GoDaddy Earnings Call: AI Momentum, Cash and Margins

GoDaddy Inc. ((GDDY)) has held its Q1 earnings call. Read on for the main highlights of the call.

GoDaddy’s latest earnings call painted a largely upbeat picture, combining solid revenue growth, expanding margins and robust free cash flow with early but promising gains from its AI-native products. Management acknowledged softer bookings, Core Platform sluggishness and the nascent contribution from AI, but struck a confident tone by reaffirming guidance and stressing disciplined investment and capital returns.

Revenue and ARR Growth

GoDaddy reported Q1 2026 revenue of $1.3 billion, up 6% year over year on both reported and constant currency bases, signaling steady demand despite macro and mix headwinds. Annualized recurring revenue reached $4.3 billion, also up 6%, underscoring the durability of the subscription-heavy model that anchors the company’s long-term visibility.

Margin Expansion and Profitability

Profitability was a standout, with normalized EBITDA rising 13% to $414 million as the margin expanded by more than 200 basis points to 33%, running ahead of guidance for the quarter. This margin improvement suggests GoDaddy is extracting operating leverage from its scale and early AI efficiencies even as it spends to support product innovation and marketing.

Strong Free Cash Flow and Balance Sheet

Free cash flow climbed 15% to $474 million, pushing trailing 12‑month FCF to $1.68 billion and keeping conversion above 1:1 versus normalized EBITDA, a key metric for investors focused on cash yield. The company ended the quarter with $1.3 billion in cash, $2.3 billion in total liquidity and net leverage of 1.4x, leaving ample flexibility for buybacks and targeted growth investments.

A&C Segment Outperformance

The Applications & Commerce segment continued to power growth, with revenue up 12% to $0.5 billion and ARR advancing 10%, making this higher-margin business roughly 40% of GoDaddy’s mix. Segment EBITDA margin improved 110 basis points to 45%, highlighting the attractive economics of value-added solutions layered on top of the firm’s domain and hosting base.

Airo AI Builder Early Traction

Airo AI Builder showed rapid early traction, surpassing a $10 million annualized bookings run rate within weeks of its beta launch and already monetizing through subscriptions and usage credits. Management noted that the product is being sold via Care channels and distribution tests on godaddy.com, indicating a deliberate go-to-market ramp aimed at scaling AI offerings across the customer base.

AI-Driven Efficiency and Care Improvements

Beyond revenue, AI is reshaping operations, with Airo Care tests lifting support resolution rates by about 50% and boosting outcomes in non-English markets by more than 150% in initial trials. The AI-powered Care solution has already rolled out to over 50 markets in 20 languages, suggesting a meaningful runway for cost efficiencies and better customer experience as adoption widens.

ARPU and Customer Quality Improvements

Customer economics are trending favorably, as ARPU climbed 9% to $246 while retention stayed above 85%, indicating that customers are spending more and sticking around. Cohorts using Airo are attaching a second product roughly 30% faster than non-Airo users, and customers spending over $500 annually now account for about 10% of the base, signaling a shift toward higher-value profiles.

Capital Returns and Share Count Reduction

GoDaddy continued to lean into share repurchases, buying back 3 million shares for $280 million in the quarter and cutting fully diluted shares outstanding to 133 million. Since 2022, the ongoing program has reduced the share count by more than 31%, effectively boosting per-share metrics and demonstrating management’s confidence in the company’s intrinsic value.

Bookings Growth Lag and Mix Headwinds

Despite healthy revenue, bookings grew just 3% to $1.5 billion, lagging top-line growth as mix and timing effects weighed, including promotional discounts and the expiration of a .CO registry contract. Core Platform bookings declined 1% and prior-year aftermarket strength created tough comparisons, raising questions around near-term demand momentum in some legacy lines.

Core Platform Softness and Hosting

Core Platform revenue increased only 3% to $769 million, with management flagging softness in non-core hosting and a difficult aftermarket backdrop that constrained growth. Bookings for the segment declined and overall performance is running in the low single digits, underscoring the strategic need to lean more heavily on A&C and AI-led products for future expansion.

Promotional Tradeoffs and Product Retirement

Promotional campaigns delivered strong gross customer additions, exceeding 100,000, and drove a 6% acceleration in new domain registrations among targeted groups, but they also pressured bookings metrics. GoDaddy also retired a lower-value product that reduced reported customer counts with minimal bookings impact, reflecting a willingness to prune offerings that do not fit its profitability and quality focus.

International Growth Impacted by Aftermarket Comparables

International revenue rose 7% to $416 million, still solid but slower than in prior periods, as the company lapped large aftermarket transactions booked last year. The deceleration highlights the volatility that sizable one-off deals can introduce, even as underlying international performance remains an important contributor to overall growth.

Early-Stage Nature of AI Products

Management stressed that AI initiatives, including Airo AI Builder, remain early in their monetization journey and are not expected to materially move the needle this year at the company’s scale. Incremental marketing for AI will be funded largely by efficiency gains, setting expectations for a measured ramp where strategic positioning and capability build-out take precedence over immediate revenue.

Potential Customer Base Reprioritization

The company reiterated its strategy of targeting high-intent, higher-lifetime-value customers and accepted that it may cede share among lower-value segments as a result. This deliberate reprioritization aims to improve overall customer quality and unit economics over time, even if it tempers headline customer counts and certain volume-based metrics.

Guidance and Forward-Looking Outlook

GoDaddy reaffirmed its full-year 2026 outlook, guiding to revenue of $5.195–$5.275 billion, or roughly 6% growth at the midpoint, with Q2 revenue expected to grow at a similar pace. Management sees A&C sustaining low double-digit growth, Core Platform in low single digits, normalized EBITDA margin at about 33% in Q2 and above 33% for the year, and free cash flow around $1.8 billion with conversion remaining above 1:1 versus normalized EBITDA.

GoDaddy’s earnings call left investors with a story of steady growth, expanding profitability and strong cash generation, underpinned by an increasingly important A&C segment and promising AI capabilities. While bookings softness and Core Platform sluggishness are watch points, the reaffirmed guidance, aggressive capital returns and clear AI roadmap suggest a company leaning into profitable growth rather than chasing volume at any cost.