Squarespace, Inc.

good morning my name is emily and i'll be your conference operator today at this time i would like to welcome everyone to squarespace's first quarter 2023 earnings conference call all lines have been placed on mute to prevent any background noise after the prepared remarks there will be a question and answer session if you would like to ask a question during this time simply press start followed by the number one on your telephone keypad if you would like to withdraw your question press start followed by two thank you I'll now turn the call over to your host at Squarespace, Claire Perry.

Claire, please go ahead. Good morning, and thank you for joining Squarespace's first quarter 2023 earnings conference call. I'm Claire Perry, head of investor relations, and with me today are Anthony Casalena, Squarespace's founder and CEO, and Nathan Gooden, CFO. After their prepared remarks, we will open the call to your questions. Earlier today, we posted a press release and shareholder letter to the investor relations section of our website. 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 these metrics, including a reconciliation of GAAP to non-GAAP measures in today's press release and shareholder letter, which can be found in the investor relations section of our website. These measures should not be considered in isolation from nor a substitute for our GAAP reporting. We will make forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which include, but are not limited to, statements related to our future financial performance, our strategies, and our ability to integrate new technology into our core platform. These forward-looking statements are subject to risk and uncertainties that could cause our actual results to differ materially. These risks are further defined in our most recent filings with the Securities and Exchange Commission. Any forward-looking statements that we make on this call are based on assumptions as of this day, May 9, 2023. We undertake no obligation to update these statements as a result of new information or future events except where required by law. Please also note that all comparisons are on a year-over-year basis unless specifically noted otherwise. I will now turn the call over to Anthony.

Thank you, Claire. Good morning, everyone, and thank you for joining us today. Last month we celebrated a major milestone, our 20th anniversary. Across the past two decades, the Squarespace platform has been used by millions to build beautiful brands and businesses online. This quarter, We delivered exceptionally strong performance with over 14% top line growth and an unlevered free cash flow margin exceeding 28% of revenue. The powerful combination of growth and profitability underscores Squarespace's solid business model. The majority of our business remains subscription-based with over 92% of revenue coming from recurring revenue streams from our 4.3 million unique subscriptions. Q1 2023 had the most trial starts in our core product and Squarespace's history. surpassing any pandemic quarter. In March, we saw a strong customer acquisition, which continued into April. This continued strength gives us the ability to raise our full year guidance today. Squarespace's core website business outperformed our expectations in the first quarter of 2023, with outperformance driven by both new customer additions and higher adoption of our premium plans. Last year, we delivered over 100 new features and updates to our customers across our product lines, which included the release of Fluid Engine, a transformation of our primary page builder experience. We believe Fluid Engine is the simplest and most expressive way to publish to the web, and our focus on democratizing access to great design remains a key competitive advantage. Adoption of our higher value plans, along with our ability to responsibly increase pricing, is beginning to be reflected in our revenue, driving average revenue per unique subscription higher to $213 each. Average revenue per unique subscription grew faster than unique subscriptions this quarter, and we expect that dynamic to continue as higher intent to sell customers join our platform and adopt additional products. Our investments in international markets over the past year are showing early signs of success as well, with positive growth across all target markets. Many of our international markets are seeing both CAC improvements in growth rates that exceed our growth rates domestically. Our commerce products also saw double-digit growth across the board. One notable outlier within the quarter was increased adoption of our email campaigns products, which benefited from macro changes in the competitive environment. Free products are increasingly becoming more restrictive in pay only, which further drives customers to consider alternatives to incumbent players. Our portfolio of products for entrepreneurs has never been stronger, and we continue to invest in our brands that are adjacent to our core Scorespace brand, Acuity for scheduling, talk for hospitality and time-slotted businesses, and unfold in bio-sites for social media creators. To remain relevant in an ever-changing technological landscape, it's essential to have tools that can seamlessly integrate and adapt to evolving customer needs. Squarespace has evolved from being a publishing platform to becoming a holistic, commerce-forward content management system. Our products allow entrepreneurs to transact in a variety of ways as they monetize physical goods, services, and content. Squarespace has always offered hundreds of curated templates for customers to choose from when they're building a site. In the first quarter of 2023, we introduced Squarespace Blueprint, a new onboarding experience that lets users custom build a starting point without having to select from our template store. We've seen record levels of demand in Q1 as customers onboard with Squarespace Blueprint and adopt the myriad of updates on our core platform, which is both easier to use and more expressive than ever. The mainstream accessibility of artificial intelligence large language models is something we are paying close attention to, and efforts are underway to build this functionality into our core platform. In our shareholder letter, we discussed in depth how this technology fits into Squarespace's core onboarding and editing experiences, including the newly launched Squarespace Blueprint. This technology helps us solve one of the core reasons customers find themselves in a difficult spot while onboarding. They do not have their content ready. The availability of AI models augments our tools perfectly, helping customers with setup and writing, while also preserving the power that Squarespace provides as an editing tool, hosting platform, commerce platform, and more. Yesterday, our Circle community received a beta release of new text generation features powered by OpenAI in our production environment. These enhancements will be made available to all customers in the coming weeks. Squarespace Payments remains on track to launch in the back half of 2023. Our engineering and product teams are building towards an integrated solution to deepen our relationship with customers and provide a seamless experience at every step within our platform. Finally, we recently published our first environmental, social, and governance report. We're proud to showcase how our mission and ways of operating our business support our ESG goals. The report can be found at the ESG section of our investor relations website, and we invite you to read about our positioning and progress. We continue the year with immense gratitude to our customers and remain focused on delivering innovative products to enable entrepreneurs everywhere. Thank you to all of our customers and employees who've been part of this journey with us over the past two decades. We remain an incredibly modern company and are delivering better products and more functionality than we have in any previous year of our existence. We look forward to serving you for the decades to come. And now I'll turn the call over to Nathan.