CDW at JPMorgan Conference: Tech Spending Amid Uncertainty

On Tuesday, 13 May 2025, CDW Corp (NASDAQ:CDW) participated in the 53rd Annual JPMorgan Global Technology, Media and Communications Conference. The company highlighted both the challenges and opportunities in the current macroeconomic environment. While facing economic volatility, CDW remains optimistic about technology’s indispensable role in business operations. Discussions centered on strategic growth areas, including AI and cloud services, amid cautious customer spending.

Key Takeaways

• CDW emphasized technology’s essential role despite economic uncertainties, focusing on AI and cloud services.
• GoDaddy highlighted growth among high-intent customers and advancements in its AI-driven platform, Arrow.
• Both companies conveyed cautious optimism, underscoring long-term growth strategies.
• CDW’s gross margins have expanded over six years but recently plateaued due to shifts in product mix.
• GoDaddy reported a 6% to 8% growth rate and a significant increase in EBITDA margins.

Financial Results

CDW

• Gross margins have expanded by approximately five percentage points over six years, though recent growth has slowed.
• CDW maintains a variable cost model, allowing flexibility in fluctuating markets.
• The company had a strong first quarter and expects low single-digit growth across its profit and loss statement for the year.

GoDaddy

• The company is growing at 6% to 8%, with a 900 basis point increase in normalized EBITDA margins over five years.
• GoDaddy improved its free cash flow and repurchased 25% of its shares over four years.
• The company remains confident in meeting financial targets through 2026.

Operational Updates

CDW

• Technology is seen as essential for competitive advantage and business success.
• CDW is navigating tariff uncertainties and maintaining strong customer relationships.
• Growth has returned to the commercial sector, while enterprise solutions saw a temporary pause.
• The company is investing in AI to enhance customer efficiency and personalization.

GoDaddy

• Focus on high-intent customers, with significant growth in those spending over $500.
• The AI-driven platform Arrow is central to GoDaddy’s strategy, enhancing customer engagement.
• GoDaddy is shifting to a customer-centric pricing and bundling strategy.

Future Outlook

CDW

• Plans to focus M&A on high-growth areas like cloud, security, and AI.
• Anticipates muted growth in the federal and education sectors.
• Continues to invest in digital transformation and technical capabilities.

GoDaddy

• Aims for double-digit growth, driven by strategic M&A and compounding strategies.
• Expects free cash flow per share to grow at a 20% CAGR through 2026.

Q&A Highlights

CDW

• CDW is recognized as a technology consultancy with linked services, offering a comprehensive customer experience.
• Federal government sector faces economic pressures, with muted growth expected.

GoDaddy

• Growth in multiple product lines, including website builders and commerce.
• Continues to foster a culture of innovation and experimentation.

Both CDW and GoDaddy are navigating economic challenges with a focus on strategic growth and innovation. For more detailed insights, please refer to the full transcript.

Full transcript - 53rd Annual JPMorgan Global Technology, Media and Communications Conference:

Unidentified speaker, Host: Thank you. I have the pleasure of hosting CW for the next session here. And we we have with us Chris Lee, who’s the CEO and Al Morales who’s the CFO. Thank you both for coming to the conference and thank you to the audience.

Chris, Al, I’ll start you off with a question that we plan to ask most companies we talk to over the next couple of days, which is you talk to a lot of customers, you get feedback continuously from the ground. How concerned should investors be that we are potentially looking at a significant macro slowdown in the second half or a recession scenario in the second half? How likely are you thinking that is?

Chris Lee, CEO, CDW: Well, I’m not gonna try to predict something that others can’t predict also. I would just say that there’s a lot of volatility. I’m sure your other clients are all saying the same thing. A lot of volatility, a lot of uncertainty. All that said, what we’re finding is that technology still is non discretionary really in terms of it’s essential to building out competitive advantage, it’s essential to attracting employees.

It’s essential to achieving the mission. And so it’s still central and essential to what our customers are doing. What I would say is, earlier in the year we saw caution start to tick up as a result of the uncertainty in the policy volatility and uncertainty. And we’re still seeing that caution, however, customers have a lot of pent up needs, whether it’s on the client device side, or whether it’s on digital transformation, or whether it’s on cost optimization, whether it’s on innovation, they’re all needing technology to drive that forward. So we’re seeing the demand that we’ve talked about over the last couple of years really come to fruition.

And what we’ve done is, we have baked into our forecast for this year those areas where we think we’re going to

Al Morales, CFO, CDW: see more

Chris Lee, CEO, CDW: muted growth, federal space in particular, education space in particular, and a couple other areas where we’re being cautious. But overall, we’re just trying to be prudent with our outlook, understand there might be some delays during the course of the year. But I’d also say customers across the board are committed to spending on technology, and actually are in various areas. Now the value we bring obviously helps in capturing that demand and driving some of the demand. So I just say it’s a very cautious environment, technology is central to what everybody is doing.

And we’re using our competitive advantages to win in the market and it’s been working.

Unidentified speaker, Host: I know tariffs sort of pass through for you, so it doesn’t impact you directly as much, but how much have the changes or the overall tariff landscape created challenges in terms of predicting the business or in terms of visibility that you get through your pipeline? Like how are you navigating or sort of what are you seeing in terms of impact from the tariff landscape itself?

Chris Lee, CEO, CDW: I’ll start. I’d say on tariffs, number one, we’ve been able to use the uncertainty and volatility to help our customers and therefore to our advantage. It’s like funding, it’s what we do. We help customers understand what partners are contemplating and where we think the pricing is going to go. And in the first quarter you saw that especially in K-twelve, where we were able to get ahead of potential tariff price increases and provide client devices at pricing that was pre tariff.

And we could do that because we get the pre buys and we could take them into inventory. There’s talk, there’s concern, there’s uncertainty, it’s changing, there are a lot of moving parts. And when that happens, that just creates more complexity for our customers. And we always say complexity and choice are our friends, and we can help in those circumstances. And particularly when you have such strong relationship with your customer base that you build over years, When you are in times like this, that trust really comes into play.

And the confidence in CDW’s ability to understand what partners are doing and what they’re going to be doing is critical.

Al Morales, CFO, CDW: Yes, I would just add the I think it’s a bit two sides of the coin. For the last two quarters, we’ve seen a return of growth. And I think we’ve noted that particularly in the commercial space, steadier, more stabilized return to growth. So that has felt good underlying. So at a broad level, I’d say certainly better in the last two quarters.

