Website-building and hosting company Squarespace, Inc. (NYSE: SQSP) recently posted mixed results for the first quarter ended March 31, 2022. The mixed results were on the back of earnings missing but revenues surpassing estimates.
However, following the earnings, shares of the company gained a massive 48.5% to close at $21.44 in yesterday’s trading session. Today, the stock is up another 7%, so far. The quantum leap in the stock price can be attributed to the company’s upbeat guidance.
Revenue & Earnings
Squarespace reported revenues of $207.8 million, which denotes a year-over-year growth of 16%. Moreover, the figure topped the consensus estimate of $204.7 million. Growth of 36% from the previous year to $63.8 million witnessed in Commerce revenue was a significant contributor to the overall growth in revenues for the company.
However, the company reported a loss per share of $0.67, which was wider than the previous year’s loss of $0.11 per share and worse than the consensus estimate of earnings per share (EPS) of $0.03.
Other Operating Metrics
Squarespace’s unique subscriptions grew 10% from the previous year to 4.2 million. Similarly, the average revenue per unique subscription went up 7% year-over-year to $204.
However, the company’s cash flow from operating activities for the quarter dropped 5.6% from the prior year to $47.3 million.
Revenue Outlook
The company also provided revenue guidance for the second quarter and FY2022.
For the second quarter, Squarespace expects revenue to be in the range of $208 million to $213 million. The consensus estimate for the same is pegged at $211.7 million.
Similarly, for 2022, the company forecasts revenue to hover between $867 million to $879 million, against the consensus estimate of $870.7 million.
Management Commentary
CEO of Squarespace, Anthony Casalena, said, “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.”
Wall Street’s Take
The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 10 Buys and six Holds. The average Squarespace price target of $33.07 implies the stock has upside potential of 44.2% from current levels. Shares have declined 53.7% over the past year.
Squarespace’s Website Traffic
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Squarespace’s performance this quarter.
According to the tool, the Squarespace website recorded a 23% monthly rise in global visits in April, compared to the same period last year. Moreover, year-to-date, Squarespace’s website traffic increased 31.43% compared to the previous year.
The heightened website traffic witnessed by Squarespace’s website acted as a timely precursor to the company’s solid results. This shows that the TipRanks’ Website Traffic Tool can be relied upon as a somewhat accurate predictor of companies’ results.
Conclusion
With solid yearly growth witnessed in the top line and some key metrics, the company remains on a strong footing to grow operationally. However, a lack of profitability can be a cause of concern for the company.
Learn more about the Website Traffic tool in this video by Youtube sensation Tom Nash.
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