Good afternoon. My name is Chris, and I'll be your conference operator today. At this time, I would like to welcome everyone to GoDaddy Q4 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you'd like to withdraw your question, press the pound key. Thank you. Sam Kemp, Vice President of Investor Relations and Strategy, you may begin your conference.
Good afternoon, and thank you for joining us for GoDaddy's fourth quarter and full year 2018 earnings call. With me today are Scott Wagner, Chief Executive Officer, and Ray Winborne, Chief Financial Officer. Scott 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, net debt, and ARPU. 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-K filed with the SEC with today's earnings release. Unless otherwise stated, when we refer to organic measures, we're referring to those measures excluding the impact of HEG and Main Street Hub.
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, or our ability to integrate recent acquisitions and achieve desired synergies, including our recent acquisition of Main Street Hub. 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 statements that we make on this call and are based on assumptions as of today, February 20, 2019, and we undertake no obligation to update these statements as a result of new information or future events. With that, here's Scott.
Thanks, Sam, and thanks to everyone for joining us today to discuss our fourth quarter and full year 2018 results. We finished 2018 on a strong note, and not just on our financials, but also in the experiences and products enabling our customers to make the world they want. GoDaddy is the best place to power an online presence, and that shows up in our results. In 2018, we grew revenue 19%, drove 25% growth in our unlevered free cash flow, and added over 1 million customers, all affirming the importance of GoDaddy to everyday entrepreneurs all around the globe. Today, we'll spend time on 3 topics. First, the customer and product experience improvements we made in 2018 and where we're headed in 2019.
Second, an update on our go-to-market engine and how we're taking the next steps in our brand to draw closer to the global community of everyday entrepreneurs. Finally, Ray will cover our fourth quarter performance and outlook for 2019. In 2018, we put our shoulder into both our product and customer experience, which is a large unlock in our business as we expand the role GoDaddy plays in our customers' lives. Each quarter, you've heard us highlight GoCentral's expanding feature set and consistently improving metrics. If you zoom out, in 2017, we launched this product as an easy-to-use website-building tool. In 2018, we took that strong foundation and integrated it across a dozen relevant third-party platforms and added a number of product functions that are seeing dramatic growth in usage.
We've entered 2019 with a platform that enables everyday entrepreneurs to create robust websites and syndicate marketing across the social, reputation, and e-commerce landscape. If you haven't used GoCentral recently, I'd really encourage you to give it a spin so you can see all that it does and how much more we're doing to help our customers succeed online. Combined with our award-winning care, GoCentral is something that is a powerful resource and uniquely GoDaddy. While GoCentral is our flagship DIY website-building product, we've also made substantial improvements in our WordPress offerings, especially within our Managed WordPress application. WordPress is important to many of our customers who want greater flexibility and customization.
A third of the internet is already built using the WordPress framework, and we're continuing to take share of that growing environment, making GoDaddy the largest host of paid WordPress instances in the world by the end of 2018. Our Managed WordPress offering automates the entire process of starting and maintaining a secure WordPress website, which saves our customers literally hours of work, frustration, and distraction. These two applications live alongside each other in our suite of presence offerings and address complementary need states. Taken together, they're growing subscriptions more than 40% year-over-year, a clear affirmation that what we're doing there is working. GoCentral and Managed WordPress have seen robust growth and have been key to the sustained growth rates you're seeing in our billion-dollar hosting and presence segment. We're also doing more for our customers within the broader product suite beyond just websites and marketing.
We've added a new complementary email platform through our partnership with Open-Xchange to better address the needs of emerging and price-sensitive markets, making it a great complement to Microsoft 365 offerings in mature markets. For example, in Mexico, we're now able to provide an email seat for about a buck and a half a month, making it a valuable product at a value price point. Much of our effort outside of launching specific products and features in 2018 was about simplifying our customer experience, from how we market, to how we welcome and onboard new users, to how we wow them with support and care. As a result of a lot of heavy lifting behind the scenes, our Net Promoter Score, or NPS, improved dramatically over the past year, which on a business of our scale is meaningful.
