GoDaddy Inc (GDDY) 2025 Q4 法說會逐字稿

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Welcome to GoDaddy's fourth quarter and full year 2025 earnings call. Thank you for joining us. I'm Christie Masoner, VP 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. (Event Instructions) On today's call, we'll be referencing both GAAP and non-GAAP financial measures and other operating and business metrics. A discussion of why we use non-GAAP financial measures and reconciliations of our non-GAAP financial measures to their GAAP equivalents may be found in the presentation posted on our Investor Relations site at investors.godaddy.net or in today's earnings release on our Form 8-K furnished with the SEC. Growth rates represent year-over-year comparisons unless otherwise noted.

The matters we'll be discussing today include forward-looking statements, such as those related to future financial results and our strategies or objectives with respect to future operations. These forward-looking statements are subject to risks and uncertainties that are discussed in detail in our periodic SEC filings. Actual results may differ materially from those contained in forward-looking statements. Any forward-looking statements that we make on this call are based on assumptions as of today, February 24, 2026. And except to the extent required by law, we undertake no obligation to update these statements because of new information or future events.

With that, I'm happy to introduce Aman.

Good afternoon, and thank you for joining us. At GoDaddy, our mission is to empower everyday entrepreneurs and make opportunity more inclusive for all. We serve millions of micro businesses around the world who rely on us to power their digital presence. By seamlessly connecting identity presence and commerce into a unified technology platform at a compelling value, we give entrepreneurs the infrastructure they need to manage their ventures.

Starting with 2025 results, we delivered bookings growth of 7% and expanded normalized EBITDA margin to 32% for the full year. This margin expansion reflects ongoing operational execution, reduced cycle times and improved structural leverage, driving strong free cash flow growth of 19%. Importantly, we achieved this while continuing to embrace and develop AI tools and innovative solutions for our customers. These results demonstrate the strong earnings power of our integrated platform and the progress we are making towards our financial North Star.

As we look ahead, the pace of change driven by AI continues to accelerate. AI is reshaping how businesses are built and run. Customer expectations around speed, automation and integration are unprecedented. Our global brand, domain leadership, platform scale, engineering talent, velocity of execution, and care organization provide competitive advantages that will continue to differentiate us as the landscape evolves. GoDaddy is adapting with a sharpened and deliberate strategy that builds on these competitive advantages and drive long-term shareholder value.

Typically, I will walked through our initiatives, including pricing and bundling, seamless experience and commerce. We continue to execute well on these priorities, and they remain foundational to how we run and grow the business every day. Today, I am focusing the conversation on the forces reshaping the world, including our AI journey, our competitive positioning and why we believe GoDaddy is positioned to win.

We have accelerated our path to offering the best AI native products and experiences for our current and future customers. Over the last quarter, we have made strong progress on the following three components of our AI journey: first, evolving Airo to be the Agentic operating system for small businesses brought to life on Airo.ai; second, driving efficiency by leveraging AI adoption across all functions; and third, powering AI agents on the Agentic Open Internet with agent named service.

Beginning with Airo, we have made meaningful progress evolving Airo from a generative AI experience into an agentic operating system for small businesses. Our team is building agentic AI experiences that feel like magic, by effortlessly handling customers as jobs to be done, then suggesting the next best action it can take for them. Airo.ai brings this to life.

We launched Airo.ai in beta late last year and are ramping traffic this quarter. Airo.ai already has 25 agents live and more are on the way. These agents autonomously perform tasks across the entrepreneurs wheel, including business idea validation, domain registration, website building, application building, marketing tools, compliance and much more.

What differentiates GoDaddy is our more than 20 million customers, decades of proprietary behavioral data and deep relationships across identity, presence and commerce, and we are uniquely positioned to train, refine, and scale these agents in ways that are grounded in real customer needs. Our distribution at the top of the funnel, combined with an integrated platform and 24/7 care uniquely positions us to deploy agentic capabilities at scale while maintaining trust and reliability.

Creating and optimizing this experience is a meaningful part of the opportunity at GoDaddy, and we are capturing value through paywalls within the experience. Engagement continues to build and as adoption scales and monetization becomes more meaningful, we will provide greater visibility into the underlying performance metrics.

Second, as we embed AI across the company, we are reducing cycle times and improving how work gets done. AI tools are now generating the majority of our code. New code bases are almost entirely AI-generated shipping new features at breathtaking velocity and multiple experiments on agent-only dev teams are underway.

In our operations, we are excited about our internal AI sales agent, which handles one of the most complex sales use cases without human intervention. In the first six weeks of 2026, the sales agent handled thousands of voice calls and text chats with healthy conversion rates and very high engagement rates. As we scale this, we expect to build on the leverage we have already seen in care over the last few years and create new opportunities for sales as well.

