Executive Summary / Key Takeaways

• GoDaddy Inc. ($GDDY) is undergoing a significant AI-driven transformation, leveraging its foundational leadership in domains to empower entrepreneurs with a comprehensive suite of integrated online tools and services.
• The company delivered robust financial results in Q3 2025, with total revenue increasing 10.3% to $1.265 billion and Normalized EBITDA growing 11.5% to $408.6 million, achieving a 32% margin. Full-year 2025 revenue guidance has been raised to approximately 8% growth at the midpoint, with free cash flow reaffirmed at $1.6 billion, representing over 18% growth.
• GoDaddy Airo, the company's AI-powered experience, is a key catalyst, driving higher-value customer cohorts with improved attach rates and "near perfect retention," boosting Average Revenue Per User (ARPU) by 10% to $237.
• Strategic initiatives like pricing and bundling, seamless experience, and the pioneering Agent Name Service (ANS) are enhancing customer value, streamlining operations, and positioning GoDaddy at the forefront of the evolving "Agentic Open Internet."
• Despite a highly competitive landscape and macroeconomic uncertainties, GoDaddy's disciplined execution, strong liquidity, and commitment to shareholder returns through substantial share repurchases underscore a compelling long-term investment thesis.

GoDaddy's Digital Foundation and AI-Driven Evolution

GoDaddy Inc. has long served as a cornerstone for entrepreneurs globally, enabling millions to establish and grow their online presence since its founding in 1997. The company's core mission is to make opportunity more inclusive by providing cloud-based products that simplify naming ideas, building websites and logos, selling products, and accepting payments. This foundational role as the world's largest domain registrar provides a unique vantage point, offering early access to new business formations and digital aspirations. GoDaddy's overarching strategy centers on attracting high-intent customers, creating significant value through integrated solutions, and translating that value into sustained shareholder returns via enhanced conversion, product attach, and customer retention.

The digital landscape is rapidly evolving, with Artificial Intelligence (AI) emerging as a transformative force. GoDaddy is not merely adapting to this shift; it is actively shaping it, particularly through the evolution of its proprietary AI platform, GoDaddy Airo. Airo is designed to simplify the entrepreneurial journey, making it faster and easier for small businesses to get online, drive traffic, and boost sales. The platform is progressing from Generative AI, which creates content, to Agentic AI, which can autonomously complete complex, multi-step tasks on behalf of customers. This technological leap is foundational to GoDaddy's vision for an "Agentic Open Internet," where AI-powered agents collaborate across systems and automate customer journeys with speed and precision.

GoDaddy's technological differentiation is evident in several key areas. Internally, Agentic AI is revolutionizing operational efficiency; in Q3 2025, over 45% of code written at GoDaddy was generated by AI, with new applications like the Airo App Builder and an ultra-premium domain portal seeing nearly 90% AI-generated code. This has led to "faster velocity" and a "reduction in product cycle time," enabling quicker innovation and product launches. For customers, Airo cohorts consistently outperform non-Airo cohorts, demonstrating "higher attach and near perfect retention," which propelled Average Revenue Per User (ARPU) up 10% to $237 in Q3 2025. Airo has also become the "largest funnel for websites plus marketing with 50% of paid subscriptions originating with the Aero experience" . Furthermore, the redesigned Managed WordPress platform now offers "two times faster performance and enhanced security" .

New technological developments are expanding GoDaddy's offerings and competitive moat. The beta launch of Airo.ai provides a dedicated platform for rapidly testing new AI agents, ensuring a seamless integration path back to GoDaddy.com. Five new Airo agents have already been launched to automate tasks such as domain acquisition, website building, logo creation, and compliance, with many more in the pipeline. "Ask Airo" represents a new conversational experience, leveraging Agentic AI and human expertise to provide instant, contextual support. A significant innovation is the Agent Name Service (ANS), an open standard built on DNS infrastructure, designed to provide verifiable identities for AI agents. This initiative is crucial for establishing trust and enabling secure discovery and validation of agents across the open web, positioning GoDaddy at the very core of this emerging digital infrastructure. In commerce, new high-margin offerings like GoDaddy Capital, a merchant cash advance program, and Rate Saver, a credit card surcharging feature that can "reduce effective rates from merchants by more than 50%" , are enhancing the value proposition for small businesses. These technological advancements not only contribute to GoDaddy's competitive advantage but also directly impact its financial performance through improved customer lifetime value, operational efficiencies, and diversified revenue streams.

