Company Reports

Squarespace offers subscription-based drag-and-drop website-building software that caters to various use cases, including e-commerce, blogging, and portfolio websites as well as stand-alone software for social media content design, hospitality management, and scheduling.

No-moat Squarespace reported fourth-quarter and full-year fiscal 2023 results, which fell marginally below our above-guidance revenue expectations and short of our profitability forecasts as domain registration fees dragged on gross margins. Nonetheless, the firm achieved robust net new user growth throughout 2023 and enjoyed resilient retention despite legacy like-for-like price increases. Following the result, we maintain our longer-term outlook but raise our fair value estimate to $27 per share from $26 on the time value of money. At current prices, Squarespace shares screen as overvalued, and we see better opportunities among our moatier companies on our coverage list.

We raise our fair value estimate for no-moat Squarespace to $26 from $25 per share following strong third-quarter results with both top-line growth and profitability exceeding our expectations. Following the result, we have revised our near- and long-term profitability assumptions as higher like-for-like pricing falls to the bottom line, and Squarespace benefits from a mix shift to higher-value solutions and improved operating efficiencies, partly offset by greater contribution from lower-margin domain registration revenue. Despite our upgraded outlook, Squarespace shares continue to trade in 3-star territory.

Squarespace offers subscription-based drag-and-drop website-building software that caters to various use cases, including e-commerce, blogging, and portfolio websites as well as stand-alone software for social media content design, hospitality management, and scheduling.

We raise our fair value estimate for no-moat Squarespace to $25 from $24 per share following sound second-quarter fiscal 2023 results. Top-line growth during the quarter and the full-year outlook met our expectations, but profitability once again surprised to the upside. Following the result, we have revised our near- and longer-term profitability assumptions upward as higher pricing falls to the bottom line. However, despite a post-release correction, Squarespace's shares continue to screen as overvalued relative to our updated valuation, currently trading at a lofty 23% premium.

Squarespace offers subscription-based drag-and-drop website-building software that caters to various use cases, including e-commerce, blogging, and portfolio websites as well as stand-alone software for social media content design, hospitality management, and scheduling.

We raise our fair value estimate for no-moat Squarespace 7% to $24 per share as the firm enters a definitive agreement to acquire Google Domains' assets. While domain registration is commoditized and lower margin relative to Squarespace’s core website building tools, we view the acquisition as a prudent strategy to expand the established domain registrar business and cross-sell complementary online presence solutions to millions of acquired customers at a lower acquisition cost. After the acquisition, we expect Squarespace to become a leading registrar by domain volumes; however, the firm will still be dwarfed by dominant provider GoDaddy, which manages about 84 million domains. The $180 million acquisition will be funded through cash and an extension of existing credit facilities, and we expect the deal to close in the third quarter of 2023 with no regulatory pushback. Despite an improved outlook, Squarespace shares continue to screen as overvalued relative to our updated fair value estimate.

Squarespace offers subscription-based drag-and-drop website-building software that caters to various use cases, including e-commerce, blogging, and portfolio websites as well as stand-alone software for social media content design, hospitality management, and scheduling.

We raise our fair value estimate for no-moat Squarespace 15% to $22.50 following a stellar start to fiscal 2023, which exceeded our expectations. During the quarter, Squarespace benefited from resilient customer retention despite the continued rollout of like-for-like price increases, greater uptake of higher value solutions, and record customer trials, suggesting potential countercyclical demand for website design software. Following the result, we have lifted our fiscal 2023 and medium-term assumptions for top-line growth and profitability. However, at current prices, Squarespace shares continue to screen as overvalued, trading at a hefty 22% premium to our updated fair value estimate.

Squarespace offers subscription-based drag-and-drop website-building software that caters to various use cases, including e-commerce, blogging, and portfolio websites as well as stand-alone software for social media content design, hospitality management, and scheduling.

Squarespace achieved a solid fiscal 2022 result largely in line with our expectations despite an uncertain macroeconomic environment. Revenue growth of 11% year over year (14% in constant currency) was driven by a continued mix shift to higher-value solutions, like-for-like price increases, and strong retention in the subscriber base. Excluding a one-time goodwill adjustment in the fourth quarter, fiscal 2022 operating margin improved as we expected to 1.5% on reduced sales and marketing spending, even with foreign exchange headwinds and softer gross merchandise volume, or GMV, growth.

Squarespace offers subscription-based drag-and-drop website-building software that caters to various use cases, including e-commerce, blogging, and portfolio websites as well as stand-alone software for social media content design, hospitality management, and scheduling.

No-moat Squarespace delivered a reasonable third-quarter fiscal 2022 result as robust demand for website building and hospitality solutions offset foreign exchange headwinds and weak gross merchandise volume growth. Revenue grew 8% year on year, or 13% in constant currency, aided by a mix shift to higher-value solutions and resilient retention despite the gradual initiation of price increases for existing customers. This top-line growth and a pullback in marketing spending underpinned 190 basis points of operating margin expansion year on year to 5%, partly offset by increased internal hiring.

Squarespace offers subscription-based drag-and-drop website-building software that caters to various use cases, including e-commerce, blogging, and portfolio websites as well as stand-alone software for social media content design, hospitality management, and scheduling.

Squarespace offers subscription-based, drag-and-drop website-building software that caters to various use cases, including e-commerce, blogging, and portfolio websites as well as standalone software for social media content design, hospitality management, and scheduling.

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.

We initiate coverage of Squarespace with a $17 fair value estimate and no-moat, stable moat trend, and very high uncertainty ratings. Squarespace offers subscription-based, drag-and-drop website-building software that caters to various use cases, including e-commerce, blogging, and portfolio websites as well as standalone software for social media content design, hospitality management, and scheduling. The offering is primarily targeted at entrepreneurs and micro businesses looking for intuitive, do-it-yourself software to build a professional-looking website. At current prices, Squarespace shares screen as overvalued, trading at a 22% premium to our fair value estimate.

Squarespace offers subscription-based, drag-and-drop website-building software that caters to various use cases, including e-commerce, blogging, and portfolio websites as well as standalone software for social media content design, hospitality management, and scheduling.