Domain registrar and web services company GoDaddy (NYSE:GDDY) announced better-than-expected revenue in Q3 2026, with sales up 6% year on year to $1.34 billion. The company expects the full year's revenue to be around $5.24 billion, close to analysts' estimates. Its non-GAAP profit of $2.56 per share was 3.4% above analysts' consensus estimates.
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GoDaddy (GDDY) Q3 2026 highlights:
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Revenue$1.34 billion vs S&P analysts' estimates of $1.33 billion (6% year-on-year growth, 1.1% beat)
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Adjusted EPS$2.56 vs S&P analysts' estimates of $2.47 (3.4% beat)
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Adjusted EBITDA$449.3 million vs analyst estimates of $441.3 million (33.5% margin, 1.8% beat)
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Revenue guidanceThe company reconfirmed its revenue guidance for the full year of $5.24 billion at the midpoint
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Operating margin27%, up from 23.4% in the same quarter last year
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Annual recurring revenue$4.51 billion vs analyst estimates of $4.53 billion (5.1% year-on-year growth, in line)
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Billings$1.36 billion at quarter end, up 5.4% year on year
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Market capitalization$13.41 billion
StockStory's take
GoDaddy's third quarter results met Wall Street's revenue expectations and exceeded profit forecasts. Management attributed the quarter's performance to rapid adoption of its new Airo platform, which has already surpassed initial internal goals for incremental bookings and customer engagement. CEO Aman Bhutani emphasized that Airo's rollout has started to offset legacy product declines, while CFO Mark McCaffrey noted ongoing strength in customer retention and multi-product adoption. The quarter also saw continued expense discipline, helping drive operating margin expansion despite some gross margin pressure from product mix changes.
Looking forward, GoDaddy's guidance is anchored by expanding adoption of Airo, deeper integration of agentic APIs, and ongoing investments in AI capabilities and marketing. Management highlighted plans to test new product bundles and optimize pricing strategies, aiming to capture emerging demand from both traditional small businesses and technically savvy developer cohorts. Bhutani indicated that evolving customer behavior—especially as more buyers originate from AI-powered interfaces—will shape the company's go-to-market plans. McCaffrey added that efficiency gains from AI-driven operational improvements are expected to help fund strategic initiatives, while maintaining a focus on high-intent, multi-product customers to support long-term growth.
Key insights from management's remarks
GoDaddy's management cited the faster-than-expected incremental contribution from Airo, operational leverage, and investments in AI-native products as the main drivers behind the quarter's results.
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Airo platform momentum:Airo adoption accelerated, with annualized bookings run rate more than doubling quarter-over-quarter to over $100 million (up from $50 million last quarter and $10 million the quarter before), largely due to migration from legacy website products and improved product attach rates. Management highlighted that Airo is already performing on par or better than its predecessor in driving multi-product adoption.
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API and developer focus:The company expanded its suite of agent-friendly APIs for domains, hosting, email, and commerce, targeting a new wave of technically oriented customers who interact through coding assistants and command line tools. CEO Bhutani described this as a "new channel of traffic" that requires differentiated product integration.
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Competitive pricing and bundling:GoDaddy is responding to increased discounting and freemium offers in the domain and hosting market by testing new bundles and pricing models, designed to deliver more value and improve visibility in AI-driven search environments.
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Gross margin dynamics:While Airo introduces gross margin pressure compared to legacy products, management expects ongoing operational efficiencies and cost controls to offset this at the EBITDA level. The company is actively optimizing AI inference costs by leveraging both internal data centers and open-weight models.
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Customer retention and product attach:More than 70% of new Airo customers add at least one additional paid product, a notable increase over historical averages. Retention rates remain above 85%, with customers using multiple products showing particularly strong loyalty and lifetime value.
Drivers of future performance
Looking ahead, GoDaddy's outlook is shaped by Airo's ongoing adoption, increased investment in AI-driven features, and the need to navigate a competitive, price-sensitive market.
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Scaling Airo and new bundles:Management plans to make Airo the core of GoDaddy's product ecosystem, with further marketing and product integration expected to drive higher customer conversion and attach rates. New bundles and pricing strategies will be tested to attract both traditional and developer-focused customers, aiming for long-term lifetime value.
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Operational efficiency and AI leverage:The company expects continued operating margin expansion by offsetting gross margin headwinds from Airo with productivity gains through AI-driven automation, internal data center optimization, and disciplined expense management. Initiatives include optimizing AI model selection and expanding internal GPU resources to manage costs.
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Navigating industry competition:Increased discounting, freemium models, and new AI-powered agents are making the domain and hosting space more competitive. GoDaddy intends to focus on high-intent customers, data-driven pricing tests, and maintaining strong retention to differentiate itself, while monitoring evolving customer behaviors linked to AI interface adoption.
Catalysts in upcoming quarters
In coming quarters, the StockStory team will closely track (1) Airo's adoption rate and attach of additional paid products, (2) the impact of new pricing and bundling strategies on customer acquisition and retention, and (3) the effectiveness of AI-driven operational improvements in sustaining margin expansion. The performance of agentic APIs, response to industry discounting, and progress in developing the Agent Name Service as a future revenue driver will also be important milestones.
GoDaddy currently trades at $112.40, up from $105.95 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it's free for active Edge members) .
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