GoDaddy is more than just website domains. The company aims to be the one-stop shop for entrepreneurs to quickly put up a website, complete with a unique brand, business email, and e-commerce platform. Mark McCaffrey, GoDaddy’s CFO, was a recent guest on Morning Brew’s “After Earnings” podcast to talk about the company’s transformation, its new AI-enabled service, and how all of that showed up in the company’s recent earnings report.
This interview has been edited for length and clarity.
For people who haven’t been closely following the expansion of your products and services for entrepreneurs, can you orient us around what GoDaddy is today?
We have 21 million customers with us and we provide them services from the domain name, to their email, to their website, more recently, [their] commerce [platform]. Now we’re taking that experience and putting it into our AI experience, what we call Airo, which allows an entrepreneur or someone who is thinking about starting a business to come on, get a domain name, and they can be up and running on a website, doing business within minutes with a logo, with a professional email, with a customized website.
Let’s get into earnings. So, you guys reported Q2 earnings Aug. 1…[and] beat revenue estimates, beat EPS, raised guidance. What was really working for you guys this last quarter?
It’s the accumulation of, I think, our transformation that we started several years ago. To give you a background, we had to create the consolidated technology stack that provided that seamless experience to our customers, and over the past few years we’ve been working on integrating all that technology into one platform so we could have access and create that experience for our customer.
…That momentum coming into this year has started to hit. We launched a bundling and pricing initiative, which bundles certain products together that we think our customers are going to value more. Obviously, it allows us a different price point. That is coming to fruition. Airo, we just launched this year; [it’s] not even in our numbers right now. It will be an addition to that as time goes on, but you’re seeing the momentum of the transformation to the one-stop shop and engaging our customers exactly where we said we were going to engage them, and that’s all starting to take effect and have the momentum, and that's what we’re seeing coming into this year.
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The current revenue breakdown looks like about two-thirds the core domain business people know, and then a third these other applications. Do you expect that mix to evolve over time as things like Airo, commerce products, those types of things take hold in a greater way?
Yeah, absolutely. We think the growth engine is the A&C [applications and commerce] segment for us. It is also our more profitable segment, because it’s really the software and the applications we provide our customers. When you think about the customer journey, you think about the core platform, our traditional business domains, application and commerce really represents most of the time the second and third product attach those customers are going into. And that is where we’re growing and it’s becoming a bigger part of what we do for our customers, and where we’ve focused our innovation efforts. Our expectation is our A&C segment will grow at a faster rate than our traditional core platform business, and with that it will be a tailwind to our profitability because it comes at a better profitability point. And we’re starting to see that slowly move in that direction.