GoDaddy Inc. Q2 FY2025 Earnings Call

Welcome to GoDaddy's Second Quarter 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. 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 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, August 7, 2025. 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 all for joining us today. At GoDaddy, our mission is to empower entrepreneurs and make opportunity more inclusive for all. We draw inspiration from the ingenuity of our customers who are the people building businesses, chasing dreams and positively impacting their communities. As our small business survey consistently shows, they are a resilient group and remain optimistic about their own businesses even when navigating increased complexity. That's why we are committed to delivering the critical technology they need, combined with the human guidance that is empathetic, accessible and grounded in their success. It is this combination that helps our customers thrive and grow with confidence. In the second quarter, our disciplined execution delivered strong results, reflecting the power of our strategy of attracting and retaining high-intent customers who generate high lifetime value for GoDaddy. A&C bookings grew 12% against the toughest comparison for the year, and normalized EBITDA margin expanded nearly 200 basis points, reflecting the operating leverage in our model. We made strong progress towards GoDaddy's financial North Star of maximizing free cash flow with growth of 21%. Reflecting that momentum, we are raising our full year 2025 free cash flow guidance to approximately $1.6 billion. As a leader in bringing AI to micro businesses, we are energized by the transformative potential that Agentic AI is unlocking for Airo and our customers. This is more than an evolution. It is a leap forward. This quarter, we began testing a new conversational experience that lays the foundation for something truly groundbreaking, an agent that can intelligently complete complex multistep tasks for our customers, freeing them to focus on what matters most — building their dreams. Imagine a world where entrepreneurs can ask Airo anything across the full spectrum of our offering and receive instant contextual support seamlessly connected to our expert guides when they need a human touch. Brought to the customer experience as Ask Airo, its goal is to be a fully guided and proactive digital experience powered by agentic AI and elevated by empathetic care. The short video you saw at the start of this call offers just a glimpse into the future we are building for our customers. Behind the scenes, our operations are undergoing a fundamental shift powered by AI. Across the company, employees are embracing AI and agentic tools to accelerate the velocity of execution. In one recent example, 2 interns leveraged our internal Agentic platform to build an agent that autonomously diagnoses anomalies in experiments, reducing a process that once took days to just minutes. From engineering to accounting, AI and Agentic AI are reshaping how work gets done by transforming roles, unlocking efficiency and enabling our teams to focus on higher impact outcomes. We can't wait to bring all of this to life for you as well. We look forward to sharing a deeper look at Airo's Agentic capabilities at our investor dinner later this year. What we are building is exciting, and we are off to a great start. As always, I also want to share a bit more about our growth initiatives, starting with pricing and bundling. With half the year behind us, we feel confident that this initiative is on track and delivering across both ANC and Core platform for 2025. At the same time, we are actively executing against our 2026 roadmap, testing and scaling new offerings that represent the next phase of this multiyear journey. These new bundles are based on new partnership capabilities and the early results have been promising. Pricing and bundling is starting to benefit from our increased code writing velocity using AI. As an example, we recently concluded a test integrating a new partner product into GoDaddy's technology stack over a matter of weeks rather than months. Remarkably, nearly 100% of the code was generated by AI and guided by a senior engineer. This was work that would typically have required a small team for a few months. While the exploration of AI-driven coding is ongoing across many use cases, this example demonstrates the transformative potential of AI-driven coding in pricing and bundling. Scaling this type of result across our teams would create a step function change in velocity, enabling us to test new bundles at a pace many times faster than today. Our next major initiative is seamless experience, an ongoing large-scale experimentation machine designed to enhance the entire customer journey from landing page and initial search all the way through to purchase and renewal. It is focused on improving discovery and reducing friction, saving our customers' time and effort. Through this initiative, we boosted conversion rates, strengthened attach and drove better renewal performance, outcomes that our scale translate into meaningful financial impact now and in the future. The bookings generated from seamless experience have scaled in an impressive manner, and this initiative has an equally strong roadmap as pricing and bundling and its impact and contribution is becoming increasingly comparable. Turning to our commerce initiative. We surpassed a significant milestone, reaching more than $3 billion in annualized gross payments volume on continued strong conversion of our existing base of customers, a clear signal that our strategy is resonating. Equally exciting, our focus on delivering powerful high-value tools is gaining traction. Our newly launched Rate Saver, a credit card surcharging feature that can reduce effective rates from merchants by more than 50% is demonstrating promising early momentum with attach rates climbing. Last but never least, Airo discovery and engagement continues to grow, and we expect it to increasingly shape and monetize our future customer cohorts, and our strongest cohorts are ahead of us. Notably, Airo cohorts consistently outperformed non-Airo cohorts across key metrics, including average order size, multiproduct attach rates and renewals, serving as a catalyst for the growth in higher lifetime value customers. These gains are compounding, creating long-term leverage in our model. We are deeply focused on Airo's continued evolution into a true differentiator that accelerates customer success and drives sustained value across the entire GoDaddy ecosystem. In closing, we are proud of the progress we made in the second quarter as we push our strategy forward, making meaningful progress towards our 3-year targets outlined at our Investor Day in 2024. Our results reflect the impact of disciplined execution and the growing traction behind our priorities of expanding high-intent customers, capturing more wallet share and driving greater lifetime value. As we enter the second half, our teams are focused, our path forward is clear, and our business is well positioned to accelerate the pace of innovation that delivers long-term value to our customers and shareholders. With that, here's Mark.

