GoDaddy Inc (NYSE: GDDY) Q4 2022 earnings call dated Feb. 14, 2023
Corporate Participants:
Christie Masoner — Senior Director, Investor Relations
Mark McCaffrey — Chief Financial Officer
Aman Bhutani — Chief Executive Officer
Analysts:
Aaron Kessler — Raymond James — Analyst
Matt Pfau — William Blair — Analyst
Trevor Young — Barclays — Analyst
Clarke Jeffries — Piper Sandler — Analyst
Ygal Arounian — Citi — Analyst
Elizabeth Porter — Morgan Stanley — Analyst
Mark Mahaney — Evercore ISI — Analyst
John Byun — Jefferies — Analyst
Deepak Mathivanan — Wolfe Research — Analyst
Presentation:
Christie Masoner — Senior Director, IR
— Aman Bhutani, Chief Executive Officer, and Mark McCaffrey, Chief Financial Officer. Following the prepared remarks, we will open up the call for your questions. [Operator Instructions] On today’s call we’ll be referencing both GAAP and non-GAAP financial results and operating and business metrics such as total bookings, unlevered free-cash flow, free-cash flow, normalized EBITDA annualized recurring revenue or ARR, gross merchandise volume or GMV, gross payments volume or GPV and net-debt. Growth rates presented represent Year-over-Year comparisons, unless otherwise noted.
A discussion of why we use non-GAAP financial measures and reconciliations of our non-GAAP financial measures to their GAAP equivalents may be found in the presentation posted to our Investor Relations site at investors.godaddy.net or in today’s earnings release on our Form 8-K filed with the SEC.
The matters we’ll be discussing today include forward-looking statements, which include those related to our future financial results, our strategies or objectives with respect to future operations, including our approach to capital allocation, new product introductions and innovations, and our ability to integrate acquisitions and achieve desired synergies. These forward-looking statements are subject to risks and uncertainties that are discussed in detail in our documents filed with the SEC.
Actual results may differ materially from those contained in forward-looking statements. Any forward-looking statements that we make on this call are based on assumptions as of today February 14, 2023 and except to the extent required by law, we undertake no obligation to update these statements because of new information or future events.
With that, here’s Aman. Thank you, Christie, and thank you all for joining us today. GoDaddy’s mission is to make opportunity more inclusive for all. We achieve this by providing sage guidance and robust tools so our customers can have a one-stop shop with GoDaddy. GoDaddy is delivering tools that help our customers get online and start their digital journey, tools that merge the in-store and online experience for their customers and bring commerce to every surface. This empowers them to focus on running their business. Today, Mark and I will cover our 2022 financial results and key accomplishments in the context of our three-year plan laid out at Investor Day last February. We will also share more information on our progress, especially in Commerce and the continued opportunity there and managing our P&L in the face of an uncertain macro environment. 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% percent 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 three-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 plus 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 line up 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 three-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% percent 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 and, on this call 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 Plus 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 microbusiness 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 three 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 six 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 percent 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.
Mark McCaffrey — Chief Financial Officer
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 three 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 the 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 $6.00. Lastly, full year normalized EBITDA grew 16% topping $1 billion, resulting in a 25% margin for the year, which is an expansion of two 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% percent on a constant currency basis. Applications and commerce revenue grew 11% percent to $333 million, in line with the guided range of 10% to 12% percent 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. Within that, the ARR from our create and grow products grew 8% percent 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 a 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 Plus 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 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 three times net leverage on a trailing twelve-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 1st, 2022 through February 1st, 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 three 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 twelve 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 longterm 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 offering 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 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 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 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 $7.00 and are committed to returning capital to shareholders under the remaining buyback authorized by the Board in 2022. As stated in the past, our capital allocation strategy remains unchanged and 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 the call back over to Christie Masoner who will [Indecipherable] the Q and A.
