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Earnings results often give us a good indication of what direction a company will take in the months ahead. With Q3 now behind us, let’s have a look at Squarespace (NYSE:SQSP) and its peers.
While e-commerce has been around for over two decades and enjoyed meaningful growth, its overall penetration of retail still remains low. Only around $1 in every $5 spent on retail purchases comes from digital orders, leaving over 80% of the retail market still ripe for online disruption. It is these large swathes of the retail where e-commerce has not yet taken hold that drives the demand for various e-commerce software solutions.
The 6 e-commerce software stocks we track reported a mixed Q3; on average, revenues beat analyst consensus estimates by 0.9% while next quarter's revenue guidance was 0.8% above consensus. Valuation multiples for growth stocks have reverted to their historical means after reaching highs in early 2021, but e-commerce software stocks held their ground better than others, with the share prices up 20.9% on average since the previous earnings results.
Squarespace (NYSE:SQSP)
Founded in New York City in 2003, Squarespace (NYSE:SQSP) is a platform for small businesses and creators to build their digital presences online.
Squarespace reported revenues of $257.1 million, up 18.1% year on year, topping analyst expectations by 2%. It was a decent quarter for the company, with strong sales guidance for the next quarter but a decline in its gross margin.
"We are on track to exceed $1 billion in total revenue by the end of 2023, a significant milestone for Squarespace as we continue to expand our offerings and footprint globally," said Anthony Casalena, Founder & CEO of Squarespace.
Squarespace pulled off the highest full-year guidance raise of the whole group. The stock is up 3.5% since the results and currently trades at $31.12.
Is now the time to buy Squarespace? Access our full analysis of the earnings results here, it's free.
Best Q3: Shopify (NYSE:SHOP)
Originally created as an internal tool for a snowboarding company, Shopify (NYSE:SHOP) provides a software platform for building and operating e-commerce businesses.
Shopify reported revenues of $1.71 billion, up 25.5% year on year, outperforming analyst expectations by 2.6%. It was a very strong quarter for the company, with a significant improvement in its gross margin and a decent beat of analysts' revenue estimates.
Shopify scored the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 55.3% since the results and currently trades at $75.82.