GoDaddy : Prepared Remarks

GoDaddy Inc. Q1 2024 Financial Results Prepared Remarks

Aman Bhutani, GoDaddy Chief Executive Officer

Intro

Good afternoon and thank you for joining us today. At GoDaddy, our mission is to empower everyday entrepreneurs and make opportunity more inclusive for all. Our strategy relentlessly focuses on creating customer value and successfully transitions it to shareholder value. This is the driving force behind our profitable growth model that maximizes free cash flow. I am excited by the innovative experiences we are delivering for our customers, the dedication and velocity of execution of our teams and the trajectory those have created for our company.

Q1 Performance Summary

At our Investor Day, we shared our updated three-year strategic framework and financial targets. As our Q1 results showcase, we are off to a strong start in 2024. In service of our North Star, we continue to expand our free cash flow meaningfully, delivering 26 percent free cash flow growth. The pillars behind our North Star are accelerating growth in our Applications and Commerce segment and disciplined margin expansion. In Q1, Applications and Commerce bookings accelerated to 22 percent and Normalized EBITDA margin expanded 400 basis points.

Key Initiatives Driving Growth & Margin

At our Investor Day, we also shared our progress on the GoDaddy Software Platform. The GoDaddy Software Platform helped create game-changing customer experiences like GoDaddy AiroTM. It combines the power of our infrastructure, large-scale data, AI and machine learning, experimentation and monetization to power our growth and margin drivers. Today, I wanted to provide an update on four of the key initiatives we shared previously.

First, enhancing our pricing and bundling capabilities remains an important lever for GoDaddy. This quarter we focused our pricing and bundling efforts on our productivity solutions which was a key contributor to the 22 percent bookings growth in our Applications and Commerce segment. Our software platform has a vast amount of data, and we leverage that data in more and more pricing and bundling experimentations. This gives us powerful insights on how and where to push forward as we continue to roll these learnings into additional products and bundles over time.

Second, creating seamless experiences for our customers continues to be a key priority. We are removing friction out of every piece of the Entrepreneur's Wheel, saving our customers time and money. We continuously work on simplification and performance improvements that deliver value for our customers. Examples from this quarter include, simplifying the editor in Websites + Marketing, making it easier for customers to discover new capabilities, reducing provisioning time for online store to a few seconds and using AI to streamline Managed WordPress website creation to just a few clicks. Simplified, smart, fast experiences come across as magical to our customers and customer delight creates customer value increasing willingness to pay.

Third, on Commerce, I am pleased to share that annualized GPV continued to grow at a fast pace, surpassing the $2 billion milestone. The primary driver continues to be conversion within

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our existing base of customers. In addition, this quarter we launched GoDaddy Smart Terminal Flex, a handheld device that allows our customers to accept payments anywhere on the fly. Our Commerce offering is growing and sets us up well for our 2024 focus of driving higher-margin subscription revenue through the sale of tailored OmniCommerce solutions to our customers.

The significant value we are driving with our Commerce offerings also introduces an opportunity for us to evolve our pricing structure within Payments. Last week, we began rolling out phased transaction fee increases across our customer population while still maintaining our status as the best value in payments.

Fourth, we continue to be tremendously excited about the range of possibilities with GoDaddy AiroTM. As planned, we started rolling out GoDaddy AiroTM to our base in late March. GoDaddy AiroTM opens the door to many opportunities across discovery, engagement and monetization and represents an incremental opportunity as a powerful growth driver over the next couple of years.

We have continued to rapidly iterate this experience and I wanted to share a couple of examples. More customers are discovering GoDaddy AiroTM and we have more for them. We launched a new Paylink card to test engagement with payments. A card is a visual representation of a product that is automatically set up and configured by GoDaddy AiroTM on just a domain purchase. We see early indication that GoDaddy AiroTM does a better job of discovery and engagement with Paylinks than our normal methods. Another significant change in monetization is that we introduced a paywall for websites built by GoDaddy AiroTM. We are actively testing different points at which this paywall can be triggered and this is a new flow that we are excited to optimize. While all this data is early, we are also excited to see that websites built by GoDaddy AiroTM are performing well. More domain customers are opting in for a website when we offer them GoDaddy AiroTM and key product metrics are either ahead or within our expectations.

