In 2022, GoDaddy delivered $4.1 billion in revenue, growing 8% on a constant currency basis and over $1 billion in Normalized EBITDA driving a 25% margin. Free cash flow increased 13% leading to a 22% increase in free cash flow per share of $6.20 higher than our 2022 targets. Our strategy, direction and priorities continue to be consistent with our 3-year plan as we work to empower new customers and our large base of existing customers with more of our product offerings, including enabling Commerce on every surface. I will go into a bit more detail in the Commerce priority section but just to touch on it now, in about 18 months, GoDaddy has added incredible new products to our lineup, including OmniCommerce offerings with Websites + Marketing and our newly launched SaaS solution, Managed WooCommerce Stores on WordPress, Payable Domains, Pay Links, Pay Buttons and much more.

Our previously announced commerce offerings are now fully in market. And today, we are adding to that lineup with an exciting new partnership with FIS Worldpay, to be their preferred provider of OmniCommerce solutions for U.S.-based small business customers and bank partners. The teams are already working together, and we are receiving positive feedback from customers. We remain confident in the long-term growth potential we outlined last year in our 3-year plan, but also recognize that these top-line growth targets may be challenged in the short-term. As a result, we have taken some aggressive and disciplined actions in our cost structure that will result in over $100 million in annualized cost savings, preserving our ability to achieve profitability targets even in a weak economic environment.

These actions include deeper integration of some of our acquired brands, an overall reduction in vendor spend and an 8% reduction in our global workforce. We will continue to make prudent and thoughtful investments in our top growth areas and priorities of driving commerce through presence, delivering for Web Pros and innovating in domains. As always, I will share a bit about our key priorities on this call and focus more on Commerce this time. On driving commerce through presence, at Investor Day we shared our vision of connected commerce, which is about bringing commerce to every surface. Our goal has been to launch products and capabilities to engage the commerce customer early in the lifecycle, which might be a Payable Domain or a Pay Button on a Websites + Marketing freemium website.

We have made tremendous progress in this direction through the broad release of payments into our website builders, domains, Pay Links, Pay Buttons, and more. In Q4, we furthered our reach by enabling GoDaddy Payments, by default, in all new commerce websites. In January, we rolled out our payments by default out to new domain purchases. Most of our new offerings have been in market in the U.S. for less than a year and we are just starting to engage our base, so I am happy to share that our customers transacted $760 million of gross payment volume in 2022. GPV has been accelerating, and we are looking forward to sharing this metric with you regularly. We have also launched our new OmniCommerce SaaS offering on WooCommerce and WordPress, called Managed WooCommerce Stores.

This product is targeted at the larger end of our micro-business customers, giving them the flexibility and ability to scale to their needs. Merchants can sell on a highly performant website, sell in-person using GoDaddy terminals, and via marketplace and social channels with shared payments and inventory. We are excited by the opportunity and potential this offering brings to customers who need a more robust solution. We are also leveraging our Managed WooCommerce Stores offering in our new partnership with FIS Worldpay. FIS Worldpay is a market-leading merchant services provider, and we will be their preferred provider of OmniCommerce solutions for U.S.-based small business customers and bank partners. FIS Worldpay provides payment strategies and technologies to over 1,400 financial institutions, including more than 700 credit unions throughout the U.S., supporting over 33 million debit cards and processing more than 15.7 billion transactions each year.

Bringing together FIS Worldpay's reach, and our commerce products will create a significant new offering in the marketplace. And briefly on supporting GoDaddy Pros, we have continued to improve our product offering and have started to integrate more deeply some of our acquired brands. While these projects are complex, they will lead to a much better customer experience and lower costs. For one of our key brands, Media Temple, we informed all customers in December 2022 and will be sunsetting the brand over the next 3 months. And while I already mentioned our new OmniCommerce SaaS offering, we are actively testing price points that best appeal to our Web Pros customers and audience. Our third priority is innovating in domains and we continue to add value into our aftermarket platform.

