Started here with Anthony from Squarespace. Thanks for joining us, Squarespace investors and future Squarespace investors. So, and you founded the company 20 years ago- Yeah. -in the dorm room. You've served almost every position: product development, CEO, customer support. You started off, you know, solving one set of challenges for entrepreneurs, and then it expanded and expanded. Just tell us about that arc. Yeah, in terms of every position, I joke that I used to be the designer and the engineer, and now I'm an HR and comms person. So this is part of the comms part of the job. So I mean, yeah, look, I mean, 20 years is a long time, and in technology, it's an even longer time. So you know, it was started as a blogging platform. You know, we launched in 2004. Blogging meant simple publishing at the time. We used that to help people learn that they could build a website, and we've kinda grown up with the web from there, including every iteration of it, from you know, portfolios being a big thing, technology changing around the web. You know, the iPhone came out, the transition to mobile and everything up to the current era we're in, which is, a very commerce-centric, you know, place to be. And you, you all are probably familiar with the public company versions of, you know, people who are there to help you sell, online products. Right. But we're in a spot where, you know, we think there's a lot of interesting ways people are transacting online that is not just selling physical items. It's, you know, they're selling services, they're selling tickets, they're accepting donations. They're, you know, they're doing all—they're booking appointments, and so we're really kind of focused there in our current iteration. Okay. Well, you have now expanded the company into multi-brand, multi-platform, multi-solution. Talk about that breadth of the platform and the offerings and brands. So I'd say over the past 10 years, and the past five years especially, is where that, you know, multimodal way to transact has come in. And so we've got everything you would expect from selling online, you know, selling physical goods, to selling services, to selling tickets, to, you know, a donations platform's coming out. And so we've really been focused on that. We've just launched Squarespace Payments, which we've been working on for a couple of years. That's out to 100% of people in the United States right now. It'll soon be out globally, so that's underpinning the commerce platform. And as you mentioned, one of the big changes for us over the past three or four years is the idea of an umbrella of brands existing. Right. So Squarespace has spent $ billions associating ourselves with the word website. I think that translates into domains and whatnot. Pretty similarly, people associate those things. But, you know, if you're looking for an appointment-based solution or a service for running your hospitality business, I don't think people go to Squarespace as their first thought. What we're trying to do these days is provide multiple entry points into the ecosystem. So, you know, historically, it's been a do-it-yourself website, and then you attach a domain. Today, it's you could start with our scheduling product, you could start with our hospitality product, you could start with a domain, you could start with a DIY website product. And then we're really focused on the interconnectivity between those brands and products. Okay. I mean, you talked about multiple types of customers there. You know, how can you share with us a few prototypical Squarespace customer types? Yeah. I mean, so in the main DIY website platform, we service a number of verticals. Everything from, you know, portfolios and blogs, to small stores, to weddings, to... I mean, it is really, really across to the nonprofits. It's really across the board there. If you go into one of the individual brands, and they are Acuity, Tock, Unfold, and Bio Sites, these have different audiences. So Acuity is our scheduling platform, so that could be, you know, it's any appointment-based business. Could be a dog walker, could be a service provider, could be a tax professional. That was one category we were advertising against in January 'cause you got Tax Day coming up. Tock is hospitality, so it started with more high-end hospitality and events. A lot of Michelin-starred restaurants on there, and it's kind of going down market to service a broader and broader group of restaurants. You've got products like Unfold and Bio Sites, which are. Unfold is a way for people to stand out on social media. Bio Sites is a simple link-in-bio website. Those are interesting because it's a younger demographic. It's more of a viral spread in terms of acquisition of those customers, and we actually don't think of those as, you know, things that are gonna generate $50 million or $100 million in, you know, their own subscriptions. Unfold generates single digit-upper single digit million in subscriptions. But really, we see those as an entry into a next generation of entrepreneurs, and we're interested in the cross-sell and upsell to other Squarespace products from there. So, how do you see the market opportunity long term, whether that's across the offerings, across the various customer sets? Give us a shape of that market opportunity over time. So one of the things that I think we've done a good job in positioning ourselves as is, you know, really... And I was talking about there's multiple verticals in the website