GoDaddy Inc.

Ladies and gentlemen, thank you for standing by and welcome to the GoDaddy Q3 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Sam Kemp, Vice President of Investor Relations and Strategy. Thank you. Please go ahead.

Good afternoon, and thank you for joining us for GoDaddy's third quarter 2019 earnings conference call. With me today are Aman Bhutani, Chief Executive Officer, and Ray Winborn, Chief Financial Officer. Aman and Ray will share some prepared remarks, and then we will open up the call for your 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.gode.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 MainStreetHub. The matters we'll be discussing today include forward-looking statements, which include those related to future financial results, product introductions and innovations, as well as our share or purchase authorizations. Any forward-looking statements that we make on this call are subject to risks and uncertainties that are discussed in detail in our third quarter 10Q, are based on assumptions as of today, November 6, 2019, and may differ materially from actual results. We undertake no obligation to update these statements as a result of new information or future events. With that, here's Aman.

Thanks, Sam, and welcome, everybody, to our third quarter earnings call. It's great to speak with you all. My first two months at GoDaddy have been an excellent experience. That's affirmed what I believed about the company and everything we have ahead of us. Today, I want to share with you what I see in GoDaddy, the points of differentiation that allow us to capitalize on our opportunity, and lastly, the principles behind how we will achieve our goals. which nicely align our customer and shareholder priorities. Even as an outsider, I was drawn to GoDaddy, a customer-centric company whose massive global brand and noble purpose delivered terrific economics. And after just two weeks on the job, as I stood in front of our customers at our very first customer event, launching Websites Plus Marketing, our new product, that relationship we have with our customers was palpable. I took the opportunity to spend some time with them. One of them was Sherelle. She has an influence of business and was so eager to support our event that she brought along her mother and her two-year-old child. Three generations, I found that to be powerful and representative of our customers as they juggle between their business venture and everything else in life. What we do, everything we do, is to make her and millions like her successful. Sherelle has been with GoDaddy for five years. She has two websites, spends about $200 a year, and wants to be doing a lot more with us. Her biggest goal is finding more customers. But even for an influencer, marketing is not straightforward. Sherelle is not alone. Everyday entrepreneurs have a fundamental need to amplify and grow their businesses. But we know that finding and engaging customers has gotten more complicated as consumers want to engage across an increasingly fragmented landscape. Technology has created this complexity, but paired with humanity, technology can also solve it with simplicity. And that's the GoDaddy passion and opportunity, to simplify the world for our customers. And for the millions like Sherelle, there's a real lack of options. We hear repeatedly that it doesn't feel like anyone is supporting their unique needs. And they're right. Our customers have real commercial needs but cannot embrace tools designed for the enterprise. This is where our scale gives them a huge advantage. Servicing the everyday entrepreneur is hard, but with scale, we have turned difficulty into success. We are the world leader in online presence. We have the world's largest paid website ecosystem. We run over a quarter of the world's domain, and we are a massive provider of online communications through our branded email offerings. We also have a deep understanding of our customers, thanks to the nearly 2 million conversations we have each month and the insights we have on the web presence of tens of millions of micro-businesses. The sheer scale of our business, customer interactions, and data gives us the ability to iterate rapidly, a huge resource to apply to our evolution. And importantly, GoDaddy has already demonstrated its ability to extend what we do for our customers. With robust products like Managed WordPress and Websites Plus Marketing, which now has over 1 million paid subscriptions after just a couple of years in market. GoDaddy is making fast progress on our shift from an infrastructure-focused company to a customer-led software company. This is a rare transition given the real challenge of simultaneously shifting both product and brand. GoDaddy's success here is an extraordinary point of affirmation that we do have that capability and we can continue to extend how we serve our customers' needs, growing ARPU over time. All in, we're looking at a time in the hundreds of billions, which will keep us busy for years to come. The way we win these