We'll be putting more effort into simplifying and unifying our experiences in 2019. On my second major point about go-to-market, GoDaddy already commands very strong brand awareness, and in 2019, we're building on the brand to more deeply identify with the daily journey of the everyday entrepreneur and to activate the community that already exists within GoDaddy today. You'll see this in our imagery, the content that we produce in the market, and the way that we reach our audience. Ultimately, where we're headed is a brand promise that can support the expansion of what we do for our customers with the tools and services we offer today and the products we'll deliver over the next several years. Tactically, this is starting in the U.S. It is being borne out by six iconic influencers that are emblematic of our customers and who've built their online presence with GoDaddy.
For example, on February 8th, we proudly launched one of those iconic influencers, Ayesha Curry, and her new Homemade brand. Over the life of this campaign, we'll generate the same viewership as the Super Bowl ads we've been historically known for, but in a cost-effective and far more targeted manner. Beyond our six cornerstone icons, we're also building out a network of hundreds of vertical-specific influencers who are revered in their trade and advocates of our brand. The reality is that GoDaddy's customer base has always been diverse, and this strategy is allowing us to reach our target audience with a message that is as relevant to someone in New Jersey as it is in Topeka, Kansas, as someone in Manchester, England, delivered more nimbly and in a sustained, ongoing conversation.
In shifting to conversations and conversational marketing, we made a ton of progress this year in how we talk to our existing customers, and we're hitting our objectives in terms of scaling campaigns with returns above our efficiency threshold. We're seeing benefits in our ability to attach new products, drive feature engagement, and find instances where there is a shifted underlying need state that we can better serve. Right now, we have an abundance of opportunities in conversational marketing, and we hope to put 10% of our 2019 go-to-market budget on the field in this channel. Before I hand it off to Ray, I'd like to welcome a new face to our team and to highlight some changes to our organization. First, we've welcomed Fara Howard as our Chief Marketing Officer.
Fara has an ocean of experience from her time at Amazon Fashion, Dell, and Vans, she's going to be responsible for stewarding our brand and overseeing day-to-day market activities. We've also continued to evolve our management structure. First, Andrew Low Ah Kee added customer care to his broader go-to-market responsibilities under the new title of Chief Operating Officer, which is uniting the end-to-end customer life cycle from acquisition to support. We're bringing our technology and infrastructure operations under CTO Charles Beadnall, which is a natural progression of our technology strategy and execution ability. Finally, our products are seeing good success today, as we look to the mid to long term, we've begun the process of identifying our next head of product experience who can oversee the transition of our products to an integrated experience for our customers.
Stepping back, we've entered 2019 with wind at our back, delivering on our financial objectives and laying the right foundation for multi-year growth. With that, here's Ray to cover our financials.
Thanks, Scott. I'll touch on our fourth quarter financial results and our outlook for 2019. We finished the year on a strong note with fourth-quarter revenue and unlevered free cash flow right on plan, and with full-year bookings crossing the $3 billion mark. In 2018, we grew revenue roughly 14%, ex-currency and acquisition noise, and delivered 25% growth in unlevered free cash flow, even as we made significant investments in customer experience, product, and go-to-market. Our investments have positioned us well for 2019, and we're continuing to invest in a number of initiatives to help deliver our multi-year outlook of double-digit top line and high teens unlevered free cash flow growth. Turning to the fourth quarter, bookings grew to $732 million, rising 12.5% year-over-year on a constant currency basis, a modest re-acceleration relative to the third quarter growth rate.
Currency created 120 basis points of headwind in Q4, and at today's exchange rates, we expect currency to be a headwind in the first half of 2019 as we comp a period of US dollar weakness in 2018. Revenue came in at $696 million, growing 16% year-over-year, or about 13% excluding the impacts of purchase accounting, Main Street Hub, and a half a point of currency headwind. We're seeing solid performance across each of the product categories. The key metrics underlying our growth have remained consistently strong. ARPU rose to $148, up 7% year-over-year, and customers grew 7%, bringing the total customer base to over 18.5 million. We added over one million net new customers in 2018, reflecting a mix of strength in gross new customer adds and improved customer retention.
