GDDY

Welcome to GoDaddy's Q1 2026 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 to 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 call, we will 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 to 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, April 30th, 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 purpose is to make opportunity more inclusive for all. We serve over 20 million customers globally, helping them establish their identity, build their presence, and grow their business. We do this through an integrated platform that brings these capabilities together in a seamless AI-powered experience, helping customers move from their idea to execution quickly and at a compelling value. Starting with Q1 results, we delivered revenue growth of 6%. This performance, combined with continued operational execution and structural leverage, drove meaningful expansion in normalized EBITDA margin to 33%, up over 200 basis points. This underscores the durability of our model and continued progress towards our financial North Star, generating strong free cash flow growth of 15% while remaining committed to delivering long-term shareholder returns.

As AI-driven innovation accelerates, customer expectations for speed, simplicity, and measurable outcomes are rising. Customers are increasingly using LLMs across their workflows and getting familiar with chat-based interfaces. We are leaning into this shift, positioning GoDaddy as the platform that helps entrepreneurs turn intent into action through AI-powered experiences and outcomes. Our AI transformation builds on our core strengths of a trusted global brand, leadership in domains, scaled infrastructure, proprietary data, strong engineering talent, and a world-class care organization. Together, these form a differentiated platform that allows us to deliver a seamless one-stop-shop solution for entrepreneurs. We are moving quickly and intentionally with focus on delivering measurable outcomes for entrepreneurs. The positive impact of our AI transformation is clear in three areas. First, the adoption and monetization of our AI-native products. Second, the expansion of Agent Name Service as a new identity layer for the agentic open internet.

Third, the use of AI to drive operational efficiency. First, we are making strong progress on our AI-native products. Airo AI Builder, introduced last quarter on airo.ai, is an AI-native experience that enables customers to move from idea to execution in minutes, automatically creating websites, applications, and core business capabilities across identity, presence, and commerce. I work directly with customers using Airo AI Builder on a weekly basis, and the customer feedback is shaping our roadmap and accelerating development. Our customers are looking for simple, integrated solutions that support their core jobs to be done, and we are delivering that through Airo AI Builder. It is delivering strong early adoption and monetization is already scaling with customers. This new Airo AI Builder product offering has rapidly scaled to $10 million-plus in annualized bookings run rate within weeks of its beta launch.

While still early, the pace of adoption and quality of customer interaction is strong. Customers are building, publishing, and purchasing incremental credits as they deepen their use of the product. Momentum continues to build week after week as we expand Airo AI Builder's functionality and distribution. We are expanding distribution of Airo AI Builder on godaddy.com and have begun selling it through Airo Care. In Airo Care, we drive higher adoption of premium plans compared to our online channels and receive direct customer feedback, both positive and constructive, to improve the product. As a next step, we are ramping targeted paid marketing in May, funded through efficiencies elsewhere in the business. We are carefully monitoring the mix between new and existing products as we scale with a focus on optimizing overall customer value and maintaining margin discipline.

The second major product initiative we introduced last quarter is the upgrade of Websites + Marketing, bringing AI-native capabilities into the product while maintaining strong cost discipline for both customers and GoDaddy. This upgrade combines AI-driven capabilities with a powerful editor, enabling customers to create and manage their presence more efficiently. The domains funnel remains our largest distribution lever for new customers, and in this quarter, we tested the upgraded product within that path. Early results exceeded our expectations and validated the direction of the product. We are excited to get the upgraded functionality in front of all our customers and are using experimentation to inform improvements on the experience. Our teams have embraced an AI-native approach across our customer products, and we are making meaningful progress delivering customer value. We are expanding these capabilities at a rapid pace while maintaining disciplined investment.

As we scale distribution and marketing, we are confident in our ability to compete effectively. The second component of our AI transformation is Agent Name Service or ANS. We are working with large players and seeing continued interest in this technology. ANS extends the role of domains as a digital identity provider in an agentic open web. We signed two partnerships over the last quarter with real-world use cases and are working hard on aligning key players on the open standard and the use of Domain Name System or DNS for agent identity and discovery. Championing the open standard and partnerships are key to getting to critical mass of support of the open standard, and we are encouraged by early results. Non-GoDaddy agents in GoDaddy's ANS implementation now number in the thousands.

