Squarespace : Fourth Quarter 2023 Earnings Call Shareholder Letter

Q4 2023

SHAREHOLDER LETTER

Q4 2023 OVERVIEW

Total Revenue	Commerce Revenue	Total Bookings
$271M	$82M	$286M
+18% YoY GROWTH	+14% YoY GROWTH	+23% YoY GROWTH
Adjusted EBITDA	Unlevered FCF	GMV
$65M	$65M	$1.7B
24% MARGIN	24% MARGIN	+6% YoY GROWTH

Q4 results are based on Unaudited Financial Statements.

A reconciliation of non-GAAP metrics used in this letter to their nearest GAAP equivalents is provided at the end.

Q4 2023

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SHAREHOLDER LETTER

2023 OVERVIEW

Total Revenue	Commerce Revenue	Total Bookings
$1.0B	$308M	$1.1B
+17% YoY GROWTH	+14% YoY GROWTH	+19% YoY GROWTH
Adjusted EBITDA	Unlevered FCF	GMV
$235M	$241M	$6.2B
23% MARGIN	24% MARGIN	+3% YoY GROWTH
Unique Subscriptions	ARPUS	ARRR
4.6M	$228	$1.1B
+10% YoY GROWTH	+9% YoY GROWTH	+19% YoY GROWTH

Unique subscriptions and average revenue per unique subscription ("ARPUS") do not account for single domain subscriptions originally sold by Google as a part of the Google Domains Asset Acquisition (the "Acquired Domain Assets").

A reconciliation of non-GAAP metrics used in this letter to their nearest GAAP equivalents is provided at the end.

Q4 2023

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SHAREHOLDER LETTER

TO OUR SHAREHOLDERS

Anthony Casalena

Founder & Chief Executive Officer

2023 was a year of incredible milestones for Squarespace. In addition to it being our 20th anniversary, we crossed the $1 billion mark in revenue (17% year-over- year growth) and simultaneously expanded our unlevered free cash flow margin by over 400 basis points to 24%, putting us firmly at the Rule of 40 for the year. Our top-line performance in 2023 was led by strong customer retention, new customer growth across markets, and strength in our subscription pricing, with operating margins supported by improved marketing efficiency.

With our robust product lineup and growth drivers in place, we begin our third decade in a stronger position than ever. We have built a broad funnel with multiple customer entry points including our website builder, Squarespace Domains, Acuity Scheduling, Tock, Unfold, and Bio Sites.

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SHAREHOLDER LETTER

2023 also marks multiple major product milestones for us. We entered into an agreement with Google to take over management of millions of domains from the Google Domains business and greatly invested in our domains product functionality, introduced Squarespace Payments, launched Squarespace Blueprint and integrated Generative AI into our web tools to accelerate website creation, and added countless other features that we summarized in October at our annual Squarespace Refreshevent.

We believe these initiatives will play an important role in driving growth for Squarespace across the key drivers of enabling small business, commerce and international expansion. Let's dive more into how Squarespace is positioning for growth in each of these areas.

ENABLING SMALL BUSINESS

Our services span the essential functions that we believe every business needs to succeed: a domain, web presence, and email. 2023 was a record-breaking year for new website trials at Squarespace, which helped grow our unique subscriptions to over 4.6 million, returning to a double-digityear-over-year growth rate. The strong growth and customer retention that we saw in 2023 underscores the strength of our website builder. We have kept our focus on the

Q4 2023

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SHAREHOLDER LETTER

fundamentals of web presence, ensuring that we offer customers intuitive UI and powerful expressibility options to differentiate their brands. In 2023, we launched Squarespace Blueprint, our guided website design system that provides professionally-curated layouts and styling options. With Blueprint, we saw higher trial rates, notably with non-English-speaking users. We also integrated generative AI features to help customers reduce the barriers to publish new websites. Continuous innovation in ourweb-buildingtools, which brings more value to both existing and new customers, allows us to maintain our competitive edge and optimize pricing when we see opportunity in the market. We see customer cohorts growing in value over time as customers subscribe to higher- value plans and attach more products.

Following our strategic acquisition of Google Domains assets, we expect to welcome millions of customers to our platform and broaden our funnel for future customer acquisition. To support our new customers, we relaunched Squarespace Domainswith a more complete domain management experience, well-suited to provide domain-first customers a seamless experience. Squarespace Domains is now one of the largest registrars in the world and we believe it is the most advanced and easy-to-use domains offering on the web. The domains acquired from Google will extend our platform reach to millions, creating opportunities to drive broader adoption of our offerings. The acquisition also strengthens our partnership with Google through exclusive reseller agreements for Google Workspace and Google Cloud customers.

