2026.10.09 | GP | Internet | Newfold Digital: GenAI & WordPress Exposure

Primary:

Newfold Digital Holdings Group, Inc.

Associated:

WIX

Squarespace, Inc.

GDDY

Viewpoint:

Former Executive

Moderator: David Farrar (DF)

Nick Rasmussen (NR), Former VP of Business Development - Newfold Digital

SUMMARY

Overview

The discussion assessed Newfold Digital’s brand strategy, hosting portfolio, WordPress exposure and potential strategic value. Newfold has concentrated customer acquisition around Network Solutions for domains and Bluehost for hosting while reducing emphasis on Web.com and other legacy brands.

The expert believes infrastructure and brand consolidation have fallen short, leaving new customers on Oracle Cloud Infrastructure and many existing customers on legacy systems. Generative AI is pressuring simple website hosting, while established platforms remain relevant for e-commerce, security-sensitive and enterprise use cases.

Key Insights

The expert viewed the timing of the Network Solutions strategy as particularly unfavorable because customer discovery and website creation are shifting toward AI tools. Newfold’s original platform-consolidation thesis was not successfully executed. Migrating inactive legacy customers could prompt cancellations, making continued operation of older infrastructure economically rational. Bluehost’s WordPress association remains valuable, but declining referral traffic, weaker WordPress market share and ecosystem disputes reduce its strategic advantage. AI builders pose the greatest threat in simple informational websites. WordPress, WooCommerce and Shopify retain advantages for commerce, compliance, SEO and complex functionality. Bluehost’s low-priced hosting primarily attracts users who can later be monetized through domains, security, backups, SEO tools and commerce extensions. Newfold is unlikely to return to significant or double-digit growth. Its primary opportunity is reducing churn and monetizing a recurring customer base. The expert considered Yoast SEO, Domain.com and ResellerClub underutilized assets. A financial buyer could value Newfold as an annuity-like business at an appropriate price; interest is not limited to strategic acquirers.

Competitive Landscape

10/12/2026 at 06:01 AM UTC

Company or asset

Positioning

Advantages

Pressures

Bluehost

WordPress-led hosting

Recognized brand, installed base and strong upselling capabilities

Falling WordPress referrals, AI competition and legacy infrastructure

Network Solutions

Domain-led acquisition funnel

Domain brand recognition and simplified purchasing

Narrow offering and uncertain cross-selling effectiveness

Hostinger

GoDaddy

Leading global hosting competitor

Exceptional customer acquisition and perceived value

Acquisition of Newfold appears unnecessary

Scale leader across domains and websites

Strong cross-selling, acquisition efficiency and economies of scale

Potentially complex acquisition economics

Yoast SEO

WordPress SEO plugin

Large installed base

Lost leading search placement to Rank Math and appears underutilized

Wix and Squarespace

Integrated website builders

Simpler user experience

AI-native builders create additional pressure

Lovable and Base44

Quantitative Insights

AI-native site creation

Strong fit for basic websites

Less mature for commerce, security and enterprise requirements

Metric

Detail

Newfold tenure discussed

More than 10 years

Legacy consolidation period

Approximately 5 years

Yoast active installations

More than 10 million

Installations regularly updating

Approximately 3 million

Installations not consistently updating

At least 7 million

Entry hosting price

Approximately $4–$6 per month

Domain charge

Approximately $15 annually

Cart conversion pressure

Became significant above roughly $15–$20 per month

Promotional periods

About 1, 3 or 12 months

Brand strategy

Two primary brands: Bluehost and Network Solutions

10/12/2026 at 06:01 AM UTC

DF: Good afternoon, everyone. My name is David Farrar. I'm a moderator and senior credit analyst with Guidepoint Insights. Welcome to our call on Newfold Digital. Former executive discusses how Gen AI and exposure to WordPress could impact the performance and strategic value of Bluehost, HostGator, and other assets with our advisor, Nick Rasmussen. Before we begin, I want to remind clients on the call that you do have an opportunity to ask questions by emailing ask@guidepoint.com. Those questions will make their way to me and I'll be able to incorporate them. Before we proceed, I want to give Nick a couple minutes to talk about his background and career. Nick, please go ahead.

NR: Hi, all. It's a pleasure to be with you. As David mentioned, I formerly was with Newfold for over a decade, which also included my time at when it was Endurance International Group. Currently, I oversee the commercial bridge between... I'm at an organization in the same industry called WebPros... and I oversee the commercial bridge between our global hosting software portfolio that supports even some of our customers like GoDaddy and Newfold, and then our broader ecosystem of driving partner and hyperscale alliances across our product portfolio and ecosystem. As I mentioned, I spent over a decade at Newfold in a similar role and capacity, and I'm very familiar not only with the product offerings, but also the transitions and the growth efforts that we employed during my time there, as well as the strategies and business cases that justified the investments and acquisitions, including Yoast SEO, MarkMonitor, and YOOtheme, and so on. So excited to be with you and I welcome any of your questions as well.

DF: Thank you very much. Appreciate it. So you left Newfold about a year ago, right? I think it's in the beginning of the third quarter of 25. Just for context, it would be good to understand, you know, the consolidation into the brands around Network Solutions has caused some thoughts around maybe that may not have been the best strategy or the best branding side of it. But could you just give us an idea of whether or not you think that the focus on the Network Solutions side has any particular impact from your perception on the actual go-to-market or the value or the operations on the hosting side, you know, that you are more closely aligned with?

