Good afternoon. My name is Laurel and I will be your conference operator today. At this time, I would like to welcome everyone to the GoDaddy First Quarter Earnings Conference Call. [Operator Instructions]. I will now turn the call over to Marta Nichols, Vice President of Investor Relations. Please go ahead

Thank you. Good afternoon and thank you all for joining us for GoDaddy's first quarter 2016 earnings call. With me today are Blake Irving, Chief Executive Officer and Scott Wagner, Chief Operating Officer and Chief Financial Officer. Blake and Scott have some prepared remarks which we will follow with a Q&A session. On today's call, we will be referencing both GAAP and non-GAAP financial results, such as total bookings, adjusted EBITDA, un-levered 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. The matters we will be discussing today include forward-looking statements which 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, May 4, 2016 and we undertake no obligation to update these statements as a result of new information or future events. I'll now turn the call over to Blake.

Thanks, Marta and thanks to all of you for joining us today. GoDaddy's first quarter was another good one, with contributions from all of our major product lines driving strong top line growth and cash flow. The strength of our execution and our financial results have remained just as consistent as our commitment to our vision. To radically shift the global economy towards small business by helping individuals easily start, confidently grow and successfully run their own ventures. Millions of global customers use our growing suite of elegant, easy to use and integrated cloud-based products, all built on a single global technology platform and supported by outcome-driven, personalized customer care to create a successful online presence. I would like to share three take-aways from our early 2016 results and longer term road map today. First, our focus on consistent, strong financial performance and growth continues to pay off. Second, following our January launch of localized websites and products in Asia, we continue to feel good about the significant long term growth opportunity in international markets. Third, we're continuing to broaden our company reach with new marketing messages about what we do and who we do it for, delivered through a broader array of marketing tactics and channels on my first point on our business results, Go Daddy's unique combination of great products, fast, reliable and high-performance technology and empathetic customer care continued to differentiate what we do and have together yielded a large, high-growth business with strong cash flow. In the first quarter, we've grown to serve over 14.1 million customers, an increase of over 1 million customers versus a year ago. Our average revenue per user or ARPU, rose over 6% to $123, in spite of currency headwinds. Strong customer and ARPU growth together drove our first quarter revenue…

Thanks, Blake. There's three key financial points I would like to cover with everyone today. First, as Blake said, we continue to deliver strong, consistent revenue growth, with a nice balance between customer and ARPU increases. Second, we continue to deliver gains and both of our key profitability metrics, adjusted EBITDA and un-levered free cash flow and third, we continue to deliver solid growth at scale. On my first point, our revenue grew approximately 18% on a constant currency basis in Q1 or 15% on a reported basis. Looking at our two revenue drivers, customers grew nearly 8% over the last year, to 14.1 million and ARPU grew over 6%, to $123, even while absorbing the impact of the stronger dollar. Our total bookings grew 14% in constant currency or 12% reported. I'd like to touch on bookings and the relationship to revenue for a second. There are several things that we're doing that happened to impact quarterly bookings and we're managing them very deliberately, with a focus on driving revenue and customer lifetime value. First, we're shortening our average contract length, intentionally reducing some of our multi-year discounts. Second, we're offering free trials of our high-value products, like Office 365 and our website builder product. And third, we're spreading more of our advertising in outbound customer marketing efforts, to our customer audience throughout the year, relative to historically heavier Q1 past efforts. Now, these are all good for the business, because we know what customers try and use our products, they stay with us for a long time and they spend more with us over time which leads to my second point which is we're consistently delivering even faster growth on the bottom line. Adjusted EBITDA grew over 23% year over year and un-levered free cash flow rose 18%…

[Operator Instructions]. Your first question comes from the line of Ron Josey with JMP Securities. Your line is open.

Two, please. Real quick, Blake, you talked almost most of the growth in 216 coming from tier 1 markets. And now, with a good amount of international users, I think 4.5 million, when do you think non-tier 1 markets can be impactful to overall growth? Knowing, of course, that Asia just launched, but just trying to understand the cadence of how that goes over time. And then with the new approach to marketing being more of a consistent, always on message throughout the year, how does this impact how you feel you're adding net customer adds throughout the year? Maybe 1Q a little bit different, simply because you weren't on the Super Bowl and how you think that goes through the rest of the year? Thank you.

