The Latest Website-World M&A: GoDaddy to Acquire Pagely

After a bit of a slowdown in M&A activity in the website world, things picked up this week with GoDaddy’s agreement to acquire Pagely for an undisclosed sum.  The deal is driven by GoDaddy’s continued interest in developing eCommerce as a core function of its expanding website services.

More specifically, Pagely has established itself firmly as a managed hosting provider in the WordPress world, with an emphasis on WooCommerce. The latter is the leading eCommerce engine in the expansive WordPress ecosystem, to the tune of 94 percent market share among WordPress eCommerce plugins.

Operating mostly as a plugin for WordPress sites, WooCommerce has grown into prominence for its easy setup and onboarding. SMBs can launch eCommerce functionality in minutes, including back-end functions (payment processing, logistics) and front-end (online storefronts, marketing, SEO).

As for Pagely’s role in all of this, it is a managed hosting provider. That means it provides an additional layer of security and support than your average website host. Though WooCommerce has largely democratized eCommerce, managed hosting is aligned with higher-volume SMB operations.

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Future Customers

Going forward, Pagely will continue to operate its core managed hosting business, competing with the likes of WP Engine for the upper tier of SMBs. But it will also create a more robust managed hosting offer — again focused on eCommerce — for GoDaddy’s current and future customers.

The “future” part is what drove this acquisition in our view. As we see throughout the website-builder landscape, there’s a land grab for finite market share as often seen in maturing markets. GoDaddy also wants to expand its addressable market to higher-end SMBs and eCommerce operations.

That brings us back to the website world’s M&A action. We’ve tracked several deals over the past few years, which inflected further during the pandemic. The latter was due to a combination of distressed assets, and an investment rush towards all things digital — especially eCommerce.

Beyond the pandemic, this M&A activity has been driven by the need for revenue diversification for website builders like GoDaddy and Automattic. As background, their core revenue stream — hosting — has largely become commoditized, resulting in “race to the bottom” downward pricing pressure.

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Switching Cost

All of the above has forced website builders to find revenue opportunities in areas that are adjacent to, and synergistic with, websites and hosting. We’re talking eCommerce, CRM, social, SEO, etc. Not only do these products create new revenue streams and higher ARPU, but customer retention.

In other words, there’s a greater switching cost for SMBs to change their hosting provider if they bought into a bundle that includes mission-critical business operations like CRM and eCommerce. In Pagely’s case, managed hosting offers operational support that’s likewise hard to switch away from.

We’ll keep watching to see how GoDaddy integrates Pagely and if this sparks a resurgence in website-world M&A. Meanwhile, this week’s announcement specifies a definitive agreement to acquire Pagely, so a few steps still need to be taken for ultimate approval. Timing and figures weren’t disclosed.

Related research: Check out Localogy’s latest report on key trends in SMB website services…

Key Trends in SMB Website Services

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