experiences to match the moment as we transform the principles behind our strategy and model, our focus on profitable growth compounding free cash flow and disciplined capital allocation are staying firmly in place. We look forward to seeing many of you there.

With that, I'll turn it back to Christie for your questions.

Thanks, Mark. [Operator Instructions] Our first question comes from the line of Vikram Kesavabhotla from Baird.

Okay. Can you hear me okay?

We can.

My first 1 is on the Domains business. And Aman and Mark, it'd be great to hear your perspective on your current competitive position within primary domains and specifically, when we think about the emergence of AI agents as part of the customer journey and some of the different strategies taking shape across the industry. I'm curious if you're seeing any changes in that business one way or another. And from a high level, it'd be great if you could talk about some of the steps you're taking to ensure that GoDaddy remains successful in primary domains as customer behavior and discovery patterns evolve.

And then separate from that, I also wanted to ask about the A&C segment. You referenced in the prepared remarks that bookings from some of your traditional products are moderating as you go through this transition, can you help us understand the magnitude of some of the headwinds coming from those products? And going forward, when do you think the ramp in aero monetization will reach the point of offsetting some of those headwinds?

Thanks, Rick. Maybe start with domains and then we'll come back to A&C. On the Domains business for over a couple of decades, GoDaddy has been the leader in domains and many, many business models. And sort of changes in technology have happened during that time. So we feel very good about GoDaddy's overall position with AI and the advent of LLM, we're definitely seeing some changes in that business overall. And we are actually meeting the moment in terms of what's happening. So as you probably saw, we launched GoDaddy's APIs in a new and renewed format. This is literally addressing the changes we're seeing in the domains business today. With the new GoDaddy APIs. Those APIs can work very well for LLM and AI. This is really work for our partners today. That's going to allow us to handle some of the changes that are happening in the Domains business and actually put more competitive and innovative products in the market that GoDaddy has an advantage because we have so many of our own products that we can bundle together and put into the API.

So we really think that's an area we can address. I think overall, Mark can maybe comment on a little bit on the our overall position. We have continued to maintain a very healthy share in terms of overall primary domains. Obviously, Q2 was a strong quarter, but I'll leave that to Mark.

Yes. And just on the domains element, our market share around the main is consistent with prior periods, right? And that's the broader term of domain. So in all the TLDs, including non-dot-com DLTs out there as well. And Vikram to your A&C comment, no doubt, we are in a dynamic environment. Our customers are broadening their use of the AI. We couldn't be more excited about the transformation we're entering into with Airo and the strong early growth signs. We believe this is going to be faster as we start to increase the purchase paths around Airo in the coming quarters. We're expecting bookings in A&C to be in the high single digit the remainder of the year. We'll probably have more information as we get further throughout the year as to when we think those inflection points will happen, but we couldn't be more happier with the growing adoption of Airo today.

And just to touch on the strategy behind the overall A&C segment. Our strategy with A&C has been to attach products across the entrepreneur's wheel for our customers with Airo, we've greatly accelerated that strategy. What we thought of as a 5-, 7-year strategic product road map can now be seen as 1- to 3-year road map. We can use AI to very quickly integrate our products with Air and Airo does a great job in terms of product discon attach, and it beats our existing web-based attach funnels. The overall vision for Airo is to cover a majority of the jobs to be done for small businesses, effectively creating a competitive AI operating system for the businesses, and our focus is to optimize it for our customers.

Like I said, since we have so many products ourselves, we can bring them to Airo much faster than others. Just in the last 4 months, we've put Airo AI Builder out there about 4 months ago. We've added GoDaddy payments. We've added customer communication and multiple other capabilities to Airo just in the last 4 months. And as we look at the next few months, we're going to introduce a host of commerce capabilities even get into things like customers being able to have business telephone numbers and IVRs and voice and video capabilities that will all work within the AI immersive Airo experience.

I work with Airo customers all the time, and I'm amazed at what they can do themselves. And that delight that they have with the product, that's the path to greater attach. That's the path to greater A&C. And that's the path to getting strong lifetime value for GoDaddy.

Yes. And just to add to that, the trade-off is we used to have separate SKUs for commerce, but now it's all the capabilities are included within Airo and we will get to see the transaction value related to that. But the reality is that becomes a second or a third patch product. When we get to second or third patch products with our customers, as we have always said, the retention goes up and retention goes up, the LTV goes up over time. So we believe this is going to be more valuable over time than our existing customer -- existing products out there.

Our next question comes from the line of Ken Wong from Oppenheimer.

Fantastic. I wanted to dig in a little more on the AI disruption angle. Aman, are you able to share perhaps where you're seeing some erosion? Is this by channel? Is this upmarket, downmarket? How does it impact the domain funnel what you guys obviously are highly dependent on? And then Mark, just on the guidance, like good to see an acceleration in Q4. But I guess considering your lap in the kind of the disruption and go-to-market comps and also the domain. The GTLD comp, like I would have assumed a little more of an uptick. Just would love any color on what type of conservatism is baked into that number.

Yes. On the domains funnel, we continue to see very healthy domain funnel economics and traffic and conversion. In Q2, we continue to have a healthy rate. Now things are dynamic and evolve over time when new stuff is happening. There's no doubt that the LLM are playing a part, and we see that shift in search traffic. We've talked about it in the past, and we're continuously improving GoDaddy's services to work better with the L&M. What we where we particularly see the changes with the API domains. And this is new services and new business models that are sort of getting attention.

And like I said, over the last couple of decades, we've seen other similar plays. And over time, our strategy remains the same, but we have to evolve. We have to provide more competitive products, which is why we relaunched GoDaddy's APIs, especially in the domain space. And you'll see us launch APIs for our other products too because we want to be able to bring forward a very competitive offering to LLM so that we rank better in LM so we get better traffic from them. And as we see the shift between search and LLMs that GoDaddy is there and is able to be competitive for the short, medium and long term.

Yes. And Ken, on the guidance and what we're looking at for the back half of the year, keep in mind, while we're lapping the [ $4.99 ] offer, that's a bookings impact we'll see immediate, but the revenue still rolls out throughout the year. So we'll still have some headwinds related to the revenue from the discount that we offered in the first part of the year. That, coupled with the fact we don't include the high-value transactions in our guidance that is our practice, that gets you to where we are with the range right now.

Our next question comes from the line of Mark Zgutowicz from the Benchmark Company.

Mark, maybe just a couple on Aero. You indicated that Air will absorb capabilities currently sold under separately priced products while you're seeing your A&C bookings moderating. I'm just curious how much of your existing bookings are attached to those products that you can well are being deemphasized, if you will, and at what level Airo subscription and token revenue, what level is that required to sort of replace those economics?

And then a separate question on the exposure to domain path traffic. What percentage domain traffic is being exposed to Aero today? And what are you seeing in terms of initial conversion, product attach and bookings relative to legacy W? And then the last 1 just related is how much marketing actually occurred related to Airo in 2Q? And what do you have plan for the second half? Just trying to get a sense of how much of the Q2 is, I guess, I would call it a cost timing benefit or how much of that reverses into 3Q and 4Q?

The first part of it I'll will, Aman, and then maybe you can get into the domains and where we stand with that. Thanks, Mark. When we look at the products impacted, there will be a few capabilities in there. I won't go through the entire list, but some examples, we talked about commerce already again, commerce is not going to go away per se, but some of the capabilities we're in separate SKUs now will be built in, right? Another example is do it for you. Our professional services used to be transactions around a couple of thousand dollars. Now our customers are coming in and doing most of that work themselves. Some of it is going through care as well, but the need for professional services is narrowing as we go further. So the impact on that business will start to wane over time.

Putting we're quantifying each specific area, I think we're early in the process here as we're going through that. The way I would look at it at a high level, probably was about a point to our total bookings this quarter. And obviously, the growing impact of Airo and the adoption is still early stage versus some great traction. We're seeing our customers convert over from WAM to the Airo to do a lot of their work. But we still have some work to do around the purchase paths, what we're offering the attach and all that, which we'll be doing in the second half of the year. So the transition period, I would say, we put the numbers out there for the rest of the year. As we get more data points and talk to you on December 1 at our Investor Day in we'll give more nets to what that means for the future period.

Yes. And the second and third point are actually related -- question are actually related, Mark. So when we actually tested Airo in the domains path in Q2 as well, as I talked about last quarter, and it performed quite well. But websites plus marketing, as you know, is deeply integrated into all our attached funnels. So what Airo has to be does not just website building with websites plus marketing, but all of it -- all of the attached capability that it has. And that's what Mark just referenced.

We still feel good about being able to replace that in the second half of this year. As you will remember, we talked about it sort of a year's journey. You'll be able to put in new capabilities that would replace websites plus marketing. We still feel good about that timeline. We're doing new tests in Q3 with it as well. And adding it to the domains path is an important game for us to add more and more marketing spend because having it in the domains path allows us to put more marketing behind it. We did put a small amount of marketing behind it in Q2. It was not a large number.

We actually saw a good result in terms of new customers coming and engaging with the product but that's where we've got to do the work to convert them and then get the attach and make all of that work. But we're encouraged by the small hole tests we did in Q2, and we intend to continue to ramp that up in Q3 and Q4.

In terms of how I think about the marketing, the core principles of sort of the guardrails that we have and the return-based framework for marketing is saying the same. We still believe in the same way of being disciplined in marketing. We're looking for those pockets where we can spend dollars and get great return. And we see great possibility to do that, especially as we get Airo into the domains path, which should be sometime in the next few months.

And just to follow up on that, we called out that some costs would be moving from the quarter to the second half of the year and marketing as an example of some of those costs.

Our next question comes from the line of Elizabeth Porter from Morgan Stanley.

Great. It was really impressive to see Airo's bookings run rate increase from $10 million to $15 0 million in 1 quarter. So could you just help us unpack some of the bigger drivers of growth factors between things like new paying customer additions, kind of the higher ARPU with the tax and then the incremental token consumption. It'd be helpful just to understand within the cohorts where are you seeing the bigger momentum? Is it more by new customers or some of those existing customers to go to.

Yes. Thanks, Elizabeth. So as you know, we have only about 4 months of data. And I would say for the first 2.5, 3 months, we mostly saw only exist customers, the large majority of customers even engaging with Airo were existing customers. But as we started even a little bit of marketing spend behind it and started to surface Airo on more of GoDaddy landing pages, we've started to see new customers engaging with the product. So we're seeing a good sign-up rate for Airo for completely new GoDaddy customers as well.

And in terms of the economics, we continue to feel vigor and confident about the economics of the product. We've talked about how we are approaching Airo. Our goal is to create a fantastic outcome for our customers while also having a profitable product, and we do by just how we approach customers, what we spend to get them. We do that by what AI costs we deliver, what models we use, and we deliver that by how we add attach to the product, again, within the euro experience. So all of it is very seamless for the customer, and we keep a very close eye on the economics on it.

In terms of tokens use, we continue to see good results there. Customers engage with Airo, a percentage of them are very, very engaged and they buy a lot of tokens, and they continue to build what we think are just fantastic, not just websites, but applications that they're building and they're able to do it themselves.

Yes. And just to call out, we're seeing better free-to-paid conversion with Airo than we were seeing prior to Airo.

Great. And then you've previously talked about the pricing and bundling contribution just being paused as websites and marketing transition upgrade occurs. I just wanted to get a sense for kind of where we are on that transition, when do you think pricing and bundling can resume to contribute telco in bookings? Is this something where websites and marketing, when it reaches customer metric parity, we expect pricing to resume a mill or is there any sort of additional lag period as you look to validate unit economics and retention. Just some of the key factors you're monitoring there as with respect to pricing.

Yes. So I'll start. Pricing and bundling continues to be a contributor to our growth in the underlying products that we have out there even as we're making this transition, we've called out in the past the wet flexes marketing pause that we made, and now we're pointing to the fact that we're building in the capabilities of what it was marketing directly into Airo in and of itself. So the bundling and pricing, we have a healthy working. It will evolve as we start to look at the capabilities we're including in Airo versus the products we are attaching to Airo, that is something that will be -- we'll have more information on as we go throughout the year, but pricing and bundling is still contributing.

Our next question comes from the line of Arjun Bhatia from William Blair.

I am Willow Miller on for Arjun Bhatia. I have a pricing question as well. Given the dynamic environment, just to use your words, is GoDaddy offering more promotional pricing now versus previously. For example, when I go on the website, I can see a free trial for the higher tier of the website builder in addition to a pop-up for that $5 1-year domain promo that I believe you've called out in the past. Essentially, I'm just hoping to better understand your pricing strategy with promotional pricing.

Yes. The only change to pricing or promotions that you're seeing on the home page, Willow, is related to aero because we have a new product, we're giving 50 free credits for people to come in and try the product, there's no actual new promotional pricing. In fact, as you probably remember, over the years, we have really reduced the viral promotions, and we continue to maintain a very low level of promotional pricing. The 2 core pricing promotions that we have is the $4.99 and that's one per customer and then what we launched with Airo.

One per new customer.

One for a new customer. Yes.

Our next question comes from the line of Alexei Gogolev from JPMorgan.

This is Elia Smith on for Alex. So we have 2. First, historically, at your last Investor Day, you cited that pricing and bundling was the largest lever to your forward revenue growth. As you look ahead, what do you think the largest lever would be? Is it a row? Is it partner -- product partnerships? Or is it something else?

Yes. We absolutely feel very good about Airo. The way Airo is growing and customers are engaging with it, the way we see free-to-pay conversion. We think this is a massive opportunity for our customers to really build what they want and get their brand and their experience out there in a manner that just wasn't possible with previous tools. So a lot of things are going to point to Airo and super excited about that. In terms of pricing and bundling, in our large portfolio of products and 20 million customers. Pricing in bundling will continue to evolve, but we no doubt part of our strategy, part of what we're going to do over the next few years.

And then you asked about partnerships and you throw that in there. We think that is a great opportunity. We've been very successful with some of our partnerships, but being Airo is an operating system that allows us to integrate partnerships a lot more going forward. So we think that will be a contributor as we continue to grow A&C and other products within the entrepreneur as well.

Very clear. And for a follow-up, your customer base as it stands is largely solopreneurs. Do you see the composition of your customer base changing as you build out Agentic web offerings? In other words, would you sell to larger SMBs or enterprises?

Yes. we're still pretty focused on small businesses, and there's a lot of time and opportunity there. So that's what we're focused on. Over time, we'll keep you informed as things evolve.

Our next question comes from the line of Robert Coolbrith from Evercore.

I just worry maybe you can just sort of contextualize how the quarter went versus your expectations. It seems like core did quite well from a bookings perspective. I was just worried was there a rapid shift in customer behavior where more customers are coming to you just for domain they're like, okay, I've already got a complete retosomething that I'm just trying to find a domain for. Was there a dramatic shift in attach for presence? Or is it more just about that pause on pricing and bundling and websites in margin, this was more or less to how you thought it was going to play out just to understand a little bit better.

Yes. Robert, thanks. There are always puts and takes in any quarter. This quarter, I would say we started to enter the phase of transformation. Probably the biggest shift we saw was the customers engaging an Airo faster and more than we anticipated and the acknowledgment that they wanted everything in a simple to use 1 platform status. So things like websites of marketing became a capability that now we're moving into Airo, and that shift obviously changed the dynamic around how we're engaging with our customers. But even in those dynamics, when you look at what we were able to do for the quarter, we were ahead on free cash flow per share growth. It's close to 28%. Our normalized EBITDA margin, 33%, we converted over free cash flow on a greater than 1:1 basis.

We show the acceleration in bookings coming out of Q1 into Q2, and our revenue, obviously, was above the midpoint of the guidance. So our expectations were pretty much in line while there were say, different moving parts within that a little bit. We were largely very happy with the performance this quarter.

Got it. And on the ramp in the ARR Airo. I understand that you're testing now in the domain funnel, but was there any other change in terms of your placement of Airo in the fall? Or is it just purely organic, people say, okay, I see both the traditional bet sets and marketing path and I see the Airo path in front of me and more people than perhaps anticipate going into the Airo path. Maybe just a little more color there.

Yes. A number of organic placements, landing pages for GoDaddy just search SEO traffic finding it and basically a large majority of it being organic. There is some testing on the domains path, but that's more a limited amount of time. because the test runs only for a certain period for us to gather the data. But a very large majority of what you see is organic. That's what gets us very excited. Customers just coming to go data using the product. just love the product. And we -- if I haven't said it already, customers love the product. We get really good feedback from customers for a product that's new that's launched just a few months ago, it's a really good number. So pretty excited about it.

Great. Last quick one, just on the API endpoint distribution. If you could talk a little bit about maybe what you're seeing from the MCP integration with Anthropic? then how do you broaden that distribution to other LLMS. How finally do you think LLM will be incentivized? Or how ultimately do they get to -- will the customer get to your end points versus.

Yes. We've worked to optimize against the LLMs and we went down a path a little while ago to say, look, we should just rethink our API strategy because the LLMs use APIs will the building apps using LLM and the lens have to be able to natively consume GoDaddy products. So that was the rebuild for domains. Again, super excited about that. It's very new. You might have seen the press release, I think, just last week. And we're very quickly going to bring other products on line 2. What these APIs do is they provide the LLM with the key information, the LLM to be able to automatically consume those products. And that, we think, is a good step up from what we had earlier.

So again, super excited about that, too. That's pretty early. But hopefully, in a quarter or 2, I'll be talking about that with equal excitement as I am with Airo today.

Our Next question comes from the line of Kishan Patel on for Josh Beck at Raymond James. Kishan, I'll put you on mute for now.

Our next question comes to the line of Naved Khan.

Great. I'm just trying to unpack the slowdown in the A&C bookings. And I think you called out a few things over there but maybe 100 basis points if I heard you correctly, I think it's attributable to the -- maybe the fact that do it for me maybe shifting over to listening into aero led enablement. But are there some other things to call out here? Because if I look year-on-year, you had an easier comp in spite of that, we saw a 200 basis point resell, just trying to understand what are the components of that?

Yes. Thanks, Naved. And not going through all the capabilities we're moving into Airo. I think the biggest examples you can look at are the ones you pointed out, the professional services around do it for you. As an example, where we're seeing narrow pipelines related to our customer needs for complex websites or us creating form. But then what places marketing also is another example we move those capabilities in and you've seen a drop off in the need for websites marketing within our A&C portfolio. So those are 2 big bolster probably a few out there at the end of the day. But as we continue to ramp Airo and we see the engagement over time, Airo will become a bigger part of the growth story as it starts to fall off. Just 1 point of clarification there. Not the 100 basis points, that was for our total bookings number, not specific to A&C. So just FYI, as you try to reconcile the numbers back.

Okay. So -- and then the -- I guess, the $150 million ARR growth in the biller, is that counted in the A&C as well? Or is that somewhere else? I should I understand that in terms of its impact on the bookings? And maybe just staying on this bookings topic. Should I just maybe understand that maybe Aero is maybe sort of deflationary because DIFM may be a higher-priced product and Air can maybe doesn't need to necessarily cost as much to give us your thoughts on that?

Yes. On the do-it-for-you product, that's typically a couple of thousand dollars in terms of bookings and so when we're building with someone. And with Airo, it's smaller number, and it's a subscription plus token-based product. And what we find is that Airo is so much easier for customers to use that they can just talk to a guide and build it themselves very quickly. So that's the main thing about the do-it-for-you product. And I think, Mark, can confirm, but I think your other question was that is Airo counted in A&C, and I believe that would be yes.

Yes, Airo is counted within A&C in that segment.

So with that, why shouldn't we have a pickup in A&C bookings in the back half if Airo is seeing an acceleration, and you probably going to put some marketing dollars also behind it?

Yes. We're -- Naved, we're looking at this as a transformational period as we start to engage our customers in different channels. it's new into the market. So the tough period of time that we expect it to start to be a bigger part of our is still something we're working through. Right now, we expect A&C bookings to be high single digits for the remainder of the year. And obviously, we'll update everybody as we get more data points as to how the other channels are working when we get to December 1.

Our next question comes from the line of Ygal Arounian from Wedbush Securities.

I just want to understand the LLM truck shift a little bit better and exactly what's going on. So can you explain what that traffic shift is? And what are people going to use different products, are they coding directly in Anthropic and Open like what's happening in that shift? Where are they going instead of GoDaddy because it sounds like it's not yet a 1:1 replacement on websites plus marketing versus Airo. And does all this change your approach? I think you were planning on rolling out a new post marketing or an update. So does your focus shift on where you're building from here? And I have a follow-up.

Yes. Just to go very quickly, the LLM comment is related to and newer models for people offering APIs that L&M can consume directly, and those end up being very low-cost providers on the domain side. And again, we've seen many models of that over the years, and we're updating our APIs to be able to compete and have better bundles and sort of offerings for customers. It's just that in this case, LMs would consume that on behalf of the customers. And on the upgrade of websites plus marketing, we actually, as I talked about it, we have tested a new product for that updated website plus marketing over the last quarter, we actually found that Airo could be all those products that we were looking at.

So in fact, just over the last few weeks, we've launched a sort of much stronger editor in templating capability within Airo, and that's just going to get stronger. We now feel very good about Airo actually being the 1 operating system on tool that can build your websites in different ways that can do customer communications, so you that can do payments, it can do commerce and many, many other things. So you're actually seeing a convergence of what we were talking about earlier.

Okay. Sorry. To be clear on the API functionality or the API usage, that means people are building websites the way that they would through GoDaddy in the LLMs.

And then just a follow-up on margins. And so with all of this, I mean, we've talked about this a lot, and we've seen pretty material margin erosion in other places, competitors as they out more vibe coating products. And as you maintain your margin guidance for the year even as the ARR is growing and you're seeing some of these shifts in behavior, has anything changed in terms of how you can balance the cost side on compute as you build out this product? Do you still have this advantage the way you've had it over last year where you haven't seen margins erode.

I'll comment on the margins real quick. We feel really about our positioning around our margins and anticipating that the costs that we will incur related to our compute cost, higher token and all that. We are very focused on making sure where we're spending our time is getting the right ROI like we've done in the past. We have the same approach to what we've done everything. And we've gone into productivity gains in our operating model right now that we're starting to see. Think about it from our head count and our head count costs are remaining flat. We're seeing benefits in care. We're seeing benefits in T&D.

We're seeing benefits in G&A all those benefits translate into our ability not only to continue to expand our margin, but also reinvest in the business around these areas like Airo that we're going to see the return, and we feel really good about the data point that show us those returns right now. So we feel we're in a great position to continue to focus on profitability, expanding margins at the same time, handle the costs associated with new products. Obviously, when we get to December 1, we'll talk a lot more about what that will look like going into 2027, but we feel good about our ability to make not only maintain profitability to increase -- continue to expand profitability going forward.

Our next question comes from the line of John Byun on for Brent fill at Jefferies.

All right. Can you hear me okay? So I have 2 questions. One is something that's come up earlier, but I just want to see if I can maybe ask a little bit differently the transition period to Airo, I mean, and I know it's still very early, and this is still evolving, but I mean are you thinking that that's something that's a 2 to 3 quarter type of transition? Or could this last more than a year, well into 2027.

And then my second question was around kind of the world press community and the professional web developers and website creators and partners. I mean how are you thinking about the impact of what's happening now to your customers on that side?

I'll take the first part. John, not putting a timetable on this. We've talked about what we expect to see for the rest of the year. And as we gather data points, we'll share more of what we think the outlook will be when we get together on December 1 in Tempe. We are excited about the growth in Airo. We've talked about the $50 million run rate.

Having said that, we are still in the process of launching it into domains purchase path. We're looking at connection plants for more attacks. So there's still a lot of data to gather for us. to really hone in on the timing of this transition and when we will see Airo contributing more to our growth going forward.

And just on the WordPress side, we do have Airo, and it continues to get traction with those customers. But that world is evolving, too. We're seeing some traction with Aero with that world as well. But it's too early, John, to be able to talk about it to say where it's really going. Our focus is to create an operating system for small businesses, whether that's used by the customer directly or through a developer, it kind of shouldn't matter to us.

Our next question comes from the line of Chris Zhang from UBS.

First 1 is on the international revenue, which continued to outpace the overall company or the U.S. on a constant currency basis. Maybe can you help us unpack the drivers across the segments and also in terms of the pricing actions versus the top of the funnel? And what portion of that you see as more durable going forward. And just to get a little more color on international? And then I have a follow-up.

Yes. On the international, nothing really call out there. It's performing well. We're seeing traction in the markets we are focusing on came in at I would say there's nothing specific to call out in any region 1 way or another. We're just very happy with the performance rationally as we are with the performance in the U.S.