At a more micro level, and to Chris’ point, we’ve seen different actions on the education front, a bit of a pull forward of activity, particularly in the client device space. And then maybe the other micro theme would be more in enterprise solutions, a bit of a pause for the quarter. We saw growth return in Q4 and Q1. There was a bit of a pause, a bit more enterprise customers sweating those assets. So two sides of the coin, kinda underlying solid demand that we’ve seen for the last two quarters, but with quite a bit of variability in these particular spaces.

So what we’re looking for as these quarters play out for the rest of the year is can we see kind of a balanced growth projection, if you will, across the categories. But our outlook calls for continued caution in that regard.

Unidentified speaker, Host: And I’m trying to compare what’s happening now to the dynamics we saw during COVID and the digestion of inventory post that. How much and you talked about some of the pull forward in like K3 to 12, but how much visibility are you getting now in terms of inventory at the customer level? And do we eventually have a situation where there’s an inventory digestion like we had after the supply chain challenges that led to inventory digestion? What level of visibility are you getting in terms of inventory with customers? Where is that today?

Al Morales, CFO, CDW: I’ll just say the our sellers are very, very close to our customers, right? And they pride themselves on being deep with customers, knowing their estates. So I’d say visibility broadly, solid in that regard. I think there are some parallels to COVID, bit maybe reversal effect. I’ll start with that is the we saw significant demand from COVID.

We had a period of digestion. We’ve been saying for a while, we think we will get back to these vectors of growth, particularly when you think about refresh opportunity. Two quarters in, knock on wood, we’re seeing that some of that return to growth. It’s really begun, most notably in clients. So if you subscribe to the FIFO effect, we’re seeing their growth in client.

It’s been a little bit more volatile on the solution side, but we do believe that there are definitely drivers there that will ultimately produce growth in solutions, including just need to modernize networks, continue to advance in terms of security needs, and the like. So that’s how I would describe it.

Unidentified speaker, Host: Okay. On the last earnings call a few weeks earlier, you outlined that you’re seeing a slowdown in large enterprise, whereas your SMB segment was really strong. Can you sort of parse that out for us a bit? I mean, what’s probably driving that dynamics and is it fair to expect that the SMB eventually follow suit of where the large end customers are?

Chris Lee, CEO, CDW: On the enterprise side, and I think I’ll just touch this, which is we’ve just seen some caution in the solution space. On the SMB side, we continue to see customers moving to ratable consumption models, elastic pricing, etcetera. And again, back to this notion that technology is needed to drive success. We are not seeing that need slow down in the small and medium sized business, which I think is a really good indicator. On the enterprise side, we’re really talking about larger projects, making decisions about where you have trade offs, how you cost optimize, how you create competitive advantage and there’s just was a little bit of more cautiousness there is how I’d say it.

Unidentified speaker, Host: Before we move forward, I mean, I know we’re discussing all this sort of volatility in the macro and tariffs from a U. S. Perspective, but overall, have you seen any spillover effects in your international business from all the discussions we’re having about the macro in The US?

Chris Lee, CEO, CDW: Yeah. It’s been very interesting on the international side because we’ve expected volatility, particularly when you think about the geopolitical environment and then the, again, the uncertainty coming from from our country. But we we had a really strong quarter and the team’s just delivering in the face of all of that. We’re, again, cautious in our fiscal outlook, our fiscal year outlook for international. I think they’re just outperforming and out executing in the market.

Unidentified speaker, Host: I’ll sort of move you a bit faster along since we started a bit late, but I do want to get to a discussion on sort of how CW helps customers, particularly in this AI landscape and as where do you find customers are looking to invest? Where’s the broader enterprise in terms of focusing on AI investments and how is CDW going to help them?

Chris Lee, CEO, CDW: So CDW, as you know, is a full stack full life cycle organization. And we’ve invested over the years to ensure that we can deliver across the full spectrum of our customers’ needs, and that we can go to market in the full way that our customers want us to, and that our capabilities are superior to those in the market. And that’s where we stand today. So when we think about AI investment, how CW can help, you think about it in terms of almost a flywheel. Professional services and discussions around what’s happening in the landscape around three areas, efficiency, personalization, and customer experience.

And customers are now on the ROI heavy discussion. About eight months ago, I’d say customers were squarely in the what do we do. Now it’s becoming clearer how we can use AI, how quickly it’s going to develop, and how CDW can deliver both strategic services, as well as then implement. I always think about it as the art of the possible, and the science of getting it done. And that’s a very unique position to be in the market.

You can have consultants come in and suggest ways to create value. CW comes in and shows you ways to create value based on referenceable clients, and then with our partnerships we can actually help you execute. That full lifecycle, full stack value has been very well received in the market. And we’re seeing AI as an entry point actually increase at CDW.

Unidentified speaker, Host: Some of your peers have talked about AI initiatives that they’re doing, like including labs for customers to come explore some of these solutions. Maybe just provide us an update on what you’re doing like in terms of actually letting customers try out solutions? Or what does that sort of overall sort of exploration for customers look like?

Chris Lee, CEO, CDW: Yeah, we’re doing a lot of that. And I’d share with you, I think I mentioned on earnings calls, our healthcare innovation labs. That’s a great example of bringing partners and bringing customers together so they’re learning collectively. Patient Room Next is a terrific example of a company that we’ve actually invested in. So we’re using our own investment dollars behind some of these solutions, which is about the patient room of the future, which is fewer pieces of equipment, more intelligent monitoring of patients, higher cost optimization, etcetera.

And having those innovation labs has been a real game changer in the healthcare space. We do that across all of our segments in different ways. Sometimes with our partners at their locations, sometimes in our innovation centers, we have six of those now. And hands on experiences with customers so they can try out and see exactly how the technology works is critically important. So we continue to do that.

Unidentified speaker, Host: Okay. Got it. Maybe moving that conversation to AIPCs and how do you view it in terms of an opportunity? Do you think there’s a large opportunity around it and how would sort of see the benefit from that?

Chris Lee, CEO, CDW: Yes, I do. I think we think of AI as very much kind of functionality that’s embedded across the full stack. So hardware, software, across cloud capabilities, etcetera, AI is going to just become part of how things operate. And if you look at any of the OEM cloud providers roadmaps, you can see that very clearly. AI PCs is another example of that, where if at some point in the near future, if your PC does not have the kind of AI capabilities that drive the efficiency and productivity of your workforce, the creativity, the innovation that comes with those capabilities, it’s gonna set you behind.

