Squarespace, Inc.

Good evening, my name is Christian and I'll be a conference operator today. At this time, I would like to welcome everyone to Squarespace's second quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's 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. Thank you. Christopher Chu, you may begin your conference.

Good afternoon, and thank you for joining us for Squarespace's second quarter 2021 earnings call. My name is Christopher Chu, and I'm the head of investor relations and corporate development. With me today are Anthony Cappellina, founder and CEO, and Marcella Martin, CFO. They will share some prepared remarks and then open up the call for questions. On today's call, we'll be referencing both GAAP and non-GAAP financial results and operating metrics. You can find additional information on how we calculate any of the metrics discussed on this call, including a reconciliation of GAAP to non-GAAP measures in today's press release, which can be found in the investor relations section of our website. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. The matters we'll be discussing include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act 1995, We conclude they are not limited to those related to our future financial results, new product introductions, and the company's marketing strategy. These forward-looking statements are subject to risks and uncertainties that are discussed in detail in our documents filed with the SEC. Actual results may differ materially from those contained in forward-looking statements. Please take a look at our findings with the SEC for discussion of the factors that could cause the results to differ. Any forward-looking statements that we make on this call are based on assumptions as of today, August 9, 2021, and we undertake no obligation to update these statements as a result of new information or future events. I'll now turn the call over to Anthony.