We have also built AI agents to handle test spanning from financial planning to compliance to marketing reviews and much more. As these examples demonstrate, AI adoption gives us confidence that we can drive further efficiencies in our business that will build on the margin improvement we have delivered over the last few years.

The third update builds on our global domain leadership to extend digital identity into the Agentic era through agent name service or ANS. ANS is designed to anchor agent identity to the global and public domain-based infrastructure called Domain Name System or DNS. This is a unique aspect of our solution that provides multiple benefits and leverages existing Internet infrastructure by linking agents to domain-based identity, ANS introduces a verifiable layer of trust in an increasingly automated environment.

And because ANS publishes to DNS, verified agent identities are discoverable worldwide within seconds using infrastructure that already supports identity and authentication across the Internet today. We are pleased to announce that last week, MuleSoft, a Salesforce company and GoDaddy launched an integration between MuleSoft, Agentic Fabric and GoDaddy ANS. This represents an important step in validating the framework and extending ANS into enterprise-grade workflows. ANS has the potential to create monetization similar to domain registration, extending GoDaddy's infrastructure leadership into the genetic economy while reinforcing our position at the center of digital identity.

I also want to share a couple of updates on our evolving go-to-market and product efforts. Domains has been and will continue to be GoDaddy's strong, durable cash-generative engine serving as a long-term funnel to drive GoDaddy's growth. To further build on this resilient foundation and bring more quality customers onto the platform, this quarter, we expanded our go-to-market approach with a streamlined purchase experience for new domain customers. Our objective is to broaden the top of the funnel, while strengthening the long-term opportunity for lifetime value expansion.

We activated our marketing channels on the streamlined experience and introduced a promotional price for com domains with a one-year term. The approach successfully increased new customer volume that purchased domain units with one-year terms. But the demand for this offer was greater than we expected. And the shift in term mix, combined with the promotional price reduced upfront bookings and near-term revenue. Mark will cover the numbers on this in his section.

This new cohort of customers had solid attach behavior and post-purchase activation close to our other one-year cohorts. This early data and our history of strong cross-sell capabilities and customer retention gives us confidence that with iteration, we can optimize this path. We are refining our approach in a manner that balances increased acquisition of new high-intent customers on one side with longer term and higher attach on the other, creating overall greater long-term value. In February, we saw improvement with this effort, and our team is focused on unlocking this value.

On the product side, we are excited to share a significant upgrade to Websites + Marketing with a new website builder that brings together powerful AI features and a powerful editor as well. The experience starts with a fully built website based on a description and then allows easy editing with an expanded set of design options in the editor or if the customer prefers, they can continue with an AI-powered chat-based interface. Optimized for GoDaddy customers, the new builder creates design-led sites with amazing ease and at a cost that meets our and our customers' expectations.

I am excited to share that new customers are already being opted into this experience. We plan to move fast on this transition. But given the scale of websites plus marketing, we expect it to take a few months. I look forward to sharing a broader update on this next quarter.

In closing, we are executing a sharpened and deliberate strategy in a period of rapid technological change, leveraging the trust we have built with more than 20 million customers. We are leaning into our competitive strengths of domain leadership, global brand awareness, platform scale, engineering talent, velocity of execution and care. We are advancing our AI journey evolving our go-to-market engine and scaling innovation in our products with measurable proof points and financial discipline.

As we look to 2026 and beyond, our path forward is clear: the market opportunity is significant. Our competitive position is strong, and we have the financial flexibility to win. With that, here's Mark.

Thanks, Aman, and good afternoon, everyone. As Aman mentioned, we are operating from a position of strength. We have a business with strong operating leverage that drives meaningful compounding free cash flow. This foundation provides us with the flexibility to invest in high conviction opportunities while continuing to expand margins. And our fourth quarter results demonstrate that.

We delivered revenue at the high end of our guidance and exceeded our normalized EBITDA margin and free cash flow targets. Our new one-year domain offer is driving strong subscription unit growth and solid attach. At the same time, we are building AI tools that enable customers to thrive in the agentic world. While small, relative to our overall business, Airo.ai is already monetized with growing adoption. Through ANS, we are expanding our existing digital identity infrastructure for the long term. We believe this creates an opportunity for GoDaddy to expand our infrastructure offerings beyond hosting and the primary and secondary domain markets.

With that, let me first cover our financial results. Beginning with Q4 results. Total revenue grew 7% on a reported and constant currency basis to $1.3 billion, coming in at the high end of our guided range. International revenue grew 10% to $420 million and ARR grew 7% to $4.3 billion.

For the Applications & Commerce segment, we drove 13% growth in revenue to $498 million on continued solid adoption and attach of our subscription-based solutions. Segment EBITDA margin improved 40 basis points to 47%. ANC ARR grew 12%. Our Core Platform segment delivered revenue growth of 3% to $776 million, driven by the continued strength in aftermarket, up 8% as well as 5% growth in primary domains, partially offset by the softness in non-core GoDaddy hosting. Segment EBITDA margin expanded 70 basis points to 35%.

