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Posted by Richy George on 19 May, 2021This post was originally published on this site
It’s Squarespace direct listing day, and the SMB web hosting and design shop’s reference price has been set at $50 per share.
According to quick math from the IPO-watching group Renaissance Capital, Squarespace is worth $7.4 billion at that price, calculated using a fully diluted share count. The company’s new valuation is sharply under where Squarespace raised capital in March, when it added $300 million to its accounts at a $10.0 billion post-money valuation, according to Crunchbase data.
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The company’s reference price, however, is just that: a reference. It doesn’t mean that much. As we’ve seen from other notable direct listings, a company’s opening price does not necessarily align with its formal reference price. Until Squarespace opens, whether or not it will be valued at a discount to its final private price is unclear.
While the benefits of a direct listing are understood, the post-listing performance for well-known direct listings is less obvious. Indeed, Coinbase is currently under its reference price after starting its life as a public company at a far-richer figure, and Spotify’s share price is middling at best compared to its 2018-era direct listing reference price.
This morning, we’re going over Squarespace’s recently disclosed Q2 and full-2021 guidance. Then we’ll ask how its expectations compare to its reference price-defined pre-trading valuation. Finally, we’ll set some stakes in the ground regarding historical direct-listing results and what we might expect from the company as it adds a third set of data to our quiver.
This will be lots of fun, so let’s get into the numbers!
Per Squarespace’s own reporting, it expects revenues between $186 million and $189 million in Q2 2021, which it calculates as a growth rate of between 24% and 26%. That pace of growth at its scale is perfectly acceptable for a company going public.
For all of 2021, Squarespace expects revenues of $764 million to $776 million, which works out to a very similar 23% to 25% growth rate.
In profit terms, Squarespace only shared its “non-GAAP unlevered free cash flow,” which is a technical thing I have no time to explain. But what matters is that the company expects some non-GAAP unlevered free cash flow in Q2 2021 ($10 million to $13 million), and lots more in all of 2021 ($100 million to $115 million).
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