Questions and Answers:
Christie Masoner — Senior Director, IR
Thanks, Mark. Sorry about the technical difficulties in the middle of call. Our prepared remarks are posted to investors.godaddy.net for reference. [Operator Instructions] Our first question comes from the line of Aaron Kessler from Raymond James. Aaron, please go ahead.
Aaron Kessler — Raymond James — Analyst
Thank you and congrats on the — on the year. Maybe just first on the revenue growth, can you 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 major price increases or just your general thoughts on ability to raise price and in the future as well.
Aman Bhutani — Chief Executive Officer
Thanks, Aaron. Thanks for the question. When we look at 2023, we’re looking at a few things that are — [Indecipherable] 0:28:23 in our growth rate. One, we’re gonna have some headwinds related to the FX in our bookings in 2022 rolling through the first part of the year and therefore impacting our overall gross.
Second to that we have integrations we’re taking into effect, and we’ve put some headwinds related to those into our numbers. I think when you look at us overall and take into account those, you are looking at around a 6% annualized growth rate before that. When it comes to pricing, it is always nuanced for us. We have a broad set of products across our customer-base. We continue to look at opportunities to price within the market, where we can take more — where we take the price and we’ll continue to look for opportunities to take market share, where we can.
And obviously, there’s a lot of things going on coming into 2023. We assumed that some of the macroeconomic environment that we’ve seen in second-half of to persists throughout the year and we think we’ll have some acceleration related to some things that we’ve talked about it in before around commerce and of course, we’re excited about the new Worldpay, partnership that we signed recently. That’s right. And maybe I’ll just add that all of those factors are included in the guidance, Mark would normally say and we take those actions, especially pricing into account when we did the guide.
Aaron Kessler — Raymond James — Analyst
Great, thank you.
Aman Bhutani — Chief Executive Officer
Thank you.
Christie Masoner — Senior Director, IR
Our next question comes from the line of Matt Pfau from William Blair. Matt, please go ahead.
Matt Pfau — William Blair — Analyst
Great, thanks for taking my question. Wanted to just expand on those macro comments a little bit. So if we look at the your commentary, it seems like retention rates have held steady. So on the macro side, is it just more in terms of you’re seeing lower demand and why might that be?
And then when we look at those customer addition numbers you gave, how should we think about the net additions for 2022 in terms of rolling that forward, and what should be a reasonable net customer attrition expectation?
Aman Bhutani — Chief Executive Officer
Yeah, Matt, I can start with that and maybe Mark can cover a couple of key items just to step through all those items. Overall, when we look at 2022 retention rates continued to be strong. We talked about 85% plus retention rates for our customers and we are very happy with those. While we have talked about through the year was that our customers did see some headwinds. So we did see a little bit of pressure on that number. We also talked a little bit about the gross adds being slightly weaker on the — I think in the last call. So it’s a combination of those factors that really impact the net-adds for 2022. Looking into 2023, I don’t know Mike if you want to touch on just, we don’t guide to net-adds, particularly, but we’re generally assuming the same demand patterns going from 2022 to 2023, and we’re continuing to expect the same strong retention rates for the company, because we’re showing up every day, delivering the great products and great service. So we continue to expect those to continue.
Mark McCaffrey — Chief Financial Officer
Yeah, and we continue to focus on customers with a greater propensity to spend with us and that will be our focus. And as we noted in our stated remarks, our definition of a customer is changing and we are dealing more with resellers, we signed a partnership with Worldpay, that we announced. In certain cases, now those agreements will have access to their customers, but they will be our customers. So the ongoing definition and nature of net-adds will change and become more broad for us going forward. We’re going to continue to focus on our ARPU, we are going to continue to focus on being a one-stop shop, and we’re going to continue to focus on making sure that we can provide all the benefits to our customers going forward, that will drive our gross.
Matt Pfau — William Blair — Analyst
Great, thanks for taking my question. Appreciate it.