product, but, you know, what we have right now, especially after the acquisition of Google Domains customers, is we're really set up to service this kind of small business trifecta, right? All small businesses need a domain, a website, and email, and we're one of the biggest Google Workspace providers, and resellers in the world. And now we're gonna be one of the biggest domain resellers, or sorry, registrars in the world. Registrars. In addition to being a partner to Google on their Workspace side, all the Google Workspace customers will be, you know, when they get a domain, it will be signed up through Squarespace. So in terms of partnerships, that's probably one of the best ones I can think of. Okay. So, you know, how do customers work with Squarespace when they're building their business, you know, with TikTok or an Instagram, with X, formerly known as Twitter? So many of them want an online presence. Mm-hmm. So, you know, they want to reach their customers that way, they want to interact with their customers that way, they want to transact with their customers that way. How do you serve those various customers who want to use those channels? ... So, yeah, we've been around for 20 years, and so those channels have either always been there or kind of come and gone, right? I mean, we all remember social networks from, like, MySpace to Friendster, now we have Twitter X. There's Facebook, which has been on the decline for our customer base. There's Instagram, which is going up. There's TikTok, which is relatively new. We encourage our customers to find distribution wherever they are, and then Squarespace winds up being the place you grow up. Ultimately, if you are only on one of those platforms and you are a growing business, one, you don't actually own the communication stream with your customers because Instagram or Facebook. The platform does. Yeah. Right, the platform does. You can't export the contacts, it doesn't work anywhere else, and sometimes your posts don't even reach your customers without paying. So for anybody considering the extreme low cost of Squarespace and what we provide, it's just a no-brainer to have the domain just so inexpensive, to have the website just so inexpensive if you're doing any kind of serious online presence. And, you know, we see that strength in the core business. You know, we had earnings a week or two ago, it's all a blur now. But you know, we kinda tried to emphasize for people that, for a number of points in the past year, we saw the highest number of trials on our website product, ever, including COVID quarters. And we've seen extremely elevated rates of new domain signups because of the fact that now Google has exited the domains industry, and we're the fourth largest. So it's, you know, a great kind of position. Yeah, and we're just excited to be there. So let's talk about design. Design is really important to you. It's important to your company, it's important to you personally. I think design is not a luxury, is the way you say it. Yeah. So talk about the criticality of design in the current world, which is your creative human customers are, you know, part of, part of instantiating that design. And then how will generative AI affect that? It's kind of a two-part question. Sure, we're only here because of design and our emphasis on creativity. So I mean, we started in a world where, you know, GoDaddy was already running Super Bowl ads, WordPress already existed and was much more viral than us. And so we just emphasized the power of design to get people's points across and to help people look better online. And as you say, design is not a luxury. We did it in a really, really expensive way. I think people kind of understand us as the design leader out there right now. Certainly. And while other companies have sort of bolted that on, it's really been with us from the very beginning. To the second part of your question regarding AI and generative AI, you know, we've been incrementally using machine learning techniques inside the company for 10 years. With the recent shifts on generative AI and the models are available, large language models, and also the diffusion models that let you create images and video, you know, we've been incorporating those into the platform, too. So there's a number of ways it benefits us. One is obviously content generation, and people like to ask, you know, months ago, "Oh, have you integrated ChatGPT and stuffed it in the interface?" We're like: Yeah, it took, like, a week. They're like: "Oh, well, have you seen a boost?" It's like: Well, not really. I mean, a third of Americans have already used ChatGPT. They kind of know how to cut and paste, so, you know, that's kind of table stakes. Where we are using it and really thinking a lot about it is something we're gonna be terming Design Intelligence, which is pairing it with the right prompt generation, the right caching of certain images, and the right touch and look and feel on top of it. So that even though there's Generative AI behind it, we're using that in a scaled way with a certain taste level applied to it, so that you've got a better result than you going to, you know, Midjourney or whatnot, and trying to figure out what to type in to get the right level of imaging. But I'll be able to use Squarespace and have the type of prompt or prompt engineering for the panda bears- Yeah ... doing what have you, to, you know, sitting on the tree, waving, and drinking a Coke. Like, I can do that without having