Welcome to the GoDaddy Q2 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. I would now like to hand the conference over to Mark Grant, Vice President of Investor Relations. Please go ahead, sir.
Good afternoon, and thank you for joining us for GoDaddy's Q2 2020 earnings call. With me today are Aman Bhutani, Chief Executive Officer Ray Winborne, Chief Financial Officer and Andrew Loake, Chief Operating Officer. Aman and Ray will share some prepared remarks and then we'll open up the call for your questions. On today's call, we'll be referencing both GAAP and non GAAP financial results and operating metrics such as total bookings, unlevered free cash flow, normalized EBITDA and net debt. 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 website at investors.
Godaddy.net or on our Form 8 ks filed with the SEC with today's earnings release. The matters we'll be discussing today include forward looking statements, which include those related to our future financial results, new product introductions and innovations, our ability to integrate recent acquisitions and proposed acquisitions and achieve desired synergies, potential tax and cash flow implications of the settlement and related leverage considerations of our TRAs, the expected impact of a recent restructuring, as well as the impact of the COVID-nineteen pandemic on our business, customers and employees. 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 the forward looking statements. Any forward looking statements that we make on this call are based on assumptions as of today, August 5, 2020, and we undertake no obligation to update these statements as a result of new information or future events unless required by law.
With that, here's Ahmad.
Thank you, Mark, and thank you all for joining us today. Since March, there has been a massive acceleration in the shift to digital for small businesses around the world. Again and again, we hear from customers how vital it is in this time of global economic uncertainty for them to have both a dedicated website for their business and the tools to help them reach their customers. We consider it a privilege to serve millions of everyday entrepreneurs worldwide as we strive to help them build their businesses and refashion the economics of their communities. As many companies benefit from the digital acceleration, I am excited that GoDaddy has continued to gain share.
I want to start today by acknowledging GoDaddy team members. The level of activity in our business and our operations are at their highest and matched by the personal challenges all of us face in the current environment. In June, we announced a restructuring of our outbound sales team. And while it is always difficult to part ways with team members, we are grateful for the contribution over the years. Our team members are working hard and have adapted quickly to address the rapidly changing landscape.
The strong financial results for Q2 speak for themselves. We are pleased with the results and more importantly, with our position to grow with our customers well into the future. We are seeing strength across many parts of our business and I want to highlight 3 items in particular. 1st, GoDaddy surpassed the significant milestone of 20,000,000 paying customers. In Q2, we added more than 400,000 customers, delivering the strongest quarter of net customer growth in our 20 year history, aside from when we acquired HEG.
This was driven by favorable trends, including stable retention rates and record gross customer adds in the quarter. Both of these trends were impacted positively by the strong market demand coupled with investments in marketing. We will continue to invest in marketing for as long as the returns stay within our threshold. 2nd, we continue to create demonstratable value for existing and new customers by adding features and functionality to our products such as marketing tools, video streaming, security options and bulk purchase experiences. We also made it easier for our customers to use and experiment with our products.
We added a freemium experience for websites plus marketing in Q1 and in Q2 we added Sellbrite's e commerce offering to the freemium lineup. 3rd, we took a set of decisive actions from a position of strength to further optimize our business for long term growth and cash flow generation. As mentioned, in June, we restructured our U. S. Outbound sales team as its sales motion had become unsustainable due to COVID-nineteen.
And today, we fully settled the TRA at an attractive return profile, while preserving both our liquidity and our ability to further invest going forward. Lastly, we are happy to announce that we have closed on the acquisition of NuStar's registry business and we look forward to unlocking value through vertical integration in the domain space. Ray will provide more details on these topics in his remarks. Let's dig into customer growth and creating value for customers. Wow, Q2 of 2020, net new customers growing over 200% year over year, getting us to 20,000,000 paying customers, lots of fantastic twos and zeros in that sense.
It demonstrates just how much GoDaddy has grown since becoming a public company 5 years ago. In fact, in those short 5 years, we added nearly 7,000,000 customers. GoDaddy continues to attract new customers to and continually stable, an ongoing testament to both the value and the criticality of our products and services to the small businesses we serve. We continue to be the global leader in the dream phase where customers name their ideas. In recent months, we brought together the greatest strength and capabilities of GoDaddy and the Uni Registry business, forming the GoDaddy corporate domains team.