NR: Yeah, I actually felt quite strongly about this migration and the effort that Newfold put behind, where they de- emphasized many of their other brands and they really began focusing their core go-to-market strategies around the 2 premier brands which are Bluehost and now Network Solutions. And part of that, I think the most controversial and even detrimental aspects to that whole strategy was deprecating the web.com brand. I mean, think of it as a 3- character TLD and just not only that, but how synonymous it was with their branding and investment into some of the golfing infrastructure and leagues about a decade ago. And so, the thesis behind that deprecation of the web brand and migration to the Network Solutions brand really revolved around the research that we performed around the brand equity of Network Solutions in the domain space. And the differentiator at the time was that Network Solutions could be the domain-centric provider with upsells and other solutions, but domains could be top of funnel on the Network Solutions side, and then Bluehost could be... The hosting-centric brand from a go-to-market perspective, obviously leveraging its significant brand equity within the WordPress ecosystem, but also expanding the hosting ecosystem and infrastructure beyond WordPress as well, including AI builders. So, you know, it was a very... It was a debated decision about the Network Solutions branding exercise. Obviously, they made their decision and I left shortly around the time of the launch. So I don't have too much insight into the results post-launch, but I was privy to a lot of the discussions, feedback, and debates around that branding discussion and that go-to-market shift.

DF: So do you see that strategy around using the domain space as the Network Solutions as top of funnel as being the most logical sort of go-forward route for the combined business? Or is there... Given the level of competition and the challenges that the way people are searching and identifying domains and starting the process for website building, does that strategy still make sense or is it your sense that that might have been a dated strategy around go-to-market or a customer acquisition?

NR: I would say, looking back with hindsight, the timing couldn't have been, you know, almost worse than what it was. The reason I say that is, yes, while domains not only continue to be significantly viable and important for anybody looking to expand their commerce or their online presence, a lot of the thesis around migrating to the Network

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Solutions brand was that they could not only leverage, like I said, domains as the top of funnel solution, but they could really tag on and add on additional products after the domain purchase. And you see that throughout not only the purchase experience of the domain on Network Solutions, but also once you're in and using kind of the dashboard or the user dashboard of Network Solutions, you can see the prevalence of the upsell pathways that they constantly pepper users with, whether that's migrating to another website or using a different type of website builder or even launching a website if the domain isn't actively being used. But you also see the prevalence of other add-ons like email solutions, security solutions, and then obviously any of the hosting solutions as well. And so really kind of by leveraging the brand equity Network Solutions has really as kind of like a domain-centric solution. I say domain- centric, not really typically identified as somebody with 3 plus domains in their inventory. They were trying to target more of like an advanced user. However, I think there's been a significant shift in their strategy, at least from what I can observe and I've seen over the last couple of months as they've continued to iterate on that Network Solutions brand and the offering. You see actually a simplification of the brand and the offering. And I'll use this, I'll use an example that is quite easy to see. If you were to pull up and bifurcate the purchase flow on Network Solutions for a website between Network Solutions and then Bluehost, you'll actually see how simplified the Network Solutions website purchase page and cart experience is compared to Bluehost. I'll reference, you know, a couple, I'll call it a couple in particular where the shopping cart on Network Solutions, it's so trimmed down, some of the upsells are really just like professional email and SSL certificates. Those 2, while they're very basic and simple upsell solutions, even if you're indicating the intent, an end user is indicating its intent to purchase a website or hosting. Those upsell pathways that are offered in Network Solutions are very domain-centric. They remain very domain-centric, and they still are not pushing many of the website-centric add-ons that you'll see in the shopping cart on Bluehost. And so I use that as a reference point and a guide to say not only are they continuing to target domains as the top of funnel go-to-market strategy, but they continue to leverage the add-ons, and they limit the add-ons and the cart experience to those domain-centric solutions, and it seems to be very intentional. I highlight that, not only that, and I'll give a little bit more background around that, maybe I'll dive into a little bit of a rabbit hole here. I think it's very publicly well known that Network Solutions or Newfold as a brand has begun shifting a significant amount of their new signups and ads and customers onto Oracle Cloud infrastructure. And part of that shift in migration is taking it off of their own servers and their own infrastructure. There's a ton of theories and reasons why they've done this, but it really... by doing that, they're leveraging a hyperscaler like OCI, and that hyperscaler allows them to white label many of their go-to-market strategies and brands and back-end infrastructure that the infrastructure Bluehost uses very well could easily be replicated on Network Solutions, but it appears to be a purpose, an intent, they're maintaining the intent of offering domain-centric solutions on Network Solutions. And so I would say the long-term strategy around Network Solutions was to expand it. I can't say I know exactly why they shifted and gone back to be more simplistic and even maintained the domain-centric brand. But to your original question and statement, David, they deprecated the use of Web.com and have doubled down on Network Solutions. And Web.com was very much an online presence solution and brand, and so they've trimmed down the offerings. Now, one last comment, and I'll turn it back over to you, David, but this may also have a marketing influence. And there may be a marketing rationale as to why they're doing this. And if you look back at the history of not only Endurance, but Web.com and Newfold since its inception in 2021, when you would look at their marketing spend, there was always a conflict in their marketing spend, be it Google AdWords or any of the social media spends, where they were bidding against themselves for keywords, be it Bluehost bidding against HostGator and the HostGator brand or Bluehost bidding against Web.com or Web.com bidding against HostGator, whatever it may be. But they had the same product offerings bidding against themselves and creating a higher CAC and really creating their own headwinds as they were trying to go to market. And so there's another, like I said, I see the ability for them to expand the Network Solutions offering. I don't know if that's a purposeful intent to maintain only a domain-centric product offering or domains being their primary product, or if this is also being driven by their ambitions to maintain their 2-brand go-to-market strategy and reducing their CAC. So it kind of begs a lot of questions. I'm giving you my guided insight and my experience.