opportunities for both our customers and for you, our shareholders, is by being laser-focused on GoDaddy's three biggest competitive advantages, our ethos of guidance, seamlessly intuitive experiences, and activating our community. Let me touch on each as they relate to our operating and strategic priorities we're aligning around as a company. First, there's guidance. which is deeply embedded into the ethos of GoDaddy, thanks to our 6,000-plus GoDaddy guys all around the world. Entrepreneurs place high value on informed advice and direction, which we're infusing into everything we do. At our recent customer event, we unveiled a new feature of websites plus marketing called Insight, which puts our guidance directly into our products. A customer using our Insight dashboard sees very specific, tailored marketing actions that allow them to take the next steps in growing their business. Insight provides tested recommendations drawn from our customer graph, which helps entrepreneurs learn from one another's success. As I look around the company, I see many places where we can use guidance to expand our role as a growth partner. Our second advantage is seamlessly intuitive experiences. that make things easier for our customers. Entrepreneurs wear a number of hats just to keep the lights on, which makes time their constraint and complexity their enemy. We break down these barriers by radically simplifying our products, making everything from site building to marketing easy, improving the outcomes for our customers and minimizing the work they have to do. Take, for example, our latest version of Managed WordPress, which shipped in October and has received stellar accolades from the community for how intuitive and accessible we've made WordPress. In the setup process alone, we've eliminated 70% of the standard WordPress install steps without compromising its power or flexibility. As we think about 2020 and beyond, Seamlessly intuitive experiences will include uniting our products around ultimate customer outcomes as we move from an a la carte experience towards integrated suites. And the third advantage I see playing out longer term is GoDaddy's potential to activate our community, which is comprised of our 19 million customers across a diverse set of populations, verticals, and geographies. We have only just begun tapping into this advantage, but as I look at our customers, their needs, and our scale, I believe there's a huge opportunity to connect our communities in ways that generate real benefits for them and for us. Given our priorities and our advantages I just discussed, I hope you can see how well aligned our customer and shareholder outcomes are. So let me turn for a moment to our execution. As we look to 2020, I can confidently say that our biggest priorities are delivering a stronger platform, increasing our pace of experimentation, and ultimately accelerating the delivery of the products, experiences, and outcomes that empower our customers. As I have gotten deeper into the business, I see a lot of promising ideas and talented teams and the clear potential to move a lot faster with a particular focus on platform and product. First, our platform sits below everything we do. It enables our marketing engine, customer experiences, how our products work together, and the automation layer that drives constant improvement. In my 20-plus years of experience, I've seen firsthand the enormous organic and inorganic value unlocked by a scalable, durable, and powerful platform. And this is absolutely true at GoDaddy. where enhancing our platform will increase our velocity, delight our customers, and more seamlessly unlock value across the business. Second, to deliver the simplest and best experiences, interfaces, and customer outcomes, we need to have exceptional products, which I'm sure is intuitive to everyone on this call. Coming into GoDaddy, I'm pleasantly surprised at how far GoDaddy's products have come And in 2020 and beyond, we'll be leaning into the quality of our core offerings and expanding the ways we enable customer success. The combination of a strong platform and exceptional products yields the ability to accelerate our value delivery to customers and importantly, produce meaningful financial outcomes. With that in mind, our approach will be financially principled and prudent with regard to allocating our people's time, our P&L, and our balance sheet. As I wrap, I want to leave you with three important points. One, GoDaddy sits in a privileged position relative to a massive opportunity. Two, our brand is differentiated in the minds of our customers and we will be leaning into guidance, seamlessly intuitive experiences, and activating our community. And three, our execution focus will be on strengthening our platform, increasing our experimentation, and continually accelerating our product. These are the underpinnings of our ability to increase value to our customers and financial outcomes for our shareholders for years to come. And with that, here's Ray to cover our quarter's financials.

