Squarespace Faces Foreign Exchange Challenges as COVID-19 Tailwinds Fade; $17 FVE Unchanged

No-moat Squarespace’s second-quarter fiscal 2022 result was largely in line with our expectations before the negative impact of a strengthening U.S. dollar. The quarter saw a waning of COVID-19 era digitization tailwinds and benefits from new business starts, with 12% constant-currency revenue growth more than half of the rate achieved in the second quarter of fiscal 2021. While we’ve marginally lowered our full-year revenue growth forecast 140 basis points due to foreign exchange impacts (to about 11% year over year, in line with the top end of management’s updated guidance) and tempered our operating margin forecast 20 basis points to 13.2%, we maintain our $17 per share fair value estimate. Following a market correction since we initiated coverage in May, Squarespace shares currently screen as fairly valued.