Thanks, Aman. Good afternoon, everyone, and thank you for joining us. Q2 was another strong quarter for GoDaddy, underscoring the resilience of our customers and the mission-critical solutions that differentiate us in the market. We delivered A&C revenue growth of 14%, expanded normalized EBITDA margins to 31%, and we grew free cash flow to $392 million. Our consistent performance reinforces the strength of our strategy and the discipline of our execution as we progress toward our North Star of maximizing free cash flow over the long term. Total revenue grew 8% to $1.2 billion on both a reported and constant currency basis, surpassing the high end of our guided range. Annual recurring revenue grew 9% to $4.2 billion and international revenue grew 11%. For our high-margin A&C segment, we drove 14% growth in revenue to $464 million, in line with our guided range. A&C is now approaching an annualized run rate of approximately $2 billion, nearly doubling over the past 4 years on the ongoing adoption of our subscription solutions. A&C revenue now accounts for 38% of total revenue, which is an all-time high, up from 36% at the same time last year. Segment EBITDA margin expanded nearly 100 basis points to 44%. Our Core Platform segment delivered revenue growth of 5% to $754 million, exceeding our guide. These results were driven by growth in primary domains, up 7% on both units and pricing and bundling initiatives, alongside continued momentum in aftermarket, which also grew 7%. Segment EBITDA margin expanded by over 200 basis points to 33%. Moving to profitability. Normalized EBITDA grew 15% to $382 million, delivering an expanded margin of 31%, up nearly 200 basis points and in line with our guide for the quarter. The expansion was driven by sustained operational discipline with leverage gains reflected across our P&L. Total bookings grew 7% on a reported and constant currency basis to $1.3 billion against the toughest compare of the year. Within that, A&C bookings grew 12% and core platform bookings grew 3%. As a reminder, bookings primarily represents cash collected during the period. Importantly, free cash flow grew an impressive 21% to $392 million, reinforcing the strengthening of our customer cohorts and the increasing conversion of normalized EBITDA to free cash flow at a ratio that is now greater than 1:1. Our go-to-market strategy is focused on attracting high-intent customers who adopt multiple products and generate high lifetime value. Over the past year, cohorts that spend over $500 annually grew meaningfully, and that momentum carried through into Q2. This group now represents nearly 9% of our total base, and Airo is playing a pivotal role in its evolution by intelligently guiding their journey. These customers are expanding average order size and fueling GoDaddy's impressive total ARPU growth, up 10% to $230. What's more, this cohort demonstrates near perfect retention. The combination of rising ARPU and exceptional retention clearly illustrates the durable pathway we built toward a growing base of sticky, higher lifetime value customers. On total customers, we have largely moved beyond the impacts of eliminating deep discounts and divestitures. That said, we continue to see some residual pressure from migrations as they move through their initial renewal cycles. Excluding this remaining headwind, customer count has grown in each of the last 2 months. As these pressures subside and we benefit from strong conversion of higher intent cohorts, we expect a return to customer growth later this year. This momentum underscores the effectiveness of our strategy and the long-term value