Thanks, Aman. I'll touch on the financial results for the quarter and the outlook for the rest of the year. We delivered another solid quarter with great top-line performance while driving operating leverage and deploying $459 million in capital to repurchase over 7 million shares of our own equity. On the top line, revenue came in at $761 million, growing 13% on a constant currency basis and 12% on a reported basis, decelerating about 100 basis points as we lapped the acquisition of Main Street Hub. On a like-for-like basis, we continue to deliver strength across the business, including our present suite, productivity, and our domains business. International revenue was $254 million in Q3, growing 12% year over year on a constant currency basis. And looking at revenue metrics, ARPU rose to $155, up 7% year over year, and our customer base grew 4.5% to $19.1 million, in line with our expectations. Bookings grew to $851 million, rising 15% on a reported basis. Currency headwinds created a point of pressure in the quarter and were stronger than we anticipated earlier in the year. Separately, during the quarter we experienced a spike in credit card abuse, which created one point of lift in total bookings, but nets out in refunds and does not impact net bookings or revenue. Unlevered free cash flow for the quarter was $191 million, growing 9% year over year, and was negatively impacted by the timing of CapEx spend between Q3 and Q4 last year. We expect full-year 2019 capital expenditures to be roughly in line with 2018. On the balance sheet, we finished Q3 with $990 million in cash and short-term investments. Net debt landed at $1.4 billion, or about two times net leverage on a trailing 12-month basis. Since our last earnings call, we deployed $459 million in capital repurchasing 7.1 million shares of our common stock at an average price of just under $65 a share. This repurchase represents a nearly 4% reduction in fully diluted shares outstanding. Additionally, the Board of Directors recently approved a repurchase authorization for an incremental $500 million, bringing our total repurchase capacity to $541 million. On the debt side of the capital structure, In October, we refinanced $1.85 billion in term loans, reducing our interest spread by 25 basis points and lowering annual cash interest payments by roughly $4.6 million. As our cash flow and balance sheet capacity expands, you'll continue to see us be thoughtful stewards of capital, with the ultimate goal of prudently driving attractive growth in levered free cash flow for our shareholders. With that, Let's turn to our outlook for the rest of 2019. We're updating our full-year revenue guidance to $2.98 to $2.99 billion, or full-year growth of 12% at the midpoint, squarely where we expected as we entered 2019. For full-year unlover-free cash flow, we are adjusting our range slightly to $730 to $740 million, reflecting continued currency headwinds on booking. The midpoint represents more than a point of margin expansion versus 2018, reflecting our ability to balance both top-line growth and margins. Based on today's interest rates, we expect approximately $80 million of cash interest in 2019, yielding slightly faster growth and levered free cash flow. In closing, we have a distinctive value proposition that combines our products, platform, and guidance to uniquely serve our customers. and help them grow their business while minimizing complexity. There's a huge opportunity in serving the needs of the everyday entrepreneur, and we're excited about delivering on the promise of making the GoDaddy experience seamlessly intuitive. With that, operator, let's open up the call for questions.

To ask a question, please press star 1 on your telephone keypad. The first question comes from Brent Phil of Jefferies. Please go ahead. Your line is open.

Thank you. For Aman, just if you could talk through some of the early adoption you're seeing in websites and marketing, the launch that just came out, and it would be great to get color there. And then secondarily for Ray, you took the high end of guidance down both in revenue and cash flow, and I just wanted to confirm that's just all FX related, nothing organically related. Thank you.

Thanks, Brent. I'll take the first part. On websites plus marketing, it's just been a fantastic launch for us with new features going in this year. Just to remind everyone, we launched the product about a couple of years ago, and we're already at a million subscribers here. The key things we've seen since the launch is a greater interest in the new features. The inside feature is something that I called out specifically, which we think over time is a game changer as well. everyday entrepreneurs go to this product and it actually guides them through what their next step should be. And with that, Ray, on the second piece.

Hey, Brent. It's Ray. On the revenue guidance, all we did was tighten down the four-year range from $30 million to $10 million. So the midpoint stayed the same there. The currency wasn't as impactful to revenue. As I mentioned in the call comments, we pulled down the top end of the unlovable free cash flow. We've left that range of $730 to $745 out there all year. But as we've moved into the back half, currency's been a little bit of a pressure on bookings. So I thought it was prudent to tighten that up.

Great. Thanks.

Your next question comes from Deepak Mathavanian of Barclays. Please go ahead. Your line is open.