I appreciate it. And just a quick follow-up. The core platform bookings I think you mentioned the outlook for the rest of the EMC bookings for the rest of the year, but sorry if I missed it, but what are you expecting for the core custom bookings growth for the second half of this year?

Yes. We should see a little bit of strength. I know we've talked about on a long-term basis, the bookings growth in core platform will be low single digits. You might see that lean a little towards more mid-single digits for the remainder of the year as we lap 99% at the back half.

So roughly stable versus the second quarter?

Yes.

We'll try again for Kishan Patel on for Josh Beck at Raymond James. Kishan, are you there? All right. I am going to hand it over to Aman to close us out. Please go ahead.

Thank you. Thank you all for joining. Again, I'll leave you with a couple of takeaways. One, super excited about Airo and its fast growth and how much customers love it and the engagement we're getting. And to the question on the transformation, I just want to point out that our strategy, our financial discipline, our approach to investment remains unchanged. And we're very happy with how we're approaching business, and we want to meet our strategy of sort of meeting small businesses where they are in offering them a ton of services.

So Huge, thank you to all GoDaddy employees and thanks for joining.

All right. Good morning. Happy to kick off our TMT Conference with GoDaddy CFO, Mark McCaffrey and VP of Investor Relations, Christie Masoner. Thanks so much for being here. Welcome to San Francisco.

Yes. Thanks for having us.

You guys had quite a day yesterday, and maybe it's true to say that you've been on the AI roller coaster as much as any of us. So maybe we could start there with just some questions about AI transformation.

Yes, it's a great place to start. Top of mind. Yes.

So you framed the AI transformation narrative at GoDaddy around, I think, 3 pillars. So you've got your AI native products like Airo AI Builder, Agent Name Service and then using AI for internal efficiency. If we come back 12 months from now, what would be some key ways you want to sort of measure your progress over the past -- over the prior 12 months?

Yes. So definitively, we're going through a transformation. We're becoming an AI-native company, and we're well on our way. When we look at the launch of Airo AI Builder, which we talked about coming out of Q1, which had been in the market for just several weeks, we've seen great momentum, great engagement by our customers. They're signing up for the higher plans. It's very -- it's organic. We haven't put marketing around driving people to Airo.ai right now. And we're seeing them come in and buy not only the premium packages, but once they get through their token, they're consuming more tokens on top of that. So the progress or the momentum from the initial launch is fantastic. And now as we get that into market, we start to put marketing behind it, we start to drive traffic to Airo.ai. We look at that as something that will help propel us going into 2027.

Most importantly, we also feel it meets a customer need. Remember, our customers are the micro businesses, the entrepreneurs. They very much are looking to run a business a side hustle, sometimes out of the garage, sometimes it's a mom-and-pop shop type of environment. So their jobs to be done and the tools that we're providing, including now our AI builder is just fulfilling what we believe is supporting the entrepreneur and our customer base. ANS in and of itself, and maybe, Christie, do you want to jump in on ANS? And then I'll come back to the operations part of it.

Yes. So on the ANS piece of it, when we think about as the Internet evolves into an agentic future, what ANS is doing is helping to propel the use case of how agents can be used across the Internet. So ANS is building trust in how the Internet and agents can be used across the Internet [indiscernible] that when you think about the early days of DNS as an example for domains, until we got to a spot where we could register domains and have provenance of domains and have an ability to verify who the ownership of the domains were, that's when the Internet took off. That's when commerce on the Internet took off.

We view ANS as the same way. It's instantly scalable. It's adoptable. It is an infrastructure that already exists for the last 30 years that is extremely elegant. And so when we look at ways to solve the agentic traffic and continue to propel advancement there, ANS has a solution that we're pretty excited by. It keeps the Internet open...

And then from the operating model, when we put out the 33% normalized EBITDA target a few years back, it was pre knowing about some of the efficiencies we're going to gain by adopting AI internally within our organization. As we sit here today, we feel we are in a great position because not only are we seeing those benefits of the AI making us more efficient in our operations, we're able to use that efficiency and reinvest in things like Airo.ai. We're able to reinvest to continue to innovate for our customers. So as we sit here today and we look at the 33% margin, I feel very comfortable saying, hey, we're on target for that 33%, and we're launching products. And we're looking at the momentum that we're building towards 2027.

And bringing this all together because I want to come back to your exact question on where do we want to be 12 months from now. We want to be still at the forefront of serving our customers and doing it in a way that meets their needs. Our model works because we focus on building for our customer. And our customer is a unique distribution. We have over 20 million of them. And our ability to serve them, know them, have that relationship through our care organization allows us to always achieve our North Star. Our North Star is free cash flow per share and our ability to drive that North Star starts with our ability to get that first product to our customers, get them to attach a second product, get to that retention rate, get to them spending $500 or more with us in a year. And that drives our free cash flow, which in Q1, our free cash flow per share, we grew by 27%.

And that was through a combination not only of driving our free cash flow, but also applying our capital allocation strategy around share buybacks. Why is that important? What we do around AI and becoming an AI-native company fits within the model very well that we've propelled for years and allows us to continue to grow and continue to move towards that North Star. So 12 years from now, I want to be talking about -- 12 years -- sorry, 12 months from now. I want to be talking about how we're continuing to drive our North Star, how we're continuing to serve our customers, how we're continuing to innovate with AI native tools and how we're continuing to drive shareholder value and return through our capital allocation strategy.

Great. There's a question of how you monitor for AI disruption and whether that's something you could potentially monitor for within the current customer base. And then as you look at your prospects, your funnel, what are you looking for? I'm sure everybody is trying to look around the corner and see are there any hints that the business is being disrupted. What are the signs that you're looking for internally of that one way or the other?

Yes. So we continue to follow a lot of data. There's no doubt about it. We've been around for 30 years. We have 14 million interactions with our customers per year through our care organization. We get 1.9 billion signals from our technology stack around our customers' activity. So -- every single day. So we monitor a lot. We monitor the top of the funnel. We monitor our strategy around how our customers are buying in the purchase path and attaching and most importantly, activating the products and getting value out of those products. Now that dynamic has remained stable. And that dynamic continues to drive a very strong top of the funnel.

And like I said, we -- when we get to that second product, that third product, the faster we get, which our Airo platform has been allowing to do with our customers, we get to that high retention rate and that LTV. So this is a great time. Innovation, when it's happening all around you, just raises the bar to what you need to do and how you need to service your customers. There is no doubt we are in an age of a lot of innovation, a lot of things coming out quickly. Our key here, our moat is to focus on our customer base. And when you're talking the mom-and-pop shop versus, I would say, going enterprise level, you're talking about a specific need, which we've done great for a long time, and we'll continue to do.

Yes. The core need state of micro small businesses remains consistent. They're looking to bring an idea to market, converse with our customers sell to their customers and accept payment for those tools, and they want to do it in a simple one-stop shop solution. And with our distribution channel, our strong brand awareness, GoDaddy is uniquely situated to be able to deliver for these micro small business customers.

Got it. I think stepping back a bit, there's a sense that we've seen more elevated growth in domains in the market generally. And there's that question of, well, I think you participated in it in Q4, right? But more generally, should GoDaddy have a bigger piece of that on an ongoing basis. And so is that customer that you see coming into the market today, they're experimenting with vibe coding. Are they not the traditional GoDaddy customers, some of this incremental growth that you're seeing in the market? What's your view on that?

So when we talk about the incremental growth in domains, you have to take a step back and look at it from a broad view. There is no doubt that where we are today with AI and innovation that it is drawing more people online than we've seen in the past. We saw that in Q1. Other companies have talked about seeing it as well. One, I will point out, we are still the largest domain player out there. We were in Q4. We are in Q1.

Our percentage of share of that is absolutely the same, and we continue to focus on that. We do focus on high-intent customers, not just domain customers. There are other elements in those numbers. Like you said, there probably is some people coming online and experimenting with some other areas. There are also investors coming into the market, and they're buying bulk domain names now, right, because they're speculating that these domains will gain value. I think the important part to note is coming out of Q4, a lot of people were questioning whether the domain was going to remain relevant in the new AI world.

And I think what we're seeing now, it's not only remaining relevant, it's becoming a priority because the agents still have to act and be able to go places and go get content and you need your real estate on the Internet and that real estate is owned by the domain name itself. So now what we're seeing is a pivot to the domain is becoming an important top of the funnel. And that's exactly what we do. I mean that's the company we built, and we've been around for 30 years doing. We know the domain space, and we'll continue to focus on that.

I will say that some of the statistics you do have to take in its broad sense and then take it down to who are the customers you're really going after, who are the customers that we want within our funnel, how are we getting to that high-intent customer that's going to convert and stay with us for a long period of time. And we feel we are very well designed to do that not only now but going into the future.

Got it. I think [ Aman ] made a comment, I think it was on the Q1 call about some pressure top of funnel from AIO or AI mode or some of the things going on in the market, but an offset from conversion. I was wondering if you could talk a little bit more about that dynamic. And then particularly, I think that some of my experience is maybe AI seems to almost concentrate the possibilities of who's link you're likely to click on. So I mean, are you seeing that share of voice become more consolidated, GoDaddy maybe being a beneficiary of that? And then maybe if you could talk through the conversion gains that you're seeing as well as sort of offsetting the volume hurdle.

Yes. So I'll start, and I know Christie has some thoughts around this, so I'll let her go as well. On the conversion part of it, we are definitely seeing higher conversion, as Aman said, at the top of the funnel because we are continuing to go after that high-intent customer. So when we get to that high-intent customer, there's no doubt that our strategy is working. When it comes to how customers are getting or how high-intent customers are getting to us, there's definitely change. I mean we have the part of 60% of our traffic comes to us naturally right to GoDaddy, not through any other sources because of our brand in the domain space. So we always start at a very advantageous point within the market. But there's no doubt that other 40% is changing and shifting through different sources right now. This happened when Google Search came as well.

You had to shift and modify how you handled search and how you market it and what terms you used in order to make sure you were the beneficiary of traffic that was coming in. And today, we're continuing to do that. It's through different sources, through different LLMs, but you have to be able to monitor what those systems are picking up, how they're attracting those customers, what is getting presented and then you have to make sure you're doing -- what you do on your part to make sure that, that doesn't change. In -5 years ago with Google, you had to monitor how that search was working. And if Google changes something, you had to adjust your search algorithm in order to make sure that you continue to get the traffic. It's the same thing with the LLMs today. You have to make sure that how you are presenting your bundles, your packages, what your buy lines are is getting picked up in the most advantageous ways by the LLM. And then if something shifts out there, you have to be able to notice it shifting, look at the downstream impact and then adjust.

I think this is something the industry has done very well for a number of years now and will continue to do well. And I expect people will continue to adjust accordingly to make sure that they're getting to the right traffic, right? Not all traffic, but the right traffic. And that's the key here with us is we want to make sure that our algorithms are getting to the right traffic and not necessarily just all the traffic.

Yes. I mean I think you summed it up -- you said it well, and I'll just sum it up, we benefit from having the largest brand awareness in the space and the technology or the ways in which you attract traffic to your funnel has and always will continue to evolve. And when we can continue to optimize to drive that traffic to our website, that's just the nature of being a technology company, and that's what we focus on.

Got it. I wanted to ask you a little bit about from a marketing perspective, brand share voice perspective, how you're sort of bridging a general gap maybe. I mean, GoDaddy, of course, is top of mind in advance for people my age. Maybe that's evolving. But for Gen Z, for Gen Y creators, Gen Z creators, how is that evolving? Are you seeing that the brand is enduring and you have as much share of voice as you did in previous generations?

Yes, absolutely. So our marketing campaigns do actually focus on the changing perceptions or the changing ways in which all users are engaging with the traffic. It's kind of along the lines of what we were just talking about in the last question, right? So trying to optimize for the traffic and high-intent customers is top of mind for us and expand the generations of the need to, of course, is still the same. I want to get an idea to market. I want to talk to customers. I want to collect payments for it.

And there are specific marketing campaigns that we have in market that are intended to attract different types of generations, Gen Z, Gen and Gen Y, or all different -- the iterations of generations that exist out there that are looking to bring their ideas to market. So you see some more of that with things like in social for the younger generations, so things that are in Instagram and TikTok and YouTube. So see us participate in all of those types of areas that attract those younger audiences.

And more to come, right? We are refining our marketing campaign. We continue to look at what's going to attract, again, the right customers and the right volume in there. And I think as you suggested, we have really benefited from a strong brand for a number of years, but we also recognize we need to continue to evolve and continue to be a company that's at the forefront of everybody's mind.

Got it. So I want to go back to Airo AI Builder and the ramp that you're doing, number one, the launch, the ramp that you're doing now, you're supporting that with some paid marketing. So what's the strategy ultimately, whether or not to bring that into the sort of main GoDaddy funnel in a bigger way that decision...

So thanks because it's a distinction that I don't think lands all the time with investors that we have godaddy.com, which is our traditional purchase path. but Airo AI Builder sits on Airo.ai. It's not in the purchase path today in godaddy.com. Now you can get to Airo.ai from godaddy.com, but it's not something that's presented to you in the checkout process or along those lines. Right now, we're focused on organic traffic to Airo.ai and engagement and buying the premium packages on Airo.ai and people activating, using it and consuming the tokens, which we've seen great and paying for the token, great momentum. At some point, when we feel comfortable, we will introduce Airo AI Builder into godaddy.com as part of the purchase path.

We want to do it pragmatically and purposely. We want to make sure that we're getting the best customer experience because any time you introduce something new into the purchase path, you have to be very conscious of what the customer is going to choose at that point in time. And is there a decision point between maybe websites plus marketing, and we've talked about we're upgrading that product as well and make sure that we're doing and knowing what the customer behavior is so we can optimize for that traffic path. We're not there yet. We're focused on Airo.ai. The marketing we talked about is to drive traffic to Airo.ai. We'll do that for the remainder of the year. We'll see how the engagement, how the premium plans are working, what customer benefits are getting to, and then we'll look to launch that at some point onto the godaddy.com when it makes sense.

I was going to ask David, but you mentioned a couple of times, tokens and how it based off. Yes. So that's an irresistible topic. So -- gross margin, I think famously for some of the vibe coding, the next-generation [indiscernible] solutions has been negative, maybe positive if you squint and eliminate the token costs associated with new customer acquisition. But how are you managing that?

I know you talked about or Aman talked about utilizing model routing, AWS, bedrock and some of those solutions. Are you continuing to see that cost curve bend down? I think there's sort of active debate about the frontier models become more commoditized and the cost curve continues to sort of bend down? Or does -- are the harness and the model so closely coupled that it's going to be harder to sort of generate efficiencies through model routing and things like that? What's your opinion?

So I'll start with when we launched Airo.ai Builder, from day 1, it's been profitable for us. We're doing it in a manner that we are trying to match the consumption even on the token basis to what our customers are paying and do things very thoughtfully to not get ahead of ourselves and not jump into the market where we don't understand the dynamics of how it's going to affect our P&L, what ultimately that's going to look like. We are in a very beneficial spot that our consolidated technology stack, which sits on top of our LLM usage allows us to monitor and control not only the volume that goes to the LLMs, but also which LLM is used for what purpose and match it up to the pricing that we've put out into the market. The idea being you don't always need the best LLM to provide every service. Some services can be provided at a lower price using a different LLM.

We also have the benefit of a lot of data ourselves that we use within the statistics I talked about the 20 million customers, the 14 million interactions, the 1.2 billion signals we get daily, it does create a proprietary data point for us, which allows us to monitor what is really needed externally and make sure that we're using our proprietary data first to provide whatever need is out there for our customers before having to ping into an LLM right off the bat. So that all has been set up for a number of years for us. As a matter of fact, we've been talking about this for years. When we talked about consolidating our technology stack several years ago, it wasn't with the foresight that AI would come into play this quickly in 2026. But the fact that we did it allows us to control our environment very thoroughly and be very efficient.

So as we look out into the future, and I'm not talking about 2027 just yet, but we will, at some point, we look at our ability to utilize not only the internal operations and the benefits we're getting but use that to make sure that we're staying ahead of ourselves on the cost basis. Comes back to the 33% we talked about. We didn't know this was going to be upon us in '26 when we set out that marker, but even in 2024. But now that, that marker is out there, we feel very comfortable even with the launch of Airo AI Builder coming into 2026 that we're able to be profitable and put that into market and look at how the premium packages are working and look at the data usage that's there. Again, it's something that needs constant monitoring. I'm not saying it isn't something that is evolving over time, but we feel really good about our ability to control it and control it within our environment. It's also good to recognize our customer base, right?

And again, this sometimes gets lost in the conversation. A lot of the other players are going into enterprise where the people who use their products aren't the people who actually cut the check on the back end. Our customers actually use the product and have to pay the bill, right? So they are seeing the benefit they're getting versus what's getting charged to their credit card, and they're matching it up and making sure that it makes sense for them. And in that dynamic, we feel really good about our ability to make sure that we're keeping that unit profitability in line with our customer needs because it's a very unique customer base in and of itself.

I think one other thing I'll add, too, is what you've long seen from us is cost and P&L discipline, and that's something that we have we'll continue to have a strong focus.

Okay. I guess there's -- it has to be this balancing act do you give people enough of a taste of what the capabilities are, what it can do for them versus what it costs. Do you feel like you have that balance right now?

Right now, yes. But I will say this is where the uniqueness of having the relationship with your customer is important because you have to monitor that customer behavior and acknowledge what they're getting the value for versus what they're willing to spend. And I've said repeatedly, 2 things in the technology industry, you have to continue to have in order to get ahead of the curve. You have to be able to innovate and you have to have the customer relationship. If you understand your customers' needs and you have the ability to innovate, you continue to stay ahead, and that's what we're doing with our AI builder. We're looking at what their needs are, matching the product to what their needs are and then building the cost structure around it to make sure it's profitable, but it meets their needs.

So I want to jump back into customer acquisition, the $4.99 offer. And controversial maybe -- I don't know how -- maybe controversial among investors or controversial among myself. But -- so when you looked at the -- it seemed like you were responding to the environment, maybe taking advantage of something you saw opportunistically in the environment in Q4. You pulled back a little bit in Q1. Throughout that, I think, well, in Q4, you really said, okay, these are still customers that are in our wheelhouse of high-intent customers. Did your view change or evolve with respect to that and you decided to sort of be a little bit less promotional or the promotion is still out there, but maybe show it a little bit less frequently or give it a little less play in the channels. So maybe just take us through the narrative, first of all.

Yes, absolutely. So it's almost take it back a year. We identified a high-intent customer that we believe was willing to spend that was incremental to our current traffic, our current customer conversion that was not only willing to spend in a 1-year term, but also willing to attach products faster within that 1-year term. And as we monitor the activation in our experimentation, we saw those customers were the exact customers we're trying to attract. They were coming in. They wanted a 1-year term, but they wanted to attach a second product, a third product very, very fast. And this was incremental to some of the other pricing we had put out there, the 3-year term.

So we decided to experiment and go with the famous $4.99, not the controversial, the famous $4.99, I'd like to say. And it worked. It attracted the customer who wanted the high intent who is activating to that second and third product. So in Q4, we put marketing dollars behind it, and it really worked. It was landing people on that page for the $4.99 discount. Now remember, the $4.99 is only available to a new customer buying their first domain. So if you're an existing customer and you went after the $4.99, you would get kicked into the regular pricing, right? So it worked as designed, but it kicked a lot of people into the 1-year terms. The modification we made in the first quarter was to make sure that when the 1-year term offer for $4.99 was coming up, that existing customers weren't getting kicked into a 1-year term, they were also getting the option to do the normal 3-year term. So now remember, we've had a discounting of a 3-year term for a domain for a number of years.

You get the first year for $0.01. You have to sign up for 3 years, it cost you $45 upfront. Putting that option along with the $4.99 was the balance we were looking for within the front of site. And that allowed us now to make sure that we were not only getting the new customers for the $4.99, existing customers who were clicking into that $4.99 were going back to the usual 3-year terms when they were buying their domains ended up to sell. So that balance, obviously, we talked about the impact in Q1 and how it would roll out through the year. But we looked at it as being very successful, but chose to modify it and make sure that we were making that balance between the 1-year term and the 3-year term was an option for our customers, and there wasn't a default into just one direction they needed to go.

I think one of the things that gets lost is that when we're talking about this offer, one of the things that we've talked about is it's driving strong traffic like Mark talked about. It's driving strong conversion. It's driving strong attach and activation. And all of these are strong indicators that these are high-intent customers, which is great. But the thing I think that gets lost is that means that these -- all of these customers are up for sooner, which is certainly a little bit of a risk, but it's also a pretty big opportunity for areas like pricing and bundling or when you think about Verisign has a new price increase that they're about to do. These customers are now eligible for that price increase 2 years sooner than anyone who's on a 3 year. So there is different opportunities that are often missed in the benefits of the 1-year cohorts.

Well, I'll take us down that conversation. So can you talk about that renewal motion? I think you've talked about in the past, okay, you have a customer that looks at 3 plans among a selection, good, better, best, and they think better and then next year, you move that into good. Can you talk about that renewal motion and any numbers you want to put around that, but just the opportunity that you see around renewal. And interesting that you bring up -- that, that accelerates that opportunity.

Yes. So think about our pricing and bundling initiative and think about our ability to touch our customers and do exactly what you just described. in a 1-year term, we have a quicker ability to get that pricing and bundling opportunity in front of our customer more naturally through the renewal cycle. The other thing very important to acknowledge and Christie said it, and I'll just repeat it because I think it's very, very worthwhile point. Pricing and value delivery for this -- for us, for everybody in this industry is on the renewal, not on the new customer. You want the new customer in, you offer them special pricing to come in. That didn't change with whatever Verisign does.

You have the ability now to raise the prices and get it to where it needs to be in the second year and in the third year. And the more renewal cycles you can hit faster, the more you're going to be able to make sure that, that stays in balance. If you have a 3-year term, the first time you can touch the pricing on that renewal is at the end of the 3-year term. It just takes longer to get there. When you're now in a motion of attaching products faster and you have other products associated with that renewal, you have the ability now to offer up not only pricing and bundling at better value points for them, as we introduce new products into the entrepreneurs wheel, we're having a better natural touch point with that renewal cycle coming faster. And this is where we see a huge incrementality to how we drive the LTV equation going forward. And what you're seeing today is our -- I would say, we're not going to just sit here and watch our customers and try the same thing over and over again.

We're going to continue to be aggressive and go after that high-intent customer and make sure that we're getting the right traffic. We're converting the right customers. We're getting the right products in front of them. They're getting value out of those products. And we will continue to look at different opportunities to push that equation into the future. Why? Because we know when those customers come in and have that behavior, we've talked about it for years, the 1x domain, when we get to that fourth product, it's 83x the LTV. That drives that compounding cash flow over time that drives the value we return to the shareholders. And it's not about trying to get there in 1 quarter. It's about building it over a period of time to make sure that we're continuing to grow the company pragmatically and towards our North Star.

In a sustainable way.

I'll go further down this path just for a moment. So what role is Airo having in the renewal cycle at this point? Is it material in the renewal cycle? Is that you're surfacing for people in a significant way?

So -- and just to clarify, Airo AI Builder because we recently -- yes, yes, is not at that -- having an impact on a renewal cycle. We are seeing people sign up for more tokens, which is great, right? They're burning through their initial tokens, they're getting into packages and then coming back and getting more tokens to consume. So we're very excited about that momentum. Airo in and of itself, the platform...

The capability...

For the GoDaddy customer, we've seen the behavior we wanted to see. And to put it in perspective, we got rid of deep discounting at the top of the funnel in the end of 2023. When we go back and measure the customers that were coming in at the beginning of 2024, which is when we launched Airo on the godaddy.com website. When we look at those customers that came in at that point versus the previous customers, we see the higher retention rates that we have talked about. We see them renewing at stronger percentages, doing exactly what we thought they were going to do. They're getting more products. They're building the LTV. They're staying on with us longer. This sometimes gets lost in the data metrics, but we've talked about customers, and we've talked about everything we've done in the past few years to dispose of or end-of-life certain products. And we've obviously talked about the impact on the customer numbers related to that.

We've maintained around 85% retention rate within our customer base, even though we were disposing of business units, even though we were end-of-life in products and making decisions to do that. And you look -- think about that for the last 2 years, our ability to maintain that is because we know that cohort that started coming in, in 2024 is much stronger than the previous cohorts that were coming in pre-Airo.

And Airo is essentially helping getting customers to that second product attach 30% faster than they were pre-Airo, right? So that happens at the new when they're coming in and at renewal, we're able to present a suite of products and solutions to customers in a way that is easy for them to touch, feel and experience what their full build-out one-stop shop can look like if they have more products to attach or something that more closely resembles the goals that they're trying to achieve with their online build, and Airo helps us get there. And to Mark's point, we're able to curate stronger high-intent customer base that is those high LTV customers.