DNS is the foundation of identity on today's Internet, and domains are uniquely positioned to play a role in agent identity and trust, extending domain relevance into the future. Third, we are transforming GoDaddy into an AI-native company by deploying AI across our operations to improve speed, efficiency, and customer outcomes. We are driving the most immediate impact in software development, where AI is enabling the rapid creation of customer-facing applications with fewer dedicated teams. We are also testing the replacement of smaller third-party SaaS tools with internally built solutions on Airo AI Builder, particularly across corporate functions, with the goal of reducing both cost and operational complexity. In care, we are advancing to the next phase of AI-powered automation. In Q1, we achieved key proof points across both support and sales.

On the support side, we launched Airo Care, a new AI-native support technology across voice and chat that handles a wide range of customer queries. We validated it against our existing offering, delivering strong improvements in resolution rates. Our first test improved resolution rate by approximately 50%. Subsequent tests demonstrated that Airo Care can equalize the resolution rates between English and non-English markets, improving performance in non-English markets by over 150% and strengthening care as a global competitive advantage. Airo Care is now rolled out to more than 50 markets and 20 languages. We will continue to expand use cases each month while maintaining a strong focus on customer satisfaction, resolution rate, sales, and cost. On the sales side, our AI-native commerce Airo sales agent makes voice calls and handles the entire commerce sales experience without human intervention.

We have optimized the agent over the last few months, and last quarter, it delivered conversion rates comparable to human-assisted sales for smaller leads. These are exciting milestones, and we plan to scale these capabilities throughout the year. Alongside these AI transformation initiatives, we continue to execute on pricing and bundling, seamless experience, and commerce. These programs continue to drive improvements in conversion, attach, and renewal rates. I want to briefly revisit the promotional offer we discussed last quarter. We refined the program to better balance customer acquisition and bookings, and these efforts are delivering results. The promotions drove strong gross customer adds and resulted in new domain registrations accelerating by 6% for independent and partner customer populations. Our strategy remains consistent. We are focused on attracting high-intent customers who attach, convert, and grow over time, optimizing for long-term value.

Towards this end, we also took the opportunity to remove a lower-value product offering this quarter. This partially offset the customer growth from the promotional offer but did not materially impact bookings. In closing, we are operating in a dynamic environment with rapid change and leaning into our strengths. We serve more than 20 million customers globally. Our domains business and our unwavering focus on micro-business customers remains foundational, supported by our scaled integrated platform that connects identity, presence, and commerce. This combination of global reach, proprietary data, seamless technology, and our care organization creates deep customer insight and consistent execution. Our model is built around attracting high-intent customers and helping entrepreneurs start and grow their ventures over time. This drives durable growth and expanding margin and strong compounding free cash flow. We continue to execute with discipline, and as we look ahead, our path forward is clear.

We have a large market opportunity, a strong competitive position, and the financial flexibility to continue investing to deliver enduring shareholder value. With that, here's Mark.

Thanks, Aman, and good afternoon, everyone. In the Q1, our model continued to demonstrate its durability, driving operating leverage, expanding margin, and generating attractive compounding free cash flow. Supported by a strong balance sheet, we had the flexibility to invest in innovation while still maintaining a disciplined capital allocation framework. We delivered revenue at the high end of our guidance while expanding our normalized EBITDA margin by over 200 basis points. At the same time, we generated strong free cash flow of $474 million, bringing our trailing 12-month free cash flow to $1.68 billion. We deployed capital through share repurchases, reducing fully diluted shares outstanding to 133 million. Our focus remains on consistent execution and delivering solid financial results as we continue to advance our AI transformation.

For the quarter, total revenue grew 6% on both a reported and constant currency basis to $1.3 billion, and ARR grew 6% to $4.3 billion. International revenue grew 7% to $416 million. For our high-margin A&C segment, we drove 12% growth in revenue to half a billion dollars on continued solid attach of our subscription-based solutions. A&C ARR grew 10%, and this segment now represents approximately 40% of our total business. Segment EBITDA margin improved 110 basis points to 45% on product mix. Our core platform segment delivered revenue growth of 3% to $769 million on 5% growth in primary domains with a stronger mix towards higher price non-.com TLDs.

This was partially offset by softness in non-core GoDaddy hosting, the .co registry contract expiration, and tougher compares in aftermarket. Segment EBITDA margin expanded 150 basis points to 33% on product mix. Total bookings grew 3% to $1.5 billion, reflecting a few points of impact from our promotional offer we shared last quarter, the .co registry contract expiration, and lapping of prior year aftermarket strength. A&C bookings grew 9% and core platform bookings declined 1%. As we outlined in February, this quarter reflects the peak impact of both these dynamics. Excluding any FX impact, we expect bookings and revenue growth rates to be at or above parity for the remainder of the year. Our focus on attracting and growing high-intent customers, combined with conversion improvements, is driving durable growth and higher customer quality.