We added best in class new functionality for bulk purchasers and our sales teams signed their first deals together. We also continue to see strength in primary domain sales, domain add on and aftermarket transactions. How our business shows up online matters more now than ever before. And this is one of the reasons you continue to see our domain segment growing more than double the industry growth. While we love our outsized growth in the dream phase with its 5,000,000,000 TAM, we are most excited about how Website plus Marketing and Managed WordPress allow us to pursue the 175,000,000,000 TAM within the create and grow phases where everyday entrepreneurs build their ventures.
Our customers want to do more with us and we continue to invest in features and functionality that will let them accomplish this, especially in marketing and commerce. In Q2, annualized recurring revenue in websites plus marketing grew approximately 60% year over year. The commerce tier of our website plus marketing product accelerated even more quickly over the last few months with net ads for our commerce tier growing 60% quarter over quarter and almost 90% year over year. In fact, 25% of new websites plus marketing subscribers are opting for the commerce tier at nearly double the historical adoption rate, making it a bigger part of our business. With our commerce tier of websites plus marketing for $25 per month, everyday entrepreneurs get a strong set of simple, easy to use tools to build their ventures online.
Bundled with that is search engine optimization, best in class platform integrations with unlimited postings and tools for selling including free listings on Google, enhanced local delivery options and 1 year of branded email. All of that back with our award winning guidance delivered 20 fourseven by our care guides worth 100 of dollars all included. For our customers, beautiful, engaging content is at the heart of their marketing. The GoDaddy offering with over let them do just that. In June alone, more than 14,000,000 pieces of content were created and exported.
That doubled year over year. The pace of user growth also accelerated. That doubled quarter over quarter. With more than 1,700,000 users engaging with over every month, we are very excited to get the full functionality embedded in websites plus marketing. GoDaddy is the only company whose strength in create and grow transcends both captive CMS and WordPress.
As a global champion for WordPress and the largest WordPress host, we are excited to bring new capabilities to the WordPress ecosystem. Already, our efforts in improving ease of use for WordPress are showing strong results. There are nearly 8,000 themes available in WordPress and our Go theme has quickly risen into the top 8. We are proud to be part of the open source WordPress community and the continued growth we see in Managed WordPress is great encouragement for us to continue to invest in the product. We also saw business applications growth reaccelerate to 18% year over year and that goes back to the frequently changing circumstances in which our customers find themselves today.
Many of our customers relied on in person interactions or inbound phone calls to brick and mortar stores as the means for their customers to engage with them. With many of those storefronts closed, customers have been adopting branded email as an additional means to communicate with their customers. This is yet another way GoDaddy can help everyday entrepreneurs thrive while driving growth in our business as well. Our focus on adding customer value in a strong demand environment powered a strong second quarter and sets us up well for the rest of the year. We are poised for sustainable, profitable growth for the long term and continue to be confident in our ability to hit our 4-1-1 goal.
Dollars 4,000,000,000 in revenue, dollars 1,100,000,000 in unlevered free cash flow organically in 2022. With that, here's Ray.
Hey, thanks, Aman. I'll touch on the financial results for what was a great quarter for GoDaddy and then provide our outlook for Q3 and the full year. Q2 reflected better than expected results on every key metric from top to bottom as the business performed very well setting us up for continued success through the remainder of the year and beyond. Aman mentioned customer growth, but we've also seen flat customer churn rates and resiliency in subscription renewals, proof points to the durability of the business model. Total revenue came in at $806,000,000 growing over 10% on a constant currency basis with 140 basis points of currency headwind and we're seeing the strength globally with U.
S. And international both growing at a 10% clip in constant currency. Looking at product categories, we delivered 11% growth in domains on strength in new registrations, renewals and aftermarket sales. Hosting and presence grew 4%. Inside that, we saw terrific growth in subscriptions of websites plus marketing along with e commerce solutions Aman talked about earlier.
This line item also reflects the headwinds from our higher priced GoDaddy social product, which was disproportionately impacted by COVID-nineteen. And finally, business applications growth reaccelerated to 18% year over year on higher demand for domain based email and productivity solutions. Total bookings grew to $936,000,000 rising 12% on a constant currency basis with roughly a 0.5 of currency headwinds. The strength was broad based across products and geographies. We were well positioned to capture demand as businesses adapted their models, establishing an online presence in response to the COVID pandemic.