Great. Thanks for taking the question. Aman, nice to hear your vision for the company. Investors are waiting to hear about it for a while, and it's very refreshing. So thanks for that. Translating it into financial context, how should we think about GoDaddy's historical targets to deliver steady double-digit stop-line growth versus free cash flow in the high teens plus? Do you still believe in that financial framework or what are your thoughts on that? And then second question sort of related to that, to your points on guidance to the customer, what does it entail operationally? Is that a customer support team that's bigger in size or is that marketing related? How do you plan to achieve it operationally? Thank you.

Thanks, Deepak. It's too early for me to get into the specific financial guidance for 2020 and beyond. I think broadly on the framework, we had put up a long-term target of $5 billion revenue for the company, and I'm super excited for GoDaddy to be that and bigger. And in general, if the statements were, do we like the idea of more customers and selling them more, I would say definitely. But the key for me is that as we get bigger, that we're clear about the customers that we're approaching. And we know that the customers that engage with us more, buy more products, tend to have higher lifetime value, which means they get more from us, and they also generate better financial returns. And in terms of guidance in the product, you know, we'll definitely talk more about over time, but the example of Insight is a very good, the example of the Insight product is very good in terms of, you know, letting an entrepreneur come to the site and say, hey, you know, other people like you are doing this as their next step. You should do that too. And what that does is it broadens guidance from our core of having the 6,000 GoDaddy guys to our digital products as well. And we'll report on 2020 when we report Q4, as we have done in the past.

Okay, that's great. Thank you very much, Amad.

Your next question comes from Sterling Audie of J.P. Morgan. Please go ahead. Your line is open.

Hey, Greg. This is actually Jackson Aderon for Sterling tonight. Thanks for taking our question. It's really about the renewal rates in the quarter how they trended relative to maybe what we've been seeing over the last couple of quarters. And then also, I think in the last quarter you talked about some of the two-year renewal cycles going back to 2017 kind of having an impact on this. So we're just curious, when should we see that headwind start to subside and maybe actually see net additions accelerate on the back of this headwind subsiding?

Yeah, thanks, Jack. Let me quickly introduce Andrew Lewaki, our Chief Opening Officer, who's on the call with us and I think took it last quarter as well. Andrew? Yeah, absolutely.

Renewal rates continue to track really well for us. That's driven by two things. One, our focus on driving more active usage of the products that we have. We know that when customers are actively engaged as a monument, As Iman mentioned, that that turns into more retention, more lifetime value for us. So that's one. And then second, we've had a team out there really staring at our renewal experience, trying to take friction out, trying to make the experience more seamless for our customers. And we find that focus on customer experience, that actually turns into strong renewals as well. So we continue to be enthusiastic and excited about what we're seeing on the renewal front.

Hey, Jackson, it's Ray. As far as the pace on the 700,000 to 800,000 customer ads in 2019, still see that happening, but we're not going to guide beyond 2020. Okay, fair enough.

And then just a quick follow-up. I guess it's in a similar vein. We've seen some other competitors kind of trying to come upmarket. Any just or initial commentary on maybe what you're seeing in the hosting and presence business relative to those competitors?

Look, I think we're enthusiastic right now based on what we're seeing in websites and marketing, crossing a million subscriptions. Our managed WordPress offering has been doing really well, and we've been excited by what we're seeing there. So we think as we've really applied focus in this area that we're seeing good outcomes for ourselves.

All right. Thank you.

Your next question comes from Mark Grant of Goldman Sachs. Please go ahead. Your line is open.

Hey, thank you for taking the question. Just a couple of quick ones from me. Just diving a little bit deeper on the hosting business there, just given the strength that you've called out in websites and marketing, can you help us understand the other moving pieces that might be preventing that segment from seeing the kind of growth you're seeing in websites and marketing and managed WordPress? And then, Ray, kind of a bigger picture one as we get a little bit closer to the event horizon on taxes, and we're trying to model out the various puts and takes there. Can you walk us through your expectations for the tax impact, both on a gap and non-gap basis, and the cash impact over the next couple of years? Thank you.