DF: So the other side of this is you have the domains, but then you also have, like you said, the Bluehost and the web

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hosting side. And do you... sorry, let me make sure I ask the question the right way. Is there a reason why if you would keep it separate that you would create more interest for the individual pieces versus, say, if you were trying to do more integration across in terms of cross-selling? You know, I ask this in the context of everyone knows the situation they've been in from a financial standpoint, right? We know that there's always a strategic process going on in terms of looking for monetization opportunities. Is keeping them separate more likely to attract interest for one or either side of the business versus the total, or how would you think about whether or not this is a case of the sum of the parts being, you know, 1 plus 1 is 2 or 1 plus 1 is 3, just given how many parts and pieces they have stacked in here?

NR: Yeah, I will just guide the audience into assuming and coming to your own conclusion that the simplest answer for this question specifically is the actual answer. I'll give 2 reasons why I say that. One of the primary decisions or rationales for doubling down on the Network Solutions branding was the brand equity associated with domains. And that really was one of the primary drivers into leveraging that and how it was very much a domain-centric brand since its inception, whereas the Web.com brand was not. It was an online presence brand, not just domain. And similar to Bluehost, Bluehost's brand and brand equity was very strongly tied to WordPress hosting for many, many reasons. And that's why they doubled down to making it not only continue to be a WordPress hosting solution, but now they're trying to expand it to be more of a general hosting, a VPS dedicated hosting solution for all your other desires. And I say that because if you look back at some of the evidence available, for example, and I'm just thinking of some common data points like on Domain Wire, you could even find that there are some alarming quantitative trends that we were trying to, in my time there, we were trying to fight against. And that was the number of domains under management. It's a very, very common metric in the domain ecosystem and the hosting industry, often abbreviated as DUM or DUMs. And there was a significant decrease in DUMs over that 2022 to 2025 period. And I know that that was one of the areas that we were trying to fight against and reverse the trend, buck the trend of churn on those domains under management. And so doubling down on a domain-centric brand was really one of the reasons and rationales that justified this. The other reason that I'll say why it's simplistic is at the time that Clearlake acquired Newfold, I'm sorry, Endurance International Group, and then created the Newfold entity with Web.com, one of the primary drivers and value drivers to justify the acquisition was to consolidate infrastructure and consolidate the brands. Now, if you look at many of the efforts that were deployed and employed over the last 5 years within Newfold was the attempt to try and consolidate many of those brands. And I say that because you can go back and look at the hundreds of hosting brands that Endurance International Group acquired. And with the acquisition of each hosting brand, you inherit a lot of technical debt, infrastructure debt, and then subsequently the management of that debt and the management of those existing customers. And so the thesis really at the time for the creation of Newfold was to consolidate platforms, consolidate technical debt and create a unified platform. Now that, I think it's well known that thesis was never, Newfold was unable to execute on. And that is still a significant challenge of migrating existing platforms onto a unified platform. And you see a bifurcation of infrastructure where there's an Oracle Cloud Infrastructure user base now, which is basically the new users and user bases compared to the legacy users which are still on Newfold infrastructure and data centers. And so I go back to just answering your question, David, it really, the rationale for creating Network Solutions was really leveraging the brand equity to reverse the domains under management negative trend.

DF: Yeah.

NR: And then also to create 2 consolidated brands that could leverage the same infrastructure moving forward. And when they wanted to make that consolidation, they just wanted to do not only the infrastructure consolidation, but also the branding consolidation at the same time and draw a line in the sand for future infrastructure costs.

DF: And so it... turning a little bit more focusing on the hosting side. You know, the Bluehost has been very WordPress centric and WordPress has its own unique situation going on with WP Engine and the... litigation. How do you see Bluehost as a standalone asset? Is it a case where, given its focus on the WordPress ecosystem, is it attractive as a

10/12/2026 at 06:01 AM UTC

standalone asset, or would you say it's probably not too much different from any other hosting sites outside of WordPress? I guess that's more of a question about does the WordPress association increase or decrease the sort of the value around that business that it's worth saying today and around just how WordPress is being impacted by the world.