We drove normalized EBITDA growth of 12% in the fourth quarter to $431 million and delivered an expanded margin of 34%, up 160 basis points and exceeding our guide. Continued operational execution aided by AI-driven efficiencies were the main drivers of expansion. Total bookings grew 5% to $1.3 billion, largely reflecting the headwinds from dotCO and the mix shift towards shorter initial contract terms. ANC bookings grew 11% and core platform bookings grew 1% and free cash flow grew 8% to $370 million.

Moving on to our annual financial results. We delivered approximately $5 billion in revenue, representing growth of 8% on our reported and constant currency basis. International revenue grew 11% to $1.6 billion. ANC revenue grew 14% to $1.9 billion, and core platform revenue grew 5% to $3.1 billion.

Total bookings grew 7% on both a reported and a constant currency basis. Growth spanned across our business, reflecting continued solid adoption of our solutions as well as strength in primary domains and strong aftermarket performance.

Driving this growth is stronger customer engagement across our products, including productivity and websites Domains remain the front door to our platform, attracting high-intent customers at a pivotal moment in their journey. Airo personalizes the experience that follows accelerating discovery and increasing attach across identity, presence, and commerce. Since its launch, the cumulative annual spend from Airo cohorts has grown in the high teens. Additionally, the velocity of a second product attach accelerated by nearly 30% relative non-aero cohorts. This dynamic is expanding lifetime value across our customer base.

We see this most clearly in our highest value cohorts who spend more than $500 annually, which grew 11%, and that represent approximately 10% of our total base. These customers have meaningfully higher second and third product attach rates and near perfect retention. The result is compounding value creation with ARPU increasing to 10% to $242 and overall retention rates rising above 85%.

Turning to margin and free cash flow. Our performance reflects the health of our model. Full year normalized EBITDA grew 14% to $1.6 billion and a margin of 32%, representing 150 basis points of expansion over the prior year. Over the past five years, cumulative margin expansion of 1,000 basis points reflects our ability to scale efficiently while continuing to invest in the business.

This margin expansion flows through directly to cash generation. Free cash flow grew a robust 19% to $1.6 billion with a normalized EBITDA to free cash flow conversion of greater than 1:1. We exited the year with $1.1 billion in cash and total liquidity of $2.1 billion. Net debt was $2.7 billion, representing net leverage of 1.6 times on a trailing 12-month basis and within our target range.

On shareholder returns, we remain active and opportunistic. In 2025, we deployed 100% of our free cash flow, repurchasing 10.2 million shares totaling $1.6 billion, while maintaining our balance sheet strength. Since 2021, our share repurchase programs have resulted in a gross reduction in fully diluted shares outstanding of approximately 33% and we ended the year with 136 million shares outstanding.

Before turning to detailed guidance, let me outline the impact of the go-to-market and product evolution we spoke about earlier. The evolved go-to-market approach increased the mix of one-year contract terms and reduced initial order sizes for the new cohort. This created a near-term trade-off in our bookings and revenue that carries into our 2026 outlook. As a result, we expect bookings growth rates to trail revenue growth rates in the first quarter by a few points from the combined effect of this go-to-market evolution, the dotCO contract termination and tough compare on strong aftermarket performance last year.

For the full year, we expect bookings and revenue growth rates to be relatively on par. We also anticipate a modest impact on reported revenue growth rates for the year in both core platform and ANC segments as the promotional price is allocated to all products included in the initial purchase. Importantly, total bookings dollars are expected to remain ahead of total revenue dollars throughout the year.

With this, our full year revenue outlook incorporates just over 200 basis points of cumulative impact from the expiration of the dotCO registry contract, the continued exclusion of high-value aftermarket transactions and the go-to-market and product evolution we spoke about. The dotCO and aftermarket impacts represent approximately two-thirds of this amount, while one-third is from the go-to-market and product evolution.

For the full year, we expect total revenue to be within a range of $5.195 billion to $5.275 billion, representing growth of approximately 6% at the midpoint with AMC revenue growth in the low-double-digits and core platform growth in the low-single-digits. We expect normalized EBITDA margin to exceed our Investor Day target of approximately 33%. This reflects continued operational efficiencies and AI-driven productivity gains, slightly offset by increased AI costs.

We expect to drive free cash flow of approximately $1.8 billion maintaining greater than a 1:1 conversion for the full year. The model continues to demonstrate structural cash generation strength and we continue to be on track to exceed our Investor Day North Star CAGR of 20%.

For Q1 2026, we expect total revenue of $1.25 billion to $1.27 billion, representing approximately 6% growth at the midpoint of the range, with ANC growth in the low double digits and core platform growth in the low single digits. We project a Q1 normalized EBITDA margin of approximately 32%, an expansion of about 150 basis points over the prior year. On capital allocation, we maintain our returns-based framework, and we'll carefully evaluate all opportunities to drive shareholder return.

