GoDaddy Inc.

Good afternoon, and thank you for joining us for GoDaddy's second quarter 2022 earnings call. I'm Christy Masoner, Senior Director 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. If you'd like to ask a question on today's call, please use the raise hand feature in the webinar to be added to the queue. On today's webinar, we'll be referencing both GAAP and non-GAAP financial results and operating metrics such as total bookings, unlevered free cash flow, normalized EBITDA, annualized recurring revenue, or ARR, gross merchandise volume, or GMV, and net debt. Growth rates presented represent year-over-year comparisons, unless otherwise noted. 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.go.edu.net or in today's earnings release on our Form 8K furnished 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, Our strategies are objectives with respect to future operations, including our approach to capital allocation, new product introductions and innovations, and our ability to integrate acquisitions and achieve desired synergies. 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 forward-looking statements, Any forward-looking statements that we make on this call are based on assumptions as of today, August 3, 2022, and except to the extent required by law, we undertake no obligation to update these statements as a result of new information or future events. With that, here's Aman.

Thank you, Christy, and thank you all for joining us today. At GoDaddy, our mission is to make opportunity more inclusive for all. The best moments of my week are when I'm engaging with GoDaddy customers. I am constantly inspired by their grit and determination and amazed by their resilience. Just a couple of weeks ago, I spoke at a small business summit. I met so many GoDaddy customers there and some who will hopefully become GoDaddy customers in the future. While they worried about the current economic environment, I found them driven, ambitious, upbeat, and passionate about their businesses. One customer walked up to me and started with, my life is on GoDaddy. I am inspired to do more for her and all our customers to be better every day. Our relentless focus on innovation delivers seamless and intuitive technology complemented by human care, helping customers grow their businesses and achieve their dreams. Our strategy to attract high-value customers continued to show success, best illustrated by our customer retention rates, which have remained greater than 85%. The Q2 results demonstrate our steady operating discipline, 9% growth in revenue and 30% growth in normalized EBITDA, despite the challenging FX environment. GoDaddy's strong and diverse business enables us to navigate fluid global demand patterns and inflation concerns from a solid position, and we are committed to attention and action on what we control. As in the past, we aligned our marketing spend and other investments with demand signals, concentrating on success-based, disciplined, and efficient spending. We actively identify and deploy marketing spend where we find opportunities to deliver long-term growth. Through this plan, we create balance across all components of our business without sacrificing our investment in technology and development for future growth. Our strategic priorities have been consistent over the past six quarters. First, driving commerce through presence. Second, delivering for GoDaddy pros. And third, innovating in domains. Beginning with commerce, we are pleased to share that we continue to achieve positive trajectory with our GoDaddy payments offering. And more specifically, the attach rates to our other products. For websites plus marketing, more than 80% of our commerce customers choose our payment solution. And for managed WordPress, 30% of our commerce customers choose our payment solution. Annualized GMV also continues to rise with Q2 at $28 billion, growing 12% year over year. We continue to drive strong sales in payment hardware devices, enabling robust in-store capabilities for customers while also steadily approving payment applications. While our payments offering is still relatively new, GoDaddy's differentiated Omnicommerce solution is well positioned in this space. Regardless of the consumer's preferences, whether they are shopping online or in person, our solution empowers our customers to benefit from our industry-low transaction rates in all locations. We also rolled out Apple Pay on GoDaddy payments, improving the buying experience. And Apple selected GoDaddy as a tap-to-pay partner. We are excited to work with Apple to bring tap-to-pay on iPhone to GoDaddy customers later this year. And as always, we will share more information about this partnership as it becomes more meaningful. We embedded more capabilities within websites plus marketing plans to make it easier for entrepreneurs to market their products, sell