As you said, we grew 4.5 million international customers no. With tier 2, it certainly is contributing. We spend the bulk of our marketing dollars at the top of funnel which is radio and TV in tier 1 markets and really spend, I would say on search, primarily SEM, in tier 2 markets. And we're seeing contribution there. Asia today and you mentioned Asia specifically, is really only 4% of our overall business today, so it's a pretty small part of our business. Yet we know that we're feeling good about the launch. We've seen increased activity there and think longer term, it provides a great opportunity for us. I think we're going to be focused on making the markets that we have out and deployed and are more effective with, again, SEM purchase and activity in tier 2. And doing top of funnel, both radio, TV, did search and display retargeting in tier 1 and going pretty deep there.

Your next question comes from the line of Sterling Auty with JPMorgan. Your line is open.

You talked about intentionally shortening duration. Curious, is that shortening duration across all three segments, so domains as well as any bundled hosting and applications? And why do you feel it actually improves the health or the long term value of the customer?

First, let's call it shortening term is showing up in hosting and presence and productivity on a relative basis. So the impact is mostly in those areas. And first of all, there is both a shortened term or you reduce long term discounting, to have people sign up for a 3 or 5 year term. But we know that when customers use these products, after the first year, that the product renewal rates are terrific, right? And so you're getting annual renewal rates that are showing up, on an in-period or year-over-year expense, a higher dollar value, right? Because you're not bringing forward five years' worth of billings, but at a discount. And our focus, again, is around getting people to try and use more of our products, right? Because again, we know that when they do, the renewal rates are great and that helps build the franchise over time. We're basically not leaving dollars on the table by discounting for those significantly multi-year terms. Does that make sense?

It does and then one follow-up. Can you give us some color? You've had some success over the last couple of quarters, I believe, in some of the bundling of the business applications with the hosting. What are you seeing in that program? And what is that driving more of? Is it driving more hosted email, Office 365 or something else?

I think we're seeing really nice attachment and usage in productivity, right? And that's Office 365 across the various plans. And we're encouraged by those results. And obviously, if you're looking at the aggregate revenue of that segment, we're continuing to put up big numbers. So you can say that some of the merchandising tactics continue to pay off there.

Your next question comes from the line of Jason Helfstein with Oppenheimer. Please go ahead.

Two questions. First, can you talk about your learning since the launch of the collateral offering? What type of demand you are seeing and how do you think about the value proposition versus, let's say, Dropbox or a box that some of your customers might be using? And can you talk about why you're not worried about Google, Amazon, Microsoft moving into your vertical with their offering? And then secondly and I've asked this in the past, but you generated another $92 million of free cash flow after interest in the quarter. It doesn't really make sense to pay down debt, given the predictability of the business. What are you going to do with the cash? Thanks.

Two distinctly different questions. So I'll hit the first one and then I'll hand it over to Scott on the what are you doing with the cash side. We're super early, as you know, with this cloud-based product. It is a new product for us. We have had it out roughly a month. We saw a very good, successful pickup with it initially. But frankly, it's just too early to say what the overall impact is going to be. The customer for our cloud offering is quite different than -- but whether Amazon, Microsoft or Google. Amazon, Microsoft and Google are all going after very large enterprise workloads. And frankly, we service a smaller developer who is building out capability for small businesses and we tend to see usage that isn't as expansive as an enterprise, but more targeted to the customer that we've been serving. Microsoft's partnered with us, actually, on their Azure platform, to offer both our domains and our SSL to target these larger enterprises which -- it's not our wheelhouse and it's not who we serve today. We service that developer who builds products for either a small business, a midsize business and that's what we built that cloud offering for. It's a super easy to use set of applications that you can instantly build on top of a cloud and build resources out as you go. And let me hand it over to Scott on the cash use question.