Underneath the headline stats, the strong customer growth is a result of consistent performance in the U.S., and especially strong growth in international markets as we benefit from share gains across the world and increasing website adoption in emerging markets. Within the U.S., we focused on doing more with our customers through better site and product experiences, interactions with care, and conversational marketing, driving double-digit U.S. ARPU growth in 2018. Unlevered free cash flow for the year was $620 million, growing 25% year-over-year and yielding over a point of margin expansion as we saw the scale of the business drive margin benefits to the P&L, partially offset by investments we made back into the core business and dilution from Main Street Hub.
On the balance sheet, we finished the year with $951 million in cash and short-term investments. Net debt landed at $1.5 billion, putting our net leverage near the low end of our targeted range of 2-4 times on a trailing 12-month basis. With that, I'll turn to our outlook for 2019. At a high level, we expect continued mid-single-digit growth in customers and ARPU to produce full-year revenue of $2.97 billion-$3.0 billion, representing growth of 12%-13% versus 2018. For the first quarter, we expect revenue of $705 million-$715 million, representing 11%-13% growth versus the first quarter of 2018, as we begin to lap the gains from changes in merchandising of aftermarket domain sales in early 2018.
Moving to cash flow, we expect to generate $730 million-$745 million of unlevered free cash flow in 2019, or 18%-20% growth over 2018, implying margin expansion of about a point and a half. We will continue to optimize around top-line growth and margin accretion, with any potential upside being directed back into the business. While the timing of CapEx and certain working capital items created lumpier unlevered free cash flow growth in 2018, for modeling purposes, you should plan for a more evenly distributed pattern of cash flow in 2019. Finally, we expect net cash payments for interest in 2019 to be $90 million-$95 million, implying slightly faster growth in levered free cash flow from 2019. Stepping back, we delivered a great 2018 and have set a strong foundation for continued growth.
Our 2019 outlook reflects the consistency in our business model and growth from areas we're putting our shoulder behind to improve the customer experience, ramp product innovation, and optimize the go-to-market engine. Thanks, everyone, for joining us today. With that, operator, let's open up the call for questions.
At this time, I would like to remind everyone, in order to ask a question, press star followed by the number 1 on your telephone keypad. I'll pause for just a moment to compile the Q&A roster. Your first question comes from Lloyd Walmsley with Deutsche Bank. Your line is open.
Thanks for taking the question, too. If I can, first, can you give us a sense of the scale and the potential of the new email business? It sounds like a nice complement to Office 365. Related to that, how we should think about business apps growth in 2019 and over the next few years, as you add more nascent things like the Open-Xchange partnership, things like SmartLine. Secondly, you talk about moving ad budget explicitly to conversational marketing, and you also mentioned leveraging vertical-specific influencers. It sounds like you're taking the conversational marketing, which has traditionally been on-site, to more of an affiliate marketing angle. Can you just help us connect the two and put that in some context, particularly as you bring in a new CMO? Thanks.
Lloyd, it's Scott. I'm going to take your second question first and then talk about Open-Xchange, and then Ray might add a few things on Biz Apps trajectory. From a marketing standpoint, the influencers are the top of a pyramid that we're laddering down to more specific verticals that are representative of our 18.5 million customers. Ayesha Curry is a mompreneur, and is building out business ideas, and we're excited to be working with her to power Homemade. Ayesha, obviously, is a well-known icon, but the same things that we've enabled Ayesha to do could be if Ayesha was somebody starting out in her basement in Topeka, Kansas. There's five other influencers across different areas like fashion, music, et cetera, that we're going to amplify. That's really our brand investment, right? It's a way to communicate our brand for everyday entrepreneurs.
Now, when you shift to conversational marketing, that's talking to our base with very specific ideas, whether it's adding social and media and reputation management to an existing site and service, or wrapping security around their entire site and email environment. It's a very specific thing that we identify at an individual customer, and then we can either reach out via care and/or different marketing channels to go address that audience. Those are really you're covering the full scope of our marketing and media opportunity. Obviously, Fara, who's coming in as our CMO, she's a terrific storyteller from a brand standpoint, but it's also analytic and purposeful, which is part of how you get to your base in a specific way. That's the strategy on the marketing front. For OX, think about that as an adjacent complement to an already strong email and productivity business.
