Welcome to GoDaddy's second quarter, 2026 earnings call. Thank you for joining us. I'm Kristi Masner, 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. 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'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.godadi.net or in today's earnings release on our Form 8K 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, July 30, 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 our strategies to serve our customers needs across the entrepreneur's wheel and ai is fundamentally changing how our customers create and grow their businesses and how we execute on our strategy we have built and positioned Aero as an agentic operating system for small businesses. Aero is the centerpiece of GoDaddy's largest initiative, our AI transformation. The AI transformation will enable us to continue to build on our significant track record of delivering value for both our customers and shareholders. When we introduced Aero almost three years ago, It was an AI-powered experience that helped our customers discover, engage, and adopt more of our products. Last quarter, Aero AI Builder took a significant step beyond that as a distinct agentic experience. Today, we have unified Aero and Aero AI Builder into a single platform as an agentic operating system for small businesses simply called Aero. Aero can build out the comprehensive experience of whatever a small business needs to operate, from storefronts and booking systems to client portals, and it helps our customers run their businesses day to day. Everything our customers relied on before lives inside this singular immersive AI experience. Aero for small businesses is our biggest focus and source of excitement, and customers are loving it. I work directly with Aero customers every week, and their response tells me we are building exactly what they need to succeed. Customers are choosing Aero at a rate that is exceeding our expectations. Annualized bookings run rate has increased 5x to 50 million versus the 10 million we shared just one quarter ago, and engagement continues to build among our high-intent customers. The momentum behind Aero is undeniable and just as important, the quality has improved as we have scaled. Nearly all of this growth has been organic, demonstrating strong customer interest even before we have meaningfully leaned into marketing. Customer satisfaction also remains high, giving us confidence heading into the second half of the year. We are actively testing Aero in the domain's purchase path, which is a high bar since it is our largest funnel and one that has been optimized for conversion and attach with our existing products for years. With a number of enhancements already underway, we expect to scale marketing and deliver continued strong traction for Aero. the world is evolving quickly and we are meeting the moment small businesses are engaging with technology in entirely new ways and we are transforming our experience to meet them where they are going that requires making deliberate choices about where we invest our time talent and capital recognizing that investments carry different return profiles our priority is to build the best end-to-end ai operating system for our customers as part of that shift we are de-emphasizing a few products as standalone offerings and bringing their capabilities into aero, simplifying the experience and enabling customers to build and manage increasingly sophisticated web experiences themselves. More broadly, as AI reshapes how small businesses create and manage their online presence, we expect the need for traditional products like do-it-for-you services, and template-based website builders to narrow and evolve over time. As the transformation unfolds, GoDaddy is well-positioned with an earned right to win, grounded in a value creation strategy that remains consistent. Building a business online takes more than a layer of AI. It takes secure hosting, payments, customer engagement tools, and dozens of other jobs. Most small businesses lack the time or expertise to stitch together themselves. We have built one of the most trusted brands in small businesses over nearly three decades, backed by more than 20 million customers, a strong distribution advantage, a broad set of solutions, deep technology expertise, and a care organization that knows our customers and the needs of small businesses better than anyone. Our AI transformation is how we are putting those strengths to work. Our vision for Aero is to deliver all of that as one integrated, immersive experience. And that completeness is what differentiates GoDaddy. We remain focused on generating profitable growth by attracting high intent customers who adopt more of our technology and in turn drive higher lifetime value. The mechanisms may evolve through AI or pricing or merchandising or other means, but the model remains remarkably durable. In addition to Aero, there are three other connected work streams in the AI transformation at GoDaddy, and I'm excited to briefly touch on these today. First, we are reinventing our own operations to be AI native, to improve customer outcomes and increase the speed of innovation. In care, Aero continues to improve resolution rates across both chat and voice, with the 24-hour repeat contact rate for customers served by our voice bar dropping by over 16 percentage points in Q2. This allows our care teams to focus their expertise on more complex needs and on guiding customers as they build their businesses. We are also using Aero to power processes internally at GoDaddy, giving us the opportunity to test new capabilities and rapidly improve the product through everyday use. That same rigor extends to how we fund this work. Scaling aero at this pace comes with investment and managing it carefully matters as does the innovation itself. We anticipated the rise in AI compute costs and took actions early to offset them, giving us room within our financial framework to support both greater AI usage and increased marketing behind Aero. We continuously test across multiple models to make sure we are creating the expected customer experience while using the most effective and efficient option for each job. That discipline gives us confidence in our ability to manage compute and token costs as Aero scales over the long term. The second and The newest work stream in the AI transformation is doubling down on GoDaddy APIs being better designed for consumption by agents, including LLMs. This quarter, we launched the GoDaddy Developer Platform, a new generation of domain APIs that allow developers and AI systems to search, purchase, configure, and manage domains directly within the tools where they are already working. LLMs are increasingly becoming a large surface for creating software and businesses, and this enables our platform to be equally accessible to both people and AI. This is our first step. Today, these APIs focus on the domain lifecycle, but over time, we see the opportunity to expand this approach across more of our platform, making it easier for AI systems to securely interact with a broader set of GoDaddy capabilities, including hosting and commerce. On ANS, our third work stream intended to help shape the infrastructure of the agentic web, we achieved strong new alliances this quarter. Identity and discovery are essential layers of the open agentic web, and domains are the natural foundation for both as the web moves towards an agentic future. To that end, GoDaddy enhanced the agent name service standard, launched it in production, and this quarter announced our intent to contribute it to the Linux Foundation. On Discovery, we co-developed the Agentic Resource Discovery Specification, or ARD, alongside many of the world's leading technology and AI companies. ARD helps solve agent discovery, making it possible to locate tools, skills, agents, and other resources instantly. Together, ANS and ARD point to the same conclusion. domains are and will remain a trusted foundation for identity and discovery in an ai driven internet and that trust enhances and extends the value and demand for domains well into the future our q2 financial performance and the work we have shared today showcases a company executing on both the business we have today and the business we are building for the future we stay focused on fundamentals and what we can control our core initiatives pricing and bundling seamless experience and commerce continue to perform well strengthening our high intent customer base and reinforcing the durability of our model at the same time the momentum in aero is giving us greater confidence in the role godaddy will play as ai reshapes how small businesses are created and grown we will host an investor night in december which will give us the opportunity to connect the ai transformation work underway across the company with the value it can create for our customers and our shareholders there is much more ahead and we look forward to sharing it with you with that here's mark thanks and good afternoon everyone we are advancing our ai transformation while maintaining the financial rigor that has long defined godaddy our second quarter results