And we've seen incredible response to our websites plus marketing offering as we introduced the freemium option early on in Q2. Gross margin was 64% in the quarter, down slightly sequentially as we saw a mix shift towards the domains and business application product lines. For modeling purposes, we anticipate the product mix and in turn the gross margin to look similar in the second half of the year. We delivered approximately 3 points of operating leverage year over year with G and A continuing to benefit from both scale and lower discretionary expenses. Leverage in G and A and Care was slightly offset by the investment in marketing that we started to ramp in the 2nd quarter.
The net sum resulted in normalized EBITDA of $162,000,000 in Q2 or approximately two points of margin expansion over last year. Moving to cash flow, unlevered free cash flow for the quarter was $186,000,000 growing 11% year over year with unlevered free cash flow margin up about 30 bps year over year. Trailing 12 month unlevered free cash flow was nearly 790,000,000 dollars and margin topped 25 percent illustrating both the size and scale of this business. Now I want to take a moment to discuss the specific financial impacts of the restructuring to our U. S.
Outbound sales team we announced at the end of June. We recorded a $39,000,000 restructuring charge in Q2. Net of those impacted that accepted other roles, 582 team members ultimately received the transition package with a combined dollar value of approximately $15,000,000 $10,000,000 of which was recorded as a charge in Q2, while the remainder will hit in Q3. We also exited leased office space in Austin and as a result recognized an impairment charge of approximately $29,000,000 to our right to use assets. Actual cash outlays for the restructuring will be excluded from future presentations of our unlevered free cash flow metric.
And you can see in the full year guide, we plan to reallocate these go to market savings to other marketing activities. Now on to the balance sheet. We finished Q2 with $773,000,000 in cash and total liquidity of nearly $1,400,000,000 Net debt landed at $1,600,000,000 or about 2 times net leverage on a trailing 12 month basis, the low end of our targeted range. And we have no significant debt maturities until 2024. Earlier this week, we closed the previously announced acquisition of NuStar's registry business, our 3rd completed acquisition this year.
We look forward to welcoming Nikolai and team as we extend the value chain in the dream phase of the customer journey. We've completed the preliminary purchase accounting work and due to the magnitude of the adjustment to the deferred revenue balance, we expect the rebranded GoDaddy registry to contribute minimal revenue in 2020. Our estimate of the contribution to unlevered free cash flow remains at less than $10,000,000 for this year. As announced today, we reached an agreement to settle our TRAs eliminating $1,800,000,000 in future cash payments for a one time payment of $850,000,000 This is a terrific outcome for GoDaddy. We feel great about this transaction because 1, at current tax rates, the implied rate of return exceeds our borrowing costs by 6 percentage points.
And 2, we believe it's likely that tax rates will go up in the future, so the actual savings will be much greater, further enhancing our returns. We'll fund this transaction with a combination of cash on hand and new debt. Post transaction, while the net leverage of roughly 3 times leaving us at the midpoint of our targeted leverage range with ample liquidity to fund the business, execute the strategy and pursue our stated capital allocation priorities. The strength and resilience of our recurring business model has fueled a strong balance sheet. And when unique and attractive opportunities like the TRA arise, we have the flexibility to take advantage and create long term value for our shareholders.
Before I get to the outlook, want to take a moment and reflect on the financial progress GoDaddy has made in the last 5 years since our IPO in Q2 of 2015. Quite simply, our focus has been creating customer value, sharing in the economics of that value creation and being good stewards of the business. The proof points of the outcomes. Since Q2, 2015, we've increased customers by approximately 50%. We have increased revenue over 100% and we've increased unlevered free cash flow by more than 200%, pretty impressive growth statistics.
And we're well positioned for the next 5 years. We'll continue to be prudent allocators of capital in the pursuit of long term growth and levered free cash flow per share. With that, let's turn to our outlook for Q3 and the full year. In the Q3, we expect total revenue of approximately 835,000,000 dollars or 10% growth year over year. For Q3, you should expect double digit growth in domains, mid single digit growth in hosting and presence and high teens growth in business applications.
Remember those products that relied on the outbound calling motion like GoDaddy Social disproportionately impact the hosting and presence line. For the full year, we expect revenue growth of approximately 10% with bookings growth outpacing revenue by about a point. On unlevered free cash flow, we expect 2020 to land in a range of 815 $1,000,000 to $825,000,000 as go to market savings from the restructuring are reinvested to drive long term growth. As you can see in the Q2 numbers and the forward guidance, the current demand environment merits incremental investment. So you should expect us to delever in marketing and tech and dev in the back half of twenty twenty.