So we see AI in every part of the stack as a significant growth factor going forward.

Al Morales, CFO, CDW: I’ll just add. I think what we’ve seen in the way of PC growth to date has not been significant in the AIC the AIPC space. Some of the market constituents have called for AI PCs ultimately or soon kind of represent about single digit mix of PCs overall and then growing from there. So we’d still call it early days, but we do think the opportunity and as the apps grow in this environment that AI PCs will become more prevalent for us. Ultimately, that will be a great opportunity, and that’s both in terms of richer configurations, kind of higher ASP, but also opportunity for us to wrap more services around AIPCs.

Chris Lee, CEO, CDW: On that point, not to not to extend the the session, but one of our most popular offerings right now is driving business results with assistance, CoPilot in this case, but driving business results using AI. So it’s not just selling the AI PC and the opportunity there, It is that full stack, full lifecycle capability, which is helping our customers actually drive value out of it that they can recognize. Big differentiator in the market.

Unidentified speaker, Host: Since we’re discussing PCs, let me sort of go back to the reporting in the quarter where you had a strong print on client devices. As you mentioned, there was some sort of K3 to K12 pre tariff. But on the enterprise side, like how much of the momentum there in client devices is buying ahead of tariffs versus end of life Windows led upgrades? And if enterprises are now coming in choosing their next PC platform, are you seeing any demand for AIPCs?

Al Morales, CFO, CDW: I’ll start. First of all, growth in client devices for the quarter pretty much across our channels, which was certainly encouraging. As you noted, Samik, we did see some pull forward on the education side, less in the way of pull forward in terms of enterprise, but broad based overall. The the the the kind of the difference or the attribution across those channels, I think when you think about education, a bit more focused on Chromebook. When you think about country of origin of those products, that drove some of the prebuying.

The other thing I would say is education a bit more cost sensitive than some of the other channels. On enterprise, which is a bit more Windows and Apple’s focus, less concerns there. Therefore, there was less pre buying on that front.

Unidentified speaker, Host: What I wanted to sort of move the discussion next to is the cloud discussion, but taking it back to I think this was couple of quarters ago when you mentioned that the company’s recent performance, which has been less of an outperformance to the underlying industry than we’ve been used to seeing historically is probably being driven somewhat by the enterprise workload migration to the cloud. Maybe you can sort of clarify overall sort of how you think about cloud as sort of playing out in terms of CW stop line dynamics, whether that is actually translating into a lower outperformance than what we’ve historically been used to seeing CW from and then in terms of what’s the strategy to then sort of go ahead and attack that opportunity?

Chris Lee, CEO, CDW: Yeah, I would say looking at net sales is one thing. If we adjust for customer spend because the sales net down, we still believe we outperformed the market last year. And we get that data direct from our partners, which is a very trusted source and we get it relative to others in the channel. So from a customer spend perspective, we are seeing significant growth in our cloud business. Where we’re focused is on scaling that business up, driving to a larger scale base to drive efficiencies, to ensure we’ve got the capabilities across our value proposition landscape.

Mission Cloud is a great example of an acquisition to do just that. And when we think about our opportunity in cloud, we really think about it like a flywheel, where you’ve got professional services, you’ve got managed services, we often wrap around that, which is obviously monitoring, optimizing, etcetera. You’ve got marketplace transactions, and you’ve got infrastructure consumption. And we look at that as an absolute way to keep customers engaged And we are seeing through the mission cloud complementary capabilities to CDW.

We’re seeing a very nice uptick in that area for CDW and for our customers.

Unidentified speaker, Host: You’d mentioned the acquisition that you’ve done. Is it fair to think that when we think about future sort of focus on for acquisitions, cloud is going to be a big focus area for you or do you see other areas where you can potentially sort of leverage more value add services as well?

Chris Lee, CEO, CDW: Yes, we’ve continually focused our M and A efforts on high relevance, high growth areas for customers and particularly those that are moving very fast. So the areas that we continue to be focused on obviously are cloud, particularly services wrapped around cloud, particularly managed services around cloud, security. Security is not going anywhere. It’s just increasing in importance and demand. The newer areas of technology, AI, and I would say data, because that’s directly related to AI capabilities, cloud capabilities, digital capabilities.

So we’ll continue to look at all of those areas and weigh whether we are building from within, whether we’re buying or investing in companies, or a combination of both. And then the other area that we look at is geographic capabilities. And you know, in an uncertain geopolitical world, we are cautious there, But that said, we are still considering how we service multinational customers across the globe and other markets that might be contributing to our growth.

Unidentified speaker, Host: Got it. Okay. Let me take a pause and open it up to see if anyone in the room has a question. Here.

Unidentified speaker: It appears you have well, I guess the first question I have, it almost feels like right now that CDW is more of a technology consultancy that happens to source the actual end products that clients will use. Can you talk about the revenue model that’s associated with more the technology consultancy as opposed to the providing of the products that you then deliver to them?

Chris Lee, CEO, CDW: Yes. And when we talk about full stack full lifecycle, that’s exactly what we mean. When I think about CDW historically, our ability to help customers buy, source the product, etcetera, has been who we are, and we’ve been expanding on either end of the, what I’ll call the value spectrum into the consultancy, but also managed services. And I see those two as intricately linked. Consultancy, important to illustrate the expertise and bring the depth of expertise and industry specific expertise to the table as a trusted advisor to be able to design and help architect.

Managed service is equally important and obviously creates a recurring revenue source for us to help our customers manage those things that we’re building. And then the sourcing in the middle is exactly as you said. So what we’re doing is driving efficiencies across the full level of that, the full life cycle, and increasing our investment and expertise on the front end and the managed services end. So that we can cover the full spectrum for our customers.

Unidentified speaker: And I think your clients probably view that I don’t know if this is working.

Chris Lee, CEO, CDW: I can

Unidentified speaker: hear you. I assume your clients are viewing the fact that you can also help them with the end sourcing as well too, in addition to the consultancy and the managed services. It’s sort of a distinctive factor in how they why they work with you over potentially, let’s just say, an Accenture or something like that.

Chris Lee, CEO, CDW: Yeah. So I I think of what CW is, you know, is the art of the possible in technology and the science of getting it done. And the ability to do both of those things is a differentiator in the marketplace. And customers, I think, are seeking that value more and more, and we’re seeing it in our results.

