Good afternoon. My name is Sierra, and I will be your conference operator today. At this time, I would like to welcome everyone to Squarespace's conference call to discuss their definitive agreement to acquire Google Domains assets. All lines have been placed on mute to prevent any background noise, and after prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. I will now hand the call over to your host at Squarespace, Clare Perry. Clare, please go ahead. Thank you. Good afternoon, and thank you for joining us on short notice. As you've seen this afternoon, we've announced Squarespace's proposed acquisition of Google's Domain assets. I'm Clare Perry, Head of Investor Relations. Joining us today to discuss the transaction is Anthony Casalena, Squarespace Founder and CEO. Nathan Gooden, CFO, is on the line as well. Please note that we will not be commenting on our second quarter 2023 or expected full year 2023 guidance during today's call. We expect to provide additional disclosure at our Q2 2023 earnings call. We'd like to remind you that during the course of this conference call, management will make forward-looking statements, including statements regarding the demand and market opportunity for our products and subscriptions, including our beliefs about the anticipated benefits of the proposed acquisition of Google Domains assets for us and Google Domain customers, as well as forward-looking statements regarding the anticipated timing of close and our migration and integration plan, and our continued execution and focus on providing more value to our customers. All statements other than historical facts, including our beliefs about the anticipated benefits, our continued execution and focus, and the expected benefits of the proposed transaction are forward-looking statements. These statements are based on management's current expectations, assumptions, estimates, and beliefs. While we believe these expectations, assumptions, estimates, and beliefs are reasonable, such forward-looking statements are only predictions and are subject to a number of risks and uncertainties which are beyond our control and which could cause actual results to differ materially from those anticipated by these statements. These forward-looking statements apply as of today, and one should not rely on them as representing our views in the future. Today's call is being recorded, and all participants are currently in listen-only mode. Following brief prepared remarks, we'll open up the call to your questions. With that, I'll turn over the call to Anthony. Thank you, Clare. Good afternoon, and thank you for joining us today. I'm thrilled to be able to share more about our proposed acquisition of the Google Domains asset. This acquisition offers an unprecedented opportunity to significantly expand our existing domains business and offer our website building tools and other services to millions of additional customers. We're proud to have been chosen as the custodian for these millions of customers and are excited to be working with Google on this critical piece of internet architecture. Under the terms of this acquisition, approximately 10 million domain names currently managed by Google will be moved to be managed by Squarespace. Squarespace's expansive suite of products for entrepreneurs range from websites, e-commerce, and marketing tools, as well as tools for scheduling with Acuity, creating and managing social media presence with Bio Sites and Unfold, and hospitality business management via Tock. Domains are a critical part of web infrastructure and a starting point for many people's journey to establish their online presence. Today, domains are the highest attached product to our core website offering, and we've been investing in our domains business for nearly a decade. Existing Google Domains customers will be onboarded to Squarespace's core domains platform, which we've already been investing in for a decade. Squarespace offers some of the most comprehensive domain registration tools in the industry, all embedded within our integrated platform. Throughout the transition period, both Squarespace and Google will remain focused on ensuring a seamless migration for our customers. We will be leveraging existing Google Domains infrastructure to ensure that this process results in no disruption. Under the terms of our agreement, we will honor all existing Google Domains customers' domain renewal prices for at least 12 months following the closing of this transaction. In addition, we'll be providing exclusive incentives to Google Domains customers who wish to adopt any of Squarespace's services moving forward. We do expect to see some degree of natural churn during this transition period, as some Google Domains customers may no longer have a need for their domain, while some may seek out another solution. Squarespace has been a longtime reseller of Google Workspace. This deal expands and strengthens this partnership. For a period of at least three years upon closing, Squarespace will become the exclusive domain provider for any customer purchasing a domain along with their Workspace subscription from Google. Some details related to the transaction. Under the terms of the agreement, the purchase price of $180 million is financed through cash on hand and an extension of our existing credit facility. Further details are available in the 8-K we filed earlier today. We expect the transition to close in Q3 2023, subject to the satisfaction of certain regulatory approvals and customary closing conditions. We believe this transaction will be meaningfully accretive to our top line and cash flow. While we will see immediate economic gains after we close this transaction, the majority of the benefits will be realized in years 2024 and beyond. Additional disclosures about the financial impact of this deal will appear in future financial updates. I'd like to again thank Google for believing in us as a partner, and I