The fundamental value proposition for many of our customers is having a branded email and productivity suite. What OX is enabling us to do is to hit much lower price points around the world. If you're in Mexico and Brazil, which is where this launched, or if you're moving over to the emerging markets in Asia, we're able to get somebody a fulsome branded email at what amounts to a little over $1 a month, which is a complement and value price point. We think that's a nice addition and is just another way that we can continue to grow our email and productivity franchise. I think Ray's gonna talk about just applications in general and how to think about the growth rates going forward.
Yeah, Lloyd, it's Ray. I think if you think about that Biz Apps line, that's obviously our fastest-growing product category. That's on trajectory to become a half billion-dollar business for us. We're really excited to continue to add piece parts into that solution set. We continue to see line of sight to deliver that Biz Apps growth within our three to four times customer growth framework that we've been giving you guys for a while.
Got it. Thank you.
Your next question is from Jason Helfstein with Oppenheimer. Your line is open.
Thanks. First, it seems that there's an overall theme in the industry where both you and your competitors are all effectively trying to move, I don't want to say up market, but really focusing on the higher LTV customers, at kind of better price points where there's the ability to upsell over time. Maybe talk about how that's been evolving, because it does seem to be a theme. We heard it this morning out of another company, it feels like a theme. Secondly, notice you didn't, if I saw it correctly, you didn't buy back any stock in the quarter following the buyback authorization. Any update on capital thoughts? We'd imagine you're thinking about potential M&A and any update there and if we could potentially see a transaction in 2019. Thanks.
Hey, Jason. First, on your first comment. Our strategy's been constant, certainly as a public company. Really if I back it up over the last five to seven years, we're really early in a ideas formation. Obviously we continue to add customers at a fast growth rate. In terms of a quantum of customer adds, we're effectively at an all-time high of being over 1 million plus net new customers. That continues to be the anchor of what we're doing. ARPU for us is really about just fulfilling a broader set of a customer's needs, which has always been the great opportunity for us over time. Relative to other people in the industry, I wouldn't even think about it or comment very much. I think this is just us fulfilling our strategy and the fundamentals of our business model.
I'll hand it off to Ray to talk about your second question.
Hey, Jason, it's Ray. No change in our capital allocation priority. It's obviously still organic growth, M&A, share repurchases in that order. There's obviously a variety of reasons we would be in the market or not in the market for our own shares. We're not going to comment specifically on those reasons.
Your next question comes from Matt Pfau with William Blair. Your line is open.
Hey, guys. Thanks for taking my questions. Wanted to touch on the commentary around ARPU growth, and specifically how ARPU growth was faster in the U.S. than the rest of the world. I guess as you think about the opportunity longer term, is there something that would keep international ARPU from being the same as that of the U.S.? Related to, I guess, the growth you're seeing in the quarter or this year, what's driving that? Is it just product set or something else that's driving the difference in ARPU growth between the two different regions?
Hey, Matt, that's a good question. I think in the U.S., what you're seeing is the U.S. is obviously our most developed market. If you think about two things, one of which is the fulsome nature of our product portfolio. When you get into more advanced digital marketing things and solutions, whether it's GoCentral itself, then things like SEO optimization or social media management. Right now, we're really focusing on the United States, and Canada to a lesser extent, but North America to bring those to market. Those have higher value, therefore higher ARPU. When I talk about conversational marketing, which is really going into the base, our efforts are also focused on North America there to really get momentum and prove it out.
What you're seeing on those things is an impact that is showing up in the U.S. that over time, we're going to move that into international markets around the world. Your question around, is there any reason why we can't think about international as that same level? I think there's always going to be a difference between the U.S. ARPU and international, specifically because of both product mix and willing to spend around the world. I think the relevant point is international growth is still solid. We're proving out certain things in the U.S. that will apply to markets around the world, and the economics around acquisition and development internationally are still really good. The international, continue to feel good about the growth overall. Down the road, there will be learnings from the U.S. that will eventually move into international markets.