In closing, let me reinforce three key points. First, we operate a durable cash-generative model, supported by strong customer cohorts expanding ARPU and consistently high customer retention. We are ahead of the financial North Star target CAGR we laid out at our last Investor Day.

Second, the near-term impact on bookings reflects deliberate decisions. The underlying engagement metrics remain strong. and the structural advantages of our integrated platform position us well for sustained growth.

Third, we are executing from a position of financial strength. We are expanding margins, generating robust compounding free cash flow with a strong balance sheet that creates long-term value for shareholders. We look forward to talking about these and other updates at an investor event later this year.

With that, I'll turn it back to Christie for Q&A.

(Event Instructions) Vik Kesavabhotla, Baird.

My first one is on this promotional offer with dotCO. Can you talk more about why you decided to make that change in your go-to-market strategy? And you referenced seeing some improvements in February. Could you talk more about what you're seeing there. And I guess from a higher level, do you think this was a onetime headwind to bookings in 2026? Or is there a potential for this change in the strategy to weigh on bookings as we move beyond this year?

And then my second question is on AI costs. As you look at the user behavior recently as well as your product road map that you have planned ahead, how would you characterize your visibility into AI costs at this stage? And how should investors think about the impact to your gross and EBITDA margins as the product evolves.

Thanks, Vik. It's Aman. Let me take the go-to-market. I'll turn it to Mark for the 2026 comment, and then I'll come back for the AI cost structure. So the go-to-market evolution is really about opening up the top of the funnel and is attracting a lot more high-intent customers. And it's more than just an offer. It's a path and optimized path that allows customers to come in and convert at a much, much higher rate.

So there are three core components to it. There's the new path, the optimized path, the offer and the marketing channels that we enable to sort of drive traffic into it. Overall, we're very happy with the results. It attracted a lot of new customers.

It was a bit more successful than we thought. So Mark can talk again. some of the financial impact of it. But the improvement that you asked about in February is us optimizing that path and the marketing channels and making sure that we're sort of routing customers to the right places. So that everyone isn't just going into the offer or into a one-year term, and then we get sort of back to the more expanded view.

The other area that we're continuing to work is that these customers, these new cohorts that bought with the offer, they had really good attach rates comparable to our sort of one year -- other one-year cohort. But we think we can do more there. We think we can attach better than what we did over the last couple of months. And as that gets better and better, it means more and more lifetime value.

I'll turn to Mark.

Yeah, absolutely, Vikram. A couple of things going on here. Number one, the -- let's look at it from the multiyear terms to the annual terms. This is impacting our bookings, but has relatively little impact on revenue itself because the timing of the revenue recognition stays consistent. So that's one aspect of it.

The other is there is a reduction in our average order size at initiation related to the discount that gets allocated amongst all the products, that does have a little bit of impact on revenue in and itself. As time goes on, volume picks up, we get better at the softer. We think the major impact is going to be at the end of this year and going into Q1, but we expect that bookings to be in parity for the most part with revenue by the time we get to the end of the year. So we are looking at this as a cumulative improvement as the year goes on.

On the AI costs, I'll start, maybe and you can finish. We're very disciplined on the AI cost end of it. We look at where we're spending the money and where we have proof points so that we'll see the return of those monies, whether that's in the innovation cycle or in the product cycle in and of itself. So we feel very good about our visibility and our ability to hit our margins that we set out there for 2026.

Yeah. And I think we've been ahead on the margin over the last two-plus years, right? And it's because we have a disciplined process internally on it. And even as we look to invest in AI over the AI products, as we talked today, we have a couple of exciting product launches powered by AI all of those sort of followed two core things.

One, all the AI costs go through one interface so that we are able to stay on top of it very, very closely. It doesn't matter if that's a developer. It doesn't matter if it's one of the products that our customers are using. And two, we are very focused on solving for the objective function where we create products that are at a cost that works for our customers. So what you'll continually see in our products is an already optimized AI solution that then leads to lower cost than what you might see at some other companies.

So those two things together, the visibility and the operational focus on it and the technological difference of just optimizing for that right within the product is what gives us confidence that we can continue to maintain the margin guidance that Mark has talked about while continuing to fund more and more use of AI, both within the company and with our products.

Ken Wong, Oppenheimer.

One question that we've been getting in our inbox on this new go-to-market change, was it necessitated by any changes you saw in your pre-existing pipeline, whether it was just pipeline build, conversion? Or is this just really you guys kind of trying to open the funnel a little bit and pursuing a different customer type.

I think, Ken, both things are true. The world is changing very, very quickly, and I don't think anyone is insulated from it. The idea was to improve our go-to-market approach to expand that approach, but we sort of conscious of what's changing in the world. When I think about the key metrics that we look at we're looking at traffic. We're looking at conversion.

