Squarespace Announces First Quarter 2024 Financial Results
Revenue Increased 19% in the First Quarter; FY24 Revenue Guidance Raised to 19%
"We had a strong start to 2024, with Q1 revenue growing 19% and bookings growing 23%" said
"In Q1, we delivered revenue and unlevered free cash flow at the high end or above our guidance range, generating strong operating leverage," said
First Quarter 2024 Financial Highlights
- Total revenue grew 19% year over year to
$281.1 million in the first quarter, compared with$237.0 million in the first quarter of 2023, and 18% in constant currency.- Presence revenue grew 22% year over year to
$200.9 million and 22% in constant currency. - Commerce revenue grew 11% year over year to
$80.3 million and 10% in constant currency.
- Presence revenue grew 22% year over year to
- Net income totaled
$0.1 million , compared with a net income of$0.5 million in the first quarter of 2023. - Basic and diluted earnings per share was
$0.00 in each of the first quarters of 2024 and 2023. Basic earnings per share was based upon 136,936,860 and 134,917,610 weighted average shares outstanding in the first quarter of 2024 and 2023, respectively. Diluted earnings per share was based upon 140,447,379 and 137,182,268 fully diluted weighted average shares outstanding in the first quarter of 2024 and 2023, respectively. - Cash flow from operating activities increased 33% to
$85.2 million for the three months endedMarch 31, 2024 , compared with$64.2 million for the three months endedMarch 31, 2023 , primarily due to sustained strength in bookings. - Cash and cash equivalents of
$241.9 million ; total debt of$556.9 million , of which$53.1 million is current, debt net of cash and investments totaled$268.0 million . - Total bookings grew 23% year over year to
$325.9 million in the first quarter, compared to$265.8 million in the first quarter of 2023. - Unlevered free cash flow increased 33% to
$89.3 million representing 32% of total revenue for the three months endedMarch 31, 2024 , compared with$67.1 million for the three months endedMarch 31, 2023 . - Adjusted EBITDA increased to
$32.0 million in the first quarter, compared with$30.9 million in the first quarter of 2023. - Total unique subscriptions increased 15% year over year to over 4.9 million in 2024, compared to 4.3 million in 2023 with strength in new domain subscriptions.
- Average revenue per unique subscription ("ARPUS") increased 7% year over year to
$226.63 in 2024, compared to$212.76 in 2023. - Annual run rate revenue ("ARRR") grew 19% year over year to
$1,117.7 million in 2024, compared to$941.9 million in 2023.
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."
Outlook & Guidance
For the second quarter of fiscal year 2024,
- Revenue of
$291 million to$294 million , or year-over-year growth of 18% to 19%. - Non-GAAP unlevered free cash flow of
$61 million to$64 million . This is the result of:- Cash flow from operating activities of
$55 million to$59 million , minus - Capital expenditures, expected to be approximately
$2 million ; plus - Cash paid for interest expense net of associated tax benefit, expected to be approximately
$7 million .
- Cash flow from operating activities of
For the full fiscal year 2024,
- Revenue of
$1,193 million to$1,208 million , or year-over-year growth of 18% to 19%. - Non-GAAP unlevered free cash flow of
$298 million to$318 million . This is the result of:- Cash flow from operating activities of
$275 million to$297 million , minus - Capital expenditures, expected in the range of
$5 million to$7 million ; plus - Cash paid for interest expense net of associated tax benefit, expected to be approximately
$28 million .
- Cash flow from operating activities of
Webcast Conference Call & Shareholder Letter Information
A replay of the live webcast and presentations will be available on
Non-GAAP Financial Measures
Revenue growth in constant currency is being provided to increase transparency and align our disclosures with companies in our industry that receive material revenues from international sources. Revenue constant currency has been adjusted to exclude the effect of year-over-year changes in foreign currency exchange rate fluctuations. We believe providing this information better enables investors to understand our operating performance irrespective of currency fluctuations.
We calculate constant currency information by translating current period results from entities with foreign functional currencies using the comparable foreign currency exchange rates from the prior fiscal year. To calculate the effect of foreign currency translation, we apply the same weighted monthly average exchange rate as the comparative period. Our definition of constant currency may differ from other companies reporting similarly named measures, and these constant currency performance measures should be viewed in addition to, and not as a substitute for, our operating performance measures calculated in accordance with GAAP.