Christie Masoner — Senior Director, IR
Our next question comes from the line of Trevor Young from Barclays. Trevor, please go ahead.
Trevor Young — Barclays — Analyst
Great, thanks. On the decline in core platform rev in the quarter, can you just talk about what areas were maybe stronger weaker versus your own expectations, was it greater declines in hosting and security or was it aftermarket slowing and converging with core domains or is it just overall softer customer growth. I appreciate the comments on the gross add cadence and that sort of thing.
And then any color on how fast aftermarket is actually growing or how large it is as a percent of revenue? Just any update there would be appreciated.
Mark McCaffrey — Chief Financial Officer
Yeah, perfect. Maybe I’ll start with the drivers within our core platform and consistent with what we talked about coming out of Q3, we are continuing to see pressure on the aftermarket. Overall, it’s still contributing about 6% growth to our revenue today coming out-of-the year, it’s about 10% of our overall revenue. So we’re still seeing progress there, just not at the pace that we saw in 2021 and also we talked about in Q3, hosting. We’re seeing impacts around the European market for hosting, especially when you take it outside of the core GoDaddy core platform hosting platform and we continue to see uneven demand and pressure on our retention rate — retention rates in that business. Overall, those are the things that I think have been consistent. We saw in Q3 looking at Q4 and we see that going into Q1 of 2023 and I think I’m going have to pause there because I forgot the second-half of the question.
Trevor Young — Barclays — Analyst
Yeah, you’ve really addressed it with the aftermarket piece just how large it is, but just to dovetail on what your answer there, Mark. The brand that’s being sunset, is that specifically hosting products. So we should expect that trend to kind of [Technical Issues] perhaps [Technical Issues] worse.
Mark McCaffrey — Chief Financial Officer
Yeah, the brand, we’re talking about is Media Temple. And it is a big hosting brand for GoDaddy.
Trevor Young — Barclays — Analyst
Great, thank you.
Christie Masoner — Senior Director, IR
Our next question comes from the line of Clarke Jeffries from Piper Sandler. Craig, please go ahead.
Clarke Jeffries — Piper Sandler — Analyst
Hello, thank you for taking the question. Firstly on the Worldpay partnership encouraging to hear that, that arrangement is expected to drive growth in the second half of this year. I was wondering if you could give a little bit more of the specifics of the partnership. What does that reseller arrangement look like? Will the economics, be different for those partnership customers and then any sense on the ARPU opportunistically for those customers. It would seem like the Worldpay customers might give [Phonetic] a lot higher in terms of size of customer compared to your existing base.
Aman Bhutani — Chief Executive Officer
Yeah, of course, it’s too early to talk about ARPU opportunity or sort of the specifics of how the relationship would evolve. But we’re super-excited about the partnership. Given the reach of Worldpay, and you’re absolutely right, the small and medium-sized business that’s the customer loyalty is sort of on the bigger end of our micro-business customers, but we are ready with the product and putting our products next Worldpay’s reach is going to create an exciting new opportunity in the market. We’re looking, it’s a long-term partnership between the two companies. Our teams are excited to work together, we’re starting to see some customers in the pilot and we’re pretty excited about where this can go.
Mark McCaffrey — Chief Financial Officer
And also the launch for 2023 is in the U.S.-only. So there’s a lot more opportunity down the road and we’re very-very excited about it. We have to hit some milestones that the first-half of the year, leading into the second-half. But when you look at our overall commerce platform in how revenue comes out of our commerce platform — commerce platform, we have hardware and software sales, we have reseller, we have GoDaddy payments and then we have the attached related to Website plus Marketing and Managed WordPress and Worldpay partnership will hit several of those. And it will start with hardware and software, it will have some reseller impact and it will also allow us to attach directly to their customers Websites plus Marketing and Managed WordPress. So we think the ability to drive not only ARPU as we go into 24, but our growth rates around commerce are going to be fantastic, given the nature of this relationship.