Okay. I want to add another diversion here on end of life. I mean, so talking a little bit about the headwind that you've seen there. And then also, I mean, is there anything else that the candidate for end of life? Or is it just -- you feel like you're done there?

Yes. Nothing to call out at this point. I will say product cycles and evaluation is a constant muscle. I think everybody should have, we definitely have. We will always review the entrepreneurs wheel, the products we're offering and making sure that they meet the customers' needs. And if we don't believe they're meeting their needs, then we will make a decision on whether we need to end of life or do something else at that point in time. And we will allocate resources to where we think we need to be to deliver value to our customers. So that is a muscle that will happen, I would say, as run the business going forward. We did a lot in the last few years. I would say we accelerated a few things based on that new strategy that we put forth in our 2024 plan that we had talked about back then.

From time to time, we may call out that we end of life this or we end of life that and made a decision. We'll be very transparent about it. We feel our ability to make those decisions because we're not playing for the short term. We're playing for the long term, and we know as long as we're making the right decisions and right choices about where we allocate our resources to meet our customers' needs that we'll be able to continue to own that relationship, innovate around it, get to that LTV equation and because I love free cash flow, drive the free cash flow number that we've talked about.

Yes. And we've got about 12, something like 5 minutes left. Just want to check and see if we might have had any questions in the audience.

This is the early morning crew out here. I appreciate this.

Go ahead please.

[indiscernible] Going back to just some of the incremental growth in the domain market. I think it's clear some amount of the incremental growth is for domains attaching to applications. Are you seeing that? Are you seeing that be a tailwind for your business? And is that something you expect to kind of capture on a go-forward basis?

Yes. So it's definitely something -- So the -- I would say you're asking about the reverse attach, right, where people are coming into the applications and attaching the domain versus going for the domain and then attaching product to it. Are we seeing that as a trend? The answer is yes, we're seeing that within Airo AI builder. People start with the interaction around the agentic agent, and that agent brings to them the domain name in and of itself. So that is the muscle within the Airo AI builder in and of itself. Now it's early stage, so I'm not calling it out as a driver going into the rest of 2026 by any means, but it is definitely a behavior that is out there within the Airo AI builder in and of itself, which I would think will continue into the future.

And having your own AI builder prohibit you from picking up some of that business from the other private coder [indiscernible] private competitors out there are [indiscernible] partnership strategy on that vector or you double down on having your own solution...

So I'll start with -- we've never been shy about partnerships. We have some very large partnerships with Microsoft being one of them. So there is no challenge with us and having relationships with third parties. For us, partnerships, though, mean that you have to share the value. And in sharing the value, that means it has to be incremental to our business model and have an ability to drive our business model and our LTV going forward. In other words, we're open to good partnerships. If those are presented, we would always have a conversation, but we're not open just to having partnerships in and of itself for the sake of having them.

I guess that gets back to whether -- the question of whether or not that customer is part of the core or something that you've traditionally seen. So the person who's brewing up something on cloud code and downloading that to a GitHub repository and looking for a host and a domain. I mean maybe it could be part of the customer set at some point. But I'd imagine it's not...

Outside of the micro small business customers that we serve because you're talking about someone who's a lot more sophisticated or technological savvy than our typical micro small business customer. Does that mean that that's not available to us in the future? Of course, we're always looking to expand the user base of who's using our customers, but we remain focused on those micro small business customers and delivering a one-stop shop solution for them. That's super important for as a micro small business customer that wears many hats and every day, their jobs to be done.

There are so many things that they're trying to manage while also just doing their actual passion and what their job is. So handling all of this back-end technology for them is where GoDaddy wins GoDaddy succeeds and it's where we deliver for our customers. And it's why we have strong retention. It's why we have strong loyal customers because they want a single dashboard to manage all of these things, not trying to cobble together a bunch of different solutions.

So we'll try to dig into the numbers a little bit. So you've seen some revenue growth deceleration. Clearly, some transitory headwinds versus maybe some more structural things in the market. I don't know you tell me, but maybe you could talk us through some of the headwinds that you're experiencing that you view as sort of temporary versus what sort of core growth is.

Yes. And we've called these out and they haven't changed from when we're coming out of Q4. There were decisions made around our core platform, [indiscernible] contract, we decided not to go forward with the renewal that we knew it was going to create a headwind. We've always called out the aftermarket. We saw great activity in 2025 on large transactions within the aftermarket. They may or may not return at any point in 2026, but they can always make a little bit of a headwind depending on what quarter we're comping and when some of those deals were recorded for us.

We talked about the $4.99, which we talked about how that would roll out for the remainder of the year. And then we talked about that we were pausing pricing -- on the pricing and bundling websites marketing upgrade. Those are all temporary in our mind. They will flow through in different manners through this year, very much all of them were going to hit the front end of the year and then tail off as we went through the remainder of the year at different rates. Those are ideally where we see it.

Now some of those impact bookings. Some of them do impact revenue a little bit. Some of them bookings, but then the timing of the revenue is just the same because the 1 year -- the upfront cash on the 1 year is less than the upfront cash on the 3-year, but the revenue attributes remain pretty similar absent the discount on the $4.99. So there's different aspects that flow through at different times between our bookings and our revenue.

I always come back to despite all those ins and outs and headwinds, we came forward with $1.8 billion target for our free cash flow for the year. Free cash flow for us is driven by the bookings upfront. And we feel really good about our $1.8 billion and our ability to meet that target. And regardless of all the headwinds on the bookings and the timing of all this, we remain steadfast that we're going to continue to hit that free cash flow number, which translated means that we feel good that this is going to wash out in different periods. But when you look at over a period of time, it remains fairly consistent.

And then I would be remiss if I didn't acknowledge again, that's why we feel good about, hey, we grew free cash flow per share 27% in the first quarter, 27% now. If you break that down in and of itself, even with the $4.99, when you think about that, half of that came from increase in free cash flow, half of that came from buying back shares at an incremental rate. So our ability to get there is being driven by both our business and our capital allocation strategy, which is again working together to make sure we continue this journey well beyond 2026.

So I want to go back to the free cash flow growth in a second. We only have a little bit of time left. But [ A&C ] growth in double digits, it's come down a little bit. just wanted to ask how you feel about the durability of that, maintaining double-digit growth for A&C. Is that something you still feel about?

I don't want to get into the future. We're going to have an investor event later in the year, and we'll start to lay out what the future looks like, but we do feel good about our momentum, and we do feel good about the LTV equation that we've talked about, and we'll continue to push.

So with the free cash flow growth at that -- free cash flow per share growth at that level, you're certainly building cash up. Do you look at a broader array of sort of capital allocation options as that continues to build. Anything else looks attractive to you beyond your own shares obviously return.

Yes. So our strategy and how we apply capital allocation hasn't changed. It remains the same. And I always say that because, one, we look at buying back our shares as a key tool to returning value to our shareholders. And then obviously, everybody will ask, is there M&A opportunities out there? And the answer is there's always opportunities, but it has to fit within our model. It has to be accretive to our model. And what we have found over the last few years is that our ability to innovate internally and come out with products like Airo AI Builder in and of itself has raised the bar on what could work within an M&A situation for us.

We always say it has to be strategic, has to be financially accretive and has to be able to be integrated that comes very efficiently for us for our own innovation cycle right now and our ability to get that value from any M&A, just sometimes the numbers don't work. So it's not that we don't get a lot of calls on different opportunities because we have such a strong balance sheet, but we've been very disciplined that it has to fit within that model, and it has to be able to be something that will continue the LTV journey for us in the future.

Okay. Well, I think we'll -- why don't we wrap it up there. That was great. Thank you very much.

Thanks...

One last thing I would mention, we have marked 5-year anniversary here...

That is right. That is today. I forgot about that.

Congratulations. Happy anniversary. All right. Thanks so much.

Thank you.

Thanks, Robert.

Okay. Hello, everyone, and welcome to JPMorgan Boston TMC Conference. And today, we are delighted to host GoDaddy management team. We've got Mark McCaffrey, CFO. We've got Christie in the audience as well from the Head of IR team. Mark, welcome.

And if I may begin with some high-level micro business health questions, what customer behaviors most reliably signal improving micro business health? And where do you typically see some early changes?

First, thanks, Alexei, for having me up here. It's always good to talk to you. Micro businesses and when we talk about small businesses, we really refer to micro businesses and entrepreneurs. And to put a little distinction, some people classify small businesses as 100 people. Generally, our customer base and who we deal with is a couple of people, mom-and-pop shop, an entrepreneur that maybe has multiple different endeavors going at once. So it really gets to what I would say that true rigor, somebody who has a lot of passion about what they're doing because they have choices of what they can do and can't do and they choose to do whatever endeavor they're on. And that's what we continue to see.

This group, despite the fact there are a lot of concerns about the macro environment and a lot of inflationary pressures being put on them, especially in the micro business area, they feel really good about their prospects to launch a business, create a business. And when we surveyed them, more of them -- most of them believe they're going to make more money this year than they did last year at their endeavor. And that's despite the fact that they have to pay out or maybe being impacted by the inflationary pressure that exists today.

So we're definitely seeing what I would call a healthy, passionate, very durable group out there. And we're seeing the behaviors within our own funnel that are very similar to that. We're seeing a lot more ideation. We're seeing a lot more demand for the domain in and of itself. We're seeing a lot more people wanting to be online and get to more markets. We're seeing a lot more attach of products. The one-stop shop is definitely well received within our customer group. The simplicity of being able to get online and get to a transaction faster than you ever could. Even availability of markets that in the past were not available to them. These are the positive signs that this group is really feeling good about their prospect going forward, knowing that there's a very volatile environment they're dealing with in and of itself.

Great. No, that's good to hear. And we understand that discovery is now shifting in AI-first world. And from that perspective, as more customer journeys begin inside AI interfaces, what changes, if any, are you seeing in terms of traffic patterns and conversion paths?

Yes. So we're blessed in that our brand has been so strong for so many years that when it comes to the domain being the place where you start to ideate that people come to GoDaddy just naturally. So a lot of our traffic is based on just our brand in and of itself. Now there is search elements to this, and there is no doubt you're seeing a switch from the traditional search metrics to the LLM search metrics. But I think everybody is adapting just like we did to the search when it came out the first time. We're adapting to what terms seem to get picked up, what is the simplicity of the offers you have out there, how do you gear that traffic in. And it's just becoming a natural part, I would say, the cycle in and of itself. So it's not something a lot of companies haven't faced before and are used to optimizing for. And I think what you're seeing today is the optimization around the new search LLMs that are coming into the funnel.

And when it comes to high-intent customer definition, can you maybe help us define and measure this high-intent customer? And specifically, what are early cohort signals most influence how you tune acquisition channels and various offers?

So when we talk about high-intent customers, we're talking about a customer who's coming in with an idea that they want to create or launch or do something online with their online presence. It could also be in-store, but they have an idea. And that's different from what we call maybe partnerships or in and of itself, investors, which we refer to in the domain space as well. Those are different cohorts of customers. We're going after the high-intent customer who not only wants a domain name, but wants a website, wants to -- an e-mail -- professional looking e-mail wants to transact or share content. And that high intent is what we gear our one-stop shop around and take the discovery and engagement and make it easy for them, so to say.

It's also a very profitable cohort because they're adding more products. They have a tendency, they have a higher renewal rate than other customers. They have higher retention rates in and of itself. And our ability to get to that LTV equation exists within that customer cohort in and of itself. We use $500 as a benchmark. I think we've been using that since our IPO. So it's not something that has been discovered recently. But generally, we look at that $500 population, customer who spends $500 with us annually. To get there, you generally have to be purchasing multiple products from us. And that is a good indication of us that you're getting value from our products, and that is the cohort that when they get there, has a near perfect retention rate for us.

So in that respect, when you run promotions, what markers do you watch to ensure that you're not trading long-term value for short-term volume?

So we always look -- we start with the traffic that we're getting into the website, who's going to the offer. We look at the conversion rates. We look at the attach rates immediately. So we take in the initial order size, are they attaching products immediately. And then subsequent to the order size, we look at activation. Activation to us is a clear indicator that a customer will renew when it comes to the renewal cycle. Why? They're using the product in and of itself. That's -- having that data and being able to observe that gave us confidence with our recent offer that we put forth in Q4 that, that 1-year cohort would renew at an effective retention rate that we've seen in the past from our other 1-year cohorts because we could see the signals around the activation once they came in and accepted that offer.

So those are the things we continue to monitor, and it will also make sure that we stay focused on that high-intent customer. Now the $4.99 offer, just to be clear, was only for new customers buying their first domain. So once we get them into the funnel and they start to maybe get more domains, maybe look at other endeavors, like I said, a lot of our entrepreneurs do multiple endeavors at a time, our ability to keep them within the funnel and attach and keep them within our platform increases.

And from that perspective, what requirements and changes have improved the balance between customer adds and bookings?

Customer adds and bookings. So again, we've seen the ease of use within the Airo platform and now the Airo platform sits on godaddy.com. It allows customers when they're going through the purchase path to attach those products to launch a website immediately to get to those second and third products we often talk about, and that allows us to increase the bookings. Again, customers in and of itself, as long as they're the right customers will drive that LTV equation we have talked about for years that when you go from one product, assuming the one product is a domain, you add an e-mail, you add a website and then you add transactions, goes to 83x over time. And that is what drives our bookings number over time. And we feel really good that, that LTV equation continues to strengthen.

In terms of your decisions around your portfolio, what are the biggest considerations when you're looking at potentially retiring or simply taking out some lower-value products? And when you're managing near-term customer count impacts versus improving cohorts quality, like how do you address that?

So our focus is on the high-intent customer, and our customer remains the center of our focus. No matter what we do, we're looking at the jobs to be done for our customers and our ability to provide those services. That sometimes requires decisions on our part. And we talked a little bit about an end of life of product that in the first quarter. We'll continue to make those decisions. In that case, it was a product that would require cost for us to service, but we weren't seeing growth in the product in and of itself. And quite frankly, we weren't seeing that it really was fitting a customer need today, and it might have fit a customer need in previous years. So we decided to reallocate those resources to make sure that we were putting them towards development of products that are actually meeting the customers' needs today.

And remember, we've been around for a long time. Micro businesses have been around for a long time, but their ability to compete online changes over time as the dynamics change. And we're well positioned to make sure we are meeting those needs of that micro business and allowing them to stay competitive. And that focus on the customer drives our decisions.

You've been talking about modernizing websites and marketing components with some of the AI-native capabilities. Can you talk about some of the success metrics that you need to see before you scale distribution more broadly?

So we -- again, we look at the customer behavior. I am blessed I have a CEO that is well engaged in our product development right now. As a matter of fact, he is talking to customers as we're introducing these new website developer applications, and we talked about Airo AI Builder. And he literally is going back and forth with customers to find out how they are working with our other products, what they're getting value out of, in some cases, what's not working. It's real-time feedback, and that continues to be the driver of how we will launch these products out into the market as we go forward. We talked about Airo AI Builder, which sits on Airo.ai today. We're going to put some marketing around it because we've seen our customers really coming in, demand coming in naturally on its own. Our customers engaging with our products. They're building applications. They're using those applications. They're not only using the tokens that we're giving them in the initial pricing packages, they're coming back for more tokens afterwards. So we're seeing the exact engagement we need.

Now we haven't put Airo application builder on godaddy.com and the purchase path yet, but we will continue to evaluate the traffic that's coming directly to Airo.ai for the application builder and seeing how our customers continue to gauge. Now we will -- at the same time, we've talked about we're upgrading Websites + Marketing and making sure that, that has Agentic AI-native components to it. We're going through that process today. We're seeing how that's integrating within the purchase path within godaddy.com. We feel really good about that progress, and we'll continue to now look at that upgrade as we get throughout the rest of the year.

And which next best actions you're sort of consistently introducing in order to increase the durable multiproduct adoption after the initial entry product?

Yes. So again, ease of use within the Airo platform has been the key to our success in our LTV equation over the past few years, and we continue to look at as the primary driver of customers coming in with the ideation of a business that they want to launch and offering them using our 30 years of history, our data set, we have a great care organization. We get 1.4 billion signals from our technology stack every day. These technologies and this data allows us to turn that into customer insights and allows our customers to anticipate what their needs are going to be, what their next steps are going to be, where they're going to get value, where they can do better, where they can maybe stay away from if it's not being as profitable as they need to be. So that continues to be the primary driver of how we engage with our customers and how we get them through discovery to engagement and ultimately to monetization.

Okay. Perfect. So tying this all together, over time, what do you view as the biggest growth algorithm for A&C growth? Would it be new customer attach or maybe some installed base expansions, pricing and bundling, some AI-native products? And how do you expect this mix to evolve?

Yes, it all evolves. So the primary model of A&C being the second and third product attach stays intact, right? Domains continues to be a great funnel for us and a great bringing in of new customers, and that sits within our Core Platform. Our Core Platform, once they start to attach, that becomes a second and third product. It's a more efficient base for us because we basically already have that customer in the GoDaddy platform in and of itself. That whole -- we evolved that several years ago. We consolidated the technology stack to make that all happen very seamlessly. That puts us in a very efficient place going forward to continue to add products. We can add partnerships into that process.

As we've talked about on some of our calls, we can launch new products, and we can also, in certain cases, end-of-life products if they're not working for our customers. But we can do it all effectively and efficiently. Again, our model is designed to be as efficient as possible, and we continue to see the benefits of that. A&C continues to be the growth driver, although I will say we've been very happy that domain remains a healthy part of the top of the funnel. And we're seeing a lot more micro businesses and entrepreneurs come in with the idea of going online a lot faster, which allows us an opportunity to attach to the second and third products. So as we launch things like Airo AI Builder, that will sit within the A&C segment to the extent of the technology in and of itself.

Now a lot of times when people are building applications through Airo AI Builder, the first thing they're doing is securing their domain name. That remains a part of the Core Platform in and of itself. So you are seeing a little bit of a reverse attach here. Again, early stage, we're in beta. We're excited. We're going to start to put some marketing dollars around driving traffic right to Airo.ai, but the engagement by the customers as of today has continued and the momentum continues to be there for us.

And Mark, you talked a lot about Airo where it drives a lot of durable value today. Maybe talk about where you think the biggest untapped opportunity as functionality expands, is it conversion or some attach activation?

Yes. So we look at the markets very broadly. And we look at our opportunity as the jobs that need to be done by our customers increases in the market today as AI becomes more of a commonplace technology that everybody is engaging with, not only the technology companies, we see there's going to be a great opportunity to add more and more tool sets that allow our customers to be successful in the agentic world, where even things like ANS and registering their agents, we think, is a great opportunity to build trust and security, something that exists in the domain space today and broadening that to the agentic space.

We also see great opportunities. We like to talk about AI a lot within the mature markets, but there also is a lot of global markets that are coming online or maturing online. We think there is a great opportunity to expand the maturity and the product base that we have today into maturing markets internationally. So we see a lot of opportunity out there. Everybody likes to focus on the mature markets and how AI is working within the mature markets, but there are a lot of markets out there that are coming online, are starting to transact, and we think it's going to create a great base for us going forward because we are set up to be a very efficient global company.

Mark, obviously, still very early days for Airo and AI monetization. But maybe directionally, how are you thinking about it longer term about the model for agentic experience, do you think it's going to be more subscription tiers or is it going to be credits or consumption based?

Yes. Listen, we're not locked into anything specific. But if you were asking me today, you're going to see a combination of subscription and usage-based tokens. We've started with that. We're seeing not only our customers come into Airo.ai and sign up for the subscriptions, they're using the tokens that they're giving within the pricing plan, they're coming in and buying more tokens today. And that is a great indicator that they're getting value for the price that we're charging, and we'll continue to look at that as a pricing tier.

Like I said, we haven't moved it into the purchase path within godaddy.com yet. That will be the next evolution, and we'll see what makes sense from a pricing standpoint once we put it into the regular purchase path. But I would envision you'll see a combination of multi ways to do this. Again, we will focus on our customer base, what works for them. And remember, our customer base not only gets the benefit of using these tools, but they also have to pay for them because they're the entrepreneur. So they cut the check at the end of the month to make sure they're getting the value of the technology, and we'll make sure that we are sitting within what is reasonable for the value they're getting from what they're getting by using our tools. And that has always been our model. Our ARPU is $240 plus and growing. But that's because we focus on the entrepreneur and their wallet share and their ability to do what they need to do and their ability to get value from our tools.

Perfect. Mark, an important topic, you talked a little about at the end of last year was your ANS strategy. So I'd love to speak to you about the right to win. How do you articulate GoDaddy's right to win in that space? And what needs to happen to reach that critical mass, like are you thinking about some standard alignments or partnerships or developer adoption?

So listen, we're very excited about ANS. And right now, our focus on ANS is adoption. We now operate in an open Internet that sits on the DNS infrastructure. As this becomes more a agentic or agents operating on the Internet, it has to operate within a secure infrastructure that is reliable and trusted. That's what was created around DNS, and that is what is going to evolve around ANS.

We are at that maturing infrastructure phase right now where people are starting to think about this and starting to think about the concept of an open Internet remaining. And you're seeing people make announcements with us that are saying, yes, they believe ANS will be the infrastructure for the Agentic Internet going forward. Right now, that is our sole focus.

Now as the largest domain player out there worldwide, we acknowledge our infrastructure is very much geared on the DNS infrastructure, and therefore, ANS maturing over the DNS infrastructure does create an advantage for someone like us. Having said that, it is open to everybody. And to us, the most important thing is to get adoption around the ANS infrastructure because we believe for micro businesses to be successful, the Internet needs to remain open. And everybody needs to have access to the Internet and be able to transact where they want to transact, whether using agents or the human element going forward.

And in terms of monetization, as adoption hopefully grows, what principles will guide that sort of packaging and pricing, so you can see the ecosystem while also capturing that long-term value?

Yes. So we've seen the economics around the domain space. And I'm not saying this will replicate it exactly, but the idea sits in ANS as well. If you -- like today, you have to register a domain name, you own that domain name, you renew it, it's yours. It's your real estate spot on the Internet. With agents, it would be a similar functionality. You have to register your agent, so people know it's authenticated so that people can trust it. If you have multiple agents, you would have to register multiple agents. Now you could do that under domain names, you can do it under subdomain names. There's a lot of things that have to be worked out and agreed to on the infrastructure in and of itself. And once it is, the economics around it will be apparent. But if we use DNS as kind of the blueprint of how ANS is going to work, you can kind of get to the sizing of what the value that can be received by just having trusted secure agents out there today.

Perfect. Well, I think this is a good time to see if there are any questions in the room. If you have a question, please raise your hand and you'll get a mic. Anyone? Perfect. I wanted to, Mark, ask about your care because obviously, it's both a cost and also a growth engine for you.

That is right.

So how do you decide which care workflows are here to automate versus keep human-led? And what metrics matter most as you scale your AI-powered support function?

We look -- first of all, care is an important element of what we do, especially within our customer base, and I can't emphasize it enough. We're about helping our customers succeed and having -- giving them access to whether human or agentic responses within our care organization remains a key part of our business going forward. Today, we are using AI more and more within our care organization. It's creating efficiencies. We look at statistics around resolution time to problems. We look at statistics around call time. We look at care guide productivity. We are now looking at agent productivity within our care organization and our ability to respond.

What we believe is AI will help our agents even more get to right resolutions of problems and even more effectively get to solutioning attach to our customers that help them be successful. So we're in early stages of rolling this out. We talked about a little bit coming out of our Q1 earnings. It will take some time to roll out globally, but we definitely see the efficiencies within the organization that we will be able to obtain without giving up our ability for that to be a pipeline to selling to our customers because our customers still come in with a need.

And through this all, we will always have a human element. There is always the use case that says someone needs to talk to somebody to get some help, and that is something we will always make sure our customers have available to them. More and more people are getting comfortable using agents to solve certain problems, but there's always an element that you want to call and talk to somebody.

I was laughing. I tried to move back my dinner reservation 15 minutes the other night, and then it took me 20 minutes just to get to somebody to move that back. We have to make sure we're not frustrating our customers. Again, our customer base is unique. When something is not working on their website or they're not able to transact, it impacts them immediately, and our care organization is there to help.

Perfect. And also I also wanted to talk to you a bit more about your capital allocation strategy. And obviously...

Yes, we have a strategy.

This has been a pretty significant area of focus for a lot of people. So I would just like to hear like how do you prioritize between buybacks versus some incremental AI and product investments as well as the M&A opportunity, would you need to change for that priority to shift?

