Market Moves: Squarespace Unveils S-1 For Direct Listing

Squarespace logo

Squarespace, the popular web building and hosting company, has unveiled its S-1 filing with the US Securities and Exchange Commission (SEC) for a direct listing on the New York Stock Exchange (NYSE). The company had before now filed confidentially for a public listing this January and raised funding valuing it at $10 billion in March.

As usual, the S-1 filing gives a peek into Squarespace’s business and financials with information not publicly known before. In Squarespace’s case, it paints a picture of a rapidly growing company with a history of profitability, the latter of which’s a rarity among the recent crop of public listings from the startup world.

  • Squarespace has been profitable for the past three years even as it grew rapidly. From 2018 to 2020, the company’s annual revenue grew from $390 million to $621 million while it maintained profitability in the tens of millions. In 2018, 2019, and 2020 respectively, Squarespace reported a profit of $43 million, $58 million, and $31 million.
  • Squarespace as a business has insane gross margins, with its ‘Cost of Revenue’ amounting to less than 20% of its revenue over the past three years. For example, the company made $621 million in revenue in 2020 and reported a $98 million ‘Cost of Revenue’. 
  • With its very high gross margins, what eats up Squarespace’s gross profit is majorly marketing and sales activities, for which it spent $260 million in 2020 and $184 million in the year before that. That figure isn’t surprising given that Squarespace has embarked on many marketing tactics including extensive YouTube ads and expensive ads on Super Bowl events over the past few years.
  • It’s apparent that Squarespace spends big on marketing and reaps rapid revenue growth as a result. Talk about a good and stable business that’s for a plus still growing rapidly.
  • Squarespace will trade on the NYSE under the ticker symbol “SQSP” after its listing. The company is pursuing a direct listing that’ll see it sell shares directly to the public without the use of intermediary banks. It’s a listing method that’s getting increasingly popular with technology companies hitting the public markets, with a recent example being crypto exchange Coinbase.
  • Notably, Squarespace will remain tightly controlled by its founder and longtime CEO Anthony Casalena even after its public listing. This draws from him holding shares that account for 68.2% majority voting power.
  • With an S-1 filing dropped, a final public listing for Squarespace should be expected very soon.

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