creation embedded in our integrated platform. On the balance sheet, we exited the quarter with $1.1 billion in cash and total liquidity of $2.1 billion. Net debt was $2.8 billion, representing a net leverage of 1.6x on a trailing 12-month basis. Year-to-date, through August 6, we have repurchased approximately $900 million of our outstanding shares. Our commitment to a disciplined capital allocation framework is unchanged, and share buybacks remain a key mechanism to return value to our shareholders. As of the end of the quarter, our fully diluted shares outstanding was 142 million. Looking ahead, I am pleased to share that given the strength of our performance year-to-date, our increasing profitability to cash flow conversion and the proven durability of our business model, we are raising our full year free cash flow target to approximately $1.6 billion, representing growth of over 18%. Additionally, we are raising our full year 2025 revenue outlook that we provided in February. We now expect total revenue to be in the range of $4.89 billion to $4.94 billion, representing growth of 7% at the midpoint. For the full year, we expect FX-neutral bookings growth to be in line with revenue growth. For Q3 specifically, we are targeting total revenue of $1.22 billion to $1.24 billion, also representing 7% growth at the midpoint of the range. Within total revenue for both Q3 and the full year, we expect Applications and Commerce revenue growth in the mid-teens and core platform growth in the low single digits. Regarding our outlook, I want to mention that beginning in the fourth quarter of this year, GoDaddy will no longer operate as the registry service provider for the .co top-level domain. As a result of this change, we anticipate an approximate 50 basis point headwind to bookings and revenue primarily in the fourth quarter. Importantly, this transition does not affect our ability to execute our strategic initiatives or deliver on our 2025 and 2026 financial commitments. For the third quarter, we are projecting a normalized EBITDA margin of approximately 32%, and we are reaffirming our full year margin expansion target of 100 basis points with continued sequential expansion each quarter this year, exiting 2025 at 33%. We expect normalized EBITDA to maintain greater than a 1:1 conversion to free cash flow for the full year. Our capital allocation approach remains unchanged, and we will continue to evaluate all opportunities according to our rigorous returns-based framework to maximize long-term shareholder value. In closing, we remain more confident than ever in the strength of our model and our ability to execute toward our targets. Our second quarter results reflect GoDaddy's solid foundation powered by disciplined operations, consistent innovation and the growing impact of our strategic initiatives from enhancing and expanding AI-powered experiences and solutions like Airo to attracting higher-value customers we are driving sustainable and profitable growth across the business. With nearly 30 years of consistent growth through a variety of macroeconomic backdrops, GoDaddy is built for durability and long-term value creation. That strength is anchored by a high-quality recurring revenue base, disciplined cost management, robust free cash flow generation and a strong balance sheet. Looking ahead, we are fully committed to delivering on our Investor Day targets of $4.5 billion plus in cumulative free cash flow generation, 6% to 8% annual revenue growth and expansion of our full year normalized EBITDA margin to 33% by 2026. With our continued momentum, we remain excited about our path forward.

