WEBVTT - GoDaddy CFO Mark McCaffrey Talks Company IPO and Outlook 0:00:02.520 --> 0:00:10.400 Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Business 0:00:10.400 --> 0:00:15.080 Weekdaily with Carol Masser and Tim Steneveek on Bloomberg Radio. 0:00:15.920 --> 0:00:17.720 Carol, you've talked about this a lot. Small and medium 0:00:17.720 --> 0:00:21.480 sized businesses just helping to power this economy. According to 0:00:21.480 --> 0:00:23.639 the US Chamber of Commerce, small businesses in the US 0:00:23.640 --> 0:00:27.120 are responsible for providing employment for about half of the 0:00:27.160 --> 0:00:30.440 American workforce, and they represent more than forty three percent 0:00:30.480 --> 0:00:34.160 of the GDP of the US. So understanding small businesses 0:00:34.640 --> 0:00:37.640 gives us a good idea of how the economy is doing. 0:00:37.760 --> 0:00:40.280 We love, love, love talking to this space. Mark McCaffrey 0:00:40.360 --> 0:00:41.960 has a great read on all of this. He's the 0:00:41.960 --> 0:00:44.839 CFO of go Daddy, which provides a broad range of 0:00:44.880 --> 0:00:49.320 online services for small and mid sized businesses think internet domains, 0:00:49.360 --> 0:00:52.279 website hosting, and so much more. The company, by the way, 0:00:52.360 --> 0:00:54.760 has a market cap of close to twenty five billion dollars, 0:00:54.800 --> 0:00:56.880 so it sees a lot of small businesses and it 0:00:56.960 --> 0:00:59.520 serves more than twenty million customers around the world. Mark 0:01:00.120 --> 0:01:02.440 nice enough to join us in our Bloomberg interaction. 0:01:03.720 --> 0:01:06.760 You're not wearing any goggins goggles? 0:01:07.360 --> 0:01:08.280 What is going on? 0:01:08.720 --> 0:01:10.440 You saw a little promo today. 0:01:10.480 --> 0:01:12.600 Oh I saw yeah, I saw it. 0:01:12.680 --> 0:01:15.720 Walton, he's he's a big fan of ours, right, obviously 0:01:15.760 --> 0:01:18.680 got us back into the super Bowl and everything. But 0:01:18.680 --> 0:01:21.200 but you know he's an entrepreneur. You know he is 0:01:21.240 --> 0:01:21.920 an entrepreneur. 0:01:22.000 --> 0:01:23.400 Does he really make these classes? 0:01:23.760 --> 0:01:26.160 Well, he has many ventures that he has gotten into 0:01:26.200 --> 0:01:27.959 through his life. And when he came up with this 0:01:28.040 --> 0:01:30.200 idea for the goggles, we just thought it was the 0:01:30.200 --> 0:01:33.440 perfect match for us. Here. You have a great actor 0:01:33.880 --> 0:01:37.600 who is passionate about small businesses, wants to launch this 0:01:37.760 --> 0:01:42.320 goggle idea, and you know, we breadcrumbed it out through 0:01:42.319 --> 0:01:44.840 the whole fall. We started, well, he started with announcing 0:01:44.880 --> 0:01:47.960 it on social media, got a little buzz. We started 0:01:48.080 --> 0:01:50.000 with announcing that we're going back to the super Bowl. 0:01:50.080 --> 0:01:52.240 Got a little buzz, and then we tried to drive 0:01:52.320 --> 0:01:54.640 everybody to connect that he was going to be our 0:01:54.680 --> 0:01:56.840 new spokesperson. And he is fantastic. 0:01:56.880 --> 0:01:58.720 So what's the ROI on that? 0:01:58.920 --> 0:02:01.880 The the ro o I? I? You know, we cost money? 0:02:02.000 --> 0:02:05.360 Oh, super Bowl ad costs money. I saw he was 0:02:05.400 --> 0:02:07.120 at the New York Stock Exchange today. He's not doing 0:02:07.120 --> 0:02:07.600 that for free. 0:02:07.640 --> 0:02:11.120 He is standing up there ringing our bell this today 0:02:11.200 --> 0:02:14.400 because it was our tenth anniversary of being a public company. 