GoDaddy (GDDY) Q3 2025: High-Intent Customer Cohort Hits 10%, Driving ARPU Up 10%
GoDaddy’s Q3 showcased the compounding effect of high-intent customer focus, with the $500-plus cohort now 10% of its base and ARPU up double digits. The company’s agentic AI shift is accelerating product delivery and operational leverage, while robust domain and subscription momentum underpin a raised full-year outlook. With Aero.ai and Agent Name Service launches, GoDaddy is positioning to be the backbone of an agent-driven open internet, setting the stage for further durable growth into 2026.
Summary
- Customer Cohort Quality Surges: High-intent $500-plus customers now 10% of base, boosting retention and ARPU.
- AI-Driven Velocity: Agentic AI rollout is accelerating product cycles and internal efficiency, reinforcing margin leverage.
- Strategic Platform Expansion: Aero.ai and Agent Name Service initiatives establish GoDaddy as a foundational player in the agentic web era.
Performance Analysis
GoDaddy delivered broad-based growth in Q3, with total revenue up 10% and sustained margin expansion, underscoring the payoff from its high-intent customer strategy. The Applications and Commerce (ANC, software subscriptions and payments) segment accelerated to 14% revenue growth, now contributing nearly 37% of total revenue, driven by higher attach rates and durable retention. Meanwhile, the Core Platform segment, anchored by domain registration and aftermarket sales, advanced 8%, with a notable 28% surge in high-value aftermarket transactions.
Free cash flow increased 21%, outpacing revenue and EBITDA growth, reflecting both operational discipline and a shift toward more profitable customer cohorts. International markets kept pace, growing 14% and mirroring domestic strength in both primary and secondary domain activity. The company’s $500-plus customer group now represents a tenth of the base, with near-perfect retention and 10% ARPU growth, signaling a step-change in customer lifetime value.
- Aftermarket Domain Spike: Large, high-value domain transactions returned, providing a one-time boost but not viewed as a sustainable trend.
- Margin Leverage from AI: AI-driven efficiencies offset incremental investment, supporting a 32% normalized EBITDA margin despite product mix shifts.
- Bookings Momentum: Total bookings rose 9%, led by ANC’s 14% increase, indicating strong forward demand and cash conversion.
GoDaddy’s execution demonstrates the compounding effect of focusing on high-value, multi-product customers and leveraging AI to drive both top-line and bottom-line results.
Executive Commentary
"Our $500 plus customer cohort now represents approximately 10% of our base, and this cohort has higher attach and near perfect retention, boosting our ARPU up 10% to $237."
Mark McCaffrey, Chief Financial Officer
"Over the last few days, we launched five new Aero agents that handle fundamental customer jobs to be done, like finding and buying domain names, building websites and applications, creating logos and compliance documents. This is just the beginning. Our pipeline includes many more agents ready for launch over the next few days and weeks."
Aman Bhutani, Chief Executive Officer
Strategic Positioning
1. High-Intent Customer Focus
GoDaddy’s strategic emphasis on high-intent, multi-product customers is transforming its revenue base. The $500-plus cohort, now 10% of total customers, delivers higher attach rates, near-perfect retention, and outsized ARPU gains. This segment-centric approach is driving both bookings and lifetime value, shifting GoDaddy’s business model toward greater predictability and profitability.
2. Agentic AI and Aero.ai Rollout
The launch of Aero.ai marks GoDaddy’s transition from generative to agentic AI, enabling rapid deployment of specialized AI agents for core customer tasks. This platform serves both as an innovation sandbox and a direct monetization channel via AeroPlus, allowing GoDaddy to iterate quickly and migrate successful agents into its main ecosystem. The agentic approach is also being leveraged internally, with 45% of code now AI-generated and new products reaching 90%, materially reducing product cycle time.
3. Agent Name Service (ANS) and Infrastructure Leadership
GoDaddy is leveraging its domain registrar scale to launch Agent Name Service (ANS), a new open standard for verifiable agent identity built atop DNS infrastructure. ANS positions GoDaddy as a foundational provider in the emerging agentic internet, enabling secure discovery and validation of AI agents across domains and platforms. This move extends GoDaddy’s relevance as digital identity and trust become central to AI-driven commerce and collaboration.
4. Pricing, Bundling, and Seamless Experience Engines
Strategic pricing and bundling initiatives continue to deepen customer engagement, simplifying product selection and driving higher attach rates. The Seamless Experience project, powered by AI-driven personalization and real-time design optimization, is further lifting conversion and renewal rates across the customer journey, contributing directly to bookings and retention improvements.