Great. That's it from me, guys. Thanks a lot.
Your next question is from Mark Mahaney with RBC Capital Markets. Your line is open.
Hi, it's Zachary Schwartz. I'm in for Mark. I had a follow-up to Lloyd's earlier question. For 2019, is there any reason to expect a different contribution to revenue between your three segments, domains, hosting and presence, and business solutions, whether that's from new products or continued shift towards conversation marketing? Do you expect the breakdown to shift in 2019? Thanks.
Hey, Zach, it's Ray. If you look at the framework that we put out there, nothing has really changed from that perspective. One times customer growth on domains, we've done a little better than that, and we expect that to be a little better in 2019. Over the long term, we're pointing back to customer growth. Hosting and presence, one to two times customer growth. We're landing at the high end of that now, and we expect that to be the case in 2019 as well. As I mentioned earlier with Lloyd's question around Biz Apps, we still see line of sight there to three to four times customer growth.
Great. Thanks. One more quick one. On international, are there any regions that you feel represent a greater opportunity in 2019 that GoDaddy's already in that you could expect to contribute more to international growth? Thanks.
Yeah, Zachary, we're in 50-plus markets today, it's not the geographic footprint as much as it is going deeper in those. It is a broad-based opportunity. As you look at the growth that we're seeing in the international business, it's widespread. Whether that's Latin America, Asia, or even in the Middle East, we're in good shape there.
Your next question is from Deepak Mathivanan with Barclays. Your line is open.
Hey, guys. Thanks for taking the questions. Two questions from me. First, last quarter, you pursued certain efforts slightly more aggressively, I believe, to reduce multi-year discounts on certain products to help improve engagement with customers, and that kind of weighed on bookings growth slightly. Did that continue into 4Q? Operationally, are you now at a steady state with respect to contract length for various products that you want to offer to customers? Second question, somewhat related to the question before, I know it's a small part of your business, but can you comment on the trends coming out of China? What are you factoring into your 2019 guide? Thank you.
Hey, Deepak, it's Ray. Yeah, when we brought up term last quarter, it was for visibility. That is something that's been a factor in our business for a long time. If you look over a multi-year basis, term has continued to shrink, and a lot of that's being driven by the product mix. As we move away from domains and the two other product groups are growing faster, those are shorter-term products. Nothing has changed dramatically third quarter, fourth quarter. We'll continue to see that over time. We are seeing good results from some of the tests that we've done there from an LTV perspective. We'll continue to work that direction with bookings. With respect to China, I mentioned it last quarter, small piece of our business that's been really growing well for us.
We saw some softness in the back half of 2018 relative to a very strong first half, but the annual growth rate is still very strong.
Your next question comes from Michael Olson with Piper Jaffray. Your line is open.
Hey, good afternoon. I just wanted to make sure that we got the message right on CapEx. Last quarter, you talked about it being a bit light in Q3 and then bouncing back in Q4, which it did. Sounds like you're saying CapEx should be a more regular run rate in 2019. Just confirming, is that what you're pointing to? And then you mentioned FX will be a headwind in Q1 and first half of the year. Just so we have a sense for it, can you share any kind of quantified ballpark impact that you're expecting in Q1? Thanks.
Mike, as you pointed out, the CapEx, you did understand that right. It was just a shift from third quarter to fourth quarter. If you look at this business, it's very capital efficient. We're going to run 3%-4% of revenue and continue to see that. That, over a longer period of time, will trend down as we move to the cloud. Near end 2019, 3%-4% of GAAP revenue is a good spot. On currency impact, you obviously saw the impact in the fourth quarter. If you look back at the rates in the first half of the year last year, the dollar is pretty weak, and we're looking at a range of 200 basis points of headwind against bookings in the first half.
Got it. Thanks. Perfect.
Your next question is from Sterling Auty with J.P. Morgan. Your line is open.
Yeah, thanks. One question for you, Ray, and then a follow-up for Scott. Ray, just philosophically, want to understand if duration continues to shorten up, that has some pressure on deferred revenue. You're guiding revenue growth 11%-13%. What's the last part that fills in that allows you to continue to grow unlevered free cash flow 18%-20%?