NR: So, I would just say it appears that Bluehost continues to see a lot of value in being an official partner of WordPress and WordPress.org. You see that in the top of the fold on Bluehost.com as they call themselves out as being recommended by WordPress.org. I was personally responsible for the relationship between Automattic and the WordPress Foundation and Bluehost for many years. And so I'm intimately aware of the details, and there's some things I can't say about that. But that being said, I would first say it appears that Newfold and Bluehost still see a lot of value in being associated with that just due to the prevalence of WordPress being all over. However, I think it does beg the question of a few changes that you can see within the WordPress ecosystem, and one of them notably being if you were to go to WordPress.org and click on the hosting page on WordPress.org, for almost a decade, that page ... offered 2 or 3 hosting solutions that they would recommend, one of them almost always being Bluehost. And not only was it Bluehost, but Bluehost was always in that first position. And then a second position was typically HostGator, another Newfold brand, HostGator, and then it would be a Pressable or somebody else. Over the last couple years, you've actually seen a decrease in Bluehost's presence on WordPress.org as being a recommended host. And that is not only, I think, a very visible and telling, well, an indicator that there's something going on in the background. But also, I do know that the value of Bluehost's placement on that WordPress.org/hosting page has decreased, that the number of leads originating and new customers originating from this page has also decreased. And so the value of its placement, while it's always been very difficult to quantify, Bluehost has always, for over a decade, relied on this placement and used this placement for not only its brand equity, but its validation as a premier hosting partner for the open source project. So I tie that because you can go and read any of the publicly available information on the WP Engine case, but they do call out, you know, some of the conflicts that exist having this Bluehost placement on WordPress.org and where that originates from. So yes, there is that, but that doesn't mean that their position could change on the value of being associated so heavily with WordPress. I raise that because it is obvious in the market that the share, WordPress' share, CMS share across public websites is decreasing. And it's forecasted to continue to decrease and even accelerate in its decrease. So, you know, back to your question of is there still value or is there negative value? I don't know. It appears that Bluehost still sees the value with their placement and leveraging not only like Trustpilot, but right next to Trustpilot WordPress, the WordPress.org recommendation. And I can assure you there still is some traffic coming in from that WordPress.org/hosting page too. So if you ever saw that Bluehost come off of that page, you'll know that something has changed commercially. And I think that would be a big red flag for the WordPress CMS as a whole, as well as a significant shift in Bluehost strategy. So I don't think, just to be more succinct now after diving down that rabbit hole, I don' DF: Yeah.

NR: See there being a negative connotation for its association with WordPress, but there's also many conflicts between how to differentiate or how end users and customers differentiate between WordPress.org and WordPress.com. So yeah, lots to unpack there if we needed to.

DF: Yeah. So let's talk a little bit about why the WordPress ecosystem is seeing this sort of deceleration. Is that something that could be accelerating or do you think that that has? Given what we were talking about before, or is it really the change in the way websites are being created or with AI or competition that's changing the way that market share or share of WordPress has gotten historically is declining and is there a reason why that accelerates?

NR: Oh, that's a really great question, and it's going to be very difficult just due to the timing of the WP Engine fallout and, you know, when all of that stuff started going down and the prevalence and rise of AI. So it's very difficult to leverage the scientific method to draw a very strong correlation. I will say, though... The website builders have

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always... or let me just back up... third-party website builders in the WordPress ecosystem have always had a commercial presence, and that has always been almost an Achilles heel to the WordPress CMS. The open source project was always struggling to build a drag and drop builder, and they were able to launch that with the launch of Gutenberg a couple of years ago. But you see the rise of commercially available third parties like Elementor, and their continued presence of Elementor, Divi, Beaver Builder being third-party products that still build on top of the WordPress CMS, and they've maintained a significant amount of staying power. So, you know, I do think that the rise of the Lovable and Base44 have contributed to the decrease in market share of WordPress. But, you know, there was always still the competition of the Squarespace and Wix. And even in light of that competition, WordPress was still continuing to grow in market share. So AI definitely has contributed to maybe a reverse in the trend of WordPress's presence in the CMS ecosystem, but I will say, and this is not groundbreaking news, but with the fallout and some of the actions taken by the foundation, by Matt Mullenweg, by Automattic, that there have been some very public personas in the WordPress ecosystem, like I'll just refer one directly to Joost de Valk, DF: Mm-hmm.

NR: Were very publicly against some of the actions that Matt and Automattic was taking. And so I think it's very easy to quantify and see... it's not easy to quantify, but it's very easy to see some of the negative community sentiment or the negative sentiment starting to arise in the community around the exact same time that the WP Engine fallout was happening. And that was shortly around the same time of the rise of AI. So I think it's very difficult to quantify the impact those two have had separate of each other. Just unfortunate that they came at the exact same time, which makes it a little bit cloudier for us to assess and quantify.

DF: Using AI to generate WordPress sites, is that a particularly heavy task? Is it particularly harder than using just a regular, other types of sites in terms of the AI ability to use AI? Like we talked about Lovable a little bit, but I think about sort of the open source, right, web host... WordPress ecosystem, is it disadvantaged by AI in terms of the ability to use it? I'm not asking the question right away, but I'm hoping you actually get what I'm sort of gunning at. Sorry.