Competitive Landscape and Strategic Positioning

The market for digital tools and services for entrepreneurs is intensely competitive and rapidly evolving. GoDaddy faces direct competition from specialized website builders and e-commerce platforms, as well as indirect competition from large technology players.

Wix.com Ltd. (WIX) is a prominent competitor, known for its user-friendly drag-and-drop website builder and AI-enhanced design tools. While Wix excels in design flexibility and speed of deployment for creative users, GoDaddy differentiates itself with a broader, more integrated suite of services encompassing domain registration, email hosting, and marketing tools, offering a more comprehensive "one-stop-shop" solution. GoDaddy's strategy emphasizes affordability and accessibility, appealing to budget-conscious customers, whereas Wix often targets users prioritizing premium design. Financially, Wix has a higher P/E ratio of 57.98 compared to GoDaddy's 29.54, suggesting higher growth expectations or different market perception.

Squarespace, Inc. (SQSP) competes with its aesthetically focused website building, e-commerce, and domain services, targeting creative professionals. GoDaddy's strength lies in its versatility and scalability for everyday business operations, providing more extensive business tools. GoDaddy's market positioning as an accessible, all-in-one solution contrasts with Squarespace's premium branding. Squarespace's negative P/E ratio (-1289.71) indicates different profitability dynamics.

Shopify Inc. (SHOP) is a dominant force in e-commerce platforms, offering scalable features and an extensive app marketplace. GoDaddy competes in e-commerce with its integrated website and payment solutions, but its broader portfolio provides a more holistic digital identity solution, particularly for users starting from scratch. GoDaddy's focus on ease of entry for small businesses contrasts with Shopify's strength in high-volume online retail. Shopify's P/E ratio of 139.87 is significantly higher than GoDaddy's, reflecting its strong position in the high-growth e-commerce sector.

Indirect competitors include Google Workspace (GOOGL) for productivity, Amazon Web Services (AMZN) (AWS) for cloud hosting, and social media platforms like Meta (META) for marketing. These platforms offer alternatives that can impact GoDaddy's market share and customer acquisition costs. GoDaddy's strategic response is to leverage its integrated ecosystem and AI innovation to provide superior value and simplify workflows, thereby enhancing customer loyalty and retention. The company's "custom-built" tools for micro-businesses and solopreneurs further solidify its niche, allowing it to compete effectively against rivals with broader or more specialized offerings. GoDaddy's strong brand recognition and leadership in domain registration also act as significant barriers to entry for new competitors.

Strong Financial Performance and Disciplined Capital Allocation

GoDaddy's strategic focus on high-intent customers and AI-driven innovation is translating into robust financial performance. In the third quarter of 2025, total revenue reached $1.265 billion, marking a 10.3% increase year-over-year on both a reported and constant currency basis. International revenue demonstrated even stronger growth, rising 14.4% to $422.5 million . Total bookings for the quarter increased 9.1% to $1.354 billion, or 9% on a constant currency basis . This strong top-line growth fueled a 16.9% increase in operating income to $296.7 million and a 10.5% rise in net income to $210.5 million . Normalized EBITDA grew 11.5% to $408.6 million, achieving a healthy 32% margin, reflecting "leverage gains across the P&L from AI-driven efficiencies and continued operational discipline" .

For the nine months ended September 30, 2025, total revenue grew 8.8% to $3.677 billion . The Applications and Commerce (A&C) segment, a key growth driver, saw revenue increase 14.8% to $1.391 billion, now representing 37.8% of total revenue . A&C bookings grew 14% in Q3 2025, approaching an annualized run rate of approximately $2 billion, nearly doubling over the past four years. This growth is attributed to "continued customer adoption of our subscription-based products" and the momentum from Airo, which is expanding customer lifetime value . The Core Platform segment also contributed, with revenue growing 5.4% to $2.285 billion for the nine months ended September 30, 2025, driven by increases in domain registration and aftermarket revenue . Notably, the aftermarket segment experienced a "return to high-value transactions" in Q3 2025, indicating bullishness among buyers .