As a reminder, Q4 has a highly anomalous 27th pay period, without which our unlevered free cash flow guide would have been $18,000,000 higher. In closing, we're playing offense as GoDaddy continues to gain share in an industry experiencing acceleration in an ongoing secular shift to online commerce. We are more confident than ever that our strong and predictable cash flow will allow us to take advantage of opportunities and create significant value for our customers, employees, communities and shareholders for years to come. And now I'll turn it back to Aman before we open up the call for Q and A.
Thank you, Ray. It has been 1 year since my first GoDaddy earnings call. In that year, I have talked to many everyday entrepreneurs and fallen in love with their stories. I have seen an employee base that deeply cares about the mission of the company and has risen to unprecedented challenges. While there is still uncertainty ahead and no one has a crystal ball, I am inspired by the opportunity in front of us and our path forward is clear.
Our focus on customer success drives our continued development of world class products. That in turn empowers everyday entrepreneurs to sell and thrive online. We have an incredible brand that is only getting stronger. We have a resilient, recurring business model and we will continue to be prudent stewards of the significant cash that GoDaddy generates, pursuing growth organically and inorganically for years to come. GoDaddy is an amazing success story.
We have a TAM of $180,000,000,000 and 20,000,000 paying customers. And I feel like we're just getting started. Operator, let's open up the call for questions.
Our question comes from Deepak Mathivanan from Barclays. Please go ahead.
Great. Hey, guys. Thanks for taking the questions and congrats on a good quarter. I wanted to ask about a couple of things. So first is, can you give us some color on the customer profile that you're seeing?
The net adds of 400,000 was very strong. And like you said, it's nearly 3 times last year. How much of that on ramp is coming from domains? And how much of that would you say you can attribute it to websites plus marketing and then also some of the e commerce products? And then, on the second question is on the hosting and presence.
Obviously, you're seeing nice tailwinds on the e commerce and also websites, but the overall growth is 4%. I know it's impacted by the social offering and then also the do it for me clean up. But can you give some color on the size and growth of each bucket, so we can think about the confidence inside this correctly? Thank you.
Thanks, Deepak. This is Aman. I can take the first part and Rick can probably take the second. We're seeing customer growth across all the product categories. We saw growth in domains.
As you see, we saw growth in the biz apps and websites plus marketing and managed WordPress continue to grow at a healthy rate, right. So it's not really about one product or the other. We're seeing growth across all products and it's a function of the demand environment and the marketing spend and the value that our products bring to our customers on certain everyday basis. We're excited about the acceleration and the quarter continued to improve for us and we're excited about that. Ray, do you want to take the question?
Yes. The only thing
I might tack on to that, Deepak, you may have heard Aman reference to it. We are super excited about the growth we're seeing in websites plus marketing, 60% growth year over year in That is a fantastic growth rate. And so you can see the adoption and more excited about even the mix of SKUs within that adoption. So we've seen a nice uptake in e commerce SKU takes. It's, I think, 25% of folks taking that SKU now.
So really excited about the progress we've seen there in that product.
Okay. If I can just follow-up on that, how much would you say the impact from the restructuring efforts is on the 3Q revenues? I mean, I know previously you quantified it for 2Q. How should we think about that for 3Q?
Yes. If you think about 3Q and the rest of the year, you saw the impact of the headwinds in the Q2. It's baked into that guidance for the rest of the year as well.
Got it. Okay.
Thanks guys.
Thank you. And our next question comes from Matthew Fow from William Blair. Please go ahead. Your line is open.
Hey, guys. Thanks for taking my questions. Just wanted to hit on the premium offers that you've been providing on the Web sites business. Maybe you can just discuss how those have been performing relative to your expectations, both in terms of interest and conversion? And then what are your thoughts on using this strategy longer term, both for the existing products that you're offering it for or perhaps expanding the 2 additional ones?
Thanks.
Yes, thanks, Matt. The freemium offering is a quarter in and we continue to be excited about how it's performing, both in terms of attracting registered users to come in and try the product and the conversion rates we're seeing. And so it's meeting our expectations and we continue to drive improvements in it. In terms of freemium as a model, we really feel that our customers more and more people need to be able to use our products. So the freemium model allows us to do that in a successful way.
And one of the things you saw this quarter is that we added the freemium offering for Sellbrite, which is a product that allows micro small businesses to connect to many of the large platforms out there and get their products out there. So it's really a model that we're using for more and more products. And one last thing to keep in mind is that when we talk about the 20,000,000 customers, we're talking about paying customers. That does not include freemium customers in that number.