NR: No, I think I do understand what you're saying, David. Yeah, so there's actually a threshold at which it becomes harder to use AI. And let's just break this down into maybe 3 different personas of looking at or leveraging AI to manage your online presence or website. And the first persona is just going to be like a very basic user, maybe somebody who's just looking to have like what we call a brochure website, right, where you might have a David's Vacuum Shop on Main Street USA, and you just need to list the services you provide, the hours you're open, your location, so that you can have a website listed on your Google Map listing, and maybe even your pricing, right? And that is a very static website that really isn't going to change much. There isn't much interaction with the end user. That is going to be the bread and butter right now for AI. And it is very difficult for, if you're talking about the ease of use. For a WordPress to justify its complexities and functionalities and justify the difficulty in terms of building that out. And so to succinctly answer your question with that persona, it's really difficult to compete with AI. And that is where you saw also WordPress having a lot of presence. That's why WordPress started as a blogging software, right? To be able to just not have some of those interactions or complexities needed, but obviously WordPress has grown significantly since its early days in inception. And so that is one persona that they're losing market share. And that's a big bulk. That's a bulky, a large quantity of users there. Now, the second persona we'll talk about is really kind of the e- commerce threshold. And let's just say you're still a vacuum shop, but you also sell vacuum parts via your e-commerce platform. Now that is where you start getting, and I think that threshold starts to appear where your business is going to want to use a CMS and a shopping cart platform like a Shopify or a WooCommerce in WordPress to maintain not only the security, the compliance, but the robustness and even the functionality and features that exist outside of just using a Lovable type to build out or write code your solution. There's some inherent SEO benefits to leveraging a CMS, a known CMS like WordPress. And so I would say that's kind of where the crossing threshold is, where you can still have a justification to leverage AI, but there's also a justification to leverage WordPress or WooCommerce to build out your site. And then the third persona, which you're really not, we haven't seen much prevalence from the AI

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builder side, is when you're starting to look at the enterprise presence. Think of any of the Fortune 5s. And they're not building, they may be vibe coding some aspects of their online presence, but you're not going to see a Coca- Cola.com vibe coded in its entirety just because of the robustness. And that's where you're not going to be seen falling back on your statement of is it easier to use AI. Initially, it's easier to build it, but the maintenance and the long- term security, that's where the enterprises just haven't, the AI solutions have not matured enough for enterprise usage in its entirety.

DF: Okay. So does that impact the, you know, I think about the type of person who's setting up that relatively inexpensive product and signing up for the lowest price point initially to run their host? That's not the most profitable customer, right? So is that necessarily... if I'm seeing a decline in terms of those websites coming through, say, Bluehost or WordPress in general, is that an indication that I might be losing numbers but my cash flow, not necessarily my revenue, may not be being impacted as significantly if that's the type of website that I'm losing?

NR: Yeah, I mean, that's a great observation. And I'll fall back onto something that's not necessarily new or being impacted by AI, but you're absolutely right. Those basic websites are not the most valuable customers. And you see, that's where the term penny hosting was coined. Bluehost is offering $5, $6, $4 a month hosting for those users that are looking to do just a very basic website. Now, they do offer that. And even at my time at hosts like Newfold, that is really just to get the end user in the front door. And if you were to go to bluehost.com and go to a checkout experience, you'll see the complexity and how thoughtful they've actually been in that cart experience because the value and the ARPU is really driven by that cart experience and any of the upsells that the customers are going to be purchasing at that time. And that cart experience hits you immediately with a domain, right? They ask you to buy a domain from them. And there's just another way that they're increasing ARPU on your user because you're buying your domain from them. And that's already going to increase it from $3 to $15 a month, and then adding a $15 annual charge for your .com domain. When I talk about the add-ons, this is actually one of the areas that I owned and managed at my time at Newfold. You then look at some of the recommended add-ons that they're offering as well, like website security, some of the e-commerce like WooCommerce plugins and extensions, Yoast SEO, which they bought, and as well that they're selling at a discount from Yoast MSRP that they have and then even website backups. The value is top of funnel for Bluehost is to bring in those penny hosters, those low-end customers and upsell because every single one of these upsells has a significant amount of margin associated with it. And they're operating as efficiently as they can in this shopping cart experience to optimize not only who their third-party provider is for each one of these recommended add-ons, but they're also trying to optimize for clicks, for conversions, and then also the upsells. And one other way that they're upselling, and I could talk more about this if we need to or want to, but one of the key areas that they're able to do this is to reduce the shopping cart and upfront sticker shock. By emphasizing a monthly cost or even offering a number of value-added solutions for free for a period of time, be it 1 month, 3 months, 12 months, but then once that credit card is secured, there will be the premium upsells and renewals at a value-added price after that free trial. And that was something that Newfold relied on for years, for decades, to increase the ARPU for each of these users. But there's also a significant impact of cart churn once that shopping cart starts exceeding. Back in my time there, once that shopping cart started exceeding kind of a $15 to $20 a month price point, you would see significant churn in conversion and negative conversion once those price points started exceeding those value points per month. I don't know what the current price points are where they're seeing the lack of conversions, but they're really optimizing that initial sticker shock to reduce the sticker shock and then increase with the value adds based on renewals.