We are driving increased conversion into primary domains and higher attach through Airo. At the same time, we continue to deliberately manage our product portfolio, exiting lower value offerings and reallocating resources towards higher value opportunities. Our newer Airo cohorts are demonstrating that higher value, with second product attach accelerating 30% faster relative to non-Airo cohorts. These cohorts are contributing to the increase in the number of customers spending more than $500 annually, which represents approximately 10% of our customer base. Higher attach and retention rates above 85% drove ARPU growth of 9% to $246. As Aman noted, this offering is already generating millions of dollars in annualized run rate organically and without dedicated marketing support.

In parallel, ANS extends our leadership in digital identity, positioning us to participate in the next evolution of the internet infrastructure. As the architecture of the internet evolves, our current strengths remain as relevant as ever, and our AI transformation positions us to consistently deliver profitable growth and capture value going forward. Turning to margins and free cash flow, normalized EBITDA grew 13% to $414 million, delivering 210 basis points of margin expansion to 33% and exceeding our guide for the quarter. Operational execution, supported by AI-driven efficiencies and favorable product mix, continues to drive margin expansion. Our expanded margin reflects the efficiency of our model and gives us the flexibility to invest in our AI transformation while maintaining a strong balance sheet and a durable free cash flow profile.

Free cash flow grew 15% to $474 million with a normalized EBITDA to free cash flow conversion of greater than 1:1. We exited the quarter with $1.3 billion in cash and total liquidity of $2.3 billion. Net debt was $2.6 billion, representing net leverage of 1.4x on a trailing 12-month basis and within our target range. On shareholder returns, we repurchased 3 million shares during the quarter, totaling $280 million.

Since 2022, our share repurchase programs have resulted in a gross reduction in fully diluted shares outstanding of over 31%, and we ended the quarter with 133 million shares outstanding. Turning to outlook, we are reaffirming our full year 2026 guidance provided in February and expect total revenue to be within a range of $5.195 billion-$5.275 billion, representing growth of 6% at the midpoint of the range. As a reminder, our full year revenue guide incorporates just over 200 basis points of cumulative impact from the expiration of the .co registry contract, our consistent exclusion of high-value aftermarket transactions, and the impacts of our product evolution and our promotional offer.

For Q2, we are targeting total revenue of $1.285 billion-$1.305 billion, representing 6% growth at the midpoint of the range. For both the Q2 and the full year, we expect A&C revenue growth in the low double digits and core platform growth in the low single digits. For Q2, we are projecting a normalized EBITDA margin of approximately 33%, and we are reaffirming our target of over 33% for the full year. This reflects our ability to drive continued operational leverage and AI-driven productivity gains while increasing our investments in our AI-native products, marketing, and compute costs. For the full year, we expect normalized EBITDA to maintain a greater than 1:1 conversion to free cash flow, and we reaffirm our full-year free cash flow target of approximately $1.8 billion.

We continue to be on track to exceed our free cash flow North Star CAGR of 20%. On capital allocation, we operate within a disciplined return-based framework and have deployed greater than 95% of our free cash flow over the last four years towards share repurchases. Our continued commitment to returning capital is a clear expression of confidence in the strength of our cash flow and the long-term value we are creating. We remain focused on allocating capital to its highest value uses with a priority on driving long-term shareholder returns. In closing, the fundamentals of our business remain strong, with consistent engagement and durable drivers of ARPU supporting our long-term trajectory. As we move forward, we remain focused on disciplined execution and continued progress toward our North Star. We look forward to talking about these and other updates at our investor event later this year.

I'll now turn it over to Christie to open the line up for questions. Thank you.

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 Vik Kesavabhotla from Baird. Vik, please go ahead.

Hey, can you hear me okay?

We can.

Yes.

Great. Thanks. Hey, thanks for taking the questions. My first one is on the customer base, and I'm curious, you know, as you navigate all these changes in the product portfolio and in your go-to-market strategy, you know, how do you ensure that you're attracting the right type of customer to the platform? And I think you mentioned in the prepared remarks that customer quality is increasing. It'd be great if you could elaborate some more on how you measure customer quality and what you're observing in the behavior of some of these recent cohorts that's informing your confidence in the strategy right now. And then separate from that, you know, my second question is on, you talked about all these ways you're using AI internally across the company's operations and some of the proof points that you're seeing already.