Clarke Jeffries — Piper Sandler — Analyst
Perfect. And if I could just ask one follow-up, create and grow ARR, slight improvement in Year-over-Year trends and I look at it from what you disclose may be an improvement in sequential trends. At this point, I’m wondering if I could get your view on where we are in the curve of the macro, does it feel like we’ve leveled out in terms of the customer trends in e-commerce? Any kind of comment there would be — would be helpful.
Aman Bhutani — Chief Executive Officer
Okay, maybe I’ll go first and you can jump-in as well. I think none of us have the crystal ball, it’s really hard to sort of predict the macro. I think we continue to see sort of uncertainty around it and we’re doing our best to look at the data that we have and look at the indicators in the marketplace. And I’m sure everybody else looks at it as well, but we’re trying to run the business and what we see and we’re pretty happy with our results and we’ll focused on the execution and what we control.
Mark McCaffrey — Chief Financial Officer
I gave up, trying to be an economist in this environment [Technical Issues]. We have a broad business too. So we see impacts, different in different areas, for example we’ve talked about aftermarket and we’ve seen the impact in this environment around our transactions there. But Commerce continues to make progress going into 2023. We’re seeing a lot of taking [Phonetic] about the attach related to Websites plus Marketing. People are coming through the funnel. We’ve continued to see the progress of our existing customer base, with 21 million customers converting over to payments. We’re really excited for the first time that we have all the revenue streams in place and they’re are making progress toward our stated objectives, especially as we look at ’24 and beyond.
So the one thing that we continue to evaluate as our business gets impacted in different ways based on different things happening, it gives us protection overall, but something we need to continue to monitor.
Clarke Jeffries — Piper Sandler — Analyst
Really appreciate it. Thank you very much.
Christie Masoner — Senior Director, IR
Our next question is from Ygal Arounian from Citi. Ygal please go ahead.
Ygal Arounian — Citi — Analyst
Hey, good afternoon. So it sounds like you are just staying committed to 10% EBITDA and then the free-cash-flow guidance you gave [Technical Issues] we’re stepping off commitment to the revenue growth given the macro. So first thinking about — can you help us think about the right way as we think through revenue growth and where we should be thinking what you guys are thinking.
And then on the OpEx and $109 million savings, any more color you can share on where specifically those are coming from which line items?
Mark McCaffrey — Chief Financial Officer
Yeah, I’ll start and Aman you could add. So looking at our investment thesis, going back to Investor Day, we talked about the revenue growth, normalized EBITDA, cash-flow per share, share buybacks, where our main components. And looking at the profitability and the cash-flow per share, coming into ’22, we started the year forecasting 23% to 24% for the year, we’re exiting the year at 26%, so we’re ahead of target on profitability. We’re delivering cash-flow per share greater than the $6, we have targeted at $6.20, so those two, we are really happy with our progress.
Things like FX and the macro-environment hit our bookings in that bookings, especially in our subscription revenue takes time to rollout. So we’re seeing headwinds leading into 2023, related to that revenue growth. We also with some of the actions we’re taking are building in some headwind on revenue for the integrated brands that we’ve been talking about. So we — as time goes on, we think we are well-positioned to be a double-digit revenue growth company going-forward. But it will take time for our bookings to roll to our revenue to get back to the tailwinds versus the headwinds we’re facing coming into 2023. We feel really good about our ability to meet our other objectives around profitability, around cash flow per share and we stay committed to our share buyback. So a lot of positive there, but we are controlling what we can control and we’re monitoring what’s going on in the macro-environment. Assuming that we will see a headwind turn into a tailwind as we go into 2024.
Aman Bhutani — Chief Executive Officer
I think you covered it all Mark. I think what I might add is that our success GoDaddy is aligned with sort of secular trends around people coming to the internet, people transacting on the internet, people wanting to get their idea out there and be inspired and be an entrepreneur, and that opportunity, it’s huge and we are super-excited about it and pursuing over the medium-to-long term. From my perspective, if the topline metrics, if those milestones are moving a bit, it doesn’t change our direction, it doesn’t change our strategy, it actually allows us to focus the business and put ourselves in a position where we can grow faster and as the macro improves, we in a very good position to take share.