Unidentified speaker: Final question.

Unidentified speaker: Yes.

Unidentified speaker: So when you look across your portfolio of clients, and probably you have a healthy number of enterprise legacy clients who grew up with you on this sourcing platform, how much have you kind of audited what the organic opportunity in these other areas are, and can you kind of give us some range of what you think the opportunity is in those buckets?

Chris Lee, CEO, CDW: We are looking at the IT potential of various customer segments all the time. And that actually is what’s driving our go to market refinement. And if you know CDW, that’s an evergreen process. And so we view consultancy, the procurement and deployment and managed services, as I said, is intricately linked. For customers, it creates a holistic experience with a number of touch points across the lifecycle.

For CDW, it creates opportunity to sell at every point. It creates stickiness, it creates an ease of experience for customers. And so we look at each of those buckets, but frankly the most important thing, and they’re all big. The most important thing though is how they interact together, and ensuring that our go to market is capturing the drag that comes across all of those buckets. It’s just, it’s the formula that is unique to CDW.

Yeah.

Unidentified speaker, Host: So moving to a couple of questions on the financials. Gross margins expanded significantly over the last couple of years, but now when we look at the recent trends, it started to, I would say plateau at a high level at this point. What are the drivers you would call out for the slower sort of expansion that you’re seeing now compared to what you saw a couple of years back? And do you view it as more temporary? Or do you view this as sort of the peak level that you’re going to hit in terms of gross margin?

Al Morales, CFO, CDW: Sure. Yes, you’re right. In the last six years, our gross margins have increased by about five points, so really significantly. We would say on the back of our three part strategy, continue to focus on new acquisition and growing market share, expanding our capabilities and solutions and continuing to drive growth in services. So that strategy has worked quite well.

Keep in mind as well, though, we have a diverse portfolio, right? We’re focused on full stack, full life cycle, which means that mix does matter. What you’ve seen in the last couple of years is pretty significant mix shifts. And while we’re certainly pleased to be there for our customers across all of the mix components, when you have stronger growth in client device, which can be a bit lower margin and less in the way of solutions and services, you can have movement in your gross margin. So look, we are long term focused.

We continue to believe in our strategy and ability to serve our customers best with our three part strategy. And we expect that over time we’ll continue to move up the curve on the gross margin front.

Unidentified speaker, Host: Okay, got it. And then on the operating expenses, you’ve consistently expanded operating expenses in this even in sort of challenging macro backdrop in some cases. One of the things that has come up even on the earnings calls has been more flexibility around sort of tweaking that envelope on the operating expenses. How should we think about flexibility on that front versus what are the long term drivers you’re investing towards that give you maybe less discretion at this point on that spend?

Al Morales, CFO, CDW: Sure. Again, I’ll go back to the point of the our investments in the strategy, including investing in the way of expenses and M and A, and that’s what helped us to drive our gross margin. So the way we think about the expense front is our goal is to balance growth initiatives with providing exceptional customer service while driving cost leverage. So even in the last couple of years that we would say growth has been more challenging, we’ve continued to invest underneath. And that includes across our own kind of digital transformation capabilities, but also growing our technical capabilities as a firm.

At the same time, we seek to drive productivity and efficiency and cost leverage. We are still very much a variable cost model, right? And so in up and down markets, we will get the benefits from that perspective. But we’ve made significant investments in our fixed cost base that ultimately will pay off in the long run.

Unidentified speaker, Host: And you just put it on earnings, you had a very strong 1Q. And when we think about the full year guide, which you primarily reiterated at this point, just help us think about the drivers or what’s embedded in the assumption for that in terms of how to think about potentially any upside risk or any downside risk you think for the year?

Al Morales, CFO, CDW: Yes. So headline is low single digits growth pretty much down the P and L. And that’s notwithstanding the fact that we had a really strong quarter. And the way we think about it is really, again, kind of two sides to it. One, there’s been solid underlying demand, and we expected this was coming.

We’ve said for a while now, it’s, it’s a when, not an if. And I think while we don’t want to declare victory, we’re seeing elements, of growth over the last two quarters. The flip side of that is, there’s still caution. There’s still uncertainty. And on a micro level, we’re seeing that most pronounced in our government business and maybe secondarily education, but we’re also making space that in our other channels, some of that uncertainty could weigh on spend, And therefore, we’re being prudent, notwithstanding that there are elements of growth underneath.

Unidentified speaker, Host: And since you mentioned government and education, can you just remind investors in terms of government, what’s the sort of I’m I’m assuming you’re more referring to federal at this point, but what’s the specific exposure there? And when you’re again thinking about education, narrowed down for us, like, where do you see more likelihood of a pressure?

Al Morales, CFO, CDW: Sure. So yes, it is more pronounced in the federal space. So as a proof point for the quarter, federal experienced a modest decline in growth and state and local, which is the other side of government, grew grew modestly. And so it is more pronounced in federal. Now federal business is split between Department of Defense and then civilian.

Department of Defense, we would say, is more insulated from some of the effects we’ve seen with this friction in this space. And the civilian business civilian business, we would have said more exposed. That being said, what happened in the first quarter was pretty consistent with our expectations. We are, though, being cautious, and we would expect, given the overhang in the federal space, that the next couple of quarters would be muted. So that’s our expectation.

And then I would call education secondary. The more pronounced elements that we would anticipate here would be more in the K-twelve space. And again, from a top line perspective, education had a good quarter, but we want to make space that you could see some secondary effects in K-twelve and thus muted spend.

Unidentified speaker, Host: Okay. Got it. Last couple of quick questions. One, I mean, to the extent that you’ve seen some price increases already being passed through to the customer on account of tariffs, what have you seen in terms of price elasticity for demand from the customer? How much of a pushback have you seen from customers to any price increases that have been passed through?

Al Morales, CFO, CDW: To date, I would say it’s been pretty orderly. And I would say customers have largely gotten on with their spend despite the environment we’ve been in. As you know, education, particularly K-twelve, actually pulled forward some of that demand in anticipation of prices going up. And I’d call them the channel probably most cost sensitive, but the spending has continued notwithstanding the overhang of tariffs.

Unidentified speaker, Host: Okay. And the last one, which is more, I guess, nuance at this point, but investors sometimes care is when you’re passing through the price increase, are you able to protect your gross margin? Are you passing through it absolute terms?

