GoDaddy Q3 Earnings Beat Estimates, Revenues Increase Y/Y

GoDaddy reported robust third-quarter 2025 results, with EPS of $1.51 and revenues of $1.27 billion, both exceeding consensus estimates and growing 14.4% and 8% year-over-year, respectively. This performance was largely driven by a 13.7% increase in Applications and Commerce revenue and a 10.2% rise in Average Revenue Per User, despite a slight 1.5% year-over-year decrease in total customers. The company also expanded its normalized EBITDA margin to 32.3% and generated $440.5 million in free cash flow, prompting it to raise its full-year 2025 revenue guidance to $4.93-$4.95 billion and project $1.6 billion in free cash flow.

Analysis

GoDaddy reported a strong third quarter for 2025, with EPS of $1.51, a 14.4% year-over-year increase, and revenues of $1.27 billion, up 8% year-over-year, both exceeding consensus estimates by 0.67% and 2.79% respectively. This robust top-line performance was primarily driven by a 13.7% growth in Applications and Commerce (A&C) revenue to $481 million, which now contributes 38% to total revenues, alongside a 10.2% increase in Average Revenue Per User (ARPU) to $237. International revenues also increased 11% year over year.

Operational efficiency improved significantly, with the normalized EBITDA margin expanding 40 basis points year-over-year to 32.3% and the operating margin increasing 130 basis points to 23.4%, largely due to a 280 basis point decline in total cost and operating expenses as a percentage of revenues. Free cash flow also saw a healthy increase, reaching $440.5 million in Q3, up from $391.5 million in the prior quarter, indicating strong cash generation.

The company demonstrated confidence in its future outlook by raising its full-year 2025 revenue guidance to $4.93-$4.95 billion, representing an 8% year-over-year growth at the midpoint, and projecting $1.6 billion in free cash flow. This upward revision, coupled with anticipated Q4 revenue growth of 6% at the midpoint, signals continued positive momentum. Despite a 1.5% year-over-year decrease in total customers, the substantial ARPU growth and strong annualized recurring revenue (ARR up 8% to $4.29 billion) indicate effective monetization strategies.

Key Decisions for Investors

• Monitor GoDaddy's continued growth in Applications and Commerce, as this segment is a key revenue driver and indicates successful diversification beyond core domains.
• Evaluate the sustainability of ARPU growth and free cash flow generation, particularly in light of declining customer numbers, to assess long-term profitability and shareholder returns.
• Consider the raised 2025 guidance as a positive signal for future performance, but remain vigilant on execution risks and competitive pressures within the web services market.