$Squarespace Inc (SQSP.US) $It is planned to launch a direct listing on the New York Stock Exchange on Wednesday, May 19. A direct listing means that existing shareholders sell shares, whileSquarespace will not issue any new shares or raise any cash for the company.Goldman Sachs Group, JPMorgan Chase & Co, Barclays Capital and RBC Capital Markets will act as financial advisers.

The company raised $300m in its latest round of financing in March 2021, with investors including well-known investors such as Tiger Global and D1 Capital Partners. According to foreign media reports, the round of financing values the company at $10 billion and is likely to be used as a rough pre-IPO benchmark.

Unicorn in the field of online website creation and hosting, with a valuation of more than fivefold in three years

Founded in 2003, Squarespace is designed to help customers create their own websites efficiently and provide e-commerce and marketing functions. Competitors include$Wix.com Ltd. (WIX.US) $、 GoDaddy 、$BigCommerce Holdings (BIGC.US) $和$Shopify Inc (SHOP.US) $。

The huge market space of e-commerce and the first-mover advantage of Squarespace have made it very popular since its establishment.Accel and Index Ventures led its $38.5 million round A fundraising in 2010, followed by another $40 million in 2014, and in 2017 received up to $200m in financing with General Atlantic's participation, with a post-investment valuation of $1.7 billion. The latest 10 billion valuation means the company has more than quintupled its valuation in just three years.

Subscription revenue is dominant, and the growth rate is lower than that of competitors

Thanks to the accelerated tide of e-commerce last year, the performance of such website creation, design and hosting platforms has grown rapidly. Squarespace's revenue in 2020 was $621 million, up from $485 million a year ago.In the most recent fiscal year, revenue increased by 28% year-on-year., surpassing the previous growth rate of 24%.

Although the revenue has increased, the revenue scale and growth rate are relatively low compared with its competitors.$Wix.com Ltd. (WIX.US) $Revenue for fiscal year 2020 was $989 million, an increase of 29.91% year-on-year and an increase of 85.63% year-on-year.

In addition, Squarespace's main revenue comes from subscription revenue, accounting for 94%. AndIts rivals obviously laid out earlier and achieved some results in the diversification of income structure.Wix accounts for 79.2% of subscription revenue. Shopify Inc has extended the e-commerce industry chain to diversify its business, and the business income of merchant solutions has already exceeded the subscription income to become the main income.

Squarespace's revenue last year was similar to that announced by Wix in 2018, but Wix grew faster on that scale.

-Jefferies analyst Brent Thill

Obviously, Squarespace is also aware of the need for diversification.SquareSpaceRecently completed a $415 million acquisition of TockTock specializes in catering and hospitality, helping corporate customers manage bookings, takeout orders, event ticketing, etc. Through this acquisition, Squarespace has expanded its business scope, but similarly, this area also faces many competitors.

How did Squarespace perform on its first day under the volatile market of technology stocks?

Last year, technology stocks were very popular in the US stock IPO market. Many new shares of fast-growing technology companies performed well on the first day and rose all the way after listing. However, due to the recent turmoil in the technology sector, many new stocks, including this year's hot new stocks, such as$Coupang Inc (CPNG.US) $、$Roblox Corporation (RBLX.US) $和$Coinbase Global, Inc. (COIN.US) $All fell below the offering price (those listed directly fell below the opening price on the first day).

Wall Street investors and bankers believe that if there is celebrity-backed online celebrity oatmeal milk this week$Oatly Group AB (OTLY.US) $And Squarespace's public offering is progressing smoothly, which will boost confidence in the IPO market.

As a reference, Wix and Shopify Inc had a market capitalization of $12.8 billion and $140.9 billion respectively as of Tuesday's closing price. What do you think of Squarespace's performance on the first day?