build on our track record of focused execution. We delivered revenue above the midpoint of our guide and expanded our normalized EBITDA margin by over 200 basis points. We generated strong free cash flow of $443 million, with trailing 12-month free cash flow of $1.73 billion. We continued our responsible and prudent capital allocation program repurchasing 852 million dollars as of july 29th reducing our fully diluted shares outstanding by another seven percent this year to 127 million shares total revenue for the quarter grew seven percent to 1.3 billion dollars and arr grew six percent to 4.4 billion dollars international revenue grew eight percent to 427 million dollars Our Applications and Commerce segment grew revenue at 11% to $515 million. Growth continued to be supported by customer adoption of our solutions. Segment EBITDA margin expanded roughly 250 basis points to 46.8%. Core Platform grew 4% to $783 million on strength in primary domain registrations and renewals led by both dot-com and higher-priced non-dot-com TLDs, alongside a strong aftermarket quarter driven by higher volume. Segment EBITDA margin expanded to 33.4%. Total bookings grew 6% to $1.4 billion. Core platform bookings grew 5%, representing acceleration from Q1, as we move past the peak of our promotional offer. Applications and commerce bookings grew 7%. These are solid results against a dynamic environment, with AI driving rapid changes to customer expectations and engagement patterns. While our ANC bookings from traditional products is moderating during this period of transition, we are moving quickly to anticipate and meet these changing expectations. Moving forward, we expect Arrow's scope to broaden, taking on capabilities that today live in separately priced products, such as traditional do-it-for-you services and template-based website builders. We view this as a deliberate trade-off as Arrow, monetized through a mix of subscription and token usage, continues to scale. We are encouraged by what we are already seeing, higher engagement and stronger free-to-paid conversion rates on Arrow. Over time, we expect this combined offering to be even more valuable than the separately priced products that our customers engage with today. Through this transformation, as always, we will remain disciplined in how we invest in growth, ensuring that we earn attractive returns as we drive growth. This approach positions us to continue generating strong free cash flow and shareholder value well into the future. Underpinning our transformation is the durability of our model, where high-intent customers who adopt more of our solutions retain at higher rates and ultimately generate greater lifetime value. Our distribution network has long been a key advantage in engaging our customers. Once customers are within the GoDaddy ecosystem, we can surface the best next product at the right moment, shortening the time it takes customers to engage, publish, and derive incremental value with more of the platform. These underlying fundamentals are continuing to strengthen alongside our transformation. More than 50% of our customers have at least two paid products with us, and that percentage continues to grow with the adoption of Arrow. What's even more encouraging is that over 70% of our customers who have used Arrow this year have two or more products, which is higher than our non-Arrow cohorts. Retention continues to improve above an already enviable 85%. ARPU increased 9% to $250. And the number of customers spending more than $500 annually continues to become a larger part of our customer base. This is what a durable self-funding model looks like. Expanding margins and strong cash conversion. Funding our AI transformation while still returning capital to shareholders. Normalized EBITDA grew 14% to $434 million, with margin expanding more than 200 basis points to 33.4%. Free cash flow grew 13% to $443 million, with normalized EBITDA continuing to convert to free cash flow at better than one-to-one. Our strong free cash flow, low leverage, and high liquidity provide us the flexibility to keep investing in our AI transformation while aggressively returning capital to shareholders. We ended the quarter with $1.2 billion in cash and total liquidity of $2.2 billion. Net debt was $2.7 billion, dollars representing a net leverage of 1.4 times on a trailing 12-month basis and well within our target range. During the second quarter we repurchased 6.6 million shares for 554 million dollars. Year to date through July 29th we have repurchased almost 10 million shares for 852 million dollars reducing fully diluted shares outstanding by 7 percent since the beginning of the year. Turning to our outlook, we are narrowing our full year 2026 revenue guidance to a range of 5.215 to $5.255 billion, representing 6% growth at the midpoint. As a reminder, the full year guide absorbs just over 200 basis points of cumulative impact from the DOTCO registry contract expiration and our consistent exclusion of high-value aftermarket transactions. For Q3, we are targeting total revenue within a range of 1.315 to 1.335 billion dollars, representing 5% growth at the midpoint. The third quarter represents our toughest compare on strong aftermarket performance last year. For both the third quarter and the full year we expect ANC revenue growth in the low double digits and core platform growth in the low single digits. Absent any FX impact, we expect bookings and revenue growth rates to be at or above parity for the remainder of the year. We are projecting a normalized EBITDA margin of approximately 33% for Q3 and reaffirm our full-year margin target of over 33%, reflecting continued operating leverage and AI-driven productivity alongside rising investments in AI products, platform, marketing, and compute. Q2 normalized EBITDA benefited from the timing shifts of certain costs, some of which we expect to be incurred in the second half of the year. We reaffirm our full-year free cash flow target of approximately $1.8 billion, with normalized EBITDA conversion greater than 1 to 1. On capital allocation, we operate within a disciplined, returns-based framework and have deployed greater than 95% of our free cash flow over the last four years toward share repurchases. Our continued commitment to returning capital reflects our confidence in the strength of our cash flow and the long-term value we are creating. We remain focused on allocating capital to the highest value uses, with a priority on driving long-term shareholder returns. Taken together, the combination of our free cash flow with our approach to capital allocation puts us on track to deliver on our North Star of three-year CAGR of over 25%, well ahead of the 20% target we set at our last investor day. finally i would like to formally invite you to our investor night on december 1st 2026 at our tempe arizona headquarters we will expand the programming of our typical investor dinner and use that evening to provide a more comprehensive view of our strategy how the work streams you heard about today come together and what they mean for our customers our business and our shareholders as the world is evolving we are launching the experiences to match the moment. As we transform, the principles behind our strategy and model, our focus on profitable growth, compounding free cash flow, and disciplined capital allocation are staying firmly in place. We look forward to seeing many of you there. With that, I'll turn it back to Christy for your questions.

