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Squarespace Announces Second Quarter 2021 Financial Results

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NEW YORK, Aug. 9, 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 second quarter ended June 30, 2021.

(PRNewsfoto/Squarespace, Inc.)
(PRNewsfoto/Squarespace, Inc.)

"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.

Second Quarter 2021 Financial Highlights

  • Total Revenue in the quarter was $196.0 million, up 31% 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

  • 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:

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:

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 website at investors.squarespace.com. An archived replay of the webcast will be available following the conclusion of the call.

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.

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 the Squarespace's future operating results and financial position, including for its third fiscal quarter ended September 30, 2021 and its fiscal year ended 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: the Company's ability to attract and retain customers and expand their use of its platform; the Company's ability to improve and enhance the functionality, performance, reliability, design, security and scalability of its solutions; the Company's ability to compete successfully against current and future competitors; the impact of the COVID-19 pandemic on the Company; the Company's ability to protect or promote its brand; the Company's ability to generate new customers through its marketing and selling activities; the Company's ability to hire, integrate and retain its personnel; the reliability, security and performance of the Company's software; the Company's ability to adapt to changes to technologies used in its platform or new versions or upgrades of operating systems and internet browsers; the Company'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 the Company's platform in various countries. It is not possible for the Company'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 the Company may make. In light of these risks, uncertainties, and assumptions, the Company'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 the Company'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, the Company 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 a leading 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. Our suite of products enables anyone at any stage of their journey 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 democratizes access to best-in-class design, helping our customers in approximately 200 countries and territories maintain consistent branding across all digital touchpoints to stand out online. Our 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.

Contacts

Investors
Christopher Chiou
investors@squarespace.com

Media
Amanda Cowie
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,



2021


2020


2021


2020


Revenue

$

196,010



$

149,640



$

375,656



$

286,514



Cost of revenue (1)

32,501



23,845



59,909



47,616



Gross profit

163,509



125,795



315,747



238,898



Operating expenses:









Research and product development (1)

48,912



36,032



90,923



72,118



Marketing and sales (1)

70,784



51,254



168,756



126,834



General and administrative (1)

284,730



11,823



304,246



25,609



Total operating expenses

404,426



99,109



563,925



224,561



Operating (loss)/income

(240,917)



26,686



(248,178)



14,337



Interest expense

(2,827)



(2,456)



(6,087)



(5,586)



Other (loss)/income, net

(1,201)



(1,319)



2,392



(114)



(Loss)/income before benefit from/(provision for)
income taxes

(244,945)



22,911



(251,873)



8,637



Benefit from/(provision for) income taxes

10,413



(4,372)



16,195



(230)



Net (loss)/income

$

(234,532)



$

18,539



$

(235,678)



$

8,407



Less: accretion of redeemable convertible preferred
stock to redemption value



(1,196)





(2,377)



Less: undistributed earnings to participating securities



(14,297)





(4,978)



Net (loss)/income attributable to Class A, Class B, and
Class C common stockholders, basic

$

(234,532)



$

3,046



$

(235,678)



$

1,052



Add: reallocation of net income attributable to
participating securities



764





278



Net (loss)/income attributable to Class A, Class B, and
Class C common stockholders, dilutive

$

(234,532)



$

3,810



$

(235,678)



$

1,330












Net (loss)/income per share attributable to Class A,
Class B, and Class C common stockholders, basic

$

(3.22)



$

0.14



$

(4.54)



$

0.05



Net (loss)/income per share attributable to Class A,
Class B, and Class C common stockholders, dilutive

$

(3.22)



$

0.13



$

(4.54)



$

0.04



Weighted-average shares used in computing net (loss)/
income per share attributable to Class A, Class B,
and Class C stockholders, basic

72,900,951



22,247,105



51,879,264



22,062,674



Weighted-average shares used in computing net (loss)
/income per share attributable to Class A, Class B, and
Class C stockholders, diluted

72,900,951



29,402,966



51,879,264



29,552,132






(1)

Includes stock-based compensation as follows:







Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)

Cost of revenue

$

380



$

205



$

655



$

366


Research and product development

8,245



5,269



15,038



9,946


Marketing and sales

1,569



782



2,741



1,423


General and administrative (a)

240,319



1,012



241,931



3,435


Total stock-based compensation

$

250,513



$

7,268



$

260,365



$

15,170




(a)

During the three and six months ended June 30, 2021, we incurred $229.3 million of additional stock-based compensation expense associated with the lapse of vesting conditions upon consummation of the Direct Listing.

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)



June 30, 2021


December 31, 2020

Assets




Current assets:




Cash and cash equivalents

$

160,142



$

57,891


Restricted cash

27,308




Investment in marketable securities

36,582



37,462


Accounts receivable, net

8,416



7,516


Due from vendors

2,200




Prepaid expenses and other current assets

48,839



37,384


Total current assets

283,487



140,253


Property and equipment, net

45,979



49,249


Deferred income taxes

6,823



7,773


Goodwill

421,076



83,171


Intangible assets, net

102,342



18,868


Other assets

7,525



7,452


Total assets

$

867,232



$

306,766


Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Deficit




Current liabilities:




Accounts payable

$

14,895



$

16,758


Accrued liabilities

62,622



46,779


Deferred revenue

238,888



210,392


Funds payable to customers

29,508




Debt, current portion

13,586



13,586


Deferred rent and lease incentives, current portion

1,265



1,197


Total current liabilities

360,764



288,712


Debt, non-current portion

519,400



525,752


Deferred rent and lease incentives, non-current portion

24,667



24,856


Other liabilities

551



262


Total liabilities

905,382



839,582


Commitments and contingencies




Redeemable convertible preferred stock, par value of $0.0001; zero and 118,117,738 shares
authorized as of June 30, 2021 and December 31, 2020, respectively; zero and 104,446,332
shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively



131,390


Preferred stock, par value of $0.0001; 100,000,000 and zero shares authorized as of June 30, 2021
and December 31, 2020, respectively; zero shares issued and outstanding as of June 30, 2021
and December 31, 2020, respectively




Stockholders' deficit:




Class A common stock, par value of $0.0001; 1,000,000,000 and 159,000,000 shares authorized
as of June 30, 2021 and December 31, 2020, respectively; 90,149,966 and 8,903,770 shares
issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

9



1


Class B common stock, par value of $0.0001; 100,000,000 and 93,782,222 shares authorized as
of June 30, 2021 and December 31, 2020, respectively; 48,344,755 and 14,368,532 shares
issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

5



1


Class C common stock (authorized March 15, 2021), par value of $0.0001; zero shares
authorized as of June 30, 2021 and December 31, 2020, respectively; zero shares issued and
outstanding as of June 30, 2021 and December 31, 2020, respectively




Class C common stock (authorized May 10, 2021), par value of $0.0001; 1,000,000,000 and
zero shares authorized as of June 30, 2021 and December 31, 2020, respectively; zero shares
issued and outstanding as of June 30, 2021 and December 31, 2020, respectively




Additional paid in capital

871,350



9,043


Accumulated other comprehensive income

1,870



2,455


Accumulated deficit

(911,384)



(675,706)


Total stockholders' deficit

(38,150)



(664,206)


Total liabilities, redeemable convertible preferred stock and stockholders' deficit

$

867,232



$

306,766



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)



Six Months Ended June 30, 2020


2021


2020

OPERATING ACTIVITIES:




Net (loss)/income

$

(235,678)



$

8,407


Adjustments to reconcile net (loss)/income to net cash provided by operating activities:




Depreciation and amortization

16,232



11,188


Stock-based compensation

260,365



15,170


Deferred income taxes

(16,981)




Other

565



2,028


Changes in operating assets and liabilities:




Accounts receivable and due from vendors

(105)



(4,636)


Prepaid expenses and other current assets

(10,786)



15,282


Accounts payable and accrued liabilities

4,260



16,769


Deferred revenue

30,766



35,986


Funds payable to customers

10,097




Deferred rent and lease incentives

(133)



764


Other operating assets and liabilities

221



(2,044)


Net cash provided by operating activities

58,823



98,914


INVESTING ACTIVITIES:




Proceeds from the sale and maturities of marketable securities

14,805



46,489


Purchases of marketable securities

(14,181)



(36,636)


Purchase of property and equipment

(2,415)



(2,218)


Cash paid for acquisitions, net of acquired cash

(202,515)




Other



(49)


Net cash (used in)/provided by investing activities

(204,306)



7,586


FINANCING ACTIVITIES:




Principal payments on debt

(6,793)



(4,375)


Contingent consideration paid for acquisition



(15,000)


Taxes paid related to net share settlement of equity awards

(25,735)



(10,820)


Proceeds from exercise of stock options

3,566



627


Proceeds from issuance of Class C (authorized on March 15, 2021) common stock, net of issuance
costs

304,409




Dividends paid

(367)




Net cash provided by/(used in) financing activities

275,080



(29,568)


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

(38)



14


Net increase in cash, cash equivalents, and restricted cash

129,559



76,946


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

57,891



43,649


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

$

187,450



$

120,595






Reconciliation of cash, cash equivalents, and restricted cash:




Cash and cash equivalents

$

160,142



$

120,595


Restricted cash

27,308




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

$

187,450



$

120,595






SUPPLEMENTAL DISCLOSURE OF CASH FLOW




Cash paid during the year for interest

$

5,628



$

5,215


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

$

1,080



$

908






SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCE
ACTIVITIES




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

$

1,090



$

204


Capitalized stock-based compensation

$

42



$

70


Issuance of Class C (authorized on March 15, 2021) common stock for acquisition

$

188,179



$


Receivables for exercise of stock options included in prepaid expenses and other current assets

$

103



$



RECONCILIATION 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,


2021


2020


2021


2020

Net income/(loss)

$

(234,532)



$

18,539



$

(235,678)



$

8,407


Interest expense

2,827



2,456



6,087



5,586


Provision for/(benefit from) income taxes

(10,413)



4,372



(16,195)



230


Depreciation and amortization

7,726



5,551



16,232



11,188


Stock-based compensation expense

250,513



7,268



260,365



15,170


Other income/(loss), net

1,201



1,319



(2,392)



114


Direct listing costs

25,318





25,318




Adjusted EBITDA

$

42,640



$

39,505



$

53,737



$

40,695






Three Months Ended June 30,

Six Months Ended June 30,


2021


2020


2021


2020

Net cash provided by operating activities

$

8,692



$

46,445



$

58,823



$

98,914


Cash paid for capital expenditures

(1,758)



(944)



(2,415)



(2,218)


Free cash flow

6,934



45,501



56,408



96,696


Cash paid for interest, net of the associated tax benefit

3,320



1,769



5,628



3,938


Unlevered free cash flow

$

10,254



$

47,270



$

62,036



$

100,634


Cision
Cision

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SOURCE Squarespace, Inc.