I'll turn it back to you, Aman.

So maybe we can start with the A&C growth. How should we think about the deceleration in the quarter? And does this continue through 2025? Just trying to figure out if there's a trough considering the Airo strategy is layering in, which should help drive average order size and attach in the segment? And then maybe just a follow-up. What are you seeing in the latest cohort of customers who experience Airo? Is this helping with the multiproduct adoption?

Yes. Thanks, Will. No trough, right? We are happy about the momentum of A&C. And overall, as a business, we think that the bookings and revenue will be on par for the year, absent any impact of FX. A&C now is at a run rate of about $2 billion for bookings and revenue. We're really proud of the momentum there, and it is a growing business. It's at 38% of our total business today, and we're looking at it growing to about 40%. So we couldn't be more excited about the momentum within A&C. And hey, it was a tough quarter compare considering the growth last year in A&C was upward of 24%.

And maybe below that the comps do get easier in the second half of the year for A&C growth. So you can keep that in mind.

I also want to address your question about the cohorts related to Airo. We are observing these cohorts coming in and converting at higher rates. Their average order size is increasing, which is contributing to our growth in ARPU, and we are achieving a nearly perfect retention rate with them. This strategy is effective, as we are reaching high-intent customers, and we are very pleased with the momentum it is generating for the business, both in A&C and in our core platform.

On the customers that are sort of over $500 customers, that's where Mark's talked about the near-perfect retention, but that's being driven by the attach that Airo facilitates. So I think you're talking about it's driving attach is a average order size. We continue to see cohorts out from non-Airo cohorts every month.

I have a higher-level question probably for Aman. But when we think about the Agentic web and this kind of potential new front end, how do you think about kind of making sure that the website ecosystem and app ecosystem remains relevant? I think in some ways, investors want to make it a little bit cut and dry, like it's either the Agentic web or something else. But just kind of big picture, high level, like how do you see this affecting the way that consumers are gathering information? And what does this mean for GoDaddy?

Thank you, Josh. I strongly support and am optimistic about AI, particularly generative AI and Agentic AI. These advancements offer our company, which has access to over 20 million customers and significant brand recognition globally, the chance to deliver a range of products in a way that is easier for our customers than ever before. From the start, we've been pioneers in the AI sector for micro businesses, and I have been deeply involved in how we implement AI and now Agentic AI to enhance our customer experience. You'll see this in Ask Airo, which introduces a new interaction style that makes communication with our customers more seamless and conversational. We're also working on integrating AI with human expertise to create a smooth experience. I see two major opportunities for GoDaddy: first, simplifying processes for our customers, which encourages them to use more products, and second, transforming our internal operations through AI, empowering every role in the company. Currently, we are exploring and utilizing AI and Agentic AI, and as these efforts grow, I believe we'll see significant opportunities for companies like ours to improve efficiency and offer outstanding products to customers. We'll share more on this at the investor dinner later this year, and I'm excited to showcase our progress.

It's super exciting. I wanted to ask about the pricing learning curve for Airo, including Airo Access and the Airo Plus logo maker. It seems like you've conducted a lot of testing. Do you feel that the pricing has reached a stable pattern moving forward, or is it still heavily experimental? I'm curious about the insights you've gained and how they impact pricing decisions.

Yes. We tested all Access, and you are seeing various forms of Airo Plus through our different experiments on the site. It's still very early in the process. In some cases, we are successfully introducing Airo Plus, and customers seem to understand and choose it intuitively. However, in other instances, we've found that more education is needed, and a gradual introduction is necessary. Airo Plus is still new, having launched in Q1, so we will keep testing it. Overall, we are very excited about Airo's potential for increasing average order sizes through attach, engaging customers with multiple products, and reaching a higher-end customer base while fulfilling a broader range of their needs. We can see that this naturally leads to Airo Plus in the future. We remain extremely excited about it.

Great. First one for me. On the Dotco registry change, I appreciate the color sizing that for us. Is there a change here in thinking on whether you want to be a registry versus a registrar? Or is this just a one-off related to that specific country code? And then, Mark, on the 3Q EBITDA margin and full year margin unchanged, it implies diminished margin improvement in the back half versus about 2 points in the front half. Are there some costs layering in here that we need to be mindful of or some mix differential or anything like that? And then bridging that to the raised free cash flow guide, is there something working capital-wise that we need to be mindful of? I think I heard you say that you're now expecting greater than 1:1 EBITDA to free cash flow conversion. So just hoping you can unpack that.

