Squarespace, Inc., 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, announced results for its second quarter ended June 30, 2021.
“We are incredibly proud of the results in our first quarter as a publicly traded company,” said Squarespace Founder & CEO Anthony Casalena. “The market opportunity for the Squarespace platform remains large and growing, especially as we expand into helping support the many ways our customers around the world transact online.”
“We reported record revenue this quarter, driven in large part by the strong growth in our Commerce offering. Our blend of scale, growth, and profitability continues to provide the flexibility to invest in new areas while achieving durable growth. As a result, we are raising our full year guidance across total revenue and unlevered free cash flow,” said Marcela Martin, Squarespace’s CFO.
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Second Quarter 2021 Financial Highlights
- Total Revenue in the quarter was $196.0 million, up 31% year-over-year:
- Commerce Revenue in the quarter was $58.7 million, up 72% year-over-year
- Total annual run rate revenue (ARRR) increased to $777.9 million, up 28% year-over-year
- Unique Subscriptions reached 3.9 million in the quarter, up 15% year-over-year, while average revenue per unique subscription (ARPUS) grew to $193, up 6% year-over-year
- Net loss in the quarter was $234.5 million vs. net income of $18.5 million a year ago, primarily due to Direct Listing related expenses, totaling $254.6 million
- Adjusted EBITDA in the quarter was $42.6 million, up from $39.5 million a year ago
- Cash flow from operating activities was $8.7 million (which includes $25.3 million in fees related to the Direct Listing), down from $46.4 million a year ago
- Non-GAAP unlevered free cash flow was $10.3 million, down from $47.3 million a year ago
- At June 30, 2021, cash and cash equivalents were $160.1 million, investments in marketable securities was $36.6 million, total debt was $533.0 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.”
Upcoming Analyst Day
We are pleased to announce that Squarespace intends to host our first ever Analyst Day, as a public company, during the first half of November of this year after we report our third quarter financial results. The company’s senior leadership team will host a series of presentations and participate in a Q&A session. More details will follow.
Outlook & Guidance
For the third quarter of fiscal year 2021, Squarespace currently expects:
- Revenue of $193 million to $198 million, representing year-over-year growth of 19% to 22%.
- Non-GAAP unlevered free cash flow of $21.3 million to $24.5 million. This is the result of:
- Cash flow from operating activities of $24.0 million to $27.5 million, minus
- Capital expenditures, expected in the range of $5.5 million to $6.0 million; plus
- Cash paid for interest expense net of associated tax benefit, expected in the range of $2.8 million to $3.0 million.
For the full fiscal year 2021, Squarespace currently expects:
- Revenue of $772 million to $780 million, representing year-over-year growth of 24% to 26%.
- Non-GAAP unlevered free cash flow (uFCF) of $102 million to $116 million. This is the result of:
- Cash flow from operating activities of $103 million to $118 million, minus
- Capital expenditures, expected in the range of $12 million to $14 million; plus
- Cash paid for interest expense net of associated tax benefit, expected in the range of $11 million to $12 million.
Webcast Conference Call Information
Squarespace will host a conference call on August 9, 2021 at 5:00 p.m. ET (2:00 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.An archived replay of the webcast will be available following the conclusion of the call.
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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 the Company’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 the Company’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.
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