You know, as you continue to scale those initiatives, how should we think about the opportunity for those efficiencies to flow through to EBITDA and free cash flow in the near term versus being reinvested back into the business to support your products and marketing needs? I realize it's probably a tough question to answer in a ton of detail quantitatively, but it'd be great to hear your philosophy around how you're balancing those dynamics during, you know, what seems like a pretty significant period of change for the business. Thanks.

Thanks, Vik. Let me take the first one, Mark can take the second. On the cohorts that we're attracting. Look, our strategy is to attract high-intent customers, the way we define high intent is looking at the traffic coming in by channel and then looking at the activation and attach of other products. What we know from years and years of data across our 20 million customers is that if we see that activation and attach of other products, we are going to see good renewal at the end of the 1-year term. That's what really gives us confidence. That's what we're looking for. When we make these trade-offs in the decision, in the business, we attract new customers with end-of-life certain products or retire certain cohorts.

What we're looking for is the quality of those, the intent of those customers, and measuring it through the activation of the other products that they have. On the operations one?

On the operations, you know, we are balancing several different factors here. You know, one, we have the ability to expand our margins. We have for the past few years. We're continuing to see operational efficiencies by the adoption of AI internally. We're paying our attention to the disciplined approach we've had in the past around, you know, investing in innovation, but using data points that show our path to return on those data points before we invest. We're taking a very disciplined framework approach. I would say we're balancing it with what we think the long-term return is going to be when we make those investments.

For example, we had talked about we were going to increase marketing around AI Builder, for the remainder of the year. It's because we are seeing the data points that are showing that return. While those returns will be immaterial for the current year, we do know the potential to drive future growth for us is there, and that makes that return appropriate.

Yeah. I think maybe just to add, the areas that we're looking at, looking at whether it's software development or care or our use of applications or marketing, all of these areas are accelerated with AI, and we see great opportunity to deliver a better outcome for our customers at a lower cost this year and into the future.

Okay, great. Thank you.

Our next question comes from the line of Ken Wong from Oppenheimer. Ken, please go ahead.

Hi. Can you guys hear me?

Yep.

Yep.

Fantastic. First question on the 10 million-plus of Airo Builder ARR. A lot of your kind of standalone AI builder platform, we've seen them scale up extremely fast. I realize it's super early, but what's the right way to think about kind of what this business or this product could potentially grow to?

Yeah. Ken, when we talk about the $10 million run rate, what we're really talking about is annualized bookings. You're right, it's very early data. This includes both subscriptions and credits or tokens. What we see is customers come in via subscription, engage with the product, love the product, and they keep coming back and improving their website or whatever actions, whatever job they're trying to complete with the AI Builder. I'm directly engaged with a few customers. I actually work with customers every week now, sessions, you know, with live customers. What's magical about the Airo AI Builder and our customers is that our customers have lots of ideas, it's very hard for them to go through menus and templates and figure it out.

If they can just in natural language explain, you know, or just say, "I would like this," Airo AI Builder goes and does it for them, and it's sort of a magical, amazing experience for that. That's the run rate we're looking at. You know, in terms of what it could be, it's super early. We're very excited about this early adoption. As I shared in the prepared remarks, we just started selling it in Care. We're going to add paid marketing to it starting this month. There's a lot of things for us to do. Of course, you know, we have the giant funnels we have with domains or website paths, which we haven't touched yet either.

There's a lot to do to get to what we think long-term run rate can be, but we're excited about where we started, and we're also keeping an eye on, you know, how customers use this product and, you know, does it change how they use our other products because that mix is gonna be important for us, too.

Yeah.

Understood. Appreciate the color there. Just a follow-up, also on AI opportunities. You mentioned ANS opening new infrastructure opportunities, now with Airo AI Builder pushing your back end beyond websites, is there the potential to potentially utilize GoDaddy's hosting capacity for additional workloads, AI workloads, given the market scarcity there? I mean, we're sort of having a moment in hosting all of a sudden, seems like that's an area you guys could potentially capitalize on.