Yes. So I think the important thing here is how we look at it and prioritize and the structure we've used around capital allocation has not changed. We still look at it using the same structure. We still look at buybacks as a key way to return value to our shareholders. We've used 95% of our free cash flow over the past years and put that back into buybacks. And at the same time, we still invest in innovation. We feel we are in a great spot. We have a strong balance sheet. We still generate a lot of free cash flow. We reiterated our target of $1.8 billion for the year. And we continue to look at what are we going to get for the return of deploying that free cash flow and where we want to deploy it.

We, no doubt, get a lot of calls on a lot of M&A, but our efficiency of innovation to do it organically has become so high that the bar for M&A has become even larger for us. So for something to be accretive to our model, it really has to hit that bar of being strategic, financially accretive and something we can integrate within the core technology stack. And as although those principles remain the same, as time has gone on, the bar around those principles gets higher and higher because of what we've been able to do and achieve internally.

So we feel, number one, our capital allocation is not an or, it's an and. We've been doing this with investing in our AI products. We're starting to see some of the metrics that we've put out in Q1 around the results of that innovation. We feel good, we have a very strong balance sheet and an ability to deploy if we see an opportunity out there if something makes sense. And we have the ability to continue to return value to our shareholders right now in the form of doing share buybacks, and we will continue to apply those consistently going forward. I always say I don't want to give away the future, but if you look at our past history, that will give you an indication of how we go and do all of this and how we've been effective at doing all of it.

And in terms of how you decide to simplify some legacy non-core hosting assets versus continuing to operate them as cash-generating businesses, like how do you think about that?

Yes, we always evaluate. We -- I think every period of time, we are looking at not only our customers' needs, what makes sense from an infrastructure standpoint for us. We talked about some of the things we did in 2023 that benefited our profitability in '24 and '25 and onward. Those were a lot of disposing of assets, in some cases, end-of-life-ing products that didn't make sense for our customers going forward. We'll continue to look at that from an evaluation. There's nothing to call out today that we're going to do differently.

The assets we have even outside of the core godaddy.com platform, some other brands are very profitable. They generate a lot of free cash flow. Our customers are very strong there. They may not be the growth engine of the business in and of itself, but we still see value in those assets. If that changes, and we believe there is another pivot we need to make around that or any of the dynamics were to shift, we know we have the ability to execute very fast and effectively to make sure that we stay on track for growing the business. We stay on track for our North Star. We continue to generate our free cash flow very profitable. I'd be remiss if I didn't say we were very happy that we grew our free cash flow per share 27% in the first quarter, and that continues to be our North Star of what we try to make sure we're on track to deliver.

Mark, it's been 30 minutes, and I haven't asked you about AI competition. What do you see as the most credible competitive threats at the moment? Maybe some specialists versus some platforms? Where is GoDaddy structurally much more advantaged given your integrated platform?

Yes. So my answer to this will always come back to the customer. While other companies out there are entering the space, they're looking at enterprises. As I've always said, some of the bigger players are designed to sell 1,000 seats to one customer. We're designed to sell 1 seat to 1,000 customers. That is our competitive advantage. We know the market we're in. We know our customers. We know their needs. We will continue to focus on our customer needs at the price points that work within their wallet share. This is a market we've been in for 30 years. This is a customer base we know better than anybody. This is where I always laugh that our CEO, Aman, is sitting out there right now texting with customers on what's working, what's not working, and they're texting him back. And our ability to stay in tune with that customer base is where our technology stack is geared towards and will continue to gear towards and why we feel really good about our future.

How about the AI cost governance? That's definitely something I'm sure you're focused a lot on. So how do you govern those AI costs? Do you do model routing or some vendor strategy, internal models, like what unit economics determine whether AI features they get shipped more broadly?

Yes. So we've set it up very disciplined from the beginning as we even launched into this several periods ago. We -- everything -- we have a consolidated technology stack. So our ability to use LLMs is regulated within our technology stack in and of itself. Think of we have one pipe that we can turn on and off, but it can go and be directed to any LLM out there depending on the value, the cost and what we need. And then we regulate it. We -- again, everybody understands that you can't run crazy and just start using this inconsistently. We stay focused on our priorities, what we're trying to develop. We know what the cost build-out is around that. We know what the product need is around that. We stay focused within that strategy and making sure we're not getting to the point where we're just building for the sake of building. It has to fit within our strategic alignment as a company. As a leadership team, we feel very strongly about that. We monitor that very closely. Obviously, as a CFO, I pay very good attention to it.

So we feel we've set up, I would say, the framework and the structure internally to make sure we're going places with purpose and not ending up somewhere where we hadn't anticipated. So we feel good about, hey, I put out there that we're on track for our 33% normalized EBITDA margin for the year. That's something we put out several years ago. Even though the dynamics around a lot of costs have changed, we feel very confident that we can maintain that profitability and still stick within that structure that we had set to investors several years ago.

Perfect. And finally, Mark, payment strategy. How do you think about Payments as a product that can drive monetization over time? Like do you look at retention rates, data attach or some ecosystem lock in? And what differentiates your approach versus your peers and Payments?

Payments has been great for us. We launched it several years ago as I would say, the next evolution of what we could offer for our customers for the one-stop shop. And in many regards, it's bucked a trend of us being able to convert our existing customer base over to a new product. And I say that many times, it's very hard to convert existing customers once they're using another product over to your product. But in Payments, we've seen great success in converting payment transactions from our customers using an existing vendor over to customers using ours. We've seen that in the growth of our GPV. We continue to be very competitive.

The attraction to our customer base is the one-stop shop, right, where you're transacting on your website, you can be transacting online, offline, you can be transacting in multiple different locations on multiple different surfaces, but it all operates within one platform for our customers. So if there is analysis that needs to be done, if there is data they need to see, if the transaction for any reason didn't go through, they have the ability to work within one care organization versus multiple care organizations, and our customers actually see that as a huge benefit for them.

So it continues to grow. It continues to grow at a good size. We continue to be on track. We think our biggest opportunity in front of us remains our existing customer base because that is customers who are already transacting at a certain level and converting that GPV over to our system is a lot of what's driving the growth within the Payments processing for us. And then as new customers come in, they're starting fresh. So their transaction level is usually a little bit lower, but they continue to grow over time and be able to transact that becomes the future base of the growth of our payments. So we feel really good that, that is all interoperating, and we feel really good about the decisions to add payments and that the growth in the GPV continues to be on track to what we have talked about for several periods now.

Mark, thank you very much for joining. Appreciate your time.

All right. Thank you.

Welcome to GoDaddy's First Quarter 2026 Earnings Call. Thank you for joining us. I'm Christie Masoner, VP of Investor Relations. And with me today are Aman Bhutani, Chief Executive Officer; and Mark McCaffrey, Chief Financial Officer. Following prepared remarks, we will open up the call for your questions. [Operator Instructions]

On today's call, we will be referencing both GAAP and non-GAAP financial measures and other operating and business metrics. A discussion of why we use non-GAAP financial measures and reconciliations of our non-GAAP financial measures to their GAAP equivalents may be found in the presentation posted to our Investor Relations site at investors.godaddy.net or in today's earnings release on our Form 8-K furnished with the SEC. Growth rates represent year-over-year comparisons unless otherwise noted.

The matters we'll be discussing today include forward-looking statements, such as those related to future financial results and our strategies or objectives with respect to future operations. These forward-looking statements are subject to risks and uncertainties that are discussed in detail in our periodic SEC filings. Actual results may differ materially from those contained in forward-looking statements. Any forward-looking statements that we make on this call are based on assumptions as of today, April 30, 2026. And except to the extent required by law, we undertake no obligation to update these statements because of new information or future events.

With that, I'm happy to introduce Aman.

Good afternoon, and thank you for joining us. At GoDaddy, our purpose is to make opportunity more inclusive for all. We serve over 20 million customers globally, helping them establish their identity, build their presence and grow their business. We do this through an integrated platform that brings these capabilities together in a seamless AI-powered experience helping customers move from their idea to execution quickly and at a compelling value.

Starting with Q1 results. We delivered revenue growth of 6%. This performance, combined with continued operational execution and structural leverage drove meaningful expansion in normalized EBITDA margin to 33%, up over 200 basis points. This underscores the durability of our model and continued progress towards our financial north star generating strong free cash flow growth of 15%, while remaining committed to delivering long-term shareholder returns.

As AI-driven innovation accelerates, customer expectations for speed, simplicity and measurable outcomes are rising. Customers are increasingly using LLM across their workflows and getting familiar with chat-based interfaces. We are leaning into this shift, positioning GoDaddy as the platform that helps entrepreneurs turn intent into action through AI-powered experiences and outcomes. Our AI transformation builds on our core strengths of a trusted global brand leadership in domains, scaled infrastructure, proprietary data, strong engineering talent and a world-class care organization. Together, these form a differentiated platform that allows us to deliver a seamless one-stop shop solution for entrepreneurs.

We are moving quickly and intentionally with focus on delivering measurable outcomes for entrepreneurs. The positive impact of our AI transformation is clear in 3 areas: first, the adoption and monetization of our AI native products; second, the expansion of Agent Name Service as a new identity layer for the Agentic Open internet; and third, the use of AI to drive operational efficiency.

First, we are making strong progress on our AI-native products. Airo AI Builder introduced last quarter on Airo.ai is an AI-native experience that enables customers to move from idea to execution in minutes, automatically creating websites, applications and core business capabilities across identity, presence and commerce. I work directly with customers using Airo AI Builder on a weekly basis and the customer feedback is shaping our road map and accelerating development. Our customers are looking for simple integrated solutions for their core jobs to be done, and we are delivering that through Airo AI Builder. It is delivering strong early adoption and monetization is already scaling with customers.

This new Airo AI Builder product offering has rapidly scaled to $10 million plus in annualized bookings run rate within weeks of its beta launch. While still early, the pace of adoption and quality of customer interaction is strong. Customers are building, publishing and purchasing incremental credits as they deepen their use of the product. Momentum continues to build week after week as we expand Airo AI Builder's functionality and distribution. We are expanding distribution of Airo AI Builder on godaddy.com and have begun selling it through Care. In Care, we drive higher adoption of premium plans compared to our online channels and receive direct customer feedback, both positive and constructive to improve the product. As a next step, we are ramping targeted trade marketing in May, funded through efficiencies elsewhere in the business. We are thoughtfully monitoring the mix between new and existing products as we scale, with a focus on optimizing overall customer value and maintaining margin discipline.

The second major product initiative we introduced last quarter is the upgrade of Websites + Marketing, bringing AI native capabilities into the product while maintaining strong cost discipline for both customers and GoDaddy. This upgrade combines AI-driven capabilities with a powerful editor enabling customers to create and manage their presence more efficiently. The domains funnel remains our largest distribution lever for new customers. And in this quarter, we tested the upgraded product within that path. Early results exceeded our expectations and validated the direction of the product. We are excited to get the upgraded functionality in front of all our customers and are using experimentation to inform improvements on the experience.

Our teams have embraced an AI-native approach across our customer products, and we are making meaningful progress delivering customer value. We are expanding these capabilities at a rapid pace while maintaining disciplined investment as we scale distribution and marketing, we are confident in our ability to compete effectively.

The second component of our AI transformation is Agent Name Service or ANS. We are working with large players and seeing continued interest in this technology. ANS extends the role of domains as a digital identity provider in an Agentic Open Web. We signed a couple of partnerships over the last quarter with real-world use cases and are working hard on aligning key players on the open standard and the use of domain name service or DNS for agent identity and discovery. Championing the open standard and partnerships are key to getting to critical mass of support of the open standard and we are encouraged by early results. Non-GoDaddy agents in GoDaddy's ANS implementation now number in the thousands. DNS is the foundation of identity on today's Internet, and domains are uniquely positioned to play a role in agent identity and trust extending domain relevance into the future.

Third, we are transforming GoDaddy into an AI-native company by deploying AI across our operations to improve speed, efficiency and customer outcomes. We are driving the most immediate impact in software development where AI is enabling the rapid creation of customer-facing applications with fewer dedicated teams. We are also testing the replacement of smaller third-party SaaS tools with internally built solutions on Airo AI Builder, particularly across corporate functions with the goal of reducing both cost and operational complexity.

In Care, we are advancing to the next phase of AI-powered automation. In Q1, we achieved key proof points across both support and sales. On the support side, we launched Airo Care, a new AI native support technology across voice and chat that handles a wide range of customer queries. We validated it against our existing offering, delivering strong improvements in resolution rates. Our first test improved resolution rate by approximately 50%. Subsequent tests demonstrated that Airo Care can equalize the resolution rates between English and non-English markets improving performance in non-English markets by over 150% and strengthening Care as a global competitive advantage. Airo Care is now rolled out to more than 50 markets and 20 languages. We will continue to expand use cases each month while maintaining a strong focus on customer satisfaction, resolution rate, sales and cost.

On the sales side, our AI-native commerce Airo sales agent makes voice calls and handles the entire commerce sales experience without human intervention. We have optimized the agent over the last few months and last quarter, it delivered conversion rates comparable to human-assisted sales for smaller leads. These are exciting milestones, and we plan to scale these capabilities throughout the year. Alongside these AI transformation initiatives, we continue to execute on pricing and bundling, seamless experience and commerce. These programs continue to drive improvements in conversion, attach and renewal rates.

I want to briefly revisit the promotional offer we discussed last quarter. We refined the program to better balance customer acquisition and bookings, and these efforts are delivering results. the promotions drove strong gross customer adds and resulted in new domain registrations accelerating by 6% for independent and partner customer populations. Our strategy remains consistent. We are focused on attracting high-intent customers who attach, convert and grow over time, optimizing for long-term value. Towards this end, we also took the opportunity to remove a lower-value product offering this quarter. This partially offset the customer growth from the promotional offer, but did not materially impact bookings.

In closing, we are operating in a dynamic environment with rapid change and leaning into our strengths. We serve more than 20 million customers globally, our domains business and our unwavering focus on micro business customers remains foundational, supported by our scaled integrated platform that connects identity, presence and commerce. This combination of global reach, proprietary data, seamless technology and our Care organization creates deep customer insight and consistent execution.

Our model is built around attracting high-intent customers and helping entrepreneurs start and grow their ventures over time. This drives durable growth and expanding margin and strong compounding free cash flow. We continue to execute with discipline. And as we look ahead, our path forward is clear. We have a large market opportunity, a strong competitive position and the financial flexibility to continue investing to deliver enduring shareholder value.

With that, here's Mark.

Thanks, Aman, and good afternoon, everyone. In the first quarter, our model continued to demonstrate its durability, driving operating leverage, expanding margin and generating attractive compounding free cash flow. Supported by a strong balance sheet, we have the flexibility to invest in innovation, while still maintaining a disciplined capital allocation framework. We delivered revenue at the high end of our guidance while expanding our normalized EBITDA margin by over 200 basis points.

At the same time, we generated strong free cash flow of $474 million, bringing our trailing 12-month free cash flow to $1.68 billion. We deployed capital through share repurchases, reducing fully diluted shares outstanding to 133 million. Our focus remains on consistent execution and delivering solid financial results as we continue to advance our AI transformation.

For the quarter, total revenue grew 6% on both a reported and constant currency basis to $1.3 billion, and ARR grew 6% to $4.3 billion. International revenue grew 7% to $416 million. For our high-margin A&C segment, we drove 12% growth in revenue to $0.5 billion on continued solid attach of our subscription-based solutions. A&C ARR grew 10%, and this segment now represents approximately 40% of our total business.

Segment EBITDA margin improved 110 basis points to 45% on product mix. Our Core Platform segment delivered revenue growth of 3% to $769 million, on 5% growth in primary domains with a stronger mix towards higher-priced non-.com TLDs. This was partially offset by softness in noncore GoDaddy hosting, the dotco registered contract expiration and tougher compares in aftermarket. Segment EBITDA margin expanded 150 basis points to 33% on product mix. Total bookings grew 3% to $1.5 billion, reflecting a few points of impact from our promotional offer we shared last quarter, the dotco registry contract expiration and lapping of prior year aftermarket strength. A&C bookings grew 9% and core platform bookings declined 1%. As we outlined in February, this quarter reflects the peak impact of both these dynamics, and excluding any FX impact, we expect bookings and revenue growth rates to be at or above parity for the remainder of the year.

Our focus on attracting and growing high-intent customers combined with conversion improvements is driving durable growth and higher customer quality. We are driving increased conversion into primary domains and higher attach through Airo. At the same time, we continue to deliberately manage our product portfolio, exiting lower-value offerings and reallocating resources towards higher value opportunities. And our newer Airo cohorts are demonstrating that higher value with second product attach accelerating 30% faster relative to non-Airo cohorts. These cohorts are contributing to the increase in the number of customers spending more than $500 annually, which represents approximately 10% of our customer base. Higher attach and retention rates above 85% drove ARPU growth of 9% to $246.

As we look ahead, Airo AI Builder is beginning to contribute directly to bookings. As Aman noted, this offering is already generating millions of dollars in annualized run rate organically and without dedicated marketing support. In parallel, ANS extends our leadership in a digital identity, positioning us to participate in the next evolution of the Internet infrastructure. As the architecture of the Internet evolves, our current strengths remain as relevant as ever, and our AI transformation positions us to consistently deliver profitable growth and capture value going forward.

Turning to margins and free cash flow. Normalized EBITDA grew 13% to $414 million, delivering 210 basis points of margin expansion to 33% and exceeding our guide for the quarter. Operational execution, supported by AI-driven efficiencies and favorable product mix continues to drive margin expansion. Our expanded margin reflects the efficiency of our model and gives us the flexibility to invest in our AI transformation while maintaining a strong balance sheet and a durable free cash flow profile.

Free cash flow grew 15% to $474 million, with a normalized EBITDA to free cash flow conversion of greater than 1:1. We exited the quarter with $1.3 billion in cash and total liquidity of $2.3 billion. Net debt was $2.6 billion representing net leverage of 1.4x on a trailing 12-month basis and within our target range.

On shareholder returns, we repurchased 3 million shares during the quarter, totaling $280 million. Since 2022, our share repurchase programs have resulted in a gross reduction in fully diluted shares outstanding of over 31%. And we ended the quarter with 133 million shares outstanding.

Turning to outlook. We are reaffirming our full year 2026 guidance provided in February and expect total revenue to be within a range of $5.195 billion to $5.275 billion, representing growth of 6% at the midpoint of the range. As a reminder, our full year revenue guide incorporates just over 200 basis points of cumulative impact from the expiration of the dotco registry contract, our consistent exclusion of high-value aftermarket transactions and the impacts of our product evolution and our promotional offer.

For Q2, we are targeting total revenue of $1.285 billion to $1.305 billion, representing 6% growth at the midpoint of the range. For both the second quarter and the full year, we expect A&C revenue growth in the low double digits and Core Platform growth in the low single digits.

For Q2, we are projecting a normalized EBITDA margin of approximately 33%, and we are reaffirming our target of over 33% for the full year. This reflects our ability to drive continued operational leverage and AI-driven productivity gains while increasing our investments in our AI native products, marketing and compute costs.

For the full year, we expect normalized EBITDA to maintain a greater than 1:1 conversion to free cash flow, and we reaffirm our full year free cash flow target of approximately $1.8 billion. We continue to be on track to exceed our free cash flow North Star CAGR of 20%.

On capital allocation. We operate within a disciplined, return-based framework and have deployed greater than 95% of our free cash flow over the last 4 years towards share repurchases. Our continued commitment to returning capital is a clear expression of confidence and the strength of our cash flow and the long-term value we are creating. We remain focused on allocating capital to its highest value users with a priority on driving long-term shareholder returns.

In closing, the fundamentals of our business remain strong with consistent engagement and durable drivers of ARPU supporting our long-term trajectory. As we move forward, we remain focused on disciplined execution and continued progress toward our North Star. We look forward to talking about these and other updates at our investor event later this year.

I'll now turn it over to Christie to open the line up for questions. Thank you.

Thanks, Mark. [Operator Instructions] Our first question comes from the line of Vik Kesavabhotla from Baird.

Can you hear me okay?

We can.

Yes.

Great. So my first one is on the customer base. And I'm curious, as you navigate all these changes in the product portfolio and in your go-to-market strategy, how do you ensure that you're attracting the right type of customer to the platform? And I think you mentioned in the prepared remarks that customer quality is increasing be great if you could elaborate some more on how you measure customer quality and what you're observing in the behavior of some of these recent cohorts that's informing your confidence in the strategy right now?

And then separate from that, my second question is on -- you talked about all these ways that you're using AI internally across the company's operations and some of the proof points that you're seeing already. As you continue to scale those initiatives, how should we think about the opportunity for those efficiencies to flow through to EBITDA and free cash flow in the near term versus being reinvested back into the business to support your product and marketing needs. And I realize it's probably a tough question to answer in a ton of detail quantitatively, but it'd be great to hear your philosophy around how you're balancing those dynamics during what seems like a pretty significant period of change for the business.

Vik, let me take the first one, and Mark can take the second. On the cohorts that we're attracting, look, our strategy is to attract high-intent customers. And the way we define high intent is looking at the traffic coming in by channel and then looking at the activation and attach to other products. And what we know from years and years of data across our 20 million customers, is that if we see that activation and attach to other products, we are going to see good renewal at the end of the 1-year term.

So that's what really gives us confidence. That's what we're looking for. And when we make these trade-offs and the decision in the business, to attract new customers with end-of-life certain products or retire certain cohorts. What we're looking for is the quality of those, the intent of those customers and measuring it through the activation of the other products that they have.

And then on the operations, Mark?

Yes. On the operations, we are balancing several different factors here. One, we have the ability to expand our margins. We have for the past few years. We're continuing to see operational efficiencies by the adoption of AI internally. And then we're playing the -- or paying our attention to the disciplined approach we've had in the past around investing in innovation, but using data points that show our path to return on those data points before we invest. So we're taking a very disciplined framework approach. And I would say we're balancing it with what we think the long-term return is going to be when we make those investments.

For example, we have talked about we were going to increase marketing around AI builder through the remainder of the year is because we are seeing the data points that are showing that return. And while those returns will be immaterial for the current year, we do know the potential to drive future growth for us as there and that makes that return appropriate.

Yes. I think maybe just to add -- the areas that we're looking at, whether it's software development or Care or our use of applications or marketing, all of these areas are accelerated with AI and we see great opportunity to deliver a better outcome for our customers at a lower cost this year and into the future.

Our next question comes from the line of Ken Wong from Oppenheimer.

Can you guys hear me?

Yes.

Yes.

Fantastic. First question, on the $10 million plus of Airo Builder ARR a lot of your kind of stand-alone AI builder platform, we've seen them scale up extremely fast. And I realize it's super early, but what's the right way to think about kind of what this business or this product could potentially grow to?

Yes. Ken, when we talk about the $10 million run rate, what we're really talking about is annualized bookings. And you're right, it's very early data. This includes both subscriptions and credits or tokens. And what we see is customers come in by a subscription, engage with the product, love the product, and they keep coming back and improving the website or whatever actions, whatever job they're trying to complete with the AI builder. I am directly engaged with a few customers. I actually work with customers every week now, sessions with live customers.

And what's magical about the Airo AI Builder and our customers that our customers have lots of ideas, but it's very hard for them to go through menus and templates and figure it out. So if they can just in natural language explain or just say, I would like this, Airo AI Builder goes and does it for them and it's sort of a magical amazing experience for that. So what happens is the same subscriber ends up using it more and more publishing, republishing and buying more credits. And that's the run rate we're looking at.

In terms of what it could be, it's super early. We're very excited about this early adoption, as I shared in the prepared remarks. We just started selling it in Care. We're going to add paid marketing to it starting this month. So there's a lot of things for us to do. And of course, we have the giant funnel we have with domains or website pads, which we haven't touched yet either. So there is a lot to do to get to what we think the long-term run rate can be, but we're excited about where we started. And we're also keeping an eye on how customers use this product. And does it change how they use our other products because that mix is going to be important for us, too.

I appreciate the color there. And then just a follow-up also on AI opportunities. You mentioned ANS opening new infrastructure opportunities. And now with Airo AI Builder pushed in your back end beyond websites, is there the potential to potentially utilize GoDaddy's hosting capacity for additional workload, AI workloads, given the market scarcity there. I mean we're sort of having a moment in hosting all of a sudden. And it seems like that's an area you guys could potentially capitalize on?

Yes. Actually, Airo AI Builder does use GoDaddy hosting. It's one of our competitive differentiators. We can provide a whole thing at scale, that's secure, that's at a great cost. And so there's definitely sort of excitement from our side to be able to take something like Airo AI Builder and power it with our hosting solution. We also have some plans to do more with hosting directly in our -- for our customers, but we're not looking to go out and do something that's for enterprises or something like that.

