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Squarespace Announces Second Quarter 2024 Financial Results

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NEW YORK, Aug. 2, 2024 /PRNewswire/ — Squarespace, Inc. (NYSE: SQSP), the design-driven platform helping entrepreneurs build brands and businesses online, today announced results for the second quarter ended June 30, 2024.

Second Quarter 2024 Financial Highlights

Total revenue grew 20% year over year to $296.8 million in the second quarter, compared with $247.5 million in the second quarter of 2023, and 20% in constant currency.Presence revenue grew 25% year over year to $215.4 million and 26% in constant currency.Commerce revenue grew 8% year over year to $81.4 million and 8% in constant currency.Net income totaled $6.1 million, compared with a net income of $3.7 million in the second quarter of 2023.Basic and diluted earnings per share was $0.04 and $0.03 for the second quarter of 2024 and 2023, respectively. Basic earnings per share was based upon 137,760,693 and 135,302,409 weighted average shares outstanding in the second quarter of 2024 and 2023, respectively. Diluted earnings per share was based upon 142,143,018 and 138,771,613 fully diluted weighted average shares outstanding in the second quarter of 2024 and 2023, respectively.Cash flow from operating activities increased 15% to $60.6 million for the three months ended June 30, 2024, compared with $52.5 million for the three months ended June 30, 2023.Cash and cash equivalents of $270.4 million; investments in marketable securities of $52.0 million; total debt of $545.0 million, of which $57.1 million is current, debt net of cash and investments totaled $222.6 million.Total bookings grew 25% year over year to $319.8 million in the second quarter, compared to $256.1 million in the second quarter of 2023.Unlevered free cash flow increased 19% to $65.4 million representing 22% of total revenue for the three months ended June 30, 2024, compared with $54.8 million for the three months ended June 30, 2023.Adjusted EBITDA decreased to $72.1 million in the second quarter, compared with $73.4 million in the second quarter of 2023.Total unique subscriptions increased 21% year over year to over 5.2 million in 2024, compared to 4.3 million in 2023.Average revenue per unique subscription (“ARPUS”) increased 3% year over year to $225.45 in 2024, compared to $219.42 in 2023.Annual run rate revenue (“ARRR”) grew 20% year over year to $1,179.5 million in 2024, compared to $983.3 million in 2023.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Transaction with Permira

As announced on May 13, 2024, Squarespace entered into a definitive agreement to go private by Permira. In light of this transaction, Squarespace will not be hosting an earnings conference call or live webcast to discuss its second quarter 2024 financial results and Squarespace will not be providing guidance for the third quarter and is suspending its financial guidance for the full fiscal year 2024.

Transaction with American Express

As announced on June 21, 2024, Squarespace entered into an agreement to sell Tock, the reservation, table, and event management technology provider, to American Express (NYSE: AXP) for $400.0 million. The transaction is subject to customary closing conditions, including regulatory approval. Squarespace classified the assets and liabilities of the Tock business as held for sale, including certain cash, cash equivalents and restricted cash as of June 30, 2024.

Non-GAAP Financial Measures

Revenue growth in constant currency is being provided to increase transparency and align our disclosures with companies in our industry that receive material revenues from international sources. Revenue constant currency has been adjusted to exclude the effect of year-over-year changes in foreign currency exchange rate fluctuations. We believe providing this information better enables investors to understand our operating performance irrespective of currency fluctuations.

We calculate constant currency information by translating current period results from entities with foreign functional currencies using the comparable foreign currency exchange rates from the prior fiscal year. To calculate the effect of foreign currency translation, we apply the same weighted monthly average exchange rate as the comparative period. Our definition of constant currency may differ from other companies reporting similarly named measures, and these constant currency performance measures should be viewed in addition to, and not as a substitute for, our operating performance measures calculated in accordance with GAAP.

Adjusted EBITDA is a supplemental performance measure that our management uses to assess our operating performance. We calculate adjusted EBITDA as net income/(loss) excluding interest expense, other income/(loss), net (provision for)/benefit from income taxes, depreciation and amortization, stock-based compensation expense and other items that we do not consider indicative of our ongoing operating performance.

Unlevered free cash flow is a supplemental liquidity measure that Squarespace’s management uses to evaluate its core operating business and its ability to meet its current and future financing and investing needs. Unlevered free cash flow is defined as cash flow from operating activities, including one-time expenses related to Squarespace’s direct listing, less cash paid for capital expenditures increased by cash paid for interest expense net of the associated tax benefit.