We're looking at attach. We're looking at product activation and we're looking at renewals. And we're very, very strong across those metrics, right? We have strong experimentation muscle in the company that if I go backwards, puts a lot of attention on renewals and activation on attach and conversion. But expanding the top of the funnel in a fast-changing world, gives us more levers as things evolve.

As an example, I think a lot of companies are facing challenges of traffic from search. When you look at GoDaddy, we continue to have a healthy graphic funnel because, one, we're able to go into other channels to drive traffic and two, we're constantly able to improve conversion as we do that. So we're constantly looking at those five things in the context of what's happening in the world.

Yeah. our strategy around attracting high-intent customers hasn't changed. We are seeing these customers come in. They're attaching to a second product, similar to other one-year terms that we had out there. And that gives us a lot more stickiness within that client base that we feel we have the ability to go after.

The great news was the offer me a demand cycle that was higher than we expected, and we were able to bring those customers in. So it was a good thing.

Fantastic. Really appreciate the insights there. And then, Mark, just some clarity on the bookings commentary. So you mentioned lagging in Q1 relative to revenue.

Revenue is fairly consistent from 1Q to 4Q and if it ends up at parity for the year, is it fair to assume that the bookings should outpace revenue as we exit the year? Is that the right interpretation of some of those moving pieces?

Yeah, that's right, Ken. We expect to see that the bookings will get stronger throughout the year on a couple of different elements, right? One, we start to add more volume based on this offer. So we're seeing the increase in that.

We're also starting to see better attach and the elements that drive our long-term valuation model. So that should improve through the year, and you're looking at it correctly.

Naved Khan, B. Riley.

Great. So Mark, you said that there was a little bit of a reduction in AOS in this GTM, the new go-to-market, which had some impact on revenue. So is that then fair for me to say that the trade-off between volume versus the average order sizes, you're getting more volume but not necessarily making up in revenue in year one. And then what gives you the confidence that this new streamline experience is then the right trade-off for a higher LTV?

Yeah. And Naved, thanks for the question. Just to start, is the shift in terms that we called out, it impacts bookings, right, and not necessarily impacts revenue because of the timing of revenue is pretty consistent regardless of whether -- when you get the cash up front. There is a slight impact on the AOS, like you mentioned, that will impact us going forward, but that should work itself out as we get to the more volumes and the higher attach that we talked about.

Yeah. And overall, Naved, what gives us confidence about the long term, of course, we'll really know when they renew, right? But we have a number of markers along the way in terms of how customers attach post purchase what do they buy in the purchase and how they activate products. And those are the data points that we're looking at. And across those data points, when they look very similar to other customers, right?

We know exactly sort of what we have to tweak or make work to get these customers to be just as part of the high intent cost -- the bundle of high-intent customers we have, right? So those are the metrics we are looking at.

These customers look very good to us. We think we can do a lot more and actually get the best of both worlds where we get a lot more new customers and we get them to renew at good rates as well.

And then maybe just to kind of build on that. So are you also experimenting with the LLM for customer acquisition? What are you doing on that front?

Yeah. So part of what we did with this chain is when I talked about the optimized path, it allowed LMs to review some of our merchandising inflows much better. That's going to be an ongoing work stream. We expect that, that will continue to evolve over time, the LLM don't switch all of a sudden. But by giving them a clearer path through GoDaddy, we think over time, that will help us as well.

But right now, we're not sort of baking any of that in. We want to provide this sort of consistent optimized experience to our customers and the LLM should pick it up over time.

Mark Zgutowicz, Benchmark.

Mark are you there?

Yep. I'm here. Sorry about that. Just maybe a follow-up on the underlying ANC bookings growth, which is a slight decel in fourth quarter. Can you just maybe differentiate between pricing and bundling versus perhaps GPV impact that you saw on ANC bookings growth.

And then my second question is around KPIs with Airo.ai, beta test. Just hoping you could maybe share some there and perhaps relative ARPU that you're seeing. And then when do you expect to formally GA Airo.ai for websites, plus marketing managed work for us and application development. And could that perhaps bring some incrementality to ANC bookings growth this year?

Yeah. Thanks, Mark. I'll take the first part. On the ANC growth, Think about it this way. We offer the discount there to the discount was specific to the domain because a large amount of the initial orders also contain product attached that are in the ANC, we have to allocate that discount to both ANC product as well as the domain. So what you're seeing in Q4 bookings as a lot of that taking place, and that's the large contributor to where we ended up for bookings in ANC.

And in terms of Airo.ai, taking that to GA and having the new website to marketing, website builder within it as well. you're actually going to start seeing the product come in very, very quickly, just so you'll see a change, I think, earlier next week in terms of the website builder. And you'll see it evolve a little bit after that.

