Chapter 5

Commerce Engine

GoDaddy's growth comes almost entirely from spending more per customer. This chapter locates where that spending goes: the Applications and Commerce segment, which grew 14% to $1.9 billion in 2025 at a 45% segment-EBITDA margin while the larger Core segment grew 5% [1]. Inside it sits a payments business that processed $3.4 billion of volume, up 31% [2]. The pricing lever is real and mix-accretive — though GoDaddy discloses less about it than peers do.

The moat chapter (Moat and Durability) established that GoDaddy now grows by lifting revenue per customer, not by adding customers: average revenue per user rose to $242 in 2025 from $203 in 2023 and $170 in 2020, while the customer count edged down [3]. That leaves an obvious question a cold reader should press: what is the customer actually buying more of, and is it the kind of spending that lasts? The answer is a mix shift toward a structurally higher-margin part of the business.

The engine under the ARPU line

GoDaddy reports in two segments. Core — domain registration plus legacy hosting and security — is the bigger and older franchise. Applications and Commerce is the newer stack: website and marketing software, productivity tools (email, Microsoft 365), and commerce (online stores plus GoDaddy Payments). Over five years the two have diverged sharply. Applications and Commerce revenue more than doubled, from $926 million in 2020 to $1,889 million in 2025, a 15% annual rate; Core grew 5% a year to $3,062 million [4].

Source: FY2025 10-K, Item 7 Segment Results (FY2023–FY2025) [5]; FY2020–FY2022 per company segment disclosures, as reported.

The mix shift is the point. Applications and Commerce was 28% of revenue in 2020; it was 38% in 2025 and is the part still compounding at a double-digit rate. Within Core, the domains line grew (to $2,310 million) while the "other" line — hosting and security — actually shrank, from $869 million in 2020 to $752 million in 2025. So the blended ARPU gain is not uniform price-taking across a static product set; it is customers migrating spend toward the newer, faster-growing software and commerce layer.

Where the margin comes from

That migration matters because Applications and Commerce is the more profitable segment, and the gap is widening. Its segment-EBITDA margin reached 45.4% in 2025, up from 41.5% in 2023; Core's margin was 33.0%, up from 28.9% [6]. A dollar of revenue shifting from Core to Applications and Commerce therefore lifts the blended margin twice over: the segment is both higher-margin and expanding its margin faster.

Source: FY2025 10-K, Item 7 Segment Results [7]; FY2020–FY2022 per company segment disclosures, as reported.

Applications and Commerce now earns nearly as much segment profit as Core — $857 million against $1,010 million — on barely more than half the revenue. That is what carried company-wide operating margin from 19.5% in 2024 to 22.8% in 2025 [8]. One caution on the figure: segment EBITDA is measured before unallocated corporate overhead, stock-based compensation, and depreciation, so 45% is a segment contribution margin, not a fully-loaded one. The fully-loaded read is the 22.8% company operating margin, and the burdened-cash read is in Cash Quality. What the segment line establishes is direction: the incremental dollar is higher-margin than the average dollar.

The payments flywheel

The fastest-moving piece inside Applications and Commerce is commerce, and specifically GoDaddy Payments — the processing business built on the 2021 Poynt acquisition. Its scale is measured by gross payments volume (GPV), the annualized dollar value of transactions run through the platform. GPV crossed $1 billion in early 2023 [9], reached $2.6 billion in 2024 [10], and $3.4 billion in 2025, up 31% [11]. It is the one line growing three to four times faster than the company.

Sources: 2026 Proxy Statement (GPV) [12]; FY2025 10-K, Segment Results (revenue, margin) [13].

Payments deepen the moat in a way a price increase does not. A merchant who takes card payments through GoDaddy has wired the company into daily cash flow, not just an annual renewal — a higher switching cost than a domain alone. But two limits belong in the same paragraph. GPV is a volume metric: GoDaddy earns a processing rate on it, and it does not break out payments revenue or that take rate, so the reader cannot size the profit the flywheel actually produces. And at $3.4 billion of volume it remains a small fraction of the transactions its customers run, which is either the runway or the reason the disclosure stays vague.

Benched against Wix

The natural same-model comparison is Wix — a website-builder and business-solutions platform that, like GoDaddy, sells prepaid subscriptions and layers commerce and payments on top. Wix confirms the model in its own filings: 2024 revenue of $1,760.7 million, of which Business Solutions (payments and commerce) was $495.7 million, up 21% [14]. The bench cuts two ways, and it is worth being even-handed about both.

Sources: GoDaddy — FY2025 10-K [15], 2026 Proxy [16]; Wix — FY2024 20-F [17], Q4 2025 call [18].

In GoDaddy's favor: its Applications and Commerce segment alone is roughly the size of all of Wix, and it earns far more. Wix's whole-company GAAP operating margin was 5.7% in 2024 [19]; GoDaddy's was 19.5%, rising to 22.8% in 2025. And GoDaddy's payments volume is growing about three times faster than Wix's, whose GPV rose 11% to roughly $3.7 billion against macro headwinds [20]. GoDaddy's engine is younger and accelerating; Wix's is more mature and, for now, stalling.

In Wix's favor, and to the reader's benefit, two things. Wix grows faster at the top line — mid-teens versus GoDaddy's high-single-digits — because it is still adding users, where GoDaddy's customer count is flat. And Wix tells investors something GoDaddy does not: a net revenue retention figure of 105% in 2025 [21], a clean measure of whether existing customers spend more or less over time. GoDaddy publishes gross retention (~85%) and ARPU, but no net-revenue-retention number — so a thesis that rests on per-customer expansion is being asked to trust a metric the company keeps to itself. On the available evidence the two look similar: GoDaddy's 10% ARPU gain on a roughly flat customer base implies net expansion in the same neighborhood as Wix's 105%.

What management is steering toward

Management frames the mix shift as the plan, not an accident. At its 2024 investor day GoDaddy described Applications and Commerce momentum as "a tailwind to profitability and free cash flow per share," with the segment reaching 40%-plus of revenue by 2026 (it was 38% in 2025) [22]. The medium-term "North Star" attaches numbers: 6%–8% annual revenue growth through 2026, a roughly 33% normalized-EBITDA margin in 2026, and cumulative free cash flow above $4.5 billion over 2024–2026 [23]. The 2024 scorecard came in ahead on the profitability lines — 31% normalized-EBITDA margin, ~400 bps of expansion, and 21% Applications and Commerce bookings growth [24]. The margin story, so far, is being delivered by exactly the segment this chapter isolates.

The read: the ARPU engine that carries the whole investment case is higher-quality than a flat customer count first suggests. It is a mix shift into a structurally more profitable, still-double-digit-growth segment, reinforced by a payments flywheel scaling three times faster than the company — customers buying more, not merely paying more. The strongest fact against that read is disclosure, not economics: GoDaddy withholds the net-revenue-retention and standalone-commerce figures that would let an outsider verify durability, and the headline 45% segment margin is a contribution measure, not a fully-loaded one. What would change the read is visible in the quarterly lines — Applications and Commerce growth slipping toward Core's mid-single-digits, GPV growth stalling as Wix's has, or ARPU flattening while the customer count keeps shrinking.