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 Our first question comes from the line of Vikram Casavutla from Baird. Vik, please go ahead.

Hey, can you hear me okay?

We can.

Okay, great. Hey, everyone. Thanks for taking the questions. Hey, my first one is on the domains business. And Aman and Mark, it'd be great to hear your perspective on your current competitive position within primary domains. And specifically, when we think about the emergence of AI agents as part of the customer journey and some of the different strategies taking shape across the industry. I'm curious if you're seeing any changes in that business one way or another. And from a high level, it'd be great if you could talk about some of the steps you're taking to ensure that GoDaddy remains successful in primary domains as customer behavior and discovery patterns evolve. And then separate from that, I also wanted to ask about the ANC segment. You referenced in the prepared remarks that bookings from some of your traditional products are moderating as you go through this transition. Can you help us understand the magnitude of some of the headwinds coming from those products? And going forward, when do you think the ramp in aero monetization will reach the point of offsetting some of those headwinds? Thanks.

Thanks, Vic. We start with domains and then we'll come back to ANC. On the domains business, you know, for over a couple of decades, GoDaddy has been the leader in domains and many, many business models and sort of changes in technology have happened during that time. So we feel very good about godaddy's overall position with ai and the advent of llms we're definitely seeing some changes in that business overall and we're we're actually meeting the moment where in terms of what's happening so as you probably saw we launched godaddy's apis in a new and renewed format this is literally addressing the changes we're seeing in in the domains business today with the new godaddy APIs, those APIs can work very well for LLMs and AI. This is how they work for our partners today. That's going to allow us to handle some of the changes that are happening in the domains business and actually put more competitive and innovative products in the market. But, you know, GoDaddy has an advantage because we have so many of our own products that we can bundle together and put into the API that we really think that's an area we can address. I think overall, Mark can maybe comment on a little bit on the our overall position you know we've continued to maintain a very healthy share in terms of overall uh primary domains obviously you know q2 was a strong quarter but i'll leave that to mark yeah and just uh on the domains element you know our market share around domains can is consistent with prior periods right and that's the broader term of domain so it includes all the tlds including non.com dlds out there as well uh and vic going to your anc comment.