Thanks, Mark. Like we say, we continue to see strength with websites with marketing and managed WordPress products, together seeing unit growth 40% plus. So that's been great for us. And, of course, the 1 million subscribers for websites plus marketing is a great milestone for us.

And, Ray? Yeah, so, Mark, to finish up, you know, we just lapped the acquisition on Main Street Hub this quarter. Obviously, that's reported in that hosting and presence line. If you just looked at the absolute quantum of growth on the hosting and presence revenue was up, call it $35 million last quarter. It's up $22 this quarter. most of that difference is your lapping of the acquisition. On your other question with respect to the TRA, the only change in our outlook for the TRA since our 2018 investor day is that now we have fixed virtually all of the TRA benefit and liability. In total, over the life of the TRA, it'll be a $1.8 billion payment stream. In the latest forecast we put together, which we update in our quarterly filings each time, by the way, we began ramping payments in 2022. For modeling purposes, by 2023, I would put in 20% plus or minus of traditional EBITDA, excluding the impact of stock-based compensation, and assume today's capital structure for that when you do it. Hopefully that gives you a little more color on what to put in there.

Yeah, very helpful. Thank you.

Your next question comes from Nick Jones of Citi. Please go ahead. Your line is open.

Hi. Thank you for taking my question. Kind of giving some of the product rollouts and how would you look at kind of your product portfolio today, and is there any area that you think there may be holes, whether it's in marketing or e-commerce or another area?

Yeah, thanks, Nick. When I look at the needs of our customers, their needs are in many, many areas. So definitely I feel that over time we can add to the breadth of the products that we have. When I look at our product suite today, I think we have a compelling offering, and our focus over the next year is to really make that seamlessly intuitive for them as they go across it. Having said that, we've continued to add in more offerings with some small token acquisitions over time, too, and we'll continue to do that because customers are calling us. They're telling us all the time of the things they need, and we have the ability to go add that into the suite and offer it to them in a manner that works for them.

Thanks. One quick follow-up. You seem to understand your customer base pretty well. How does... Are you able to find and acquire these customers through different channels and maybe some of your competitors that have kind of turnkey solutions that are very kind of vertically focused? How should we think about, you know, how these do-it-yourselfers can kind of differentiate between, you know, the different offerings that are, you know, some are becoming more robust or, you know, the ones that are more vertically integrated?

Yeah. Hey, Nick, I think the biggest thing that we have from a customer acquisition perspective going for us is our brand. We've invested hundreds of millions, if not billions, over nearly two decades as a company. And we've got a differentiated position, not just here in the U.S., but truly globally around the world. And that brand strength is actually what drives the vast majority of our customer acquisitions. And importantly and excitingly, we're actually seeing real growth in our core brand health metrics as we've rolled out a new set of creative executions and positioning. So we're enthusiastic not just about the asset we have in our brand, but how we continue to invest and grow it.

Great. Thank you for taking my questions.

Your next question comes from Ron Josie of JMP Securities. Please go ahead. Your line is open.

Great. Thanks for taking the question, Aman. Maybe just going back to the broader strategy, and you talked about the benefits of a stronger platform and increased pace of experimentation and the product as key focus areas. I wanted to see sort of how you think about those three things relative to what you saw at Expedia and you did at Expedia in terms of conversion flows and marketing and sort of see how you bring those learnings from Expedia to GoDaddy along those three things. And when you talk about a stronger platform, I immediately started thinking, okay, well, it'll be an upgrade cycle or whatever, but maybe any insights on how advanced maybe GoDaddy's infrastructure is now and what's needed here as you layer on new products. Thank you.

Thanks, Ron. Definitely over the last 20 years, I've seen the power of platforms and, you know, in previous role and the role before that as well. And a growing, evolving platform can bring both organic and inorganic benefits. to any company. And I would say GoDaddy has done a pretty good job over the years growing the platform and has seen some benefits. But there are a couple of areas where I would like to focus in on, and I think with time, energy, and talent, we can do a better job in those areas, and it will unlock new opportunities for us. When I think about items like conversion flows and such, I would say GoDaddy's experience has really improved over the last couple of years But again, it's an area where we're putting in a lot more attention and making sure that we're just raising the level of experimentation so that we can have more attempts out there, more tries at goal, and hence have more winners. And we think this really brings together what customers need because with every experiment, a customer clicks and tells you whether they like it or not. And that sort of brings together what customers need and what creates value for the company and shareholders as well.

