Squarespace Earnings: Healthy User Growth and Pricing Upside Underpin Strong Period

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.