All right. No problem. Trevor. No change in our philosophy. This was a one-off situation where we went out to rebid and the profitability metrics that were needed to continue in this relationship just weren't there for us. So I would say it's more on the strategy of our profitable growth and making sure we stay disciplined to our framework versus a change in philosophy. On the diminished margin expansion, nothing really to call out here. We are doing well. We're expanding sequentially quarterly. We're on target for a 33% exit. Our comparisons for the margins last year in the second half are a little harder than they were in the first half. There's nothing to call out expense-wise. And on the free cash flow, it's being driven by our strong bookings and the cohorts coming in. Remember, bookings is the beginning of our free cash flow, the top line of our free cash flow. And we're seeing a lot of strength at the top of that funnel related to the cohorts we're bringing in. They're coming in at higher average order size, better retention, and that's helping us on our free cash flow. So positive momentum in the business and operations is the driver. Nothing to really call out on working capital or unique expenses in the second half.

Can you hear me okay?

Yes, payback.

My first one is on Ask Airo. I appreciate the video that you shared at the top of the call and all the commentary around the opportunity from Agentic tools. I'm just wondering if you could talk more about how you're thinking about the timeline for bringing these solutions to market across your customer base and just what some of the initial feedback has been from the tests that you've been running so far? And then my second question is on the customer count. I appreciate all the color on some of the underlying trends there. But on a headline basis, I think you said you still expect to return to growth later this year. And I'm wondering if you can put a finer point on the timeline there, if that's going to happen in the third quarter or the fourth quarter? And what you're seeing at the top of the funnel or other signs that give you confidence that you'll return to growth this year? And I'll leave it there.

Thanks, Vik. Let me start with Ask Airo. Ask Airo is actually already being tested on a few pages on the site. So what happens is we replace that little button at the bottom where customers can ask questions with Ask Airo. And the initial tests have shown that customers actually like clicking on that button. It attracts their attention and it opens up a model and a conversational experience for them where they can do a few things. Now having this initial success where the user interaction pattern seems good and is tested, we're going to layer in more and more Agentic capabilities into Ask Airo over the next quarter. So it's very much right in front of us over the next few months. And the idea is to keep bringing in more and more capabilities as we see what customers are exploring and what sort of works well. I think folks probably understand this, the AI capabilities, they're not deterministic. It's a probabilistic modeling work. And so you have to test it. You have to see that the customer is getting a fantastic interaction and then you sort of roll it out and handle more and more use cases. The thing I would say about Airo is we are talking about a real set of agents that actually find and resolve issues or do sales or all of that on the customer's behalf. We're not talking about an agent that says, 'Oh, if you want to do this, you can find it here.' We're talking about very, very real AI Agentic technology that really simplifies it for our customer.

Yes. Our strategy focuses on attracting high-intent customers, and we are seeing an increase in the number of customers spending over $500 with us. This group is significantly contributing to our growth, showing a higher average order size and near-perfect retention. Everything is functioning as planned, possibly even ahead of schedule. Regarding the total customer count, we are experiencing some decline due to migrations as we complete the renewal cycle, primarily among one product customers, often low-cost domains. We anticipate this trend will continue throughout the year. Recent months have shown positive indicators, but we cannot pinpoint an exact timing for a positive outlook. Nonetheless, our emphasis remains on high-intent customers who are likely to spend more than $500 with us.

Fantastic. I guess my question is kind of merging Vik and Josh is a little bit this is probably less of a headwind for you guys versus your peers. But are you guys seeing any change in terms of the top of funnel? Are you seeing any change in share shift in terms of potentially AI, by coding tools maybe taking some share on kind of your web presence products? Any color there would be great Aman.