Thank you.

Your next question comes from Zachary Schwartzman of RBC Capital Markets. Please go ahead. Your line is open.

Great. Thanks for taking my question. Aman, in the press release and your prepared remarks, you spoke about a focus on increasing experimentation and continually accelerating the product for customers. As you look into the future from a qualitative level, what areas of the business do you feel you can generate the greatest incremental value from, whether that's tech and dev, customer care, marketing, or maybe somewhere else? And then I have a quick follow-up.

Yeah, thanks, Zach, for that question. I would say experimentation and the application of the scientific method, for me, has worked in all of the areas that you just talked about, whether it's marketing or care or tech and dev. And in terms of where to start, my experience has been the place to start is where the customer touch point is. That's where the maximum return is, and that's where we're focusing our teams to make sure that we're sort of resourcing those teams strongly so that they're able to go after that bigger opportunity.

Got it. Thanks. So, As investors think about this shift from infrastructure to a customer-led software company, as you mentioned, how do you think about, I guess, reallocating resources maybe in product development? Is this a greater area of focus? I think investors are wondering if you can do this without having to spend higher than in prior years, given GoDaddy's attractive margin profile and robust cash flow generation.

Yeah. Thanks, Zach. I would say, you know, my early observations has been that GoDaddy has been investing in a number of places over the last year or two. And although it's too early for me to just be super specific of one area or the other, I'll just call out, you know, like I said in my prepared remarks, that we're economic beings here and we're going to be diligent stewards of our P&L.

Great. Thank you.

Your next question comes from Matt Pfau of William Blair. Please go ahead. Your line is open.

Hey, guys. Thanks for taking my questions. I wanted to ask a bit on your e-commerce initiatives. And it seems like you're leaning a bit more into the e-commerce market with the Sellbright acquisition as well as the WooCommerce partnership that you just announced. So just curious as to what you're seeing in this market that's making you perhaps put a bit more focus on it than you have in the past? Sure.

Hey, Matt. Look, e-commerce is an area where as our customers start with us and then begin to grow, we'd be foolish not to grow with them. And in the spirit of Aman's comments around the ethos of guidance, when we see our WordPress customers installing WooCommerce, gee, we ought to go serve that need. Similarly, on the websites and marketing side of things, we see more and more customers wanting to transact online, but really uncertain about how to go about it. And so by deeply integrating commerce experiences, not just product, but also service commerce and our online appointments and bookings offering, that's just delivering on our promise of guidance to our customers.

Okay, and so I guess it's more of what you're seeing in the customer base than something in terms of maybe the competition changes, creating opportunities, or anything along those lines.

No, look, we find we're at our best when we're listening closely to our customers, whether that's what they're telling us in the 2 million interactions we have each month or whether it's based on looking at how they're using our products.

Okay. Great. That's it for me. Thanks a lot.

Your next question comes from Navid Khan of SunTrust. Please go ahead. Your line is open.

Hi. This is Nate Mitchell on for Nived. Maybe first, just if you could touch on gross margins for the quarter. Came in, again, a bit lower than last quarter, a bit lower than what we had, and how we should think about gross margins in 4Q. And then my second question is just around VeriSign. It seems like they're pretty close to gaining approval for the dot-com price increase. We're wondering how we should think about the impact to GoDaddy and GoDaddy customers.

Hey, Nate, it's Ray. I'll take the first one. It's just normal quarter-to-quarter fluctuations, and gross margin was right in line with our expectations for that mid-60s range that I've been pointing you guys at quarter after quarter. Fundamentally, we haven't made any changes in the nature of our talks, either to the fees we pay to registries or to software license fees with partners. One other point I might make around gross margin, remember the margin impact of currency is pretty high flow-through, given that a lot of our COGS is USD-based. That's another factor as you look at the changes quarter over quarter that could be hitting it.