So let me start by, again, just describing how we think about the business today and then our opportunities for growth. Which is, we're serving a customer segment and audience that our customers stay with us for a long time. 7 years plus, on average, with those who are engaged even staying longer. And a service and business model that grows with our customers over time. I think we've proven over the last 2 to 2 1/2 years that we can expand our product portfolio and our geographic footprint productively. Particularly organically, plus with a couple of very small product-related acquisitions that we've done to really just plug in something like email marketing into our portfolio, at attractive unit economics overall. So it's a really nice position to be and obviously we're looking at different product categories that fit the bill for our customers, where we think we can add distinctive value with a combination of integrating it with the products we have and delivering the service in the manner in which we deliver it and we think there's really nice opportunities for us to continue to expand the product portfolio. And as we've built that out obviously, then you can turn towards geographies, as well and think about how and where we overlay our now increasingly robust product portfolio and go to market into geographies. So that's how we think about it. And there are certainly opportunities for us to do it, but we're going to be pretty thoughtful and economic about if and how and stay tuned. And this will probably be -- I'm sure as we nicely continue to generate cash, this will be questions that everyone will continue to ask. We're going to think about using this, how to grow the franchise for the long term productively and distinctively.

Your next question comes from the line of Gene Munster with Piper. Your line is open.

Couple things. First, in terms of the duration of the contract, because you've been tightening that up. I think, Blake, you had mentioned that you have high customer retention, but have you actually -- since it's a relatively new phenomenon of you tightening those up, if I'm not mistaken, is there data to suggest that this will in fact not lead to higher churn? And then separately, you talked about some of the new tactics, such as with the cats and the hats and the cheese theme. And have you been bucket testing some of these new tactics? Or can you just walk through how you see this playing out, in terms of the impact to revenue growth? Thanks.

So the first one around, how do we think about renewal, are we testing the impact of it? And the answer is, yes. We're looking at the behavior of every single customer cohort around not only when they start with us in month 1, but then month 13 and beyond and as we experiment with these tactics, we're watching it, right? And we're watching it and things that are working and where we're seeing good indications across the cohort, we're going to do more of it. So generally, again, thematically, when customers activate and use our stuff, they are staying with us and they're buying more. And so at a theme level, if that is a true statement and it has been for long time and our various tactics are just ways to introduce products in a good way to our customers.

So just building on top of that, but the churn level of the business has been extremely low. Our retention of customers is at 85% plus. So we continue to maintain that impressive retention level. And then just a quick comment on both the cats and hats trade of execution and the cheese head execution, as well. Look, we have been bucket testing. We certainly continue to bucket test those offers and have been pulsing that across all media types, whether it's digital -- you've certainly probably heard it on the radio and seen it on the top of funnel on TV, as well. We continue to pulse and spend frankly more on social mid-funnel stuff like re-targeted, I will call it re-targeted display and email marketing and we're hitting every one of those channels with the same messages in the U.S. Outside of the U.S., we've introduced and you probably haven't seen this -- but if you go through some of the other languages or other country websites, you will see a thematic about customers of ours that talk about what they do, what we provide for them and what they do with the tools and the products we give them. And you can actually go to the website and pop into different countries and see the thematics playing out across the global. Very uniform in our messaging, very uniform in our approach. And we get some good operating leverage out of providing that same creative across the world, but the U.S. is a rather unique market for us. We've been here quite a long time and have used humor for a heck of a long time and continue to do that. And it resonates with our audience here in the United States.

Your next question comes from the line of Mark Mahaney with RBC Capital Markets. Your line is open.

Scott, I missed something. You talked about three steps that you were undertaking, shortening of the average contract length, spreading the marketing throughout the year and there was a third one. Could you just repeat that? And then on spreading the marketing throughout the year, I think you were asked this earlier, but I want to ask again. What's the why behind that? Why spread marketing more evenly throughout the year? Was there a learning recently that made you think that would be more optimal? Thanks a lot.

Yes, Mark. It's more touches. So historically, our marketing spend, obviously weighted heavy up towards the first quarter of the year. And we really didn't have a lot of, call it reach frequency touches around our customer base. And now, as we're spreading things consistently throughout the year, it is allowing us to frankly reach, touch our customers in a more consistent way through different venues. And if you think about, again, GoDaddy, what makes us special, the mix of the products that we have and the great way we deliver it, again, it's about exposing customers to that value proposition. And frankly, we're looking for more not only medium but times that we can do it. And we think it's just the next way that the marketing matches the size of the franchise and frankly the opportunities for us and our customers. And then on your first question, the other tactic is free trial of high-value products like Office 365 and website builder. So you'll notice that particularly at Office 365 will offer first month free trial, again for that service and increasingly our website builder. And we're finding really good activation with that starting point. And again, on the back end of that month's free trial, the conversion in dollars, but to be clear, that's a free trial. We're bringing people into these products, allowing them to use and try to them because again, we know when people try them, they stay and then they tend to spend more over time.