In Q4, our Dan.com integration reached a critical milestone 6 months ahead of schedule by launching Dan listings on our Afternic platform. All Dan users currently opted-in for the distribution network will now benefit from greater exposure as their inventory is automatically integrated into the Afternic domain listing service network. This milestone was accompanied by numerous other enhancements such as bid and offer history that further optimized the aftermarket experience. Payable Domains is 100% enabled in the U.S. and will be ramping up the marketing launch in a couple of weeks. As you recall, Payable Domains are branded pay links that create a secure checkout page, shareable via a link, that enable U.S.-based domain name customers to begin accepting payments shortly after they purchase a newly registered domain, even if they do not yet have a website or online store.

For any domain purchased, existing or new, customers can already access the respective Payable Domain through their GoDaddy Dashboard. Combining the ability to accept payments with the credibility of a domain name enables small businesses to get up and running easily and quickly. While this capability has been rolling over a few months, we're thrilled and ready to be fully in-market giving GoDaddy domain customers a truly differentiated domain with expanded payment capabilities. In closing, we are pleased with the quarterly and annual financial results we delivered, while operating in this difficult environment. More importantly, we are proud of our progress against the key initiatives that we outlined last year at our Investor Day. We remain incredibly excited for the future.

We are building on our unique market leading position with identified, abundant, long-term opportunity, bringing together our customers' digital identity, their presence and connecting commerce to every surface. Being this one-stop shop for our customers is at the center of our strategy. We are committed to continuing our pace of innovation, participating in our customers' success, intently focused on delivering strong financial results, and as always growing shareholder value. With that, here's Mark.

Copyright: welcomia / 123RF Stock Photo

Mark McCaffrey: Thanks Aman. Hello, everyone, and thank you all for joining us. Last year, we hosted a comprehensive Investor Day, where we shared our financial goals for the coming 3 years around revenue growth, Normalized EBITDA, free cash flow per share and share buybacks. GoDaddy turned in a strong year against those financial goals, delivering revenue of $4.1 billion; Normalized EBITDA of $1 billion; free cash flow per share of $6.20 and executing $1.3 billion in share buybacks, meeting and exceeding our targets. While revenue growth has moderated in the short-term, we remain confident in our ability to deliver the profitability and cash flow we outlined at Investor Day and feel the strategic steps Aman described earlier will serve as tailwinds for accelerating our pace of growth going forward.

We also remain committed to completing our share buybacks authorized by the Board last year. Reviewing our annual financial results, total revenue was $4.1 billion in 2022, growing 7%. Excluding a point and a half of FX headwind, total revenue for the year would have grown over 8% on a constant currency basis. Applications and commerce revenue for the year grew to $1.3 billion, representing 13% growth, and Core platform revenue for the year totaled $2.8 billion, representing 5% growth, both in line with the targets we set last year. International revenue was $1.3 billion for the year, representing 5% growth. Excluding the FX impact, international growth would have been 8% on a constant currency basis. Total bookings in 2022 was $4.4 billion, growing 4%, or 6% on a constant currency basis.

Full year unlevered free cash flow grew to $1.1 billion, representing 14% growth, in line with our guide issued last year. Free cash flow grew 13% to $969 million. Free cash flow per share increased 22% to $6.20 per share, ahead of our investor day target of $6. Lastly, full year Normalized EBITDA grew 16% topping $1 billion, resulting in a 25% margin for the year, which is an expansion of 2 points over the prior year. Moving on to our fourth quarter results, total revenue topped $1 billion, growing 2%, or 4% on a constant currency basis. International revenue grew 3%, or 8% on a constant currency basis. Applications and commerce revenue grew 11% to $333 million, in line with the guided range of 10% to 12% for the quarter. Growth in Applications and Commerce was fueled by continued adoption of our Create and Grow products, email attach, and increasingly the adoption of GoDaddy payments and the related hardware sales.

