Squarespace Earnings: Price Increases and Robust Retention Boost Profitability Amid Steady Demand

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.