Your next question comes from the line of Deepak Mathivanan with Deutsche Bank. Your line is open.

Two questions. First, wanted to ask about the website builder and business apps products. Can you perhaps qualitatively discuss about where we're with respect to the penetration rates for these in your customer base? And then also, how did the mix look like between these products into your new customer base? And I have a follow-up for Scott.

So on business applications, we've shared that we're over 2 million paid customers into the franchise, out of our 14 million base. And so that's, again, our installed base. So business apps were 2 million of 14 million. If we're looking at our new cohorts, our percentage of users of business applications is quite a bit higher than that. We're not going to share the exact numbers, let's just call it quite a bit higher, qualitatively. On presence, across the hosting and presence segment, the number is 5 million, so 5 million of the 14 million. And again, if you're thinking about the percentage of new cohorts that are using those products, again, it is higher than that percentage, as well. Not as dramatically as Biz Apps, but it's higher.

And then Scott, one other thing. In the past few quarters, you saw some significant hit to bookings from FX. Does your revenue guidance for the full year and also for second quarter, currently reflect the flow-through impact from that? Or do you expect meaningful effects headwinds to continue on revenues?

No, thanks, our guidance incorporates the impact of FX on bookings. So thanks for the question, Deepak.

Your next question comes from the line of James Cakmak with Monness, Crespi & Hardt. Your line is open.

Just to go back on the contract duration, not to beat a dead horse. Can you just talk about the average contract length that you're targeting. Is this trying to go from like 5 years down to 2 years? Or I guess what is the magnitude of the narrowing of the contract life? And then Blake, on the leadership bench, you had some churn at the CTO level. Can you just talk about the team you have in place? And I guess how you're thinking about the replacements there and confidence in the team in general?

The average term length of a product is a shade over a year, a shade meaning, call it, 16 months-ish. And so we're not doing wholesale dramatic changes. But what we're doing is taking a relatively small amount of customer behavior which had big, multi-year term discounts and trimming those back a little bit. And so what you have is that length moving in by, you might call it an average week and it's not a dramatic change in practices; it's just good operational tightening. And then the other thing I would say to that same point is, the higher value services that we have, like Office 365 and some of the more advanced hosting services, we pretty much sell them on a year. And so as those products grow as a percentage of our mix and growth, just by basic mix math, your term length is moving in a little. Not for anything that we're even consciously doing, it's just the growth in these higher value services. But again, it's important to note that the product renewal rates are as good, if not even better, than they've ever been. So this is just good business for us.

James, this is Blake, answering the second part of your question. So we had a CTO change, as you pointed out. I'll tell you, I feel very, very good about the bench strength of the leadership team across the company. We had a very capable technical staff here and actually had hired, two years ago, Arne Josefsberg, who was the Chief Technical Officer at Service Now, to be our CIO. So we have an incredibly strong and very experienced leader who took the reins of CTO and CIO and he has built a huge platform, at scale, actually built along the Azure platform at Microsoft, as well, has built and assembled a great team. So across both the technical side of the business, we've got a very strong team. The double leads that are on that team and honestly across the company on every product group, are rocking and rolling and I would put them up against any team in the industry, frankly, today. And I'll just say this. When you have really great people and this happens to every company -- you are going to be pursued by companies like Google and others of that category and class. And so I think it's a good testament to the quality of the people we have on the team that frankly, after 3 years and getting a whole lot of work done, our CTO took a role, it's a pretty important role -- after building out a really nice platform that we're using across the company and it's helping us scale. And we still have a ton of folks that are great at it and are still hiring a ton of folks that are great at it. So we're pretty stoked about the quality of our senior leadership team and down through the ranks.

Your next question comes from the line of Mark May with Citi. Your line is open.

I guess on the non-domain services, I wonder if you could comment bit on what you've been seeing recently, both in the quarter, but over the last 6 to 12 months or so, in terms of attach rates from a domain to one or more of your non-domain services? And then on a related point, anything from a product and/or merchandising standpoint that could meaningfully change the mix of the non-domain revenue over the next year that we should be thinking about? And I had a follow-up.