Adjusted EBITDA, unlevered free cash flow and revenue constant currency are not prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and have important limitations as an analytical tool. Non-GAAP financial measures are supplemental, should only be used in conjunction with results presented in accordance with GAAP and should not be considered in isolation or as a substitute for such GAAP results.

Further information on these non-GAAP items and reconciliation to their closest GAAP measure is provided below under, “Reconciliation of Non-GAAP Financial Measures.”

Definitions of Key Operating Metrics

On September 7, 2023, we closed an asset purchase agreement between us and Google LLC (“Google”) to acquire, among other things, Google’s domain assets (the “Google Domains Asset Acquisition”). Unique subscriptions and average revenue per unique subscription do not account for single domain subscriptions originally sold by Google as a part of the Google Domains Asset Acquisition (the “Acquired Domain Assets”).

Annual run rate revenue (“ARRR”). We calculate ARRR as the quarterly revenue from subscription fees and revenue generated in conjunction with associated fees (fees taken or assessed in conjunction with commerce transactions) in the last quarter of the period multiplied by 4. We believe that ARRR is a key indicator of our future revenue potential. However, ARRR should be viewed independently of revenue, and does not represent our GAAP revenue on an annualized basis, as it is an operating metric that can be impacted by subscription start and end dates and renewal rates. ARRR is not intended to be a replacement or forecast of revenue. ARRR for the three months ended June 30, 2023 has been recast to conform to the current period definition. Previously, ARRR was calculated using monthly revenue from subscription fees and revenue generated in conjunction with associated fees in the last month of the period multiplied by 12. We have since revised our calculation to use quarterly revenue from subscription fees and revenue generated in conjunction with associated fees in the last quarter of the period multiplied by 4 to normalize results for the run rate each quarter.

Unique subscriptions represent the number of unique sites, standalone scheduling subscriptions, Unfold (social) and hospitality subscriptions, as of the end of a period. A unique site represents a single subscription and/or group of related subscriptions, including a website subscription and/or a domain subscription, and other subscriptions related to a single website or domain. Every unique site contains at least one domain subscription or one website subscription. For instance, an active website subscription, a custom domain subscription and a Google Workspace subscription that represent services for a single website would count as one unique site, as all of these subscriptions work together and are in service of a single entity’s online presence. Unique subscriptions do not account for one-time purchases in Unfold or for hospitality services nor do they account for our Acquired Domain Assets. The total number of unique subscriptions is a key indicator of the scale of our business and is a critical factor in our ability to increase our revenue base.

Average revenue per unique subscription (“ARPUS”). We calculate ARPUS as the total revenue during the preceding 12-month period divided by the average of the number of total unique subscriptions at the beginning and end of the period. ARPUS does not account for Acquired Domain Assets or the revenue from Acquired Domain Assets. We believe ARPUS is a useful metric in evaluating our ability to sell higher-value plans and add-on subscriptions.

Total bookings represents cash receipts for all subscriptions purchased, as well as payments due under the terms of contractual agreements for obligations to be fulfilled. In the case of multi-year contracts, total bookings only includes one year of committed revenue.

Gross payment volume (“GPV”) represents the value of physical goods and services, including content, time sold, hospitality and events, net of refunds, on our platform over a given period of time. “Gross payment volume” or “GPV” was previously presented as “Gross merchandise value” or “GMV” in prior period disclosures. There were no revisions to the calculation of GPV as a result of this nomenclature change.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on management’s expectations, assumptions, and projections based on information available at the time the statements were made. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including risks and uncertainties related to: Squarespace’s ability to consummate the take private transaction; Squarespace’s ability to attract and retain customers and expand their use of its platform; Squarespace’s ability to anticipate market needs and develop new solutions to meet those needs; Squarespace’s ability to improve and enhance the functionality, performance, reliability, design, security and scalability of its existing solutions; Squarespace’s ability to compete successfully in its industry against current and future competitors; Squarespace’s ability to manage growth and maintain demand for its solutions; Squarespace’s ability to protect and promote its brand; Squarespace’s ability to generate new customers through its marketing and selling activities; Squarespace’s ability to successfully identify, manage and integrate any existing and potential acquisitions or achieve the expected benefits of such acquisitions; Squarespace’s ability to hire, integrate and retain highly skilled personnel; Squarespace’s ability to adapt to and comply with existing and emerging regulatory developments, technological changes and cybersecurity needs; Squarespace’s compliance with privacy and data protection laws and regulations as well as contractual privacy and data protection obligations; Squarespace’s ability to establish and maintain intellectual property rights; Squarespace’s ability to manage expansion into international markets; and the expected timing, amount, and effect of Squarespace’s share repurchases. It is not possible for Squarespace’s management to predict all risks, nor can it assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements Squarespace may make. In light of these risks, uncertainties, and assumptions, Squarespace’s actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Further information on risks that could cause actual results to differ materially from forecasted results are included in Squarespace’s filings with the Securities and Exchange Commission. Except as required by law, Squarespace assumes no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

