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SQUARESPACE INC - CLASS A (SQSP) Stock Fundamental Analysis

NYSE:SQSP - New York Stock Exchange, Inc. - US85225A1079 - Common Stock - Currency: USD

46.57  -0.1 (-0.21%)

After market: 46.75 +0.18 (+0.39%)

Fundamental Rating

3

Taking everything into account, SQSP scores 3 out of 10 in our fundamental rating. SQSP was compared to 82 industry peers in the IT Services industry. Both the profitability and financial health of SQSP have multiple concerns. SQSP is valied quite expensively at the moment, while it does show a decent growth rate.


Dividend Valuation Growth Profitability Health

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3

1. Profitability

1.1 Basic Checks

In the past year SQSP has reported negative net income.
SQSP had a positive operating cash flow in the past year.
SQSP had negative earnings in each of the past 5 years.
In the past 5 years SQSP always reported a positive cash flow from operatings.
SQSP Yearly Net Income VS EBIT VS OCF VS FCFSQSP Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2018 2019 2020 2021 2022 2023 0 100M -100M 200M -200M

1.2 Ratios

SQSP has a Return On Assets (-0.50%) which is comparable to the rest of the industry.
The Return On Invested Capital of SQSP (9.88%) is better than 75.31% of its industry peers.
Industry RankSector Rank
ROA -0.5%
ROE N/A
ROIC 9.88%
ROA(3y)-21.03%
ROA(5y)-44.47%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
SQSP Yearly ROA, ROE, ROICSQSP Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2018 2019 2020 2021 2022 2023 0 500 1K 1.5K

1.3 Margins

Looking at the Operating Margin, with a value of 4.68%, SQSP is in line with its industry, outperforming 56.79% of the companies in the same industry.
SQSP's Operating Margin has declined in the last couple of years.
With an excellent Gross Margin value of 74.21%, SQSP belongs to the best of the industry, outperforming 91.36% of the companies in the same industry.
In the last couple of years the Gross Margin of SQSP has remained more or less at the same level.
Industry RankSector Rank
OM 4.68%
PM (TTM) N/A
GM 74.21%
OM growth 3Y8.52%
OM growth 5Y-10.06%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-1.89%
GM growth 5Y-0.62%
SQSP Yearly Profit, Operating, Gross MarginsSQSP Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2018 2019 2020 2021 2022 2023 0 20 -20 40 -40 60 80

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3

2. Health

2.1 Basic Checks

SQSP has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
SQSP has more shares outstanding than it did 1 year ago.
The debt/assets ratio for SQSP has been reduced compared to a year ago.
SQSP Yearly Shares OutstandingSQSP Yearly Shares OutstandingYearly Shares Outstanding 2019 2020 2021 2022 2023 20M 40M 60M 80M 100M
SQSP Yearly Total Debt VS Total AssetsSQSP Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2019 2020 2021 2022 2023 200M 400M 600M 800M

2.2 Solvency

SQSP has an Altman-Z score of 2.57. This is not the best score and indicates that SQSP is in the grey zone with still only limited risk for bankruptcy at the moment.
SQSP has a Altman-Z score of 2.57. This is comparable to the rest of the industry: SQSP outperforms 54.32% of its industry peers.
SQSP has a debt to FCF ratio of 2.61. This is a good value and a sign of high solvency as SQSP would need 2.61 years to pay back of all of its debts.
SQSP has a better Debt to FCF ratio (2.61) than 66.67% of its industry peers.
Industry RankSector Rank
Debt/Equity N/A
Debt/FCF 2.61
Altman-Z 2.57
ROIC/WACC1
WACC9.93%
SQSP Yearly LT Debt VS Equity VS FCFSQSP Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2019 2020 2021 2022 2023 0 200M -200M 400M -400M

2.3 Liquidity

SQSP has a Current Ratio of 0.76. This is a bad value and indicates that SQSP is not financially healthy enough and could expect problems in meeting its short term obligations.
The Current ratio of SQSP (0.76) is worse than 83.95% of its industry peers.
A Quick Ratio of 0.76 indicates that SQSP may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.76, SQSP is doing worse than 83.95% of the companies in the same industry.
Industry RankSector Rank
Current Ratio 0.76
Quick Ratio 0.76
SQSP Yearly Current Assets VS Current LiabilitesSQSP Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2019 2020 2021 2022 2023 100M 200M 300M 400M 500M

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6

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 97.53% over the past year.
The Revenue has grown by 18.77% in the past year. This is quite good.
The Revenue has been growing by 21.02% on average over the past years. This is a very strong growth!
EPS 1Y (TTM)97.53%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%33.33%
Revenue 1Y (TTM)18.77%
Revenue growth 3Y17.68%
Revenue growth 5Y21.02%
Sales Q2Q%19.89%

3.2 Future

SQSP is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 115.31% yearly.
Based on estimates for the next years, SQSP will show a quite strong growth in Revenue. The Revenue will grow by 14.77% on average per year.
EPS Next Y732.4%
EPS Next 2Y261.81%
EPS Next 3Y177.11%
EPS Next 5Y115.31%
Revenue Next Year20.35%
Revenue Next 2Y17.46%
Revenue Next 3Y15.64%
Revenue Next 5Y14.77%

3.3 Evolution

Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
SQSP Yearly Revenue VS EstimatesSQSP Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 500M 1B 1.5B 2B 2.5B
SQSP Yearly EPS VS EstimatesSQSP Yearly EPS VS EstimatesYearly EPS VS Estimates 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 0 1 -1 2 3