So on the non-domain products in attach, I think similar to the color from Deepak's question, we're seeing a nice attachment on our anchor products. Anchor products meaning website builder, shared hosting and particularly O-365 and look, O-365 is the big star around that which is -- and showing up in the revenue growth rate. So our attachment and success with that attachment continues to show up in, frankly, what's a very high revenue growth rate on what's become a pretty sizable business. And I think that it leads into your next question of boy, are there some things on product and merchandising that might alter the mix? We're hoping that we see continued growth, right? We have got continued growth in the Biz Apps category, its productivity plus email marketing. And there are a couple other, I think, areas and categories that we think we can move into and develop franchises that are going to continue to add more legs to the product stool. So we're excited about that and excited about what it means for the long term. And this is on a pretty big base of revenue already, right, where our non-domain business is already 2 times the rate of domain growth. And we're going to continue to build out everything in that stable.

And if I could ask a follow-up, all of the OpEx lines showed pretty meaningful leverage in the quarter. But gross margin expanded year on year, but maybe at a little bit slower rate than what we've seen in the last few quarters. Is there anything that influenced that? I don't know if it was FX or mix or maybe margins at the segment level changed a bit on one or two products? Can you call out anything there in particular?

Sure. So the margin profile of the non-domain products continues to be really attractive. And as we're lapping really big growth and particularly productivity and we're again bundling that service in, we're frankly intentionally -- it's not necessarily holding our gross margin percentages. But the impact of both some of the lapping of our growth of O-365, plus some of our merchandising tactics, is flattening out that gross margin percentage line. Now as you point out, we're getting really nice leverage through our operating expenses and that balance is intentional.

Your next question comes from the line of Brian Essex with Morgan Stanley. Your line is open.

I was wondering if I could and I apologize if I missed it. But in the cloud server and cloud apps products that you rolled out, can you offer maybe a little bit of color behind the catalyst? As well as what you expect the penetration to be and contribution to the platform along the recent comments that you're making with regard to margins? How profitable, how meaningful will that business be?

It's early days. So over time, we think there's going to be meaning behind the product. I would say the catalyst behind the product and the reason for building it, is that it is clear that there are a variety of applications that our developer community likes to use and they'd like to be able to spin up an instance of that very, very quickly. So we provided a situation and application suite that allows them to spin up, whether it's a Joomla, Drupal, Ruby, WordPress instance, very, very quickly and simply, on top of OpenStack that allows them to also expand the number of instances they've got as their customers grow. And frankly, it's something that competitively we did not have. We weren't in market with it before. And so getting that launched and getting it into the marketplace and launching it globally and just to be really clear, when we launched this product, we launched it in 53 markets, in 26 languages and 44 currencies, all on the same day and nobody's done that before. And our developers, in fact I would say more than half of our developers on our pro platform, they are coming in from outside of the country. So there's actually meaning for us to provide this capability in multiple languages, making it accessible to developers all over the world. And we think that that hypothesis will prove out to be a builder of revenue and attach for developers across the globe.

Yes, if I could, for one second. I think the value for this product is really a line towards these web pros that are pros particularly overseas. And again, this isn't the hard-core developers who are muscling up on AWS, it's allowing this infrastructure for this audience. And look, it's early days. It's early days and we will see what the ramp is. But we think the marginal economics and the market opportunity is one that we can plan and it's early and we'll see how goes.

And also, Scott and I are [indiscernible] a little bit. But I think the other thing to note is, we built this on top of an OpenStack platform. So the leverage and the operating leverage we're getting out of that OpenStack platform, is allowing us to build product suites on top of it, on top of common infrastructure, globally. So that is a very important thing to note across everything that we're doing. So this is a segment built on top of a platform that we're going to be taking everywhere.

And if I could just follow up on progress with Asia, I understand you're focused on tier 1 markets, going forward. But any updates on Asia and how that's going? And have you learned anything since you started penetrating? Any changes to your strategy in that market?