About Squarespace

Squarespace (NYSE: SQSP) is a design-driven platform helping entrepreneurs build brands and businesses online. We empower millions in more than 200 countries and territories with all the tools they need to create an online presence, build an audience, monetize, and scale their business. Our suite of products range from websites, domains, ecommerce, and marketing tools, as well as tools for scheduling with Acuity, creating and managing social media presence with Bio Sites and Unfold, and hospitality business management via Tock. For more information, visit www.squarespace.com.

Contacts

Investors
investors@squarespace.com 

Media
press@squarespace.com 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Revenue

$               296,769

$               247,529

$               577,917

$               484,557

Cost of revenue (1)

82,939

43,167

163,713

86,117

Gross profit

213,830

204,362

414,204

398,440

Operating expenses:

Research and product development (1)

69,805

61,412

136,651

119,982

Marketing and sales (1)

88,282

75,373

205,815

177,045

General and administrative (1)

38,873

30,909

69,696

63,249

Total operating expenses

196,960

167,694

412,162

360,276

Operating income

16,870

36,668

2,042

38,164

Interest expense

(10,157)

(8,635)

(20,538)

(16,729)

Other income, net

4,454

2,038

9,031

1,198

Income/(loss) before (provision for)/benefit from income taxes

11,167

30,071

(9,465)

22,633

(Provision for)/benefit from income taxes

(5,034)

(26,411)

15,742

(18,471)

Net income

$                   6,133

$                   3,660

$                   6,277

$                   4,162

Net income per share, basic

$                     0.04

$                     0.03

$                     0.05

$                     0.03

Net income per share, diluted

$                     0.04

$                     0.03

$                     0.04

$                     0.03

Weighted-average shares used in computing net income per share,
basic

137,760,693

135,302,409

137,348,777

135,111,072

Weighted-average shares used in computing net income per share,
     diluted

142,143,018

138,771,613

141,419,521

138,013,454

(1) Includes stock-based compensation as follows:

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Cost of revenue

$                   2,026

$                   1,549

$                   3,795

$                   2,601

Research and product development

19,025

15,650

34,675

26,337

Marketing and sales

3,590

3,045

6,801

4,916

General and administrative

8,157

9,235

15,694

17,751

Total stock-based compensation

$                 32,798

$                 29,479

$                 60,965

$                 51,605

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

June 30, 2024

December 31, 2023

Assets

Current assets:

Cash and cash equivalents

$                270,363

$                257,702

Restricted cash

36,583

Investment in marketable securities

52,041

Accounts receivable

41,384

24,894

Due from vendors

6,089

Prepaid expenses and other current assets

83,016

48,947

Total current assets

446,804

374,215

Property and equipment, net

49,609

58,211

Operating lease right-of-use assets

61,016

77,764

Goodwill

196,522

210,438

Intangible assets, net

140,839

190,103

Other assets

11,560

11,028

Assets of business held for sale

94,529

Total assets

$             1,000,879

$                921,759

Liabilities and Stockholders’ Deficit

Current liabilities:

Accounts payable

$                  21,933

$                  12,863

Accrued liabilities

98,933

99,435

Deferred revenue

397,923

333,191

Funds payable to customers

42,672

Debt, current portion

57,140

48,977

Operating lease liabilities, current portion

11,281

12,640

Total current liabilities

587,210

549,778

Deferred income taxes, non-current portion

1,164

1,039

Debt, non-current portion

487,846

519,816

Operating lease liabilities, non-current portion

71,843

97,714

Other liabilities

18,940

13,764

Liabilities of business held for sale

76,745

Total liabilities

1,243,748

1,182,111

Commitments and contingencies

Stockholders’ deficit:

