Squarespace Announces First Quarter 2022 Financial Results and $200 Million Share Repurchase Program
Squarespace, Inc., the all-in-one website building and ecommerce platform, announced results for the first quarter ended March 31, 2022.
“Our Q1 results mark another strong quarter of growth,” said Anthony Casalena, Founder & CEO of Squarespace. “We achieved record revenue of $207.8 million as our global customer base continued to grow and new use cases evolved within our all-in-one platform. We remain committed to maintaining our unique combination of growth alongside profitability as we continue through 2022. Further building on the confidence we have in our business, our board of directors has authorized a $200 million share repurchase program. We strongly believe in the opportunity Squarespace has open to us over the coming years.”
“Revenue and unlevered free cash flow exceeded our guidance in the first quarter as we attracted new subscriptions and delivered additional capabilities to our customer base,” said Marcela Martin, CFO of Squarespace. “We are pleased to be raising our full-year guidance for both revenue and unlevered free cash flow.”
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First Quarter 2022 Financial Highlights
- Total revenue of $207.8 million grew 16% year-over-year as reported on a GAAP basis and 18% in constant currency
- Commerce revenue of $63.8 million grew 36% year-over-year
- Annual run rate revenue (“ARRR”) increased 15% year-over-year to $869.0 million
- Unique subscriptions reached 4.2 million in the quarter, up 10% year-over-year
- Average revenue per unique subscription (“ARPUS”) grew to $204, up 7% year-over-year
- Net loss of $92.9 million vs. net loss of $1.1 million a year ago
- Net loss per share of $0.67 based on 139,423,228 basic and dilutive weighted average shares
- Adjusted EBITDA was a loss of $2.9 million vs. a gain of $11.1 million a year ago, primarily driven by marketing expenses, headcount in research & product development, and investments in Tock
- Cash flow from operating activities was $47.3 million vs. $50.1 million a year ago
- Non-GAAP unlevered free cash flow was $45.5 million vs. $51.8 million a year ago driven primarily by increased marketing and research & product development spend
- Cash and cash equivalents of $230.5 million, investments in marketable securities of $27.9 million; total debt of $523.5 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.”
Share Repurchase Authorization
Squarespace’s board of directors authorized a general share repurchase program of the Company’s Class A common stock of up to $200 million with no fixed expiration. These repurchases may occur in the open market, through privately negotiated transactions, through block purchases, other purchase techniques or by any combination of such methods. The timing and actual amount of shares repurchased will depend on a variety of different factors and may be modified, suspended or terminated at any time at the discretion of the board of directors.
Outlook & Guidance
For the second quarter of fiscal year 2022, Squarespace currently expects:
- Revenue of $208 million to $213 million, or year-over-year growth of 6% to 9%
- Non-GAAP unlevered free cash flow of $33.0 million to $37.0 million. This is the result of:
- Cash flow from operating activities of $32.6 million to $36.5 million, minus
- Capital expenditures, expected in the range of $1.4 million to $1.6 million; plus
- Cash paid for interest expense net of associated tax benefit, expected in the range of $1.8 million to $2.0 million
For the full fiscal year 2022, Squarespace currently expects:
- Revenue of $867 million to $879 million, or year-over-year growth of 11% to 12%
- Non-GAAP unlevered free cash flow of $156.0 million to $169.0 million. This is the result of:
- Cash flow from operating activities of $154.4 million to $167.4 million, minus
- Capital expenditures, expected in the range of $6.7 million to $7.3 million; plus
- Cash paid for interest expense net of associated tax benefit, expected in the range of $8.3 million to $8.9 million
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Non-GAAP Financial Measures
Revenue 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.
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.
Constant currency, 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, 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”.
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