GoDaddy’s $3 Billion Buyback and Q1 Surge: A Strategic Play to Cement Long-Term Value

GoDaddy’s first-quarter earnings report wasn’t just a win for the domain and website services giant—it was a clear signal of confidence. The company reported an 8% year-over-year revenue rise to $1.2 billion, while announcing a $3 billion share repurchase program that extends through 2027. This move underscores GoDaddy’s belief that its growth trajectory, fueled by AI innovation and disciplined capital allocation, will translate into sustained shareholder value.

Revenue Growth: A Balanced Play Between Core and Emerging Businesses

GoDaddy’s Q1 results revealed a well-rounded performance. Its Applications & Commerce (A&C) segment, which includes high-margin offerings like godaddy Capital and Same-Day Payouts, surged 17% to $446.4 million. Meanwhile, the Core Platform segment, driven by domain sales and Aftermarket transactions, grew 3% to $747.9 million. Notably, international revenue jumped 10%, outpacing expectations, as global Aftermarket sales and cross-border commerce solutions gained traction.

The company also reaffirmed its full-year 2025 revenue forecast of $4.86–4.94 billion, implying a midpoint growth rate of 7%. To put this in context, . While the sector has faced volatility, GoDaddy’s consistent growth—driven by its small- and medium-sized business (SMB) focus—has insulated it from broader tech slowdowns.

Profitability Soars, Free Cash Flow Strengthens

GoDaddy’s margins are expanding rapidly. Operating income jumped 40.6% to $247.3 million, with a 21% margin, while Normalized EBITDA rose 16% to $364 million, hitting a 31% margin—up 200 basis points from last year. Even more critical is free cash flow, which hit $411.3 million, a 26% year-over-year increase, surpassing its $1.5 billion+ annual target.

This financial health is crucial for the new buyback program. GoDaddy has already retired 25% of its shares since 2022, using a prior $4 billion buyback to repurchase 43.7 million shares at an average price of $91. The new program, combined with reduced net leverage (now 1.9x, down from 2.4x in 2024), suggests management has room to continue rewarding shareholders without overextending.

The Strategic Edge: AI and Commerce Solutions

GoDaddy’s long-term value hinges on its ability to retain and upsell customers. Here, AI integration is a game-changer. Its GoDaddy Airo® tool, which automates website design and business setup, has already boosted retention and multi-product purchases. Customers using Airo show higher term lengths and renewals, while ARPU rose 9.2% to $225. The upcoming Agentic AI enhancement—a personalized recommendation engine—could further deepen engagement.

Additionally, the GoDaddy Agency Program, launched in April 2024, is creating a flywheel effect. By connecting SMBs with digital agencies, GoDaddy is not only expanding its service offerings but also increasing the stickiness of its platform. Meanwhile, commerce solutions like Same-Day Payouts and merchant cash advances are driving Gross Payments Volume (GPV) growth, a key metric for its financial services arm.

Why the Stock Stumbled—and Why It Might Bounce Back

Despite beating estimates (adjusted EPS of $1.51 vs. $1.38 consensus), GoDaddy shares were flat in after-hours trading. This muted reaction likely reflects broader tech-sector caution, as investors remain wary of valuations and macroeconomic risks. However, the fundamentals suggest GoDaddy is undervalued.

Consider this: The company’s $3 billion buyback—equivalent to roughly 15% of its current market cap—will amplify earnings per share growth. Meanwhile, its free cash flow trajectory (up 26% YoY) and low net leverage (1.9x) provide flexibility. shows a clear upward trend, reinforcing its ability to fund growth and returns.

Conclusion: A Compelling Case for Long-Term Investors

GoDaddy’s Q1 results and buyback announcement paint a clear picture: this is a company executing on its strategy to dominate the SMB tech stack. With AI-driven tools boosting retention, strong international expansion, and a capital allocation plan that prioritizes returns, GoDaddy is positioned to sustain its 6–8% annual revenue growth target.

The key risks? Macroeconomic headwinds could slow SMB spending, and competition in the AI space is intensifying. However, GoDaddy’s diversified revenue streams—from domains to payments—and its focus on high-margin products mitigate these risks.

For investors, the $3 billion buyback isn’t just a shareholder-friendly move—it’s a bet on GoDaddy’s ability to grow its core business while monetizing the SMB ecosystem. At current valuations—trading at around 14x forward EBITDA—the stock looks attractively priced. If the company meets its $4.5 billion+ cumulative free cash flow target by 2026, this could be a multi-year winner.

In short, GoDaddy’s Q1 results and strategic moves aren’t just about today’s earnings—they’re about building a tech platform that SMBs can’t afford to leave behind. That’s a bet worth considering.