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
Adjusted EBITDA, unlevered free cash flow and revenue constant currency are not prepared in accordance with generally accepted accounting principles in
Further information on these non-GAAP items and reconciliation to their closest GAAP measure is provided below under, "Reconciliation of Non-GAAP Financial Measures."
Definitions of Key Operating Metrics
On
Annual run rate revenue ("ARRR"). We calculate ARRR as the quarterly revenue from subscription fees and revenue generated in conjunction with associated fees (fees taken or assessed in conjunction with commerce transactions) in the last quarter of the period multiplied by 4. 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. ARRR for the three months ended
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 nor do they account for our Acquired Domain Assets. 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. ARPUS does not account for Acquired Domain Assets or the revenue from Acquired Domain Assets. We believe ARPUS is a useful metric in evaluating our ability to sell higher-value plans and add-on subscriptions.
Total bookings represents cash receipts for all subscriptions purchased, as well as payments due under the terms of contractual agreements for obligations to be fulfilled. In the case of multi-year contracts, total bookings only includes one year of committed revenue.
Gross payment volume ("GPV") represents the value of physical goods and services, including content, time sold, hospitality and events, net of refunds, on our platform over a given period of time. "Gross payment volume" or "GPV" was previously presented as "Gross merchandise value" or "GMV" in prior period disclosures. There were no revisions to the calculation of GPV as a result of this nomenclature change.
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
About
Contacts
Investors
investors@squarespace.com
Media
press@squarespace.com
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (unaudited) |
|||
|
|||
|
Three Months Ended |
||
|
2024 |
|
2023 |
Revenue |
$ 281,148 |
|
$ 237,028 |
Cost of revenue(1) |
80,774 |
|
42,950 |
Gross profit |
200,374 |
|
194,078 |
Operating expenses: |
|
|
|
Research and product development(1) |
66,846 |
|
58,570 |
Marketing and sales(1) |
117,533 |
|
101,672 |
General and administrative(1) |
30,823 |
|
32,340 |
Total operating expenses |
215,202 |
|
192,582 |
Operating (loss)/income |
(14,828) |
|
1,496 |
Interest expense |
(10,381) |
|
(8,094) |
Other income/(loss) |
4,577 |
|
(840) |
Loss before benefit from income taxes |
(20,632) |
|
(7,438) |
Benefit from income taxes |
20,776 |
|
7,940 |
Net income |
$ 144 |
|
$ 502 |
|
|
|
|
Net income per share, basic and diluted |
$ 0.00 |
|
$ 0.00 |
Weighted-average shares used in computing net income per share, basic |
136,936,860 |
|
134,917,610 |
Weighted-average shares used in computing net income per share, diluted |
140,447,379 |
|
137,182,268 |
|
|||
(1) Includes stock-based compensation as follows: |
|||
|
|||
|
Three Months Ended |
||
|
2024 |
|
2023 |
Cost of revenue |
$ 1,769 |
|
$ 1,052 |
Research and product development |
15,650 |
|
10,687 |
Marketing and sales |
3,211 |
|
1,871 |
General and administrative |
7,537 |
|
8,516 |
Total stock-based compensation |
$ 28,167 |
|
$ 22,126 |
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (unaudited) |
|||
|
|||
|
|
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 241,905 |
|
$ 257,702 |
Restricted cash |
38,778 |
|
36,583 |
Investment in marketable securities |
46,981 |
|
— |
Accounts receivable |
30,297 |
|
24,894 |
Due from vendors |
5,298 |
|
6,089 |
Prepaid expenses and other current assets |
70,419 |
|
48,947 |
Total current assets |
433,678 |
|
374,215 |
Property and equipment, net |
58,759 |
|
58,211 |
Operating lease right-of-use assets |
75,325 |
|
77,764 |
|
210,438 |
|