The ARR for applications and commerce grew 9% to $1.3 billion. With that, the ARR from our create and grow products grew 8% to $445 million. Additionally, annualized GMV across the GoDaddy ecosystem grew 10% to approximately $28 billion. Furthering our efforts to provide more visibility into key growth areas of the business, we will share a new metric demonstrating our progress with GoDaddy Payments. GPV represents the dollar amount of payments processed on the GoDaddy payments platform. With Q4 as the first quarter with commerce fully launched on every surface in the U.S., GPV has already grown to an impressive $760 million. Core platform revenue decreased 2% to $707 million in the fourth quarter, primarily due to the tough compare to the year-ago quarter when aftermarket benefited from some larger than average transactions we have discussed previously as well as a modest decrease in our hosting business.

As previously mentioned, the hosting business has out-sized exposure to uneven demand in Europe as well as FX pressure. ARR for core platform grew 1% to $2.3 billion. Q4 bookings grew to $1.1 billion, flat year-over-year and growing 2% on a constant currency basis. Applications and Commerce bookings grew 7% on strength of Websites + Marketing, email attach and hardware and software sales. Core Platform bookings decreased 3% year-over-year on tough aftermarket compares noted earlier and due to softness in the broader hosting business. Gross margin was down slightly for the quarter, primarily due to product mix. Payments revenue will put some pressure on gross margins as this revenue stream gets larger in the future. However, there are relatively low incremental operating costs once those customers are acquired and set up on GoDaddy Payments, so we expect payments to be highly accretive to Normalized EBITDA as we scale.

Normalized EBITDA in Q4 grew 5% to $266 million, representing a 26% margin and an expansion of 70 basis points in the quarter. Continued discipline in spending allowed us to increase our margins at a rate higher than our bookings. GoDaddy's high brand awareness and the effectiveness of our in-house bidding algorithm allowed us to drive efficiencies in marketing spend. We also continued to drive leverage in customer care. Unlevered free cash flow grew 17% to $238 million, while free cash flow grew 16% to $202 million delivering $1.29 free cash flow per share in the quarter, a 25% increase over last year's Q4 free cash flow per share. Turning to the balance sheet, we exited the year with $774 million in cash and total liquidity of $1.8 billion.

Net debt landed at $3.1 billion, below 3 times net leverage on a trailing 12-month basis, and near the midpoint of our targeted range of 2 to 4 times. On our share repurchase efforts, we've returned $1.3 billion of cash to shareholders under the current authorization. From January 1, 2022 through February 1, 2023, we repurchased 17.2 million shares, which has reduced our fully diluted share count by approximately 10% since the beginning of 2022, on target for the 15% to 20% net reduction for the 3-year period. On customers, over recent years, the way we generate revenue has evolved through our expanded offerings to our customers, resellers and partners. We will continue to use metrics like ARR, GMV and GPV to show the health of our business and the progress towards our strategic goals as discussed at Investor Day.

As a result of the way our relationship with customers is evolving, we have updated the way we measure and report our total customers. In addition to paid subscriptions at the end of the period, we will now include accounts with paid transactions in the trailing 12 months and exclude accounts that have converted to free versions of our software. These changes do not meaningfully affect the historical customer growth or retention trends previously disclosed. We believe the updated definition more accurately reflects the dynamic customer lifecycle and provides more detail around the overall strength of our historical cohorts with a continued focus on long-term customers with a higher propensity to spend. Under the new definition, in 2022 ARPU increased to $197 compared to $187 and $170 in 2021 and 2020, respectively.

Retention rates remained consistent at 85% and customer count increased to 20.9 million in 2022 compared to 20.7 and 20.1 million in 2021 and 2020, respectively. Moving on to our outlook for Q1 and for full year 2023, let us start by covering several notable events. In January, we signed a partnership agreement with FIS Worldpay to be a strategic reseller of our OmniCommerce solutions for U.S.-based small business customers and bank partners. This arrangement is expected to drive growth in the second half of the year and will contribute to our commerce strategy through increased reach of our OmniCommerce offerings and website attachment. We are excited about the launch of this partnership in 2023 and the momentum this gives our Application and Commerce segment going into 2024 and beyond.