Ygal Arounian — Citi — Analyst
Great. And then on the OpEx, where that’s coming from specifically, savings?
Mark McCaffrey — Chief Financial Officer
So a couple of different areas, one, most of the actions were primarily around our core platform segment to give some color of the area and then some of the areas in-line items including HR recruiting, and marketing, I think were the ones that were targeted during this event. And I think those were the primary things within our operating expenses.
Ygal Arounian — Citi — Analyst
Okay and then last question on the Worldpay and partnership there. It’s really interesting. I think it is the first major reseller partnership you guys have done, is this strategy look to do more things like this and going to [Phonetic] become a bigger part of the customer growth and kind of future growth?
Aman Bhutani — Chief Executive Officer
Look, our path is to see GoDaddy terminals in every store and to see GoDaddy software being used by millions and millions of micro and small businesses, a partnership like — partnership like Worldpay, gives us access to be able to reach customers faster, so. I would say it’s very much aligned to our core strategy. And yes, you know, as opportunities present themselves to reach our goals are, execute that strategy will look at other opportunities as well.
Ygal Arounian — Citi — Analyst
Okay, great, thanks.
Christie Masoner — Senior Director, IR
Our next question comes from the line of Elizabeth Porter at Morgan Stanley. Elizabeth, please go ahead.
Elizabeth Porter — Morgan Stanley — Analyst
Great, thank you so much. I just wanted to hit on the restructuring, a little bit more. So can you help us understand just the restructuring announcement with the context for your outlook on revenue growth to start to improve from Q4 and Q1 guidance, is this more about allocation of resources versus an outlook on demand? And then just related, how should we think about reinvestment in the business.
Mark McCaffrey — Chief Financial Officer
So I’ll start with hi — hey, Elizabeth, I’ll start with the Q4 leading into Q1. When we look at our growth and the impact 2022 had on our bookings coming out of Q4, we needed to right-size our operating structure to reflect the bookings growth and the impact it was going to have on revenue growth going into 2023 and that’s how we’ve looked at it. Controlling what we can control from an operating perspective and monitoring and assuming that the macroeconomic environment, we’re in today will persist throughout the year.
When it comes to investment in tech and dev, we primarily lifted port platform and some of the non-strategic brands around hosting as we’ve started to evaluate where we were going to look at reductions versus invest and the flip side of it is applications and commerce continues to be an area we invest in commerce continues to be a growth driver for us, leading into 2024, so when it comes to investment in tech and dev, we continue to push that. I always use the commentary that there’s two things you need to have to win in the tech industry going forward. You need innovation and you need to own the customer relationship. We continue to focus on both of those, and continue to innovate. Commerce is again, it’s one of the areas, we continue to look for innovation and growth. And obviously, our customer care relationships have been something that has been a strength for us going forward. So those two areas continue to be the areas of investment for us.
Elizabeth Porter — Morgan Stanley — Analyst
Great. And then just on the ARPU given the change in customer count any context for how ARPU grew in 2021 versus the 10% that you just reported for 2022 and how should we think about the level of sustainability, any opportunity there is to actually accelerate ARPU and 2023, just as you improve with the attach of commerce and payments.
Aman Bhutani — Chief Executive Officer
Yeah, we are absolutely focused on growing ARPU and our strategy around bundling more products, and it’s something we’ve talked about over many quarters. [Indecipherable] is about bringing new customers and existing customers to — and exposing them do more-and-more of our product range. So we are absolutely looking at opportunities to increase ARPU. And just to touch on your comment over the years, the trends are similar, we’ve had sort of consistent ARPU growth over the years and we’re investing and making the right decisions to continue to see that happen.
