GoDaddy (GDDY) Q2 FY26 earnings call: guidance and Q&A

How is GoDaddy maintaining its leadership in domains with AI agents emerging, and what's the magnitude of headwinds from traditional A&C products, and when will Airo offset them?

GoDaddy is addressing AI-driven changes in domains by relaunching APIs optimized for LLMs, maintaining a healthy market share. In A&C, traditional product moderation is a trade-off for Airo's scaling. Bookings are expected to be high single digits for the rest of the year, with more info on inflection points at the Investor Dinner. Airo's integration of capabilities accelerates the strategic roadmap.

“With the new GoDaddy APIs. Those APIs can work very well for LLMs and AI. Just as well they work for our partners today. That's going to allow us to handle some of the changes that are happening in the Domains business and actually put more competitive and innovative products in the market that GoDaddy has an advantage because we have so many of our own products that we can bundle together and put into the API.”

asked by Vikram Kesavabhotla · answered by Amanpal Bhutani

Where is AI causing erosion (channel, market segment, domain funnel)? And why is Q4 guidance not showing a stronger uptick given easier comps?

Domain funnel economics remain healthy, but LLMs are causing shifts in search traffic, addressed by updated APIs. The Q4 guidance reflects continued revenue headwinds from earlier promotional offers and the standard exclusion of high-value aftermarket transactions.

“On the domains funnel, we continue to see very healthy domain funnel economics and traffic and conversion. In Q2, we continue to have a healthy rate. Now things are dynamic and evolve over time when new stuff is happening. There's no doubt that the LLMs are playing a part, and we see that shift in search traffic.”

asked by Hoi-Fung Wong · answered by Amanpal Bhutani

How much of existing bookings are tied to products being deemphasized by Airo, what level of Airo revenue is needed to replace them, what percentage of domain traffic is exposed to Airo, and what's the marketing plan for Airo?

Products like do-it-for-you and Websites + Marketing capabilities are moving into Airo. The impact on total bookings was about 100 basis points this quarter. Airo is currently exposed to a limited portion of domain path traffic, with strong initial conversion and free-to-paid rates. Small marketing spend in Q2 yielded good results, with ramp-up planned for Q3/Q4, especially once Airo is fully integrated into the domains path.

“The way I would look at it at a high level, probably was about a point to our total bookings this quarter. And obviously, the growing impact of Airo and the adoption is still early stage.”

asked by Mark Zgutowicz · answered by Mark McCaffrey

What are the main drivers behind Airo's 5x bookings run rate increase (new customers, ARPU, token consumption)? And when will pricing and bundling resume contributing to ARPU/bookings, given the W+M transition?

Initially, existing customers drove Airo engagement, but new customers are now also signing up due to marketing and landing page exposure. Airo shows better free-to-paid conversion than prior products. Pricing and bundling remains a contributor to growth, evolving as Airo integrates more capabilities.

“We're seeing better free-to-paid conversion with Airo than we were seeing prior to Airo.”

asked by Elizabeth Porter · answered by Mark McCaffrey

What are the components of the A&C bookings slowdown beyond the 100 basis points attributed to do-it-for-you/Airo transition, especially given easier comps? Is Airo deflationary compared to DIFM?

The slowdown is primarily due to capabilities like professional services (do-it-for-you) and Websites + Marketing moving into Airo. The 100 basis points impact was for total bookings, not just A&C. Airo is subscription plus token-based, typically lower priced than a multi-thousand dollar DIFM service, but easier for customers to use themselves. Airo's growth is counted in A&C.

“The 100 basis points, that was for our total bookings number, not specific to A&C.”

asked by Naved Khan · answered by Mark McCaffrey

Can you explain the LLM traffic shift and its implications for website building? How is GoDaddy balancing costs and maintaining margins amidst the AI transformation, given observed margin erosion in competitors?

The LLM traffic shift relates to APIs and low-cost providers on the domain side, which GoDaddy is addressing by optimizing its APIs for LLM consumption. Airo is now seen as the convergent operating system, absorbing previous W+M updates. GoDaddy feels good about its margin position, anticipating costs and leveraging productivity gains in Care, T&D, and G&A to expand margins and reinvest.

“We feel really good about our positioning around our margins and anticipating the costs that we will incur related to higher compute costs, higher token and all that. We are very focused on making sure where we're spending our time is getting the right ROI like we've done in the past.”

asked by Ygal Arounian · answered by Mark McCaffrey