Squarespace, Inc. (NYSE: SQSP) shares jumped almost 5% on March 7, after the all-in-one website building and e-commerce platform delivered stronger-than-expected fourth-quarter revenues.
However, shares dropped 1.5% during extended trading hours, after the company provided FY2022 revenues guidance below analyst expectations.
Revenues jumped 20% year-over-year to $207.4 million and exceeded consensus estimates of $205.39 million. The increase in revenues reflected a surge in commerce revenues, which increased 45% to $64.2 million.
The company reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $33.0 million, while realized net loss came in at $16.3 million.
Looking ahead, management provided financial guidance for FY2022.
The company expects full-year revenues to grow between 10% and 12% year-over-year in the range of $862 million and $878 million, versus the consensus estimate of $934.6 million.
For the first quarter, revenues are projected to grow between 13% and 14% year-over-year in the range of $203 million to $205 million, versus the consensus estimate of $216.8 million.
Management Weighs In
Sharing his views on the $5.8 billion of GMV recorded in 2021, Squarespace CFO, Marcela Martin, commented “These commercial dynamics give us confidence that our highly profitable business model supports future expansion while still generating very attractive levels of free cash flow. Further, we believe demand from our 4.1 million unique subscription base will fuel future growth.”
Wall Street’s Take
Following the Q1 results, Mizuho Securities analyst Siti Panigrahi downgraded Squarespace from Buy to Hold with a price target of $22 (7.9% downside potential) from $35.
The downgrade is based on Panigrahi’s belief that pandemic-related tailwinds for the stock are fading away, implied in the lower-than-expected revenues guidance of 10-12% versus street expectations of 19%.
He further anticipates a return to normalized growth to the mid-teens post-pandemic due to challenging 1H22 comps, muted unique subscription growth, and sub-optimal product bundling, as well as a potential hike in prices in 2H22.
Panigrahi expects shares to remain range-bound in the short term and will wait for better marketing efficiency and new product performance before potentially taking a more constructive view of the shares.
The rest of the Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 6 Buys and 4 Holds. The average Squarespace price target of $36 implies 50.69% upside potential to current levels.
Bloggers Weigh In
TipRanks data shows that financial blogger opinions are 100% Bullish on SQSP stock, compared to a sector average of 69%.
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