Al Morales, CFO, CDW: Yeah. We are a cost plus provider. So for the most part or substantially, when there are price increases like in this case with tariffs, we are passing those on. We are holding our gross profit neutral, if you will, which means you get a bit of a kind of a benefit on the net sales as prices go up and then you get a little bit of dilution from the gross margin.

Unidentified speaker, Host: Great. I will wrap it up there since we’re out of time, but thank you to for coming to the conference. Thank you to the audience as well. Thank you.

Chris Lee, CEO, CDW: Thank you so much. Thank you. You all.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: Hello, everyone. My name is Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team here at JPMorgan. I’m delighted today to welcome Mark McCaffrey, CFO of GoDaddy. Welcome, Mark. It’s good to see Thank

Mark McCaffrey, CFO, GoDaddy: you for having me.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: Yes, absolutely. And still rather early West Coast time, so hope you had a few.

Mark McCaffrey, CFO, GoDaddy: It is. I’ve had a few cups of coffee. Hopefully, they’re a little kick in here.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: Great. Well, as you get fired up, we can start discussing some of the macro trends you’re seeing. And part of the consumer audience that you have is very resilient, it seems. But maybe you can talk about some of the trends that you’ve seen, discuss the survey that you published recently.

Mark McCaffrey, CFO, GoDaddy: Yes. So we came out with a survey from our venture forward. We do these surveys every so often to get the pulse of what’s going on out there with small businesses, micro businesses. And if there’s one thing I would like everybody to walk away from hearing is these small businesses, these micro businesses remain extremely optimistic about their ability to do what they love doing, whatever it is, a pizza oven or a downtown store, remain optimistic. Now we’ve seen that resiliency time and time again for years.

This is a customer group that is putting food on their table. They want to do better. The value they get from the GoDaddy products far exceeds the value they’re getting. And even at times like we’re seeing now, they become more mission critical for them. Our relationship with this customer group is fantastic.

We have so many different touch points with them from customer visits to our care organization to surveys, and we keep getting the same message back from them. We feel really good about what we’re doing. Yeah, there’s some uncertainty out there, and that’ll happen from time to time, but it doesn’t change how we feel, how we are going to be successful doing what we love to do. And that’s why we always check their temperature.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: And obviously, many investors after the most recent earnings have been focusing on the headline number of customers, while your priority seems to be focusing more on high intent customers. So could you maybe highlight some of the metrics we should look at when judging your success with high intent customers? And how should we think about the growth algorithm ads versus Absolutely.

Mark McCaffrey, CFO, GoDaddy: I’ll take it in two parts. Let’s take it up a level. Our strategy is working. We’re getting to a higher intent customer. When we look at our overall business, we’re growing 6% to 8%.

We’ve expanded our normalized EBITDA margins by 900 basis points in five years. We’ve, at the same time, improved our free cash flow, our free cash flow per share. And we bought back 25% of our fully diluted shares outstanding in the last four years. Not many companies can say they’ve done that. So at a high level, our model, our algorithm is showing the resilience.

Our strategy is going after higher intent customers. We’ve taken people through the customer count. We’ve done some divestitures. But at the end of the day, and this is in our 10 ks, so I’ll point to it, it’s not a new number. But if you look at the amount of customers that are spending more than $500 with us, it went to $1,800,000 from $1,500,000 in 2023.

Those are the customers we’re going after, the customers who are going to attach products, who are going to get value out of our technology stack, who are going to have higher retention over the long term. Why? Because our LTV compounds on itself. It compounds. It starts in the year a customer signs up.

It gets bigger when they go to a second product, and that retention rate improves on every single renewal cycle. So that is our strategy. That is our intent, and those are the customers we’re going after. I will trade what I call lower calorie customers or customers who aren’t doing anything with our products for customers who are getting value out of our products any other day. That’s that resilient customer group that we keep talking about.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: Any comments about the e commerce trends that you’re seeing? And how does typically an entrepreneur start their journey on GoDaddy?

Mark McCaffrey, CFO, GoDaddy: Yes, we see many different avenues. Traditionally, the domain was the beginning of ideation. I have an idea, I have to come up with a domain name. And that starts your journey because from there you realize you need a website. Oh, and it would be nice to have a professional email.

And then ultimately you can get into transacting. That was the normal journey. I would say today we are seeing customers come in from multiple different avenues. Sometimes they’re coming in wanting a logo first. Sometimes they’re going right to wanting a website.

I don’t want to say domains isn’t still a very popular on ramp for us. It is still our largest on ramp. But having said that, the ideation phase starts in many different directions now. And so we see that top of the funnel coming from different avenues. For example, we have Arrow plus now as a separate SKU.

It’s our AI driven platform, for those of you who are new to the story, Arrow. The main intent of Arrow plus SKU is to tap into premium logos, which are a very popular on our app and getting better and stronger every day. But part of our having the one stop shop is to make sure that we’re capturing the customer where they are in the ideation and getting to them at the top of the funnel and then allowing them to expand that business in a seamless, easy way. I always say if you go and buy a domain now and you go through our Arrow experience, you can be up and running with a website, email, logo, everything you need to do business within minutes. And that’s part of the advantage we offer in our technology stack.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: Maybe we could still go back a little bit and talk about the domains business. Your market share has been very sustainable and strong for more than 20%. How do you think about retention rates for the domains business? And what is the mix between pricing and volume growth in that business?

Mark McCaffrey, CFO, GoDaddy: Yes. So we’re the largest domains player out there. I think the statistic is we’re you could put the next 10 together and it’s still not as large as us. Domains is where we started. We’re obviously very good at it.

We have over 500 TLDs today, so not only .com, Ai. You can go to almost any TLD out there. We can provide that to a customer. The domain space in and of itself provides that on ramp for us. Again, we see strength in the second attach.

Often that comes with a domain first, then getting to the second product. So we use it to get to that high intent customer that we always talk about. In and of itself, the domain space is a very constant grower for us. It’s a combination of volume plus price. I will say every TLD out there has a different price point.

Some are more profitable than others. .Com is very popular. We all know about how .com comes to GoDaddy. So I won’t dig into that too much. But remember, we offer so many different ones today that our customers can come in and get almost any TLD they want to start their business and then move into whether it’s websites as marketing, managed WordPress, whether it’s email, professional email, whether it’s transacting through our commerce engine, all that’s available to them.