look forward to what I believe will be a fruitful deal for both of our companies and our customers. With that, let's open the line to your questions. Our first question comes from Trevor Young with Barclays. Please proceed. Great, thanks. Two, if I may. First, on the 10 million domain install base that you're getting, are all of those customers currently at that $12 a year pricing, or are some of those domains maybe at lower pricing or even free for some existing Google customers as part of, like, some broader promotion and that sort of thing? Second one, Anthony, historically, the few acquisitions you've done before were to get some interesting tech, maybe some talent, or just features that are a bit differentiated from peers like Tock and Unfold. Domains is maybe a little bit more vanilla and commodity. Just help us think through, you know, how can you be differentiated on domains? Sure. To your first question around price, I think you're citing what I believe is the lowest of the prices, around $12 a year for dot coms. Y ou know, I believe they go up from there, depending on TLD. To my knowledge, there are no domains given for free, mostly because, I mean, domains have an underlying cost with, you know, Verisign if it's a dot com. I don't believe there's any other subsidies or whatnot being given, so all the domains are paid. Secondarily, I mean, in terms of the opportunity, this is just incredible for us. You know, by the way, it's up to 10 million domains could transfer, some could transfer away, et cetera, et cetera. I think we're the best place for these domains, especially considering the landscape of options. I mean, of these 10 million domains, this is like our lifeblood. These are starting points for websites. They're starting points for entrepreneurs. We're just so excited to be expanding our business this significantly, and also this deeper partnership with Google so that we can, you know, be in front of a whole new cohort of new customers with this starting point. It's a really unique opportunity for us. I have referred to it as maybe once in a lifetime, and certainly not in the vein of anything, you know, we've done in the past, but we've never seen something like this in the past. Frankly, I doubt we'll ever see something like it again. Great. Thanks, Anthony. Sure. Our next question comes from Ken Wong, sorry, with Oppenheimer. Please proceed. Great, fantastic. Thank you for taking my question. A super interesting acquisition here, Anthony. I was just wondering, can you give us any sense of, you know, what the annual domain additions from the Google domain business might look like as we think about what that, you know, potential new customer funnel could potentially be? There's a lot of publicly available information on domains and their growth rate for various registrars, which, you know, I'm sure you will look up. We won't be providing anything additionally at this time. You know, there's a multitude of opportunities here. You know, we've got the domains that will be coming in, will be resold, the underlying reseller agreement we have with Google now, which, you know, we'll be providing backend services for the domains, and then just, you know, the ones that are, of course, transferring over as part of the overall agreement. This represents a really interesting shift in the industry, and I'm just really happy with how we're positioned here. Got it. As far as just the domain business, you know, naturally, there is a good attach onto kind of the core website. Just wondering, as far as registrar, is Squarespace a registrar, or do you currently utilize a partner on the domain side of things? We are currently a registrar, and we manage, we use that registrar to manage some of the most popular TLDs that are on the platform,.com,.net, and.org, things like that, which gives us advantageous positioning in terms of our margins. Both Squarespace and Google do rely, Google Domains currently do rely on a number of other partners to do the long tail of TLD registrations, especially ccTLDs. We'll continue to move, you know, more domains, just based on demand into our registrar. The, you know, everyone relies on partners to get that, you know, 400th domain TLD, you know, into the platform. Got it. If I could just maybe sneak in a quick one. Just margins- Yeah. Should we think of this business as having comparable margin profile to the website business? Any color there? Our current domains business doesn't have comparable margins to the website business, right? We manage millions of domains right now. I think over time, you know, there's an ability to improve margin here, and with a lot of tests we can do and other things. You know, this is not like a loss leader business for us. Nor is it for any of the other large companies that sell domains right now. Got it. Okay. Thank you very much, everyone. Sure. Our next question comes from Chris Zhang with Credit Suisse. Please proceed. Hi, thanks a lot for taking our question. I have two questions. The first one, on the exclusivity part, just wondering about the mechanics. Historically, we would think of the need for Google Workspace arising from, you know, somebody already using a web builder, for example, Squarespace, and then they decide to use, add a Google Workspace. But to the extent that Google Workspace can serve as a kind of a funnel for new customers to Squarespace, historically, what's that like? What's the kind of percentage of the new customers that typically come from, you know, someone that wants to use a Google Workspace and then discovers that, "Oh, we can use Google Workspace, Google Domains," and then from there, since it's, since they're able to use, Squarespace and then add Squarespace, can you give any thoughts on that? I have a follow-up on the mechanics. Sure. If I understand the question, I mean, look, there's a lot of ways people go about establishing the core things they need to be, you know, need to be online. I'd