And hey, Matt, it's Andrew. I'd just tack on one other thing. Ray mentioned we're leaning into marketing. And obviously, we've got the conviction to lean into marketing based on what we're seeing in the early returns.
Got it. Just one quick follow-up.
Good. Based on the growth that you're seeing in the websites business, but what about visibility into future quarters? Are you able to get any idea of predict in terms of predictability of what the conversion of some of those premium users will be? And how does that perhaps help you in terms of the visibility into your business?
Thanks.
Yes, I think it's a bit too early to be able to sort of set the quarterly cohorts up. We're still, like I said, only a quarter in, But over the next few quarters, we'll definitely have a clearer idea of how those cohorts perform. Early indications, they continue to meet our expectations, so we're excited to continue to move forward on it.
Great. Thanks, guys. Appreciate it.
Thank you. And our next question comes from Ron Josey from JMP. Please go ahead. Your line is open.
Great. Thanks for taking the question. Aman, you started off the call just talking about the massive acceleration of digital and we're seeing that in your subscriber growth, the numbers, freemium, e commerce adoption, etcetera. Just wanted to get your take on where do you think we are in the shift to digital and the importance of we just talked about the importance of freemium, but with 20,000,000 subs and more freemium coming on, I just want to know like where do you be curious your thoughts on where you think we are in overall adoption of this digital transformation and where GoDaddy is there? Thank you.
Yeah, I do think that COVID-nineteen has pushed a number of people past the point of inertia where they were not adopting digital. Another way to say that is pull forward the TAM. So because people have no choice but to go digital to support their businesses, we're seeing people experimenting with ideas, we're seeing people come online even though they had hesitated to do it in the past. You look at that TAM of $180,000,000,000 and it's just huge. There's space for so many players there.
And when I look at GoDaddy, I think we're really positioned well. And when I talk in the script about, I feel like we're on the start line, I look back at GoDaddy and see a leader in the dream phase, doing so well in the create phase over the last 2, 3 years. And now as we put more and more attention into the grow phase, name out there related to those offerings, the more we improve those offerings, I expect GoDaddy to play a very significant role in that moving forward.
Great. Thank you.
Thank you. And our next question comes from Nick Jones from Citi. Please go ahead. Your line is open.
Great. Thank you for taking my questions. I guess just 2. First on strategic acquisitions. I mean, how do you feel about the pipeline today given kind of market multiples and any kind of thoughts on how you view the environment?
And then the second question would be on kind of customer acquisition and increasing investment in advertising. How do you feel about kind of the, I guess, the advertising window? Are CPMs lower today and you're able to be more aggressive? How long do you think that will last from where we stand today? Any color there would be helpful.
Thanks.
Yes. As you know, we've been quite active in the acquisition space over the last few months, just talking about closing Newstar today and super excited about that. Our pipeline continues to be healthy. And of course, valuations are what they are, but we've continued to look for opportunities which can add value to our customers and become part of the GoDaddy ecosystem. And broadly speaking, we're looking for opportunities where customers get non linear value and our brand extends to being able to offer that value to customers.
That's kind of the lens we're looking things at and there's a healthy pipeline. In terms of customer acquisition, our customer acquisition costs actually went down quarter over quarter and year over year and part of that is the CPMs, but a big part of that is just demand and intent from customers. So as we look forward, our commitment is that we'll continue to invest in marketing, looking at this demand, taking share within this demand, as long as it meets our thresholds.
Great. Thank you.
Thank you. Our next question comes from Brent Thill from Jefferies. Please go ahead. Your line is open.
Aman, nice to see the business apps reaccelerate. I'm just curious, when you look at the opportunity set ahead, it seems pretty massive. How are you gaining better awareness? And where are you finding the best areas for adoption? And then for Ray, can you many companies we all cover in tech have been commenting on how things look in the month of July August.
I'm curious if you have any comments about how you exited the quarter? And was there a sugar high tail off? Are you still seeing the continued strength that you saw at the end of Q2? Thanks.
Yes, on the business apps, the focus for the teams there is to continually improve not just sort of awareness of that product when people come to our site or through our marketing channels, but really, really reduce the friction in terms of activation, the friction in terms of fulfillment. So that as a customer steps into that product, they're able to really get value very, very quickly. And some of those efforts that we've been making over the last few quarters have started to show value. Now clearly, part of the reacceleration here is the overall environment where customers are looking for avenues to contact their customers. And we've been telling them for years that if you use branded email, you have many multiples more likely to get the attention of your customers than a regular email address.