So when we report our business out, we have a core platform, which is what I would say our traditional business. It includes the domain space. It also includes the aftermarket. We do believe that having a secondary market for domain space is something we’re the largest player. We should have the largest secondary market as well.

It’s a very good business for us. And that’s the core platform. Applications and commerce in and of itself is usually that second product attached, third product attached. It’s proprietary software that we create. It’s also third party software that we sell out there.

And that comes at a highly profitable point for us, which is why as that gets larger, it drives our expansion of our normalized EBITDA.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: Perfect. Thank you, Marc. And you’ve touched upon IRO. Can you maybe talk a bit more about how you’ve been investing into this technology and what benefits do you think AI could bring to the website building space?

Mark McCaffrey, CFO, GoDaddy: Yeah. So let’s let’s start with the technology basis itself. We’re the only company out there that has the technology stack from the domain all the way to the transaction. That’s a lot of data consolidated. That fuels Arrow for us.

It’s the first place Arrow goes to get that data. And you think about how much data exists. We have 14,000,000 interactions through our carrier organization every year. We get 1,200,000,000 signals from our technology stack every day. We have over 20,000,000 customers.

We’ve been around twenty eight years. We have that in a consolidated technology stack that allows us to understand our customers, know what our customers like, know what they need, know when they’re having problems. We can respond to them through our care organization. When we talk about Arrow, the primary driver and the work we did over the past few years is access that data in a manner that we can flip it back to our customers and say, Hey, here’s a great website. We think you should You want to do a bike shop in Arizona?

Here’s some websites for a bike shop in Arizona. Oh, this is a perfect email that goes along with that. We think this logo you might like based on the history we’ve seen in our databases. So that provides us the ability to have more unique responses back to our customer group. Not that we don’t use LLMs at some level, but we control that because it fills in the blanks to our own technology and just provides value, but we have one choke point that we also can control the volume that’s going there, and that’s why it doesn’t impact our cost basis as much as some others talk about out there.

So all that works very well within our technology stack. We’re seeing our customers discover Arrow. We’re seeing them engage with Arrow. Obviously, we’ve now entered into the monetization stage, a little ahead of schedule, so we’re very happy about that. But this was the investment we made because we knew that for the micro business, these tools, their ability to use AI themselves to do business better, we were going to be able to provide them that ability.

Amazing. And can you maybe give us

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: a bit more of an update on the Arrow rollout? So today,

Mark McCaffrey, CFO, GoDaddy: as we stand, Arrow for all new customers will be thrown into the Arrow platform. Provides that easy experience, whether they’re coming in, like I said before, via domain, logo, or they’re coming in directly from a website. All new customers come in through the Arrow experience. On our existing customer base, many of them have been exposed to Arrow through the renewal cycle. We continue to make sure they’re getting exposed as they get into their dashboards.

So we have an opportunity to upsell. We have an opportunity to look at what products might be useful for them. In certain cases, have the ability to convert them over from an existing competitor, like in payments, to our platform because it’s easier to use. And we’re, I would say, in a good spot on that journey. But boy, with 20,000,000 plus customers, we have a lot of space to continue to move and continue to get them exposed to Arrow in and of itself.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: Can you maybe provide a few use cases on how Conversations tool is driving

Mark McCaffrey, CFO, GoDaddy: ad engagement? Of course. I have to talk about Larry and Leroy, the pizza guys. Conversations is becoming very popular. It’s part of the websites less marketing.

And I laugh. I love going out and visiting with customers. And sometimes I bring customers to us. In this case, it was a mobile pizza oven. He’s got it on the back of a trailer.

They bought their own pizza oven. And they go from place to place. And a tool like conversations has become key to them. It takes ninety seconds to make a pizza. I had to learn this.

I never knew it took ninety seconds to make a pizza. But in those ninety seconds that the pizza is being made, one of them is making the next pizza, the other one is responding on conversations to all the inbound that are coming in through the website. Why was that important to these guys? Well, if you’re looking for someone to help you at an event or a party with food, you know, the first call you make, if the person doesn’t respond, they go from the pizza oven to the taco truck. Right?

They don’t wait around for you to return that call. So their ability to set up their next gigs in the coming weeks through our conversations tool, which is AI driven, they can automatically respond, allows them to make sure that they’re staying current with their business, that they have gigs for the next couple weeks out there. And to me, that was the perfect example of when you’re a mom and pop shop, an underdog, and you have all these inbounds coming you can’t wait till 11:00 at night to sit down at your computer and start to filter through all the social media platforms to figure out who’s reaching out. You need someone to actively engage while you’re doing what you do, and this is what our tools allow them to do. It prompts the response that they can make immediately to their customers to set this up.

It writes it for them and it uses their voice because it goes back to what they’ve done before. And you can tweak it a little bit or you can just let it fly instantaneously, but now they have the response and then it goes right into scheduling for them on our tool. So they have it all lined up. They don’t have to come home at night and figure all this out. It’s done automatically through Arrow, through our AI tools.

And for a micro business who’s just trying to compete with bigger players out there, this is an amazing resource for them. And it is a resource. It is a tool that actually keeps them from having to incur cost or hire people to do this for them. They can do this themselves. I I still laugh if he was on his mobile device, sitting there responding as we’re talking, I’m asking him, What are you doing?

He’s like, Oh, I have to get back and I’m using your conversations right now in between each of these pizzas. By the way, great pizza. Great pizza. And I say that as a New Yorker who moved to the West Coast. This was great West Coast pizza.

Mark, but how did you decide on the current price point of AeroPlus? And in general, what is the thought process for these AI features as they evolve? Yeah. So Arrow plus is the first separate charge SKU that we have in our portfolio. It’s really early stage.

We just launched it. We basically get certain functionality in a premium SKU that you can use and then we are charging $5 a month for it. Now we experiment. If you’ve heard our CEO, Aman, talk at all, he will talk about we are an experimentation culture. We look at what the different price points are.

We look at what we think is going to be attractive. We came up with the $5 a month, 60 a year, based on what we thought would be the surplus of the value that the customer is getting based on what we were giving them. We’ve been around doing this for a while. So we also know that if you come in too high, you will lose customers right off the bat. People will not engage with it based on the price point you set.

So you have to set it in the initial stages based on a point that seems economical to the person coming in that it just makes sense for them to come in and then obviously renew. So our initial price is $5 a month. Doesn’t mean that it will stay that way necessarily. We’ll continue to look at what the overall impact of it is. But everything we do is based on initial experimentation, how our customers are reacting, how they’re renewing, what we’re seeing in that renewal basis, are they getting the value out of it, are they using the functionality we’re giving them.

