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Explore the research to see how business evidence informs assumptions and valuation.
Start with the business evidence, then follow the assumptions through to scenarios and valuation.
Valuation and assumptionsThe market prices GoDaddy at roughly 11x forward earnings and a 14.7% free-cash-flow yield, implying severe structural decline, while reported metrics show ARPU +8.7%, FCF +14%, and flat customer count. The tension is whether AI commoditisation permanently impairs the installed base or whether the cash flow is durable.
Written at USD 96.3700; now USD 98.07000000 (+2%). Upside to the weighted case has moved from +49% to +46%.
GoDaddy sells recurring subscriptions for domains, hosting, website building, email, and commerce to roughly 20.5 million small businesses. Core Platform is 60% of revenue and grows about 4%; Applications & Commerce is 40% and grows about 11% at higher margins. ARPU of $250 is the growth engine because customer count is flat.
The current enterprise value of roughly $14.8bn implies either zero-to-negative perpetual FCF growth or a ~13.5% cost of capital, a level of pessimism inconsistent with reported ARPU and FCF growth.
The weighted average required return of a company's debt and equity providers, used to discount cash flows to the firm.
In this report: GDDY's valuation is highly sensitive to the discount rate: a 1% change in WACC moves intrinsic value by about $40/share, roughly 40% of the current price. This reflects the long-duration FCF stream and the high FCF yield.
A valuation model that works backward from a share price to find combinations of growth, margins, and other assumptions consistent with that price.
In this report: The reverse DCF shows the market is implying negative perpetual FCF growth or a roughly 13.5% WACC. This is the key evidence that the stock is priced for pessimism, and it frames the central tension of the thesis.
ARPU growth: +/-300bps changes intrinsic value by about $18/share because customer count is flat; Airo attachment and renewal pricing are the leading indicators.
The sensitivity of operating profit to changes in revenue when some operating costs are fixed.
In this report: GoDaddy's fixed cost base means revenue growth flows disproportionately to operating profit; margins expanded 1,460bps from 2020 to 2025. The same mechanism works in reverse if revenue declines, which is why the bear case is severe.
Free-cash-flow durability: +/-10% moves value by about $32/share and determines whether the 14.7% FCF yield is real; bookings growth and OCF conversion lead it.
Customer count trajectory: +/-500k customers moves value by about $12/share and signals whether AI competition is causing churn; net additions lead it.
ARPU growth: >5% is healthy; <3% for two consecutive quarters warns of pricing-power erosion.
Customer count: >20.6m supports the thesis; <20.3m weakens it and points to accelerating churn.
Bookings growth: >5% supports revenue durability; <2% signals demand weakness ahead of revenue.
Exact churn rates, R&D expense, and the full economic cost of stock-based compensation are not disclosed in sufficient granularity to compute precise owner earnings. The sustainability of the 14.7% FCF yield cannot be fully verified without churn data. Credit ratings were not verified in sources.
These model scenarios depend on their inputs. Review the assumptions and supporting evidence alongside the implied values.
earnings multiple v2 · as of 2026-09-12
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