Hey, Sterling, it's Ray. As I look at the growth rate, that term is not going to go down forever. It's a fairly steady reduction that we've seen over a multi-year basis. It can bounce a little bit if we have specific merchandising, I think you're going to continue to see pretty stable growth rate between revenue and bookings. We've converged now, a lot of the acquisition noise has come out of that number. I think if you look at the pacing of our bookings on a constant currency basis in the third and fourth quarter of 2018, that's a good barometer as you look into 2019.
Sterling, it's Scott. Maybe just to add on. We do just get some flow-through to margin through the P&L, whether it's the value gross margin accretion or some amount of scale through G&A and our tech and dev lines that over time, we've been managing that trade-off of reinvestment into the business and scale and flow-through. As you look at our guide through the year, that incorporates those actions playing out.
Okay. The follow-up, it was touched upon a little bit earlier, I'm just going to be a little bit more blunt about it. Wix really announced a very significant change in their strategy, getting rid of Domain Connect, some of the low end, saying that they're going to come after more of the professional developer, the WordPress and Drupal crowd. Do you think that GoCentral is having a competitive impact? Do you think you're taking share? When you look at that developer community, both things that you did for Media Temple and all the way through, how do you feel like your retention and growth opportunity in that base is, as it looks like the competition between the two companies is going to heat up?
Hey, Sterling. I think we're just well-positioned to serve the need state of activating somebody's presence, whether it's a little basic, right? A basic DIY or more advanced services. Gosh, it's still a really fragmented market. I think we're just happy with the growth rates we're seeing in our business, I wouldn't necessarily call out one company versus another. We're focused on continuing to fulfill the need state of activate online presence across customers who either already have or are coming to us for an aim. The better and better we do that, the better for us it is, and we think it's great for our customers, too.
Got it. Thank you.
Your next question is from Ronald Josey with JMP Securities. Your line is open.
Great. Thanks for taking the question. Just two, one on Main Street Hub, one on merchandising. Just with Main Street Hub, post the acquisition being closed, I think in, call it mid, early 3Q, can you just talk about the progress you've made of the 2 million potential customers you've highlighted that you can go after with the upsell? That's the first question. The second question is just on merchandising. I know there's been a lot of investment and talk last year about just making the site a lot more easier to use in terms of highlighting all the different products you sell and offer. GoCentral, its capability is a great example of how that's turned into a platform. Just, can you talk about where you are maybe on the way to improving the overall merchandising of the platform and maybe how that ties into conversational marketing?
Thank you.
Thanks, Ron. First on Main Street Hub, we're making progress. Right now, the Main Street Hub social media and reputation management service is integrated into GoDaddy and is being represented as GoDaddy Social, and we have teams reaching out into GoDaddy's base. The thesis of delivering that service as part of GoDaddy versus a standalone third party is completely proving out. Now, in terms of execution and where we are on the journey, it's still early days to making that super tight. We're seeing all the proof points of progress around it, but I'd still say we're in the very early innings of executing that at scale relative to, let's say, the 2 million customers that you just described. The proof points are playing out, which is nice.
On front of site, we've been focused quite a bit around basic mechanics in the site to connect both our products together and to make the site more visual. In 2019, you're just going to start to see more of those changes. Here's a simple example today that you're seeing, where if you're going to GoDaddy and you're seeing Ayesha Curry's Homemade site, you're actually seeing templates, Ayesha-inspired themes and designs that you can connect into immediately off the site and flow right into those kinds of themes, and it's much more seamless and fluid than what we've been able to do in the past. Boy, 2019 is going to be about doing more of that kind of work.
Great. Thank you.
Your next question is from Nicholas Jones with Citi. Your line is open.
Hi, thanks for taking the question. On the top-level domains, are there any trends you can point to as far as domain buyers bundling multiple TLDs? Then my second question is on Managed WordPress. Are you seeing any professionals or experts start to use that in their business?