These metrics give us confidence that we are achieving our goal of a seamless, intuitive, magical experience for our customers.

I also wanted to quickly share that GoDaddy AiroTM domain search is now on the homepage for all desktop users globally and we are starting to test opportunities to optimize the traditional search experience using these new capabilities.

Last but not least, GABi our Guide Assist Bot is now rolled out across our entire Care footprint and is handling escalations and questions from our guides. GABi also helps with providing call summaries and case notes, helping our guides be more efficient. Every month that goes by, GABi becomes smarter, and over time, we can add use-cases and drive further adoption.

Closing Remarks

In closing, we continue to deliver on our key initiatives and unlock new avenues of growth and value creation for the long term.

The GoDaddy team is a driven group and shares an unwavering determination to fearlessly push boundaries and prioritize, continuously experiment, meticulously track results and strive for improvement each day. I am thrilled with the speed of execution as we continue to strive to exceed customer expectations, propel profitable growth and create enduring shareholder value.

With that, here's Mark.

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Mark McCaffrey, GoDaddy Chief Financial Officer

Thanks Aman. We are pleased to announce our strong Q1 results and continued track record of durable growth. We demonstrated attractive progress toward our North Star, delivering strong free cash flow of $327 million alongside continued execution of our capital allocation strategy, which reduced our fully diluted shares outstanding at the end of the quarter to 146 million. The key pillars underlying our North Star are the double-digit growth in our Applications and Commerce segment revenue of 13 percent coupled with disciplined Normalized EBITDA margin expansion to 28 percent, which converts to free cash flow at an impressive one to one ratio.

Through our seamless technology and comprehensive one-stop-shop approach, we are building improved customer value. Our strategic focus is delivering results that drive better attach and conversion, while maintaining impressive retention rates. Together, these efforts are building a foundation for enduring shareholder value.

Q1 2024 Results

Moving to our financial results for the quarter, total revenue grew to $1.1 billion, up 7 percent on a reported and constant currency basis, and exceeding the high end of our guided range on the strength of the pricing and bundling initiative as well as strong demand in our Aftermarket. ARPU grew 5 percent to $206 on a trailing twelve-month basis and our customer count remained stable, despite the headwinds from our divestiture and migration efforts, also impacting revenue by approximately 100 basis points. Additionally, customers with two or more products remained above 50 percent and our customer retention rate remained at 85 percent.

Double-clicking into the segments, our higher-marginApplications and Commerce segment delivered $383 million in revenue, growing 13 percent, in line with our guided range. The drivers of this performance included strength in our bundling and pricing initiative across all major product offerings, including productivity solutions, website building products and Commerce. Additionally, annualized GPV for GoDaddy Payments grew to $2 billion for the first time. Segment EBITDA margin was 42 percent, up over 300 basis points. Lastly, ARR for Applications and Commerce grew 13 percent to $1.5 billion.

Core Platform revenue totaled $725 million, growing 4 percent, which exceeded our guide on strength in Domains, up 7 percent, and Aftermarket, up 12 percent. Our growth was driven by strong demand for domains in the primary and secondary market, increased pricing in the primary market and a higher average transaction value in the secondary market. This was partially offset by a decrease in hosting on our divestitures. Segment EBITDA margin for Core Platform grew to 30 percent, up nearly 300 basis points. Lastly, ARR for our Core Platform segment was $2.3 billion, up 3 percent.

Consolidated Normalized EBITDA grew 25 percent to $313 million, while delivering an expanded margin of 28 percent, up 400 basis points, exceeding our guide. Margin expansion was driven by continued leverage gains within all expense lines on the P&L.