We are very focused on our customer base, the solutions that our customers need. We feel that we serve a unique customer, a lot of the new entrants in the AI space are serving enterprises, and we have this unique relationship with this type of customer. So we're really leaning into that relationship and the needs of that customer.

Our next question comes from the line of Trevor Young from Barclays.

Great. First one for Mark. On your comments on bookings growth at or above parity with rev growth or the balance of the year, is there a particular shape of the bookings curve to be mindful of? 1Q implicitly the low point, but will 2Q step all the way back up to where rev growth is and 2H bookings a bit above that? Or is 2Q going to be maybe a tad ahead because it has an easier compare?

And then second one on capital allocation, buybacks here in 1Q well below free cash flow generation and the 95% payout stat that you've given. Meanwhile, cash at kind of the highest level since middle of '21, if I'm not mistaken. Just any updated thoughts on capital allocation and buyback appetite with the stock at current levels? And in lieu of buybacks, any updated thoughts on M&A?

Right. Thanks, Trevor. On the first, on the bookings, growth rates should be on par or above. We're looking in that both quarter on an annual basis for the remainder of the 9 months. So it should give you a sense of the momentum we're starting to gain as we go out throughout the year.

On capital allocation, what I always say is don't look at any particular quarter. I look at our history, our history is a good indicator of how we approach this. We look at the quarter going forward, we make determinations and buybacks are still a strong way or a strong lever for us to return value to our shareholders. So again, look at our track record, our history of what we've done. And it will give you a good idea of how we continue to approach it and the way we look at it hasn't changed.

Our next question comes from the line of Mark Zgutowicz from Benchmark.

You just closed $10 million in annualized bookings, the run rate for Airo AI Builder within -- it sounds like weeks of beta. Can you break down the unit economics there? Like what's the average transaction size? How much of that earn rates coming from credit top-ups versus the initial plan purchase. And what's the margin profile relative to legacy W+M?

Yes, Mark, overall, we remain committed to what we have shared in the past that we are building a product that serves our customer but comes at a gross margin and a price point that works for our customer and for GoDaddy. So from the very first day, we have continued to look at this product as a gross margin positive product, as a product that can continue to grow and deliver the economics for the company.

In terms of what is subscription and what is credit. We're so early like this has to bake, this has to grow, that there are going to be, I think, so many ups and downs as we enter marketing as we open the channels as we drive more traffic even from godaddy.com to this product. So it's too early to talk about sort of the more detailed pieces of how -- of what's happening here.

In terms of the comparison to websites marketing, as we had shared in the prepared remarks and last quarter as well, we haven't upgraded our website plus marketing going out this year. That product focuses more on exactly that need for that customer and the economics that would be needed to make it successful. We did test that product, and it all works together. It's all together with Airo. It's not like going to be something different when it comes out. When we tested that experience, and it did quite well in the test. But as I said last quarter, Websites + Marketing, the current version is an established champion, it is going to take a little while to test challenger, Websites + Marketing the new version, and we expect to do that this year as we roll through the year, we're going to test sort of the new product, new version a couple of times, and we expect it to win sometime this year.

Got it. And maybe a follow-up then on the upgrade that W+M upgrade, being tested now in the domains funnel, and it sounds like you're having some really solid early results there. Just curious when we should expect pricing to be reimplemented at Websites + Marketing, specifically and whether you can quantify how much of the historical ARPU accretion that you've witnessed from pricing and bundling has been attributable to W+M versus other products?

Yes, I can take the first part, and Mark, if you can take the second. On the pricing initiative around Websites + Marketing, because this is a very significant upgrade and there's a lot of moving parts. We're moving from a solution that is template first and uses AI to a solution that balances editor capabilities and AI capabilities. And frankly, it just comes with a different set of COGS and profile that we're working with.

Any sort of pricing change would have to wait until we get to parity on the customer experience and metrics like published rates. So that we can be certain that the product is -- the new version is delivering what customers expect. And once we've done that, then we can look at any sort of pricing initiative.

Yes. And on the contribution to ARPU, we don't get into distinguishing between products because it gets very difficult with the concept of bundling because multiple products are involved. But I will highlight that the pricing that we talked about is specific to this area and not to the other bundling aspects that we've had. So there's still contribution in our ARPU related to our pricing and bundling is just not to this one specifically.

Our next question comes from the line of Arjun Bhatia from William Blair.

I'm Willow on for Arjun Bhatia. Can you unpack A&C bookings growth? Was it largely impacted from the recent promotional activity in the quarter? Or is there anything else to call out? I'm just trying to appreciate the [ decel ] and the time line to inflected growth from initiatives like Airo and then pricing bundling historically.

Yes. Thanks, Willow. Nothing to call out different than what we talked about last quarter. There are various aspects across our bookings that were impacted. The 2 specific to A&C are the go-to-market offer. There is an allocation element when we bundle products together in the initial order that will impact A&C. And then what we're just talking about on the pricing aspect, the pricing and bundling related to the upgrade to the website book marketing product. Those are the 2 impacts on A&C bookings. And obviously, as we go throughout the year, we expect some of that to pass. Now on revenue, it's more evened out because of the subscription nature of what we do. But on bookings, that was mostly peaked in Q1.

Our next question comes from the line of John Byun on for Brent Thill at Jefferies.

Can you hear me?

Yes, we can hear you.

Just 2 questions. Again, on the Airo AI Builder. In terms of monetization, is it just the subs and the AI credit with the product itself? Or are you starting to generate anything from upsell or cross-sell by the code products? And then a follow-up would be international revenue growth seemed to slow a little bit to 7% from, I think, last year was mostly within 10% to 14% range. I don't know if there's anything you can call out there.

Yes. Thanks, John. On the run rate for Airo AI Builder, that's just the subscription and credits for ROI builder. We have not baked in sort of attach or other products into that yet. All of that is to come. You will see over the next few weeks this product sort of become a bigger, bigger part of the GoDaddy ecosystem. And as it does that, then we can have additional bookings that relate to those customers. But for now, we're just trying to give you the cleanest picture of this new product so that folks can understand the overall AI story at GoDaddy.

And on the international revenue, the only thing to call out is aftermarket last year with some of the larger transactions hit the aftermarket and contributed to the growth rate overall. We didn't see those type of transactions in Q1, the larger ones. So it's just a tougher compare from aftermarket for Q1.

Our next question comes from the line of Ella Smith on for Alexei Gogolev at JPMorgan.

So first, I was hoping to ask about the ANS. What do you think is GoDaddy's competitive advantage or right to win as it comes to the ANS, especially versus larger competitors?

So the biggest thing about ANS is that we have put to the world that agents that we believe will be roaming the Internet and were larger in terms of traffic than human traffic soon should be registered on the Internet. And large destinations, whether those are website, systems, platforms, other organizational enterprises should recognize agents that are registered because if they're not registered it is going to be very difficult to trust agents. It's going to be very difficult to transact with agent, it's going to be very difficult. You just know which agents are real and which are fake and we think we can avoid all of that by registering agents using Agent Name Service, which again is backed by an open standard.

The reason Goady has huge right to win here is because within the Agent Name Service open standard, we say that while people should register agents with ANS, they should be -- those agents should be discovered using DNS, which is domain name service. Domain name service is a directory on the Internet that everybody uses. It's one directory. It replicates everywhere. Agent registries are popping up in every company. So how do you bring that together? You bring that together by connecting those registries to the one directory. And if we connect it to the one directory and in that directory, put the agents under the domain name then the domain name becomes core to the identity and trust relationship that agents have now and into the future, which as the world's largest domain registrar, it's obviously good for us if domains plays that role.

And what we're excited about and we're seeing good reaction from the large players. And of course, they want to take their time to understand things. But what we're really offering to the world here at an open standard is a beautifully elegant, scalable solution, and it already exists. Nobody has to recreate it. So hopefully, that helps a little bit to understand why agent name service is so important and why it links back to go to be as the world's largest domain registrar.

That's very clear, Aman. And if I may, a follow-up for the domain business. We're hoping to ask some question -- or a question about your strategic objectives for the domain business. Is your intention to maintain or gain share? Or would you be willing to let some lower LTV domain customers go at the expense of your market share?

So I think we've said that we will let low LTV customers go because our focus is high-intent customers. And if I step back and look at the domains business, we continue to be the world's largest domain registrar by far. Over the last [ 30 ] years, all kinds of competition has come into the world, right? We have seen very low-priced domain registrars. We've seen people use domain as loss leaders. We've seen people who give them for free. We've seen blockchain and the list goes on. And now the new normal includes LLM, the abides and lots of things.

So we are coming to that world with a lot of experience in competing in this business and a lot of tools to compete in this business. But what we have consistently found is that the value is in the high intent customer. The value is in the customer that has good intent, buys a domain and then does other things with it. And by doing those other things, that's what drives LTV for GoDaddy, that's what drives our business.

Our next question comes from the line of Naved Khan from B. Riley.

I'm curious, Aman, how much of the traffic are you exposing to the website to the Airo website builder? Is this still something you are testing and iterating or you already kind of rolled it out broadly? So that's one question. The other is just on the app builder. You said, I think the plan is to put some marketing dollars behind it, maybe you're already doing it. How significant is that? And what will it take for you to go from going from sort of testing the orders or kind of putting more or increasing the allocation that you have on marketing trend behind this?

Yes. On the first, Navid, from godaddy.com, we are still sending only a small amount of traffic into this new experience. Our largest funnels on godaddy.com are our domains path and they are our create path, which is the website path. And both those paths currently go into the existing champion version of Websites + Marketing. Over this year, we expect that to evolve, but as that evolves, more and more traffic will go to the new products, and I'm super excited about them, and it will definitely grow the usage of the products, the units on the products and the dollars associated with that. So when we look at godaddy.com, it is still a small amount of traffic, and we have a ways to go in terms of being able to drive more traffic to it.

In terms of the marketing plan for Airo Builder, we expect to spend a significant number of dollars this year, and we are starting in Q2 this year towards that. Now we're going to fund that -- those dollars with other efficiencies in the business. So doesn't have to change any of his plans. But when we look at that, it's the same disciplined approach that we have done in the past. When we look at what we are spending, what the return is and then we increase it and we improve it. And this is core to our evidence-based decision-making culture. You'll start to see us spend more in marketing. And what we're looking for is traffic coming to the product, the engagement with the product, they sign up with the product, people buying it, people publishing sites and then people coming back and engaging with their own buying credits. So that's the whole chain we're looking at. And over the next 2 or 3 quarters, our expectation is to ramp that up.

Yes. And just to reiterate, there's no change in the framework of how we approach this. We'll use the data. And when we see the returns, we'll continue to invest into the marketing.

And maybe just to kind of follow up on that on the Airo app builder, how is pricing evolving? Is it something that's set in stone? Or is that something that you're testing and might change? Give us your thoughts then on that.

We did test a couple of different plans, Naved, and we're happy with the plan we have settled with. That's one of the gates in terms of ramping up marketing spend. So we are happy with the current plans. The current plans include a startup plan that you can get us started with for free with a few credits or just free plan and then a starter and a professional and an ultimate plan and it has a subscription and a credit system with it. So we think we have a good setup here and for the foreseeable future, we're going to stick to it. And there are levers that we can pull over time. But for now, we're just going to focus on scaling it as fast as possible.

Our next question comes from the line of Jack Halpert on for Deepak Mathivanan from Cantor Fitzgerald. Jack, I think you're muted.

There we go. You guys hear me now?

Yes, we can.

Just one for me. You guys mentioned removing a lower value product offering this quarter. Can you just give us some more color on what exactly that product was and maybe how much it impacted customer count, revenue and if there are any other lower value products that you're evaluating in the portfolio?

Yes. Let me take that, and then Mark can jump in. As we talked last quarter, we have taken bold steps in terms of our promotional offers because we are in a dynamic environment, and we need to test faster. We need to move faster. And as part of those promotions, what you saw from us last quarter is we actually saw a significant gain in customer gross adds. In fact, the promotions that we did moved gross adds over 100,000. It brought us over 100,000 new customers. It's a very, very large number for us with a set of promotions.

But when we saw those promos and of course, we optimize -- we decided to optimize those promotions to balance bookings and customer growth because we want to stay with a high intent customer. When we look forward, we're really excited about our ability to do that. But when we bring in that many number of customers, we also take the opportunity to make tough decisions on products that we're going to retire. And that's what we did in this last quarter. The promos that we had did very well in attracting customers. We -- what we did is we decided to tune them to balance bookings and customer count, and then we took the opportunity to retire an old product that actually had an impact on customer count, but I think Mark can confirm little to no impact on bookings.

Yes, that's right. And this is the case of a product that we offered in prior years. It wasn't really generating the value that we needed. So we're just not going to support it anymore, and we're going to reallocate those resources but it didn't have any impact on bookings and did have a slight impact on churn within our customer group. But again, I would look at this, we will continue to evaluate our portfolio because our goal is to optimize for our higher-value offerings and in certain cases, make the choices between that and a lower value offering that may not be getting the return anymore that we need.

Our next question comes from the line of Kishan Patel on for Josh Beck at Raymond James.

This is Kishan Patel on for Josh Beck. As chat bots, AI mode and other AI-native discovery surface continue to gain scale. Have you observed any notable changes in top of funnel traffic patterns, customer acquisition behavior or conversion paths. And how are you thinking about GoDaddy's positioning if more customer journeys begin inside AI interfaces rather than traditional search?

Yes. On the traffic coming to the top of the funnel, I think consistent in the last quarter in terms of what we've talked about before, I think we had shared that we do see some impact to traffic in search because of the move to AI mode, but we were able to offset that impacted traffic by improving conversion on our side. So that same relationship has continued. We haven't seen any further change. in that or the trajectory of that versus what we saw in previous quarters.

In terms of customer journey starting in AI bots or there's lots of new interfaces and sort of new things that we're looking at. The way I look at it is what we are looking for is wherever customers are starting their journey how can we provide them the value that we have. And when we provide them the value, is this an exchange of value for us. Like are we able to build on it. And the simple example of that is that if people, let's say, if we get to a world where everybody has an agent and that agent goes out and does things, we want to make sure that we have the APIs. We have the offering where those agents can work with GoDaddy as successfully as with anybody else because we would slowly developing is the new normal, and that's what we have to compete with. And we've competed over 30 years with lots of companies, with lots of business models, and this is a new one, and we think AI is here to stay. So we're actually excited in organizing our teams to compete in that world.

Our next question comes from the line of Elizabeth Porter from Morgan Stanley.

Awesome. This is Katie Keyser for Elizabeth. Just with Airo Care now being rolled out to multiple markets, multiple languages, highlighting kind of improved resolution in those non-English-speaking markets. Does that change your kind of international growth opportunity at all? And I guess, just broadly, how does AI-enabled multilingual Care kind of change or accelerate the approach to entering markets that maybe previously were less attractive because of support or kind of localization costs.

Yes. As you know, Care is so core to our competitive differentiation and so core for the customer. We know our customer needs that support, whether it's through voice or chat that we provide that capability in many markets in 22 languages all over the world, and we just start core line we then translate it in even more. So having Airo Care, which natively provides our ability is definitely going to allow us to compete much better in international markets.

And we're really, really excited about this first data point where by taking AI or Airo Care and using it within our messaging system, actually, that's the test that I talked about in the prepared remarks. That test being able to perform almost equally globally is great news for us because it's so difficult for us to provide that high level of service that we have that huge NPS that we have in smaller markets, in Asian markets where we may not have a big presence. If we can do that with Airo Care, we can definitely be more aggressive in those markets. So we're looking forward to that. And I think it's an exciting opportunity for the future for us.

Thanks, Katie. I'll turn the call back over to Aman for closing remarks.

Thank you, Christie. Thank you all for joining. Super excited to be where we are and a great journey in front of us. A big thank you to all GoDaddy employees for a great quarter, and I'll see you next quarter.

Awesome. Well, I think we can get it started. Thanks, everyone, for being here at the day 1 of Morgan Stanley TMT Conference. My name is Katie Keyser. I'm on the software equity research team here at Morgan Stanley and very excited to be kicking the day off -- the conference off with GoDaddy. We have Christie Masoner here from the IR team stepping in for Mark. Thanks a lot for being here.

Yes, of course. Thanks for having me.

Awesome. So a quick disclosure before we get started. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures.

Awesome. So a lot to dig into on the GoDaddy story here. Maybe we can start at a high level, the kind of topic that's on everyone's minds, framing the AI landscape for GoDaddy. We've heard you talk a lot about kind of evolving Airo from that generative AI experience into more of the agentic operating system for your small business customers. At the same time, right, investors somewhat worried about how AI could disrupt the traditional kind of domain of creation value chain.

So maybe just how you frame the risk versus opportunity for GoDaddy here, where you see the company kind of most uniquely positioned versus some of those disruptive forces?

Yes. Thanks for the question. We're really excited and really bullish about Airo.ai. As you mentioned, it's evolving that generative AI experience into a more agentic experience. And what this is doing, what it's accomplishing for micro small businesses is a set of agents that are carrying out tasks on behalf of the micro small businesses.

So the core jobs to be done for micro small businesses remain the same. They're looking to validate their business idea. They're looking to do -- get the right domain, get the right website for their business. And we expect the evolution of the Internet is going to continually change as it has for the last 30 years. So we think that this tool is going to continue to go into the direction of how the -- or these tools and capabilities of how the evolution of the Internet will go.

We're really excited about it and the customers that are starting to use it, we're seeing a little bit more tech-savvy users that are going into it day in and day out. And we're getting really positive feedback about how it helps them get their jobs to be done that they need to do to run their micro small business because the core like I was saying, the core goals of micro small businesses is they want to establish their identity and a digital presence. They want to get to a place where they can reach their own customers, market to their customers, sell to their customers, accept payments from those customers. So all of those core competencies are going to change even if the tools and interfaces change along the way.

Awesome. We'll definitely dig into those pieces as we go through the conversation. I wanted to shift to kind of Q4 results quickly. One of the key discussion points being the impact from the introduction of the promotional pricing that you guys launched and kind of want to take it from 3 different levels.

Maybe first, just kind of what the strategic rationale was, what you're seeing on the kind of cohort quality of the customers that came in through that promotion and then a little bit on kind of the financial impact.

So maybe first, if you can just walk us through what the strategic rationale for introducing the promotional pricing was at this time, just a kind of deliberate effort to expand the top of funnel? Or was there any competitive kind of macro dynamics that led to that decision?

Yes. So like you said, it was about widening the aperture of the customers that we can reach and getting some of those customers that were interested more in a 1-year offer. And so what we were able to find is -- well, first, the way that we were launching it, there are three important things to understand.

So first, of course, is the price. We did a $4.99 offer and second, how is that purchase path of those customers? How are they being shepherded through our front of site? And third, what is the marketing might that we're putting behind these offers.

At the end of the year, we turned all of these on in full force, and we got a really strong response. So what we found is that there was extraordinarily strong demand that we are reaching for this offer.

And thus you asked about the cohort quality. The cohort quality of customers that came in under this path was pretty similar to other 1-year offers. And what I mean by that, the five things that we measure is, first, what's the traffic coming in? What is the conversion of this traffic as it's coming in? What is the attach of the additional products that they're getting? What's the activation? And those four things are really predictive on the fifth and most important thing of renewal.

And so what we're seeing on the cohort quality is those first four metrics are just as strong as -- almost as strong as our other 1-year cohorts. And with our long history of having extremely strong customer retention and upsell capabilities, we're really excited and we have the confidence that this cohort will perform just as well as other historical cohorts. So it really was about widening the aperture to get more high-intent customers. And that's what we're seeing is that the intent is measured by the attach and attach quality, and we're seeing really strong metrics on that front.

Got it. So kind of no change to the strategic focus of that $500 ARPU kind of customer.

Exactly. Yes, that high-intent customer, what we talked about or you're calling out is customers who spend $500 or more with us continues to grow really impressively, and we still see strength in those customers.

Got it. And then maybe a little bit on the financial impacts of the go-to-market initiative, weighed on bookings a little bit more than revenue just based on kind of contract dynamics, but is impacting both core and A&C. So maybe how should we think about the drag from kind of annual contract mix? And then just kind of outline why a domain-focused promotional flow is kind of going into the A&C side of the business?

Yes. So we're leaning on our core strengths of being the leader of domains, right? GoDaddy is the largest domain provider in the world. And leaning on that strength, we're able to put this offer out there. And like you said, it does have a bookings impact. But what's important to understand is that it's not have or it has a very marginal impact on our revenue, right? These customers like we were just talking about, have really strong metrics of showing all of the markers and signals that they will have really strong renewal.

So then you get -- you just get the bookings at a different time at their renewal as opposed to getting all 3-year book -- all years of the bookings at that first purchase path. So the bookings are the only thing that's really impacted right now with a slight and modest impact to revenue right now.

Got it. And so that's kind of why we're guiding to bookings to trail revenue in Q1, but to kind of catch up.

Yes. This offer we launched at the end of 2025. And then we started to do some tweaking on the amount of marketing might behind it and the purchase path into January and February. So you'll still see these dynamics play out in Q1.

Got it. Awesome. That's helpful. I wanted to shift to kind of the product side for a little bit. Meaningful progress being made around Airo, kind of evolving that from the agentic or the generative experience into something more agentic. I think it's 25 agents live as of Q4, more on the way. Maybe talk us through what fundamentally changes about the customer experience with Airo.ai relative to the original Airo through kind of core GoDaddy.com? And then how are the two initiatives working in tandem across the company?

Sure. So the original or legacy Airo experience is about shepherding customers through all of the products and experiences that GoDaddy has to offer for micro small businesses and presenting for them a one-stop shop solution that helps them to build out their entire online presence. Airo.ai is more of the Agentic experience. So how can we do things on behalf of our customers in a way that is automating tasks for them and doing things for them in the background when they're off doing other things like maybe helping their customers or restocking the shelves of their store or going out to farmers' market, depending on what their products and services are.

So that Agentic experience is really helpful for our customers to be able to do a lot more automation with the things that they're trying to do. We're really excited about it as a multi-agentic experience. It's one of the only ones, if not the only multi-agentic experience designed for micro small businesses to be able to help micro small businesses and tasks that they need to do.

Right. And so what are some of those key use cases that you're running with the Airo.ai agents today? Any kind of areas of the portfolio seeing the most traction kind of early on with this initiative?

Yes. It kind of back for what we were talking about earlier. So it's helping micro small businesses validate their business idea and get the right domain, get their presence started and helping to connect with their customers, to have conversations with their customers and to help even things like marketing research or understanding what is the area that my small business is competing in and what are the things that are important for me to understand about other local businesses in my area so I can have better research about how to do things like price my own products or connect with my own customers.

So all the things that micro small businesses are typically they don't have a lot of experience of running businesses. When you think about solopreneurs or people that don't have a lot of staff, they don't have a lot of experience doing these things. But GoDaddy with nearly 30 years of existence helping this micro small business, we have so much insights and so much data about how micro small businesses operate and what is the next best step that they need to be doing, and we can suggest that.

And by the way, when you're conversing and having these natural language interface conversations with these agents, they can detect and understand when the micro small business or the solopreneur is feeling stuck. And we can have human-guided moments built in the loop automatically to jump in and say, looks like you're having a little bit of difficulty. Let's jump in and help you, and you can talk to Care Guides. And that's one of the core competitive strengths, of course, of GoDaddy is that we have those capabilities to be able to jump in and really partner with micro small businesses to help shepherd them to success.

More about automating those workflows that they're already doing on the day-to-day. Awesome. And then the other interesting kind of product announcement that came out of Q4 was kind of the impending upgrade to the Websites + Marketing product, more of that melding the traditional web builder with AI-powered chat. Maybe some new customers already being opted into the experience there. Any early kind of green shoots? Any early data points you can share about how customers are receiving that experience?

Yes. The customers that are using it, we're getting a lot of really good feedback from it, and we'll roll this out sort of slowly as customers are being opted in, like you mentioned. Like with anything, we do a lot of experimentation and understanding what is the right path for how to introduce these types of things to existing customers. And the new customers, of course, it's a little bit easier to put them down the path that makes sense. But you can start to, at the beginning, split the traffic so that you can understand the engagement and how customers are using the products and over time, get more and more customers to opt into that experience.

We're pretty excited about it. This product, we were expecting to have launched it much later in the year, but the development of it was happened a lot faster than we were anticipating. So we're starting to already roll this product out imminently.

Got it. And I think last year, there were a lot of compelling stats about Airo accelerating website attach. So maybe what are any early expectations of how Airo.ai can kind of further inflect web attach with this new kind of up-leveled Websites + Marketing product?