You know, no doubt we are in a dynamic environment. You know, our customers are broadening their use of the AI. We couldn't be more excited about the transformation we're entering into with Arrow and the strong early growth signs. You know, we believe this is going to be, you know, faster as we start to increase the purchase paths around Arrow in the coming quarters. You know, we're expecting bookings on ANC to be in the high single digits for the remainder of the year. We'll probably have more information as we get further throughout the year as to when we think those inflection points will happen, but we couldn't be more happier with the growing adoption of Arrow today.

Yeah, and just to touch on the strategy behind the overall ANC segment, you know, our strategy with ANC has been to attach products across the entrepreneur's wheel for our customers. With Arrow, we've greatly accelerated that strategy. What we thought of as a five, seven-year strategic product roadmap can now be seen as one to three-year roadmap. You know, we can use AI to very quickly integrate our products with Aero, and Aero does a great job in terms of product discovery and attach, and it beats, you know, our existing web-based attach funnels. The overall vision for Aero is to cover a majority of the jobs to be done for small businesses, effectively creating a competitive AI operating system for those small businesses and our our focus is to optimize it for our customers like i said since we have so many products ourselves we can bring them to aero much faster than others just in the last four months you know we put aero ai builder uh out there about four months ago we've added godaddy payments we've added customer communication and multiple other capabilities to arrow just in the last four months and as we look at the next few months we're going to introduce a host of commerce capabilities. We'll even get into things like customers being able to have business telephone numbers and IVRs and voice and video capabilities that will all work within the AI immersive aero experience. I work with aero customers all the time, and I'm amazed at what they can do themselves. And that delight that they have with the product, that's the path to greater attach. That's the path to greater ANC.

And that's the path to getting strong lifetime value for godaddy yeah and just to add to that you know the trade-off is we used to have separate skews for commerce but now it's all the capabilities are included within arrow uh and we will get see the transaction value related to that but the reality is that becomes you know a second or third attached product when we get to second or third attached products with our customers as we always said the retention goes up the retention goes up the ltv goes up over time so we believe this is going to be more valuable over time than our existing customer existing products out there okay great thanks for all the color thanks our next question comes from the line of ken wong

from oppenheimer ken please go ahead fantastic thanks for taking my question i wanted to dig in a little more on the ai disruption angle uh aman are you able to share perhaps where you're seeing some erosion. Is this by channel? Is this up market, down market? How does it impact the domain funnel, which you guys obviously are highly dependent on? And then, Mark, just on the guidance, good to see an acceleration in Q4, but I guess considering your lap in the disruption and go to market comps and also the domain, the GTLD comp, I would have assumed a little more of an uptick just would love any color on what type of conservatism is baked into that that that number thank you yeah on the domains funnel you know we continue to see very healthy domain funnel economics and traffic and conversion in q2 you know we continued at a healthy rate now things are dynamic and and evolve over time so new stuff is happening there's no doubt that are you know

the llms are playing a part and we see that shift in search traffic we've talked about it in the past. And we're continuously improving GoDaddy's services to work better with the LLMs. Where we particularly see the changes with the API domains. And this is new services and new business models that are sort of getting attention. And like I said, over the last couple of decades, we've seen other similar plays. And, you know, over time, our strategy remains the same, but we have to evolve, we have to provide more competitive products, which is why we relaunched GoDaddy's APIs, especially in the domain space. And you'll see us launch APIs for other products, too, because we want to be able to bring forward a very competitive offering to LLM so that we rank better in LLM so we get better traffic And as we see the shift between search and LLMs, that GoDad is there and is able to be competitive over the short, medium, and long term.

Yeah. And Ken, on the guidance and what we're looking at for the back half of the year, keep in mind while we're lapping the 499 offer uh you know that that's a bookings impact we'll see immediate but the revenue still rolls out throughout the year so we'll still have some headwinds related to the revenue uh from from the discount that we offered in the in the first part of the year that coupled with the fact we don't include the high value transactions uh in in our guidance you know that that is our standard practice that gets you to where we uh we we are with the range right now our next question comes from the line of mark zagutowicz from the benchmark company

mark please go ahead thanks christy hi i'm on mark uh maybe just a couple uh on arrow you indicated that arrow will absorb capabilities currently sold under separately priced products while you're seeing uh your anc bookings moderating i'm just curious how much of your existing bookings are attached to those products that you mentioned um uh you know will are being de-emphasized if you will and at what level will aero subscription and token revenue uh what level is that required to sort of replace those economics and then a separate question on the exposure to domain path traffic what percentage are of domain traffic is being exposed to arrow today and what are you seeing in terms of initial conversion product attach and bookings relative to legacy uh w plus m and then the last one just related is how much marketing actually occurred related to arrow in uh 2q and what do you have planned for the second half um just trying to get a sense of how much of the q2's you know i guess i'd call it a cost timing benefit or how much of that reverses into 3q and 4q thanks all right do you