Look, I wouldn't say that there's any change in strategy. We're going to be very consistent with the way we roll Asia out. Consistent with the way we rolled out Europe, consistent with the way that we rolled out Latin America. Which was, as I described, get the language in, get some products that are specific to those markets and then once you've done that, then start tuning the site and then start doing marketing spend. The market reacted quite positively to the launch and our PR and we saw an immediate uplift, but I'll tell you, look, it's still super early. We're early days there and I did learn something anecdotally that was quite surprising to me from -- I was personally out there launching those markets. And it turns out that GoDaddy is a brand that is quite well known both in Asia and India and anywhere that developers have been educated in the United States and receive their computer science degree, whether undergrad or Masters or PhD. So we found multiple folks that told us, we know who you are, we're quite familiar with your brand, we just didn't know you were here. So when we show up in market, one of the reasons we've seen our brand-aided awareness in India move from the teens to almost 80 in the last 3 1/2 years is because we were known when we entered. And we just let people know we were there in their language and in their market, in their currency and we were easier to do business with. And we expect to see similar results in Asia that we've seen in our other markets.

Your next question comes from the line of Brent Thill with UBS. Your line is open.

Scott, on the EBITDA margin side at 27%, that's the best we've seen. Can you talk about some of the drivers there? And you're guiding for 22% annually, so you're expecting, obviously, a slowdown through the year. Why would you see that slowdown after what you just showed in the current quarter?

Yes Brent, if you back up the quarters, Q1 is always the highest margin. And that's just about the pacing of how, really, the top line is flowing in. And so Q1 is always our highest margin quarter. And so if you're looking at just the operating leverage, though, you are seeing really nice year-over-year leverage from our tech and dev, particularly infrastructure at G&A and even some on care which is nice. And so that operating leverage, we think, across those expense lines are going to continue to flow through the rest of the year which is going to drive continued really nice growth in adjusted EBITDA.

Okay. And real quickly on the ARPU, 6% growth the last three quarters. I know you're not guiding to that metric, but it seems like there's a considerable opportunity with the layered stack, if you will, of the applications that you can put in relative to what you're doing right now. Can you just walk through what you think could be the biggest driver, here in the back half of the year, for you on ARPU?

Yes, Brent, we're just layering on a big, big base. And so you are seeing hosting and presence and business applications just continue to grow very nicely and those will continue to be the drivers of ARPU growth. But again, if we're looking forward a quarter or two, we're just doing this on top of such a monstrous base that you're not going to see dramatic changes in that number. And I would point out, again that the FX impact that is hitting us now and will continue to flow through the next couple of quarters, that shows up at ARPU, right? All ARPU. So these ARPU gains are absorbing that FX hit that's going to continue for the next couple quarters.

Your next question comes from the line of Sameet Sinha with B. Riley. Please go ahead.

Scott, you touched on it earlier, but the shortening contract length and I'm just trying to figure out what would be the impact on deferred revenues? And I know you mentioned it's going to bring it down by a week or so, but how should we think about it over the next couple of years? And secondly, in terms of the international markets, what is the messaging that you're using there? Is it more direct response messaging, branding? Can you elaborate on that? Thank you.

Yes, so first on the deferred, you can actually see the contribution to deferred, certainly, in the adjusted EBITDA reconciliation. And it's a bit more than a week. Now going forward, again our tactics are tactics designed around maximizing revenue and lifetime value. So we'll be clear about what we're doing with everybody, but we're not intentionally trying to land at some number or term length. And then on number two, on international messaging, Blake, you want to take that?

Yes, so on international messaging, I'm not exactly sure which direction your question is going. Messaging that we're bringing into market is consistent and it is targeted at small business person who is fighting the good fight and frankly in different creative, but very, very similar thematics. And then your question actually talked about, I think, what type of marketing. And in tier 1 markets, we're doing, I will call it broad-based top of funnel advertising, both in TV and radio, all the way down to direct and search and display retargeting. In tier 2 markets, we tend to go direct. We spent most of our lion's share of spend in tier 2 is on search and there's some display retargeting, but it's primarily digital. Yet the themes that we're using for messaging are the same. So no big brand spend in tier 2 markets. A benefit, as I described earlier, by having significantly bleed-through from tier 1 markets into second-tier markets, the brand spend that we do make in tier 1 markets does benefit us in tier 2, as well. Yet the spend that we actually do in those tier 2 markets is direct. Does that answer the question, Suneet?

There are no further questions. At this time, I turn the call back to the presenters for closing remarks.

Hey everybody, thanks for staying with us for our Q1 earnings and we look forward to talking with you in one more quarter. Thanks, everyone.