Yes. Airo, like we were talking about earlier, does do that shepherding of surfacing all of the rest of the products of the GoDaddy portfolio, and that helps to drive and we've seen results of driving higher average order size, higher attach, higher retention and higher renewal. Airo.ai is a little bit different from the perspective that it's more of an Agentic experience that is a natural language Agentic experience. And the customers that have been gravitating towards that now are a little bit more tech savvy. And so they're the customers that are more interested in having those types of Agentic experiences.

So over time, we expect that, that will continue to march forward and to drive more and more adoption. Airo.ai, the way that it's monetized is slightly different than how Airo itself, as you know, is not a SKU. It's just shepherding customers into greater attach. Airo.ai is more as customers are using the products, they're getting surfaced with paywalls as they're advancing into the different types of things that they're trying to carry out.

Right. And to that point, right, we've kind of noted that we're not assuming any contribution from pricing and bundling kind of related to the websites during this transition. So is '26, like do you think that's kind of an upside driver to '26? Do you think you'll start to see some of that benefit flow through more materially beyond '26? Kind of how do you think about timing when you'll see that monetization come through?

Like you said, we haven't built that into our 2026 guide. So we'll have more to share as time goes on.

Got it. Thought I'd try. And then just shifting to ANS for a little bit, introduced the Agentic Name Service kind of as that foundational infrastructure layer for the open Internet. I guess just broadly, what's the strategic vision for ANS in the context of your kind of broader domain infrastructure that you guys have been doing for so many years?

Yes. We're really excited about ANS. So this is an extension of the DNS and SSL framework that helps to build verified identity into how we are using the Internet. And I think we can all agree that the Agentic experience worldwide is going to start getting proliferated everywhere, right? There's going to be lots of agents that are going to be roaming about the Internet. And it's really important, I think, for the end users of these agents to know and understand the provenance of where these agents come from. Like is this a real or a rogue agent? And ANS is intended to say, let's have an organization that says a mechanism to organize these agents to say, this is the identity of this agent. It is who it says it is.

And we're able to leverage the power of DNS, which is proven infrastructure that has been powering the Internet for the last 30 years. It has instant -- it's a very elegant way to have instant adoption and instant ways for all of the partners that we're talking to and some have already been announced to help build out this infrastructure. And so we have a proof of concept out there.

Everyone is pretty excited about it because everyone understands the need for organization of agents and really proving that they are who they say they are. And GoDaddy is uniquely positioned to do this because of our strength with the DNS. That being said, it is an open standard. It's not something that GoDaddy specifically owns. We're proposing this saying, this is the right way for the Internet to evolve. This is how everybody should want to have this open Internet.

Right. And two follow-ups there. I guess on the monetization kind of path, comparing it to domain registration economics, maybe are there any parallels that you can help investors draw on how monetization followed the DNS adoption curve in the past so we can think about how ANS might transpire?

Yes. It would be similar to how you're thinking about you would register your domain and renew it annually. That being said, the agents can have a one-to-many relationship. So you could have many agents tied to a specific domain. So then in those types of instances, you would -- what we would be thinking about is having maybe a tiered approach to how the pricing works. So it wouldn't necessarily be the same pricing for someone who's putting hundreds of agents in the same domain versus one that's putting one agent per domain.

Yes. So an opportunity to more deeply monetize.

That's right. Also like more of like -- you can think about it similar to like a seat model of like something like our e-mail where you can have a subscription to e-mail, but as you hire more employees, you would have more e-mail seats for that subscription.

Got it. And then recently announced the partnership with MuleSoft here, characterized it as kind of a validation point of the framework. I guess what other milestones should investors be watching out for? Is it kind of more partnerships to kind of get excited about the materiality of the ANS framework?

Yes. The adoption is obviously what we're focused on, getting widespread adoption of this technology and this protocol. And because of the simple and elegant way that this can just be turned on overnight, we think that it's really compelling for how to get these agents like I was talking about organized earlier. And to your point, MuleSoft did announce an integration with our ANS. And so we think that getting more and more players to adopt this technology is the most important first step, right? We need to get wide-scale adoption for -- going forward into the future.

Awesome. And then on pricing and bundling, I wanted to hit on that. It's been a multiyear growth driver for GoDaddy, continues to be a multiyear growth driver. I guess as we look into '26, kind of how are you seeing that strategy evolving? Maybe talk to the amount of runway you see to go back into the existing installed base and kind of utilize pricing strategies. Does anything change just because of kind of how dynamic the competitive environment is? How are you thinking about pricing as a lever more broadly?

Sure. So pricing and bundling, you can think of it as more of an evergreen type of initiative. There's going to always be opportunities for us to understand our customer base even better than we already do and for our customers, be able to bundle together a set of products that make sense for what they're trying to accomplish. And so when we can -- and these happen a lot in the renewal path as well as the new customers are coming in to.

And when we can surface for customers and understand how their usage patterns are working and what type of value they're getting from these products, we can continue to offer more and different bundles year in and year out. And as we think about the cohorts of customers that we're serving, we have customers and cohorts that are customers that look similar to each other and what we can do is offer the right bundle for that type of customer, which would be a different bundle for this other type of customer and so on and so forth.

So pricing and bundling continues to be a really strong initiative for the business that continues to show really good growth and pretty much the -- one of the core engines of the growth that you see.

Got it. And how does the pricing and bundling strategy converge with kind of what we were talking about earlier with paywalls via Airo.ai? Is there -- like are these two pricing strategies that are existing alongside each other? Is there any risk of maybe convert cannibalizing, right, like what you can be monetizing between the two? Just how are you thinking about those two pricing initiatives running kind of together?

Yes. I would think of it slightly separate from the perspective that the pricing and bundling is about surfacing for customers, what is the right bundle of products that you should have in your build for what the stage or the journey that you as a micro business are in? What are the things that you're trying to accomplish? And what are the different attached products that make sense for what you're trying to do. On the Airo.ai and paywalls, that's for how you're using that particular product and how you're engaging with that particular component of the product.

Awesome. Helpful. I wanted to spend a couple of minutes on customer count and kind of ARPU dynamics. Emphasize the focus on those high-intent customers and spending $500 annually. Pretty compelling mixed that is now 10% of your customer base, growing low double digits in fiscal '25. So into '26, maybe how are you thinking about the trade-off between customer account growth and ARPU expansion? And then maybe just when we think about how that mix is trending, any data points we can put around what level of mix that can ultimately inflect to in the overall customer base in the next couple of years?

Yes. So both are important, right? Having ARPU expansion and customer growth are important, either of which that we guide to. However, we're really focused on getting customers into -- first and foremost, getting those high-intent customers and getting them to areas in which we can drive better attach of the things that they're getting in their bundle.

The reason we focus so much on this is because we have so much data that shows us that when customers are in a second product, their retention is significantly higher than our already strong 85% customer retention. And when we get customers into that third product, they're near perfect retention. And so when we talk about that $500 line of demarcation, it's sort of a demonstration of showing this customer likely has 2 to 3 products with GoDaddy.

So this is showing you that these are really strong near-perfect customer retention, and that's why we drive that $500 customer or that's why we talk a lot about it, I should say, because it is a demonstration of our efforts working with getting that higher attach, that higher intent customer. And so we are essentially focused on and that kind of talks a little bit about both the growth and the ARPU expansion there.

Right. And I think that's the debate, right? Like if the retention and the ARPU is so strong, do you really need to be so focused on the actual customer count number. But obviously, we benefit from having just that broader pool of customers to drive to those higher-value cohorts. And so I guess like coming back to the promotional activity, like does that -- how does that play into what you're thinking about customer count? Should that be driving positive customer count growth in '26? And then just kind of how do you balance that tension between customer quality and then kind of meeting that growing top of funnel?

I think it's really important to call out that the low price for that offer does not mean low intent. Intent is measured like I was talking about earlier by attach. And so that $4.99 offer was showing extraordinarily strong attach that was almost as good as every other 1-year cohort that we've ever had. So we have a demonstrated track record of not just being able to cross-sell into additional products with our customer base, but also have those customers renew.

So when we did this offer, what it does is it broadens the aperture for the customers that we can get. Not every customer is interested in having 3 years as their starting point. A lot of customers are interested in having a 1 year as a starting point. And we're perfectly happy with broadening the aperture to get those that are interested in 1 year and those that are interested in 3-year offers. So I don't know that they're in as direct conflict as what the question might suggest. I think that it's additive. It's not an or, it's an and.

Right. Got it. That makes sense. Just broadening that funnel.

And we did see the only thing I'll add to that, too, is we did see a lot of really strong take for that offer, right? And so we did see -- we started at the end of the year. But even going into the beginning of the year, we're seeing such strong adoption or strong take of that offer that it's kind of to that point of, yes, that new customers are coming in to take on that offer.

Right. Got it. I wanted to kind of run through the two revenue segments quickly and kind of see how you're thinking about those into '26. I mean A&C has definitely been the growth baton growing kind of in that mid-teens range. You're guiding to low double digits for next year. I guess we've kind of heard that there's a number of drivers that aren't being embedded within the guide, whether it's Airo.ai cohort monetization, pricing and bundling around the new Websites + Marketing product.

I guess kind of what are those key growth drivers that you're thinking about for A&C into '26? And if there's anything you can kind of give texture around the bookings trajectory just because kind of comps are less of a big deal than they have been in the past. So anything on kind of A&C growth trajectory would be great.

Yes. Importantly, we do have pricing and bundling on A&C, just not on that one product. But there is various other products that exist within A&C that are subject to pricing and bundling. So we have an offer out there for Managed WordPress for hosting that is doing really well and various other ones, too, for our e-mail and productivity offering as well. It's just not for that specific piece of Websites + Marketing. So that helps to drive it.

And then, of course, Airo itself as being the shepherd of getting customers to that second product third product. And that's typically, an A&C is usually the highest beneficiary of that Airo shepherding customers through those additional product suite. We're pretty excited about the -- obviously, A&C is that high-margin part of our business that continues to grow quite nicely. And it helps customers have more of that fulsome one-stop shop experience.

And again, when you think about the micro small business and the tools and services that they need to have that one-stop shop, it's a very compelling value proposition for them to have a single dashboard to manage all of these things and A&C is usually the products where they're getting everything else on top of that. So we're pretty bullish about A&C. We're pretty excited about the forward trajectory for it.

Awesome. And then in the core kind of growing or guiding for a little bit of a slowdown from '25 to '26. There's a number of dynamics at play there, right? We have expiration of the DotCO contract, not really embedding aftermarket in there just based on the volatility of that business and then some of the impacts from the promotional pricing that we talked about at the top. I guess, is low single-digit growth, is that the right way to kind of structurally think about the core platform? Or is this more of a kind of one-off year just because of some of those headwinds?

Well, we've been guiding to low single digits for core platform for a very long time. It's been outperforming. So we have -- and the biggest outperformer you called out was aftermarket. So when we think about aftermarket, we have been guiding to low single digits and the large part of aftermarket, which, by the way, is a validation of the strength of the domains and the value of that asset in and of itself.

When we think about aftermarket grew 12% last year, and we expect it to be low single digits. That is 9 points of outperformance -- 9 to 10 points of outperformance for aftermarket. That is a tough thing to grow on top of. So we don't have that built into the guide. But I think it's important to understand and acknowledge we do expect that large aftermarket deals are going to happen. We just don't put them into our guide because of the volatility like you mentioned. And there's also the DotCO expiration that you talked about, too. So we ended that contract in October of last year. And so we still have about 50 bps of headwind from the expiration of being the registry for DotCO. We are still the registrar for DotCO. So that part of the business remains intact.

Perfect. Moving to margins for a little bit before we open it up for questions. The pace of margin expansion has been very impressive, right? I think 1,000 basis points over the past 5 years, 32% in 2025, and you're guiding for '26 to kind of exceed that Investor Day target of 33%. Maybe first, you can kind of outline the key initiatives that have gotten you there. Where do you find the most kind of OpEx leverage? How does mix play into it? Talk a little bit about the journey.

Thank you for noticing. You're right, 1,000 bps of margin expansion is no small feat, and we've been very successful there. The top 3 areas that have gotten that margin expansion for us is infrastructure simplification. So we did a lot of work in the last couple of years to get our platform onto a single place where we can have sort of all of the data and all of the platform in an area where we can leverage our data a lot better, leverage our offerings to customers a lot easier.

The second one is from having the access to global talent. So we're able to -- even with the power of having a strengthened platform, we can -- and the power of AI, we can give better insights to new employees as they're coming into the business. And so it helps us to leverage talent in other areas that it doesn't have to necessarily be U.S.-based.

And then the third, like you mentioned, it's the product mix, the A&C tailwind. So A&C is growing a lot faster than core, which has the lower margin. And so the segment margin for A&C is just significantly higher than core platform. So all 3 of those play into the -- what we have enjoyed as really strong margin expansion and what we expect to continue to enjoy. So we're -- like you said, we've guided to 33% for our Investor Day target 2 years ago. We're on pace to exceed that for this year.

Yes. And I think that gets that kind of the follow-up question, right? How much room is left to go on margins just because what you've achieved thus far. When you look forward, like does anything change about your approach? Or is it kind of continuing to drive forward that similar playbook?

Yes, that plus operational efficiency, and there is efficiency and leverage to be found in AI, but we'll tell you more about beyond '26 when we guide there.

Awesome. Any questions in the room before I keep going? Alright.

Nothing specific to call out. I think that when we think about who our customers are, those micro small businesses and the core competencies that they need, the competitive advantages that GoDaddy enjoys is having the strongest brand awareness in the space. So that drives a lot of traffic to the GoDaddy.com website. We have over 60% of traffic that is direct navigation to GoDaddy. So that is really strong of having that powerful brand.

And then having the scale that GoDaddy has enables us to operate efficiently globally all over the world. And then the third competitive advantage is the products that we have that are seamlessly built to have that one-stop shop that micro small businesses need. And I think not to be underappreciated, of course, is the Care model that GoDaddy has so that we can partner with our customers to help and that keeps that retention and renewal really strong.

And by the way, Care drives 9% of our bookings, which on a $5.4 billion business, 9% of bookings is really powerful. So the competitive landscape in the Internet space has always been intense, right? Everybody is competing in the Internet space. So there isn't anything to call out specifically of really different about the competitive landscape. It's always been a really intense competitive environment.

I think it's extraordinarily strong. Like I was just mentioning that -- and so the question in case it didn't get caught on Mike is how important is the brand in an Agentic world.

Because micro small businesses know GoDaddy is the place to go to get online and especially if I want to be running a micro small business and have a partner that powers all of the things that I need to do, customers start out with going to godaddy.com directly. We get more than 60% of our traffic because micro small businesses know GoDaddy is the place to go. So brand is extraordinarily important. We are a B2B business, but we operate as B2C. And our end user in micro small businesses needs our tools and capability. Brand awareness is extraordinarily important.

Maybe just a couple of questions. Maybe could you contextualize kind of the rate at which you're attaching websites on to your customers and how that's kind of been changing as you brought out new products? And then secondly, I think you mentioned when you've used Airo.ai, the customers are the more tech-savvy customers so far. How do you think about the marketing strategy to bring that such that more customers are comfortable with understanding what the product is and driving that attach as well?

Sure. The way we've talked about attach is the amount of our customer base that has more than one product with us. So greater than 50% of our customers have at least a second product with us, which is pretty remarkable when you think about GoDaddy having a scale of over 20 million customers. And that number continues to go up.

And on top of that, the velocity of getting customers to that second product attach has been going up. So customers are getting to that second product 30% faster. And to your question about Airo.ai and how do you market that, that's a constantly evolving engine and something that we're extraordinarily experienced in almost 30 years of operating in this business and on the Internet.

So the ways in which we reach out to customers, of course, all the traditional ways that you would expect for new customers, right? You're doing things like YouTube, you're doing direct marketing channels, direct targeting, that type of stuff.

There is also like over-the-top type of advertising that you do for even like TV advertisement. But existing customers, it's different. The motion is different because you can have direct conversations with those customers.

And so when we have the relationship that GoDaddy has with micro small businesses, that helps to drive even to the earlier point of when we said that Care driving 9% of bookings. Those are happening through empathetic conversations that we have with existing customers that drives additional cross-sell and attach. So the marketing and the way that we get these other products in front of existing customers happens to those types of channels as well.

Awesome. If I could just squeeze in one more on capital allocation. You guys have been heavy deployers of the buyback. Should we expect that to continue going forward? And then does anything change about kind of your view on M&A just because there's kind of also some dislocation in external assets as well?

Yes. You're bringing up a really important point. GoDaddy has an extraordinarily strong balance sheet. And we have a lot of opportunities because of the strong cash generation that we have, that we have a lot of options. And we get asked a lot about being at the table for M&A. Our criteria for M&A is the same, right? It needs to strategically fit. It needs to financially make sense, and it needs to be something that we can integrate into the platform.

We have done a lot of work with simplifying our tech stack and having any sort of acquisition that would be difficult to integrate would be not preferred, right? And by the way, we continue to drive so much innovation and launching more and different products internally that, that too raises the bar for what makes sense strategically for us to purchase. That said, you're right, we have been really strong deployers of share buybacks. In fact, in 2025, 100% of our free cash flow was deployed through cash -- or sorry, through stock buybacks. And so I think that probably it will end on our strategy is the same.

Awesome. That brings us to our time. Thanks so much, Christie.

Yes. Thanks for having me. And Mark sends his apologies. He got very sick last night. So I'm filling in on a pinch. So thank you for your grace.

Awesome.

Welcome to GoDaddy's Fourth Quarter and Full Year 2025 Earnings Call. Thank you for joining us. I'm Christie Masoner, VP of Investor Relations. And with me today are Amanpal Bhutani, Chief Executive Officer; and Mark McCaffrey, Chief Financial Officer. Following prepared remarks, we will open up the call for your questions.

[Operator Instructions] On today's call, we'll be referencing both GAAP and non-GAAP financial measures and other operating and business metrics. A discussion of why we use non-GAAP financial measures and reconciliations of our non-GAAP financial measures to their GAAP equivalents may be found in the presentation posted on our Investor Relations site at investors.oti.net or in today's earnings release on our Form 8-K furnished with the SEC. Growth rates represent year-over-year comparisons unless otherwise noted. The matters we'll be discussing today include forward-looking statements, such as those related to future financial results and our strategies or objectives with respect to future operations.

These forward-looking statements are subject to risks and uncertainties that are discussed in detail in our periodic SEC filings. Actual results may differ materially from those contained in forward-looking statements. Any forward-looking statements that we make on this call are based on assumptions as of today, February 24, 2026. And except to the extent required by law, we undertake no obligation to update these statements because of new information or future events. With that, I'm happy to introduce Amanpal.

Good afternoon, and thank you for joining us. At GoDaddy, our mission is to empower everyday entrepreneurs and make opportunity more inclusive for all. We serve millions of micro businesses around the world who rely on us to power their digital presence. By seamlessly connecting identity presence and commerce into a unified technology platform at a compelling value, we give entrepreneurs the infrastructure they need to manage their ventures. .

Starting with 2025 results, we delivered bookings growth of 7% and expanded normalized EBITDA margin to 32% for the full year. This margin expansion reflects ongoing operational execution, reduced cycle times and improved structural leverage, driving strong free cash flow growth of 19%. Importantly, we achieved this while continuing to embrace and develop AI tools and innovative solutions for our customers.

These results demonstrate the strong earnings power of our integrated platform and the progress we are making towards our financial North Star. As we look ahead, the pace of change driven by AI continues to accelerate. AI is reshaping how businesses are built and run.

Customer expectations around speed, automation and integration are unprecedented. Our global brand, domain leadership platform scale, engineering talent, velocity of execution and care organization provide competitive advantages that will continue to differentiate us as the landscape evolves. GoDaddy is adapting with a sharpened and deliberate strategy that builds on these competitive advantages and drive long-term shareholder value.

Typically, I walked through our initiatives, including pricing and bundling, seamless experience and commerce. We continue to execute well on these priorities, and they remain foundational to how we run and grow the business every day.

Today, I am focusing the conversation on the forces reshaping the world, including our AI journey, our competitive positioning and why we believe GoDaddy is positioned to win. We have accelerated our path to offering the best AI native products and experiences for our current and future customers. Over the last quarter, we have made strong progress on the following 3 components of our AI journey.

First, evolving Airo to be the Agentic operating system for small businesses brought to life on Airo.ai; second, driving efficiency by leveraging AI adoption across all functions. And third, powering AI agents on the Agentic Open Internet with agent named service. Beginning with Airo, we have made meaningful progress evolving Airo from a generative AI experience into an agentic operating system for small businesses.

Our team is building agentic AI experiences that feel like magic, by effortlessly handling customers as jobs to be done, then suggesting the next best action it can take for them. Airo.ai brings this to life. We launched Airo.ai in beta late last year and are ramping traffic this quarter.

Airo.ai already has 25 agents live and more are on the way. These agents autonomously perform tasks across the entrepreneurs wheel, including business idea validation, domain registration, website building, application building, marketing tools, compliance and much more.

What differentiates GoDaddy is our more than 20 million customers, decades of proprietary behavioral data and deep relationships across identity, presence and commerce, and we are uniquely positioned to train, refine and scale these agents in ways that are grounded in real customer needs. Our distribution at the top of the funnel, combined with an integrated platform and 24/7 care uniquely positions us to deploy agenetic capabilities at scale while maintaining trust and reliability. Creating and optimizing this experience is a meaningful part of the opportunity at GoDaddy, and we are capturing value through paywalls within the experience. Engagement continues to build and as adoption scales and monetization becomes more meaningful, we will provide greater visibility into the underlying performance metrics.

Second, as we embed AI across the company, we are reducing cycle times and improving how work gets done. AI tools are now generating the majority of our code. New code bases are almost entirely AI-generated shipping new features at breathtaking velocity and multiple experiments on agent-only dev teams are underway.

In our operations, we are excited about our internal AI sales agent, which handles one of the most complex sales use cases without human intervention. In the first 6 weeks of 2026, the sales agent handled thousands of voice calls and text chats with healthy conversion rates and very high engagement rates.

As we scale this, we expect to build on the leverage we have already seen in care over the last few years and create new opportunities for sales as well. We have also built AI agents to handle test spanning from financial planning to compliance to marketing reviews and much more. As these examples demonstrate, AI adoption gives us confidence that we can drive further efficiencies in our business that will build on the margin improvement we have delivered over the last few years.

The third update builds on our global domain leadership to extend digital identity into the Agentic era through agent name service or ANS. ANS is designed to anchor agent identity to the global and public domain-based infrastructure called Domain Name System or DNS.

This is a unique aspect of our solution that provides multiple benefits and leverages existing Internet infrastructure by linking agents to domain-based identity, ANS introduces a verifiable layer of trust in an increasingly automated environment.

And because ANS publishes to DNS, verified agent identities are discoverable worldwide within seconds using infrastructure that already supports identity and authentication across the Internet today. We are pleased to announce that last week, MuleSoft, a Salesforce company and GoDaddy launched an integration between MuleSoft, Agentic Fabric and GoDaddy ANS. This represents an important step in validating the framework and extending ANS into enterprise-grade workflows. ANS has the potential to create monetization similar to domain registration, extending GoDaddy's infrastructure leadership into the genetic economy while reinforcing our position at the center of digital identity.

I also want to share a couple of updates on our evolving go-to-market and product efforts. Domains has been and will continue to be GoDaddy's strong, durable cash-generative engine serving as a long-term funnel to drive GoDaddy's growth. To further build on this resilient foundation and bring more quality customers onto the platform.

This quarter, we expanded our go-to-market approach with a streamlined purchase experience for new domain customers. Our objective is to broaden the top of the funnel, while strengthening the long-term opportunity for lifetime value expansion.

We activated our marketing channels on the streamlined experience and introduced a promotional price for com domains with a 1-year term. The approach successfully increased new customer volume that purchased domain units with 1-year terms. But the demand for this offer was greater than we expected. And the shift in term mix, combined with the promotional price reduced upfront bookings and near-term revenue. Mark will cover the numbers on this in his section.

This new cohort of customers had solid attach behavior and post-purchase activation close to our other 1-year cohorts. This early data and our history of strong cross-sell capabilities and customer retention gives us confidence that with iteration, we can optimize this path.

We are refining our approach in a manner that balances increased acquisition of new high-intent customers on one side with longer term and higher attach on the other, creating overall greater long-term value. In February, we saw improvement with this effort, and our team is focused on unlocking this value.