Yeah. Actually, you know, Airo AI Builder does use GoDaddy hosting. It's one of our competitive differentiators. We can provide hosting at scale that's secure, that's, you know, at a great cost. There's definitely sort of excitement from our side to be able to take something like Airo AI Builder and power it with our hosting solution. We also have some plans to do more with hosting directly for our customers, but we're not looking to, you know, go out and do something that's for enterprises or something like that. We are very focused on our customer base, the solutions that our customers need. We feel that we serve a unique customer.

A lot of the new entrants in the AI space are serving enterprises, and we have this unique relationship with this type of customer, so we're really leaning into that relationship and the needs of that customer.

Great. Thank you, Aman.

Thank you.

Our next question comes from the line of Trevor Young from Barclays. Trevor, please go ahead.

Great. Thanks. First one for Mark. On your comments on bookings growth at or above parity with rev growth for the balance of the year, is there a particular shape of the bookings curve to be mindful of? Q2 implicitly the low point, will Q2 step all the way back up to where rev growth is and H2 bookings a bit above that? Is Q2 going to be maybe a tad ahead because it has an easier compare? Second one on capital allocation, buybacks here in Q1 well below free cash flow generation and the 95% payout stat that you've given. Meanwhile, cash at kind of the highest level since middle of 2021, if I'm not mistaken.

Just any updated thoughts on capital allocation and buyback appetite with the stock at current levels, and in lieu of buybacks, any updated thoughts on M&A? Thank you.

All right. Thanks, Trevor. On the bookings, you know, growth rates should be on par or above. We're looking at that on both a quarter on an annual basis for the remainder of the nine months. It should give you a sense of the momentum we're starting to gain as we go up throughout the year. On capital allocation, you know, what I always say is don't look at any particular quarter. Look at our history. Our history is a good indicator of how we approach this. You know, we look at the quarter going forward, we make determinations, buybacks are still a strong way or a strong lever for us to return value to our shareholders.

Again, look at our track record, our history of what we've done and, you know, it'll give you a good idea of how we continue to approach it, and the way we look at it hasn't changed.

Great. Thank you.

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

Thanks, Christie. Hey, guys. You just closed $10 million in annualized bookings, the run rate for Airo AI Builder within, it sounds like weeks of beta. Can you break down the unit economics there? Like, what's the average transaction size? How much of that run rate is coming from credit top-ups versus the initial plan purchase? What's the margin profile relative to legacy of Websites + Marketing?

Yeah, Mark, you know, overall, we remain committed to what we have shared in the past, that we're building a product that serves our customer, that comes at a gross margin and a price point that works for our customer and for GoDaddy. From the very first day, we have continued to look at this product as a gross margin-positive product, as a product that can continue to grow and deliver the economics for the company. You know, in terms of what is subscription and what is credits, we're so early. Like, this has to bake, you know, this has to grow. There are going to be, I think, so many ups and downs as we enter marketing, as we, you know, open the channels, as we drive more traffic even from godaddy.com to this product.

It's too early to talk about sort of the more detailed pieces of how of what's happening here. In terms of the comparison to Websites + Marketing, as we have shared in the prepared remarks and last quarter as well, we have an upgrade for Websites + Marketing going out this year. That product focuses more on exactly that need for that customer and the economics that will be needed to make it successful. We did test that product, and it all works together. It's all together with Airo. It's not like, you know, going to be something different when it comes out. We tested that experience, and it did quite well in the test. As I said last quarter, Websites + Marketing, the current version, is an established champion.

It is going to take a little while to test the challenger, Websites + Marketing, the new version. We expect to do that this year. As we roll through the year, we're gonna test sort of the new product, new version a couple of times, and we expect it to win sometime this year.

Got it. Maybe a follow-up then on the upgrade, the W+M upgrade being tested now in the domains funnel, and it sounds like you're having some really solid early results there. Just curious when we should expect pricing to be reimplemented at Websites + Marketing specifically, and whether you can quantify how much of the historical ARPU accretion that you've witnessed from pricing and bundling has been attributable to W+M versus other products. Thanks.

Yeah. I can take the first part, Mark, if you can take the second. On the pricing initiatives around Websites + Marketing, because this is a very significant upgrade and there's a lot of moving parts, we're moving from a solution that is template first and uses AI to a solution that balances editor capabilities and AI capabilities. Frankly, this comes with a different set of cogs and, you know, profile that we're working with. You know, any sort of pricing change would have to wait till we get to parity on the customer experience and metrics like publish rates, so that we can be certain that the product is delivering what customers expect. Once we've done that, we can look at any sort of pricing initiative.