online, manage their business, and grow. New capabilities include product image enhancement, including background removal, quick view and buy capabilities, enabling single-click add to cart, integrated discounting shipping labels, online appointment features, making calendaring and appointments more intuitive. Enhancing our product helps our customers grow their business while building retention and creating greater lifetime value for GoDaddy. We also continue to test price increases for a highly competitive and feature-rich websites plus marketing product. Our approach to pricing is nuanced, taking into consideration the right balance of increased price and market share while also closely monitoring shifts in customer behavior due to macro factors. We have limited the use of heavy discounting programs that frequent this space while maintaining our competitive position by offering products that our customers value. Our customer retention rates remain strong with consistent 15-month cohort retention, which is trending higher than prior year cohorts. And our overall customer retention metric has stayed above 85%, even as we observe some pressure for customers due to macro factors. This is something we are extremely proud of because it is a sign that we continue to deliver for an often left behind customer, the micro businesses that are the backbone of their local communities. We are proud that Websites Plus Marketing delivers websites for customers that are highly performant. We have pushed the bar further on that and have implemented significant behind the scenes changes that result in improved website performance for millions of sites. These powerful improvements enable GoDaddy customers to achieve improved page speed insights and core Web Vitals scores. For example, our core Web Vitals pass rate for our customers' sites increased by 75%, making us the leader in this category. These improvements ensure GoDaddy customers' websites rank higher in search results, and for small businesses, this is extremely important. Moving on to GoDaddy Pros. This quarter, we launched a beta Woosat solution to allow us to reach a larger customers, those with sales of a million to a few million dollars. These larger customers will be able to sell anywhere, including in person, on their online store and in online marketplaces and social platforms and benefit from omni-channel payment processing all managed in one place. This new online store offering provides growing merchants virtually infinite flexibility of WordPress plus WooCommerce combined with highly performance scalable and secure cloud hosting technology and a seamless, intuitive, and comprehensive software user experience. The fully managed technology stack allows our customers to focus on running their business. We brought together a team of experts in multiple technology domains to create this new premium offering, which includes exclusive functionality with free premium extensions and exclusive capabilities, such as an expert-level dedicated support team. Our customers want a one-stop-shop offering from us, and the WooSaaS solution is the latest proof point of GoDaddy's ability to move slightly upmarket over time. The beta program started in Q2 with an invite-only group of WooCommerce merchants and partners, testing the integration and unification of multiple acquired technologies to offer a seamlessly managed, all-in-one experience for WooCommerce stores. We are excited about the possibilities and looking forward to a full marketing launch. On our third priority, we are excited about the upcoming full launch of payable domains in Q3. A limited pilot program in Q2 focused on learnings demonstrated that customers value the offering. We also saw some green shoots in terms of meaningful GPV in the pilot being driven by customers without a website. In our Q3 launch, payable domains will be included for free and by default with every domain purchase, creating a frictionless out-of-the-box experience for new businesses. We believe this will simplify the online payments process for our customers by giving them a professional branded checkout experience and the freedom to accept online payments without needing any other subscription. In closing, I want to acknowledge that while we are all in uncertain times, GoDaddy's relentless focus on executing against our strategic priorities, delivering for our customers, building seamless and intuitive technology for our customers to succeed, backed by human care, our scale and vast portfolio of offerings steadily drives GoDaddy's consistent financial results. Our incredible customers inspire us to continue to innovate and do even more for them. We will continue to be prudent stewards of capital, investing behind long-term growth drivers, and staying committed to delivering value to our customers, employees, and shareholders. With that, here's Mark.