Thank you, Christopher. Good afternoon, everyone. Welcome to our first-ever quarterly earnings presentation as a publicly traded company. My name is Anthony Costolano, founder and CEO of Squarespace. Thank you for joining us today as we report a strong quarter of growth for Squarespace. Before we get started sharing the details that led to the financial results, as some of you may be new to the Squarespace story, I'd like to remind our audience of why we exist. For those on the webcast, I would refer you to the slides. First, our vision and mission. Squarespace exists to help people with creative ideas stand out and succeed. As more and more people choose to turn their passions into ventures, we strive to be the best company to support them as they differentiate themselves, grow their audience, and most importantly, transact with their customers. I created Squarespace because I wanted to build a blog and couldn't find anything that would help me look professional and be easy to use. Since then, We've helped millions of customers build their brands. We believe strongly in the power of brands to build connections with customers and create loyalty. We believe that design is a powerful tool to visually and emotionally express your brand. Today, there are over 800 million small businesses and self-employed ventures globally, and they need to do two things to succeed. Build their brands and transact directly with their customers. We focus on both. Squarespace helps millions show up beautifully and consistently across the touch points that matter most and then sell anything. products, services, content, or community. The Squarespace journey began in 2003, and over the last 18 years, we've grown to become one of the leading website building companies in the world. With over 1,400 employees, a global workforce and customer base, we are now proudly a publicly traded company. We've achieved significant scale with over 3.9 million unique subscriptions as of June 2021, and our last 12 months of revenue is over $710 million, nearly all of which is subscription-based. Our revenue has grown approximately 30% year-over-year on a trailing 12-month basis. We've achieved this with strong gross margins, which speaks to how efficiently we operate our business. Strong returns on our spending has always been important, as illustrated by our positive unlevered free cash flow margins. We also have differentiated commerce offerings that go far beyond physical goods to help our customers sell anything online, from selling their time and expertise with our scheduling product to selling exclusive content and communities with our member areas products. This is translated into commerce revenue of over $180 million over the last 12 months. We think that commerce enablement is a significant opportunity and continues to be an increasing part of our business. We believe that the combination of scale, growth, and profitability places us in an elite class of technology companies with compelling financial profiles. Our market opportunity. We believe our total addressable market is massive and continues to expand. It's highly fragmented, which is an advantage to us given our scale, and isn't a winner-take-all environment that other companies may face. We believe that we have ample runway ahead of us, and it will be able to maintain significant growth at scale. The overall market is large based on a top-down approach. We believe that there are other ways to view the market opportunity. As you look at various products that Squarespace offers today, be it our member areas products, our restaurants and hospitality products via talk, websites, or our social presence products with Unfold, online stores, or professional users via Circle. Each of these components address incredibly large markets. We believe this further underpins the size in our large and growing addressable total market opportunity. Macro Trends. This market opportunity is being driven in part by the intersection of several secular trends that will allow us to continue to expand our customer base. In the United States, new business formation grew at 62% in the second quarter of 2021, according to the US Census. On entrepreneurship, Square States also commissioned a poll that concluded that Gen Z is the most ambitious generation to date. The vast majority, 92% of Gen Zers, plan to start their own businesses. We believe this will contribute to the continued growth in unique subscriptions. We are also benefiting from the shift to online versus offline. According to the same poll, 60% of Gen Zers and 62% of millennials believe how you present yourself online is more important than how you present yourself in person. With more than half, 57% of Americans being pulled, believe it is more important for a business to have a well-designed online store or website than a brick-and-mortar location. Finally, we believe that social commerce remains a high-growth industry segment for which we are well-positioned to capitalize on in the future. Our platform has six key pillars we believe differentiate us. First, we have an all-in-one platform. This means having a fully integrated suite of online tools an entrepreneur needs to show up online, build their brand, connect with customers, and sell anything. Second, we believe in beautiful design being consistent everywhere. Design is the core of all of our products, and we make it easy to keep a brand consistent across multiple touchpoints. Third, our platform lets our customers sell anything. Our commerce platform goes far beyond just selling physical goods. With Squarespace, you can also sell time, expertise, or content. Fourth, we believe in power with simplicity. Simplicity is one of our corporate values, and our products deliver professional-grade results quickly and easily. Fifth, We're built for modern use cases. We intend to continue to evolve, as we always have, from beyond websites to broad commerce capabilities, to marketing tools, social tools, to whatever's next that will make a difference for our customers. And sixth is our investment in customer support. Our award-winning customer support team is one of the best in class, and we've always invested in having a high-quality in-house support team. Our customer journey. We seek to provide tools for every step of our customer's journey through having their ideas come alive and grow online. From the very moment when our customers have an idea to flashing out a brand online to growing and scaling, Squarespace has products that are part of every piece of that journey. Presence. We are a leader in website design with customers across nearly all industries and verticals. Our tools allow our customers to create websites that often might otherwise require a digital agency and could cost tens of thousands of dollars. With Squarespace, you get a professional quality product right out of the box. And, of course, we help you set up a domain and everything else you might need to get you seen online. We're also a reseller of Google Workspace, so our customers can get branded email in their domain as well. For larger customers, we have a relatively new offering called Enterprise, which combines our most advanced features with dedicated priority support, bulk purchasing, and custom contracting and payment methods that larger organizations might otherwise require. With Unfold, our app that lets people improve their brand across their social presences, we are acknowledging that not every journey starts with a website. This exciting acquisition expands our funnel and allows our customers to maintain a consistent brand on social media. Social presence. With the acquisition of Unfold, we enable creators and small and medium businesses to stand out and keep their brand consistent across social media. Unfold is a top 10 graphics and design app in dozens of countries and has been downloaded 55 million times and has led to the creation of over 1 billion stories. Recently within Unfold, we launched Biosites, which are small websites intended to exist in users' social media bios and act as a hub to link to deeper experiences across the web. Selling anything. Our commerce offering provides the tools for our customers to transact in the ways that work best for their business. We believe that we have one of the few commerce solutions that supports a diverse set of business models, with the breadth to capture the entire online commerce market beyond just physical commerce. We enable customers to sell subscriptions, content, and services all within the same platforms. Our acquisition of Acuity Scheduling added a robust appointment scheduling solution that works for almost any industry, while our member areas product lets our customers monetize private content beyond paywalls. The ability for a customer to transact in multiple ways on the same platform, all while ensuring brand consistency, is a key differentiator for us. Today, we're processing billions of dollars worth of GMV and believe our commerce solutions will continue to be a significant revenue driver. Finally, with Squarespace, brands have access to powerful marketing tools that allow them to better engage their audiences and stand out online. The real value of our platform, though, is that all aspects of the platform are fully integrated, so our customers can share data and brand assets across every touchpoint they manage with Squarespace. Additionally, with our integrations and extensions marketplace, we're able to offer functionality to our customers via partnerships, whether it's shipping and fulfillment services or synchronization with third-party accounting systems. We're an engineering and design-led company with a technology stack that is modern, agile, and built to scale. Our best-in-class platform serves billions of page views per month. We've invested hundreds of millions of dollars over the years to build both broad and deep functionality. Our company was established in the heart of New York City, which continues to inspire us as we scale our business, innovate on our products, and serve a growing, diverse customer base. That said, we've made significant progress in expanding our global footprint and have begun the process of opening locations in London, Amsterdam, and Sydney to capitalize on our growing international opportunity. On March 31st, we acquired TOC, a leader in providing reservation and online ordering services for the hospitality industry. We've been successful in our approach to past integrations and are taking care to make sure this one is successful as well. We decided to take a very thoughtful approach towards integration across people, process, and technologies, considering it is our largest transaction to date. I hope you enjoyed this overview of our business. And with that, I will pass along to Marcel Martin, our CFO, who will walk you through the financials.