GoDaddy Raises 2025 Outlook on Airo.ai Traction, Nudging AI Story Forward

What happened

GoDaddy is deepening its AI-driven transformation by leaning into its Airo/agentic AI stack, now highlighted under the Airo.ai brand, to help entrepreneurs automate website creation, marketing, and commerce workflows. Alongside these initiatives, management has lifted its 2025 revenue outlook, signaling greater confidence that AI-enabled offerings are beginning to translate into stronger bookings and monetization despite a tough macro and competitive environment. This development layers onto an already resilient franchise, with mid‑80s overall retention (around 90% for >3‑year cohorts), strong free cash flow, and first-half 2025 operating cash flow of roughly $785 million supported by ample revolver capacity. Capital allocation remains focused on funding AI and OmniCommerce expansion while executing against a large share repurchase authorization through 2027, even as the company acknowledges ongoing AI quality/security and industry-competitive risks. The key debate now is whether this emerging AI-driven growth can sustain enough acceleration to justify GoDaddy’s mixed valuation—reasonable on P/E but elevated on EV/EBITDA—and thereby shift investor perception of the stock’s risk/reward balance.

Implication

The raised 2025 revenue outlook indicates that GoDaddy’s AI and commerce initiatives are starting to contribute more tangibly to growth, modestly de‑risking the top-line trajectory. If these trends translate into sustained improvements in bookings, attach rates, and GoDaddy Payments adoption, they could underpin earnings resilience and support the current multiple or even some upside over time. That said, the shares already trade at a rich EV/EBITDA, implying that further execution and upside surprises may be needed to drive material rerating rather than just maintain today’s price level. Competitive pressure from other AI-enabled website builders and commerce platforms, along with unresolved concerns around AI output quality and security, continue to cap conviction and could quickly erode any perceived AI advantage. Practically, this setup favors a measured stance—maintaining positions or adding on weakness rather than chasing AI headlines—while closely tracking upcoming quarters for confirmation that AI initiatives are driving durable revenue and cash-flow acceleration rather than a one-off guidance bump.

Thesis delta

The new disclosure that GoDaddy has raised its 2025 revenue outlook in conjunction with Airo/agentic AI progress modestly strengthens our confidence that AI investments are starting to monetize, addressing one of our key WATCH ITEMS around Airo and commerce traction. However, with the valuation still full on an EV/EBITDA basis and competitive and AI-risk profiles effectively unchanged, we view this as an incremental positive within our existing framework rather than a thesis-changing catalyst, and therefore maintain a HOLD stance with slightly improved bias toward the upside contingent on continued execution.