Thanks, Iman, and thank you, everyone, for joining us today. GoDaddy's resiliency and durable top-line growth, profitability at scale, and robust cash flow are evident in our Q2 financial results and enable GoDaddy to continue to invest to deliver long-term value while returning excess capital to investors in the form of share buybacks. Revenue in Q2 was $1 billion, growing 9% on a reported basis and 10% on a constant currency basis. Excluding the currency impact, revenue would have come in at the high end of our Q2 guidance. Within total revenue, international revenue grew 4% on a reported basis and 7% on a constant currency basis. Applications and commerce revenue grew 15% within the target range of 14% to 16% driven by continued strength in our create and grow products and email attached. the ARR for applications and commerce grew 12% to more than $1.2 billion. And within that, the ARR from our create and grow products grew 10% to $420 million. Additionally, annualized GMV across the GoDaddy ecosystem was approximately $28 billion, growing 12%. high end of our 5% to 7% Q2 guidance, primarily due to strengthened domain registration, aftermarket, and security, offset by a slight decrease in our hosting business. ARR for our core platform grew 5% to $2.3 billion. Q2 bookings sold $1.12 billion, growing 6% on a reported basis and 8% on a constant currency basis. Applications and commerce bookings grew 10%, and core platform bookings grew 4% on similar growth factors noted for revenue. Normalized EBITDA grew 30% to $258 million. Our 25% margin represented over four points of margin expansion, primarily because of expanded gross margins on product mix and reduced marketing spend. The decreased marketing spend investment as we zero in on success-based marketing and flex our spending to capture attractive returns. Our technology and development expenses increased as a percent of revenue this quarter as we advanced our commerce and innovation strategies. Lastly, we recognized a $10 million impairment charge related to IT licenses and facilities as we continue to simplify our infrastructure. Unlevered free cash flow for the quarter totaled $274 million, growing 16% driven by strong profitability. Additionally, year-to-date, we completed $1 billion of share buybacks, repurchasing 12.8 million shares and reducing our fully diluted share count by approximately 8% since year-end. free cash flow per share rose to $5.67 on a trailing 12-month basis versus a prior year cash flow per share of $4.78, a 19% increase on strong cash flow and share repurchases. On the balance sheet, we finished Q2 with $770 million in cash and total liquidity of $1.4 billion. Net debt stands at $3.1 billion at the midpoint of our targeted range of two to four times. Moving on to our outlook, we continue to be confident in our ability to execute in the second half of 2022 and are on target to meet our full-year operational and strategic goals, including our targets around normalized EBITDA, unlevered free cash flow, and cash flow per share. With that said, we are not immune to the macro environment of the strengthening dollar and the impact that it has on our top line performance. Assuming a continuation of today's rates over the rest of the year, we expect that the adverse FX impact for the full year to be approximately $35 million or approximately 1% compared to our full year revenue guidance issued in February. As a result, we revised our 2022 full-year revenue outlook to $4.1 to $4.13 billion. We remain focused on driving strong financial results and are committed to delivering $1.1 billion in unlevered free cash we are also increasing our margin expectations for normalized EBITDA to 24% to 25% for the full year based on strong execution and disciplined investments. For Q3, we are targeting total revenue in the range of $1.03 to $1.045 billion, representing growth of 8% at the midpoint. today's rates would be approximately $10 million or 1%. Flowing through this impact, we expect applications and commerce revenue to grow between 13 and 15% and core platform revenue to grow between 4 and 6%. For Q3 and full year bookings, we expect growth to be approximately two points below revenue, primarily driven by FX pressure. We will continue investing in technology into while balancing our goal for margin expansion through efficiencies in customer care and marketing. Normalized EBITDA for Q3 is expected to be in the range of $250 to $260 million, which would represent growth of 12% at the midpoint. Our capital allocation strategy remains the same. We fulfilled our $1 billion buyback target for 2022 and will continue to evaluate use of cash options for the remainder of the year. in line with our disciplined capital allocation framework. Lastly, as we said last quarter, we will evaluate the impact of rising interest rates and explore refinancing our term loan and revolver with the intention of maintaining our leverage ratio of two to four times. Before I close, I want to remind folks that during economic to improve upon our market-leading position through prudent investments and market share gains, growing the business long-term, while also delivering on our profit and cash flow goals. Our 21 million customers create a foundation for our resiliency. We enjoy exceptional retention, and we continue to execute on our strategic priorities, build deeper relationships, and partner along 15% plus normalized EBITDA CAGR, and 20% or better free cash flow per share CAGR through 2024. And with $1 billion of buybacks complete halfway through the year, we remain committed to executing against the remaining $2 billion of shares under our current authorization through 2024. With that, we will have Christy Masoner from our investor relations team open up the call for questions.