In terms of GA, we're just waiting to get some data in terms of product market fit. We just want to ramp the traffic to a certain amount organically before we call it general release and start driving traffic externally as well -- sorry, to the last part, you asked about incrementality. I don't know I can quickly take that market. We haven't built that much for sort of erode obviously, it's all completely new. It went into beta just very, very late last year. But any sort of wins with the new website builder or with Aero.AI would be incremental to what Mark is guiding.

Trevor Young, Barclays.

First one, just on active customers. Second quarter in a row here with modest sequential growth, but still trending down year-on-year. As we look into '26, should we expect momentum to build here? And will this be the year in which year-on-year growth turns positive? Is this an important metric in your view?

And with the one-year domain promo be a tailwind to that -- that's my first question.

Yeah. Trevor, thanks. And yes, we saw a sequential growth in the customers quarter-over-quarter. We continue to like our ability to attract high intent customers and our strategy around that hasn't changed.

We're really going after the high intent customer the customer that's going to get us to annually spending around $500 with us because that's when that second product and third product get attached.

That's when we get to that near perfect retention rate. So while we're very happy with our progress on adding customers and being positive and doing that incrementally, our goal remains the same. We want the high intent customer.

And it does -- the new sort of expanded go-to-market approach does become a tailwind. But just again, I always want to reiterate, we're optimizing it for that high-intent customers so that we're getting the attacking the long life the larger lifetime value.

That makes sense. And then, Mark, in your prepared remarks, I think you noted bookings were impacted by shorter initial contract terms. Was that specific to core platform and the new one-year domain dynamic? Or is that more broadly that you're seeing shorter contract commitments for other products?

It has a flow-over effect into our other attached products because what happens is the domain signed on for one year generally, the attached products are going to be signed on for one year as well. So there is a little bit of a carryover effect to our other products that are included in the initial order size as well in the initial order that the customer makes.

Our next question comes from the line of Alexei Gogolev from JPMorgan.

This is Ella on for Alex Gogolev. Maybe first for Aman. Aman, you alluded to this in your prepared remarks. Given GoDaddy was founded over 30 years ago and has drove the proprietary data, what advantage might this provide you versus newer entrants in the ecosystem?

Yeah. Our competitive advantage is, of course, start with our brand. It started with our domains funnel, the scale of our platform and the data we have about interaction with our customers, whether it's like $1.7 billion, almost 2 billion data points selected on a daily basis, all the way from interaction on the site to customers calling and chat transcripts and all of that. And we have that data globally. So a ton of that data is available for us to tune agents to get agents to perform sort of in news way down to the customer agreement.

That, of course, is one of the amazing value that AI brings is that when companies are no longer looking at segments of customers you're looking down to this customer, what do they need and AI can part to the data for that customer and provide them with sort of valuable insight or whatever next best action they should be doing.

When I think about GoDaddy, our -- why -- our focus is to move towards a agentic to be AI native to build products that are AI first and other companies that may have started there have to get to all the things that we have. right? And we're excited about the position we have and to get to the new space where we're able to adopt AI, and we're able to build these products and use the rest of our competitive advantages.

There is no doubt that GoDaddy is starting in a great position. And AI is the type of technology that it actually is easy to bring into a company like GoDaddy given the capabilities we already have. At the end of the day, what we are bringing forward to the world is and is demonstrated by Airo.ai, is that experience and it's an AI chat-based experience on Aero.ai that brings all the capabilities to the customer, where the customer doesn't have to go to web page after web page or call in or chat to do various things.

They can do it all in one place and GoDaddy brings them all those services right there. And it doesn't even have to be the things that GoDaddy builds alone. We're bringing our partnerships into Airo.ai as well. And it's actually much easier to integrate a partner into Airo.ai than it is to integrate into the funnels because just -- it's the interaction models could be different.

Very clear. And for a follow-up, could you quantify how much of your customer care and cogeneration is AI-driven versus employee-driven today? And how do you anticipate that evolving over time?

Yeah. So I shared a little bit majority of our code is now AI-driven, AI-generated. We had set a target out that I talked about the 70% of the code. The world is moving so quickly that the algorithm we have, it's like majority -- like large majority well core bases are now AI driven. That metric is sort of becoming less relevant now because what you're finding is that one engineer can have a team of five agents that are all developing.

And the way we used to think about coding, it's not the same way anymore. So I would just say, we are well down the path of AI generating all of our code. The next evolution is agents creating code. And along with agents creating code agents automating the software development life cycle and then the product development life cycle.

Those are the areas where we're going into, as an exam, a new website builder that we showed you a little slip of that brings together a very powerful editor and a very powerful AI-based chat bot. That's based on learnings we got from the AI builder we have built. And it has been built very, very quickly and well ahead of our expectation.

