Squarespace Joins Revenue Unicorn Club

Congratulations to Squarespace as it crosses $1 Billion in annual revenue and joins the software Revenue Unicorns!

Let's see what we can learn from Squarespace's journey...

Revenue Growth

Squarespace maintained a median revenue growth of 14% or higher on the path to $1 Billion in annual revenue. The company reaccelerated revenue growth as it crossed $1 Billion in revenue.

Gross Margin

Squarespace’s gross margin profile exceed the Revenue Unicorn median at each revenue range and maintained a gross margin of 80%+ at scale. Atlassian and Dynatrace displayed similar gross margin strength on their path to $1 Billion in annual revenue.

Sales & Marketing

Squarespace had a lower sales and marketing spend on its path to $1 Billion in annual revenue as compared to the Revenue Unicorn median. Wix and Workday exhibited a similar sales and marketing trend on their journey to $1 Billion in annual revenue.

Research & Development

Squarespace started the journey to $1 Billion in annual revenue with a lower investment in research and development as compared to the median Revenue Unicorn. Squarespace then accelerated research and development spend as they grew before converging with the median Revenue Unicorn when crossing the $1 Billion in annual revenue mark. HubSpot exhibited a similar trend on its path to $1 Billion in annual revenue.

General & Administrative

Squarespace’s general and administrative expenses started lower and grew in-line with the median Revenue Unicorn as they approached $1 Billion in annual revenue.

Stock Based Compensation

Squarespace had a lower SBC expense as a percentage of revenue compared to the Revenue Unicorn median throughout their journey to $1 Billion in annual revenue. When viewing SBC expense as a percentage of enterprise value, Squarespace is at 2.5%, which is approximately 1.5x higher than the Revenue Unicorn median of 1.7% in the $1 Billion+ revenue range.

Free Cash Flow

Squarespace’s free cash flow margin was above the Revenue Unicorn median throughout its path to $1 Billion in annual revenue. Datadog and Zoom delivered similar free cash flow margin durability at scale.

Time to Reach $1 Billion in Revenue

Squarespace reached $1 Billion in revenue after 20.00 years. This is longer than the median time of 13.25 years it took other Revenue Unicorns to reach the $1 Billion revenue mark. Other Revenue Unicorns that took a similar amount of time to achieve the $1 Billion revenue threshold include Box (17.25 years), Palantir (17.00 years), and Unity (16.75 years).

Other Revenue Unicorns founded around the same time as Squarespace (2003 founding) include Atlassian (2002), DocuSign (2003), and Splunk (2003). This set of companies took a median of 16.00 years to achieve $1 Billion in revenue (Atlassian at 16.00 years, DocuSign at 16.25 years, and Splunk at 13.50 years).

The Journey to $1 Billion in Revenue

For those of you that love data as much as we do, below is the full data set used for this analysis. Again, congratulations to the Squarespace team! Stay tuned for the next Revenue Unicorn update.

Note: The complete list of Revenue Unicorns used in the comparison can be found in the presentation here.

About Squarespace

As per the company’s materials, Squarespace enables anyone to stand out and succeed online. The company was founded in 2003 by Anthony Casalena. Squarespace’s domains, website, marketing and social media management tools provide an online presence with best-in-class design and a consistent brand experience. Their commerce solutions include tools for selling digital content, classes, appointments, reservations and events, physical goods and more. Squarespace facilitates an intuitive, seamless user experience across products and provides a unified view of analytics. The company’s mission is twofold - for the ease of use of their products to provide anyone the ability to participate in the opportunity that comes from publishing and transacting on the internet, and for their design-centric and comprehensive tools to help them stand out and succeed.?The company reported $271 Million in fourth quarter revenue for the period ended December 31, 2023. Combined with results from the preceding quarters, this recent performance boosts Squarespace across the $1 Billion in annual revenue threshold as measured on a last twelve month basis to become the latest software Revenue Unicorn.

About The Revenue Unicorn Playbook

The Revenue Unicorn Playbook is an analytical guide that explores the growth of public software companies from $100 Million to $1 Billion in revenue. The goal of the Playbook is to offer founders and company leaders a framework to examine their growth and investments as they scale. You can find the original Revenue Unicorn article here and presentation here.

The information provided herein is the opinion of Friends & Family Capital and does not reflect the view of any other person or entity. It is for informational purposes and should not be construed as an investment recommendation. Data sources include CapIQ and Wall Street research. Copyright ? 2024, S&P Global Market Intelligence (and its affiliates, as applicable). Friends & Family Capital is an investment adviser registered with the U.S. Securities and Exchange Commission.