say those core things are a domain, an email address, and a website. At Squarespace, sometimes they're starting with the website, sometimes they're starting with the domain. We support both those paths. Conversely, Google, sometimes people are starting with Workspace, and then they want the domain or the website. The mechanics of it work like this: if you're in Workspace and you're signing up for a domain, they will use an API call behind the scenes to register that domain with Squarespace using our infrastructure as the registrar, but that domain and that front-end customer experience will still be managed by Google. Now, we do have, you know, advantageous you know, we're in a great spot to also sell them a website later, but that's kind of how those mechanics work. Got it. That's super helpful. I think to the extent you can convert additional customers on the domain to Squarespace, what would you think of the percentage that are out of the 10 million domain users? For example, I'd imagine it's probably gonna be a little harder for somebody that's already using, you know, a competitor's solution just because of, you know, the way to, like, rebuild the website. Or is there gonna be any solution to make them to convert to Squarespace easier? You know, we, of course, have our internal models that, you know, are why we were confident in doing this deal. I'd say that what we're gonna be doing over the next couple of months as we, you know, The first and foremost thing we're focused on is just business continuity and making sure this is smooth for everybody, and that, you know, we're doing this so that there's no disruptions. Then after that, you know, and I spoke about it earlier, and I alluded to it on the press release, there's just a lot of opportunities for us to say, "Hey, you know, You're a new customer of Squarespace. What can we do for you that's kind of an outsized, you know, incentive to use Squarespace's products if that's something you want to use? I mean, there's plenty of people who use Squarespace and only have the domains with us. It's not a rare use case. I just think it's just great positioning, and, you know, I'm super excited about the partnership. All right. Thanks a lot, Anthony, congrats on the transaction. Thank you. Our next question is from Ygal Arounian with Citi. Please proceed. Hey, good afternoon, guys. Just to follow up on that last question first, do you have any sense of how many Google Domains customers are currently using Squarespace to build their websites? Is that what you're referring to with your internal models? I have a follow-up. Yeah. We're not really seeing any breakdowns of kind of the services that people are using right now. It's all across the board. Okay, great. Then, just wanted to, maybe hear a little bit more about how you think about domains as kind of a top-of-funnel marketing tool. You know, as we think about how people start their journey, you talked about the core things that people need to establish to be online. You know, you've seen some real marketing efficiency over the past couple of quarters. Yeah. Is this a tool where you could see kind of increased marketing efficiency around? You know, it's a lower price point just to start a domain versus to start a website. How do you think about that opportunity? Thanks. Well, it represents a giant marketing funnel for us. I mean, you know, we have millions of domains under management. This gives the opportunity to have up to 10 million more, without the, you know, ongoing synergies. It'll cause even more people to go kind of over to our platform. It's gonna help us, of course, sell Squarespace services into these millions of domains and millions of customers. You know, that's kind of really positive for us moving forward. Look, it just, in terms of, like, the importance of domains, people, a lot of times... these are just the two flows that we provide on the front of Squarespace right now. Some people want to start with the website. Some people have an idea, they buy a domain, they park it, and they build the website later. It really just depends where you are and how you prefer to get started. But, I mean, right now, I think more than ever, just owning that piece of the internet, that's the authoritative you, like, just, you know, a domain is so inexpensive compared to what it is. I mean, you know, our price is $20 a year, and you own this piece of the internet that you control what's on. It's authoritative. We don't really see the importance of this going away anytime soon. In fact, as your online presence becomes more and more important, like, this is your online real estate. It's critical. It's why we've been investing in it for a decade. You know, this is not a new business for us. It's just such a great opportunity for us to be able to strengthen that business and really, really invest in the domains product further, because it's such a critical part of our whole ecosystem. Thanks. Let me add to that also one quick follow-up. If there's anything you could share on the system or, you know, conversations with Google, you know, during this, why, you know, why they were kind of interested in selling this asset, you know, the rationale from their end? I don't know if there's anything you can share on that, but if there is, I'd be interested in hearing. Thanks so much. Yeah, you'd have to reach out to them for commentary on their strategy. You know, I'm mostly focused on why this was just a fantastic opportunity for us, because it's just so critical to the website infrastructure. Again, we've been doing this for a decade, almost a decade. We've been a Google Workspace reseller for almost a decade. You know, it's just a really natural fit for our in our world. You know, we're really excited. Fair enough. Thanks, Anthony. Our next question comes from Siti Panigrahi with Mizuho. Please proceed. Hey, Anthony, thanks for taking my question. I guess everybody's trying to understand