Performance Analysis:
Squarespace has reported an increase in its revenue from $784 million in 2021 to $867 million in 2022, representing a YoY growth rate of 10.5%. The primary revenue source for the company is its monthly and annual subscription plans, which accounted for 91.5% and 92.1% of its total revenue in 2022 and 2021, respectively. The company’s commerce offerings have helped expand its addressable market, and the adoption of its commerce services has resulted in the growth of commerce revenue, which was $269.7 million in 2022, representing a YoY growth rate of 17.5%. The company's focus on product innovation while retaining a talented product development workforce has resulted in a growth rate of 19.4% in research and product development expenses in 2022, which was $227.3 million.
Squarespace's number of unique subscriptions was 4.2 million as of December 31, 2022, representing an increase of 3% relative to December 31, 2021. To support the acquisition of new unique subscriptions, the company plans to invest in its direct response marketing efforts and expand internationally. The growth opportunities in overseas markets will enable the company to diversify its revenue streams and reduce its dependence on the North American region.
Forward-looking Analysis:
Squarespace expects to continue its revenue growth momentum in the upcoming year. The company has a predictable business model driven by stable customer acquisition, expansion of commerce offerings, and add-on subscriptions. The company intends to innovate and expand its commerce offerings further, enabling customers to build the most impactful online stores, expand its functionality and establish leadership in commerce services and hospitality services. The expansion opportunities in the hospitality industry stemming from the acquisition of Tock will enable the company to offer a more comprehensive commerce service portfolio.
The ongoing investments in product innovation and the product development workforce's retention will help the company remain agile to address customer needs. Squarespace plans to invest in its direct response marketing efforts and expand internationally to support the acquisition of new unique subscriptions. However, the company is exposed to foreign currency fluctuations as customers from overseas markets account for nearly 30% of its bookings. Any adverse fluctuations in foreign currency exchange rates could affect year-over-year comparability of its operating results.
In conclusion, Squarespace seems well-positioned to deliver a strong financial performance in the upcoming year, driven by its stable customer acquisition, focus on innovation and product expansion, and international market expansion. Its ongoing investments in product innovation and focus on retaining a talented product development workforce will enable it to remain agile to address customer needs. However, the company's exposure to foreign currency fluctuations could impact its financial performance in specific markets.