DF: So you have the ability to optimize within your own operation, right? So within Bluehost, I can be efficient and actually capture as much as I can, which it sounds like they were actually paying attention to. But then there's the ability to actually attract the customers when you have folks like GoDaddy or Wix or Squarespace spending a lot more money on customer acquisition. Changes in terms of, am I now doing a Google search for "how do I build a website" or "where do I... how do I create a website?" Or is it my asking a ChatGPT or a Claude, a Copilot? Is that changing the

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value of the install base of Bluehost? Because as I think about it, if it's becoming more expensive and more difficult to capture a user base, then the value of an install base should be higher, right?

NR: Mm-hmm.

DF: But I'm just wondering if the value or the perceived value around a set of customers like at Bluehost, would you expect that to be going up or because of the way that the world is changing and the type of websites people are creating or however the optics may be that you would look at the Bluehost business as sort of more valuable in the age of Gen AI searches or chat searches versus where things used to be. Because like you said, we're on a... you're in a situation where you're on a platform that's got its own idiosyncratic problems and then you have the cost aspect of it and you have the AI aspect. But it feels to me like it might actually either be becoming more valuable or less valuable to strategics who want to grow but don't want to necessarily keep paying the same high costs for acquisition.

NR: Yeah. Well, I mean, there's a lot to unpack with that question.

DF: I mean, sorry, let me sort of narrow it down a little bit because I think what it comes down to is, right, I have my install base and the question is, can I raise prices on them and will they leave?

NR: Yeah.

DF: So, you know, does this... does the new world and that install base, like, does this change the math on a set of customers for Bluehost or do you think it's sort of the same as it has historically been?

NR: Yeah. So... There's a data point I think I'd like to point to that will help me answer this. There's a correlation to this data point, and I'm going to refer to Yoast SEO to help me answer this.

DF: Yeah.

NR: Yoast SEO has a free version available, and that free version can be downloaded on WordPress.org. And if you go to that listing for Yoast on WordPress.org, you'll see plastered all over the place that one of the key metrics that they highlight is that there's 10 million active installs of Yoast SEO. And allow me to give you some background and then I'll tell you why I'm getting to this. When you look at that 10 million active installs, every time Yoast sends an update or they update their plug-in, you're able to see in the number of downloads per day when that update was released and how many websites or live WordPress sites took that update and applied it to their website, to that plug-in. And so I'm coming back to this because it highlights that there's over 10 million active installations of Yoast SEO. However, we can very easily quantify and see that there's only about 3 million websites that are taking every single update, applying it and updating their plug-in. And so when you ask about like renewals and the ability to raise prices to the existing customer base, I would say that there is a significant portion, a very large portion of the Bluehost install base. That is in a set it and forget it mode, and I'm using this data point of the Yoast SEO downloads per day and the number of active installs is because there is at least 7 million active installs of Yoast SEO that are not actively uptaking the latest versions of the software. And I use that as a data point to show you and justify my statement that they're in set it and forget it mode. And so that is also a reason why Bluehost is not able to migrate off of some of the legacy infrastructure. It's too risky to introduce more churn or require an end user to think about their existing website, which will cause them to churn if they have to have some user input in order for Bluehost to migrate or update their infrastructure. And so it's worth more to a company like Bluehost to just maintain legacy infrastructure as opposed to disrupting that set it and forget it user base.

DF: David Farrar, Guidepoint.com.

NR: Why Bluehost is not able to migrate off of some of the legacy infrastructure. It's too risky to introduce more churn

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or require an end user to think about their existing website, which will cause them to churn.

DF: Rasmussen, David Farrar, Guidepoint.com.

NR: From a new acquisition perspective, they're just trying to get the users in the front door. They're trying to then increase the value proposition by offering some of these solutions for free and then charging upsells upon renewal. And so you can very easily see that if a user launches their website in the first 30 days of purchase at Bluehost, their likelihood to churn reduces by orders of magnitude. And so Bluehost is trying to accomplish multiple things here where they're trying to help their users get online as quickly as possible, often leveraging AI or some of these value adds, get them locked in, and then get them to a set it and forget it state as quickly as they can so that the renewals will continue to happen without the end users seeing it or having to think about it.

DF: So we talked a little bit about some of the other parts, and you mentioned Yoast a couple times. Do you think Yoast has been sort of maximized in terms of value, or would you put it in the category of maybe an underutilized asset that could have more value to a different operator or strategic?

NR: That's a great question. I'd argue it has been underutilized. I'll point just recently that the Yoast head of product departed the company and left, staying in the industry, but left Yoast SEO. And so there's obviously some conflict and upheaval over there. And I'll point to another thing, too, is if you were to go to WordPress.org and search plugins and just type in SEO, you'll see that Yoast SEO is no longer in the first position on the rankings page. It's been replaced by Rank Math. And so losing its long-standing placement in its organic ranking within the WordPress.org plugin repository is the first data point that I would show to say it probably could be better utilized and monetized in the hands of an alternative owner.

DF: Are there any other hosting? I mean, we talked about HostGator briefly, but are there any of the other hosting sites that I guess you would perceive as having some level of differentiated value? Because like you said, a lot of them are still running legacy clients on legacy technology because they don't want to move them and force them to make a decision. As you think through the numerous old brands, are there ones there that would fall in the category of potentially strong runoff businesses where you wouldn't necessarily want to be buying it for the brand but for the client base? Very steady or has very particularly strong long-term behavior.

