Q3 2024 Earnings Summary
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +7% | Strong performance from the Applications & Commerce segment (+16% YoY) and Domains (+5% YoY) drove overall revenue increases. Sustained market demand for digital presence solutions also contributed to growing sales. |
Applications & Commerce | +16% | Robust adoption of commerce solutions, subscription-based products, and productivity applications fueled growth. Cross-selling and bundling initiatives improved customer lifetime value and overall A&C revenue. |
Domains | +5% | Sustained demand for domain registrations and add-ons bolstered revenue, supported by improved marketing funnel conversion. Some headwinds persist in the high-value aftermarket segment, but overall domain-related sales remained solid. |
United States Revenue | +8% | Strong brand presence and increased uptake of productivity solutions in the U.S. market drove revenue growth. Despite macro uncertainty, domestic conditions remained supportive, aided by up-selling efforts in various product lines. |
International Revenue | +7% | Expanded product availability, enhanced localization, and marketing improvements underpinned international growth. Brand migration efforts and domain count adjustments also influenced revenue trends. |
Operating Income | +52% | Improved operating leverage from higher revenue, combined with lower restructuring costs and disciplined cost management, drove profitability. This resulted in a significant increase in operating income. |
Net Income | +46% | Higher operating income, coupled with reduced interest expense and one-time tax benefits, contributed to the jump in net income. Cost structure optimization further supported net margin expansion. |
Diluted EPS | +52% | Stronger net income and improved operating margin, along with share repurchases that lowered the share count, led to a substantial increase in EPS. The company’s focus on higher-margin segments also boosted overall profitability. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q4 2024 | no prior guidance | $1.165B–$1.185B (≈7% growth) | no prior guidance |
Normalized EBITDA Margin | Q4 2024 | no prior guidance | 31% | no prior guidance |
A&C Segment Growth | Q4 2024 | no prior guidance | mid-teens | no prior guidance |
Core Platform Growth | Q4 2024 | no prior guidance | low single digits | no prior guidance |
Revenue | FY 2024 | $4.525B–$4.565B (≈7% growth) | $4.545B–$4.565B (≈7% growth) | raised |
A&C Segment Growth | FY 2024 | mid-teens | mid-teens | no change |
Core Platform Growth | FY 2024 | low single digits | low single digits | no change |
Normalized EBITDA Margin | FY 2024 | 29% | 30% | raised |
Unlevered Free Cash Flow | FY 2024 | $1.45B+ | $1.475B+ | raised |
Free Cash Flow | FY 2024 | $1.3B+ | $1.325B+ | raised |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q3 2024 | $1.13B - $1.15B | $1.1476B | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Applications & Commerce (A&C) | Q2 2024: +24% YoY; Q1 2024: +22% YoY; Q4 2023: +16% YoY, consistently cited as a key growth driver. | Bookings grew 20% YoY, sustaining a third consecutive quarter at or above this level; management noted tougher comps ahead but did not express deceleration concerns. | Consistently growing; optimism continues, but caution arises from tougher upcoming comparisons. |
Pricing & Bundling | Cited in every prior call as a strategic, data-driven approach to boost A&C bookings and expand ARPU; emphasis on bundling productivity solutions and commerce offerings. | Remains a multi-year growth driver, now extending to the core platform starting in Q4 2024; focus on balancing customer retention with incremental price opportunities. | Ongoing emphasis, broadening scope across product lines; still core to GoDaddy’s growth strategy. |
Margin Expansion | In earlier quarters (Q2, Q1, Q4), margin expansion was consistently highlighted, with no explicit mention of short-term contraction; focus was on leveraging infrastructure and A&C to improve profitability. | Achieved a 32% normalized EBITDA margin, helped by operational discipline. However, increased marketing for Airo could lead to near-term compression (targeting 31% in Q4). | Shifting from a purely expansionary narrative to acknowledging short-term marketing costs that may compress margins before rebounding. |