to then hire graphic designers. Well- You'll work through to Sora or Stable Diffusion- Well, that's kind of- or Midjourney? I mean, you're not gonna develop your own- No, no, no. We're not- - transformer- No, no, no, we're not doing that. ... diffusion model. The point is that we can use certain prompts in certain ways and do certain editing to get you to better results. Right now, if you- Still through a model? Still through a model, but we'll end up caching a lot of what comes out of that model- Okay ... so that the onboarding and whatnot is extremely fast. So imagine we, you know, we know that Google classifies small businesses into about, like, I don't know, 1,000 or 1,500 different categories. Okay. If we took the top 1,500 categories and took the top 300 keywords in there and pre-generated libraries of 200- Create, create assets. I see. Yeah, two- Pre-generate the assets. Exactly, with certain style applied to them. And we'll keep those and say, "Okay, so we'll generate 200,000 of those, and then when you sign up, we're using those, we're preloading that." 'Cause again, to my ChatGPT point, you can go online right now, and most of America has, and make- Sure ...... AI-generated images. You can download that image and put it in Squarespace. Like, you could do that with many- Right now ... of our competitors. Right now. You can do that right now. Right now. So, um- Download and then re-upload. Exactly. So I think we wanna use it intelligently and not just give people the same demo that everyone keeps seeing online, where somebody goes and they go, "Make me a website about a forest." And, you know, it generates a website about a forest, and then nobody takes it to step two, which is that outputted content needs to go into an interface. What if you had ChatGPT, but you couldn't edit the text, and you had to edit the text by going back to ChatGPT and saying, "Change a word"? That's a bad interface, especially for a visual product. So you need to pair that with something like Squarespace to really get great results. And generate the code? I mean, I'm really picturing something that then has it all, between the text and the code and the image. Yeah. And it's, I can drive that way, and- Yeah ... you'll be the solution instead of- I mean- ... I'm the system integrator- Right ... trying to run my auto repair business or what have you- Sure ... trying to have a presence online. I mean, Squarespace has removed the need for people to code websites for 20 years. Yeah. So that's, like, not novel. And then what you get for Squarespace for $20 is not just something an AI model can output. It is the code behind the website, a taste level applied to it, a domain, you know, bandwidth, storage, DDoS protection, a commerce engine, a payments engine, like, an email marketing machine with the emails filtered, making sure that sender viability is okay. I mean, there's, like, 20 things for $20 a month. It doesn't quite make sense to me that you would wanna like redo all that? Be a system integrator. Yeah, so you're really poised to inject generative AI into that framework. That's what I'm hearing. Yes, and in a unique way, with a certain taste level applied. So, that's really key to what we do, right? Like, again, ChatGPT doesn't mean everyone wants to create their own Microsoft Word. It doesn't make sense. Right. Yeah. Let's get to the results. You announced Q4 last week. You put out the guidance. What do you see as the opportunities for 2024 that you're the most focused on or excited about? So there's a number of things. I think with payments going to 100% of the population in the United States right now, there is packaging opportunities that we could pursue that were previously unavailable to us. If you go to most of our competitors who have a transaction-focused business, the way they differentiate their payment, their SaaS plans, is by offering a decreased take rate as you move up the plans. We've never done that. We couldn't do that because we didn't have payments. So I'm super excited about that. Just what that unlocks in terms of the commercialization behind the products we've made and the ways to transact, I think is really exciting too. From a financial standpoint, you know, you're referencing earnings. We finally crossed $1 billion in revenue last year. You know, we're guiding to a 25% free cash flow. This year we've never had a problem with profitability. We were cash flow breakeven for 15 years and profitable for five, and we continue to tick that up. So I think, you know, what investors can look forward to is us to keep moving that free cash flow number up into something with, with or close to a 30, with, you know, within a certain time... Yeah, I'm not going to say the time frame, but, you know, you can kind of look at how we've been acting and what we've been doing, in addition to a lot of great leverage on the top line via packaging, via pricing, via more products, more GMV-producing products, which are now commercialized properly. And all that is great. And again, that small business trifecta, right? A domain, a website, and email, we are the best place to do that on the web. Your goal is to be that single hub for, right, the entrepreneur or the business that wants to do all their web-based needs. How often does the customer journey begin with building a web presence or a domain versus not, versus coming through one of your other brands or solutions? They're just different customers and different starting points. I think