that, maybe that authoritative part of that comment you said, because that's kind of the cross-sell opportunity, is kind of what we see there, because domain name kind of pretty slow growth, you know, low single-digit kind of growth, domain names kind of getting saturated. I think the cross-sell opportunity you said. I guess I want to understand, like, anybody, those who have a domain name, has access to, or all your competitors have access to them, they can reach out to that. I s it the bundling part of it? You can bundle it, your domain name registration along with this, that's what attractive, I mean, for those who don't have a website. Second thing, those who have a website, what really drives someone to change their website and, you know, start building on something on Squarespace? It's purely a displacement market, so what would trigger that to do it? What would trigger a... somebody to change their website? I mean, it's the same kind of factors that. Yeah. Would kind of be the existing factors, in addition to the fact that, you know, for us, during this, I mean, just a number of things to emphasize. We're maintaining price continuity. We are re-utilizing existing infrastructure to ensure that this is seamless, right? If you know, wanted to change registrars right now, one, you have to pay to change because you have to renew your domain to transfer, and then two, you have to make sure all your settings are right so that it doesn't screw up your website or your email and all that. We're managing all that using existing infrastructure. On top of that, you know, and we haven't rolled any of this out yet, because we're just at the very beginning of this deal. We're gonna be providing interesting incentives and opportunities to people who've moved over as part of this transition, for some period of time, to utilize Squarespace services. You know, obviously, you know, just like it is currently in our business, the upsell, cross-sell around a domain, just getting that, you know, trio of things attached to it, domain, email, website is really important. You know, look, domains are not... well, not the worst margins ever, they're not the highest margin stuff we do. Obviously, that's the website business. You know, again, it's a business we've been in for a long time, and we're just excited to have the new opportunities in front of us and to expand it. That's a good color. Do you have any number out of the 10 million, how many of these domain name don't have any websites at this point? We have an idea, but we're not, you know, kind of breaking that down publicly right now. Okay. All right. Thank you. I mean, part of the advantage of us kind of in this kind of process is that, again, this is a business we've had for 10 years. We have our own view on churn, pricing, you know, cross-sell, upsell. You know, we're not treating it the exact same as a domain that would have come in through us, but we're not kind of operating blind here. We have our own infrastructure that runs domains. We support domains right now with our customer operations group. We support Google Workspace with our customer operations group. In that sense, it's sort of like, it's kind of ideal in a way, because again, we're buying assets here. We don't have to buy any IP, there's no salary change, you know, we're not buying a bunch of headcount. You know, there's no you know, so infrastructure, I mean, we're utilizing Google's infrastructure, but we're not like... it's not like buying a company, which again, I think is very, very good, in this, in this transaction for us. Yeah, that's fair. Thank you. Our next question comes from Andrew Boone, with JMP Securities. Please proceed. Thanks for taking my questions. I wanted to go and ask about the scale of adding 10 million domains for Squarespace. What does that unlock operationally? Does that imply that you guys go after aftermarket? Does that imply anything else now that you guys have more scale? It's up to $10 million, you know, depending on, you know, what transfers and what doesn't. We think it'll be, you know... We're confident that we're a really, really great home for domains customers. What I think about in terms of the future, maybe not, you know, going all the way into aftermarket yet, but just really making sure that our domains product is the best in the world, and that there's no reason why you would ever want to manage a domain anywhere else. It's already very, very, very good, and this will just increase our investment there. Again, it's not like we have to double it, triple it, because we've already put so much work into this. You know, I think it allows us to invest more, but we've always been very disciplined about kind of our headcount and our, the initiatives that are on, and controlling our cost structure. Again, the thing that's great about this, and we mentioned in the press release, we think this is accretive to both the top and bottom line over time. For my second question. Can you just talk about the deal coming together? Was it competitive? How, kind of, how fast or how slow did it take? Just any other details you can share there. Thanks so much. You know, I can't share a lot of details. You know, obviously, this is an opportunity that a lot of people would have really been very interested in. I think I'm very happy that we were able to partner with Google on this and strengthen the relationship. I think it's just so great because, again, we've been doing this with Google for, like, a decade. You know, it's a very natural thing for us to support Workspace. I mean, we're huge resellers of Workspace. We're huge supporters of Workspace. I use Workspace personally all the time. You know, like, so it's. Yeah, this is more than just, you know, anyone who wanted it. You know, us and Google care so much about the customer experience during this and making sure that the customers have a good home and that. You know, we're, you know, companies that share an