On the contribution to ARPU, you know, we don't get into, you know, distinguishing between products because it gets very difficult with the concept of bundling because multiple products are involved. I will highlight that the pricing that we talked about is specific to this area and not to the other bundling aspects that we've had. There's still contribution in our ARPU related to our pricing and bundling, it's just not to this one specifically.

Got it. Thanks, Mark. Thanks, guys.

Thank you.

Our next question comes from the line of Arjun Bhatia from William Blair. Arjun, please go ahead.

Hi, team. I'm Willow on for Arjun Bhatia. Thanks for taking our question. Can you unpack A&C bookings growth? Was it largely impacted from the recent promotional activity in the quarter, or is there anything else to call out? I'm just trying to appreciate the detail and the timeline to inflected growth from initiatives like Airo and then pricing and bundling historically.

Yeah. Thanks, Willow. You know, nothing to call out different than we talked about last quarter. The, you know, there are various aspects across our bookings that were impacted. The two specific to A&C are the go-to-market offer. There is an allocation element when we bundle products together in the initial order that will impact A&C. Then what we were just talking about on the pricing aspect of pricing and bundling related to the upgrade to the Websites + Marketing product. Those are the two impacts on A&C bookings. And obviously, as we go throughout the year, we expect some of that to pass. Now, on revenue, it's more evened out because of the subscription nature of what we do, but on bookings, that was mostly peaked in Q1.

Great. Thank you.

Our next question comes from line of John Byun on for Brent Thill at Jefferies. John, please go ahead.

Hi, can you hear me?

We can hear you.

Great. Thank you. Just two questions. Again, on the Airo AI Builder, in terms of monetization, is it just the subs and the AI credit for the product itself? Or are you starting to generate anything from also cross-sell of other GoDaddy products. Follow-up would be international revenue growth seemed to slow a little bit to 7% from, I think last year was mostly within 10%-14% range. I don't know if there's anything you can call out there. Thank you.

Yeah, thanks, John. On the run rate for Airo AI Builder, that's just the subscription and credits for AI, Airo AI Builder. We have not baked in sort of attach or other products into that yet. All of that is to come. You know, you will see over the next few weeks, this product sort of become a bigger part of the GoDaddy ecosystem. As it does that, then we can have additional bookings that relate to those customers. But for now, we're just, you know, trying to give you the cleanest picture of this new product so that, you know, folks can understand the overall AI story at GoDaddy.

On the international revenue, the only thing to call out is aftermarket last year was some of the larger transactions hit the aftermarket and contributed to the growth rate overall. We didn't see those type of transactions in Q1, the larger ones. It's just a tougher compare from aftermarket or Q1.

Agree. Thanks very much.

Our next question comes from the line of Ella Smith on for Alexei Gogolev at JPMorgan. Ella, please go ahead.

Good evening. Thank you for taking our questions. First, I was hoping to ask about the ANS. What do you think is GoDaddy's competitive advantage or right to win as it comes to the ANS, especially versus larger competitors?

The biggest thing about ANS is that we have put to the world that agents that we believe will be roaming the Internet and be larger in terms of traffic than human traffic soon should be registered on the Internet. Large destinations, whether those are websites, systems, platforms, other, you know, organizational enterprises, should recognize agents that are registered, because if they're not registered, it is going to be very difficult to trust agents. It's going to be very difficult to transact with agents. It's going to be very difficult to just know which agents are real and which are fake. We think we can avoid all of that by registering agents using Agent Name Service, which again is backed by an open standard.

The reason GoDaddy has huge right to win here is because within the Agent Name Service open standard, we say that while people should register agents with ANS, those agents should be discovered using DNS, which is Domain Name System. Domain Name System is a directory on the Internet that everybody uses. It's one directory. It replicates everywhere. Agent registries are popping up in every company. How do you bring that together? You bring that together by connecting those registries to the one directory.

If we connect it to the 1 directory and in that directory put the agents under the domain name, then the domain name becomes core to the identity and trust relationship that agents have now and into the future, which as the world's largest domain registrar, it's obviously, you know, good for us if domains plays that role. You know, what we're excited about and we're seeing good reaction from the large players, and of course they wanna take their time to understand things. What we're really offering to the world here as an open standard is a beautifully elegant, scalable solution, and it already exists. Nobody has to recreate it. Hopefully that helps a little bit to understand why Agent Name Service is so important and why it links back to GoDaddy as the world's largest domain registrar.