0:02:14.760 --> 0:02:16.920 But when you think about where GoDaddy was as a 0:02:16.960 --> 0:02:19.639 domain company and where we are now is a one 0:02:19.680 --> 0:02:22.480 stop shop for entrepreneurs. We need to get that message 0:02:22.520 --> 0:02:26.639 out like we have such useful tools for the mom 0:02:26.680 --> 0:02:28.920 and pop shops to now do business not only on 0:02:28.960 --> 0:02:32.240 the corner but in social media. They want to do 0:02:32.320 --> 0:02:34.720 professional emails, they would want to do marketing campaigns. We 0:02:34.760 --> 0:02:36.880 can handle it all for them. And we did that 0:02:37.040 --> 0:02:39.880 with Walton, like we handled all his platform for him, 0:02:39.919 --> 0:02:42.079 so we can get out there and sell this. So 0:02:42.080 --> 0:02:44.120 so you know, hey, we've been around for a while. 0:02:44.160 --> 0:02:46.680 This is a long term play. We're not going anywhere. 0:02:46.800 --> 0:02:49.400 We have a great company that grows. We're profitable, we 0:02:49.480 --> 0:02:51.919 generate a lot of free cash flow, and it's because 0:02:51.960 --> 0:02:54.200 we have such good retention with our customers. You look 0:02:54.240 --> 0:02:56.919 at our urpoo it's just over two hundred dollars for 0:02:57.680 --> 0:03:00.840 an entrepreneur micro business. That's a good deal. We prought 0:03:00.880 --> 0:03:03.200 a lot of value and that's why they keep coming back. 0:03:03.280 --> 0:03:05.520 So remind our audience. So in terms of churn and stuff, 0:03:05.520 --> 0:03:07.160 are that once you get a customer, how long do 0:03:07.200 --> 0:03:08.040 they typically stay with you. 0:03:08.160 --> 0:03:11.480 So they'll stay with us if we if we get 0:03:11.480 --> 0:03:15.560 them to a second product, our retention almost goes through 0:03:15.560 --> 0:03:17.120 the roof with them. If we get them to a 0:03:17.160 --> 0:03:19.519 third product, we have a customer for life, and that's 0:03:19.560 --> 0:03:22.680 why we have this compounding element of cash flow. People 0:03:22.840 --> 0:03:26.320 just keep renewing, so we say our average is around 0:03:26.360 --> 0:03:29.720 eighty five percent. But if they the longer they stay 0:03:29.720 --> 0:03:31.440 and the more they use our tools, or if they 0:03:31.440 --> 0:03:34.120 engage with our care guides. You can actually talk to 0:03:34.160 --> 0:03:36.720 a live person with us in our care organization still 0:03:37.200 --> 0:03:40.280 and when they engage with our guides, that lifetime value 0:03:40.440 --> 0:03:42.920 just goes up. So we always use the statistics when 0:03:42.960 --> 0:03:46.160 we're out there talking. If you assume a domain is 0:03:46.240 --> 0:03:48.600 one X. If we can get someone from a domain 0:03:48.720 --> 0:03:51.559 to an email, to a website and then to transacting, 0:03:52.040 --> 0:03:55.080 it's eighty three x LTV for us on our customers. 0:03:55.200 --> 0:03:58.280 And we do that because we focus on our customers 0:03:58.280 --> 0:04:01.280 like this is the place we go to, like we 0:04:01.400 --> 0:04:01.920 know this. 0:04:01.800 --> 0:04:06.040 Customer, let's talk AI. Because you guys have your AI 0:04:06.160 --> 0:04:09.880 platform go downy arrow, when are we going to see 0:04:09.880 --> 0:04:11.600 it start to make an impact on our poo. 0:04:12.000 --> 0:04:15.480 So we're starting to see the beginning stages of the monetization. 