Squarespace, Inc. (NYSE:SQSP) Q4 2022 Earnings Call Transcript

Andrew Boone: Thanks so much for taking my questions, and good morning. I wanted to ask about two things. You talked about the slowdown in ecommerce as well as the opportunity within services. Can you just double-click on what you’re seeing in services and where you guys are pushing? And then, Nathan, I think you mentioned more S&M, sales and marketing discipline as we think about 2023. Can you just expand on that? Thanks so much.

Anthony Casalena: Sure. So, our GPV, the amount of payments flowing through the platform is a mix between physical commerce, which we all saw surge during the pandemic, and has weaned a bit, and we’ve been talking about that dynamic, and multiple companies have been talking about that dynamic for the past couple quarters. We’ve got services-based commerce, so those are people selling services. There’s the appointment-based stuff that’s flowing through Acuity, and then there’s the hospitality and bookings fee area of things which is flowing through Tock. Our focus has been more on the services, appointment-based, and advance and booking fee area versus just focusing on physical commerce. We have an almost 10-year investment in physical commerce.

And so, I think when you were referring to softness in the overall GMV number, it’s mostly from the physical side. And also, I’d like to say, during ’23, we’ve got a lot of changes coming out that will be our product changes that benefit service-based sellers. And so, those will start to roll out during the year. And then, of course, later in the year, hope to have merchants onboarding the Squarespace payments for the first time, which is just — I mean, obviously, there’s a financial impact there to us, it’s positive, but there’s really also a customer experience impact that was very positive. So, we hope that all those changes will continue to bolster our presence in that space.

Nathan Gooden: Good morning, Andrew. Your question on the marketing ER, I might step back a little bit first and say, the — we are taking a very maniacal approach as we think about driving the profitability and investing in growth. And marketing is certainly a key lever there. In 2022, we were constantly assessing the return on our marketing dollars to make sure that we were making conscious decisions of where we were investing. And you saw in the latter half of the year, we did pull back and continue to see strong return from our core subs, and in Q3 and Q4 we saw that acceleration in our core business. As we look to 2023, I would expect that same discipline and similar ratios on the ER for marketing and sales, but we will keep an eye on the spend there to make sure that we are most efficient in getting the highest return for what we’re spending.

Andrew Boone: Great, thank you so much.

Operator: Thank you. Our next question comes from Ygal Arounian from Citi. Your line is now open, please go ahead.

Ygal Arounian: Morning, guys. And just, Anthony, a follow-up on the comment you just made on the products that are launching this year that’ll benefit the sellers. You talked about a really strong product pipeline in ’22, one of the best you’ve ever had. Maybe so just expand a little bit on what’s to come next, maybe broadly, but specifically to following up on that service seller comment too?