Domain registrar and web services company GoDaddy (NYSE: GDDY) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 10.3% year on year to $1.27 billion. On the other hand, next quarter’s revenue guidance of $1.27 billion was less impressive, coming in 0.5% below analysts’ estimates. Its GAAP profit of $1.51 per share was 3.4% above analysts’ consensus estimates.
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GoDaddy (GDDY) Q3 CY2025 Highlights:
- Revenue: $1.27 billion vs analyst estimates of $1.23 billion (10.3% year-on-year growth, 2.7% beat)
- EPS (GAAP): $1.51 vs analyst estimates of $1.46 (3.4% beat)
- Adjusted Operating Income: $296.7 million vs analyst estimates of $283.9 million (23.4% margin, 4.5% beat)
- Revenue Guidance for Q4 CY2025 is $1.27 billion at the midpoint, below analyst estimates of $1.27 billion
- Operating Margin: 23.4%, up from 22.1% in the same quarter last year
- Customers: 20.41 million, up from 20.41 million in the previous quarter
- Annual Recurring Revenue: $4.29 billion vs analyst estimates of $4.21 billion (8% year-on-year growth, 1.9% beat)
- Billings: $1.29 billion at quarter end, up 9.1% year on year
- Market Capitalization: $17.55 billion
StockStory’s Take
GoDaddy delivered a solid third quarter, with revenue and profit surpassing Wall Street expectations and stable customer growth. Management credited the outperformance to the accelerated adoption of its AI-powered Airo platform and growing demand for both primary and secondary domain offerings. CEO Amanpal Bhutani emphasized the company's focus on developing new Agentic AI capabilities and improving operational efficiency, stating, "We delivered strong financial results, achieving 10% growth in total revenue while also delivering A&C bookings growth acceleration to 14% on strengthening customer cohort dynamics." The market responded with little movement, reflecting an in-line assessment of the results.
Looking forward, GoDaddy’s guidance reflects cautious optimism as it continues to invest in expanding its AI offerings and product portfolio. Management highlighted the rollout of new Airo.ai agents, deeper integration of Agent Name Service (ANS), and ongoing enhancements to customer engagement and retention. CFO Mark McCaffrey noted, "Our strategy that elevates GoDaddy Airo as our primary customer engagement engine is hitting its stride," while warning that product mix and investment in AI will influence margin trends in upcoming quarters. Management is focused on driving high-value customer cohorts and carefully balancing innovation with disciplined cost management.
Key Insights from Management’s Remarks
Management attributed the quarter's results to the continued momentum of the Airo platform, strong performance in high-value domain transactions, and operational improvements powered by AI-driven efficiencies.
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Airo platform adoption accelerates: The Airo suite, which integrates generative and agentic AI, saw continued growth in customer engagement and attach rates, particularly among high-intent customers. Management reported that the $500-plus customer cohort now makes up about 10% of the base, with near-perfect retention and higher average order size.
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Agent Name Service (ANS) launch: GoDaddy introduced ANS, an open standard leveraging DNS infrastructure to provide verifiable identities for AI agents. This initiative aims to position GoDaddy as a foundational player in the emerging Agentic Open Internet, creating new value for both publishers and users of AI agents.
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AI-driven internal efficiencies: The company is making substantial progress in its goal to generate 70% of new code via AI by year-end, with over 45% already achieved. This has led to faster product development cycles and improved operational velocity, as smaller teams deliver new features quickly through platforms like Airo.ai.
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Aftermarket domain strength: There was a notable resurgence in high-value aftermarket domain transactions, supporting broad-based growth across both primary and secondary domain markets. Management noted these large transactions tend to be unpredictable and can result in quarter-to-quarter volatility.
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Commerce and subscriptions growth: Strong adoption of high-margin subscription solutions, such as GoDaddy Capital and Rate Saver, boosted the A&C segment. These products are helping entrepreneurs streamline operations and improve cash flow, strengthening the overall ecosystem and driving up average revenue per user.
Drivers of Future Performance
GoDaddy’s outlook is shaped by continued investment in AI innovation, evolving product mix, and a strategic focus on high-value customer cohorts.
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AI product expansion: Management believes that the rapid rollout of new Airo agents and deeper integration of Agentic AI across platforms will drive customer engagement, product attach, and retention. The company expects these initiatives to strengthen its position in both existing and emerging markets, though near-term revenue growth may be tempered by product testing and phased adoption.
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Margin and efficiency focus: The company expects ongoing efficiency gains from AI-driven internal processes to help offset increased investment in product development and innovation. However, management cautioned that product mix shifts, particularly within the A&C segment, and incremental AI infrastructure costs could pressure gross margins in the short term.
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Customer cohort strategy: Future growth is expected to stem from targeting high-intent customers with bundled offerings and personalized solutions. Management highlighted that customers adopting multiple products demonstrate higher retention and lifetime value, but acknowledged that macroeconomic uncertainty and evolving customer preferences could impact the pace of cohort expansion.
Catalysts in Upcoming Quarters
In future quarters, our analysts will be watching (1) the adoption rate and monetization of new Airo agents and the Agent Name Service, (2) the impact of product mix changes and AI-driven efficiencies on margins, and (3) continued growth in high-value customer cohorts and expanded subscription offerings. Additional attention will be paid to international performance and the resilience of aftermarket domain transactions.
GoDaddy currently trades at $125.99, in line with $126.64 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).
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