Squarespace Announces Third Quarter 2021 Financial Results

NEW YORK, Nov. 8, 2021 /PRNewswire/ -- Squarespace, Inc. (NYSE: SQSP), the all-in-one website building and ecommerce platform that enables millions to build a brand and transact with their customers in an impactful and beautiful online presence, today announced results for its third quarter ended September 30, 2021.

"Squarespace had another outstanding quarter as we continued to achieve strong revenue growth and introduce new solutions that give our millions of customers around the world the competitive advantages they need to succeed," said Anthony Casalena, Founder & CEO of Squarespace. "We launched Everything to Sell Anything, our new brand vision that aims to disrupt the traditional ecommerce model by offering new and dynamic ways to sell any type of product or service in parallel."

"We achieved $210 million trailing twelve-month Commerce revenue at the end of the third quarter," said Marcela Martin, CFO of Squarespace. "Commerce represents an increasingly important part of our business, contributing to our robust financial profile." 

Third Quarter 2021 Financial Highlights

• Total Revenue in the quarter was $201.0 million, up 24% year-over-year
• Commerce Revenue in the quarter was $59.8 million, up 55% year-over-year
• Total annual run rate revenue (ARRR) increased to $788.6 million, up 21% year-over-year
• Unique Subscriptions reached 4.0 million in the quarter, up 13.5% year-over-year, while average revenue per unique subscription (ARPUS) grew to $198, up 5.7% year-over-year
• Net income in the quarter was $2.8 million vs. net income of $17.9 million a year ago
• Adjusted EBITDA in the quarter was $38.4 million, down from $40.6 million a year ago
• Cash flow from operating activities was $49.3 million, up from $44.9 million a year ago 
• Non-GAAP unlevered free cash flow was $47.3 million, up from $45.2 million a year ago driven primarily by higher revenue partially offset by a decline in net working capital
• At September 30, 2021, cash and cash equivalents were $200.2 million, investments in marketable securities was $31.9 million, total debt was $529.8 million

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."

Outlook & Guidance

For the fourth quarter of fiscal year 2021, Squarespace currently expects:

• Revenue of $203 million to $206 million, representing year-over-year growth of 18% to 20%.
• Non-GAAP unlevered free cash flow of $7.7 million to $12.7 million. This is the result of:
• Cash flow from operating activities of $11 million to $17.3 million, minus
• Capital expenditures, expected in the range of $5.8 million to $7.3 million; plus
• Cash paid for interest expense net of associated tax benefit, expected in the range of $2.5 million to $2.7 million.

For the full fiscal year 2021, Squarespace currently expects:

• Revenue of $780 million to $783 million, representing year-over-year growth of 25.6% to 26.1%, and an increase from $772 million to $780 million previously.
• Non-GAAP unlevered free cash flow (uFCF) of $117 million to $122 million, an increase from $102 million to $116 million previously. This is the result of:
• Cash flow from operating activities of $119.2 million to $125.5 million (which includes $25.3 million in fees related to the Direct Listing), minus
• Capital expenditures, expected in the range of $12.5 million to $14.0 million; plus
• Cash paid for interest expense net of associated tax benefit, expected in the range of $10.3 million to $10.5 million.

Webcast Conference Call Information

Squarespace will host a conference call on November 8, 2021 at 4:30 p.m. ET (1:30 p.m. PT) to discuss its financial results. A live webcast of the event will be available in the Events & Presentations section of the Squarespace Investor Relations website at investors.squarespace.com. An archived replay of the webcast will be available following the conclusion of the call.

Upcoming Investor Day

Squarespace will host a virtual Investor Day on November 18, 2021 at 1:00 p.m. ET (10:00 a.m. PT). The event will include presentations from Anthony Casalena, Founder & CEO, Marcela Martin, CFO, and Alfonso Cobo, Head of Unfold. See the Events & Presentations section of the Squarespace Investor Relations website at investors.squarespace.com for details. 

Non-GAAP Financial Measures

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 and unlevered free cash flow 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.

Definitions of Key Operating Metrics

Annual run rate revenue ("ARRR"). We calculate ARRR as the monthly revenue from subscription fees and revenue generated in conjunction with associated fees (fees taken or assessed in conjunction with commerce transactions) in the last month of the period multiplied by 12. 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.

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. 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. We believe ARPUS is a useful metric in evaluating our ability to sell higher-value plans and add-on subscriptions.

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. These statements include, but are not limited to, statements regarding Squarespace's future operating results and financial position, including for its fourth fiscal quarter ending December 31, 2021 and its fiscal year ending December 31, 2021. 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 attract and retain customers and expand their use of its platform; Squarespace's ability to improve and enhance the functionality, performance, reliability, design, security and scalability of its solutions; Squarespace's ability to compete successfully against current and future competitors; the impact of the COVID-19 pandemic on Squarespace; Squarespace's ability to protect or promote its brand; Squarespace's ability to generate new customers through its marketing and selling activities; Squarespace's ability to hire, integrate and retain its personnel; the reliability, security and performance of Squarespace's software; Squarespace's ability to adapt to changes to technologies used in its platform or new versions or upgrades of operating systems and internet browsers; Squarespace's compliance with privacy and data protection laws and regulations as well as contractual privacy and data protection obligations; and risks associated with international sales and the use of Squarespace's platform in various countries. 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 ("SEC") including its final prospectus filed on May 19, 2021 with the SEC. 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 is the all-in-one platform with everything to sell anything, providing customers in approximately 200 countries and territories with all the tools they need to sell physical products, digital content, classes, appointments, reservations and more. Powered by best-in-class design for a consistent brand experience across all touchpoints, our suite of fully integrated products enables anyone to manage their projects and businesses through websites, domains, ecommerce, marketing tools, and scheduling, along with tools for managing a social media presence with Unfold and hospitality business management via Tock. Squarespace's team of more than 1,400 is headquartered in downtown New York City, with offices in Dublin, Ireland, Portland, Oregon, Los Angeles, California and Chicago, Illinois. For more information, visit www.squarespace.com.

Contacts

Investors
Christopher Chiou
investors@squarespace.com

Media
Kaitlyn Rawlett
press@squarespace.com  

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SOURCE Squarespace, Inc.