5. Commerce Ecosystem Expansion
GoDaddy’s payments and subscription solutions, including GoDaddy Capital and Rate Saver, are gaining adoption, supporting merchant cash flow and reinforcing the company’s position as a one-stop shop for microbusinesses. These high-margin products are deepening relationships and increasing wallet share as customers scale.
Key Considerations
Q3’s results reflect a business in transition—leveraging AI to accelerate both customer value and operational efficiency while laying the groundwork for platform leadership in the agentic web. Investors should weigh the durability of these gains against the company’s ability to scale new initiatives and manage evolving cost structures.
Key Considerations:
- Compounding Customer Quality: The shift to high-intent, multi-product cohorts is raising ARPU and retention, but future growth depends on continued success in converting and expanding this segment.
- AI-Driven Operating Leverage: Internal AI adoption is materially reducing cycle times and costs, but ongoing investment needs to be balanced against gross margin impact from new product mix and AI token costs.
- Platform Experimentation at Scale: Aero.ai provides a fast iteration loop for agentic offerings, but success will depend on effective migration of winning agents into the main GoDaddy platform and monetization at scale.
- Aftermarket Volatility: Q3 benefited from a spike in high-value domain sales, which are inherently lumpy and not a reliable driver for future quarters.
- International and Segment Mix: Sustained international growth and balanced momentum across primary and secondary domains are supporting broad-based expansion, but regional or segment-specific slowdowns could introduce volatility.
Risks
Key risks center on the scalability and monetization of agentic AI initiatives, potential margin pressure from product mix and AI compute costs, and the unpredictability of high-value aftermarket domain transactions. Competitive dynamics in AI-powered web tools and digital identity could intensify, while macro uncertainty among SMBs remains a latent risk despite current resilience.
Forward Outlook
For Q4 2025, GoDaddy guided to:
- Revenue of $1.255 to $1.275 billion, representing 6% growth at the midpoint
- Normalized EBITDA margin of 33%
For full-year 2025, management raised guidance to:
- Revenue of $4.93 to $4.95 billion, 8% growth at the midpoint
- Mid-teens ANC revenue growth, mid-single digits for core platform
- Free cash flow target of $1.6 billion, up over 18%
Leadership highlighted continued strength in high-intent customer cohorts and ongoing AI-driven efficiency as tailwinds, while acknowledging tougher ANC comps and a more challenging aftermarket environment in Q4.
- Momentum in attach and retention rates expected to sustain ARPU growth
- Ongoing innovation pipeline for agentic AI agents and platform expansion into 2026
Takeaways
GoDaddy’s Q3 marks an inflection in customer quality and operational agility, with agentic AI and platform innovation positioning the business for durable, high-margin growth. The company’s strategic bets on identity infrastructure and agent-powered experiences are bold, but execution on monetization and cost control will be critical as the agentic web matures.
- Customer Cohort Quality: The $500-plus segment, now 10% of the base, is delivering higher ARPU and retention, validating GoDaddy’s high-intent focus.
- AI-Driven Velocity: Internal AI adoption is accelerating product cycles, reducing costs, and enabling rapid innovation through Aero.ai and agentic agents.
- Platform Leadership Risk and Reward: The Agent Name Service and Aero.ai initiatives could position GoDaddy as a foundational player in the next evolution of the web, but scaling and monetizing these efforts remain key watchpoints for 2026 and beyond.
Conclusion
GoDaddy’s Q3 2025 results reflect a business successfully transitioning to higher-value customers and AI-powered operating leverage, with platform bets that could redefine its long-term relevance. Sustained execution, disciplined cost management, and the ability to scale agentic offerings will determine whether these gains compound into enduring leadership in the evolving internet landscape.
Industry Read-Through
GoDaddy’s rapid deployment of agentic AI and verifiable agent identity infrastructure signals a new competitive frontier for domain registrars, hosting providers, and SMB SaaS platforms. As AI agents become central to web operations, companies with deep domain and identity expertise are poised to capture outsized value. The compounding impact of high-intent customer focus and AI-driven operational leverage will likely become a playbook for other digital platforms seeking durable growth. The return of high-value aftermarket transactions also suggests renewed optimism among digital entrepreneurs, though volatility in this segment remains a sector-wide reality.