Everything’s designed so, hey, if the five areas that are in there now today don’t seem like they’re landing or there’s a sixth area we can put in or we can flip out functionality based on behavior, we’ll do it. We’re very agile that way, it was part of the process of getting a consolidated technology stack that we have the ability to use our products to interact to get to the best value proposition for each of our customers.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: I think it’s also worth discussing kind of the broader pricing and bundling initiatives. Can you talk about how you moved from the so called product lens to customer lens of that

Mark McCaffrey, CFO, GoDaddy: pricing So last year, when we launched pricing and bundling, we were very much on a product based focus. That was the natural evolution of launching bundling in and of itself. So focused on launching. We’ve talked about it.

The major one was email plus security last year as a bundle to all of our customers based on a product lens. And it was very successful. As we’ve come into 2025 sorry, I always have to think about what year we’re in 2025, we’ve gone to what we call cohort specific, which means we are looking at specific customers and the attributes they have of the products they’re using today and creating bundles around attributes. We have multiple bundles based on these cohorts in play today. And we are going into the cycle now of testing what I call the cohort specific bundles for 2026 as we go into the back half of the year.

We have a cycle set up now that basically says we launch at the beginning of the year, we test into new bundles by the end of the year, and then we launch those based on the testing that we see out there. How this works? When the bundle is introduced, you get two flavors of it. You get new customers coming in that are choosing those attributes will get offered a bundle. Have customers who are renewing now have the ability to go to a bundle.

How does that work? Well, it helps us with our uplift around new coming into the year. But the most important part of it is as we go to the next year renewal, we see the strength in the renewal rate because now they’re moving from one product to two product to three product. And as I’ve always said, our retention rate is great at 85%. Once they get to the second product, it goes up from there, gets to a third product, it’s a product for that customer for life.

And our ability now to move that within the customer view allows us to really focus on that second and third product attach and get to those retention rates. And that’s what we saw in Q1. We talked about we’ve seen improvement coming into the year around the retention rates of our customers, and a lot of that’s driven by the bundling that happened last year. And again, we continue to test into that cycle and it continues to compound on itself and it continues to drive the long term model that I talked about at the beginning of our conversation of how we can grow, how we can be more profitable. Obviously, have capital allocation and then we’re growing our free cash flow per share at a 20% CAGR.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: So how individualized do you think those pricing points could become? And what role do third party products play in those bundling?

Mark McCaffrey, CFO, GoDaddy: So we have the ability to do across our products that are on the consolidated stack, and most of our products are on the consolidated stack as we sit here today. We have the ability to do it with third party products. We have the ability to do it with our own proprietary software. So we can combine the attributes based on any element that we think our customer is getting value out of it. One of the important things we do absent a partnership that we may have on our site is we own the customer relationship no matter what.

So our ability to own that customer view becomes very important to us and a key advantage to us in launching these type of cohort specific bundles. So it’s all in play. It’s all our strategy is what I keep coming back. Strategy is working.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: Perfect. And this is probably a good time to talk about your payments business. Can you maybe remind us what is your strategy in the payments arena and the implications of your recent rollout of phased transaction fee increases?

Mark McCaffrey, CFO, GoDaddy: Yes. So we launched into the commerce well, actually, the payments business several years ago. And we continue to see steady growth in our GPV related to, I would say, signing on new customers into our payment platform but also converting existing customers over to our payment platform. And right now our biggest growth in GPV is being driven by the conversion. When you think about it, most of our customers in the ideation stage that are going to do transaction, it takes a while for the volume for them to build up.

But when we convert an existing customer who is already transacting, we get all that GPV onto platform immediately. And that has been driving our GPV growth. Perfect example of the pricing and the transaction fee, we’ve talked about our ability to be agile. We are the lowest transaction fee out there. For our customers, that’s a big deal.

It means a big difference to the money that goes into their pocket. But even in that circumstance, we saw the ability that we could move up pricing still remain the lowest and still get the conversion rates because our, I would say, our ease of use was really attractive to our existing customer base and keeping them at a lower point. So again, we continue to look at the surplus they’re getting out of the value of our technology. I’ll never say we won’t use pricing occasionally. We will.

This was a case that we did raise our transaction fees. Having said that, we’re still well below the market of what other people are charging on transaction fees, which allowed us to do that and allowed us to make that evaluation.

Unidentified speaker: Are these point of sale type of transactions?

Mark McCaffrey, CFO, GoDaddy: Yes, they are point of sale.

Unidentified speaker: So you would be like Square and these customers are giving them a low price so that they can That’s right.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: And as we speak about Commerce and Application segment, how much of the A and C division is driven by price versus cross sell and new customer additions?

Mark McCaffrey, CFO, GoDaddy: It all comes into play. And keep in mind, when you’re talking bundling, it’s a combination of volume and getting price value. So it’s hard to say, hey, pricing is this much versus product is this much because it’s all combined into the strategy in and of itself. The idea is to drive more value to our customers and therefore be able to take a little bit of that customer surplus back to us. When our customers are successful, we are successful.

And we continue to look at it from that angle. So I would say you look across ANC and you look across the different product groups, all are growing at a healthy state. Double digit bookings, I think, is what we’ve set out there publicly. We continue to see the strength in our bookings coming out of ’twenty four, coming into 2025. Obviously, we have tougher compares this year in bookings.

We had a very good year last year. The comparables for this year get a little harder for us. Q2 is probably the hardest comparable quarter we have going for this year. But the momentum in and of itself around how we’re engaging customers, how they’re getting value, how they’re converting over to two plus product, how the average order sizes are going up, has continued through Q1. And obviously, you’ve recently come out with this multiyear target of 6%

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: to 8% for revenue growth. A lot of it is driven by this revenue mix towards A and C as we discussed. But do you see long term path to double digit growth at some stage? And what would be the sources of that So

Mark McCaffrey, CFO, GoDaddy: I’ll come back to where I started. Our model works. Our strategy is working. 6% to 8% revenue growth, improving our normalized EBITDA margins the way we’ve done it, buying back over 25% of our fully diluted shares outstanding and getting to our CAGR. This all works.