And in a time like COVID where our micro businesses, small businesses are looking to reach their customers, they're sort of thinking about all the things that we've been telling them and we think we see that acceleration coming in business apps through that. And I'll turn it to Ray for sort of July and so on.
Yes. Hey Brent, it's a good trend. As we look through the quarter, it was nice progression, continued to increase right up through June. And I think if I recall back to maybe it was Andrew that pointed it out on the last call, saying that April the April cohort was our strongest we've seen in 10 years. May was better.
June was better. And then we saw no slowdown in the July cohort. So that should give you some sense of what we're seeing in the business.
Always appreciate the color, Ray. Thank you.
You bet, Ben.
Thank you. And our next question comes from Jiang Li from RBC. Your line is open.
Hi, Dan for Mark Mahaney and congrats on the quarter. So just maybe piggybacking on the last answer, just given the accelerating trend you're seeing from in Q2 and into July, what assumptions are you baking into your Q3 guide in terms of the trend of new user growth and what kind of macro assumption are you baking into that? And I'm thinking that given your full year end Q3, are you assuming that macro getting better in Q4 and therefore the higher price pressure that you're seeing that's in H and P right now will be more alleviated. Just wanted to see if you have any thoughts on that.
Yes, it's Ray. I'll take that one. Look, there's a lot of uncertainties at play right now. We're trying to call it like we see it, not being overly aggressive or conservative in the guide. It just reflects what we know right now in our sense of trajectory.
If you look at the guide we're giving, it does imply some acceleration from the pre COVID Q1 number. Keep in mind, the back half of the year gets a little tougher on year over year comps. In the demand environment, it's honestly been great. Aman talked about some of the stats and metrics we're seeing, but we don't have perfect insight into how long or at what strength that's going to continue. We're always going to strive to do more, be better every day, but the guide is what we see happening plus or minus.
Great. Thank you. And if I may follow-up on the NuStar acquisition, I know it's early days, but have you looked at maybe medium term the size of the opportunity there? And how should we think about kind of the margin accretion potential from the NuStar?
Yes, I think we're just coming upon closing in just a couple of days in. So it's a bit too early to be talking about the medium term return on NuStar. Suffice to say, we're super excited about being able to vertically integrate within the domain space. It opens a lot of opportunity for us to create new offerings for customers to experiment at a pace and scale that we don't think the registry business has seen for many years. So that's the opportunity we're going after and we'll be able to talk about it a lot more over the next quarter or so.
Great. Thank you, guys.
Thank you. And our next question comes from Miguel Arounian from Wedbush Securities. Please go ahead. Your line is open.
Hey, good afternoon, guys. Wanted to ask Ron's question maybe slightly differently and how to think about the sort of pull forward and runway of increased need for digital presence relative to the 400,000 net new customers this quarter. As we look forward, is that a number that we should kind of continue to expect to be at that level? Are we at a new run rate for new customers for the time being to tail back off a little bit? Is the mix of growth coming a little bit more from new customers or ARPU?
Just how to think about and frame this discussion in terms of new customers going forward? And then the second question, when you guys announced the restructuring, we got a lot of questions from investors around trying to understand exactly what the outbound sales team was versus the inbound sales team. So can you help just make sure to clarify and help investors understand what the outbound sales team was? Was it all related to GoDaddy Social? And then at the same time, what are you seeing from the inbound sales team in terms of productivity as we're continuing to work from home?
Thank you.
Yes. So if I caught sort of 3 parts of that question, first around net customer growth, the second around revenue breakdown subscribers versus ARPU and third around outbound sales. Maybe I'll get started and Andrew and Ray can jump in. On the net customer growth, obviously, we're super excited about the $400,000 number. It's massive.
It's our best quarter ever if you take out the HGG acquisition. And it's really something that is a function of the demand environment we see and the work that GoDaddy has been doing. In terms of looking forward, as you know, we don't guide to net customer growth, but we do share that data with you over time, especially on a milestone basis. And given that this was just such a big milestone, we felt that it would help sort of you see the things happening in the business. In terms of the breakdown of subscribers versus ARPU, I think we continue to see that healthy mix.
