Squarespace, the popular website building and hosting platform, has been making headlines recently with its plans to go public through a direct listing on the New York Stock Exchange. The company, which was founded in 2003, has grown steadily over the years and is now valued at around $10 billion. In this article, we will take a closer look at IPO plans and what they mean for the company and its investors.
The Basics of Squarespace’s IPO
Squarespace announced its plans to go public in late March 2021, with a direct listing on the NYSE. This means that instead of issuing new shares to raise capital, the company will allow existing shareholders to sell their shares directly to the public. The direct listing is expected to take place in the second quarter of 2021.
According to Squarespace’s SEC filing, the company had revenue of $621.1 million in 2020, up from $484.8 million in 2019. However, the company also reported a net loss of $47.2 million in 2020, compared to a net loss of $58.2 million in 2019.
The Potential Risks of Squarespace’s IPO
While Squarespace’s IPO has generated a lot of excitement among investors, there are also some potential risks to consider. One of the biggest risks is the company’s reliance on a small number of customers for a significant portion of its revenue.
According to Squarespace’s SEC filing, the company’s top ten customers accounted for approximately 28% of its revenue in 2020. If one or more of these customers were to leave or reduce their spending with Squarespace, it could have a significant impact on the company’s financial performance.
Another potential risk is the competitive landscape in which Squarespace operates. The website building and hosting market is highly competitive, with a number of well-established players such as Wix, Shopify, and WordPress. Squarespace will need to continue to innovate and differentiate itself in order to maintain its market position and grow its customer base.
The Potential Benefits of Squarespace’s IPO
Despite the potential risks, there are also a number of potential benefits to Squarespace’s IPO. One of the biggest benefits is the additional capital that the company will be able to raise. While Squarespace is already a well-established company, the additional capital will allow it to invest in new products and services, as well as expand its marketing efforts.
Another potential benefit is the increased visibility that comes with being a public company. Squarespace will be able to use its public profile to attract new customers and partners, as well as potentially acquire other companies or technologies.
The Future of Squarespace
Overall, Squarespace’s IPO represents a significant milestone for the company and its investors. While there are certainly risks to consider, the potential benefits of additional capital and increased visibility make it an attractive option for the company.
Looking ahead, it will be interesting to see how Squarespace continues to innovate and differentiate itself in the competitive website building and hosting market. With its strong brand and loyal customer base, the company is well-positioned to continue to grow and succeed in the years to come.