As we reflect back on the just completed Q3 e-commerce software sector earnings season, we dig into the relative performance of 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 5 e-commerce software stocks we track reported a slower Q3; on average, revenues beat analyst consensus estimates by 1.49%, while on average next quarter revenue guidance was 1.93% under consensus. There has been a stampede out of high valuation technology stocks as raising interest rates encourage investors to value profits over growth again, but e-commerce software stocks held their ground better than others, with the share prices up 11.3% since the previous earnings results, on average.
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 $217.6 million, up 8.32% year on year, in line with analyst expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and slow revenue growth.
"We delivered another solid quarter of strong total revenue, margin, and cash flow," said Anthony Casalena, Founder & CEO of Squarespace.
Squarespace delivered the weakest full year guidance update of the whole group. The stock is up 10.9% since the results and currently trades at $21.79.
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 $1.36 billion, up 21.5% year on year, beating analyst expectations by 2.27%. It was a solid quarter for the company, with a decent beat of analyst estimates.
The stock is up 36.7% since the results and currently trades at $39.80.
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Weakest Q3: GoDaddy (NYSE:GDDY)
Founded by Bob Parsons after selling his first company to Intuit, GoDaddy (NYSE:GDDY) provides small and mid-sized businesses with the ability to buy a web domain and tools to create and manage a website.
GoDaddy reported revenues of $1.03 billion, up 7.17% year on year, missing analyst expectations by 0.33%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and slow revenue growth.
GoDaddy had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is up 6.72% since the results and currently trades at $77.59.
Founded in 2006 in Tel Aviv, Wix.com (NASDAQ:WIX) offers a free and easy to operate website building platform.
Wix reported revenues of $345.8 million, up 7.79% year on year, in line with analyst expectations. It was a mixed quarter for the company, with a significant improvement in gross margin but slow revenue growth.
The stock is up 19.8% since the results and currently trades at $83.34.
Founded in Sydney, Australia in 2009 by Mitchell Harper and Eddie Machaalani, BigCommerce (NASDAQ:BIGC) provides software for businesses to easily create online stores.
BigCommerce reported revenues of $72.3 million, up 22.1% year on year, beating analyst expectations by 3.97%. It was a slower quarter for the company, with underwhelming revenue guidance for the next quarter.
BigCommerce delivered the strongest analyst estimates beat, fastest revenue growth, and highest full year guidance raise among the peers. The stock is down 17.3% since the results and currently trades at $10.95.
The author has no position in any of the stocks mentioned