Global Internet Expansion Will Catalyze Digital Transformation

Key Takeaways

• Rapid AI-driven bundling, innovative Agentic AI features, and global reach are accelerating revenue, margin expansion, and operating leverage beyond expectations.
  
• Scale, automation, and strong brand position GoDaddy to capture a greater share of profits as the leading full-stack platform provider for businesses worldwide.
  
• Rising competition from advanced AI tools, integrated platforms, and free solutions threatens GoDaddy's core business and future revenue by reducing demand for traditional domain and hosting services.

Catalysts

Engages in the design and development of cloud-based products in the United States and internationally.

• Analyst consensus expects the pricing and bundling initiative to drive revenue growth and minimize churn, but current AI-driven bundling velocity and partner integration suggest GoDaddy could compress multiyear growth into a much shorter period, rapidly accelerating both top-line revenue and net margin expansion above expectations.
  
• While analysts broadly credit AI innovations like Airo for improved attach rates and upselling, the transformational rollout of Ask Airo and Agentic AI features could enable entirely new monetization channels and hyperautomation of internal processes, delivering breakthrough expansion in operating leverage and normalized EBITDA margin well ahead of current models.
  
• GoDaddy's position as the first point of entry for millions of new businesses coming online globally-driven by the explosive expansion of internet access and digital entrepreneurship in emerging markets-will structurally expand its total addressable market, fueling sustained multiyear revenue growth.
  
• The unprecedented scale and automation achievable through Agentic AI, from customer onboarding to ongoing SEO and marketing optimization, will allow GoDaddy to deliver enterprise-grade services to SMBs at mass-market economics, potentially leading to step changes in average revenue per user and retention metrics.
  
• GoDaddy's unique blend of strong brand equity, global customer base, and growing ecosystem of value-added products positions it as the consolidator of choice in a market trending toward full-stack platform solutions, enabling it to capture disproportionate share of industry profit pools and supporting long-term, above-peer EPS growth.

GoDaddy Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on GoDaddy compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming GoDaddy's revenue will grow by 10.0% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 16.2% today to 24.0% in 3 years time.
• The bullish analysts expect earnings to reach $1.5 billion (and earnings per share of $11.29) by about August 2028, up from $754.9 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 32.3x on those 2028 earnings, up from 28.4x today. This future PE is greater than the current PE for the US IT industry at 27.7x.
• Analysts expect the number of shares outstanding to grow by 1.08% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.38%, as per the Simply Wall St company report.

GoDaddy Future Earnings Per Share Growth

Risks

• The emergence of advanced AI-driven website generation tools poses a structural risk by making it easier for entrepreneurs to build websites outside of GoDaddy's traditional offerings, potentially eroding the company's addressable market and impacting long-term revenue growth.
  
• GoDaddy's reliance on domain registration as a core revenue driver is vulnerable to ongoing domain market saturation, which could lead to a slowdown in recurring revenue streams and limit top-line growth in future periods.
  
• A sustained migration of small businesses toward social media platforms for their primary web presence diminishes the need for traditional domain registration and hosting services, directly threatening GoDaddy's customer base and recurring revenues.
  
• Increasing competition from integrated platforms such as Shopify, Wix, and Squarespace could erode GoDaddy's pricing power and put pressure on net margins and earnings as these newer platforms may offer more value-added solutions.
  
• The growing availability of free and open-source website hosting, SaaS, and ecommerce tools means that GoDaddy's paid offerings may lose perceived value over time, risking both customer acquisition and retention, which could negatively impact future revenue and earnings potential.

Valuation

• The assumed bullish price target for GoDaddy is $250.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of GoDaddy's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $250.0, and the most bearish reporting a price target of just $150.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $6.2 billion, earnings will come to $1.5 billion, and it would be trading on a PE ratio of 32.3x, assuming you use a discount rate of 9.4%.
  
• Given the current share price of $150.25, the bullish analyst price target of $250.0 is 39.9% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.