the bigger customers, like a Tock user, wouldn't necessarily get the domain first, so they may take a different voyage in how they get to that processing platform. Again, there's been a seismic change in the ecosystem with the exit of Google Domains. We're seeing an incredibly increased velocity of new domains flowing through the platform. We're really closely tracking those cohorts and how they upgrade to websites and email. That flow, actually, with Squarespace right now is totally unoptimized. We aren't even trying to cross-sell or upsell. We're focused on getting the interface perfect and the migration perfect, and we make sure that that's okay. Again, I was a Google Domains customer myself, and so I'm watching my domains move over, and I'm very picky about how that looks and feels. And so, there's just a wide range of things ahead of us in terms of, of what we can do there. But again, all small businesses have a domain, website- They all do. ... email. So you mentioned this Google Domains acquisition. It sounds really strategically important. You know, what is the migration path timing? And then you've just given revenue guidance, right- Mm-hmm ... for the domains business, and how do we think about that over the arc of time, and how large of an opportunity this can be? Well, very little in our guidance is a result of, you know, like, wishful thinking about attach rates and whatnot. Okay. We tend to be pretty conservative. Okay. So we're very, very focused on the migration. The domains have started to migrate. We migrate batches every single day, and we've been increasing the throughput on ones we can bring over. So, you know, I hope that's completed in a few months- Okay ... and then we're done with the migration, and we have the better interface there, and we can kind of move on with an idealized interface for the small businesses. When we sat down, you talked a bit about commerce. How important of a driver will e-commerce be for you, and what types of companies are really in the sweet spot for your e-commerce offering? So incredibly important. I think as we repackage our key plan levels, being able to provide a discounted take rate with Squarespace Payments for our customers is a huge, huge thing. It just hasn't been there before. I think certain customers look at our pricing page and leave. They never even become customers in our ecosystem because of how that looks. And to build on that, e-commerce and physical commerce is always gonna be important to us because, you know, our customers want that in addition to other ways to transact, but there's so many other ways to transact. There's services, there's tickets, there's events, there's reservations, there's appointments, there's donations. It's, like, all these other ways to transact online, many of them kind of without, like, big, scary public company industry leaders, and, you know, frankly, a lot easier to deal with than physical commerce, which has to involve shipping and all these other things that are very region-dependent and all that. You know, compare that to, you know, for instance, the donations platform where the money's transferred. That's about it. That's about it. That's about That's about it. So take us through the... Given all the solutions here, the cross-sell opportunity has to be massive. Take us through that journey from onboarding to selling multiple solutions to customers, you know, and cross-selling. So the journey in the past is pretty simple, right? We've spent a bunch of money on advertisements for Squarespace. They associated that in their head with hopefully at least website and then something else. You go to Squarespace.com, you pick a template, or we get you into a template in one of many ways, and then you're in the ecosystem, and then we want to upsell you on email, a domain, email marketing, and things like that. Squarespace of the future has multiple brand entry points, and even when you enter through Squarespace.com, it will have multiple products that are available to you via that. So if you just want a domain and email... I want you to use Squarespace. Like, I don't want, I don't want the website to be a blocker. If you wanna start with appointments and then buy our email marketing product, I would like you to use Squarespace for the email. The, you know, the website shouldn't be the blocker. So that's much more of what the future will look like in an integrated way as possible. So competition, you know, we could look at on one side, you know, WordPress, you know, on the other side, like a Wix, a Shopify, given, I mean, so many places that you play. So how do you win against, you know, competitor or category of competitor, and, and, and what's the competitive landscape for you? So we're mostly juxtaposed with the website builders you mentioned, WordPress, obviously Wix. I think that right now, at any point in time in history, the Squarespace actual product and the development of the product, including the release of Fluid Engine, all the updates we've done over the years, is frankly just the best it's ever been. I mean, the expressibility is through the roof, the ease of use is through the roof. Like I was saying before, in terms of the commerce products, the commerce functionality, a lot of these categories can be really big, and there aren't exactly big modern public companies going after them. So again, services, tickets, events, yeah, all this other stuff, you know, you don't have a public company and a name because there