NR: Yeah, I'll just point to kind of the leaders in the industry, and that's probably Hostinger, is probably the most robust brand in the WordPress hosting ecosystem. Their ability to acquire new customers and convey perceived value all over the world and all the geos is astounding and it's a record that they've held for years. Hostinger is probably the biggest value add. And then the 800-pound gorilla in the room as well, being GoDaddy, I think also has a lot of perceived value, especially leveraging the way that they leverage their economies of scale. They're able to just really optimize not only their existing user base but the way that they cross sell and upsell is impressive. The way that they're able to leverage domains as a top of funnel and websites as a top of funnel is something that many have tried to replicate but obviously no one has been able to duplicate. So those, I'll call out the 800-pound gorilla for what they've been so incredibly good at, but I'll put the diamond or the gold medal around Hostinger's neck for the marquee brand.

DF: So it sounds like they would be probably the most logical or most synergistic acquirer if someone was to come looking at the host brands for Newfold.

NR: Oh, I don't know that they would want to.

DF: Yeah.

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NR: That's a really, yeah, that's a good question. I don't know that they would want to because you'd be paying the premium for the Newfold brand, whereas they'd rather just, you know, their capital TTV ratio is just so valuable over at Hostinger. I don't see them needing to buy a Bluehost. And not only that, but look at all of Bluehost's onboarding or top of funnel presence, including on WordPress.com or WordPress.org that I had talked about. You still see that Hostinger is there competing neck and neck with Bluehost. And so I don't see Hostinger being an acquirer of Newfold.

DF: Okay. Do you... so you mentioned this a little bit earlier, and it's hard to keep track of the WP Engine and Automattic within the WordPress ecosystem, all the sort of challenges and soap operas going on. But do you see the relationship between Bluehost and a lot of them limiting the willingness of other people to get involved and to make an acquisition at this point until things have settled out? And I guess this is sort of, like you said, there's some specific sort of, I won't say agreements, but relationship there before everything came apart between Bluehost and the entities. Are they close enough together that it could be limiting to the ability to separate them if someone else wanted to come in without sort of picking up some question marks on the liability side? I'm not sure. I don't want to put you in a bad spot, but I'm just trying to understand sort of how that relationship might have been different from WP Engine.

NR: Yeah, obviously I'm not an attorney so I'm not going to weigh in on some of those things. But I don't see them... I think from a macro environment, there's a lot of disruption caused by this WP Engine litigation. And so if a potential acquirer were to see those macro headwinds, that would be more contrary to the WordPress as a CMS and its close ties with Automattic, then that acquirer is going to feel the headwinds across the entire hosting ecosystem. And it wouldn't be specific to Bluehost. And so I don't feel that it would be impossible to separate. The risks associated with the WP Engine litigation and Bluehost... I have to be careful what I say because of some of my ties.

DF: Yeah, NR: back DF: no, no, please don't go there.

NR: there, but yeah.

DF: On the recorded call, for sure.

NR: I just don't feel that it'd be impossible for them to separate the risk or the 2 companies, no.

DF: But the way they... their relationship, there's not a correlation or a similar behavior like what WP Engine was doing. It's a totally separate, like they're part of the rest, right? The others?

NR: Yeah, it's a part of the rest.

DF: It's not similar to or anything like that; it's more just that they're there, so.

NR: Exactly, yep.

DF: Besides the Yoast asset, are there other parts of the ecosystem, or you have a conglomerate roll-up here, are there other areas that you think have been underutilized or could see additional significant value, or just as a way to improve the attractiveness in terms of parts, some of the parts valuation or evaluation?

NR: Yeah, you know, some of the other... and this is part of, it may even go contrary to their strategy... but when they doubled down on Network Solutions being their domain-centric brand, not only did they deprecate the value or the perceived value of Web.com, but Domain.com was a significant portion of, and has a ton of brand equity associated

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with it as well. So that's another area that I think there's a lot of value that they could... I don't know, for some reason they're not executing on that or leveraging that. But if you look separate from those 2, the website or hosting-centric solution, and then also the domain-centric solution, they've got a product called ResellerClub that they haven't touched for many, many years. And ResellerClub also has a significant amount of brand equity and a lot of resellers. Now, many of those resellers are geo-restricted or they're not in the most profitable geos, but just the volume of resellers over there that have access and tap into the benefits of that marketplace, I believe, is significantly underutilized. So of the 2, I think those are 2 areas that I think are pretty valuable. And I think they're starting to execute on it or they have been executing on it, but also their VPS presence, being able to provide virtual private servers for any of the open claw or AI-centric solutions and bots, there's a lot of value that they're starting to execute on, but there's also a lot of competition. So I would say those are probably the 3 areas that I think are most valuable that have some value, but I can't say that they're going to execute on it. I just have DF: Yeah.

NR: always seen that value there.

DF: So do you see the ability to actually grow this business going forward? Or is, if you're not going to be a top spender on CAC, you're just not going to be, you know, they'll lose out, right? I mean, is this a growth business still or just given the nature of the market? Are they effectively blocked out of the growth side?

NR: Yeah, I don't think they're part of the growth side anymore. I think if they could reduce churn as much as possible and apply growth, I'm not sure that they'll ever flip back to significant growth or double-digit growth. I don't see that happening.

