In a climate of growing scrutiny over digital businesses, GoDaddy Inc. delivered what CEO Aman Bhutani described as “a very strong quarter,” posting results that beat Wall Street forecasts on both the top and bottom line for its first quarter of 2024. Yet, despite the solid quarterly performance and reaffirmed full-year outlook, concerns persist among investors and analysts about the sustainability of GoDaddy’s growth, especially against a backcloth of economic headwinds and wavering consumer sentiment.

“We beat across all financial metrics in Q1. So a very strong quarter for us. And we reaffirmed our full-year guidance,” Bhutani told CNBC’s “Closing Bell: Overtime” in an exclusive interview. “Our customers are resilient. Our business is durable. I’ve never been more excited about being at GoDaddy.”

GoDaddy’s financial highlights for the quarter included better-than-expected revenue and earnings per share, supported by ongoing demand for the company’s suite of digital tools enabling small businesses and entrepreneurs to establish an online presence. But the company’s shares have come under pressure, sliding in the wake of the report as market participants voiced concerns about underlying trends in customer growth and dependency on price hikes for revenue expansion.

Analyst Queries Over Customer Dynamics

A number of analysts questioned the optics around declining customer counts and whether increases in average order size or “attach rate”—the number of products per customer—can sustainably drive revenue growth in a competitive and sensitive marketplace.

“One analyst has pointed out that the optics are that customer count is coming down. There’s a narrative out there that price drove most of the growth in 2024. And there are questions about whether it’s sustainable this year,” said CNBC host John Fortt.

Bhutani responded by shifting the focus from absolute customer numbers to the quality and depth of GoDaddy’s customer relationships. “The idea is to bring high intent customers to GoDaddy, not folks who are looking to buy a cheap domain and then not renew or buy any of our other products,” he said. “We’ve really expanded the product suite over the last few years. We want customers that want to use the breadth of products, and that’s what we’re seeing. We’re seeing increased average order size, improved retention rates, and customers using more of our products.”

GoDaddy has been investing in product innovation, including the recent launch of Aero, an AI-powered solution designed to help clients quickly access the full spectrum of GoDaddy’s offerings, from domain registration and website design to e-commerce, digital marketing, and payments.

Small Businesses: A Barometer for Economic Mood

As a linchpin for millions of small business owners and entrepreneurs, GoDaddy’s performance provides a unique window into the mindset of Main Street businesses—often the first to feel the chill of a softening economy but also the first to rebound when optimism returns.

The company conducts regular surveys with its customer base, which Bhutani said gives the company “real-time” insight. “There’s a little bit more tentativeness from our customers on the broader economy. But the core story has not changed, and that story is about our customer being resilient,” Bhutani said. “When we ask them about the economy, yes, they’re a little more concerned, but when we ask them about their business, the majority of them continue to be very bullish about their business.”

Industry observers note that GoDaddy operates at a critical juncture for small businesses, many of which rely on the company’s low-cost and essential digital infrastructure. “Our customers need us most for marketing,” Bhutani explained. “A domain name, a website, a little email solution, or just a link to take payments…these are the solutions that are going to be the last things customers give up.”

That stickiness, he argued, works in GoDaddy’s favor even in downturns. “Even when a business goes down, a customer doesn’t get rid of their domain name. They’re not giving up the dream,” Bhutani said. “They’re going to keep going and try it again or try something different.”

Competitive Positioning Amid Digital Heavyweights

Even as GoDaddy faces its usual competition from hosting and web development rivals, broader industry trends are shaping its trajectory. The digital tools segment has been lifted by surging demand for online marketing and commerce solutions; tech giants like Amazon, Meta, and Google reported robust advertising growth in their latest quarters, reflecting businesses’ increased willingness to optimize digital spending, even amid economic uncertainty. Amazon’s advertising revenue, for instance, rose 90% year-over-year.

Asked how GoDaddy fits into this bigger digital transformation, Bhutani outlined an effort to expand beyond core domain registration into “marketing solutions and commerce solutions.” The company’s newest products are designed to capture a greater share of its customers’ digital spending, with lower overall prices and added value for switching or consolidating services.

“We’ve got more and more offerings like marketing solutions and commerce solutions as well,” Bhutani said, hinting at a strategy to position GoDaddy not simply as a domain registrar, but as a one-stop digital partner for small businesses.

Stock Under Pressure, But Focus Remains on Execution

Despite the strategic narrative and the company’s recent investments, GoDaddy stock remains under pressure. Analysts appear unconvinced that product attach and average revenue per user will be enough to drive sustained growth in the event of waning new customer acquisitions—especially in a challenging macroeconomic environment.

Bhutani, for his part, remains focused on execution. “My view is let’s focus on the things that we do. Let’s focus on the innovation. Let’s focus on serving our customers. And the rest takes care of itself,” he concluded.

He maintains confidence that share price will eventually reflect what the company sees as underlying business strength and resiliency among its core customer base. For now, GoDaddy will be measured less by the hype that once defined the digital domain industry and more by its ability to deepen and lengthen relationships with existing clients—many of whom, in Bhutani’s words, are “not giving up the dream” even in challenging times.