That's very clear, Aman. Thank you. If I may, a follow-up for the domain business. We were hoping to ask some questions or a question about the, your strategic objectives for the domain business. Is your intention to maintain or gain share, or would you be willing to let some lower LTV domain customers go at the expense of your market share?

I think we've said that, you know, we will let low LTV customers go because our focus is high-intent customers. If I step back and look at the domains business, you know, we continue to be the world's largest domain registrar by far. Over the last 30 years, all kinds of competition has come into the world, right? We have seen very low-priced domain registrars. We've seen people use domain as loss leaders. We've seen people give them for free. We've seen blockchain, and the list goes on. Now the new normal includes LLMs and app builders and lots of things. We are coming to that world with a lot of experience in competing in this business and a lot of tools to compete in this business.

What we have consistently found is that the value is in the high-intent customer. The value is in the customer that has good intent, buy the domain name and then does other things with it. By doing those other things, that's what drives LTV for GoDaddy. That's what drives our business.

Great. Thank you, Aman.

Our next question comes from the line of Naved Khan from B. Riley. Naved, please go ahead.

Great. Thank you, Christie. I'm curious, Aman, how much of the traffic are you exposing to the website, to the Airo website builder? Is this still something you're testing and iterating or you already kind of rolled it out broadly? That's one question. The other is just from the Airo AI Builder. You said, I think, the plan is to put some marketing dollars behind it. Maybe you're already doing it. How significant is that, and what will it take for you to go from, you know, going from sort of testing the waters or kind of putting more or increasing the allocation that you have on marketing trends behind this. Thank you.

Yeah. On the first, Naved, from GoDaddy.com, we are still sending only a small amount of traffic into this new experience. Our largest funnels on GoDaddy.com are our domains path, and they are our create path, which is the website path. Both those paths currently go into the existing champion version of Websites + Marketing. Over this year, we expect that to evolve, but, you know, as that evolves, more and more traffic will go to this, to the new products, I'm super excited about them, and it'll definitely grow, you know, the usage of the products, the units on the products and the dollars associated with that. When we look at GoDaddy.com, it is still a small amount of traffic, and we have a ways to go in terms of being able to drive more traffic to it.

In terms of the marketing plan for Airo AI Builder, we expect to spend a significant number of dollars this year. We are starting in Q2 this year towards that. We're going to fund that, those dollars with other efficiencies in the business. You know, Mark doesn't have to change any of his plan. We, when we look at that, it's the same disciplined approach that we have done in the past, where we look at what we are spending, what the return is. We increase it, and we improve it. This is core to our evidence-based decision-making culture.

You know, you'll start to see us spend more in marketing. What we're looking for is the traffic coming to the product, the engagement with the product, the sign-up with the product, people buying it, people publishing sites, and then people coming back and engaging with it and buying credits. That's the whole chain we're looking at. Over the next few, two or three quarters, our expectation is to ramp that up.

Yeah. Just to reiterate, there's no change in the framework of how we approach this. We'll use the data, and when we see the returns, we'll continue to invest into the marketing.

Maybe just to kind of follow up on that, on the Airo AI Builder, how is pricing evolving? Is it something that's set in stone, or is that something that you're testing and might change? Give us a touch then on that.

We did test two different plans, Naved, and we're happy with the plan we've settled with. That's one of the gates in terms of ramping up marketing spend. We're happy with the current plan. The current plan include a starter plan that you can get just started with for free with a few credits, or just free plan and then a starter and a professional and an ultimate plan. It has a subscription and a credit system with it. We think we have a good setup here, and for the foreseeable future, we're going to stick to it. There are levers that we can pull over time, but for now, we're just gonna focus on scaling it as fast as possible.

Great. Thank you.

Thank you.

Our next question comes from the line of Jack Halpert on for Deepak Mathivanan from Cantor Fitzgerald. Jack, please go ahead. Jack, I think you're muted.

Oh, there we go. Can you guys hear me now?

Yes, we can.

Awesome. Thank you. Just one from me. You guys mentioned removing a lower value product offering this quarter. Can you just give some more color on what exactly that product was and maybe how much it impacted customer count, revenue, and if there are any other lower value products that you're evaluating in the portfolio?