Class A common stock, par value of $0.0001; 1,000,000,000 shares authorized as of June 30, 2024
and December 31, 2023, respectively; 90,630,649 and 88,545,012 shares issued and outstanding as of June 30,
2024 and December 31, 2023, respectively

9

9

Class B common stock, par value of $0.0001; 100,000,000 shares authorized as of June 30, 2024 and
December 31, 2023, respectively; 47,844,755 shares issued and outstanding as of June 30, 2024 and
December 31, 2023, respectively

5

5

Class C common stock (authorized May 10, 2021), par value of $0.0001; 1,000,000,000 shares authorized
as of June 30, 2024 and December 31, 2023, respectively; zero shares issued and outstanding as of June 30,
2024 and December 31, 2023, respectively

Additional paid in capital

936,277

924,634

Accumulated other comprehensive loss

(1,280)

(843)

Accumulated deficit

(1,177,880)

(1,184,157)

Total stockholders’ deficit

(242,869)

(260,352)

Total liabilities and stockholders’ deficit

$             1,000,879

$                921,759

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Six Months Ended June 30,

2024

2023

OPERATING ACTIVITIES:

Net income

$                   6,277

$                   4,162

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

36,885

14,477

Stock-based compensation

60,965

51,605

Deferred income taxes

125

124

Non-cash lease income

(1,757)

(989)

Other

625

310

Changes in operating assets and liabilities:

Accounts receivable and due from vendors

(15,697)

2,364

Prepaid expenses and other current assets

(35,545)

(1,480)

Accounts payable and accrued liabilities

29,784

9,822

Deferred revenue

69,012

38,030

Funds payable to customers

(4,943)

(2,131)

Other operating assets and liabilities

117

408

Net cash provided by operating activities

145,848

116,702

INVESTING ACTIVITIES:

Proceeds from the sale and maturities of marketable securities

1,000

39,664

Purchases of marketable securities

(52,856)

(7,824)

Purchase of property and equipment

(6,074)

(7,167)

Net cash (used in)/provided by investing activities

(57,930)

24,673

FINANCING ACTIVITIES:

Principal payments on debt

(24,488)

(20,379)

Payments for repurchase and retirement of Class A common stock

(16,311)

(25,321)

Taxes paid related to net share settlement of equity awards

(37,640)

(20,318)

Proceeds from exercise of stock options

2,585

134

Net cash used in financing activities

(75,854)

(65,884)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(513)

165

Increase in cash, cash equivalents and restricted cash, including cash classified as assets of business held for
sale

11,551

75,656

Less: Increase in cash, cash equivalents and restricted cash classified as assets of business held for sale

(35,473)

Net (decrease)/increase in cash, cash equivalents and restricted cash

(23,922)

75,656

Cash, cash equivalents and restricted cash at the beginning of the period

294,285

232,620

Cash, cash equivalents and restricted cash at the end of the period

$                270,363

$                308,276

Reconciliation of cash, cash equivalents, and restricted cash:

Cash and cash equivalents

$                270,363

$                274,004

Restricted cash

34,272

Cash, cash equivalents, and restricted cash at the end of the period

$                270,363

$                308,276

SUPPLEMENTAL DISCLOSURE OF CASH FLOW

Cash paid during the year for interest

$                  19,883

$                  16,360

Cash paid during the year for income taxes, net of refunds

$                  31,231

$                  22,902

Cash paid for amounts included in the measurement of operating lease liabilities

$                    8,124

$                    7,861

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCE ACTIVITIES

Purchases of property and equipment included in accounts payable and accrued liabilities

$                       295

$                       196

Capitalized stock-based compensation

$                    1,404

$                    1,638

 

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

(in thousands)

(unaudited)

 

The following tables reconcile each non-GAAP financial measure to its most directly comparable GAAP financial measure:

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Net income

$                  6,133

$                 3,660

$                  6,277

$                  4,162

Interest expense

10,157

8,635

20,538

16,729

Provision for/(benefit from) income taxes

5,034

26,411

(15,742)

18,471

Depreciation and amortization

18,213

7,236

36,885

14,477

Stock-based compensation expense

32,798

29,479

60,965

51,605

Other income, net

(4,454)

(2,038)

(9,031)

(1,198)

Proposed merger costs

4,198

4,198

Adjusted EBITDA

$                72,079

$               73,383

$              104,090

$              104,246

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Cash flows from operating activities