Airo (AI-powered website builder) | Q2 2024 noted over 1 million new discoverers; Q1 2024 described early rollout and testing paywalls; Q4 2023 emphasized controlled expansion and higher monetization rates in tests. | Expanded globally and discovered by nearly 3 million customers, with ~40% of Websites + Marketing paid subscriptions now originating via Airo; began introducing paywalls for monetization. | Enhanced focus, sparking strong user engagement and new monetization opportunities. |
Aftermarket | Q1 2024: 12% growth noted; recognized as volatile and transactional. Q2 2024 and Q4 2023 calls both stressed inherent unpredictability of large domain transactions. | Growth slowed to near-flat YoY, down from earlier double-digit rates; management attributes volatility to buyer-seller dynamics and emphasizes low single-digit outlook. | Losing momentum after prior optimism; now seen as flat to low single-digit grower. |
Hosting Divestitures | Q4 2023–Q2 2024 calls frequently discussed hosting divestitures and migrations as short-term revenue and customer count headwinds; anticipated to peak in H1 2024. | No direct mention this quarter; prior impacts appear resolved, and leadership expects return to customer growth in 2025 as these headwinds abate. | No longer a focus, as the company has largely completed its hosting rationalization. |
Payment Solutions | Q4 2023: emphasized as a key future growth driver, reaching $2B annualized GPV; Q1 and Q2 2024 calls described new SaaS payment plans (POS Plus, Invoicing Plus) and a strong push toward omnichannel commerce. | Not explicitly discussed in Q3 2024 documents; focus on Airo overshadowed any separate payment updates. | Absent from Q3 conversation; previously highlighted as critical, suggesting near-term focus shifted to Airo and core growth drivers. |
AI Initiatives (beyond Airo) | Q2 2024 broadly discussed AI capabilities but heavily centered on Airo; Q1 and Q4 2023 also underscored internal AI tools to streamline operations and reduce costs. | Management referenced a generative AI-based support bot across 20 markets, claiming double-digit efficiency gains and 16 million fewer contact minutes without sacrificing customer satisfaction. | Expanding AI adoption in support and operations, indicating new cost efficiencies and improved customer experience. |
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A&C Bookings Growth and Revenue
Q: Will A&C bookings growth drive higher revenue growth?
A: Management acknowledges that bookings acceleration in Applications & Commerce can be a tailwind for revenue. They note the timing depends on product mix and terms, such as monthly, annual, or multiyear. While excited about the momentum, they remain comfortable with the 6% to 8% growth over three years and expect overall bookings to outpace revenue by about 2 points, driven largely by A&C. -
Pricing and Bundling in Core Platform
Q: Will pricing and bundling expand to core products like domains?
A: Management confirms that the pricing and bundling strategy will extend to core platform products, including domains. They will use data-driven approaches to find customer cohorts where they can balance retention with pricing opportunities, potentially benefiting growth across segments. -
Resuming Customer Acquisition in 2025
Q: Will you increase investments to acquire customers in 2025?
A: Management plans to resume customer acquisition in 2025 as they lap divestitures and end-of-life products. They see opportunities to spend more on marketing due to their strong product portfolio, expecting to attract more customers and normalize net customer adds. -
Continuation of A&C ARR Growth
Q: Can strong A&C ARR growth continue despite tougher comps?
A: Management acknowledges that as they enter Q4 and 2025, comparing growth rates becomes more challenging due to tougher prior-year comparisons. They believe momentum will continue but percentage growth may appear lower because of the higher base. -
Airo Monetization Progress
Q: How is Airo progressing towards monetization?
A: Airo is becoming a significant on-ramp for Websites + Marketing subscriptions, with 40% originating from it. They have introduced paywalls to monetize engaged customers but are focusing on building discovery and engagement before emphasizing monetization. -
Bundling Initiatives Update
Q: Is bundling still focused on productivity, or expanding?
A: Management states that their pricing and bundling approach is being tested across various customer cohorts. While productivity has been a focus, they are now identifying opportunities in other products with larger customer bases, potentially in Applications & Commerce and core segments.