GoDaddy Inc.

Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to the GoDaddy Q1 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. I will now turn the call over to Sam Kemp, VP of Investor Relations and Strategy. You may begin your conference.

Good afternoon, and thank you for joining us for GoDaddy's first quarter 2019 earnings call. With me today are Scott Wagner, Chief Executive Officer, and Ray Winborn, Chief Financial Officer. Scott and Ray will share some prepared remarks, and then we'll open up the call for questions. On today's call, we'll be referencing both GAAP and non-GAAP financial results and operating metrics, such as total bookings, unlevered free cash flow, net debt, and ARPU. 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 website at investors.godaddy.net or on our Form 8K filed with the SEC with today's earnings release. Unless otherwise stated, when we refer to organic measures, we're referring to those measures excluding the impact of Main Street Hub. The matters we'll be discussing today include forward-looking statements, which include those related to our future financial results, product introductions and innovations, our share or purchase program, and our ability to integrate recent or potential future acquisitions and achieve desired synergies. Any forward-looking statements that we make on this call are subject to risks and uncertainties that are discussed in detail in our documents filed with the SEC, are based on assumptions as of today, May 2, 2019, and may differ materially from actual results. We undertake no obligations to update these statements as a result of new information or future events. With that, here's Scott.

Thanks, Sam, and thanks to everyone for joining us today to discuss our first quarter of 2019, which has started off at a solid pace. GoDaddy revenue is up over 12%, and our cash flow margins continue to expand, even with the investments we're making across the business. Companies that thrive over the long term consistently focus on finding new ways to add customer value. And here at GoDaddy, we're doing this through constant improvements in our entire experience across product, marketing, and care, as we build not just for 2019 and 2020, but for the years to come. Today, we'll spend time on three topics. First, I'll share our quarterly product progress, both organically and through our recent acquisitions. Second, an update on how we're driving growth in domestic and international markets. And finally, Ray will cover our first quarter financial performance and outlook for the remainder of 2019. I'll start with our products. GoDaddy empowers the everyday entrepreneur by designing applications and services that help our customers look good, be everywhere, and engage with their audiences. Our feature release pace continues to be rapid, and in just the first several months of the year, we've taken big steps forward in e-commerce, digital marketing, and the WordPress ecosystem. Let me touch on each briefly. First, on e-commerce, our functionality continues to build on what's now a multi-year effort behind both service and product commerce tools. In March, we launched support for digital downloads in online stores, enabling customers to sell music, e-books, videos, art, and other digital content. In April, we acquired Cellbrite, a world-class multi-channel commerce suite that has tens of millions of orders and billions of dollars of cumulative GMV in channels like Amazon, Etsy, eBay, and Walmart.com. We partnered with Sellbrite last year to power our first Go Central Marketplace offer and saw strong early customer traction. And by joining forces, we'll more deeply integrate Sellbrite's e-commerce channel capabilities, inventory management, and fulfillment tools into Go Central and eventually into our WordPress offerings. Second, we continue to expand the suite of marketing tools available in Go Central. At an enterprise or mid-market level, you'll hear the term CRM and marketing automation a lot. But for our customers, these functions and their digital presence are really all blurred together. And as we help our customers be everywhere, we at GoDaddy are at our best when we unite these tools into a simple and thoughtful experience. Today, we're tailoring marketing recommendations using data science in the Go Central dashboard. And in March, we launched a customer management tool called Connections, which helps entrepreneurs organize and stay close to their customers. We have deep insights into the ventures using GoDaddy and their audiences. And this tool is a foundation that we'll use to help simplify, personalize, and automate marketing for our customers. This is an important step as we expand what we do, enabling not only the creation of an online presence, but ensuring that it thrives. And finally, We continue to invest behind WordPress's ecosystem of third-party themes, which make websites beautiful, and plugins, which give them functionality. At the end of Q1, there were more than 3 million installs of GoDaddy-owned plugins and themes in WordPress websites around the world. In April, we added to this ecosystem by acquiring Koblox, which streamlines the WordPress website creation process, and ThemeBeans, which is a library of elegant and modern website themes. As we expand the resources supporting our WordPress offer, we're bringing an increasingly differentiated experience to the world's largest open source CMS through simplicity, security, and elegant design. Stepping back on our products overall, the investments we're making across both Go Central and WordPress are increasingly being recognized in the market as we pursue strategies that lead to the success of our customers. Let me now turn to our go-to-market efforts, where we're supporting the product momentum I just discussed by driving consideration and usage for both prospective and existing GoDaddy customers. Our underlying bookings growth accelerated for the second quarter, reflecting strong tailwinds from our brand initiatives and tactical marketing performance. Over the last several years, we've grown our incremental marketing spend largely by investing outside the U.S., which has helped drive our global scale. In 2019, we're directing the bulk of our new marketing efforts and discretionary spend in the U.S., and we're happy with the results, including the great early performance of the brand strategy that we launched in February. Our lineup of influencers has resonated well, we're reaching a more diverse audience, and our marketing execution continues to acquire customers at Attractive Economics. Importantly, the metrics we monitor for brand health and how well everyday entrepreneurs identify with GoDaddy are all moving in the right direction. Conversational marketing also continues to ramp nicely with a broader base of campaigns being run against a broader range of customer needs. Since the beginning of 2018, we've taken conversational marketing from a concept to a scaling channel for reaching our base in a helpful, impactful way, all while exceeding our target thresholds for returns. Our international business has been a big success over the last several years and at a billion dollar run rate is now larger than all of GoDaddy in 2012, which is the year that we first began localizing international markets. As we look forward, we remain bullish on our international potential and have three core priorities to continue driving growth. First, International market growth starts with localizing our existing products, marketing, and care in a targeted geography. We've done this across well over 50 markets, and we continue to ramp into new and underpenetrated countries like Germany, South Africa, and the Philippines. As we do this, we benefit from both the tailwinds of continuing Internet adoption and developing markets and share gains from small and relatively fragmented local players, which builds a nice runway in countries across Asia, Europe, Latin America, and the Middle East. The second priority is launching products and experience tailored to a market's unique needs, which we've just started to do in a handful of regions. For example, in Asia, we're expanding support for care conversations in WeChat, and other relevant messaging platforms. In India, which is a do-it-for-you market, we have a vibrant pro community built around our WebPro offering and the GoDaddy brand. And in certain price-sensitive markets like Brazil, Mexico, and recently India, we've launched value-priced email through open exchange, which has doubled the run rate of email unit sales in these countries. And finally, in our largest and most mature markets, we look to drive deeper customer engagement, which ultimately shows up in ARPU. As you know, the U.S. is our oldest market, and we continue to grow at a double-digit pace, showing that strategies like conversational marketing can sustain healthy growth over the long term. A ramp of conversational marketing, along with a broader and richer product portfolio and experience, has been focused in the U.S. where we're driving significant innovation. And as we refine this new playbook, we expect to be able to export it to other maturing international markets as a core strategy to drive ongoing growth. The punchline is that we continue to see many vectors of growth in domestic and international markets supported by a diverse set of product and operational initiatives in each market. And for you, our shareholders, this creates a clear line of sight to continue double-digit top-line growth. Before I wrap, I want to emphasize our focus on building a business that's aimed at customer success and that can deliver for years to come. We're proud of the consistency of our execution and, more importantly, how we've evolved as a company. We've got a good business, a great customer and market to serve, and a fantastic team, all of which underpin what we deliver to our shareholders. And with that, here's Ray to cover the financials.