Thanks, Mark. As a reminder, if you'd like to ask a question, please use the raise hand feature at the bottom of the webinar screen to be added to the queue. Our first question comes from the line of Trevor Young from Barclays. Trevor, please go ahead.

Great, thanks. Two, if I may. First, what drove the sequential uptick in gross margin? How much of an impact was FX on GM, given that maybe a bit more of COGS there, such as like domain pass-through costs and infrastructure, are incurred in dollars versus the revenue mix? And then second, on the price testing, Aman, I think you alluded to it. It looks like what we saw on our end, both basic premium and commerce plans saw increases mid-July ranging from like $1 to $3 a month, which translates to some pretty healthy increases on a percentage basis. Could you just clarify, are these increases just for new customers versus existing subs? Is it domestic versus worldwide? And what do you expect the weighted average increase to be once this is fully rolled out?

Mike, do you want to take the gross margin?

Yeah, no problem. Hey, Trevor, how are you doing? So I would say most of the gross margin mix or change was based on product mix. The FX impact to that was pretty nominal.

And then on pricing, yes, what you saw, Trevor, was us testing some changes, and those were the price tests for websites plus marketing. In terms of taking that international, as I've shared before, the price testing for us is quite nuanced. We base it on geography, on sort of customer expectation changing, on market share. So you'll see it appear in certain geographies but not in others.

That's really helpful. And just, Mark, just to clarify on the gross margin, if FX rates stay where they're at today, should we expect some impact on gross margin in the balance of the year in currency? Yeah, so most of the impact on the FX affects our bookings.

Our costs are pretty much fixed and in line with, you know, the U.S. dollar. So I would say look for, you know, most of the FX impact to flow through the bookings and then ultimately to revenue with minimal impact on the cost in our structure today.

Great. Thank you.

Our next question comes from the line of Matt Pfau. Excuse me. From William Blair. Matt, please go ahead and talk.

Great. Thanks, guys. Yeah, Iman, you called out your retention rates continue to remain strong. You did see some pressure from macro factors. Are there certain areas where you're seeing the macro impact your business more than others, maybe both on the product side as well as on the geography?

Yeah, thanks, Matt. You know, perhaps one thing to call out geographically is that we see some greater pressure for European customers right now, given inflation or other macro factors. So that's something we're keeping an eye on. But overall, you know, we have continued to sort of focus our efforts to bring in customers that have high LTV, have great intent to build businesses to stay with us. So that's allowing us to stay with the higher retention rates, the 85 plus. So we're pretty happy with that overall.

Got it. And then just a question on the marketing spend. You adjusted that for demand. Should we expect if macro improves and demand ramps back up that then we could see that go back up as a percentage of revenue? Or how do you think about that adjusting that dial going forward?

Yeah, my broad view on marketing spend is that we let it trail the demand and the signals we see, and we look at both sort of external signals in terms of the Google universe and such, giving us data, but also our customer data and what we're seeing in terms of return. on marketing investment. So what you can expect is if the demand spikes again, our marketing spend will follow. But, you know, we're also constantly improving the success rates metric for our marketing. So you'll see potentially some optimization that continue to come. And we, you know, as an example, in Investor Day, we shared some improvements in our SEM spend, which was all based on improvement rather than just demand. Makes a vote.

And I'll add, we continue to expect to get leverage out of our marketing line, especially as our business and our solutions are broader, you know, as we get into more commerce, as we get into more of aftermarket. You know, once customers are in the entrepreneur wheel, our efficiency in marketing gets better. So over time, we expect to get a leverage out of that marketing line and continue to be able to expand our normalized EBITDA margins based on that.

Okay, great.

Thanks, guys.

Our next question comes from the line of Brent Phil from Jefferies. Brent, please go ahead.

Thanks. Many of the companies in the peer group around SMB have been calling out, you know, higher churn impact from macro. I'm just curious if you can kind of drill in and ultimately give us a sense of what is leaving you more immune to this and what's resonating in the new product set. And then I had a quick follow-up.

Yeah, sure, Brian. So let's start with the customer, right? GoDaddy's average customer is the micro business, you know, a third of our micro business customers are solopreneurs. We add to that the fact that the products we sell create tremendous value for our customers and the price we charge leaves plenty of consumer surplus for our customers, right? So even if they have to adapt to a changing economic environment, the products we typically sell to them tend to be the last products they walk away from. So that's why we see sort of the continued high retention rates for customers. But also keep in mind, you know, the more we have focused in terms of attracting the customer to whom we can attach more and more products and reach higher LTV, you know, that sort of limits some of the, shall I say, discounting and, you know, other techniques that companies might use to attract a lot of customers that may not have sort of good retention rates. But obviously our strategy is to attract the customers that have high LTV, have good retention rates.