0:04:15.560 --> 0:04:18.080 And again, we are a long road. We're not in 0:04:18.080 --> 0:04:20.240 a rush here to get to a certain place in 0:04:20.279 --> 0:04:23.360 a short period of time. We're taking our customers from 0:04:23.400 --> 0:04:27.679 discovery to engagement and ultimately to monetization, and that starts 0:04:27.720 --> 0:04:29.279 to show up in our renewal rates. Now we just 0:04:29.360 --> 0:04:31.880 launched this recently, but when you think about it, twenty 0:04:31.920 --> 0:04:34.840 million customers you know we have out there. This is 0:04:34.880 --> 0:04:38.760 our platform, it's consolidated, and we're starting to see our 0:04:38.800 --> 0:04:41.200 average quarter size goes up. We're starting to see our 0:04:41.200 --> 0:04:44.479 over now for us, remember it starts with bookings and 0:04:44.520 --> 0:04:47.320 then over time it becomes revenue. And that's the point 0:04:47.360 --> 0:04:49.599 that it starts to hit our arts. Okay, so it 0:04:49.640 --> 0:04:51.719 takes a little time to get in there, but what 0:04:51.760 --> 0:04:54.200 I always say is, hey, this is about the long 0:04:54.279 --> 0:04:58.160 term play supporting micro businesses because we want them to 0:04:58.240 --> 0:05:01.760 continue to be successful. If they thrive. You gave some 0:05:01.839 --> 0:05:04.200 great data out there. If they thrive, we do great. 0:05:04.320 --> 0:05:05.479 Are they thriving right now? 0:05:05.600 --> 0:05:10.120 Well? So this is a very durable, optimistic group. They 0:05:10.200 --> 0:05:12.720 always feel good about what they're doing. And you know 0:05:12.760 --> 0:05:15.440 what's amazing about this group too, is even if they 0:05:15.480 --> 0:05:16.600 do hit a failure point. 0:05:16.800 --> 0:05:19.360 They generally they felt good during the pandemic. 0:05:18.960 --> 0:05:20.159 They felt good on ring the panet. 0:05:20.160 --> 0:05:21.920 They were optimistic a financial crisis. 0:05:22.000 --> 0:05:25.520 They we actually see some of our numbers go more 0:05:25.560 --> 0:05:29.279 into entrepreneurialism. When when you know you're you're trying to 0:05:29.279 --> 0:05:31.359 do a side hustle or a side gig, or you 0:05:31.400 --> 0:05:33.560 want to start selling. I always joke. My joke is 0:05:33.720 --> 0:05:35.480 I want to sell my baseball cards all of a 0:05:35.480 --> 0:05:37.400 sudden to make a side business out of it. You know, 0:05:37.480 --> 0:05:39.719 I have to do that somehow. So this is a 0:05:39.760 --> 0:05:42.279 group that is just very optimistic. Doesn't mean they're always 0:05:42.279 --> 0:05:45.400 confident in the economy, right, but they are optimistic in 0:05:45.520 --> 0:05:48.240 their chances to be successful in doing what they love. 0:05:48.279 --> 0:05:50.599 So they're willing to at least make that first yes 0:05:51.240 --> 0:05:52.320 to get their business going. 0:05:52.480 --> 0:05:52.680 Yes. 0:05:52.800 --> 0:05:55.520 I mean, so, what insight do you have, especially among 0:05:55.600 --> 0:05:59.279 your customers who are repeat customers, stay with you, expand 0:05:59.360 --> 0:06:03.560 their services with you. I mean, that's a better indicator perhaps, 0:06:03.920 --> 0:06:06.400 right in terms of what they are seeing about the economy. 0:06:06.400 --> 0:06:07.960 What are you seeing from them? What are you hearing 0:06:07.960 --> 0:06:08.440 from them? 0:06:08.480 --> 0:06:14.320 We are hearing that they want more help reaching different channels, audiences, themselves. 0:06:14.680 --> 0:06:17.800 So you think about it, right, you're maybe selling in 0:06:17.839 --> 0:06:21.040 your local town. Well, now social media becomes a platform. 