How executing our strategy and this model continuing to compound on itself. There there there you know, I always say our North Star is free cash flow. Everything else is a lever to get to the highest free cash flow we can because that strengthens our balance sheet, it allows us to return value to our shareholders, and it allows us to continue to invest in the business, it allows us to look at different areas based on the ROI. So there is no strategy that says we have to do a, we have to do b, or we have to do C. The idea is this model continues to compound on itself.

Our North Star continues to be the free cash flow. We continue to expand our profitability, our operating leverage. We’re growing revenue over 2x the rate that we’re growing our operating expenses. This model continues to compound on itself. It continues to grow.

It’s a great model. We’re getting to the customers we need to get to. We’re getting to the higher intent customers. We’re getting to the higher retention rates we talked to her about coming out of Q1 earnings, and it works.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: Perfect. Maybe we can take a few questions from the audience.

Mark McCaffrey, CFO, GoDaddy: We’ve put out there at our Investor Day a few years ago our free cash flow per share target of a 20% CAGR over the three years.

Unidentified speaker: Is that going forward or do you have already seen that?

Mark McCaffrey, CFO, GoDaddy: That’s through ’twenty six.

Unidentified speaker: So you talked about, multiple product lines within ANC growing in double digits. So what are the key ones? Is it Outlook, Microsoft Security? And I guess, you see new products being layered in over time? You’re to start selling Copilot to your base or something else?

Mark McCaffrey, CFO, GoDaddy: Yeah. So the major product groups within our ANC or website builders. That includes managed WordPress and websites less marketing. Email, which part of that is Microsoft email. We have some other options as well.

Commerce. And I think that’s about it. So all those are the major product groups. Now it doesn’t mean we won’t have other product groups. It doesn’t mean we don’t have complementary add ons within each of those categories in and of itself.

We’re a one stop shop for our customers. We have great relationships with our customers. If there is something they need, we will know about it. And obviously, we will consider that within our ANC or core platform depending on where it fits. But right now, we feel really good about the entrepreneur’s wheel, where we stand today, our ability to innovate for our customers, our relationship.

I always say there’s two things you need in technology. You have to be able to innovate and you have to understand your customer needs. We’re doing both. So right now, we feel really good about where we are. But we are always challenging ourselves based on what we’re hearing from our customers about what they might need and our ability to provide that.

Unidentified speaker: As far back as I can remember, the GoDaddy has favored share buybacks over dividends. But are you monitoring this new tax bill? I’ve seen that there may be taxes on share buybacks. At what point would you rethink that?

Mark McCaffrey, CFO, GoDaddy: We look at everything based on what I call a very rigorous framework on ROI. And we apply that to how we return value to shareholders as well. Right now, very attractive to do share buybacks. No immediate change to that equation. But we’re always looking at what the best ROI is for our capital using what I would say a very consistent framework.

Unidentified speaker: Could you talk a bit about competition and as you continue to evolve the product, how that shift any share shifts or how you see that going forward?

Mark McCaffrey, CFO, GoDaddy: When we think about competition, we take a few different angles here. So we’re the only company in the world that owns the technology stack from the domain all the way to the transaction and everything in between. Within each of those, I would say, product groups or point products, we have different competition. There are some people who do domains, some people who do websites. Obviously we talked about payment processing.

There are some people who do that. So we look very much we want that customer that’s going to use all our products, and this is why our bread and butter is the micro business and that we remain focused on that because they really value the one stop shop only using one application. We do monitor competition within each of those groups, but we also know that when it comes to entrepreneurs and micro business, this is our sweet spot. This is where we do the best. Not many people can compete with us in this market, and no one can compete with us across the whole technology stack because we’re the only ones who offer it.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: There’s another question over there.

Unidentified speaker: Quickly just curious about how you’re thinking about equity compensation as you continue to retain and attract talent, is it more or less or just the same as important as it’s been in the past?

Mark McCaffrey, CFO, GoDaddy: Yeah, so we’ve had, I would say, a very consistent application of stock based compensation or equity grants to our employees. We continue to make sure we’re attracting the right talent. I would say one of the great things about GoDaddy is we have a culture around innovation and experimentation, which attracts a lot of talented people in and of itself. So when we talk about equity grants, we’ve kept the consistent process. I think we’re about 2% to 3%.

We’ve kept it very consistent to our metrics within a percentage of revenue. We did have an uptick one year. We did move vesting from four years to three years to make sure we were staying within industry guidelines or standards or competition. But there’s no major change to that or we’re not contemplating anything different than what we’ve done in the past. We love our model.

We have a great culture. We have a great employee base. And we continue to think they’re they want to be here, if that makes sense.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: And Mark, maybe I’ll close the conversation with the final question about free cash flow. Please. To ask it differently, Q1 was a very strong quarter for free cash flow. And you have a rather broad guidance of $1,500,000,000 plus as your target for this year. Plus.

How much can this plus be? How confident do you feel five months into the year?

Mark McCaffrey, CFO, GoDaddy: Yes. So listen, we reaffirmed guidance out there. Thank you for pointing out it’s $1,500,000,000 plus. And we feel very good about our ability to meet all the, I would say, the guidelines that we put out there, not only for the remainder of this year. We put some markers out there for 2026 in our Investor Day, and that’s what I keep coming back to.

Our strategy is working. We’re executing. Everything is going according to plan. We have a resilient model, And we continue to compound on our success every single year, and we’re doing it in a manner that we’re honoring our North Star of free cash flow.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: And considering how strong your free cash flow generation is right now, does it make sense to look elsewhere for M and A opportunities either in The U. S. Or abroad?

Mark McCaffrey, CFO, GoDaddy: Yes. So we will always have a seat at the table around anything that comes up. There is nothing to call out. We feel really good about where we are today. It doesn’t mean there might not be something down the road that may be of interest, so I never want to rule things out.

But we always said it has to meet three criteria. Those criteria not changed. It has to be strategic, it has to work within our financial model, and we have to be able to integrate it within our core technology stack. And our success has raised the bar on the need for anything that we would look at be better than what we are doing ourselves today. So we feel really good about where we are.

Our balance sheet keeps getting stronger. We’ve talked about our leverage ratios. We’ve talked about our free cash flow generation. But right now, we feel really good about the execution and the strategy we have in place, our ability to really serve the micro business, our focus on the entrepreneur and the ideation and our ability to make this model compound. We’ll see what the future holds.

Alexey Gogelev, Head of the Vertical SaaS and Entrant Infrastructure team, JPMorgan: Perfect. Thank you very much, Marc. Appreciate your help.

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