Profitable since 2016, ~$621m in revenue 2020, $30.5m profit in 2020
Curious to see how the reception'll be for this, given they're not on the 'if we're not on a loss, we're not spending enough money to grow' path
Curious to see how the reception'll be for this, given they're not on the 'if we're not on a loss, we're not spending enough money to grow' path
> CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (In thousands)
Doesn't that mean they're not profitable? Or am I reading that wrong?
The section includes income, or loss, depending on the situation. Losses (negative income values) are typically represented with parenthesis.
Income of $25000: 25
Loss of $25000: (25)
168 million on R&D, 260 million on marketing&sales, 54 million on running the business, 10 million in interest payments
Wonder what all that R&D is for. Maybe they are working on a coronavirus vaccine.
Context is that Companies prefer to spend capex, because it produces “depreciable assets” (your soon to be legacy software system), that make financials look better.
Then they use this to allocate a proportion of the salary towards one bucket or another.
Of course the lines are fuzzy and arbitrary in many cases, but 80/20 Cap/Op is the typical net distribution in departments that employ software engineers, from what I’ve seen.
The problem with following US GAAP 350-40-05-1D[1] to the letter is that if you capitalize development costs then you generally should only do this for internally developed software. If you "externally market" said software (which is now a capitalized asset on the balance sheet), which usually means selling to external customers upon which your revenue is then derived, you have to derecognize the capitalized asset before you can record any revenue.
IFRS differs from FASB (US GAAP) in this regard; it's more in line with what you noted. Having said this, since Squarespace is based in the US and subjects themselves to US GAAP, they expense all of their R&D costs. Skimming the S-1 it was interesting to note the $10.6MM in R&D credits for 2020 only (possibly due to the pandemic; not sure).
[1] https://fasb.org/jsp/FASB/Document_C/DocumentPage?cid=117617...
One tidbit I recall about that is there are often tax grants for business development that include R&D expenditures. So while it often feels weird to think of your primary product as tangental to "research", there are potentially some tax benefits to categorize it as such.