On restructuring, we took certain actions necessary to align our structure with the current economic environment and position ourselves for future growth. This will result in annualized savings of approximately $100 million through a combination of a reduction in workforce, reduced spending, and integration of certain European brands and businesses within our Core Platform segment. This will also result in a modest headwind to core platform revenue of 100 basis points in 2023 as we sunset certain brands. We expect estimated restructuring and other related exit charges of $55 million to $65 million with most of the charges to be recognized in the first half of 2023. In Q1 2023, we are targeting total revenue of $1.03 billion to $1.05 billion.

This represents 4% growth at the midpoint of the range and includes approximately 2 points of FX headwind from prior year bookings. Excluding this, the midpoint of our guidance would imply approximately 6 points of growth. We expect Normalized EBITDA margin during Q1 to be in the range of 24% to 25%. For the full year, we expect total revenue to be within a range of $4.25 billion to $4.325 billion, representing growth of 5% at the midpoint of the range. This outlook is inclusive of approximately 2 points of headwind from FX from prior year bookings and the anticipated brand integrations mentioned above. In the Application and Commerce segment, we are projecting revenue growth of 8% to 10%. In Core Platform, we are projecting revenue growth in the range of 2% to 4%.

Normalized EBITDA during the year is expected to continue to grow, with a targeted margin of approximately 26%. As a reminder, as we scale our commerce offerings, gross margin will be pressured and is expected to be in the low- to mid-60s range. As we gain operational efficiency in commerce, this is expected to drive incremental Normalized EBITDA margins. As we have shared previously, we have multiple levers within our control to drive margins, while we continue to invest in the business. This allows us to strike a balance and continue growing revenue, while achieving operating leverage down the income statement to drive sustainable shareholder value over the cycle. You have seen our recent record of accomplishment of delivering against our margin targets, and we are confident in executing on our profitability goals this year regardless of where we land within our revenue guidance range.

For the full year of 2023, we are targeting free cash flow of greater than $1 billion and unlevered free cash flow of greater than $1.2 billion. We remain on target to deliver free cash flow per share of more than $7 and are committed to returning capital to the shareholders under the remaining buyback authorized by the Board in 2022. As stated in the past, our capital allocation strategy remains unchanged and we will continue to evaluate our use-of-cash options on a quarterly basis. We expect capital expenditures of approximately $50 million, income tax payments of approximately $30 million and cash interest payments of approximately $170 million. Moving forward, we will share ARR, GMV, ARPU and customer count quarterly. We will share GPV and retention rate annually.

Taken together, these metrics provide a more comprehensive view of GoDaddy's expansive business over time and provide a view into revenue growth and profitability as we continue to expand customer lifetime value. These metrics may fluctuate based on acquisitions, integrations, divestitures and seasonality. That said, we are in an advantaged position given our ability to provide an ever-growing suite of solutions to a large, embedded customer base. In summary, we are proud of our strong and resilient business model, where we are mission critical to our customers. We are confident in our ability to deliver the profitability and cash flow we outlined at Investor Day, and feel the strategic steps taken this quarter will serve as tailwinds for accelerating our pace of revenue growth going forward into 2024 and beyond.

Our predictable model provides us the visibility to make prudent business decisions and allows us to remain resolute in operating the business to grow long-term value for our shareholders. With that, I'll hand over to Christie Masoner, who will be leading the Q&A.

A - Christie Masoner: Thanks, Mark. Sorry about the technical difficulties in the middle of the call, our prepared remarks are posted to investors.godaddy.net for reference. As a reminder, if you'd like to ask a question, please use the raise hand feature on the bottom center of the webinar screen to be added to the queue. Our first question comes from the line of Aaron Kessler from Raymond James. Aaron, please go ahead.

Aaron Kessler: Thank you, and congrats on the year. Maybe just first on the revenue growth, can you just provide a little bit more details how are you thinking about 2023 revenue growth maybe between customer growth and pricing? And does guidance include any maybe price increases, or just your general thoughts on ability to raise pricing in the future as well?

See also 11 Most Profitable Canadian Stocks and 25 Best Countries for Solo Female Travelers.

To continue reading the Q&A session, please click here.