GoDaddy’s Q1 Outlook Brightens as Benchmark Doubles Down on Buy Rating

GoDaddy (NYSE: GDDY) investors are bracing for its Q1 2025 earnings, set to release on May 1, 2025, as Benchmark’s recent reiteration of a Buy rating and a sharply higher price target highlight the company’s potential to outperform. Analyst Mark Zgutowicz’s bullish stance—raising the price target to $275 from $230—suggests confidence in GoDaddy’s ability to navigate sector-specific headwinds while capitalizing on its AI-driven growth engines.

Revenue Outlook: A Tale of Two Sectors

Benchmark’s analysis centers on GoDaddy’s Applications & Commerce (A&C) and Core Platform (CP) segments. While the A&C sector faces challenging year-over-year comparisons and uncertain demand for large deals, it is projected to deliver high-teens revenue growth in Q1, fueled by 20%+ bookings growth in 2024. This outperformance, however, may lag in revenue recognition due to transaction-heavy Aftermarket bookings (e.g., domain renewals and marketplace sales).

Conversely, the Core Platform—a stable cash cow—benefits from 16% YoY ARPU growth in Q4 2024, driven by upselling of premium hosting and security services. The Digital Marketing Suite and GoDaddy Capital (which provides SMB financing) are also emerging as key profit drivers, boosting customer retention and cross-selling opportunities.

Profitability and Strategic Leverage

GoDaddy’s margin expansion hinges on its AI-powered monetization strategy, epitomized by the Airo platform. This tool automates website design, SEO, and analytics, reducing customer churn while increasing ARPU. The company’s 2025 revenue target of $4.919 billion assumes modest CP growth and cautious A&C guidance, yet Zgutowicz argues that product innovation could exceed these benchmarks.

Analyst Consensus and Valuation

Benchmark’s $275 price target—implying a 16.2% upside from current prices—contrasts with a $214.36 average price target across analysts. While firms like Cantor Fitzgerald cite valuation concerns (downgrading to Neutral at $210), Raymond James and Citi have also raised their targets, signaling a growing belief in GoDaddy’s long-term narrative.

Risks and the Bottom Line

Near-term risks include Aftermarket volatility and macroeconomic pressures on SMB spending. However, GoDaddy’s $90.5% stock return over the past year underscores investor faith in its execution. The Q1 EPS consensus of $1.37 (a 4.7% decline from prior estimates) reflects margin headwinds but aligns with a 17.07% EPS growth trajectory by 2026.

Conclusion: Buy the Dip Ahead of Q1

Benchmark’s reiteration of Buy is well-founded. GoDaddy’s AI-driven product pipeline, strong ARPU trends, and disciplined cost management position it to outperform in 2025. Even with A&C sector risks, its high-teens bookings growth and Core Platform resilience suggest sustainable momentum.

Investors should note that $275 price target—the highest on record—is supported by a DCF model valuing GoDaddy’s cash flow at 16x 2026 estimates, a premium reflecting its market leadership in SMB digital tools. With shares down from recent highs but trading at 14.5x forward EV/EBITDA (below its 5-year average of 15.8x), the stock offers a compelling entry point ahead of Q1 results.

In short, GoDaddy’s blend of innovation, profitability, and scalability makes it a top pick for investors willing to look past near-term noise and bet on its long-term growth story.