Since re-launching Squarespace Domains, we are focused on the migration of legacy Google Domains customers to Squarespace's platform. Following the acquisition's close in September, renewal rates from this customer base have surpassed our expectations.

We see domains as an onramp to our ecosystem because we believe a domain is a starting point for businesses and a means of claiming a brand and a home on the web. In relaunching Squarespace Domains, we reimagined our offering to provide domain-first customers a best-in-class experience regardless of whether a customer's domain is connected to other Squarespace services. We believe providing outstanding service at this entry point improves our opportunity to offer customers additional products and services.

For personalized email services, we resell Google Workspace, which we believe provides customers with essential communication and collaboration tools to grow and run their business. By connecting Google Workspace through Squarespace,

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SHAREHOLDER LETTER

customers can centralize their business email with their Squarespace tools for a unified solution, connecting domain, web presence, and email. 2023 was a solid year for our Google Workspace reseller agreement in terms of its contribution to our full-year topline growth.

COMMERCE

We are in an era when commerce of all types is proliferating across the web. With our comprehensive set of tools, we are focused on making it effortless for individuals to harness the power of software and digital presence to grow their businesses. Our customers can sell digital content, appointments, reservations, physical goods, services, and more. Growing our Commerce business, both in terms of the products we offer entrepreneurs and the amount of GMV we process, is a key focus of our product strategy.

At the time we release this letter, we have successfully turned on Squarespace Payments for all new customers in the United States. Our release of Squarespace Paymentsin Q4 2023 was a critical milestone in our Commerce strategy. Squarespace Payments fully integrates with our customers' online stores to accept fast and secure payments and provides a seamless purchase experience for their customers all in one place. Our native payment solution

Q4 2023

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SHAREHOLDER LETTER

enables merchants to collect money for goods and services directly, without having to integrate an external payment processor themselves. We believe Squarespace Payments provides a more cohesive user experience for end users and customers. We are encouraged by the early adoption we are seeing from new customers and, to date, user feedback has been enthusiastic. International availability is expected to be released market by market throughout the remainder of 2024, and we will begin targeted migration for existing customers.

Within Commerce, we believe Squarespace's focus on service sellers drives product differentiation in the marketplace. Service sellers monetize their time and expertise through appointments, provision of experiences, and digital content, among other things. These are sellers whose primary offering is not a physical good, although they may complement their services with merchandise.

Acuity Schedulingis a foundational component of our competitive positioning within this space, and is an area of the business where we saw strength in 2023.

Acuity Scheduling subscription revenue and associated revenue share continued to drive Commerce growth. In 2023, GMV from Acuity customers grew year over year as more appointments were booked and we improved product functionality to drive more transactions onto our platform. Platform updates helped streamline

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SHAREHOLDER LETTER

the client booking experience. We also added features such as a new centralized dashboard, enhanced payment and invoicing features. The ability to purchase Acuity Scheduling as a standalone product or as an attach to Squarespace web tools expands our reach and provides customers flexibility depending on their use case.

For our service sellers, we introduced more digital content and communication tools to help customers unlock value and systematize their businesses. Coursesis the next evolution of Member Areas, and offers new ways for entrepreneurs to create, market, and sell online courses. We also made improvements to invoicing features and project management tools to help streamline our customers' workflows.

Tockis our Commerce offering with premium tools and features that solve for hospitality needs. Tock provides a comprehensive reservation platform to help hospitality businesses drive revenue, increase covers, and stay engaged with guests. Tock closed out the year with its best revenue quarter yet as it benefitted from an uplift in seasonal GMV, setting a new record, and strong customer growth. We believe product improvements and new integrations helped drive strength this year. In 2023, we redesigned Tock's iOS app to allow diners to easily search and book restaurants. We also integrated Reserve with Google so guests are

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SHAREHOLDER LETTER

able to book directly through Google Search and Maps. We see the Reserve with Google integration driving more covers and building customer loyalty. Additionally, we released an array of feature updates and improved functionality to further broaden our value proposition and competitive separation.

The innovations launched in 2023include some of the biggest advancements in our Commerce product. Ecommerce is an important part of our offering and we are focused on driving more GMV with our product improvements. We believe Squarespace's ecosystem has never been better positioned to realize our mission to help entrepreneurs stand out and succeed.

INTERNATIONAL

We are amidst a multi-year journey to expand our brand and grow our customer base in new markets globally. In 2023, we continued to improve product-market fit in international markets and crafted brand campaigns with a global audience in mind. We increased our currency options 450% to a total of 22 global currencies, which, alongside our growing support languages, bolsters our ability to support our international customers. We also ran localized marketing campaigns across

Q4 2023

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SHAREHOLDER LETTER