I'm very enthusiastic about the potential of AI and Agentic capabilities, which simplify processes for customers, whether they're looking to find domains, create websites, or utilize any of our features. It's important to note that we're not experiencing any direct issues. Our strategy focuses on attracting customers with high intent. We're noticing strong engagement at the top of the funnel, improved year-over-year conversion rates, and increased order sizes. Those are the metrics we're observing. Looking ahead to the next year or two, I want to emphasize that I've been deeply involved with our teams on this for many years. The advancements we're seeing today would have seemed unattainable just a year ago. If we evaluate our current capabilities and claim that we've reached a peak, I don't agree. We're at the onset of a transformative era driven by AI, and significant developments are expected in the next two to three years as AI technology advances, scales, and integrates into every aspect of our operations. This presents a substantial opportunity. Will multiple companies leverage it? Absolutely. However, GoDaddy boasts strong global brand recognition, an extensive customer base, and a steady influx of new customers each year. We have the potential to develop these tools in-house due to our enhanced technology and software development capabilities, as well as the financial strength to invest in the best solutions for our customers. I see this as a tremendous opportunity for our company.

Got it. Understood. Appreciate the insights there. And then maybe somewhat building on that, I guess, do you feel the value or having the starting point at the domain, does that strategic value increase going forward? Maybe a little high level and maybe a little far out, but I'm sure something you guys have noodled on internally.

We love our position as the world's largest domain registrar. We love our position that the world thinks of GoDaddy to think of domain names because every idea, when people have the idea, the first thing they think about is, 'Oh my God, let me protect the name of that idea. And they do that by buying a domain name. That gives us access to those customers when their ideas start. In fact, we see so many ideas that never start because customers search for things, they may not even become our customers, but we are gathering that data all the time. And given our large scale, we get to see search traffic or what people are searching more than probably anybody else. So our core model of starting with the domain name, making that funnel stronger has been a tremendous advantage for the last 28, 30 years. And as we look forward, it's only becoming stronger because we've taken the domain name and we've worked to reinvent it to say when you start with the domain name with Airo, you're going to get all these other things, too. So you're not just starting with the domain name, you're starting almost with sort of a set of things that start your business, almost like a business in a box, just with a domain name.

Could you provide an update on Airo, specifically regarding conversion and monetization? When Airo was first introduced, a key feature was the creation of the initial landing page upon domain registration, with the expectation that this landing page would evolve over time. It seems like you're making progress with $500 customers, but are you experiencing improved conversion rates on these landing pages, leading to real sites and additional products? Please update us on that flow and its current trend.

Yes, Ygal, the percentage of customers who use our website product has increasingly been through Airo over the past year. For several quarters, we've shared that data, and it keeps rising. Customers typically start with a domain name, and we then create one paid site for them. A significant number of customers are happy with that, making it easier for us to upsell additional paid websites. More of these paid websites are now created using AI, which completely changes the previous notion that customers needed to build a website with an editor and a template. Instead, when customers acquire a domain name, we effectively understand their ideas and present them with several options. Choosing one of these options clarifies their needs, allowing us to develop a paid site for them. We take this information, along with insights from other customers, to transform it into a tailored paid product. This is the direction we're pursuing, and increasingly, customers are obtaining paid products through the Airo pathway.

Yes. And just taking a step up, right? If you think about volume for us being stronger retention rates, better attach, new customers coming in and buying and converting higher, that is doing really, really well for us. The other side of the equation is the pricing and bundling, giving more value and getting price for it. If you look at those as the 2 drivers, the price element plus the volume element, they are contributing equally now to our growth. And that puts us in a really good spot going forward. pricing for value, but yet also getting the stronger cash retention and new customers coming in and converting at a higher rate.

The transition to focusing on customer cohorts has been remarkable. We have taken a customer-centric approach, which has enabled us to gain a comprehensive understanding of our customers' relationships. This has positively influenced our renewal rates because our goal is to support our customers' success without driving them away through pricing. We aim to equip them with the necessary tools for success, and when they thrive, we benefit from that success as well. This is the essence of our value-based offering.

You have more to add, but the great part about this cohort is that it is now contributing to both A&C and the core platform. We are starting to see some of that growth reflected in the domain aspect of the core platform because we are bundling the domain with certain features. These cohorts are really beginning to prove effective, and we are already considering next year.