Hey, it's Scott. On the first question, honestly, there's no trends that are big enough to mention on this call. To your second point on just pros in Managed WordPress is the open-source CMS platform for the open web. The biggest issues with WordPress, if you're working and using on it, are plug-in maintenance and overall security, and just the level of time and attention that it takes to actually run that. Look, our Managed WordPress platform totally automates and simplifies that process, and we're making it easier and easier. The feature improvement is both in the security layer, but more importantly on app plug-in and theme updates to just make it super easy for performance and reliability.
I think you're seeing it not just for pros, but also for pros handing sites like that off to individuals or small businesses that are managing it for themselves.
Got it. Thank you.
Your next question is from Naved Khan with SunTrust. Your line is open.
Yeah, thanks a lot. Just a follow-up question on Main Street Hub. I guess the plan was to introduce lower-priced packages as well, sometime in 2019. Can you give us a sense of timing in terms of where you are with respect to the relaunch?
Hey, Naved. You're going to see really the services rolling out across GoDaddy, which is what we're focused on now. In terms of the specifics of lower price points delivered through there, we're going to keep working on it and experimenting about delivery on it. I'm not going to give you a specific timeframe, but that's the kind of stuff that the teams are working on. Priority number 1 is great value proposition for what exists represented under GoDaddy.
Got it. Maybe as a quick follow-up, can you just comment on the broader macro picture? Are you seeing any changes in terms of either maybe customer retention or just gross adds?
Not particularly at a macro level. I will say retention, remember, operates at 2 levels for us. The first is customers, and then the second are individual products. For us, the continued theme of retention at both levels are slightly improving. By slightly, I mean individual products and overall customers, both on a mix-adjusted basis, are just continuing to improve on really tens of basis points, which has been over the last several years. That's all goodness because those are the kind of things that happen when you have products, deliver them in a great way with great support and service. You just get those kinds of things as an outcome. To be very clear, no big change in the trajectory that we're on, but there's goodness happening there.
Second on ads, again, we don't manage to the ad number, but it's nice that our net add number is up. Again, we're focused on good customers that we think are going to build things up over time. What you're seeing in that number is continued opportunity and fulfillment for us around the world. No big change, I think, on the acquisition front than the trajectory we've been on for the last several years.
That's right. The only thing I'd add to that from an international basis in a macro, we're just obviously seeing currency pressures.
Okay.
The customer growth and market share increases are still occurring.
Got it. Thank you, Scott. Thank you, Ray.
Your next question is from Brent Thill with Jefferies. Your line is open.
Hi, Scott. If you could maybe just walk through how you prioritize the international playbook for 2019. Where are you seeing the biggest opportunities? Where are you putting the most energy in? I had a quick follow-up for Ray, just as it relates to deferred revenue was down, I think sequentially the first time we've seen in the model. I would assume that's due to the shorter contract duration. Is there anything else accounting for that change in DR? Thank you.
Thanks, Brent. In terms of prioritization, there's no one geo that we're saying, boy, we're leaning into at a different level or rate. In EMEA, that's obviously our biggest market. The focus in EMEA is taking some of the capabilities and product portfolio of the U.S., whether it be conversational marketing or features like security, backup, malware scans, plugins, and actually moving it over to Europe. I think priority in Europe is take what we see as working in the U.S. and moving it there. Mexico and Brazil continue to have great growth potential. That's the focus in Latin America. In Asia, it continues to be about customer adds.
Hey, Brent, it's Ray. To answer your second question, we've been pretty pleased. We saw bookings re-accelerate in the fourth quarter relative to third. The same factors are affecting your deferred revenue. It's term year-over-year, and that's being driven by the product mix for the most part, and currency is the other impactor there.
Thank you.
Your next question is from Mark Grant with Goldman Sachs. Your line is open.
Great. Thanks for taking the question. I just wanted to do a follow-up quickly on Lloyd's question earlier on the conversational marketing initiatives. You've been working on these now for about a year. You've been talking about them publicly. With Fara coming in and Andrew taking on incremental responsibility for customer care broadly, can you talk a little bit about what you've learned over the last year that informs your decision to allocate 10% of the budget to those initiatives? What you're seeing from the customer care reps and their outreach, and any change to your view on how effective those initiatives could be around driving or potentially even accelerating ARPU growth in 2019 would be helpful.