On the product side, we are excited to share a significant upgrade to Websites + Marketing with a new website builder that brings together powerful AI features and a powerful editor as well. The experience starts with a fully built website based on a description and then allows easy editing with an expanded set of design options in the editor or if the customer prefers, they can continue with an AI-powered chat-based interface. Optimized for GoDaddy customers, the new builder creates design-led sites with amazing ease and at a cost that meets our and our customers' expectations.

I am excited to share that new customers are already being opted into this experience. We plan to move fast on this transition. But given the scale of websites plus marketing, we expect it to take a few months. I look forward to sharing a broader update on this next quarter.

In closing, we are executing a sharpened and deliberate strategy in a period of rapid technological change, leveraging the trust we have built with more than 20 million customers. we are leaning into our competitive strengths of domain leadership, global brand awareness, platform scale, engineering talent, velocity of execution and care.

We are advancing our AI journey evolving our go-to-market engine and scaling innovation in our products with measurable proof points and financial discipline. As we look to 2026 and beyond, our path forward is clear. The market opportunity is significant. Our competitive position is strong, and we have the financial flexibility to win. With that, here's Mark.

Thanks, Aman, and good afternoon, everyone. As Aman mentioned, we are operating from a position of strength. We have a business with strong operating leverage that drives meaningful compounding free cash flow. This foundation provides us with the flexibility to invest in high conviction opportunities while continuing to expand margins.

And our fourth quarter results demonstrate that. We delivered revenue at the high end of our guidance and exceeded our normalized EBITDA margin and free cash flow targets. Our new 1-year domain offer is driving strong subscription unit growth and solid attach. At the same time, we are building AI tools that enable customers to thrive in the genic world.

While small, relative to our overall business, Airo.ai is already monetized with growing adoption. Through ANS, we are expanding our existing digital identity infrastructure for the long term. We believe this creates an opportunity for GoDaddy to expand our infrastructure offerings beyond hosting and the primary and secondary domain markets. With that, let me first cover our financial results. Beginning with Q4 results. total revenue grew 7% on a reported and constant currency basis to $1.3 billion, coming in at the high end of our guided range. International revenue grew 10% to $420 million and ARR grew 7% to $4.3 billion.

For the Applications & Commerce segment, we drove 13% growth in revenue to $498 million on continued solid adoption and attach of our subscription-based solutions. And EBITDA margin improved 40 basis points to 47%. ANC ARR grew 12%.

Our core platform segment delivered revenue growth of 3% to $776 million, driven by the continued strength in aftermarket, up 8% and as well as 5% growth in primary domains, partially offset by the softness in non-core GoDaddy hosting.

Segment EBITDA margin expanded 70 basis points to 35%. We drove normalized EBITDA growth of 12% in the fourth quarter to $431 million and delivered an expanded margin of 34%, up 160 basis points and exceeding our guide.

Continued operational execution aided by AI-driven efficiencies were the main drivers of expansion. Total bookings grew 5% to $1.3 billion largely reflecting the headwinds from Dotco and the mix shift towards shorter initial contract terms. ANC bookings grew 11% and core platform bookings grew 1% and free cash flow grew 8% to $370 million. Moving on to our annual financial results.

We delivered approximately $5 billion in revenue. representing growth of 8% on our reported and constant currency basis. International revenue grew 11% to $1.6 billion. ANC revenue grew 14% to $1.9 billion, and core platform revenue grew 5% to $3.1 billion.

Total bookings grew 7% on both a reported and a constant currency basis. Growth spanned across our business, reflecting continued solid adoption of our solutions as well as strength in primary domains and strong aftermarket performance.

Driving this growth is stronger customer engagement across our products, including productivity and websites Domains remain the front door to our platform, attracting high-intent customers at a pivotal moment in their journey.

Airo personalizes the experience that follows accelerating discovery and increasing attach across identity, presence and commerce. Since its launch, the cumulative annual spend from Airo cohorts has grown in the high teens. Additionally, the velocity of a second product attach accelerated by nearly 30% relative non-aero cohorts. This dynamic is expanding lifetime value across our customer base.

We see this most clearly in our highest value cohorts who spend more than $500 annually, which grew 11% and that represent approximately 10% of our total base. These customers have meaningfully higher second and third product attach rates and near perfect retention. The result is compounding value creation with ARPU increasing 10% to $242 and overall retention rates rising above 85%. Turning to margin and free cash flow.

Our performance reflects the health of our model. Full year normalized EBITDA grew 14% to $1.6 billion and a margin of 32%, representing 150 basis points of expansion over the prior year.

Over the past 5 years, cumulative margin expansion of 1,000 basis points reflects our ability to scale efficiently while continuing to invest in the business. This margin expansion flows through directly to cash generation. Free cash flow grew a robust 19% to $1.6 billion with a normalized EBITDA to free cash flow conversion of greater than 1:1. We exited the year with $1.1 billion in cash and total liquidity of $2.1 billion. Net debt was $2.7 billion, representing net leverage of 1.6x on a trailing 12-month basis and within our target range. On shareholder returns, we remain active and opportunistic.

In 2025, we deployed 100% of our free cash flow, repurchasing 10.2 million shares totaling $1.6 billion, while maintaining our balance sheet strength. Since 2021, our share repurchase programs have resulted in a gross reduction in fully diluted shares outstanding of approximately 33% and we ended the year with 136 million shares outstanding.

Before turning to detailed guidance, let me outline the impact of the go-to-market and product evolution we spoke about earlier. The evolved go-to-market approach increased the mix of 1-year contract terms and reduced initial order sizes for the new cohort.

This created a near-term trade-off in our bookings and revenue that carries into our 2026 outlook. As a result, we expect bookings growth rates to trail revenue growth rates in the first quarter by a few points from the combined effect of this go-to-market evolution, the Dotco contract termination and tough compare on strong aftermarket performance last year. For the full year, we expect bookings and revenue growth rates to be relatively on par. We also anticipate a modest impact on reported revenue growth rates for the year in both core platform and ANC segments as the promotional price is allocated to all products included in the initial purchase.

Importantly, total bookings dollars are expected to remain ahead of total revenue dollars throughout the year. With this, our full year revenue outlook incorporates just over 200 basis points of cumulative impact from the expiration of the Dotco registry contract, the continued exclusion of high-value aftermarket transactions and the go-to-market and product evolution we spoke about.

The dotco and aftermarket impacts represent approximately 2/3 of this amount, while 1/3 is from the go-to-market and product evolution. For the full year, we expect total revenue to be within a range of $5.19 billion to $5.275 billion, representing growth of approximately 6% at the midpoint with AMC revenue growth in the low double digits and core platform growth in the low single digits. We expect normalized EBITDA margin to exceed our Investor Day target of approximately 33%. This reflects continued operational efficiencies and AI-driven productivity gains, slightly offset by increased [indiscernible]. We expect to drive free cash flow of approximately $1.8 billion. maintaining greater than a 1:1 conversion for the full year.

The model continues to demonstrate structural cash generation strength and we continue to be on track to exceed our Investor Day North Star CAGR of 20%. For Q1 2026, we expect total revenue of $1.25 billion to $1.27 billion, representing approximately 6% growth at the midpoint of the range, with ANC growth in the low double digits and core platform growth in the low single digits.

We project a Q1 normalized EBITDA margin of approximately 32%, an expansion of about 150 basis points over the prior year. On capital allocation, we maintain our returns-based framework, and we'll carefully evaluate all opportunities to drive shareholder return. In closing, let me reinforce 3 key points.

First, we operate a durable cash-generative model, supported by strong customer cohorts expanding ARPU and consistently high customer retention. We are ahead of the financial North Star target CAGR we laid out at our last Investor Day. Second, the near-term impact on bookings reflects deliberate decisions. The underlying engagement metrics remain strong. and the structural advantages of our integrated platform position us well for sustained growth.

Third, we are executing from a position of financial strength. We are expanding margins, generating robust compounding free cash flow with a strong balance sheet that creates long-term value for shareholders. We look forward to talking about these and other updates at an investor event later this year. With that, I'll turn it back to Christie for Q&A.

[Operator Instructions] Our first question comes from the line of Vik Kesavabhotla from Baird.

My first one is on this promotional offer with dot-com. Can you talk more about why you decided to make that change in your go-to-market strategy? And you referenced seeing some improvements in February. Could you talk more about what you're seeing there. And I guess from a higher level, do you think this was a onetime headwind to bookings in 2026? Or is there a potential for this change in the strategy to weigh on bookings as we move beyond this year?

And then my second question is on AI costs. As you look at the user behavior recently as well as your product road map that you have planned ahead, how would you characterize your visibility into AI costs at this stage? And how should investors think about the impact to your gross and EBITDA margins as the product evolves.

Thanks, Vik [indiscernible]. Let me take the go-to-market. I'll turn it to Mark for the 2026 comment, and then I'll come back for the AI cost structure. So the go-to-market evolution is really about opening up the top of the funnel and is attracting a lot more high-intent customers.

And it's more than just an offer. It's a path and optimized path that allows customers to come in and convert at a much, much higher rate. So there are 3 core components to it. There's the new path, the optimized path, the offer and the marketing channels that we enable to sort of drive traffic into it. Overall, we're very happy with the results. It attracted a lot of new customers. It was a bit more successful than we thought.

So Mark can talk again. some of the financial impact of it. But the improvement that you asked about in February is us optimizing that path and the marketing channels and making sure that we're sort of routing customers to the right places.

So that everyone isn't just going into the offer or into a 1-year term, and then we get sort of back to the more expanded view. The other area that we're continuing to work is that these customers, these new cohorts that bought with the offer, they had really good attach rates comparable to our sort of 1 year -- other 1-year cohort. But we think we can do more there.

We think we can attach better than what we did over the last couple of months. And as that gets better and better, it means more and more lifetime value.

I'll turn to Mark.

Yes, absolutely, Vikram. A couple of things going on here. Number one, the -- let's look at it from the multiyear terms to the annual terms. This is impacting our bookings, but has relatively little impact on revenue itself because the timing of the revenue recognition stays consistent. So that's 1 aspect of it.

The other is there is a reduction in our average order size at initiation related to the discount that gets allocated amongst all the products, that does have a little bit of impact on revenue in and itself. As time goes on, volume picks up, we get better at the softer.

We think the major impact is going to be at the end of this year and going into Q1, but we expect that bookings to be in parity for the most part with revenue by the time we get to the end of the year. So we are looking at this as a cumulative improvement as the year goes on.

On the AI costs, I'll start, maybe and you can finish. We're very disciplined on the AI cost end of it. We look at where we're spending the money and where we have proof points so that we'll see the return of those monies, whether that's in the innovation cycle or in the product cycle in and of itself. So we feel very good about our visibility and our ability to hit our margins that we set out there for 2026.

Yes. And I think we've been ahead on the margin over the last 2-plus years, right? And it's because we have a disciplined process internally on it. And even as we look to invest in AI over the AI products, as we talked today, we have a couple of exciting product launches powered by AI all of those sort of followed 2 core things.

One, all the AI costs go through 1 interface so that we are able to stay on top of it very, very closely. It doesn't matter if that's a developer. It doesn't matter if it's one of the products that our customers are using. And two, we are very focused on solving for the objective function where we create products that are at a cost that works for our customers.

So what you'll continually see in our products is an already optimized AI solution that then leads to lower cost than what you might see at some other companies. So those 2 things together, the visibility and the operational focus on it and the technological difference of just optimizing for that right within the product is what gives us confidence that we can continue to maintain the margin guidance that Mark has talked about while continuing to fund more and more use of AI, both within the company and with our products.

Our next question comes from the line of Ken Wong from Oppenheimer.

One question that we've been getting in our inbox on this new go-to-market change, was it necessitated by any changes you saw in your pre-existing pipeline, whether it was just pipeline build, conversion? Or is this just really you guys kind of trying to open the funnel a little bit and pursuing a different customer type.

I think, Ken, both things are true. The world is changing very, very quickly, and I don't think anyone is insulated from it. The idea was to improve our go-to-market approach to expand that approach, but we sort of conscious of what's changing in the world. When I think about the key metrics that we look at we're looking at traffic. We're looking at conversion.

We're looking at attach. We're looking at product activation and we're looking at renewals. And we're very, very strong across those metrics, right? We have strong experimentation muscle in the company that if I go backwards, puts a lot of attention on renewals and activation on attach and conversion. But expanding the top of the funnel in a fast-changing world, gives us more levers as things evolve.

As an example, I think a lot of companies are facing challenges of traffic from search. When you look at GoDaddy, we continue to have a healthy graphic funnel because, one, we're able to go into other channels to drive traffic and two, we're constantly able to improve conversion as we do that. So we're constantly looking at those 5 things in the context of what's happening in the world.

Yes. our strategy around attracting high-intent customers hasn't changed. We are seeing these customers come in. They're attaching to a second product, similar to other 1-year terms that we had out there. And that gives us a lot more stickiness within that client base that we feel we have the ability to go after.

The great news was the offer me a demand cycle that was higher than we expected, and we were able to bring those customers in. So it was a good thing.

Fantastic. Really appreciate the insights there. And then, Mark, just some clarity on the bookings commentary. So you mentioned lagging in Q1 relative to revenue. Revenue is fairly consistent from 1Q to 4Q and if it ends up at parity for the year, is it fair to assume that the bookings should outpace revenue as we exit the year? Is that the right interpretation of some of those moving pieces? .

Yes, that's right, Ken. We expect to see that the bookings will get stronger throughout the year. on a couple of different elements, right? One, we start to add more volume based on this offer. So we're seeing the increase in that.

We're also starting to see better attach and the elements that drive our long-term valuation model. So that should improve through the year, and you're looking at it correctly.

Our next question comes from the line of Naved Khan from B. Riley.

Great. So Mark, you said that there was a little bit of a reduction in AOS in this GTM, the new go-to-market, which had some impact on revenue. So is that then fair for me to say that the trade-off between volume versus the average order sizes, you're getting more volume but not necessarily making up in revenue in year 1.

And then what gives you the confidence that this new streamline experience is then the right trade-off for a higher LTV?

Yes. And Naved, thanks for the question. Just to start, is the shift in terms that we called out, it impacts bookings, right, and not necessarily impacts revenue because of the timing of revenue is pretty consistent regardless of whether -- when you get the cash upfront. There is a slight impact on the AOS, like you mentioned, that will impact us going forward, but that should work itself out as we get to the more volumes and the higher attach that we talked about.

Yes. And overall, Naved, what gives us confidence about the long term, of course, we'll really know when they renew, right? But we have a number of markers along the way in terms of how customers attach post purchase what do they buy in the purchase and how they activate products. And those are the data points that we're looking at. And across those data points, when they look very similar to other customers, right? We know exactly sort of what we have to tweak or make work to get these customers to be just as part of the high intent cost -- the bundle of high-intent customers we have, right? So those are the metrics we are looking at.

These customers look very good to us. We think we can do a lot more and actually get the best of both worlds where we get a lot more new customers and we get them to renew at good rates as well.

And then maybe just to kind of build on that. So are you also experimenting with the LLM for customer acquisition? What are you doing on that front?

Yes. So part of what we did with this chain is when I talked about the optimized path, it allowed LMs to review some of our merchandising inflows much better. That's going to be an ongoing work stream. We expect that, that will continue to evolve over time, the LLM don't switch all of a sudden. But by giving them a clearer path through GoDaddy, we think over time, that will help us as well. But right now, we're not sort of baking any of that in. We want to provide this sort of consistent optimized experience to our customers and the LLM should pick it up over time.

Our next question comes from the line of Mark Zgutowicz from Benchmark.

Just maybe a follow-up on the underlying ANC bookings growth, which is a slight decel in fourth quarter. Can you just maybe differentiate between pricing and bundling versus perhaps GPV impact that you saw on ANC bookings growth. .

And then my second question is around KPIs with Airo.ai, beta test. Just hoping you could maybe share some there and perhaps relative ARPU that you're seeing. And then when do you expect to formally GA Airo.ai for websites, plus marketing managed work for us and application development. And could that perhaps bring some incrementality to ANC bookings growth this year?

Yes. Thanks, Mark. I'll take the first part. On the ANC growth, Think about it this way. We offer the discount there. to the discount was specific to the domain because a large amount of the initial orders also contain product attached that are in the ANC, we have to allocate that discount to both ANC product as well as the domain. So what you're seeing in Q4 bookings as a lot of that taking place, and that's the large contributor to where we ended up for bookings in ANC.

And in terms of Airo.ai, taking that to GA and having the new website to marketing, website builder within it as well. you're actually going to start seeing the product come in very, very quickly, just so you'll see a change, I think, earlier next week in terms of the website builder. And you'll see it evolve a little bit after that. In terms of GA, we're just waiting to get some data in terms of product market fit. We just want to ramp the traffic to a certain amount organically before we call it general release and start driving traffic externally as well. sorry, to the last part, you asked about incrementality.

I don't know I can quickly take that market. We haven't built that much for sort of erode obviously, it's all completely new. It went into beta just very, very late last year. But any sort of wins with the new website builder or with Aero.AI would be incremental to what Mark is guiding.

Our next question comes from the line of Trevor Young from Barclays.

First one, just on active customers. Second quarter in a row here with modest sequential growth, but still trending down year-on-year. As we look into '26, should we expect momentum to build here? And will this be the year in which year-on-year growth turns positive? Is this an important metric in your view? And with the 1-year domain promo be a tailwind to that -- that's my first question.

Yes. Trevor, thanks. And yes, we saw a sequential growth in the customers quarter-over-quarter. We continue to like our ability to attract high intent customers and our strategy around that hasn't changed.

We're really going after the high intent customer. the customer that's going to get us to annually spending around $500 with us because that's when that second product and third product get attached.

That's when we get to that near perfect retention rate. So while we're very happy with our progress on adding customers and being positive and doing that incrementally, our goal remains the same. We want the high intent customer.

And it does -- the new sort of expanded go-to-market approach does become a tailwind. But just again, I always want to reiterate, we're optimizing it for that high-intent customers so that we're getting the attacking the long life the larger lifetime value.

That makes sense. And then, Mark, in your prepared remarks, I think you noted bookings were impacted by shorter initial contract terms. Was that specific to core platform and the new 1-year domain dynamic? Or is that more broadly that you're seeing shorter contract commitments for other products?

It has a flow-over effect into our other attached products because what happens is the domain signed on for 1 year generally, the attached products are going to be signed on for 1 year as well. So there is a little bit of a carryover effect to our other products that are included in the initial order size as well in the initial order that the customer makes.

Our next question comes from the line of Alexei Gogolev from JPMorgan.

This is Ella on for Alex Google. Maybe first for Aman. Aman, you alluded to this in your prepared remarks. Given GoDaddy was founded over 30 years ago and has drove the proprietary data, what advantage might this provide you versus newer entrants in the ecosystem?

Yes. Our competitive advantage is, of course, start with our brand. It started with our domains funnel, the scale of our platform and the data we have about interaction with our customers, whether it's like $1.7 billion, almost 2 billion data points selected on a daily basis, all the way from interaction on the site to customers calling and chat transcripts and all of that. And we have that data globally. So a ton of that data is available for us to tune agents to get agents to perform sort of in news way down to the customer agreement.

That, of course, is one of the amazing value that AI brings is that when companies are no longer looking at segments of customers you're looking down to this customer, what do they need and AI can part to the data for that customer and provide them with sort of valuable insight or whatever next best action they should be doing.

When I think about GoDaddy, our -- why -- our focus is to move towards a agentic to be AI native to build products that are AI first and other companies that may have started there have to get to all the things that we have. right? And we're excited about the position we have and to get to the new space where we're able to adopt AI, and we're able to build these products and use the rest of our competitive advantages.

There is no doubt that GoDaddy is starting in a great position. And AI is the type of technology that it actually is easy to bring into a company like GoDaddy given the capabilities we already have. At the end of the day, what we are bringing forward to the world is and is demonstrated by Airo.ai, is that experience and it's an AI chat-based experience on Aero.ai that brings all the capabilities to the customer, where the customer doesn't have to go to web page after web page or call in or chat to do various things. They can do it all in one place and GoDaddy brings them all those services right there.

And it doesn't even have to be the things that GoDaddy builds alone. We're bringing our partnerships into Airo.ai as well. And it's actually much easier to integrate a partner into Airo.ai than it is to integrate into the funnels because just it's the interaction models could be different.

Very clear. And for a follow-up, could you quantify how much of your customer care and cogeneration is AI-driven versus employee-driven today? And how do you anticipate that evolving over time?

Yes. So I shared a little bit. Majority of our code is now AI-driven, AI-generated. We had set a target out that I talked about the 70% of the code. The world is moving so quickly that the algorithm we have, it's like majority -- like large majority well core bases are now AI driven. That metric is sort of becoming less relevant now because what you're finding is that 1 engineer can have a team of 5 agents that are all developing.

And the way we used to think about coding, it's not the same way anymore. So I would just say, we are well down the path of AI generating all of our code. The next evolution is agents creating code. And along with agents creating code agents automating the software development life cycle and then the product development life cycle.

Those are the areas where we're going into, as an exam, a new website builder that we showed you a little slip of that brings together a very powerful editor and a very powerful AI-based chat bot. That's based on learnings we got from the AI builder we have built.

And it has been built very, very quickly and well ahead of our expectation. I mean one of the reasons we're talking about it today in a manner that, hey, this is coming, and it's going to be a big change for websites plus marketing. I think if you had asked me 3 months ago, I would have thought about it later in the year, but it's actually coming up ahead of a lot of other things, like we have pricing and bundling initiatives that are going to have to wait because this new AI-based website builder is just ready to go. So we're going to launch it and get it going.

Our next question comes from the line of John Byun on for Brent Thill at Jefferies.

Just 2 questions. On the ANC, there was a question earlier on some of the deceleration. Obviously, you have seen it go from mid-teens to low teens the last few quarters. Understand that there's a little bit of impact from the domain promo.

But is this kind of like what should be the new level that we should expect given the scale that you're at now in terms of kind of low teens growth or could we potentially see some acceleration as this top of funnel go-to-market get settled in?

John. A couple of things to call out. We talked about the fourth quarter and the impact that had on the new offering that we had out there. But as Aman mentioned a few minutes ago, we are also rolling out the upgraded websites and marketing experience, right?

And we are not assuming any contribution from pricing and bundling related to the websites as we go through this transition. After that, we'll obviously see on the other side, how we continue with the momentum going into 2027.

But those are really the -- what's impacting the ANC growth, not only coming out of this year but going into next year.

Okay. Great. And this might be related, but any update on the pricing and bundling test that you usually discuss in a quarter? That's a [indiscernible].

We continue to execute well on pricing and bundling. Interestingly, one of the things for 20 I'll give a couple of examples. One is our managed hosting for WordPress doing very well for 2026. You might remember a couple of years ago, we invested heavily built a new platform sort of expand it to reach a little bit bigger customer. And now we're seeing good growth in units, with good growth in bookings on that product.

So the new pricing, new bundle that's coming out. And maybe the other one I'll mention is that the LLC formation bundle is growing. We're still mostly cross-selling it within Aero. That's where a majority of that is coming. But very soon, you will see some bundles around that as well. So we're pretty excited about that one, too.

Our next question comes from the line of Arjun Bhatia from William Blair.

Just maybe going back to the go-to-market changes. And I'm trying to maybe [indiscernible] in with the broader competitive dynamics because obviously, we've seen the new entrants in the space come in over the last year. So I'm curious, just as you looked at your old funnel, was there anything that sort of was indicating that the competitive intensity was increasing, especially from some of the big coating players out there.

And man, I think you touched on the moat there a little bit, but I'm curious how the new motion will maybe help you sort of defend against some of the competitors that are coming into the space?

When I look at the competitors in the AI space, we still continue to see a lot of that focus being on enterprise employees, like product managers, people that work within enterprises or people that are a little bit sort of working for agencies or companies like that. We see less of that behavior with our direct customer, the person who is the roof or the clean out of the micro business owner. So we see less of that. Our expansion of go-to-market is really about being able to bring more high-intent customers into the domains funnel, which is our largest funnel and then attached to it very well.

Like that is the primary motion at our company, and we want to continue to reinforce that more and more. I'm not suggesting that we are immune to what's happening in the world, we just have not seen very large impact of that in our funnel at or at this time.

Okay. Understood. That's very helpful. And then just one thing. I know you mentioned that just in the forecast for 2026, Airo.ai is not contemplated. But if you are able to sort of get it to be generally available shortly here. Is there a potential upside? Like could it have an impact in a handful of months? Or how do you think about the ramp once it's out and generally available?

Yes. I'll take it first, and Mark can comment on it again. Overall, it's very similar to how I talk about the go-to-market approach. Airo.ai has to find product market fit the same way. It has to be about traffic. It has to be a conversion. It has to be able to attach activation of the product and then some renewal.

