Boost Q1 revenue at Squarespace — Price increases
Sticky clients help Squarespace boost revenue.
Proprietary website builders are sticky. It’s hard to switch from one provider to another. And they mostly cater to non-technical people, making it even harder to switch.
Squarespace (NYSE: SQSP) is taking advantage of that, reporting solid revenue growth thanks mostly to price increases.
Today, the firm noted 14% year-over-year revenue growth to $237.0 million in Q1 2023. During that time, the number of unique subscriptions grew by only 2.5%. But the firm noted that price increases for both fresh and existing clients buoyed the results.
In its shareholder letter, the firm wrote:
“Pricing increases to our legacy clients contributed to our outperformance this quarter. We completed two full quarters of recognizing revenue associated with legacy clients (primarily US-based) and we continue to see strong rates of client retention affirming our belief that we can provide an essential service to our clients and deliver more value each year with our ongoing innovation and improvements.”
Entry level plans are now $23 a month, or $16 when paid monthly. The lowest plan four years ago was $8 per month when paid annually. Pricing is comparable to competitor Wix.
Granted, Squarespace has added fresh features. The basic plan now includes a domain name, for example.
Still, it shows that the firm has been able to flex pricing power. It’s not surprising that retention rates have remained strong for people who have by now created a site on the platform.
The firm also noted that more people are selecting its premium plans.
Looking forward, the firm expects year-over-year revenue growth of 13%-15% in Q2, and 12%-13% for the full year. The firm will start lapping the price increases instituted last year in Q4, although revenue growth will continue since it recognizes revenue over time.