Thanks, Mark. The purpose, again, behind this is, boy, if we identify, and we can, with a specific need or opportunity for our customers, and to reach out with that purpose, whether it be security, whether it be a SEO optimization, but just one thing to reach out and say, "Hey, check this out," or, "Have you thought about this?" From a metric standpoint, we're targeting a 3x lifetime value to cost of acquisition, which incorporates not only spend, but the cost of a rep if we're reaching out through the care center, which is all incremental. Some of the returns that we're seeing are multiples beyond that. You're seeing double-digit returns on specific ideas. We're seeing, again, I mentioned 3x is the absolute minimum and floor for us to continue, but we're seeing things that are modestly even better than our average acquisition metric.
We're seeing enough proof points to say this should take some amount of dollars for us as a system to continue to scale it out. I think what you're seeing on care connected to marketing, Fara, Andrew, is just our evolution to try to execute that at scale, not only in the U.S. but around the world. Our biggest gate here is just our ability to execute with a great integrated design flow for every single conversation. We have hundreds of, frankly, ideas or things that we absolutely know that we can, should, and want to reach out to individual components of our customers. It's about getting scale through our platforms and connecting our website to email to care in an integrated way with great design and great messaging. What you're seeing organizationally is just our desire to go execute that.
Great. Thank you. That's helpful.
Again, to queue for a question, it is star 1 on your telephone keypad. Your next question is from Brian Essex with Morgan Stanley. Your line is open.
Hi, good afternoon, and thank you for taking the question. Hey, Scott, I just wanted to touch on your international expansion, particularly as it relates to potential pricing power. Is it different in different geographies? Are there other parts of your suite that are more robust in certain areas? Then might you be able to leverage any pricing power in geos to offset any either development costs for penetration of those geos or associated FX headwind that you might have there?
Hey, Brian. Certainly, different geos have different both willingness to pay in absolute and applicability within our product markets. I think the North America and European markets customers' need states are effectively the same. You see the same application of product suite plus relative price points in those geographies. Modestly, Latin America kind of looks like that too. When you move over to the Asia markets, as we've said for a long time, whether you're in India or Asia, the applicability and willingness to pay is different. When you see something like OX, for example, to deliver just low-cost email, we're using that as a way to make a branded email and communication for those markets more accessible. Starting that in Latin America, we're going to roll that into the Asian markets as well.
Over time, I do think the Asia markets today have a different spend profile than the U.S. Again, when we think about marketing dollars and how we spend against those markets, it's reflective of sort of a lower spend right now.
Hey, Brian, it's Ray. To follow up on your other question, as far as current pricing for currency, absolutely. We adjust prices based off of currency movements to the extent the market will bear it.
Got it. That's helpful. Maybe if I can follow up on your partnership with Amazon, any current update there? How is that impacting as you migrate to more of a cloud-based infrastructure, the margins? Is there any kind of incremental, I guess, momentum with the partnership in terms of ability to develop on that platform or ability to sell through that partner?
Brian, let me start with the infrastructure piece. I'll let Scott follow up on the product side. From an infrastructure perspective, things are going very well. We've already started to move some of our workloads over, particularly on the product development side. As I've mentioned in prior calls, that's a smaller piece of the overall workload. This is a multi-year effort. You're not going to see any dramatic impacts from a P&L or capital perspective in 2019. It's all reflected in the guide that we provided earlier.
From a product front, we're working across a couple of different areas of applications and capabilities that we have to roll into Amazon. That's going to work throughout 2019. There's nothing that I would call out specifically on this call that would be a big mover for the business. Again, we're developing. We have five to six different things on the roadmap that we're working through throughout 2019.
Very helpful. Thank you.
Again, to queue for your question, please press star and then one on your telephone keypad. This does conclude the Q&A portion of today's call. I'll now turn it back over to the presenters for any closing remarks.
Thanks, everybody. Hey, really appreciate the questions. Thanks for listening in. We'll talk to everybody next quarter. Thank you.
This concludes today's conference call. You may now disconnect.