0:06:21.080 --> 0:06:23.240 But if you're you know, I ran into a customer 0:06:23.279 --> 0:06:26.720 and choose panicking because her daughter was going off to 0:06:26.760 --> 0:06:29.520 college in a month, and her daughter did all her 0:06:29.560 --> 0:06:33.520 social media campaigns. So we have a tool that literally 0:06:33.600 --> 0:06:36.880 takes all the inbound emails coming in from all the platforms, 0:06:36.960 --> 0:06:39.760 creates an outbound marketing campaign for you, and it'll do 0:06:39.800 --> 0:06:42.240 it based on you know, whatever you're These are the 0:06:42.279 --> 0:06:44.880 type of tools we provide, and this is why this 0:06:45.000 --> 0:06:47.720 is what they need. They need it all to work, 0:06:47.839 --> 0:06:50.520 you know, because you're not talking about a sophisticated customer 0:06:50.600 --> 0:06:50.960 group or. 0:06:51.120 --> 0:06:54.040 Right, but that is more of like my daughter is 0:06:54.080 --> 0:06:56.120 going to college and I just now I need to 0:06:56.160 --> 0:06:58.320 do it. But are you seeing any signs of stress? 0:06:58.600 --> 0:07:01.000 Because you know, as Tim said, mark coming into it, 0:07:01.440 --> 0:07:05.039 small business, medium sized business, but small business the backbone 0:07:05.080 --> 0:07:08.400 of what we do. And so when there's some stress, 0:07:08.400 --> 0:07:11.080 and we've seen it in business sentiment surveys, cutting back 0:07:11.120 --> 0:07:14.440 on CAPEX consumer sentiment as well another side. But I mean, 0:07:14.520 --> 0:07:17.480 I'm just curious, are you seeing any signs of stress 0:07:17.640 --> 0:07:19.000 or holding back a little bit. 0:07:19.440 --> 0:07:22.440 We haven't seen any signs of that coming out of 0:07:22.600 --> 0:07:25.200 twenty twenty four. Now, I will say in. 0:07:25.240 --> 0:07:26.200 The last couple of weeks. 0:07:26.280 --> 0:07:28.960 Yeah, so you know, I we'll get out there with 0:07:29.000 --> 0:07:30.800 this current year when we have a chance to get 0:07:30.800 --> 0:07:34.520 out there. But you know, you remember, we are actually 0:07:34.560 --> 0:07:38.559 engaging a lot of these entrepreneurs before they actually become 0:07:38.560 --> 0:07:41.120 a small business. That's why we use the term micro business, 0:07:41.600 --> 0:07:45.520 and that micro business is still trying to get out 0:07:45.560 --> 0:07:48.160 there and do more. Right now that you know, what 0:07:48.200 --> 0:07:50.800 we saw coming out of twenty twenty four is the 0:07:50.880 --> 0:07:52.880 demand at the top of the funnel. And remember a 0:07:52.880 --> 0:07:54.520 lot of people just come to us for a domain. 0:07:54.840 --> 0:07:55.040 Yeah. 0:07:55.160 --> 0:07:59.720 Name rights still healthy, it's it's still very very much healthy. 0:07:59.760 --> 0:08:01.360 And that's the book of your business. 0:08:01.400 --> 0:08:03.880 It's a lot of our business. Yeah, but that attach 0:08:04.360 --> 0:08:07.000 you know, is going up for us, which means they're 0:08:07.040 --> 0:08:09.880 coming in with intent. And if you come in with 0:08:10.040 --> 0:08:11.760 to get a domain name and you have an intent 0:08:11.840 --> 0:08:14.119 to do something, that is a great sign for us. 0:08:14.280 --> 0:08:17.120 But I'm curious about how you grow from here because 0:08:17.120 --> 0:08:19.560 the customer account has seemed to plateau a little bit, 0:08:19.560 --> 0:08:21.800 and this market is only so big. What do you 0:08:21.840 --> 0:08:23.480 do do you go up market. 0:08:23.800 --> 0:08:25.880 Now, listen, we have a right to win where we 0:08:25.920 --> 0:08:28.080 are in the micro business and we will continue to fin. 0:08:28.040 --> 0:08:30.920 So this is like fewer than ten employees micro business. 