Taking everything into account, SQSP scores 3 out of 10 in our fundamental rating. SQSP was compared to 88 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.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

SQSP had negative earnings in the past year.
SQSP had a positive operating cash flow in the past year.
In the past 5 years SQSP always reported negative net income.
SQSP had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

SQSP has a Return On Assets of -0.50%. This is comparable to the rest of the industry: SQSP outperforms 45.68% of its industry peers.
With a decent Return On Invested Capital value of 9.88%, SQSP is doing good in the industry, outperforming 75.31% of the companies in the same industry.

		Industry Rank	Sector 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

1.3 Margins

SQSP has a Operating Margin (4.68%) which is comparable to the rest of the industry.
SQSP's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 74.21%, SQSP belongs to the top of the industry, outperforming 91.36% of the companies in the same industry.
SQSP's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector 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%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), SQSP is destroying value.
SQSP has more shares outstanding than it did 1 year ago.
Compared to 1 year ago, SQSP has an improved debt to assets ratio.

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 (2.57) which is comparable to the rest of the industry.
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 Debt to FCF ratio of 2.61. This is in the better half of the industry: SQSP outperforms 66.67% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	N/A
Debt/FCF	2.61
Altman-Z	2.57

ROIC/WACC1

WACC9.93%

2.3 Liquidity

A Current Ratio of 0.76 indicates that SQSP may have some problems paying its short term obligations.
SQSP has a Current ratio of 0.76. This is amonst the worse of the industry: SQSP underperforms 83.95% of its industry peers.
SQSP has a Quick 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 Quick ratio of SQSP (0.76) is worse than 83.95% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	0.76
Quick Ratio	0.76

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WACC

Debt/Equity

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Altman-Z score

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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.
SQSP shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 21.02% yearly.

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.
The Revenue is expected to grow by 14.77% on average over the next years. This is quite good.

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.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings Ratio is negative for SQSP. In the last year negative earnings were reported.
Based on the Price/Forward Earnings ratio of 83.98, the valuation of SQSP can be described as expensive.
Compared to the rest of the industry, the Price/Forward Earnings ratio of SQSP is on the same level as its industry peers.
SQSP is valuated expensively when we compare the Price/Forward Earnings ratio to 25.83, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	N/A
Fwd PE	83.98

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, SQSP is valued a bit more expensive than the industry average as 62.96% of the companies are valued more cheaply.
The rest of the industry has a similar Price/Free Cash Flow ratio as SQSP.

		Industry Rank	Sector Rank
P/FCF	30.87
EV/EBITDA	56.06

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
A more expensive valuation may be justified as SQSP's earnings are expected to grow with 177.10% in the coming years.