And I'll just throw in there the care relationship becomes extremely important in these times. And having that relationship and a person to go to to help, you know, fix, come up with more economic solutions to provide value seems to be and continue to be a winning formula. And in these times, even more, you know, important to that customer base.

Okay. And real quick, I think the street unelabored free cash flow number is a little bit – your number was a little bit below what the street wanted. Was there anything to read into the number this quarter? I know you're reiterating the long term, but anything to comment there relative to the street?

Nothing. We're really happy with our progress, and we continue to work towards our annual goal.

Excellent. Thanks.

Thank you.

Our next question comes from the line of Elizabeth Porter from Morgan Stanley. Elizabeth, please go ahead.

Great. Thank you so much. Since the entrepreneurs' wallets get a little bit stretched with inflation and higher interest rates, are you guys seeing any change in behavior or willingness to pay up for more expensive tiers or functionality across the portfolio? Thanks.

Thanks, Elizabeth. So as you know, you know, the higher premium tier offerings are especially in the case of websites plus marketing with the new commerce plus offering is relatively new for us. Right. And we're just super excited and announcing the launch of our solution, which is also going to be a premium offering. But all of these businesses are very new for us. Right. We have a. based on 21 million customers. We have great relationships in care. So we're sort of early in the process and not, you know, of course we realize that customers feel the pinch of inflation, but these businesses are small for us in our core products. They just deliver tremendous amounts of value. And, you know, one of the things we sometimes say here is, you know, people don't give up their dream because of an economic downturn. So they're not going to give up the domain name.

Got it. And then as a follow-up, I was hoping to provide more color on what you're seeing in terms of those macro impacts on demand. I know VeriSign reported a weaker outlook on domains, which raised some questions. And it sounds like churn is holding in pretty well. So just any incremental you could provide, particularly on kind of a new customer demand, would be really helpful.

Yeah, we're definitely in a fluid demand environment, and it's different by geography. I did make a small comment earlier about the European demand being weaker. But just to take a step back and look at the customer or the domains business overall, if If we look at GoDaddy's business, it's very, very broad. Obviously, you know, we sell 400 TLDs. We have a primary market. We have a secondary market, the aftermarket business. You know, in both cases, we are leaders in those businesses. We've invested in a corporate domains business. You know, you saw us take on a registry business over the last couple of years, and that's grown very well for us too. So, you know, when we look at our domains business, we feel it's a much broader business with many levers that obviously we use to continue to grow it. compared to any one registry out there that may have one or a few TLDs. So we think our business is quite different.

Great. Thank you so much.

Thank you.

Our next question comes from the line of Aaron Kessler from Raymond James. Aaron, please go ahead.

Great. I'll meet there. Maybe just if you can talk a little bit about the ad environment, just kind of hearing with ad pricing kind of coming down, are you seeing kind of less competition and maybe getting some more efficiencies from a pricing coming down, whether it's Google search or other areas? And then maybe just talk a little bit about the M&A environment just in terms of are you seeing valuations get more attractive with obviously public equities coming down as well? Thank you.

Yeah, you know, on the sort of ad environment, it's always a competitive marketplace. You know, I would never quite ever call that easy. But as we shared with you at Investor Day, we've continued to sort of push more success-based, you know, improve our abilities with bidding, with machine learning to get better and better efficiency. So you do see some of that in our marketing. leverage improvements. But overall, I would just say, you know, the competitive dynamics are still the competitive dynamics. You know, obviously, in certain quarters, it's a bit easier than others. But overall, I wouldn't say there's some huge, huge shift in it yet. And, Mark, on M&A?

Yeah, on M&A, our approach hasn't changed. You know, we have our capital allocation strategy that we've talked about. We have our M&A strategy that we've talked about has to fit strategically, has to work financially, and has to be able to be integrated. We'll evaluate anything that comes along those lines. Obviously, we don't talk about anything active in any way, shape, or form. But, you know, we try to balance our decisions for today based on keeping an eye on our long-term objectives, and we can remain laser-focused on executing our objectives right now, and we feel good about having a strong and solid year.

Great. Thank you.