0:08:31.040 --> 0:08:33.120 Yeah, micro business could be around ten maybe a million 0:08:33.160 --> 0:08:36.400 dollars a year type of business. This is this is 0:08:36.440 --> 0:08:38.000 where we have a right to win. This is the 0:08:38.000 --> 0:08:40.280 customer we know. I say in technology two things you 0:08:40.320 --> 0:08:42.600 always have to be able to do innovate and know 0:08:42.720 --> 0:08:44.760 your customer. And we have the ability to do it 0:08:44.800 --> 0:08:48.040 in this market. And listen, we generate a lot of 0:08:48.040 --> 0:08:50.400 free cash flow and we have a strong balance sheet. 0:08:50.840 --> 0:08:52.800 We just hit ten years of public company. We are 0:08:52.800 --> 0:08:55.560 so excited about the next ten years and our ability 0:08:55.600 --> 0:08:59.600 to keep this compounding on it. Why this group needs 0:08:59.640 --> 0:09:02.959 these tools to be successful. They need to know how 0:09:02.960 --> 0:09:05.920 to use technology and they can't be dealing with eight 0:09:05.960 --> 0:09:09.480 applications at night trying to figure out which one isn't 0:09:09.480 --> 0:09:11.440 working or working. They just deal with us. 0:09:11.640 --> 0:09:15.400 So you're about twenty one million customers, right, Yeah, how 0:09:15.400 --> 0:09:18.520 do you kind of grow beyond that or what are 0:09:18.559 --> 0:09:21.719 your expectations because it does seems like it seem like 0:09:21.760 --> 0:09:22.760 you've plateaued a little bit. 0:09:23.000 --> 0:09:25.400 We get some of the research we have focused on. 0:09:25.520 --> 0:09:28.120 You know, hey, we call it profitable growth and so 0:09:28.240 --> 0:09:31.520 making sure that we are continuing to drive profitability and 0:09:31.720 --> 0:09:32.679 grow at a steady rate. 0:09:32.800 --> 0:09:34.800 So you would rather keep that base and make each 0:09:34.840 --> 0:09:36.320 of those customers more profitable for you? 0:09:36.400 --> 0:09:39.160 Yes, right, right? And you think about it. We for 0:09:39.200 --> 0:09:41.880 our customers, there's three levels of it. There's the new 0:09:41.920 --> 0:09:44.080 customers just coming in which we have the ability to 0:09:44.160 --> 0:09:47.400 sell them products, and then attach we have our existing customers. 0:09:47.480 --> 0:09:50.040 We have a lot of existing customers and our ability 0:09:50.080 --> 0:09:53.319 to get them to even attach currently is a great 0:09:53.320 --> 0:09:56.520 opportunity for us. And you think we launch commerce a 0:09:56.559 --> 0:10:00.120 couple of years ago and our ability to convert our 0:10:00.120 --> 0:10:03.040 existing base over to our commerce platform has been able, 0:10:03.080 --> 0:10:06.559 allowing us to drive GPV within our model again because 0:10:06.600 --> 0:10:07.640 we know this customer. 0:10:07.840 --> 0:10:13.560 How do you look at the relationship between you, the 0:10:13.600 --> 0:10:16.920 websites that you host that you have and also social 0:10:17.000 --> 0:10:21.560 platforms as they increasingly get into commerce. Is a website 0:10:21.840 --> 0:10:24.160 still going to be the primary digital platform in the 0:10:24.160 --> 0:10:26.240 age of social and in the age of AIA. 0:10:26.840 --> 0:10:29.680 So for the entrepreneur, for the micro business, their ability 0:10:29.720 --> 0:10:33.480 to go across multiple platforms is just needed by them. 0:10:33.520 --> 0:10:35.480 They can't focus on just one platform. 