isn't one. The amalgamation of all these ways to transact on the platform should be transformative for the business over time. I see. I see. Payments, you mentioned, I wanna make sure I got the take rate right. I don't... You know, what's the take rate on payments? And talk about how it's changed their experience. So we don't release the take rate on payments. You know, we've had a partnership with Stripe for a decade, literally. We're one of the first people to put people onto Stripe, including putting our own business on it. The take rate with payments is advantaged for us because we're taking on more of the risk- Okay ... while still building on top of Stripe. It's a better experience for customers in a number of ways. One, most of our customers don't know what Stripe is, so they just wanna accept payments. Two, once we get into differentiating take rate by, for our customers- Okay ... by plan levels, that'll be more economically advantaged for them and us. And, yeah, it's just one company for them to interact with, so it's better- Fine ... you know, better UI for them, and- It's just better. And then how about, what's the penetration on payments? We've been focused on new customers coming on the payment, so it's 100% coming here. Hundreds of new? 100% of in the U.S. That's new. Of U.S. new. We have not focused yet, 'cause, again, this has happened like weeks ago- Yeah ... on the people moving over. The people- The incentive to move over will be the discounted take rate, which we have not launched yet. Right. That's where they're related. Yes. They're related. Yeah. So, you talked about, you know, the positive profitability from bootstrap, you know, not a lot of burn rate in the dorm room. No. So now, how do you think about the trade-off between profitable growth and the investments that you can make, given that market opportunity we talked about? We've had a story of discipline from the very beginning, right? We have always been cash flow breakeven, but prioritize growth at, you know, when we could, do it sustainably. So we're always investing in our new products. Squarespace Refresh, our product event last year, was one of the best ever. We released more than we've released in, you know, any other year, in the past 20, and that's while still controlling expenses effectively. And so we're always balancing those two. Again, I think we can continue to tick up free cash flow without damaging what we wanna create. You know, we kinda compare ourselves to other companies at times and just can't figure out the headcount, when applied to things. So we're an efficient company, but also a very innovative one. Again, I think the products we have in the market right now, especially in our core, are the best they've ever been. So you made some moves with pricing recently for your legacy customers for the first time. What, what further opportunities are there, do you think, in pricing on that as a lever for growth? So, in August, September of this year, it will be two years since our price increase. And so insofar as we can get the list price higher for new customers sustainably, I think that we'll have an opportunity to, you know, modestly raise prices for existing customers again. If you think about that happening every two years or so, and us providing more value via new plan packages with, you know, bigger discounts in for payment processors, I think we're gonna be able to sustainably tick up pricing, you know, over the next decade, in a way that's not offensive and kinda matches the market. Talking about return of capital, you announced $500 million buyback, so that's gonna add to shareholder return. Obviously, depends upon the timing, et cetera. But how do you think about return of capital and contrasting it with growth? And, you know, is it focused on delivering total shareholder return via a combination? It's definitely a combination. I mean, we value, you know, sustainable growth over, you know, just cash flow. The buyback, you know, we had a $200 million buyback authorized about, I think it was two years ago. That was about to expire, so just wanted to reauthorize that. It's completely opportunistic. You know, we have metrics that we look at internally and apply it when we think we're undervalued. But there's no part of that buyback that would ever get in the way of M&A- The investment or- ... or any investment- Right. Okay Okay ... in a growth initiative. So I wouldn't think about it like that. It's just, it's excess, making sure you don't have a lazy balance sheet, and yet you're still focused on growth, inorganic and organic. Yep. Let's tie that into growth and wrap this all together. You've got this competitive position, the solutions for the customers across all the various areas. Mm-hmm. Over $1 billion of revenue. Mm-hmm. Where do you go from here, growth, growth-wise? What are the growth opportunities? So we've got an investor day coming up in May, where we're gonna give- Mm-hmm a lot more longer-term view on where the cash flow can go, and why we think we're gonna be able to get to the top line that, you know, you will see there, and what the drivers of those are. I'm touching on a couple already. You know, we've always got pricing leverage, you know, the take rate with payments, the expansion of GPV in the commerce platform as we shift the pricing, so that commerce is available for more of our customers. The additional brands, the cross-sell and upsell in that ecosystem, which is completely not completely