Sticky customers 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 company reported 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 company noted that price increases for both new and existing customers buoyed the results.
In its shareholder letter, the company wrote:
“Pricing increases to our legacy customers contributed to our outperformance this quarter. We completed two full quarters of recognizing revenue associated with legacy customers (primarily US-based) and we continue to see strong rates of customer retention affirming our belief that we can provide an essential service to our customers 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 new features. The basic plan now includes a domain name, for example.
Still, it shows that the company has been able to flex pricing power. It’s not surprising that retention rates have remained strong for people who have already created a site on the platform.
The company also reported that more people are selecting its premium plans.
Looking forward, the company expects year-over-year revenue growth of 13%-15% in Q2, and 12%-13% for the full year. The company will start lapping the price increases instituted last year in Q4, although revenue growth will continue because it recognizes revenue over time.