0:10:35.559 --> 0:10:37.520 So you're saying, yeah, they might have the TikTok shop 0:10:37.640 --> 0:10:40.800 or the Instagram, whatever it is, but they're also going 0:10:40.840 --> 0:10:43.360 to have their landing page that's hosted by you. 0:10:43.440 --> 0:10:45.679 They're going to need their landing page because they're going 0:10:45.720 --> 0:10:48.240 to have to go to more platforms. And by the way, 0:10:48.320 --> 0:10:51.440 when they have their own website landing page, they can 0:10:51.559 --> 0:10:54.040 use that data to determine where they want to go next, 0:10:54.080 --> 0:10:57.360 what is more profitable. Every social media platform is going 0:10:57.440 --> 0:11:00.160 to have their own metrics of how they sell. There's 0:11:00.160 --> 0:11:02.760 nobody out there on a platform that actually just gives 0:11:02.760 --> 0:11:05.160 them the data that they need in order to be successful. 0:11:05.200 --> 0:11:07.840 And that's what we do and that's why we service 0:11:07.920 --> 0:11:08.640 this market. 0:11:10.480 --> 0:11:13.079 Last question, what worries you when you look at the 0:11:13.160 --> 0:11:14.000 environment right now? 0:11:14.160 --> 0:11:16.840 Yeah, so there's a lot of unpredictability out there. Now 0:11:16.920 --> 0:11:19.560 we have felt really good. We've been around for a while. 0:11:19.559 --> 0:11:21.600 We've been around for almost thirty years. We've gone through 0:11:22.760 --> 0:11:27.520 and cycles. Everyone is a little different, and we've been 0:11:27.559 --> 0:11:31.440 able to watch as entrepreneurs. Have you managed through this? 0:11:31.480 --> 0:11:33.280 We saw the financial crisis, We saw a lot of 0:11:33.760 --> 0:11:36.400 new business formations during the financial crisis of two thousand 0:11:36.400 --> 0:11:39.440 and eight, we saw unemployment go up at the same time. 0:11:39.520 --> 0:11:41.599 This time, as we went through we didn't see unemployment 0:11:41.640 --> 0:11:43.599 go up as high. You know, you didn't see the 0:11:43.640 --> 0:11:46.480 same reaction. In the entrepreneurial business. Everything went fine, but 0:11:46.600 --> 0:11:51.680 everything has a reactionary difference as we go through different markets. 0:11:51.800 --> 0:11:54.679 And what worries me is making sure that we're watching 0:11:54.800 --> 0:11:57.280 all the signals to see how they may have a 0:11:57.360 --> 0:12:00.280 downstream impact and not just trying to focus on one 0:12:00.320 --> 0:12:02.960 of the signals. And when you watch all of them, 0:12:03.000 --> 0:12:04.640 then you can start to pick up a little bit 0:12:04.679 --> 0:12:07.400 of Okay, how is this going to you know, hit 0:12:07.440 --> 0:12:09.760 that mom and pop shop down the block. They may 0:12:10.120 --> 0:12:12.760 you know, they may be able to hire somebody like 0:12:12.760 --> 0:12:14.680 they wanted to. Well maybe we can provide them a 0:12:14.720 --> 0:12:17.079 tool now that allows us to do that. So we 0:12:17.600 --> 0:12:20.560 feel we have to constantly be out there watching that market, 0:12:20.640 --> 0:12:23.520 feeling them, meeting the customers, seeing what's working for them, 0:12:23.600 --> 0:12:26.679 and hearing them. So again, coming back to that, that 0:12:26.760 --> 0:12:30.320 relationship with that customer group becomes just very very important 0:12:30.320 --> 0:12:30.560 to us. 0:12:30.640 --> 0:12:33.400 Yeah, that sounds certainly, especially with so much coming at 0:12:33.960 --> 0:12:35.840 business owners right now. It's a lot. 0:12:36.480 --> 0:12:38.320 This was fun. Thank you, Thank you. This is great. 0:12:38.400 --> 0:12:39.200 Thank you for having me. 0:12:39.280 --> 0:12:43.800 Yeah, thank you. Congratulations ten years company. Mark McCaffrey, all right, 0:12:43.880 --> 0:12:46.400 CFO of Go Daddy, joining us right here in studio. 0:12:46.559 --> 0:12:48.960 Hey, let's get an update on everything happening after hours 0:12:49.000 --> 0:12:51.920 and how the market's closed. Here he is, Charlie Pellett.