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3

4. Valuation

4.1 Price/Earnings Ratio

SQSP reported negative earnings for the last year, which makes the Price/Earnings Ratio negative.
SQSP is valuated quite expensively with a Price/Forward Earnings ratio of 83.98.
SQSP's Price/Forward Earnings ratio is in line with the industry average.
SQSP is valuated expensively when we compare the Price/Forward Earnings ratio to 22.13, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE N/A
Fwd PE 83.98
SQSP Price Earnings VS Forward Price EarningsSQSP Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 0 -200 -400 -600 -800 -1K

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, SQSP is valued a bit more expensive than 62.96% of the companies in the same industry.
SQSP's Price/Free Cash Flow ratio is in line with the industry average.
Industry RankSector Rank
P/FCF 30.87
EV/EBITDA 56.06
SQSP Per share dataSQSP EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 0 2 -2 4 -4 6

4.3 Compensation for Growth

SQSP's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
SQSP's earnings are expected to grow with 177.10% in the coming years. This may justify a more expensive valuation.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y261.81%
EPS Next 3Y177.11%

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0

5. Dividend

5.1 Amount

SQSP does not give a dividend.
Industry RankSector Rank
Dividend Yield N/A

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SQUARESPACE INC - CLASS A

NYSE:SQSP (10/16/2024, 9:01:31 PM)

After market: 46.75 +0.18 (+0.39%)

46.57

-0.1 (-0.21%)

Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)08-02 2024-08-02/bmo
Earnings (Next)11-05 2024-11-05/amc
Inst Owners47.24%
Inst Owner Change-96.84%
Ins Owners7.17%
Ins Owner Change0%
Market Cap6.45B
Analysts71.11
Price Target46.32 (-0.54%)
Short Float %N/A
Short RatioN/A
Dividend
Industry RankSector Rank
Dividend Yield N/A
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)18.28%
Min EPS beat(2)-63.44%
Max EPS beat(2)100%
EPS beat(4)1
Avg EPS beat(4)-56.87%
Min EPS beat(4)-191.2%
Max EPS beat(4)100%
EPS beat(8)2
Avg EPS beat(8)-212.48%
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)0
Avg Revenue beat(2)-0.5%
Min Revenue beat(2)-0.75%
Max Revenue beat(2)-0.25%
Revenue beat(4)2
Avg Revenue beat(4)-0.08%
Min Revenue beat(4)-0.75%
Max Revenue beat(4)0.65%
Revenue beat(8)3
Avg Revenue beat(8)-0.12%
Revenue beat(12)3
Avg Revenue beat(12)-0.36%
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)1.54%
PT rev (3m)2.74%
EPS NQ rev (1m)41.48%
EPS NQ rev (3m)-14.76%
EPS NY rev (1m)0%
EPS NY rev (3m)-19.58%
Revenue NQ rev (1m)-0.12%
Revenue NQ rev (3m)0.52%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.65%
Valuation
Industry RankSector Rank
PE N/A
Fwd PE 83.98
P/S 5.83
P/FCF 30.87
P/OCF 28.69
P/B N/A
P/tB N/A
EV/EBITDA 56.06
EPS(TTM)-0.04
EYN/A
EPS(NY)0.55
Fwd EY1.19%
FCF(TTM)1.51
FCFY3.24%
OCF(TTM)1.62
OCFY3.49%
SpS7.98
BVpS-1.75
TBVpS-4.19
PEG (NY)N/A
PEG (5Y)N/A
Profitability
Industry RankSector Rank
ROA -0.5%
ROE N/A
ROCE 12.51%
ROIC 9.88%
ROICexc 44.8%
ROICexgc N/A
OM 4.68%
PM (TTM) N/A
GM 74.21%
FCFM 18.89%
ROA(3y)-21.03%
ROA(5y)-44.47%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3Y8.52%
OM growth 5Y-10.06%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-1.89%
GM growth 5Y-0.62%
F-Score5
Asset Turnover1.1
Health
Industry RankSector Rank
Debt/Equity N/A
Debt/FCF 2.61
Debt/EBITDA 4.13
Cap/Depr 23.94%
Cap/Sales 1.44%
Interest Coverage 1.32
Cash Conversion 190.39%
Profit Quality N/A
Current Ratio 0.76
Quick Ratio 0.76
Altman-Z 2.57
F-Score5
WACC9.93%
ROIC/WACC1
Cap/Depr(3y)36.24%
Cap/Depr(5y)35.04%
Cap/Sales(3y)1.47%
Cap/Sales(5y)1.37%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)97.53%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%33.33%
EPS Next Y732.4%
EPS Next 2Y261.81%
EPS Next 3Y177.11%
EPS Next 5Y115.31%
Revenue 1Y (TTM)18.77%
Revenue growth 3Y17.68%
Revenue growth 5Y21.02%
Sales Q2Q%19.89%
Revenue Next Year20.35%
Revenue Next 2Y17.46%
Revenue Next 3Y15.64%
Revenue Next 5Y14.77%
EBIT growth 1Y-35.06%
EBIT growth 3Y27.71%
EBIT growth 5Y8.85%
EBIT Next Year171.84%
EBIT Next 3Y62.45%
EBIT Next 5Y41.74%
FCF growth 1Y56.14%
FCF growth 3Y13.8%
FCF growth 5YN/A
OCF growth 1Y51.78%
OCF growth 3Y15.5%
OCF growth 5YN/A