want i'll take the first part of it come on and then maybe you can get into the domains and where we stand with that sure um thanks mark uh when we look at the products impacted you know there'll be a few capabilities in there won't go through the entire list but some examples we talked about commerce already uh again commerce is not going to go away per se but you know some of the capabilities that were in separate SKUs now will be built in, right? Another example is do it for you. Our professional services used to be transactions around a couple thousand dollars. Now our customers are coming in and doing most of that work themselves. Some of it is going through care as well, but the need for professional services is narrowing as we go further. So the impact on that business will start to wane over time. Putting or quantifying each specific area, i think we're we're early in the process here as we're going through that you know the way i would look at it at a high level probably was a about a point to our total bookings this quarter uh and and obviously uh the growing impact of arrow and the adoption is still early stage we're seeing some great traction we're seeing our customers concert convert over from wham to the to the arrow to do a lot of their work but we still have some work to do around the purchase paths what we're offering, the attach and all that, which we'll be doing in the second half of the year. So the transition period, I would say, you know, we put the numbers out there for the rest of the year as we get more data points and talk to you on December 1st at our investor dinner, we'll give more guidance as to what that means for the future period.

And the second and third point are actually related, questions are actually related, Mark. So when we actually tested Aero in the Domains Path in Q2 as well, as I talked about last quarter, and it performed quite well. But Websites plus marketing, as you know, is very deeply integrated into all our attached funnels. So what Aero has to be, it is not just website building with websites plus marketing, but all of it, all of the attached capability that it has. And that's what Mark just referenced. We still feel good about being able to replace that in the second half of this year. As you will remember, we talked about it sort of a year's journey to be able to put in new capabilities that would replace websites plus marketing. We still feel good about that timeline. We're doing new tests in Q3 with it as well. And adding it to the domains path is an important gate for us to add more and more marketing spend because having it in the domains path allows us to put more marketing behind it. We did put a small amount of marketing behind it. In Q2, it was not a large number. We actually saw good result in terms of new customers coming and engaging with the product. But that's where we've got to do the work to convert them and then get the attach and make all of that work. But we're encouraged by the small level of tests we did in Q2, and we intend to continue to ramp that up in Q3 and Q4. In terms of how I think about the marketing, the core principles of the guardrails that we have and the return-based framework for marketing is staying the same. We still believe in the same way of being disciplined in marketing. We're looking for those pockets where we can spend dollars and get great return. And we see great possibility to do that, especially as we get arrow into the domains path, which should be sometime in the next few months.

And just to follow up on that, we called out that some costs would be moving from the quarter to the second half of the year and marketing is example some of those costs.

Got it. Thanks guys.

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

Great. Thank you so much for the question. I was really impressive to see Arrow's bookings run rate increase from 10 to 50 million in one quarter. So could you just help us unpack some of the bigger drivers of growth factors between between things like new paying customer additions, kind of the higher RP with the tact, and then the incremental token consumption. It'd be helpful just to understand within the cohorts, where are you seeing the bigger momentum? Is it more by new customers, or some of those existing customers from GoDaddy?

Yeah, thanks, Elizabeth. So yeah, as you know, we have only about four months of data. And I would say for the first two and a half, three months, we mostly saw only existing customers, the large majority of customers, even engaging with Aero for existing customers. But as we start to put even a little bit of marketing spend behind it and started to surface Aero on more of the GoDaddy landing pages, we've started to see new customers engaging with the product. So we're seeing a good sign-up rate for Aero for completely new GoDaddy customers as well. And in terms of the economics, we continue to feel very good and confident about the economics of the product. We've talked about how we're approaching Aero. Our goal is to create a fantastic outcome for our customers while also having a profitable product. And we do that by just how we approach customers, what we spend to get them. We do that by what AI costs we deliver, what models we use, and we deliver that by how we add attached to the product, again, within the Euro experience. So all of it's very seamless for the customer, and we keep a very close eye on the economics on it. In terms of tokens that you see, we continue to see good results there. Customers engage with Aero. A percentage of them are very, very engaged and they buy a lot of tokens and they continue to build what we think are just fantastic, not just websites, but full-on web applications that they're building and they're able to do it themselves.

Yeah, just a call out. We're seeing better free-to-paid conversion with Aero than we were seeing prior to Aero.

Great. Great. And then you've previously talked about the pricing and bundling contribution just being paused as websites and marketing transition upgrade occurs. I just wanted to give a sense for kind of where we are on that transition. When do you think pricing and bundling can resume to contribute to ARPU and bookings? Is this something where websites and marketing, once it reaches customer metric parity, we expect pricing to resume immediately? Or is there any sort of additional lag period as you look to validate even economics and retention, just some of the key factors you're monitoring there as with respect to pricing. Thank you.

Yeah, so I'll start. Pricing and bundling continues to be a contributor to our growth in the underlying products that we have out there. Even as we're making this transition, you know, we've called out in the past the website just marketing pause that we made, and now we're pointing to the fact that we're building in the capabilities of website plus marketing directly into Arrow in and of itself. So the bundling and pricing, live and healthy, working, it will evolve as we start to look at the capabilities we're including in Arrow versus the products we are attaching to Arrow. That is something that we'll have more information on as we go throughout the year, but pricing and bundling is still contributing.

