Squarespace files to go public through a direct listing

Dive Brief:

Squarespace has filed for a direct listing to go public on the New York Stock Exchange under the stock symbol SQSP, according to an S-1 filing submitted on Friday.
The company, which offers websites and domains to a variety of businesses including restaurants, has nearly 3.7 million unique subscriptions as of the end of 2020 and grew its revenue 28% to $621 million last year. Its customers include restaurants.
This move comes after Squarespace completed its acquisition of restaurant booking platform Tock for $415 million, according to the filing, in March.

Dive Insight:

As a public company, Squarespace will focus on a variety of growth strategies, including expanding its customer base, especially internationally, deepening relationships with existing customers, promoting and developing enterprise capabilities and expanding and investing in commerce by offering tools that provide clients new ways to transact online, according to the S-1 filing.

Squarespace's growth strategy will benefit from its newly acquired Tock customers. Tock To Go, which launched April 2020, along with Squarespace's existing tools could help grow the company's subscription base with regards to independent restaurants, many of which don't have the technological capabilities to build websites or e-commerce platforms on their own. Tock To Go, which allows independent restaurants to offer online ordering for takeout and delivery, helped the company more than double its customer base to 7,100 last year. One of its customers individually accounted for 13% of net sales, according to the filing. Tock generated over $23 million in revenue last year.

For Squarespace, its monthly and annual subscriptions and commerce tools are its main sources of revenue. In 2020, subscriptions made up 94% of its revenue. Non-subscription revenue came from commerce transaction fees received from revenue sharing agreements with payment processors handling customers' commerce transactions in addition to revenue generated from third-party services offered to costumers to improve functionality. Tock's revenue is largely derived from subscription fees and payment processing fees, among other sources, which will only help Squarespace grow its commerce revenue.

Squarespace joins a growing number of technology companies that work with restaurants to go public in the last six months. More restaurants have turned to technology to build up their e-commerce platforms in light of the dining restrictions that occurred last year, which has led to growing investor interest in restaurant technology. Software company Olo went public in February while DoorDash launched its IPO at the end of 2020. Toast is also rumored to be going public.