Obviously, the subscriber growth was very large, but we continue to see that, I would say, stable ARPU growth that this business has demonstrated for many years. So that's together, that's been really good. In terms of the outbound sales motion, as we discussed, our outbound sales is a very particular motion. It was honed over the years and COVID-nineteen did impact it significantly. But I'll turn it over to Andrew to share a bit more detail on it.
Yes. Our outbound sales team was a small portion of our overall care operations. We have a history as you all know of uniquely selling, whether in an inbound motion or in an outbound motion. That outbound motion, that was a discretionary one, right? The inbound one, we take a customer's call.
We have an obligation to answer the phone when they call us. On the outbound side, that's a discretionary thing. And as we looked at the productivity challenges that we were facing and what we expected ahead, it makes sense for us to stop that motion and reallocate that investment, as Ray mentioned, into other marketing activities. As we and that outbound team, yes, they focused on social, but they focused on a range of other higher end products and services. On the other side, with respect to productivity, we obviously took a hit there as we've shared with you in the past.
We've seen steady and continuous progress around improving it. We've embedded the level of productivity we expect to see into the guide that Ray mentioned. And importantly, we have seen consumer behavior change as we've gone through COVID in terms of how they choose to engage with care. Increasingly, it's around asynchronous chat, other digital channels, some of which we talked about in our Investor Day, but we're really seeing those different modes of engagement come to the fore in this current environment.
All right. Thank you. That's very
helpful. Thank you. And our next question comes from Lloyd Walmsley from Deutsche Bank. Your line is open.
Great. Thanks for taking the questions. First, are there any key product holes you guys would flag in websites plus marketing where if you kind of either add a product or improve a part of it a lot, you feel like you can unlock meaningful new TAM or growth acceleration? And secondly, when you guys announced your deal with AWS, there was talk of kind of working together, maybe AWS selling some of GoDaddy services. Wondering if there's been any movement on that side of the relationship.
Is that something we should think about for the future? Thanks.
When we think about websites plus marketing and the opportunities, they're squarely in what we talked about the grow phase for our customers. And 2 areas that we're investing in are marketing and commerce. To give you a flavor, marketing includes content, marketing includes messaging, right? And we did the Over acquisition and we're bringing it into websites plus marketing very, very quickly. So all of the great feature functionality engagement that Over has all website plus marketing customers are going to have that this year very, very quickly.
Those marketing capabilities are really core to our micro businesses reaching their customers. And similarly, as we all know, commerce is a big part of it as well. And commerce. And the more our customers use us, the more we're adding features and functionality for them in the commerce space as well. In terms of AWS, we've had some good milestones in terms of progress in our relationship there.
But overall, it continues to be relatively small. We think it's a great sort of example of what GoDaddy can do for a big partner, but in the revenues in the total size of our revenues, it's a small item.
Okay. Thank you.
Thank you. And our final question today comes from Naved Khan from SunTrust Robinson. Please go ahead. Your line is open.
Yes, thank you. We've been renamed Truist Securities, so change of name. But I had a couple of questions. In your April update, you guys have talked about some weakness in the domain aftermarket. Curious to know if that self persists, the results kind of indicate it might have improved.
And the other question I had was just around the your onboarding ramps for new customer acquisition. Is it fair to assume that with the addition of the premium offering and the revamp in the website plus marketing product is becoming more meaningful as a source of new consumer acquisition versus maybe just a year ago?
Yes, Navi, thanks for your question. On the aftermarket, like we said, were seeing great traction in primary, secondary, domain sales. Overall, that business or that segment growing at 10% for us, as you know, growing much faster than double of the industry. So we're super happy with that. We did we had in April talked about some weakness in that and there are pockets of different experiences by different countries that we're seeing.
But overall, very happy with the result in that segment overall. And in terms of premium and website plus marketing, the 60% ARR number just says it all, right? We continue to see healthy growth in that business on a unit basis, on a revenue basis, super excited about what it means for the future. And it's massive LTV, right? The website plus marketing customer rise somewhere in the order of 10 to 25 times the LTV than a domain customer for us.
So being in that space, being a big player in that space and gaining share in that space has been really good for us. Great.
Thank you.
Thank you. And that concludes our questions today. I'll now turn the call back over to Aman Bhutani, CEO, for closing remarks.
Thank you and thank you all for joining on the call today. A big thanks to all GoDaddy team members all over the world for a great quarter and look forward to talking to you next quarter.
And this concludes today's conference call. Thank you for participating. You may now disconnect.