Our next question comes from the line of Mark Zagutowicz from Benchmark. Mark, please go ahead.

Thanks, Christy. Just a couple questions, quick ones on payments and then – I want a macro. On payments, you mentioned that 30% stat of WordPress customers using your payments. I'm curious how you sort of move that number up and, you know, sort of what you see as sort of a trajectory over the next couple years. And then in terms of Apple Pay being added, was that simply a cart conversion decision or is there some potential pull-in of of new subscribers that potentially comes with that. And then on the macro, maybe just two sides of the coin. One, both sort of centered around marketing, but how much of your marketing budget reduction is aligned to just lower absolute demand? And then on the flip side of that, in terms of the success that you're seeing upselling products, what What is the characteristic of that subscriber that is buying your product? Is it simply duration of a subscriber? Are there regional tier characteristics? Anything on that side of the coin would be interesting as well. Thanks.

Sure. Thanks, Mark. Let me take the payments and Apple pay piece and maybe I can tag him on the other two items. So on payments, GoDaddy payments for managed WordPress, super excited to move that number for 25 percent to 30 percent. You know, ask what are the types of things that we do? customers actually have a choice of, I think it's 140 options that they can choose from in WordPress. So we're continually improving the experience for customers. So it's easier and easier for them to make that choice, for them to be able to differentiate between those choices and pick the best choice. And, you know, In that, with those simplifications and improvements, we've seen this improvement to 30%. In terms of, you know, without commenting on sort of specific numbers that we'd be at in a couple of years, you know, What I would say is we're very, very focused on simplifying the customer experience. We're very, very focused on delivering the one-stop shop to our customers, whether they're selling in-store, on their online store, or on social media or the major marketplaces. So giving that one subscription to our customers and letting them do everything they want to do from one place, you know, clearly is our objective. In terms of Apple Pay, so there are a couple of things there. There's the Apple Pay support and the Tap-to-Pay partnership. I think you're referencing the Tap-to-Pay partnership. And this is super early. This just got announced by Apple. We'll happily share more with you as that sort of partnership develops.

And I'll start on the macro and the marketing budget. You know, no doubt demand has been fluid in 2022, but overall it's been pretty solid. We look at marketing more as efficiency and optimization. You know, we do look at things like Aman mentioned, you know, demand is down in Europe and we adjust accordingly. But we continue to look at the ROI and optimize it based on not only our expanded product offerings, but how successful we are on the entrepreneur's wheel and our ability to attach. So it's, you know, like I said, demand is definitely fluid, but the marketing is being efficient and optimized to make sure we're capturing the demand that makes sense. And I think there was a – and I apologize, there's a few questions in there.

I think we had a – Yeah, sorry. The other question was the other side of that coin in terms of the upsell, the success you're having upselling products. Just curious, I guess, the subscriber characteristics that are, you know, they're absorbing those products. Is it regional? Is it just the duration? The longer they're with you, the more likely they're going to, you know, buy.

Yeah, so – Sure. So the core funnel for us continues to be folks coming in to buy domains and attaching email, attaching websites, attaching websites turned into attaching commerce. And we're laser focused on optimizing conversion through those funnels. We're also very, very focused on tracking the customer. That has that intention, right? So if our marketing is intent-focused and the conversion funnel is good, that's what allows us to attach more and more products. And, of course, you know, we shared at Investor Day a lot of good data in terms of penetration for emails, for example, with our customers. 21 million customer base. You know, we're also creating new products and bringing them to the market. The best example of that is payable domains where you don't have to attach payments to a domain. You buy a domain, you get a checkout page that you can customize. That's enabled for your domain automatically. So you literally buy the domain and you can start taking payments, right? And that's a bit of a different movement in that we're not selling the product and then attaching more. We're bundling it in right with the first purchase and literally putting – and the idea there is put commerce on every surface we have because that is, in a sense, the omni-commerce ethos, right? Like wherever you're transacting, whatever surface you're creating, your commerce or your micro-business is enabled in there.

Thank you. Super helpful.

Thank you.

Our next question comes from the line of Mark Mahaney from Evercore ISI. Mark, please go ahead.

