GoDaddy Inc Oppenheimer 29th Annual Technology, Internet & Communications Conference

Yeah. To put it simply, we are where people come to start their ideas, right? We allow people to launch, ideate, and create a presence, most often starting with a domain name, but then it includes things like website, emails, commerce, and basically gives them the ability to, whatever their passion is, whatever their side hustle is, whatever their dream is, get it online, get it up and running, and get them making money. Now, it's not always about making money. Sometimes it's about sharing content. Sometimes there's other avenues that it will take. But we focus on the micro-businesses, and the micro-businesses to us are the small end of small businesses. So it could be a one-person shop. It could be two or three people.

But at the high end of our, I would say, target audience is somewhere around 7 to 10 employees, and I do say that's the high end. I say that to differentiate us. We have over 20 million customers. 20 million. We've been around for 30 years. We know this customer base very well. This is not the enterprise. This is the one or two seat type environment. This is the underdog who's trying to compete with much bigger players out there and trying to do that not only through offering products and services in their local market, but also trying to extend that out to other markets that are now available and may not have been available in the past. So it has a tendency to be a very passionate customer group, a very, I would say, resilient.

I like to use the word gritty at times, but Christie always corrects me that I shouldn't call our customers gritty.

They have grit. Very cool.

It has a different connotation to it. The way we make money, it's about the LTV equation we always talk about. We have a strong brand in the domains. It's the top of the funnel. When our customers attach to that second product, we have a strong overall retention rate of 85% for our customer base, which is fantastic. But when our customers get to a second product, we even go up higher than that. They get to a third product, we have a customer almost for life. That LTV equation, the slide we've shared in the past says, if you're just a domain holder with us, it's 1x. If you get all the way to commerce, that LTV equation goes to 83x.

And we will be having an investor event on December 1st here, and we are going to be sharing the new metrics and what that looks like for the LTV equation. But the underlying durability of the model and our ability to generate free cash flow and continue to compound on that free cash flow, those underlying principles still remain intact, even as we are transforming the company to our new Airo agentic AI platform. I will stop there. I could keep going, obviously, but I want to challenge the questions.

Yeah, I will just add, too, the competitive advantages, of course, that we have is we are one of the most trusted brands in small businesses with the highest brand awareness for over three decades, like Mark said, with a breadth of customers, a distribution advantage, a broad set of solutions that help micro small businesses get started and converse with their customers, sell to their customers, collect payment, and a care organization that knows our customers and small businesses better than anyone. And you have heard us talk a lot about Airo, which is our agentic operating system for small businesses. It is the centerpiece of our largest initiative as we transition into an AI-first platform.

Yeah. Ken, I would say where we are going is more of an immersive experience with our customers. We are meeting them where they want to engage with technology. I think the world has to acknowledge not only our customer base, but customers across the macro environment are changing how they engage with technology today. We are meeting them not only where they are, we are getting to know where they want to be, and that technology is what we call Airo. Now, Airo has matured. It started off as an AI platform in and of itself that brought a discovery and engagement to the customers at a certain pace. Now this is an interaction where customers can interact within the Airo engine, decide what they want, edit, make changes.

It's basically typing in in real time, drawing on not only our technology and 30 years of history and data that we have, but also drawing on the LLMs that we provide them in order to do that. When you think about it is a- Our customer base isn't sitting there saying, "Oh my God, I want to use AI." They're sitting there saying, "I want this faster. I want this easier. I want this better. I want it smoother. I want it at better price points for the value that I'm getting, and I want to be able to compete more effectively." That's what Airo brings to them. We just launched in the second quarter. Within weeks, we saw an annual run rate of $10 million. Then within one quarter, that number has jumped up to $50 million.

It doesn't come, I would say, without a transition phase, because as we are moving everybody to this Airo platform, in this Airo immersive experience, there are historical products that are not going to be as attractive to our customers going forward. The example we used was DIFY. No longer are people going to spend a few thousand dollars to have you do their websites for them. Why? Because Airo can do it right on the spot for them. That customer is going to now do different things through the Airo platform over time, which will drive LTV over time. But the immediate bookings we used to get around DIFY in and of itself up front will start to go away. It'll start to narrow. Doesn't mean it's going to go away entirely overnight, but it will definitely narrow as people get more comfortable with the Airo platform.

We're okay with the trade-off. We're doing it from a position of strength. Our technology is, we think, second to none. It really meets our customer base and the ease of use around what our customer needs are. And we're doing it in a manner that we can control the outcomes and control what the customer, how they're going to use it, how they're going to attach incremental products going forward, what will be included in the capabilities of Airo in and of itself, how we're going to sell them tokens. What are going to be the price on those tokens? What are going to be the cost on those tokens?