Yeah. Let me take that. Mark, you can jump in. You know, as we talked last quarter, we have taken bold steps in terms of our promotional offers because we are in a dynamic environment, we need to test faster, we need to move faster. As part of those promotions, what you saw from us last quarter is we actually saw a significant gain in customer growth adds. In fact, the promotions that we did moved growth adds over 100,000. It brought us over 100,000 new customers. It's a very large number for us with a set of promotions. When we saw those promos, of course, we optimized, we decided to optimize those promotions to balance bookings and customer growth because we want to stay with a high-intent customer.

When we look forward, you know, we're really excited about our ability to do that. When we bring in that many number of customers, we also take the opportunity to make tough decisions on products that we're going to retire. That's what we did in this last quarter. The promos that we had did very well in attracting customers. What we did is we decided to tune them to balance bookings and customer count, and then we took the opportunity to retire an old product that actually had an impact in customer count, but I think Mark can confirm little to no impact on bookings.

That's right. This is a case of a product that we had offered in prior years. It wasn't really generating the value that we needed, we're just not going to support it anymore, and we're going to reallocate those resources. It didn't have any impact on bookings and did have a slight impact on churn within our customer group. Again, I would look at this, we will continue to evaluate our portfolio because our goal is to optimize for our higher value offerings, and in certain cases, make the choices between that and a lower value offering that may not be getting the return anymore that we need.

Great. Thanks very much.

Thank you.

Our next question comes from the line of Kishan Patel on for Josh Beck at Raymond James. Kishan, please go ahead.

Hi, this is Kishan Patel on for Josh Beck. As chatbots, AI mode, and other AI native discovery searches continue to gain scale, have you observed any notable changes in top of funnel traffic patterns, customer acquisition behavior or conversion paths? How are you thinking about GoDaddy's positioning if more customer journeys begin inside AI interfaces rather than traditional search?

Yeah, you know, on the traffic coming to the top of the funnel, I think consistent in the last quarter in terms of what we've talked about before, I think we had shared that we do see some impact to traffic in search because of the move to AI mode. We were able to offset that impact to traffic by improving conversion on our side. That same relationship has continued. We haven't seen any further change in that or the trajectory of that versus what we saw in previous quarters. In terms of, you know, customer journeys starting in AI bots or, you know, there's lots of new interfaces and sort of new things that we're looking at.

The way I look at it is, you know, what we're looking for is, you know, wherever customers are starting their journey, you know, how can we provide them the value that we have? When we provide them the value, is this an exchange of value for us? Like, are we able to build on it? The simple example of that is that, you know, if people Let's say if we get to a world where everybody has an agent and that agent goes out and does things, we want to make sure that we have the APIs, we have the offerings where those agents can work with GoDaddy as successfully as with anybody else. Cause we see that world slowly developing as the new normal, that's what we have to compete with.

You know, we've competed over 30 years with lots of companies, with lots of business models, and this is a new one, and we think AI is here to stay. We're actually excited and organizing our teams to compete in that world.

Thanks very much.

Thank you.

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

Awesome. Thanks. This is Katie Kieser for Elizabeth. Just with Airo Care now being rolled out to multiple markets, multiple languages, highlighting kind of improved resolution in those non-English speaking markets, does that change your kind of international growth opportunity at all? I guess just broadly, you know, how does AI-enabled multilingual care kind of change or accelerate the approach to entering markets that maybe previously were less attractive because of, you know, support or kind of localization costs? Thank you.

Yeah. As you know, care is so core to our competitive differentiation and so core for the customer. We know our customer needs that support, whether it's through voice or chat, that we provide that capability in many markets in 22 languages all over the world. Those are just our core languages and translated in even more. Having Airo Care, which natively provides that ability, is definitely going to allow us to compete much better in international markets. We're really excited about this first data point where by taking AI or Airo Care and using it within our messaging system, actually, that's the test that I talked about in the prepared remarks.

That test being able to perform almost equally globally is great news for us because it's so difficult for us to provide that high level of service that we have, that huge NPS that we have in smaller markets, in Asian markets, in a way we may not have a big presence. If we can do that with Airo Care, we can definitely be more aggressive in those markets. We're looking forward to that, and I think it's an exciting opportunity for the future for us.

Katie, I think you're muted.

That's it for me. Thank you.

Thanks, Katie. I'll turn the call back over to Aman for closing remarks.

Thank you, Christie. Thank you all for joining. super excited to be where we are and a great journey in front of us. A big thank you to all GoDaddy employees for the quarter. I'll see you next quarter.