Great. 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 batia thanks for taking your question i have a pricing question as well given the dynamic environment just to use your words is godaddy offering more promotional pricing now versus previously for example when i go on the website i can see a free trial for the higher tier of the website builder in addition to a pop-up for that five dollar one-year domain promo that i believe you've called out in the past essentially i'm just hoping to better understand your pricing strategy with promotional pricing thank you yeah the only change to uh pricing that or promotions that you're seeing on the home page willow

is related to arrow because we have a new product where we're giving 50 free credits for people to come in and try the product there's no actual new promotional pricing we you know in fact as you probably remember over the years we have really reduced the uh the viral promotions and we continue to maintain a very low level of promotional pricing the the two core pricing promotions that we have is the 4.99 and that's one per customer and then what we launched with aero and one per new customer one per new customer yeah okay thank you so much yep our next question comes from a line of alexi gogola from jp morgan alexi please go ahead hi this is ella smith on for alexi thank you for taking our question um so we have two first historically at your last investor day you cited that pricing and bundling was the largest lever to your forward revenue growth as you look ahead what do you think the largest lever would be is it aero is it partner product partnerships or is it something else yeah you know we absolutely feel very good about aero The way Aero is growing and customers are engaging with it, the way we see free-to-paid conversion, we think this is a massive opportunity for our customers to really build what they want and get their brand and their experience out there in a manner that just wasn't possible with previous tools. So, you know, a lot of things are going to point to Arrow and super excited about that. In terms of pricing and bundling, you know, given our large portfolio of products and 20 million customers, you know, pricing and bundling will continue to evolve, but be no doubt part of our strategy, part of what we're going to do over the next few years.

And then, you know, you asked about partnerships and you threw that in there. We think that is a great opportunity. We've been very successful with some of our partnerships, but being Arrow as an operating system, it allows us to integrate partnerships a lot more going forward. So we think that will be a contributor as we continue to grow ANC and other products within the entrepreneur's wheel.

Very clear. Thank you. And for a follow up, your customer base as it stands is largely solopreneurs. Do you see the composition of your customer base changing as you build out agentic web offerings? In other words, would you sell to larger SMBs or enterprises?

You know, we're still pretty focused on small businesses, and there's a lot of time and opportunity there. So that's what we're focused on. You know, over time, we'll keep you informed of things of all.

Great. Thank you.

Our next question comes from the line of Robert Colbreth from Evercore. Robert, please go ahead.

Hi, thanks for taking the question. I was just wondering, you know, maybe you could sort of contextualize how, you know, the quarter went versus your expectation. It seems like, you know, core, you know, did quite well from Booking's perspective. I was just wondering, was there a rapid shift in customer behavior where more customers are coming to you, you know, just for a domain? They're like, okay, well, you know, I've already got to complete the project or something that I'm just trying to find a domain for. Or was there a dramatic shift in attach for presence or is it more just about that pause on pricing and bundling and websites and marketing? This was, you know, more or less to how you thought it was going to play out. Just trying to understand a little bit better. Thank you.

Yeah, you know, Robert, thanks. There are always puts and takes on any quarter. This quarter, I would say we started to enter the phase of transformation. probably the biggest shift we saw was the customers engaging in arrow faster and more than we anticipated and and the acknowledgement that they wanted uh everything in a simple to use one platform status so things like websites and marketing became uh you know a capability that now we're moving into arrow and that that shift obviously changed dynamic around how we're engaging with our customers. But even in those dynamics, you know, when you look at what we were able to do for the quarter, you know, we were ahead on free cash flow per share growth. It's close to 28%. Our normalized E-to-DOT margin, you know, 33%. We converted over free cash flow on a greater than one-to-one basis. You know, we showed the acceleration in bookings coming out of Q1 into Q2. And our revenue obviously was above the midpoint of the guide.

So our expectations were pretty much in line while there were you know i would say different moving parts within that a little bit we were largely very happy with the performance discord got it and on the on the uh the ramp in the arr arrow was that you know i understand that you're testing now in the domains funnel but was there any other change in terms of your placement of arrow in the file or is it just you know purely organic people say okay i see both the traditional websites and marketing path and i see the aero path in front of me and more people that then perhaps anticipate going into the aero path, maybe just a little more color there. Thank you.

Yeah, a number of organic placements, you know, landing pages for GoDaddy, just search SEO traffic, finding it, and basically large majority of it being organic. There is some testing on the domains path, but that's only for a limited amount of time, you know, because the test runs only for a certain period for us to gather the data. But very large majority of what we see is organic. That's what gets us very excited. Customers just coming to GoDaddy, using the product. They just love the product. And if I haven't said it already, customers love the product. We get really good feedback from customers for a product that's new, that's launched just a few months ago. It's a really good number. So pretty excited about it.