I mean one of the reasons we're talking about it today in a manner that, hey, this is coming, and it's going to be a big change for websites plus marketing. I think if you had asked me three months ago, I would have thought about it later in the year. But it's actually coming up ahead of a lot of other things, like we have pricing and bundling initiatives that are going to have to wait because this new AI-based website builder is just ready to go. So we're going to launch it and get it going.

John Byun, Jefferies.

Just two questions. On the ANC, there was a question earlier on some of the deceleration. Obviously, you have seen it go from mid-teens to low teens the last few quarters. Understand that there's a little bit of impact from the domain promo.

But is this kind of like what should be the new level that we should expect given the scale that you're at now in terms of kind of low teens growth or could we potentially see some acceleration as this top of funnel go-to-market get settled in?

John. A couple of things to call out. We talked about the fourth quarter and the impact that had on the new offering that we had out there. But as Aman mentioned a few minutes ago, we are also rolling out the upgraded websites and marketing experience, right?

And we are not assuming any contribution from pricing and bundling related to the websites as we go through this transition. After that, we'll obviously see on the other side, how we continue with the momentum going into 2027. But those are really the -- what's impacting the ANC growth, not only coming out of this year but going into next year.

Okay. Great. And this might be related, but any update on the pricing and bundling test that you usually discuss in a quarter? That's (multiple speakers).

We continue to execute well on pricing and bundling. Interestingly, one of the things for 2026 -- I'll give a couple of examples. One is our managed hosting for WordPress doing very well for 2026. You might remember a couple of years ago, we invested heavily built a new platform sort of expand it to reach a little bit bigger customer. And now we're seeing good growth in units, with good growth in bookings on that product.

So the new pricing, new bundle that's coming out. And maybe the other one I'll mention is that the LLC formation bundle is growing. We're still mostly cross-selling it within Aero. That's where a majority of that is coming.

But very soon, you will see some bundles around that as well. So we're pretty excited about that one, too.

Arjun Bhatia, William Blair.

Just maybe going back to the go-to-market changes. And I'm trying to maybe [tie it] in with the broader competitive dynamics because obviously, we've seen the new entrants in the space come in over the last year or two. So I'm curious, just as you looked at your old funnel, was there anything that sort of was indicating that the competitive intensity was increasing, especially from some of the big coating players out there. Aman, I think you touched on the moat there a little bit, but I'm curious how the new motion will maybe help you sort of defend against some of the competitors that are coming into the space?

When I look at the competitors in the AI space, we still continue to see a lot of that focus being on enterprise employees, like product managers, people that work within enterprises or people that are a little bit sort of working for agencies or companies like that. We see less of that behavior with our direct customer, the person who is the roof or the clean out of the micro business owner. So we see less of that.

Our expansion of go-to-market is really about being able to bring more high-intent customers into the domains funnel, which is our largest funnel and then attached to it very well. Like that is the primary motion at our company, and we want to continue to reinforce that more and more. I'm not suggesting that we are immune to what's happening in the world, we just have not seen very large impact of that in our funnel at or at this time.

Okay. Understood. That's very helpful. And then just one thing. I know you mentioned that just in the forecast for 2026, Airo.ai is not contemplated.

But if you are able to sort of get it to be generally available shortly here, is there a potential upside? Like could it have an impact in a handful of months? Or how do you think about the ramp once it's out and generally available?

Yeah. I'll take it first, and Mark can comment on it again. Overall, it's very similar to how I talk about the go-to-market approach. Airo.ai has to find product market fit the same way. It has to be about traffic.

It has to be a conversion. It has to be able to attach activation of the product and then some renewal. Of course, renewal goes back -- goes back a bit, but the other four were able to see pretty quickly.

Now it's still early. We're getting what is relatively still, I would say, a smaller amount of traffic given the large amount of traffic we get at godaddy.com, in that small traffic, the metrics look good, but you don't really know the metrics until you get to a certain scale. So that's what we'd like to get to. And when I talk to Martin, my view is, let's get to that minimum threshold of scale where we can see all these metrics perform and then it makes more sense to include in the financials.

That's right. Now we haven't included any contribution from it this year. While we're seeing monetization relatively small compared to our size. So without including it, yes, any progress we would make on that would be upside. Having said that, we'll keep updating everybody as we go throughout the year to what we're seeing, what are those metrics and how we think it will impact us going into the future.

Jamesmichael Sherman-Lewis, Citi. Jamesmichael, are you online? You're muted.

James?

Hello there. Thank you for taking my questions. Two if I may. You noted Airo drove a nearly 30% lift in product attach.

So what offerings are seeing the greatest uptick? And how is the typical path different for an acquired Airo customer versus other cohorts? And then I have a follow-up.

Yeah. Aero as an experience really goes to being a vehicle that attaches mostly to the domain customer. And over the last couple of years, as a result, we saw higher attach, higher average order size. And a couple of years into the aero cohort, we can tell you with high confidence as we see very good renewal.