Mark McCaffrey — Chief Financial Officer
Continued focus on customers with a greater entity to spend. In commerce, we think will be a big opportunity. But 85% of our revenue comes from our existing subscription base right now. But as we get more into the transactional nature of the businesses and one-stop shop that will create an opportunity for us to continue to increase ARPU.
Elizabeth Porter — Morgan Stanley — Analyst
Thank you so much. Our next question comes from the line of Mark Mahaney from Evercore ISI. Mark, please go ahead.
Mark Mahaney — Evercore ISI — Analyst
Thanks. The increased disclosure is a good thing. So thanks for doing that and doing it quarterly going forward. You talk about marketing launch for payables domain in the U.S., can you provide any more color on that and then any color on the timing for international payable domains enablement? Thank you.
Aman Bhutani — Chief Executive Officer
Yeah, thanks, Mark. The marketing launch starts in about two weeks with some PR and you’ll start to see people domains really show up in a lot of our marketing collateral, including the site today, you can get to payable domain, in fact. I think I’ve talked about it in the past, but given our large domain size of domains under management, we have to roll this out. So we could support all different kinds of domains. We’re ready with that in the U.S. Now, we’re just going to bring it to the side, bring it into our marketing, bring it into our merchandising and promotions, so that every customer, new and existing is able to see it and we [Phonetic] start to connect the dots for them so that they start to understand what the payable domain is.
In terms of international, obviously, we feel this product is it’s very global. Just like a domain name, payable domain with PayLink, it just should work everywhere in the world, but no specific timing on international rollout just yet.
Mark Mahaney — Evercore ISI — Analyst
Okay, thank you, Aman.
Christie Masoner — Senior Director, IR
Our next question comes from the line of John Byun from Jefferies, on behalf of [Indecipherable]. John, please go ahead. Hey, John, you’re muted.
Aman Bhutani — Chief Executive Officer
John?
John Byun — Jefferies — Analyst
Sorry about that. I guess I’ve got muted. Thanks and this is again on behalf of [Indecipherable]. So until the first question on the FIS Worldpay. Is there a way to think about when that is scale, what sort of impact that might have on gross margin, and operating margin?
Aman Bhutani — Chief Executive Officer
Yes, so as we [Indecipherable], we think it’s going to start to have impact in 2023 as we hit certain milestones. Now it will be relatively small within ’23, but will give us momentum going into 2024, but we expect it to be accretive to our margins overall, our operating margins, again as we start to scale and the breadth of the relationship is just not about a transactional but it’s hardware, software, it leads to other fees and then leads to our ability to attach for Flex Marketing and Managed WordPress that should gives us the ability to get operating leverage and improve our operating margins down the road, very very excited about this. It’s a very broad relationship. Again, it’s focused on the U.S. right now, but we think the opportunity to go global on it overall is it’s going to be exciting moving forward.
John Byun — Jefferies — Analyst
All right. Thank you. And then we’re about halfway through Q1. I’m wondering, what you seeing in terms of the environment, in terms of activity and demand trends. I mean, does it feel like it’s similar to Q4, are you starting to see any recovery at all with new customer base? Thank you.
Aman Bhutani — Chief Executive Officer
Yeah. I think the board that we’ve used in the past continues to work, which is — we continue to see sort of uncertainty around what’s going to happen. There is — there is no large fluctuation, but when we look at the geographies, when we look at certain products that we sell, we do see trends that are different from what we’ve seen in the long term and in right now in any one geography, a trend can change very-very quickly, but overall, I’d say, over the last couple of quarters looking into Q1 we are seeing some core stability, which is ultimately a good thing.