ethos and customer service and, you know, just making sure we have a quality product. There's a lot of factors that come into this deal that, you know, again, I'm just very pleased and looking forward to supporting these customers, looking forward to working with Google in a closer fashion. Thank you. Our next question comes from Aaron Kessler with Raymond James. Please proceed. Great. Thanks. A couple questions. First, any details you can share in terms of maybe the demographics of the Google Domains customers? Just are they similar to your current customer base? Second, I think on the Google Domains website, they currently recommend, I think, like nine, 10 website designers on their site. They just have them listed. Do you know if those will still stay the same, or would that be replaced, kind of, as a primary shift to Squarespace as well? Thank you. I can say that Squarespace will probably recommend Squarespace as the website, designer of choice that we would prefer. You know, I think that one's... Yeah W e have a strong opinion there. Regarding the demographics, you know, look, we did not go into this blind. We looked at. We're not gonna, you know, obviously share the breakdown of it, publicly, but, you know, we were able to look at this, look at how it overlapped with ours, get confidence or not around which segments we were interested in. You know, we just found that there was a pretty positive fit here. Yeah, a lot of that analysis and thinking went into our decision here. Got it. Should we primarily be viewing this deal as kind of a lower-cost marketing funnel versus kind of bidding on traffic on various sites, or is it much more strategic in nature in terms of the cross-selling abilities? It's everything at once. It's the really positive positioning for us, obviously the cross-sell and upsell opportunity here, but it's also accretive to the top and bottom line, so. There's the Workspace reseller opportunity. I mean, there's a lot. Also, you mentioned this in the press release, you know, we're gonna be servicing a number of domains that are moving over that already are using Google Workspace, and we'll be providing the front end and support for them, as we've done for, you know, hundreds of thousands of customers already up to this point, maybe even millions. All those are kind of parts of this. It's really a multidimensional thing, but, you know, it's not like this should be viewed as like, "Oh, we did it as a marketing spend." It's a positive business outcome for us as well. The same reason why we don't look at domains currently as a loss leader. You know, it's an important part of the experience. We, you know, bundle it in with certain plans. We provide incentives around it. You know, it's a business for us, too. Great. Thank you. Congrats. Our last question come from Brad Erickson with RBC. Please proceed. Yeah, thanks. Just two follow-ups. First, following up on Aaron's question, how would you see this kind of affecting your broader customer acquisition strategy? Obviously, it would seem like it makes it more efficient in general, but just curious, how does the rest of your normal course, customer acquisition strategy change as you build in this piece to the fold? T hen I have a follow-up. I'm not sure it's such a departure, right? Again, I feel like I'm repeating myself, but, like, we've been in the domains business for a long time. We've done advertising related to domains. This is gonna increase our investment there. I think that that will mean that we're one of the best places to have a domain. Yeah, I think it's gonna be really interesting for us. Of course, that unlocks the cross-sell, upsell stuff. You know, as mentioned before, attached to a domain is one of the highest attach rates we have, as you might imagine, because websites live on domain. Yeah, there's a lot of different aspects to this deal rolled into one, and that's what's so exciting about it. You had a follow-up? Got it. Yeah, just one last one. You mentioned in the press release you sort of used the word chosen to kind of effectively win this acquisition. Just curious, maybe speak to how competitive this situation was, and further, just kind of does this have any implications as it pertains to any of your cloud relationships? Thanks. Yeah. The cloud relationship one is easy. You know, we've been a big user of Google's cloud products, and we will use more of them, especially their Cloud DNS products, as part of this movement over. What was the first other question again? It was around-- Just the language you used in the press release around being chosen suggests that maybe there was- Oh, yeah. -some competition here. Competitive. Speak to that, if you can. Yeah. Yeah. Got it. Got it. Yeah, I can't speak to that because, you know, I'm, you know, I'm on my side of this. I just do know that this is not the kind of thing where... I mean, again, if you put the customer first and you think, "Where is the best home for these customers?" In addition to us, you know, obviously, this asset is very valuable. I think Squarespace ticks so many boxes in terms of our decade-long relationship with Google, reselling Workspace already, our investment in our own registrar, and really everything else we've done up to this point. We're huge fans of supporting Workspace and supporting Google, and we're just really grateful to have the opportunity to deepen that relationship. That's great. Thank you. Yep. That will conclude today's Q&A session. I will now hand the conference back to our management team for any closing remarks. Just thank you all for joining on such short notice. You know, it's great turnout with only an hour's notice. We're really excited about this deal. I'm really personally excited about this deal, and look forward to working with Google and supporting everybody and making this great for everyone. Thank you all. This concludes today's call. Thank you so much for joining. You may now disconnect your line.