Cash Generation

Moving on to Bookings, in Q1, we achieved 9 percent growth on a reported and constant currency basis reaching $1.3 billion. As a reminder, Bookings primarily represent the cash collected during the period. Applications and Commerce bookings grew 22 percent, from improvements in pricing and bundling for productivity solutions, website building products and Commerce. Core platform bookings increased 3 percent on the performance of Domains and Aftermarket on strong demand for domains in the primary and secondary market, offset by headwinds in hosting. Subscription bookings grew two points ahead of subscription revenue.

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The impressive momentum in our bookings, coupled with our commitment to profitable growth and ability to convert Normalized EBITDA to free cash flow at a ratio of one to one, powers our substantial cash generation. Unlevered free cash flow for the quarter grew 18 percent to $359 million and free cash flow grew 26 percent to $327 million. We are committed to effectively managing our balance sheet, and the proactive measures we took to reprice our long-term debt resulted in a 30 percent favorable change in cash interest payments compared to last year. Capital expenditures for the quarter were also down 81 percent from data center divestitures.

Through April 30, we repurchased 2.8 million shares year-to-date totaling $346 million. This brings the cumulative shares repurchased under our current authorizations to $2.9 billion and

37.0 million shares, reducing gross shares outstanding since the inception of these authorizations by 22 percent, ahead of our three-year targeted reduction of 20 percent. Fully diluted shares outstanding at the end of the quarter was 146 million shares.

Our successful share repurchase program continues to drive impressive ROI for free cash flow deployment. We have $1.1 billion remaining under our current authorization, and we plan to be in the market every quarter-subject to market conditions and other factors, with a minimum offset to share-based compensation dilution.

Balance Sheet

Moving to the balance sheet, we finished Q1 with $664 million in cash and total liquidity of $1.7 billion. Net debt was $3.2 billion, representing net leverage of 2.4 times on a trailing-twelvemonth basis.

Outlook

Shifting to our outlook, given our strong start to the year, we are raising the lower end of the range for our full-year revenue guidance. We now expect full year revenue to be between $4.50 and $4.56 billion, representing growth of 6.5 percent at the midpoint. Additionally, we are targeting Q2 total revenue in the range of $1.10 to $1.12 billion, representing growth of 6 percent at the midpoint of our range. We expect Applications and Commerce to deliver low to mid-teens growth for Q2 and the full year. In our Core Platform segment, we expect revenue to deliver low single-digit growth in the second quarter and the full year.

We are proud of our track record of margin expansion and we will continue to maintain operational discipline to drive further leverage in our model. We expect Normalized EBITDA for Q2 to be approximately 28 percent. Additionally, we remain on track to meet 31 percent Normalized EBITDA margin in Q4. Full year Normalized EBITDA margin is expected to be approximately 29 percent.

We are on track for our full year unlevered free cash flow and free cash flow targets of $1.4 billion plus and $1.2 billion plus, respectively.

On capital allocation, we will continue to evaluate opportunities for shareholder return, subjecting them to our published rigorous returns-based framework to ensure we achieve the optimal mix for cash flow deployment.

Closing Remarks

The entire GoDaddy team remains committed to delivering against the three-year framework we shared at Investor Day, with 6-8 percent annual topline growth, fueled by our Applications and Commerce segment, accelerating Normalized EBITDA margin expansion to 33 percent by 2026 and generation of $4.5 billion plus in cumulative free cash flow. Our profitable growth and one to

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one Normalized EBITDA to free cash flow ratio, coupled with our disciplined capital allocation framework, creates significant value for our shareholders. While I am pleased with our progress towards our North Star, we are far from done and I continue to have strong confidence in our strategy and execution.

Forward Looking Statements

These remarks reference 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 our earnings release on our Form 8-K furnished with the SEC. Growth rates represent year-over-year comparisons, unless otherwise noted.

The matters presented 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 in this presentation are based on assumptions as of today, May 2, 2024, and except to the extent required by law, we undertake no obligation to update these statements because of new information or future events.

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