210,438 |
Intangible assets, net |
175,225 |
|
190,103 |
Other assets |
12,044 |
|
11,028 |
Total assets |
$ 965,469 |
|
$ 921,759 |
Liabilities and Stockholders' Deficit |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 21,386 |
|
$ 12,863 |
Accrued liabilities |
109,789 |
|
99,435 |
Deferred revenue |
376,134 |
|
333,191 |
Funds payable to customers |
44,076 |
|
42,672 |
Debt, current portion |
53,058 |
|
48,977 |
Operating lease liabilities, current portion |
12,819 |
|
12,640 |
Total current liabilities |
617,262 |
|
549,778 |
Deferred income taxes, non-current portion |
1,100 |
|
1,039 |
Debt, non-current portion |
503,833 |
|
519,816 |
Operating lease liabilities, non-current portion |
94,317 |
|
97,714 |
Other liabilities |
15,230 |
|
13,764 |
Total liabilities |
1,231,742 |
|
1,182,111 |
Commitments and contingencies |
|
|
|
Stockholders' deficit: |
|
|
|
Class A common stock, par value of |
9 |
|
9 |
Class B common stock, par value of |
5 |
|
5 |
Class C common stock (authorized |
— |
|
— |
Additional paid in capital |
918,552 |
|
924,634 |
Accumulated other comprehensive loss |
(826) |
|
(843) |
Accumulated deficit |
(1,184,013) |
|
(1,184,157) |
Total stockholders' deficit |
(266,273) |
|
(260,352) |
Total liabilities and stockholders' deficit |
$ 965,469 |
|
$ 921,759 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) |
|||
|
|||
|
Three Months Ended |
||
|
2024 |
|
2023 |
OPERATING ACTIVITIES: |
|
|
|
Net income |
$ 144 |
|
$ 502 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
18,672 |
|
7,241 |
Stock-based compensation |
28,167 |
|
22,126 |
Deferred income taxes |
62 |
|
62 |
Non-cash lease income |
(767) |
|
(466) |
Other |
350 |
|
93 |
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable and due from vendors |
(4,592) |
|
411 |
Prepaid expenses and other current assets |
(21,554) |
|
(13,697) |
Accounts payable and accrued liabilities |
19,627 |
|
16,960 |
Deferred revenue |
45,669 |
|
29,279 |
Funds payable to customers |
1,404 |
|
1,580 |
Other operating assets and liabilities |
(1,963) |
|
64 |
Net cash provided by operating activities |
85,219 |
|
64,155 |
INVESTING ACTIVITIES: |
|
|
|
Proceeds from the sale and maturities of marketable securities |
— |
|
39,664 |
Purchases of marketable securities |
(47,031) |
|
(7,824) |
Purchase of property and equipment |
(3,385) |
|
(3,075) |
Net cash (used in)/provided by investing activities |
(50,416) |
|
28,765 |
FINANCING ACTIVITIES: |
|
|
|
Principal payments on debt |
(12,244) |
|
(10,189) |
Payments for repurchase and retirement of Class A common stock |
(12,164) |
|
(25,321) |
Taxes paid related to net share settlement of equity awards |
(24,372) |
|
(12,760) |
Proceeds from exercise of stock options |
841 |
|
92 |
Net cash used in financing activities |
(47,939) |
|
(48,178) |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
(466) |
|
135 |
Net (decrease)/increase in cash, cash equivalents and restricted cash |
(13,602) |
|
44,877 |
Cash, cash equivalents, and restricted cash at the beginning of the period |
294,285 |
|
232,620 |
Cash, cash equivalents, and restricted cash at the end of the period |
$ 280,683 |
|
$ 277,497 |
|
|
|
|
Reconciliation of cash, cash equivalents, and restricted cash: |
|
|
|
Cash and cash equivalents |
$ 241,905 |
|
$ 239,327 |
Restricted cash |
38,778 |
|
38,170 |
Cash, cash equivalents, and restricted cash at the end of the period |
$ 280,683 |
|
$ 277,497 |
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW |
|
|
|
Cash paid during the year for interest |
$ 9,951 |
|
$ 7,985 |
Cash paid during the year for income taxes, net of refunds |
$ 1,426 |
|
$ 10,163 |
Cash paid for amounts included in the measurement of operating lease liabilities |
$ 4,103 |
|
$ 3,922 |
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCE ACTIVITIES |
|
|
|
Purchases of property and equipment included in accounts payable and accrued liabilities |
$ 649 |
|
$ 22 |
Capitalized stock-based compensation |
$ 812 |
|
$ 469 |
Accrued taxes related to net share settlement of equity awards |
$ 12 |
|
$ 645 |
RECONCILIATIONS 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 |
||
|
2024 |
|
2023 |
Net income |
$ 144 |
|
$ 502 |
Interest expense |
10,381 |
|
8,094 |
Benefit from income taxes |
(20,776) |
|
(7,940) |
Depreciation and amortization |
18,672 |
|
7,241 |
Stock-based compensation expense |
28,167 |
|
22,126 |
Other (income)/loss, net |
(4,577) |
|
840 |
Adjusted EBITDA |
$ 32,011 |
|
$ 30,863 |
|
|||
|
Three Months Ended |
||
|
2024 |
|
2023 |
Cash flows from operating activities |
$ 85,219 |
|
$ 64,155 |
Cash paid for capital expenditures |
(3,385) |
|
(3,075) |
Free cash flow |
$ 81,834 |
|
$ 61,080 |
Cash paid for interest, net of the associated tax benefit |
7,488 |
|
6,016 |
Unlevered free cash flow |
$ 89,322 |
|
$ 67,096 |
|
|||
|
|
|
|
Total debt outstanding |
$ 556,891 |
|
$ 568,793 |
Less: total cash and cash equivalents and marketable securities |
288,886 |
|
257,702 |
Total net debt |
$ 268,005 |
|
$ 311,091 |
|
|||
|
Three Months Ended |
||
|
2024 |
|
2023 |
Revenue, as reported |
$ 281,148 |
|
$ 237,028 |
Revenue year-over-year growth rate, as reported |
18.6 % |
|
14.1 % |
Effect of foreign currency translation ( |
$ 468 |
|
$ (2,803) |
Effect of foreign currency translation (%)(1) |
0.2 % |
|
(1.3) % |
Revenue constant currency growth rate |
18.4 % |
|
15.4 % |
|
|||
|
Three Months Ended |
||
|
2024 |
|
2023 |
Commerce revenue, as reported |
$ 80,264 |
|
$ 72,637 |
Revenue year-over-year growth rate, as reported |
10.5 % |
|
13.8 % |
Effect of foreign currency translation ( |
$ 77 |
|
$ (489) |
Effect of foreign currency translation (%)(1) |
0.1 % |
|
(0.8) % |
Commerce revenue constant currency growth rate |
10.4 % |
|
14.6 % |
|
|||
|
Three Months Ended |
||
|
2024 |
|
2023 |
Presence revenue, as reported |
$ 200,884 |
|
$ 164,391 |
Revenue year-over-year growth rate, as reported |
22.2 % |
|
14.2 % |
Effect of foreign currency translation ( |
$ 391 |
|
$ (2,314) |
Effect of foreign currency translation (%)(1) |
0.2 % |
|
(1.6) % |
Presence revenue constant currency growth rate |
22.0 % |
|
15.8 % |
|
(1) To calculate the effect of foreign currency translation, we apply the same weighted monthly average exchange rate as the comparative period. |
|
Amounts may not sum due to rounding. |
SUMMARY OF SHARES OUTSTANDING (unaudited) |
|||
|
|||
|
Three Months Ended |
||
|
2024 |
|
2023 |
Shares outstanding: |
|
|
|
Class A common stock |
89,684,219 |
|
87,295,014 |
Class B common stock |
47,844,755 |
|
47,844,755 |
Class C common stock |
0 |
|
0 |
Total shares outstanding |
137,528,974 |
|
135,139,769 |
KEY PERFORMANCE INDICATORS AND NON-GAAP FINANCIAL MEASURES (unaudited) |
|||
|
|||
|
Three Months Ended |
||
|
2024 |
|
2023 |
Unique subscriptions (in thousands) (1) |
4,912 |
|
4,264 |
Total bookings (in thousands) |
$ 325,946 |
|
$ 265,789 |
ARRR (in thousands) (2) |
$ 1,117,659 |
|
$ 941,860 |
ARPUS (1) |
$ 226.63 |
|
$ 212.76 |
Adjusted EBITDA (in thousands) |
$ 32,011 |
|
$ 30,863 |
Unlevered free cash flow (in thousands) |
$ 89,322 |
|
$ 67,096 |
GPV (in thousands) (3) |
$ 1,649,457 |
|
$ 1,534,058 |
______________ |
|
(1) |
Unique subscriptions and average revenue per unique subscription ("ARPUS") do not account for single domain subscriptions originally sold by |
(2) |
Annual run rate revenue ("ARRR") for the three months ended |
(3) |
"Gross payment volume" or "GPV" was previously presented as "Gross merchandise value" or "GMV" in prior period disclosures. There were no revisions to the calculation of GPV as a result of this nomenclature change. |
View original content to download multimedia:https://www.prnewswire.com/news-releases/squarespace-announces-first-quarter-2024-financial-results-302137434.html
SOURCE