Okay. Thanks, Christy. Two questions. One, international revenue growth I think is pretty consistently trailed out of your global growth, is there anything there that you need to solve for to change that? And then secondly, Mark, on share repurchases, you've repurchased what you said you were going to do on trail or on track or even a little bit faster. So just thinking about it going forward, you know, you're generating a lot of free cash flow. What would cause you to even up that range? Like what would you have to see that would make buying back the stock even more attractive than it's already been? I'm not asking what more can you do for us, but, you know, I guess I am asking that a little bit. You obviously purchased back a lot of stock. You had the ability to purchase more. What would cause you to amp that up faster? Thanks.

Why don't you take the first part of that? I'll take the second.

Thanks, Mark. Yes, you know, we're very happy with the international business. You know, over 9 million of our 21 million customers are outside the U.S. and represent tremendous opportunity as we bring more and more products to that customer base outside the U.S. So, you know, super bullish, super happy with it. You know, some macro headwinds there, force effects is there, and we see some demand challenges too. But structurally, no concern with the international business. Continue to be very happy with it. Continue to allocate marketing dollars where we see the best return. And over the last two, three years, I will say you've seen us move those dollars back and forth a bit, and that has some impact. But, no, like super happy with it overall. And Mark, for you.

And, Mark, thanks for pointing out we have a lot of free cash flow. Obviously, that's a good thing, especially in this day and age. Listen, we're really happy we've been able to execute on the billion dollars six months in. And, you know, we are continuing to balance our decisions today, you know, based on what our objectives are and driving long-term value. I say the best way to answer that question is we have a very, you know, disciplined capital allocation strategy. We will continue to look at use of cash. It's an active discussion between us and the board. And right now, you know, hey, we're authorized at $3 billion. Okay.

Okay. Thank you, Mark. Thank you, Aman. Thank you.

As a reminder, if you'd like to ask a question on the call, please use the raise hand feature at the bottom of the webinar screen. Our next question comes from the line of Navid Khan from Truist. Navid, please go ahead.

Yeah, hi. Thank you. Maybe just wanted, you know, just can you talk about the price increase? that you're testing, you said you're discounting less. Is that sort of the way of thinking about it, or are you also doing explicit price increases to your existing base of customers? How should we understand this from the outside looking in? And then I don't know if you've touched on this already. I joined a little late, but maybe just talk about demand trends in terms of just month-on-month Did you see any changes through the course of the quarter? How does July look like? Any color would be helpful.

Yeah, on the pricing, so I think there was a specific example for websites plus marketing pricing in the earlier question. But let me sort of pull it back, Navid, a little bit and talk about, remember our pricing is nuanced, not just by geography, sort of customer shifts with macro, but also customer populations. So I think in the past, you and I have talked about how for certain populations, for example, our domain investor customer, the pricing that we will have will be different from, let's say, a micro-business customer. So, you know, we take a look at all of that. That's the testing that happens, right? Then when we find sort of the best balance of that versus share, depending on geography, depending on customer population, you see us roll those out. And I think Mark can comment on it, but those get built into our plan and into our forecasts, basically. So it's not sort of a single event type thing. You know, we have a large sort of broad portfolio of products. So we're constantly evaluating and doing tests and seeing where we should take price. And typically we're taking price after we have added more value for the customer. We want to continue to push the willingness to pay up and then take price so that the surplus for the consumer continues to be maintained and the customer stays super happy with us. And then I think you had a question about the second part was around the overall demand trend. You know, I did comment a little bit about Europe being a bit weaker. But overall, you know, month to month, there are some small shifts depending on different businesses. But we're not seeing a tidal wave change in any way.

Yeah, and I'll add on the pricing part of it, right? Anything we plan on doing on pricing has been included in our forecast. And we always keep in mind that, you know, 85% of our revenue comes from our existing 21 million customers. And we're very, very particular about making sure that the pricing we do do is matched up to value we're providing with them. You know, and we see it in our retention rates staying at stronger, at higher than 85%. All right. Thank you both.

That concludes our Q&A for this session. I'm going to turn the call over to Aman for closing remarks.

Thank you, Christy. I'll just say thank you all for joining, and a big thank you to all GoDaddy employees around the world for another solid quarter.