Great. Last quick one, just on the API endpoint distribution, if you could talk a little bit about maybe what you're seeing from the MCP integration with Anthropic, then, you know, how do you broaden that distribution to other LLMs? And how finally do you think the LLMs will be incentivized? Or how ultimately do they get to, will the customer get to your endpoints versus someone else's? Thank you.

Yeah, we've worked to optimize against the LLMs. And, you know, we went down a path a little while ago to say, look, we should just rethink our API strategy because the LLMs use APIs. People are building apps using LLMs, and the LLMs have to be able to natively consume GoDaddy products. So that was the rebuild for domains. Again, super excited about that. It's very new. Might have seen the press release, I think, just last week. And we're very quickly going to bring other products online too. What these APIs do is they provide the LLMs with the key information the LLMs need to be able to automatically consume those products. And that, we think, is a good step up from what we had earlier. So, again, super excited about that, too. That's pretty early, but hopefully, you know, in a quarter or two, I'll be talking about that with equal excitement as I am with Aero today.

Great. Thank you so much.

Thank you.

Our next question comes from the line of Keyshawn Patel, on for Josh Beck at Raymond James. Keyshawn, please go ahead. Keyshawn, we'll put you on mute for now. Our next question comes to the line of Navid Khan. Navid, please go ahead.

Great. Thank you very much. I'm just trying to unpack the slowdown in the ANC bookings. And I think you called out a few things over there, but maybe 100 basis points, if I heard you correctly, I think is attributable to the maybe the fact that do it for me maybe shifting over or transitioning into aero led enablement but are there some other things to call out here because if I look at the comp year on year you have a you had an easier comp in spite of that we saw the 200 base point this is trying to understand what are the what are the uh components of that thank you yeah thanks navin and then not going through all the capabilities we're moving into arrow i think

the the biggest examples you can look at are the ones you pointed out the professional services around do it for you as an example we're seeing narrow narrow pipelines related to our customer needs for for complex websites or us creating them for them uh but then then uh websites with marketing also is another example where we've moved those capabilities in and you've seen it in a you know a drop off in in the need for websites with marketing within our anc portfolio so so those are two you know examples probably a few out there at the end of the day uh but but but you know as we continue to ramp arrow and we see the engagement you know over time arrow will become a bigger part of the growth story as it starts to fall off uh just one point of clarification there, Navid, the 100 basis points, that was for our total bookings number, not specific to ANC. So just FYI, as you try to reconcile the numbers back.

Okay. And then, I guess the 150 million ARR growth in the app builder, is that counted in the ANC as well? Or is that somewhere else? I should understand that in terms of its impact in the bookings and maybe just you know staying on this uh on this bookings topic uh is should i just maybe understand that maybe aero is maybe sort of deflationary because difm may be a higher priced product and aero can maybe doesn't need to necessarily cost as much give us your thoughts on that yeah on the do it for you product that's typically a couple of thousand dollars in terms of bookings and some when we're building with someone and with arrow you know it's a smaller number in and it's a subscription plus token based product and what we find is that arrow is so much easier for customers to use that they can just talk to a guide and build it themselves very quickly so that that's the main thing about about the do it for you product and i think mark can confirm but i think your other question was that is arrow counted in anc and i believe that would yes yes arrow is counted and is counted it with an anc that's right so um so with that uh why why shouldn't we we have a pickup in anc bookings in the back half if if arrow is uh is seeing an acceleration and you're probably going to put some marketing dollars also behind it yeah arrow we're we're in uh navet uh we're we're you know we're looking at this as a transformational period as we start to engage our customers in different channels.

You know, it's new into the market. So the period of time that we expect for it to start to be a bigger part of our growth, you know, is still something we're working through right now. We expect ANC bookings to be high single digits for the remainder of the year. And obviously we'll update everybody as we get more data points as to how the other channels are working when we get to December 1st.

Understood.

Thank you. thank you our next question comes to the line of igal aroundian from wood bush securities eagle please go ahead uh hey guys good afternoon um i just want to understand the the lm traffic shift a little bit better and exactly what what's going on um so can you explain what that traffic shift is and what are are people going to use uh different products are they coding directly uh you know in anthropic and open ai like what what's happening in that shift where are they going instead of go daddy because it sounds like it's not yet a one-to-one replacement on websites plus marketing versus versus aero and does does all this change your approach i i think you were um you were planning on rolling out a new website plus marketing or an update so the But does your focus shift on where you're building from here? And then I have a follow-up.

Yeah, just to go very quickly, the LLM comment is related to APIs and newer models for people offering APIs that LLMs can consume directly. And those end up being very low-cost providers on the domain side. And again, we've seen many models of that over the years. And we're updating our APIs to be able to compete and have better bundles and and sort of offerings for customers it's just that in this case llms would consume that on behalf of the customers and on the upgrade of websites plus marketing we actually as i talked about it we had uh tested a new product for that updated websites plus marketing over the last quarter we actually found that aero could be all those products you know that we were looking at so in fact just over the last few weeks we've launched and a much stronger editor and templating capability within Aero, and that's just going to get stronger. We now feel very good about Aero actually being the one operating system, the one tool that can build your websites in different ways, that can do customer communications for you, that can do payments, it can do commerce, and many, many other things. So you're actually seeing a convergence of what we were talking about earlier.