$               60,629

$               52,547

$              145,848

$              116,702

Cash paid for capital expenditures

(2,689)

(4,092)

(6,074)

(7,167)

Free cash flow

$               57,940

$               48,455

$              139,774

$              109,535

Cash paid for interest, net of the associated tax
benefit

7,480

6,310

14,968

12,326

Unlevered free cash flow

$               65,420

$               54,765

$              154,742

$              121,861

June 30, 2024

December 31, 2023

Total debt outstanding

$              544,986

$              568,793

Less: total cash and cash equivalents and marketable securities

322,404

257,702

Total net debt

$              222,582

$              311,091

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Revenue, as reported

$             296,769

$             247,529

$             577,917

$             484,557

Revenue year-over-year growth rate, as reported

19.9 %

16.4 %

19.3 %

15.2 %

Effect of foreign currency translation ($)(1)

$                   (686)

$                    685

$                   (218)

$                (2,118)

Effect of foreign currency translation (%)(1)

(0.3) %

0.3 %

— %

(0.5) %

Revenue constant currency growth rate

20.2 %

16.1 %

19.3 %

15.7 %

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Commerce revenue, as reported

$               81,396

$               75,455

$             161,660

$             148,092

Revenue year-over-year growth rate, as reported

7.9 %

14.0 %

9.2 %

13.9 %

Effect of foreign currency translation ($)(1)

$                   (107)

$                    119

$                     (29)

$                   (369)

Effect of foreign currency translation (%)(1)

(0.1) %

0.2 %

— %

(0.3) %

Commerce revenue constant currency growth rate

8.0 %

13.8 %

9.2 %

14.2 %

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Presence revenue, as reported

$             215,373

$             172,074

$             416,257

$             336,465

Revenue year-over-year growth rate, as reported

25.2 %

17.4 %

23.7 %

15.8 %

Effect of foreign currency translation ($)(1)

$                   (579)

$                    565

$                   (188)

$                (1,749)

Effect of foreign currency translation (%)(1)

(0.3) %

0.4 %

(0.1) %

(0.6) %

Presence revenue constant currency growth rate

25.5 %

17.0 %

23.8 %

16.4 %

(1) To calculate the effect of foreign currency translation, we apply the same weighted monthly average exchange rate as the comparative period.

Amounts may not sum due to rounding.

 

SUMMARY OF SHARES OUTSTANDING

(unaudited)

Six Months Ended June 30,

2024

2023

Shares outstanding:

Class A common stock

90,630,649

87,723,667

Class B common stock

47,844,755

47,844,755

Class C common stock

0

0

Total shares outstanding

138,475,404

135,568,422

 

KEY PERFORMANCE INDICATORS AND NON-GAAP FINANCIAL MEASURES

(unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Unique subscriptions (in thousands) (1)

5,195

4,305

5,195

4,305

Total bookings (in thousands)

$                319,774

$                256,137

$                645,720

$                521,926

ARRR (in thousands) (2)

$             1,179,456

$                983,265

$             1,179,456

$                983,265

ARPUS (1)

$                  225.45

$                  219.42

$                  225.45

$                  219.42

Adjusted EBITDA (in thousands)

$                  72,079

$                  73,383

$                104,090

$                104,246

Unlevered free cash flow (in thousands)

$                  65,420

$                  54,765

$                154,742

$                121,861

GPV (in thousands) (3)

$             1,589,076

$             1,525,476

$             3,238,533

$             3,059,534

______________

(1)

Unique subscriptions and average revenue per unique subscription (“ARPUS”) do not account for single domain subscriptions originally sold by Google as a part of the Google Domains Asset Acquisition.

(2)

Annual run rate revenue (“ARRR”) for the three and six months ended June 30, 2023 has been recast to conform to the current period definition. Previously, ARRR was calculated using monthly revenue from subscription fees and revenue generated in conjunction with associated fees in the last month of the period multiplied by 12. We have since revised our calculation to use quarterly revenue from subscription fees and revenue generated in conjunction with associated fees in the last quarter of the period multiplied by 4 to normalize results for the run rate each quarter.

(3)

“Gross payment volume” or “GPV” was previously presented as “Gross merchandise value” or “GMV” in prior period disclosures. There were no revisions to the calculation of GPV as a result of this nomenclature change.

 

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SOURCE Squarespace, Inc.

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