Of course, renewal goes back -- goes back a bit, but the other 4 were able to see pretty quickly. Now it's still early. We're getting what is relatively still, I would say, a smaller amount of traffic given the large amount of traffic we get at godaddy.com, in that small traffic, the metrics look good, but you don't really know the metrics until you get to a certain scale.

So that's what we'd like to get to. And when I talk to Martin, my view is, let's get to that minimum threshold of scale where we can see all these metrics perform and then it makes more sense to include in the financials.

That's right. Now we haven't included any contribution from it this year. While we're seeing monetization relatively small compared to our size. So without including it, yes, any progress we would make on that would be upside. Having said that, we'll keep updating everybody as we go throughout the year to what we're seeing, what are those metrics and how we think it will impact us going into the future.

Our next question comes from the line of Jamesmichael Sherman-Lewis from Citi.

Two if I may. You noted Airo drove a nearly 30% lift in product attach. So what offerings are seeing the greatest uptick? And how is the typical path different for an acquired Airo customer versus other cohorts? And then I have a follow-up.

Yes. Aero as an experience really goes to being a vehicle that attaches mostly to the domain customer. And over the last couple of years, as a result, we saw higher attach, higher average order size. And a couple of years into the aero cohort, we can tell you with high confidence as we see very good renewal. I think Mark, good in his remarks, customer retention continues to improve in a nice way, and those are cohorts are performing for us. The products that are attached to the most over the last couple of years had been -- like the biggest product catch was still websites and then e-mail. But now more recently, we see some of the new products, for example, the LLC formation starting to attach well, too.

Helpful. And then on ANS, I understood it's early days, but how has feedback been from partners in the developer community? Could you revisit the broader opportunity and how you'll drive adoption with modernization similar to domain registration.

On Asian -- did I hear on ANS, just to clarify?

Yes, ANS.

Yes, we continue to work with a number of companies on ANS, Super excited to have the integration with MuleSoft, which is a sales force company. But there's a lot more to do. Agent name services, it's a simple scalable, very elegant solution to what I believe is going to be a very large problem world, which is how do we know who owns what agents and how do we trust those agents.

And ANS solves that problem using the DNS infrastructure that the Internet already relies on. So we do see some sort of good reactions from folks that understand, but just like when the Internet came along, it took a little while for D&S to work for people to realize that it really powered it.

I think we're committed to that same level of effort to go and sort of explain to people why this is the easiest way to do it across the world. And why it has so many benefits for the open Internet for everyone.

Our next question comes from the line of Kishan Patel on for Brad Erickson.

This is Kish Patel on for Josh Beck. Just one from us. How are you thinking about the long-term monetization model for genetic experiences? And what factors would lead you toward subscription, usage, outcome-based or high approach?

Yes. We have an opportunity to think about this a lot. We continue to lean towards the hybrid approach where there is an upfront subscription model that it unlocks a certain number of credits, and there is a model to add credits.

You'll see some of that come into Airo.ai, especially with our Airobuilder, but we're just going to roll those things out slowly. We want to be able to have one monetization path, which we already have for subscription, and then we'll add more layers to it.

Our next question comes from the line of Katie Kaiser on for Elizabeth quarter at Morgan Stanley.

Awesome. This is Katie on for Elizabeth. A bit of a higher-level question, maybe a 2-parter. Mark, we've heard you talk about kind of what the SMB wallet looks like in the past, how GoDaddy's ARPUs are positioned within that you guys are delivering a high caliber of innovation that should enable that broader wallet share capture to move up over time.

I guess how are you thinking about levels that this can ultimately inflect to can the entirety of the customer base kind of reach that a sweet spot. And I think also I'd heard you speak to a bit of green shoots of Aero.ai bringing a bit of a different customer persona onto the funnel, one that's a bit more sophisticated. So are there any kind of structural differences you're thinking about in capturing wallet share of those 2 groups, that would be great.

Yes. Let me touch on those pieces and Mark can fill in whatever I miss. So just starting with the first, on Aero. AI, we see completely different interaction model customers not only do the chat base, they really go after the suggestions that come back from the we're seeing, as an example, in Airo.ai through a partnership, we've introduced customers being able to create a privacy policy or an end user license agreement.

And customers are finding that and buying it. And it's not something that we even sell on the website today. And if we had to sell it on the website today, it would be a very complex thing to add to the current path. The the testing required. We introduced that in adding that friction, but taking friction out somewhere else, be pretty complicated.

But within this chat interface, it has fit seamlessly. And so when we see -- when we get learnings like that, it really is sort of opening up our mind on what is truly the one-stop shop and how broad that one-stop shop can be because it's really, really low friction for the customer.

I think on the wallet side, and I'm sure Mark wants to jump in on this and customers reaching $500. Are customers have continued to grow with us, right? You've seen the improvement in ARPU over the last few years. And of course, we want more and more of these customers like Mark said, they have great attach rates on second and third products. They have new perfect retention rates.

And ultimately, it demonstrates a customer that's not just successful with GoDaddy, they're successful in their venture. So obviously, we want more and more of those. And that's why our go-to-market continues to focus on high-intent customers because those are folks that have the best chance to get there.

And I think that's right. We've often talked about the durability of the model, the fact that we get high intent customers our ability to attach when they get to the second and third product where retention rates go to new or perfect the drive LTV ultimately drives the compounding free cash flow that we generate year after year. .

And we believe our ability to cross-sell into that customer base because we focus on the micro business is stronger and getting stronger as we introduce these new products as we introduce these new agents. So we feel really good about our progress moving forward and our ability to continue to look at that $500-plus customer.

Yes. And just the strong retention just drives the lifetime value at the end of the day. We make obviously, a lot more money when customers stay with us over the long term, and that's the magic of the model.

That concludes our Q&A. I'll hand it back to you for closing marks. .

Well, I'll just say thank you, everyone, for joining, and a big thank you, as always, to all GoDaddy employees. A lot of exciting stuff coming out from products and marketing across the board, a lot on our AI journey and a lot more in front of us, excited for 2026.

Good morning, everyone. My name is Trevor Young. I'm one of the Internet analyst here at Barclays. I am pleased to be hosting the GoDaddy team, Mark McCaffrey, CFO; Christie Masoner, VP of Investor Relations. Thanks for joining us. I think this is at least 3 or 4 years in a row now. So I appreciate the continued support.

That's right. And I always like coming back because this was my first conference that I attended, when I joined GoDaddy. So it's like an anniversary for me when I'm back up...

First and best conference.

That's right.

That's right. We'll go ahead and get started. Obviously, being a tech conference we have to hit on AI first and foremost.

I would be disappointed if we did.

Well, lots of new AI product initiatives come together recently. Let's start with Airo.ai. It's a new surface that you recently launched. It's in beta right now. highlights some of the new Agentic AI product suite that you've rolled out, I think, over the last month or so in the it's coming -- what can you share on early engagement with some of these new tools? Do any of the features stand out more than any of the others? And are new to GoDaddy customers engaging more or less with this surface?

Yes. So we have just launched it, and we haven't put any efforts around driving traffic. So what we're seeing now is people are naturally coming to Airo.ai. And what we love about it is, hey, we built some agenda agents that are sitting in there helping our -- meet our customer needs. And in each of the cases, we're seeing that we are meeting our customers exactly where they are and where their needs are. So for an example, we have a version of it that is for the sole entrepreneur, who just wants everything up and running instantly. They will see when they type in what they are looking to do, that created almost instantly for them.

Now you may have a handyman who's trying to do a business wants to do bookings, wants to create things as they go, want to play with the agent a little bit more interact with the agent, we have the ability to do that as well. So they can see how this is being developed, how their businesses are getting developed, what are the important aspects of it? Do they need a booking calendar? How are they going to charge for certain services the Airo.ai brings that to them very seamlessly and allows them to get up and running very quickly.

And then you have the ability to meet the pro, right? The pro is going to have a whole different requirement. They're going to need a statement of work. They're going to need a business plan. They're going to want to engage with their customers at a different level. And in each case, in Airo.ai, it allows them to move depending on what that customer needs are to get them to the outcome they need to go very, very quickly, very seamlessly. I come back to -- and I always talk about the entrepreneurs wheel still is our major focus.

What are the jobs to be done by our customers and how do we provide that to them in a manner that they may not know where they want to do or what they want to do or where they want to go, but it presented to them so they can get up and running and do what they do even better. Remember, we're micro businesses, mom-and-pop shops. They're not sitting there going, I want to code. They're not sitting there going, I want to create this elaborate functionality if they want to sell soap at a flea market, they want to get there fast, and they want to be able to announce it online, and that's what we provide -- that's the service we provide.

And that Airo.ai is a new surface for us to engage with these customers and have rapid experimentation and deployment of additional agents. When we did our initial launch right before earnings, there was 5 agents that we launched. And now there's more than 2 dozen agents that are rapidly being deployed. And with this new surface, what we're able to do is understand the usage patterns of customers.

What is the conversion? How are -- how is the orchestration of all of these agents working together to deliver like Mark was saying, these jobs to be done for our customers that help them have a fulsome experience business in a box solution.

Got it. And it sounds like -- so kind of 3 key takes there. One, new surface with rapid experimentation and expansion of kind of use cases. Two, continued innovation and going from 5 agents to 2 dozen and presumably more to come. And then the third piece being really being outcome-driven. That was something that I think I heard you hammer on, but it's not, hey, let's build new tools and find a use case. It's more let's solve a problem for that customer.

And that is -- listen, we've said this time and time again. We've had AI out in the market for almost 2 years -- I think it's about 2 years now. Our continued focus is how to use the AI to get the jobs to be done by our customer done. And that's what we focus on.

Got it. And obviously, with this just being in market roughly a month. It's obviously just the start in terms of the breadth of agents that will become available. What are some of the improvements that the team is building in the feature set? What are maybe some of the pain points that you're trying to solve for those SMB customers?

Yes. So I think this -- right now, we're very focused and it's a concept that we've started to speak about in the open Internet and ANS right? And if you think about how the Internet operates today on a DNS infrastructure, the evolution of the Internet now will go to ANS, agent named services, right? Agents have to be registered, they have to be validated, and they have to be basically marked as a good actor for lack of a better term.

As agents start to get introduced into that environment, the improvements will come with the ability to operate and collaborate with agents outside the existing environment. So for example, while we do a lot of jobs to be done for our customers in certain aspects, there are certain jobs to be done that we don't do. For example, we do not prepare their tax returns.

Think about a world now that will take one of our agents and go reach out to an agent outside of our platform to get that job to be done with our customer and be able to do that in an efficient manner that our customers, this micro business, doesn't even see that happening. That's where the next improvements will start to happen is our ability to operate with other agents outside of our platform and technology. So that job now is being done in collaboration with somebody else.

I think it's just that orchestration of what Mark was saying is these jobs to be done by micro small businesses. They have a lot of needs in having that simple, seamless solution that is frictionless to be able to carry out the tasks that they need to do, not only to get started and build their website, but also run their business and grow their business. And converse with their customers and market to their customers, to social media.

So all of these things sort of work together to -- and instead of saying like pain points is that more of that less experience and carrying out those jobs to be done for customers.

That makes a lot of sense. And you outlined kind of 3 distinct use cases when folks go to Airo.ai can you help investors understand the differences between these 3 experiences? And in particular, how does the customer find themselves pushed into one funnel versus another when maybe they don't know what they need.

Yes. I think that's the key is customers coming in, engaging and then ultimately, seeing what they want and how they interact. So it is an experiment phase. And I will say we are trying different approaches as to how we identify each of those types of customers.

Right now, as they come in based on the prompt that is there and what the input will direct it to the experience they will get because it will immediately say, okay, I'm a pro. I need a project plan to present to my client that is a bigger. And immediately, it will identify that person as a pro. Chances are it will go into a managed work press type of environment. It's a more complex environment, managed WordPress. It had a lot of plug-ins that creates a -- has a certain requirement within Airo.ai versus, hey, I'm a handyman, I want to start a business, then it will start to give you prompts and based on how you start to interact with it, it will say, okay, here's where I'm going out.

Now remember those agents maybe have to pull a map from another platform and bring it in. But you'll see the ability for it to do it, you'll also see, and it's really fun to watch. The agent sometimes has to go somewhere and where it's going isn't available. It will come back and say, I can't get that right now, right? We'll try again later. Where I'm going to go off and do this while I'm trying to do that. The agent actually starts to interact with that person because it realizes the way they are instructing it that they have the ability to kind of work within that type of framework.

And further to that point, too, one of the things that is identifying in those -- as the agent is orchestrating those tasks is it looks like you as the end user is getting stuck. Let's build human in the loop, and let's get care immediately involved in this and help you continue to build out this the solution for you and carry out the things that you're trying to get done and how can we do that better for you.

And think about it, the technology creates active links for you sometimes you'll hit on that link. It may not work. You can type in right away. This link isn't working, what's the problem. It will go in and diagnose the problem. And it will come back, okay, we need to do this are you okay with -- and you have that interaction going back and forth. But it's a very seamless kind of natural interaction versus having to understand how to set up a link on a website to get to where you need it going, it's taking care of it for you.

Right? So it solves a lot of problems for the laymen?

Yes, that's right. And that's why I always come back to it works in our customer base because that is our customer base, the micro business and the entrepreneur -- they're not necessarily the program or the technician that understands how to do that, how to fix a link or how to move forward very quickly.

And further to that point, too, it's what's embedded into this experience to is what is the next best action that these micro small businesses need to do. And so micro small businesses, we all can know and understand that they often don't know what they don't know.

So when we say this is the next thing that you as this particular vertical in this type of community, this is the next thing you should do. You should, like Mark was saying, should build a map showing your service area. You should have some social media tools and let us help you draft a log or a host and let's help drive traffic to your site. So having those next best actions get them there sooner.

And prompting that for them because they don't know. Got it.

How should we think about monetization of this? I realize it's very early days, probably a lot of experimentation going on. But how should we think about that, the types of paywalls that you could introduce -- and how should we measure success from here from a financial perspective, the P&L impact maybe a year or 2 from now?

Yes. So I'm going to take you back a little bit and then you can kind of get an idea of where this is heading. We've been in market with AI now for 2 years. And 2 years ago, when we launched Airo, we said this was going to filter through in our model in a number of ways. We're going to see better attach. We're going to see average order size going up. We're going to have customers coming in with higher intent.

We're going to see the cohort around $500 plus start to increase over time. And those will filter through our P&L. Now remember, and I remiss if I don't say we focus on free cash flow, and we focus on free cash flow per share. Those are North Star, and we continue to operate our model in that manner. And you're starting to see that show up within our model today after we launched Airo.ai -- sorry, Airo for the first time. Now as we're launching Airo.ai, we have the ability to look at what's happened in the past couple of years. what's worked to see where the premium services are attractive, see where the subscriptions and premium subscriptions we can put into play. We know how the paywalls work within that environment. We know when to put that paywall in that a customer wants to launch something or put something out there or publish it.

We know what the cost around providing that services to our customers because we've had the experience with the LLM, we also know that we don't have to build solutions for perfection we can build solutions that get our customers' jobs done, and we can build that into our model naturally. So more to come, obviously, as we talk about how this over evolves. But when you look at what we've done, we're building on the 2 years of history we have around launching AI into the marketplace and meeting our customers' needs and now evolving that to be even better as we go forward.

And I think the good way to think about it, too, is Airo itself has both an indirect monetization like Mark described, average order size up, better retention, better renewals. And then there's that direct monetization path that is essentially where does the right place to put those paywalls and where do we pay or have our customers enter into maybe higher tiers of service for enhanced services like Mark was talking about.

Got it. You've also launched agent name service, which is a totally different offering from Airo.ai. Just at a high level, can you walk us through how it works and the problems that this is going to solve. And what kinds of new opportunities this could open up and maybe just illustrate an example.

So this is the belief in the open Internet. We have built the opening -- well, I shouldn't say we built it, but we have contributed to the building of the open Internet, which now works on DNS, right? It's the technology and think about it when you go somewhere on the Internet, you want to know that the name you're typing in the domain name you're typing in that's taking you there is valid and taking you to the right place when you're giving over your information, you want to make sure you're giving it in a secure site. That's how people operate today. Now think about this from a world of agents. People will no longer be doing these tasks. Agents will be doing these tasks for you.

That infrastructure that exists for DNS now evolves into what we call ANS, right? In other words, an agent -- we'll go to an agent to perform a task, but you want to make sure that the information that's being passed between those 2 agents is correct. You're giving that over into a secure environment, you're not giving your social security number over to something that is not a or a rogue agent or something along those lines. So how does that work, right?

It works similar to how a domain works. So you today register domain, you pay an annual fee for it. That becomes your valid domain and everything around that domain that you build on the domain to get sent to you and it's authenticated. Now that will happen with ANS, right? You will register an agent. This agent is yours. It will be validated. You will own that agent, and that agent will do that task that you define on top of that the technology of the agent.

So when you know your agents reaching out to do that task, it's going to a secure environment. that infrastructure already exists today. It was built under DNS. This is the extension of that. And we believe the open Internet is going to be what evolves or what agents evolve into is operating on the open Internet. We gave a demo last week. We don't do jingles just so everybody understands this.

We do not create jingles for our customers is not a job to be done that we've identified. But we did a demo that shows our agent when our customer wanted to jingle on their website, went out to another agent that created jingle that is outside of our platform got that jingle created, brought it back in and put it up on the website for our customer.

That agent had to know that, that agent it was going to was registered and authenticated and a good actor that actually was there to perform that task versus just being somebody who's going to take the information right of it all. So that's why we say the open Internet will evolve into ANS, but it's a natural progression of moving from DNS to ANS. And obviously, we are a very big player in the DNS world. We already have the infrastructure in place to do this. That is not something that just happened overnight and someone just launched the infrastructure around the Internet in and of itself has been around for a while, but took a while to get in place right -- so leverage what's out there to establish a new standard for...

Eventually, yes, it is the proposal is the continuation of this open standards like we're talking about it. And so the monetization like Mark was alluding to, is the registration, those that are publishers of agents will want to register and have certificates of trust attached to those agents so that others know that these are agents that can be trusted and it gives a way for those agents to be discovered and to be utilized in this space.

And if you believe that agents are going to proliferate on the Internet, which we do, then there needs to be a trusted security system built into it. And that's sort of when DNS was established and adopted, that's when you saw the rapid commercialization of the Internet. We think that the same rapid innovation can happen in the agent space.

You have a standard.

And GoDaddy is obviously uniquely positioned here. Like Mark said, of course, we are a major player in CNS, but we also have certificate or status so that we can offer and the security layers for these agents also.

Yes. And we're -- to be clear, we're not saying that GoDaddy will own the Internet in any way, shape or form. This is an open standard. It will be -- everybody will be able to access it. Obviously, we feel we're in a good spot from an infrastructure standpoint to support that standard. And we do believe in the open Internet is the natural course of where everything will go.

That will be interesting to see how that evolves and see how adoption goes. Let's shift gears a little bit hit on customer trends and macro. You've now returned to positive customer growth sequentially this past quarter. What product areas or funnel changes contribute contributed most of that shift? And how much of that growth is tied to the rollout of Airo and your newer AI assisted onboarding flows?

Yes. So we feel really good about what we see in the demand funnel, and I've said this for a while. We've seen a consistent strong top of funnel. We've seen our strategy around getting to higher-intent customers working. We've seen the average order size go up, the $500-plus customers go up. We -- the great thing about it is every customer's journey within our platform is different. So we don't see -- it always comes in and goes domain to e-mail to website to transactions.

It can go different places. It can go domain to logo, to e-mail, to transaction -- every customer is taking a bit of a different journey. And as Airo is becoming more of the interaction or is the interaction today. Those interactions can happen almost instant it's up to the person engaging to go and make the choices very quickly what they want. And sometimes, they're right on top of each other.

When you think about an experience. I want an e-mail I want a website, I want to transact. It happens so fast within our environment now. It's almost impossible to say this is just the normal route. So we feel really good about some of the top of the funnel. We still have a great brand name in domains, which is a large part of the funnel and a lot of 60% of our traffic comes to us naturally.

And that is still a big, big part of it. We feel good about our -- that we're getting to higher-intent customers, which we had talked about being our strategy. We're feeling good that the attach rates are going up. We're feeling good that the retention now statistics we put out there at the end of Q3 is that when we get a customer to $500 plus, our retention of that customer is nearly perfect. And that is ultimately one to go. And that continued strength is evolving. Airo.ai will continue to evolve that journey.

Okay. And as we head into '26, what are you seeing in terms of the top of funnel trends in SMB demand signals in the U.S.? How would you kind of characterize the state of SMB right now?

Resilient and healthy and...

And they we survey our customers and we publish our survey work quarterly. And what the survey work tells us is that micro small businesses continue to be very optimistic about their business and their revenue prospects over the 6 months future from that survey point.

They are more optimistic about their business than they are about the overall economy, and that's what matters for our ability to service these customers when they continue to be more optimistic about their business and their prospects. That we are buying our products from us. That means they're using our products. They're out there hustling and trying to find new customers trying to find new revenue, and we're enabling them to those things with the simplified business and box solutions that here's your next back section that you should do. Let us help you build your marketing funnel, let us help you converse with your customers and convert more sales for you.

And we collect and share those stats with our customers, too, that they can learn how to market their business even better, right? So all of these things with what we find is that, again, micro-small businesses continue to be more optimistic about their prospects than the overall economy.

So they sound pretty resilient despite some uncertainty. Okay. That's right. And I can't emphasize enough. This is a customer group that also cherishes the care organization within GoDaddy because when they need help or they need to fix something, they want somebody who's going to be on their side that's going to try to get that solution.

We really pride ourselves in our care organization's ability to need that even using new technology being able to meet the needs of this customer base because they just want to do what they're passionate about. They don't want to worry about the back end. They want to be out there selling their products. They want to sell their products in many places as they can. They want to compete with the bigger players out there. They want to make sure their pipeline secured.

Our average customer base, maybe we have some customers that go up to 10 employees. On average, you're talking about maybe 2 or 3 and a whole bunch of them as sole entrepreneurs. And that passion is because that is a unique individual that wants to be out there selling and doing something on their own.

And GoDaddy is a true partner for them to be able to access like Mark was saying. sometimes they want someone to talk through their challenges.

That makes sense. Competitive dynamics, how should we think about the competitive set today, particularly given the emergence of a genetic coding tools, natural language interface, AI website build tools, live coating, how do you think about how competition is evolving here and how you stack up versus them?

Yes. Remember, we pride ourselves on being a one-stop shop. So we provide multiple solutions and provide multiple products that focus on our customer base and the jobs to be done by our customer base. They're competitive natures to every single 1 of our products out there from the domain to the payment processor. No doubt about it. Our view and our focus continues to be focus on our customer.

This is a unique customer set. We've been doing it for almost 30 years. We know this customer. It is a customer that has specific needs and therefore, our ability to create that platform in that one-stop shop for them works in our environment. We're not trying to look at what A or B or C are doing. We're looking at what our customer needs are, and we know if we continue to meet our customer needs. We will continue to be successful as a company and our model continues to work over the long term.

So just focus on that customer need work back from that rather than that's interesting tools and then find...

Yes. We're not trying to come up with tools and then define a use case. We know what the use cases are. We're trying to meet those needs of our customers.

That makes a lot of sense. On pricing and bundling, how is your appetite to flex that pricing lever? And as well as the overall pricing and bundling strategy overall. How has that evolved as some of these new AI-enabled competition pops up?

Does it matter? Do consumers have changing appetite to absorb price increases? Is it not even on their radar.

So the way we look at it is our average customer is going to spend anywhere between $1,000 to $2,000 being online. So we always say $1,500 is the average wallet size for a difficult customer for us being online. Our ARPU was around $230. We have a lot of room to move up, meeting our customer needs to get better share of that wallet.

And if we continue to provide value that continues to allow us to look at pricing and bundling where we can take some of that value back to us because our customers are getting more value out of the products that we are there. We -- our strategy and how we've designed all of this is around -- I always talk about everybody likes to go to [ P times Q ].

The [ Q ] for us is really better retention. More product attached to our existing customers and the new customers coming into the top of the funnel. Those are very important elements of how we drive the cut part of the equation, and the P has evolved from blood pricing to generally now, we do value-based pricing based on a cohort, the value they're getting out of it.

We try to keep those as equal contributors to our model, to our growth because we know when we balance that out, it not only sets us up well for today, but it sets us up well for the future. We pride ourselves that our North Star is free cash flow and free cash flow per share. And the way we compound that is by trying to keep balance of how we grow the business without getting too far ahead on either part of that because that can set that equation off in and of itself.