GoDaddy Inc.

Ladies and gentlemen, thank you for standing by and welcome to the GoDaddy first quarter 2020 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 further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Mark Grant, Vice President of Investor Relations. Thank you. Please go ahead, sir.

Good afternoon. And thank you for joining us for GoDaddy's first quarter 2020. 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'll 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, unleveraged free cash flow, normalized EBITDA, and net debt. 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. The matters we'll be discussing today include forward-looking statements, which include those related to our future financial results, new product introductions and innovations, our ability to integrate recent acquisitions and proposed acquisitions and achieve desired synergies, including our recent acquisition of Over, our recent acquisition of Uniregistry's domain registrar and marketplace businesses, and the expected acquisition of New Star's registry business, and the impact of the COVID-19 pandemic on our business, customers, and employees. These forward-looking statements are subject to risks and uncertainties. that are discussed in detail in our documents filed with the SEC. Actual results may differ materially from those contained in the forward-looking statements. Any forward-looking statements that we make on this call are based on assumptions as of today, May 6, 2020, and we undertake no obligation to update these statements as a result of new information or future events unless required by law. With that, here's Amon.

Thank you for joining us today and thanks again to those who joined us for our investor day in April. While it has only been one month since we spoke to you, we have several important updates to share today. First, In Q1, we delivered strong financial results, which included the early impact of COVID-19. As expected, changes in consumer behavior rippled across the globe along the COVID-19 arc, with the last two weeks in March being the toughest in the U.S., as everyone focused on safety first. Second, there are definitive proof points that we are creating significant value for our customers. We are seeing an uptick in customer demand as new customers are exploring how to build a website and everyday entrepreneurs in fashion, beauty, health, professional services, and many other verticals are forging ahead with new ideas. Those with a website are expanding the online scope of existing ventures, adding commerce and payment features, creating digital content and downloads, adding virtual classes, appointment scheduling, and much more. Third, I'm excited to share more on Open We Stand. What started as an idea about a month ago has become a movement. With over 50 partners and over 50 million views on YouTube, it is a testament of the extraordinary power of our community and the distinctive, powerful, and differentiated reach of our brand. The true heroes in this movement are the everyday entrepreneurs who are finding a virtual way to be open even when their physical doors are closed, making Open We Stand a reality. And fourth, as we look into Q2, our core business continues to be resilient with renewal rates edging up year over year. Predicting the balance Of the pressure on small and medium-sized businesses on one hand and human creativity driving new digital demand on the other is pretty hard. For example, in Germany and Italy, where the pandemic seems to have been restrained, we have seen gross customer ads accelerate to 80% year-over-year growth, albeit of a relatively smaller base. Additionally, while we have some headwinds in care and services, and through discipline execution, we have improved them on a weekly basis. For some teams, being back in the office environment remains a key part of getting back to peak performance. In his comments, Ray will go through what all of this means for Q2 guidance. Let's dig into creating value for everyday entrepreneurs. GoDaddy is a customer-led software company built on the foundational idea that creating value for our customers is the best way to create value for our shareholders. Helping our customers on the journey from dream to create and grow remains a key driver of engagement and TAM expansion. As customer needs shifted over the past few weeks, accelerating our pace of experimentation and innovation enabled us to quickly bring offers to support them. Over the last four weeks, we have started an experiment with a premium model for websites plus marketing. This is now available to all customers in the U.S. and includes product integration with GoFundMe, robust gift card functionality, expanded capabilities with PayPal, and much more. In the true spirit of experimentation being customer-led, we also launched a basic messaging capability so our customers are able to connect with their customers. Getting these features out quickly allows us to give early customer feedback and improve them rapidly. For example, you will see us upgrade the messaging capability within days. and that is just one of the two ecosystems we are part of we also have a new offer available to designers and developers bringing together managed wordpress and woocommerce at an attractive limited time price point of one dollar for three months everything they need to get their customers selling online fast in fact it's not just websites plus marketing or managed wordpress that we're moving on quickly to improve all our product and engineering teams have reset their roadmaps on the win model meaning what's important now we have active offers for three months free trials of our digital marketing suite and over pro and 30-day free trials of sellbrite's multi-platform e-commerce marketplace solution and the results Installs of the Over app jumped 24% month-over-month in March, and Sellbrite saw a 20% month-over-month increase in connections to online marketplaces. The opportunity to introduce our products