Okay. Sorry. To be clear on the API functionality or the API usage, That means people are building websites the way that they would through GoDaddy in the LLMs. And then just the follow-up on margins. And so with all of this, I mean, we've talked about this a lot, and we've seen pretty material margin erosion in other places and competitors as they've rolled out more Vibe Coding products. and you know as you maintain your margin guidance for the year as as even as uh the arrow arr is growing and you're seeing some of these shifts in in behavior has anything changed in terms of um you know how you can balance the cost side on on compute um as you as you build out this product you do you still have this uh advantage the way you've had it uh over the last year where you haven't seen margins erode? Thank you.

Yeah, Gala, comment on the margins, you know, real quick. You know, we feel really good about our positioning around our margins and anticipating the costs that we will incur related to higher compute costs, higher token and all that. We are very focused on making sure where we're spending our time is getting the right ROI like we've done in the past. We have the same approach to what we've done, everything. And we've gone into productivity gains in our operating model right now that we're starting to see. Think about it from our headcount and our headcount costs are remaining flat. We're seeing benefits in care. We're seeing benefits in T&D. We're seeing benefits in G&A. All those benefits translate into our ability not only to continue to expand our margin, but also reinvest in the business around these areas like Arrow that we're going to see the return. And we feel really good about the data points that show us those returns right now so we feel we're in a great position to continue to focus on profitability expanding margins at the same time handle the costs associated with new products obviously when we get to december 1st we'll talk a lot more about what that will look like going into 2027 but we feel good about our ability to make not only maintain profitability but to increase and continue to expand profitability going forward our next question comes to the line of john Bayoun on for Brentville at Jefferies.

John, please go ahead.

Hi, can you hear me okay?

We can.

Great, thank you. So I have two questions. One is something that's come up earlier, but I just want to see if I can maybe ask a little bit differently. I mean, the transition period with the era, I mean, and I know it's still very early and this is still evolving, but I mean, are you thinking that that's something that's like a two to three quarters type of transition or could this last you know more than a year well into 2027 um and then my second question was around kind of the wordpress community and the professional web developers and website creators and partners i mean how are you thinking about the impact of what's happening now to your customers on that side thank you i'll take the first part uh john you know not not putting a timetable on this we we've talked about what we expect to see for the rest of the year And as we gather data points, we'll share more of what we think the outlook will be when we get together on December 1st in Tempe.

We are excited about the growth in Arrow. We've talked about the $50 million run rate. Having said that, we are still in the process of launching it into domains purchase path.

We're looking at connection points for more attached. so there's still a lot of data to gather for us to really hone in on the timing of this transition and when we will see arrow contributing more to our growth going forward and just on the wordpress side we we do have aero for wordpress and it continues to get traction uh with those customers but you know that that world is evolving too we're seeing some traction with aero with that world as well but it's too early john to to be able to talk about it to say where it's really going you know our focus is to create an operating system for small businesses you know whether that's used by the customer directly or through a developer it kind of shouldn't matter

to us great thank you our next question comes from the line of chris zhong from ubs chris please go ahead hi thanks for taking my question so the first one is on the international revenue which continued to outpace the overall company or the us on a custom cards basis maybe can you help us unpack the drivers um across the segments and also in terms of the price and actions versus the top of the funnel and um what portion of that you see is more durable going forward and just now to get a little more color on the international um and then i have a follow-up yeah um on the

international nothing really cool out there uh it's performing well we're seeing traction in markets we are focusing on came in at eight percent i would say there's nothing specific to call out in any region one way or another we're just very happy with the performance internationally as as we are with the performance in the us all right i appreciate it and um just a quick follow-up on the core platform bookings i think you mentioned the um the outlook for the rest of the anc bookings uh for the rest of the year but uh sorry if i missed it but uh what are look what are you expecting for the core platform bookings growth uh for the second half of this year yeah we we should see a little bit of strength i know we've talked about on a long-term basis that bookings growth and core platform will be low single digits uh you might see that lean a

little towards more mid uh single digits for the remainder of the year as we lap the 499 uh at the back half got it so roughly stable versus the second quarter yes all right thanks so much we'll try again for kishan patel on for josh beck at raymond james kishan are you there hey hi kishan we can't hear you all right i am going to hand it over to uh aman to close this out please go ahead thank you uh thank you all for joining um again i'll leave you with a couple of takeaways

one super excited about aero and its fast growth and how much customers love it and the engagement we're getting and you know to the questions on the ai transformation i just want to point out that our strategy our financial discipline our approach to investment remains unchanged we're very happy with how we're approaching this business and we want to meet our strategy of sort of meeting small businesses where they are and offering them a ton of services so huge thank you to all GoDaddy employees, and thanks for joining.