And on the second point, as you well know, Nate, .com continues to be the most important TLD in the world, and it is still a valuable product at a value price point. And historically, the industry has passed price increases to consumers. And although it's too early for us to be specific about our pricing strategies in 2020, I think we have the history of how things have worked.

In terms of the industry's historic ability to pass through that price increase, it's helpful to ask the question, why is that? In reality, a domain name is actually, in many cases, deeply coupled and tied to an individual's dream. When you think about a price increase of a dollar or two relative to giving up on their dream, that's a relatively easy trade.

Thank you.

Your next question comes from Igal Arunian of Wedbush Securities. Please go ahead. Your line is open.

Hey guys, thanks for the questions. So you gave the number, the 1 million subscribers for websites and marketing. That's super helpful. I was wondering if you could help kind of frame whether, I doubt you'll give a subscriber number, but any way to think about what your WordPress customer base is And then if I missed this, I apologize. I've been bouncing around calls. But any changes to M&A views now, Aman, with you on board? And I know you've talked about the leverage ratios and you add buybacks to the capital structure now. So just any changes to the way you think about how you guys are thinking about M&A going forward? Thanks.

Hey, it's Ray. I'll take the first one. Not going to disclose the specific subs on our managed WordPress, but we've been talking about growth in those subscriptions together in the 40 plus percent, and it's still in that area. So very happy with both the number of subscribers together, but more importantly, the growth rate we're seeing in it.

And then just a bit of color on how I think about M&A. I tend to think of it in two parts. The first type of M&A is where we're acquiring companies that look like us. And Godaddy has done a good job of that. That was how we added our European brands. And the path there is really about the platform and the integration and the synergies that come with that. And the second way I think about M&A is that the companies do something a bit different. They don't exactly look like you. And they can be small, which are small tuck-ins, and you've seen us do Koblox and Cellbrite are great examples of that, where they tend to be small and the integration effort also tends to be low. And then there are commercialized sort of medium-sized acquisitions that add new capability or key capability to the business, and a good example of that is MainStreetHub. And the third, which we've done less of, is where we add sort of at the corporate level completely new capability or category to the business where we start to serve new customer segments. And I feel that we have the ability to do all of these as a company. And really I think all of this is just to say that I think the opportunities are ahead of us and probably what makes sense is for us to reiterate how we think about it, where we think, We want to invest in our organic business. We want to be able to do M&A and then do share buybacks. And our order of priority there hasn't changed.

Okay. That's helpful. Thank you.

Your next question comes from Jason Helfstein of Oppenheimer. Please go ahead. Your line is open.

Thanks. So just maybe to dig through that last question. So do you think the future of M&A as a company is more focused on existing or new product lines just because it would seem like there aren't a lot of HEGs out there. And then just another follow-up on the VeriSign, does that change the economics of the domain portfolio that you hold? And to the extent you're holding those domains, the price goes up. You said you'd pass them on, but just generally does it change how you think about it or just having those domains are so important for the other parts of the business? Any more color there, thanks.

Yeah, I think on the first part of your question around would we do one or the other, I would say we have the ability to do both, and I wouldn't constrain us to do one or the other. And in terms of the change in economics of our portfolio with VeriSign, I'm not seeing a ton of stuff there in terms of a huge impact to us.

And I'd just add, you know, our own portfolio, the reason we have that is it's a way for us to remove friction and actually help build a secondary market in the namespace, which names have real value. And right now that marketplace is really bespoke. It happens in many cases human to human, but by virtue of having the portfolio and helping drive that marketplace, we're able to introduce technology like our valuation algorithms and other things, which actually help people in that experience.

Thank you. There are no further questions at this time. I will turn the call back over to Amon Bhutani for closing remarks.

Well, I just want to end by saying thank you to all of you for joining, and thank you to the 9,000-plus GoDaddy employees all over the world that work every day for us to be better and do a fantastic job. Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect.