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Squarespace (SQSP) Q3 Earnings Report Preview: What To Look For

StockStory - Mon Nov 6, 2023

SQSP Cover Image

Website and ecommerce tools provider Squarespace (NYSE:SQSP) will be reporting results tomorrow before market open. Here's what to expect.

Last quarter Squarespace reported revenues of $247.5 million, up 16.4% year on year, beating analyst revenue expectations by 1.7%. It was a solid quarter for the company, with strong sales guidance for the next quarter and a decent beat of analysts' revenue estimates.

Is Squarespace buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Squarespace's revenue to grow 15.7% year on year to $251.9 million, improving on the 8.3% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.29 per share.

Squarespace Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 1.4%.

Looking at Squarespace's peers in the e-commerce software segment, some of them have already reported Q3 earnings results, giving us a hint what we can expect. Shopify delivered top-line growth of 25.5% year on year, beating analyst estimates by 2.6% and VeriSign reported revenues up 5.4% year on year, missing analyst estimates by 0.8%. Shopify traded up 16.9% on the results, VeriSign traded flat on the result.

Read our full analysis of Shopify's results here and VeriSign's results here.

The whole tech sector has been facing a sell-off and while some of the e-commerce software stocks have fared somewhat better, they have not been spared, with share price declining 2.7% over the last month. Squarespace is up 0.5% during the same time, and is heading into the earnings with analyst price target of $35, compared to share price of $29.9.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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The author has no position in any of the stocks mentioned.

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