untapped, but it's pretty untapped. I mean, the cross-sell on Squarespace historically has been website. What do you need? Oh, domain, yeah, email on it. That's one path. Now, we've got domain first, domain email. We've got Unfold to website, Unfold to Bio Sites, Bio Sites to website. Like, I mean, we've got all these ways we can move around within this platform that were not as accessible as before. So it's those things, and really just keeping cutting edge on the core product. Squarespace's website builder is the best right now, and, you know, it's... And you're seeing volume flowing onto that platform in terms of trials that's at an unprecedented high, including COVID quarters, so. Do you think there's anything misunderstood about the company that you'd like to spell if you had to think it? Or do you think people generally understand it at this stage, given how you've evolved? I think it's underappreciated what we can do in terms of the SaaS fees in conjunction with payments, with the- 92% subscription. 92% subscription. So I think what I'm looking for over the next five years is a giant step function change on GPV. I think that's really, really important for us. I think that when you go to Squarespace.com, it can still be a little website-centric, and I think it needs to be product-centric. The family brand story is yet to be put together. And then, look, from a financial standpoint, we remain incredibly disciplined, as we've always been, doing that balance between growth and cash flow, as we've always done. And I think people may not appreciate where those margins can really go while still maintaining growth on the top line. Maybe that's an opportunity for analyst day to help tell us more. With some beautiful slides. What can you tell us about... You know, talk to us about the culture of the company. Like, what's the culture you've wanted to instill, and has it taken and shaped the way you've wanted to? Tell us about the culture and the employees. Hard to summarize that in, you know, a couple minutes, but, you know, I think the thing I kinda keep going back to is a culture of hopefully people that act like owners, and they... You know, one of the benefits of being public is, you know, the employees actually get more information in this world than they had when we were private, right? They can see the earnings calls. They can look at why we may have made a decision around cash flow versus growth. Yeah, they can watch chats like this one, which is more frequent. They have more information than what they were previously getting at all hands. So what I mean by a company that acts like owners, like, the more they can internalize that, the more they can talk about, "Are these products that I would want for myself? Right. Are these values that I want myself—I need to do well? I care about the details. I care about the customer experience. I really care about the customers." The more they can embody more of those things, the better it is. I think that for a technology company that's 20 years old, we remain incredibly modern. You know, we deal with our- Vibrant. Vibrant. Right. You know, our products are new, fresh. You know, they I can't say the same for a lot of 20-year-old technology companies, so. I agree with that, having experienced that myself. Mm. Do we have any audience questions? We've got a couple more minutes, if you'd like, over here in the corner. Sure. Mic, mic r unners, we'll get it over to you. Just on go-to-market, your largest competitor in the last couple of years was really focused on agencies and, like, putting DIY a bit, a bit on second priority. I was wondering, what's your vision for Squarespace on that front? And, how are you going to execute on... If, if you are, on that? Yeah. You know, that maybe should go into the underappreciated story inside Squarespace. I mean, about one in ten of our websites right now are created by members of our Circle community, which is roughly resellers, agencies, a lot of them small, but the people who build on top of our platform. One of the key differences between what we do and whoever you're talking about, might what do, is, you know, I kind of believe we can accomplish a lot in one single design system and not fork it and fragment it. As the core Fluid Engine platform gets better and better and better, we add more concepts to that. It really eliminates the need to go to a much more advanced platform, of which there are a couple, both private and, and, and some from public companies. And so we're gonna keep focusing on that. The reseller and design community is, you know, exceptionally important to us. I mean, Squarespace ran away with pretty much, like, everybody who wanted to make a serious portfolio online. Tons of ad agency people used it for that reason. A lot of those are freelancers as well. It's just really in the core of what we do, and the alignment of the company, and what they want to deliver to their customers, super important to us. So, we don't talk about it in the same way, but it is an actual big part of the business, and I think, you know, I like what we're doing in terms of our CMS strategy and how it, how it can apply to those, to those companies. Other questions from our audience? Follow-ups? If not, we really appreciate your time here. Thank you for joining us at the Morgan Stanley Conference, and thank you for joining us for Squarespace. Thank you for having me, and thank you for coming. Well done. Love it. Great. Ooh, great, great. Here you go.