GoDaddy's profitability metrics remain robust, with a TTM Gross Profit Margin of 63.81%, Operating Profit Margin of 21.34%, Net Profit Margin of 17.15%, and EBITDA Margin of 24.76%. The company's focus on attracting high-intent customers is yielding tangible results; the $500-plus customer cohort now represents approximately 10% of the total customer base, exhibiting "higher attach and near perfect retention" . This shift in customer mix is a significant factor in the improved ARPU and overall business durability.

Liquidity remains strong, with $923.7 million in cash and cash equivalents and total liquidity of $1.9 billion as of September 30, 2025 . Net cash provided by operating activities increased 25.1% to $444.2 million in Q3 2025 . The company maintains a disciplined approach to capital allocation, actively returning value to shareholders through share repurchases. In Q3 2025 alone, GoDaddy repurchased 4.1 million shares for approximately $600 million, bringing year-to-date repurchases to $1.4 billion for 9 million shares . A new $3 billion share repurchase authorization through 2027 further underscores management's confidence in the company's cash flow generation and the attractiveness of its shares. Net debt stood at $2.9 billion, with a net leverage of 1.7x on a trailing 12-month basis, well within the company's reduced target of under 3x.

Outlook and Risks

GoDaddy's management has expressed strong confidence in its forward trajectory, raising its full-year 2025 revenue guidance to a range of $4.93 billion to $4.95 billion, representing approximately 8% growth at the midpoint . This places the company at the top end of its 3-year revenue growth range of 6% to 8%. Full-year free cash flow is reaffirmed at approximately $1.6 billion, indicating over 18% growth and maintaining a greater than 1:1 conversion from Normalized EBITDA. For Q4 2025, revenue is projected between $1.255 billion and $1.275 billion, reflecting a 6% growth at the midpoint. This outlook incorporates anticipated headwinds, such as a more difficult A&C revenue comparison and an approximate 50 basis point impact from the expiration of the .CO top-level domain registry contract in Q4 2025 . Management expects A&C revenue growth in the mid-teens and Core Platform growth in the mid-single digits for the full year.

The company's guidance is underpinned by several key assumptions, including the continued success of its AI-powered Airo platform in driving customer engagement and monetization, the effectiveness of its pricing and bundling initiatives, and ongoing operational efficiencies from AI integration. Management anticipates a return to overall customer growth later in 2025 as the impacts of past divestitures and the elimination of deep discounts subside.

Despite this optimistic outlook, GoDaddy operates in a dynamic environment with inherent risks. The rapid evolution of AI technology presents challenges, including potential increases in intellectual property infringement claims, privacy and data protection concerns, and the risk of AI-generated content being inaccurate or biased . Evolving legal and regulatory frameworks for AI, such as the E.U. AI Act, could lead to increased compliance costs and operational adjustments . The competitive landscape is intense, with rivals continually introducing new solutions and investing in AI, potentially impacting GoDaddy's market share and pricing power . Operational risks include system failures, reliance on third-party cloud providers like AWS, and cybersecurity incidents, which could disrupt services and incur substantial costs . Furthermore, macroeconomic conditions, including inflation and interest rate changes, could affect customer spending and business formation, although GoDaddy's customer base has historically demonstrated resilience . The company's level of indebtedness also poses a risk, potentially affecting its financial flexibility and ability to raise additional capital .

Conclusion

GoDaddy is executing a compelling transformation, strategically leveraging its dominant position in domain registration to become a leading AI-powered platform for entrepreneurs. The company's commitment to innovation, particularly through the evolution of GoDaddy Airo and the pioneering Agent Name Service, is not only enhancing its product offerings but also fundamentally reshaping its operational efficiency and customer engagement model. This technological leadership, combined with disciplined execution of strategic initiatives like pricing and bundling, is driving robust financial performance, characterized by strong revenue growth, expanding profitability margins, and impressive free cash flow generation.

The investment thesis for GoDaddy is anchored in its ability to attract and cultivate high-value customer cohorts, who exhibit superior attach rates and retention, thereby maximizing long-term customer lifetime value. While the competitive environment remains fierce and macroeconomic uncertainties persist, GoDaddy's resilient business model, strong liquidity, and proactive capital allocation strategy position it favorably for sustained profitable growth. Investors should recognize GoDaddy's strategic foresight in embracing the Agentic Open Internet, which promises to unlock new avenues for value creation and solidify its role as an indispensable partner for millions of small businesses worldwide.