Mark McCaffrey — Chief Financial Officer
Yeah, it’s we still think that the large opportunity is out there for us to go gather, obviously we’re assuming the macro-environment stays muted a bit as we go into 2023. And again, coming back to one of my previous answers, different parts of our business are impacted differently in this environment and we continue to see that and monitor that. We talked about aftermarket. We’ve continued to see — not seeing the large transactions related to aftermarket. So that is something that has continued into 2023. On the other hand, we see greater attach around commerce and we’re seeing that trend continue to grow throughout the year. So we’re excited about things going-in the rest of the year. However we’re acknowledging that some of these may, may take some time to develop as — as we reset our bookings into revenue or under subscription business.
John Byun — Jefferies — Analyst
Thank you. Our next question comes to the line of Deepak Mathivanan from Wolfe Research. Deepak, please go ahead.
Deepak Mathivanan — Wolfe Research — Analyst
Hey, guys, thanks for taking the questions. And I just want to ask about the pricing expectations for 2023. Now there’s a lot of pricing tweaks happening in the market currently given the sustained inflation. Can you talk about philosophy — your philosophy in 2023 whether you see potential to raise prices on any products either on the domain side or on other areas?
And then, second question, are you seeing any market share shifts in your core products in domains, or in Websites plus Marketing currently?
Aman Bhutani — Chief Executive Officer
Yeah. On pricing, Deepak, we continue to have a nuanced approach. As I’ve talked about before, we price our products based on the customer population we serve based on the geography, there is also specific bundling and channel dynamics, your pricing as well. We also maintain that we provide services and products to our customers, where the value we provide is much higher than the price that we have. So we do continue to feel that there’s pricing opportunity. But we’ll continue to be nuanced about it, because we have added a lot of capabilities over the last year for us to be flexible around how we price and how we market and how we sort of move dollars around within between geos and channels to allow us to get the best return on ad spend.
So, yes, you’ll see some pricing actions from us, which are all in the guide like Mark says, but you’ll also see some sort of — as you see some increases, you’ll also see in some markets, some decreases, because our testing clearly shows that there’s room to take share there. And that’s sort of our approach to market share overall as well. We’re constantly now testing these things. And when we see an opportunity, we’re going to lean in and take market share, and we’re able to move marketing dollars around quickly much faster, I would say, than we were in the past. So we will lean in there and take market share. And in other markets where we see opportunity to take price, we will take price.
Deepak Mathivanan — Wolfe Research — Analyst
Got it. And then, if I can just ask one quick follow-up, and I apologize if this was asked already. Can you unpack the 2023 revenue guidance a little bit, maybe specifically in terms of how much you expect contribution from things like payments, and some of these other incremental growth areas?
Mark McCaffrey — Chief Financial Officer
Yeah. We haven’t gotten into the breakdown of each of the contributing areas we’re looking at in our revenue guidance right now is continued growth in ARR around our subscription businesses. Again, a focus on applications and commerce is obviously our higher growing area right now versus our core platform, which we’ve talked about some of the pressures we’ve seen around hosting and aftermarket. We continue to be excited about commerce, we haven’t broken down the dollars between all of that, but we look at that as a contributor. And remember, we we’re looking at some of the — in our subscription business, what I would say, a rollover effect of the FX that will be a headwind for our revenue in the first part of the year. But assuming macro condition stabilizes should become a tailwind as we get to the back half of the year, as well as looking out into 2024.
So a lot of moving parts there, we haven’t gotten into this product versus this product type of things. We’re extremely excited about the progress of commerce that’s the one thing we continue to call out. We’re excited about the contribution of Worldpay, and the momentum it gives us going into 2024, again, those around our applications in commerce business. And we continue to see our ability to be that one-stop shop for our customers and be able to [Indecipherable] long-term opportunity that we continue to pursue.
Christie Masoner — Senior Director, IR
Great. Thank you. I’ll now hand the call over to Aman for some final remarks.
Aman Bhutani — Chief Executive Officer
Thank you, Christie, and thank you all for joining us. As always I’d like to thank all GoDaddy employees for another good quarter, and sort of the focused energy to continue to drive the business and grow the business. We’ll see you next quarter.