Yes, exactly. I wanted to add that we feel very confident about our upcoming pricing and bundling strategy. We are currently testing bundles that will be launched in Q4 of this year or Q1 of next year, which will drive our pricing and bundling efforts for the future. We approach this with a strong experimental mindset. The same applies to our initiative for a seamless experience, which is based on thousands of tests aimed at enhancing the customer experience in numerous ways. We are continuously improving in this area, and I highlighted in my prepared remarks that both of these initiatives are beginning to show similar returns and have promising plans ahead.

Maybe I'll just follow on to that last one. I think security was a pretty big driver for you on the pricing and bundling last year. I guess as you're doing all these tests, and you talk about the Q4 launch, any way to think about kind of sizing the magnitude of impact that it had because I think I think it showed up in the P&L fairly well from the security side. So just how to think about that as you roll these products out over the next 12, 18 months?

Yes. I'll probably turn to Mark a little bit, but my guess is a little early to talk about what the specific bundles would be for 2026. As we've evolved this capability, we're a little careful about how much detail we publicly talk about the specific bundles because they can tend to be quite unique to cohorts of customers. But I think we'll talk about 2026 when we get to it.

Yes. We'll talk about 2026, but coming back to the commentary I made before, when we look out at the contribution across our cohorts, how much is being driven by the volume element and the improvement and the attach and convert versus how much is being driven by pricing and bundling and that value element of it. And the fact that they are now starting to even themselves out, it gives you a pretty good idea that we have a good model here that's starting to contribute, and it's based on the balance between the 2.

First, nice acceleration on ARPU sequentially. I was hoping you could qualify uptake from marketing suite or Airo Plus that may have contributed to that.

The marketing suite and Airo Plus are still pretty new products. So while we're very happy with the attach that's happening with these products, and we continue to put them in front of more and more customers. Overall, there is still a small part. I don't know, Mark, if you want to.

I'll just talk about Airo in and of itself. We couldn't be more happy at how the strategy is working and what we're seeing at the top of the funnel and the increased convert and the ability to get to the average order size and the near perfect retention that we're getting from that cohort that is coming in. Airo Plus, that is still in the early stage and things like that will contribute to Airo overall. But right now, we're just seeing the experience driving that strong behavior at the top of the funnel. We see steady traffic. We see higher convert. We see better attach. We see higher average order size. And that's because the Airo experience is taking our customers on that journey of what they need much faster, much better and that cohort is becoming very strong in our customer base right now. It's reached 9% or about 9%, and we continue to see that contributing more and more to our overall growth.

Got it. That's helpful. And then just one last one on a high picture question. As you think about Agentic and the opportunity that this may catalyze an upmarket push for you guys, perhaps something like an MCP, broader integrations there. Just curious if you could elaborate on that and perhaps some of the milestones we should expect over the next 12 months in terms of Agent monetization.

Yes. I think over the next 12 months, you can expect to see a GoDaddy that is completely enabled for Agentic AI, where Ask Airo uses agent-to-agent technology your other evolving technology that if you're asking me about these, I'm sure you know there are new standards coming out sort of every few weeks. And we expect to keep pace with them. We expect to be able to enable the GoDaddy platform for our customers and for our partners in a very significant way using Agentic AI.

Can you hear me?

We can.

Great. Regarding your comments about the rate saver that provides a 50% savings, I am curious about its sustainability and the kind of economics we can expect from it. Any additional insights would be appreciated. Also, concerning Airo, how much of the flow at the top of the funnel is currently exposed to Airo? Previously, you mentioned that more than half of the users see it, but any updates on that would be helpful.