DF: So there's a lot of thought that you could, an AI lab or the like could use them as a kind of partner or a hosting, wholesale hosting to create websites, is that, are they positioned for that? Does that make any sense? Is that even economically beneficial to them? I mean NR: Yeah.

DF: How would you see the AI, you know, the big guys sort of using these legacy type products, or would they just skip that entirely and go straight to VeriSign?

NR: Well, I actually would argue that it's published to AI or AI-published connections. It's an emerging market. And the way that is historically been managed is when you're in Cloud or Codex and you build out... or even Lovable and you build out your site, they have a connector for you to then go and launch it on AWS or DigitalOcean or you know, XYZ. Now, those connectors, though, are limited, and the AI companies, the anthropics and the open AIs have been very open that, like, you can maintain a lot of presence or status on this AI to publish connection or click-through funnel. But that's contingent on your annual spend on the AI within the AI company. And so they're not... I don't see Bluehost being a solution for them to go and be acquired or Newfold to be acquired by an AI company because they're DF: Yeah.

NR: making so much money by incentivizing their end users to just... incentivizing those partner companies to continue to invest in their core product.

DF: So it doesn't even sound like there's a... I mean, would it be beneficial to... are there any services that a Newfold could offer to the AIs that would be additive from the point of view of Newfold?

NR: Maybe.

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DF: Right. I mean, that doesn't seem like it, but I'm just asking to make sure I didn't sort of miss it.

NR: I'm not sure I can envision one off the top of my head in the final 2 minutes. There may be. It would take some further investigation.

DF: Yeah, well, that probably answers the question, too. You know, is there any thoughts about how the Gen Digital, that part of the consumer NR: Uh-huh.

DF: business looking at buying and making a bid for GoDaddy, does that make sense to your mind around trying to monetize the customer base or does that seem like it's pretty far apart? You know, I'm not sure myself about sort of how I think about it, whether it's sort of a portfolio ad or a synergy, but I'm just curious from your perspective whether you see something there in terms of the consolidation.

NR: I can't say I've done the calculations, but I'll just reference any of the listeners back to like the Bluehost.com checkout and cart experience or even the GoDaddy cart experience. You see the recommended add-ons being website security or security. And so if the thesis and premise of this Gen Digital acquisition of GoDaddy or potential acquisition, I should say, being like a top of funnel opportunity. I 100%. I'm very bullish on that acquisition. I think it would be a great value add for a security company to buy a top of funnel solution that would be able to augment their broader go-to-market strategy. So I do see it and I see the value and that's actually something I've... these add-ons is what I've been living for the last decade or so. And I see a lot of value that they could derive from that.

DF: But doesn't that raise... because you mentioned earlier about the fact that you had such a significant decline when you got above $15, $20 at the cart. I mean, doesn't... and if you're talking about a Norton subscription that's certainly higher than that or hacking insurance or identity insurance, I mean, does that still resonate given the higher price points and the dollar amounts you're talking about in the checkout?

NR: Yeah, to me it does because many of those Norton, for example, Norton Solutions. Being a software product or however they structure it, they can always scale it back, scale the cost back to create a price point that makes sense or resonates to that customer base.

DF: Okay.

NR: And so just because their existing product portfolio may not make sense at those price points doesn't mean it's not easy for them to replicate or duplicate a similar type solution. So, yeah, I don't think that's an argument against the acquisition, in my opinion.

DF: But we're sitting here at the hour, but I did want to come back because, you know, thinking about the business, right? I mean, one of the biggest challenges for this business has been that it hasn't had a lot of capital to put behind the transformation. At the right price, are there... do you see non-strategic interest, or any other sort of... say, a GenDigital or someone else like that in a similar space... having interest in Bluehost as a scratch and dent asset, given that it does have, definitely has different tempered growth characteristics than GoDaddy? But does it make sense to look outside of the historical strategics to think about people who might be interested in the operations?

NR: Yeah, I do. I think, especially if you look at some of the cohort analysis that any of your investors would have access to or be able to get access to, I think there's an argument, like you said, at the right price, for a non-strategic to acquire a Newfold as a... It almost has like an annuity base. So yeah, I think there is. And I'm pretty confident that the market or there has been conversations about that. I'm not privy to those, but yeah, I see there being value for sure.

DF: Yeah. Lots of people kicking the tires, not a situation where it's pretty even more niche. Yeah.

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NR: Yeah, so I don't see it being confined to a strategic acquirer. So yeah, I think there's definitely an annuity value just on its face.

DF: All right. Well, good. Well, listen, we're here at the end of the hour, so we'll go ahead and wrap up. But I really appreciate your time and your insights. Thank you very much. For our clients, if you have additional questions, please reach out to your salesperson. We can help you set up a consult with Nick. But thank you very much and everyone have a great day. Thank you, Nick. Really enjoyed it. Thank you. Have a good one. Bye.

NR: Thank you.

DISCLAIMER: The statements or opinions expressed today are those of the Advisor and not Guidepoint, who disclaims all liability for the content provided. The Advisor may not disclose material nonpublic or confidential information or any information that would cause the Advisor to breach any duty or obligations. Guidepoint is not a registered investment advisor and the information provided is not intended to constitute investment advice.

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