So with public SaaS companies continuing to grow, but revenue multiples often at relative lows, it can make sense in some cases to “go private”, invest in more growth for a few years, and try to IPO again down the road.  Qualtrics did it, nCino just did it, and the latest is Squarespace.  They are going private at an almost $7 Billion valuation.

Now that may sound like a lot, and it is a lot, but less so a multiple of revenue and ARR.  Squarespace is at ~$1.1B in ARR, growing almost 20% with strong margins — and even with a 30% premium to take it public, it’s still been acquired for about 6x ARR.

Squarespace hasn’t done everythiing right, but it’s a pretty darn good one.  One I’d hoped would be worth more than 6x ARR.

5 Interesting Learnings:

#1.  4,900,000 Paid Subscriptions, and Still Growing Paid Subscribers 15%

Want to make a self-serve model work at scale?  You may well need 5m+ paid customers.  Dropbox has 10m+ at $2.5B ARR.

#2.  ARPU up 7%, A Significant Drive of Growth at Scale

The more growth slows, the bigger the impact of price increases — assuming they are tolerated by the base.  Squarespace did a big price increase in 2022, and it takes time to rippling through the ARR and base.

#3. 29% of Revenue From eCommerce

Folks in the ecomm space know this, but B2B folks may be surprised.  But Squarespace and Wix and WordPress / Automattic are all big Shopify competitors — albeit at the very low end of the market for the most part.

#4.  Efficient Model Now, Though Not Hyper-Efficient

Like almost every SaaS leader, Squarespace got a lot more efficient the past 24+ months.  Through 2022, the company was basically break-even from an adjusted EBITDA perspective.  Since then?  Like most of us, it’s gotten a lot, lot more efficient.  Now at +11 to +13% adjusted EBITDA.  Even more impressive, free cash flow has grown to a stunning 32% of revenue.

#5.  Not Predicting Any Deceleration in the Coming Year

Perhaps the most heartening thing here.  Squarespace isn’t a rocketship anymore, but it’s still growing at a solid rate, just under 20% at $1.1B ARR.  And it’s saying it doesn’t seen growth slowing (albeit some of this is fueled by their acquisition of Google Domains).  Squarespace isn’t seeing any big macro impacts, and in fact is seeing bookings accelerate a smidge.

And a few other interesting learnings:

#6.  International Revenue is 28% of Total

Go global when and where you can!

#7.  Only Growing Sales & Marketing Expenses 4% as Revenue Grows 19%

Squarespace is likely leaving some revenue on the table to stay efficient.  Whether this is “good” or not is a bit unclear.  But it does make the company more and more profitable.


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