And I think Mark, good in his remarks, customer retention continues to improve in a nice way, and those are cohorts are performing for us. The products that are attached to the most over the last couple of years had been -- like the biggest product catch was still websites and then e-mail. But now more recently, we see some of the new products, for example, the LLC formation starting to attach well, too.

Helpful. And then on ANS, I understood it's early days, but how has feedback been from partners in the developer community? Could you revisit the broader opportunity and how you'll drive adoption with modernization similar to domain registration.

On Asian -- did I hear on ANS, just to clarify?

Yes, ANS.

Yeah, we continue to work with a number of companies on ANS, Super excited to have the integration with MuleSoft, which is a sales force company. But there's a lot more to do. Agent name services, it's a simple scalable, very elegant solution to what I believe is going to be a very large problem world, which is how do we know who owns what agents and how do we trust those agents.

And ANS solves that problem using the DNS infrastructure that the Internet already relies on. So we do see some sort of good reactions from folks that understand, but just like when the Internet came along, it took a little while for D&S to work for people to realize that it really powered it. I think we're committed to that same level of effort to go and sort of explain to people why this is the easiest way to do it across the world. And why it has so many benefits for the open Internet for everyone.

Our next question comes from the line of Kishan Patel on for Brad Erickson.

This is Kish Patel on for [Josh Beck]. Just one from us. How are you thinking about the long-term monetization model for genetic experiences? And what factors would lead you toward subscription, usage, outcome-based or high approach?

Yeah. We have an opportunity to think about this a lot. We continue to lean towards the hybrid approach where there is an upfront subscription model that it unlocks a certain number of credits, and there is a model to add credits.

You'll see some of that come into Airo.ai, especially with our Airo builder, but we're just going to roll those things out slowly. We want to be able to have one monetization path, which we already have for subscription, and then we'll add more layers to it.

Our next question comes from the line of Katie Kaiser on for Elizabeth quarter at Morgan Stanley.

Awesome. This is Katie on for Elizabeth. A bit of a higher-level question, maybe a two-parter. Mark, we've heard you talk about kind of what the SMB wallet looks like in the past, how GoDaddy's ARPUs are positioned within that you guys are delivering a high caliber of innovation that should enable that broader wallet share capture to move up over time.

I guess how are you thinking about levels that this can ultimately inflect to can the entirety of the customer base kind of reach that $500 sweet spot. And I think also I'd heard you speak to a bit of green shoots of Aero.ai, bringing a bit of a different customer persona onto the funnel, one that's a bit more sophisticated. So are there any kind of structural differences you're thinking about in capturing wallet share of those two groups, that would be great.

Yes. Let me touch on those pieces and Mark can fill in whatever I miss. So just starting with the first, on Aero. AI, we see completely different interaction model customers not only do the chat base, they really go after the suggestions that come back from the we're seeing, as an example, in Airo.ai through a partnership, we've introduced customers being able to create a privacy policy or an end user license agreement. And customers are finding that and buying it.

And it's not something that we even sell on the website today. And if we had to sell it on the website today, it would be a very complex thing to add to the current path. The testing required. We introduced that in adding that friction, but taking friction out somewhere else, be pretty complicated.

But within this chat interface, it has fit seamlessly. And so when we see -- when we get learnings like that, it really is sort of opening up our mind on what is truly the one-stop shop and how broad that one-stop shop can be because it's really, really low friction for the customer.

I think on the wallet side, and I'm sure Mark wants to jump in on this and customers reaching $500. Are customers have continued to grow with us, right? You've seen the improvement in ARPU over the last few years. And of course, we want more and more of these customers like Mark said, they have great attach rates on second and third products. They have new perfect retention rates.

And ultimately, it demonstrates a customer that's not just successful with GoDaddy, they're successful in their venture. So obviously, we want more and more of those. And that's why our go-to-market continues to focus on high-intent customers because those are folks that have the best chance to get there.

And I think that's right. We've often talked about the durability of the model, the fact that we get high intent customers our ability to attach when they get to the second and third product where retention rates go to new or perfect the drive LTV ultimately drives the compounding free cash flow that we generate year after year. And we believe our ability to cross-sell into that customer base because we focus on the micro business is stronger and getting stronger as we introduce these new products as we introduce these new agents. So we feel really good about our progress moving forward and our ability to continue to look at that $500-plus customer.

Yeah. And just the strong retention just drives the lifetime value at the end of the day. We make, obviously, a lot more money when customers stay with us over the long term, and that's the magic of the model.

That concludes our Q&A. I'll hand it back to you, Aman, for closing marks.

Well, I'll just say thank you, everyone, for joining and a big thank you, as always, to all GoDaddy employees. A lot of exciting stuff coming out from products and marketing across the board, a lot on our AI journey and a lot more in front of us. So excited for 2026.