to customers when they need them most in a manner that is easy for them creates immediate customer value and will lead to shareholder value over time. And we want to extend our ability to experiment, to innovate, and give customers more choices at competitive price points. One of the key tools in our toolbox is the ability to deploy capital. And in early April, we announced the acquisition of the registry business from NewStop, which will be known as GoDaddy Registry. While the acquisition will have only a small financial impact this year, we believe there is significant strategic importance here. We have demonstrated in our roughly 20 years as a registrar that we can innovate and dramatically increase the value we offer to customers. We plan to bring the same innovative rigor to the registry business. Vertical integration reduces the many complexities of building innovative end-to-end offerings for customers at competitive price points. We have experience creating value for everyone in the industry. Just look at the domain's aftermarket. Over the nearly seven years since AfterNIC became part of GoDaddy, almost every major registrar leverages our AfterNIC platform for aftermarket domain sales, creating greater choice and value for customers and creating greater value for our partners. We look forward to closing the acquisition in the coming months and welcoming the team to the GoDaddy family. Equally important is the guidance we provide to our customers, which has been part of our ethos at GoDaddy since the beginning. It is our killer app. It is a competitive advantage. In these unprecedented times, entrepreneurs need guidance, and we are committed to being there for them. When we took 7,500 guides home several weeks ago, we focused first on their safety and then moved quickly and creatively to guide customers effectively. And I am happy to share that our average speed to answer has been exceptional. Customers are surprised and delighted that we would call them just to offer help, and they have shared positive recognition for our guides across many calls. Anecdotally, I have received a greater number of messages directly from customers thanking us for being there to help them in this difficult period. This is why we exist. This is what our brand is about. The GoDaddy brand is a remarkable asset, and there has never been a better expression of it than Open We Stand. Let me take a moment to share its origin. About a month ago, we saw a gap in the way small businesses could find and take advantage of the many offers available to them. The offers were not in a central location that made it easy for entrepreneurs to find them. Open We Stand solved both these problems and has grown beyond our wildest expectations. In an amazing display of the exponential power of our community, what I thought would be 20-20 hindsight has become 50-50. I thought 20 partners and 20 million views would have been an amazing achievement. But here we are, more than 50 partners and over 50 million views on YouTube and thousands of activations by small business owners. That is a movement, and the momentum continues. The movement started with a 60-second film to communicate our desire to help businesses stay open, even when their doors are closed. We invested in media to communicate this message and directed all traffic to OpenWeStand.org. This site now stands as a repository for us and our partners to provide offers, help, and advice. where partners can edit their own content and small business owners can find the help they need. As traffic to the site continues to grow, we are posting more offers and content, as well as enhancing filtering capabilities, making it easier to navigate. The need for these resources is great. As an example, we did our first webinar last week with expectations of 300 attendees. It tremendously exceeded our expectations, with 5,000 sign-ups and over 1,000 attendees. It has been humbling and inspiring to see the response from the community, and we will continue to put muscle and marketing dollars behind OpenWeStand, providing valuable offers to our community in a central location. Before I wrap up, I want to tell you about Liv, one of our remarkable everyday entrepreneurs. She started Box & Flow in New York, a boxing and yoga studio. If you talk to her, she will tell you that she really believes in this idea of balance and combining strength and softness as a way of life. When the pandemic hit, she left her studio in New York and temporarily moved to Florida to be near family. But the entrepreneurial spirit in her didn't stop. She was comfortable taking risks, so she continued to try and experiment. She started teaching classes on Instagram and last week offered all her classes online. She is not only teaching her regulars in New York. She now has regulars from Malaysia to Barcelona. Liv is not just trying to survive. She figured out how to make her dream bigger. And she demonstrates the spirit and drive we are here to serve. And in these times where so many parts of our lives have transitioned to a digital experience, we are seeing the best of human creativity. We believe human creativity will drive many variations of online businesses, and we are fortunate to be a global leader serving this massive market of everyday entrepreneurs like Liv. In the current COVID-driven climate, GoDaddy's distinctive financial profile with profitable growth at scale stands out. We have the capability to invest capital aggressively, and an experienced management team that can make sure we do that with prudence and as good stewards of both the P&L and the balance sheet. We know that short-term, everyday entrepreneurs like Liv may have some setbacks, but we know that their beliefs and spirit will not be deterred. Our belief in Liv and millions of other everyday entrepreneurs just like her, keeps us confident that we will deliver on our 411 target. $4 billion in revenue and $1.1 billion in unlevered free cash flow organically by 2022. With that, here's Ray.