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Squarespace stock falls after posting disappointing earnings

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Yahoo Finance Live anchors discuss earnings and the stock performance for Squarespace.

Video Transcript

- Also, let's check out shares of Squarespace this morning. Ticker symbol SQSP on the move after the e-commerce focused website provider did not quite square up to investor expectations despite results that beat estimates. Clever writing.

All right. So taking a look at shares right now, they're down. They open lower by about 7% here on the day. Some of the highlights that Squarespace had put out there, revenue growing 9% year over year, $212.7 million there. And their commerce revenue grew 13% year over year to $66.2 million.

But continuing to think about Squarespace and this broader kind of environment for the ability for individuals, whether small business or just somebody who's coming out of college trying to create their own website for their resume, where they're going to see those actual freemium model obligations continue to move higher in the number of paid users. Because I've been an unpaid user for Weebly for years at this point in time, so how are you going to see those over an extended period of time just continue to convert?

And I think that's why we saw a couple of years back Square even make the acquisition to bring on one of the smaller platforms to say, you know what, we're already working so much with these small businesses and merchants, we might as well just have an end to end kind of vertical integration there. But for Squarespace going in alone right now, I think that's a larger question how that conversion rate continues to move forward and excel.

- Yeah. My read on this one, here's another disappointing consumer-forward tech report. Of course, the other one being Snap, Maybe I'm missing a few other ones. But still, another disappointing quarter. Annual run rate revenue only up 8% year over year. For a growth tech company or one that is supposed to be a growth tech company, that is not going to get it done. You're going to get penalized in this type of market if you deliver that type of quarter.

- Yeah, and they're getting penalized, although not as-- I think they're not down as much as they were in the pre-market if I'm not mistaken for Squarespace. I mean, I think what we have to examine in this current period, this current rerating period, you know, we've seen some of the private market players that have really slashed staff and there are may be questions about them continuing as a going concern.

And then I think that question. I mean, this is not the .com bubble but nonetheless. At some point, you're going to have to have questions about, do some of these smaller players get gobbled up? We've talked about Stitch Fix for example, at some point--

- [INAUDIBLE]

[LAUGHS]

- No, but the question is-- the question is survival at a certain point, right? And I think the further down we go, we're going to have to figure out-- we're going to have to game out which ones are going to be around.

- Right. And for their end customers. I mean, they're talking about unique subscriptions increasing 6% year over year, 4.2 million unique subscriptions that Squarespace has. But if we do continue to move along this path where consumers are trimming how much they are spending in every category of the household, or even for smaller businesses looking to cut costs, where does that unique subscription actually have to kind of lower the price, number one, and then do you see some of the churn actually start to take place as well?

- I'm going to withhold sharing more Stitch Fix real time analysis. I think everybody--

- And speaking of slashing consumers betting on stuff--

- Yes. And here we go--