I'm happy to provide that information. The Rate Saver product works by allowing merchants to reduce their fees by about half when they adopt it. It's not just a promotional offer; it's a product feature designed to help them lower their costs. We anticipate its adoption will grow among the new cohorts where we introduce it. In new sales, customers are quickly adopting it, understanding its benefits and expressing a desire for it. That's encouraging. For our existing customers, we're also running a campaign to encourage them to activate it. This aligns with our broader strategy at GoDaddy to enhance our economics and improve the SaaS aspect of our commerce and payments offerings. We're performing well with gross payment volume, but our focus has shifted towards SaaS products to provide a more comprehensive offering for our customers. Our core strategy remains unchanged, and we are benefiting from low customer acquisition costs, generating strong leads, which indicates that our strategy is effective. We are gradually expanding our sales force to reach more existing customers as we enhance our feature set across both payments and SaaS offerings. Regarding Airo, nearly all of our new customers at the top of the funnel are starting to see and engage with Airo. When Mark discusses Airo and non-Airo cohorts, he refers to those customers becoming aware of Airo. The approach has evolved, giving customers more options on how they utilize Airo. This development allows us to better segment customers, catering to those who simply want to buy a domain for their portfolio and those interested in Airo, leading to increased engagement across various products. As for the rollout, Airo will soon be visible to basically every customer, and we will continue to enhance engagement strategies, such as Ask Airo, which offers a conversational style and will function differently for existing customers, for instance.

Yes. And no doubt that now that all our customers at the top of the funnel are exposed to Airo that it is helping grow that customer base that is spending more than $500 with us because it is getting them to that attached and average order size that's higher. So it's having a real meaningful impact on our model, and that continues to be a bigger part of our customer base.

I have another AI question, but maybe from a bit of a different angle. We're often hearing about how it's harder for businesses to get their website found as SEO becomes more challenging. So just kind of 2 questions here. First, how is GoDaddy managing its own impact by SEO? I know you guys have a big brand recognition, so it might not be as impactful. But just curious how diversified is traffic? Any changes that you're making to the marketing strategy? And then second, what's the opportunity for GoDaddy to help its customers navigate this new world, whether it's by specific products or services that you guys can capitalize on?

Yes, GoDaddy is a prominent brand, and we perform well in SEO. We're also working to develop similar capabilities with AI language models. This makes sense as we observe the evolution of Google and search traffic. However, GoDaddy has managed to adapt to these changes through our strategy and approach. We have diversified our channels to attract customers and enhanced the efficiency of our outreach, leading to improved conversion rates. These factors help us offset any changes that occur. We believe that as the landscape evolves, we have the potential to lead in this new environment. One product we are particularly excited about, which we mentioned earlier in this call, is an agent that will handle SEO optimization and other enhancements for our customers' websites continuously. We have some internal projects exploring this idea, including an interesting autonomous experiment that measures its own performance. We see these technologies employing Agentic AI as a way to benefit our customers. The interaction for customers will be straightforward; they will simply ask Airo for help, confirm their interest, sign up, and then the agent will manage the rest.

Great. And then maybe just a quick follow-up on the Ask Airo. Just the surface area of what you can go after in supporting small businesses is very significant. So as you think about the expansion of capabilities, are there certain areas of workflows that you are highly focused on kind of near term? Are there other areas that could be surprising to investors that you could start to address? And are there any areas that are really just kind of out of the scope of what you guys are trying to look to with this product?

Yes. The customer tasks we are concentrating on include the entrepreneurs wheel, which we've discussed frequently. Agentic AI enhances our technology transformation internally by enabling us to consolidate all our capabilities into a conversational experience for our customers. Another point I mentioned briefly in the prepared remarks is the integration we have with our partners; using Agentic coding with AI is a valuable use case for various reasons. As we scale this, I believe the element of surprise and delight will emerge, allowing GoDaddy to bring in more partners quickly, test them faster, and deliver those experiences to our customers. We expect this area to evolve significantly in the next six months, and you will notice partners on the site offering diverse services. We will keep you informed about these developments in our earnings calls and share where we see the best results.

I'll now turn the call over to Aman to close this out.

Thank you, Christie, and thank you all for joining us. As always, a fantastic thank you to all GoDaddy team members across the world. We're super excited about the products we're building, the customers we have, and the best is still in front of us. Thank you very much.