Anthony Casalena: Yeah, for sure. Thanks for the question. At Refresh last year, which is just really kind of almost a couple months ago, we have some demo videos about how we plan on and have incorporated AI advancements into the product. I mean, Squarespace has always had a machine learning group here, which we’ve used insights from to guide the onboarding experience and the setup experience. So I’d say a couple of things. So first off, jumping back to your original positioning of Squarespace, which is how I believe we’re positioned too, which is that we’re really the leader in design, and we’re the leader in, I believe, quality and all of the things we do. So coming over the next couple of months, you’re going to see more ongoing releases.
By the way, the AI stuff is an ongoing process. We’re always releasing things. We’re always updating things. It’s not this big bang, now it’s here, we’re done sort of situation. But we’re going to be releasing a number of incremental improvements under the banner of sort of design intelligence, we’re calling it. So it’s really not just the fact that AI is there. It’s the combination of AI, which us and all these smaller start-ups have equal access to, with a tool and a taste level that is really, really, really incredible. I mean, you can’t just have AI generate the code for your site, have no tool, no hosting, no domains, no order management, no e-commerce capabilities. You have to build all this stuff. And Squarespace has an amazing technology stack that we’re building on top of.
So we’re constantly releasing AI improvements into our editor, into Blueprint, into setup. We have new services going online that understand the context of your brand and start to help you automatically put that into prompts as you build your site. So a lot of releases, I’d take a look at the Refresh stuff and then also stay tuned for design intelligence appearing on the front side. That’s really how we are going to continue to integrate AI. The other thing, just one more thing on this, is that a lot of the magical stuff people see with Mid-Journey or ChatGPT or whatever, we’ve integrated a lot of that into the interface, which is a convenience thing. But also keep in mind that – I think this is directionally correct, don’t quote me exactly, but like a third or a third of Americans have used ChatGPT.
So whatever they’re getting there, if that’s not augmented with a great tool, it’s just a commodity at this point. So we’re looking to make sure our integration of AI isn’t the same tricks we see everyone use and is something genuinely useful for our customers.
Siti Panagrahi: That’s a great color. And Nathan, just a quick housekeeping question. So, I don’t know if you talked about the Google domain impact on revenue and gross margin in Q4?
Nathan Gooden: Yeah, happy to unpack that a little bit there. As a reminder, for Google domains, you will see the impact of revenue. We recognize that over 12 months. So you’ll see the initial impact in bookings, which we saw 20% year-over-year growth in bookings in Q4, which is pre-dominantly driven by the Google domain. But the revenue impact, you will see over time. There was an 820 basis point degradation in our margin, which we were not surprised by. That’s because we recognize the registry costs up front, whereas revenue is recognized over time. So you’ll see this continue in the first half of 2024, and then as we lap the anniversary of the acquisition, we expect that to improve as we have a full year of revenue in the model.
Siti Panagrahi: Thank you.
Operator: Thank you. The next question comes from the line of Ygal Arounian with Citi. Your line is now open.
Ygal Arounian: Hey, good morning, guys. Okay, Anthony, I’ll bite on the pricing philosophy question. I think we noticed some pricing increases, at least at the list price, about a month ago, a few weeks ago. So can you talk about that, what the impact might be? It sounds like it’s not super material, or at least in terms of your guidance, and then how you’re thinking about pricing and pricing opportunity moving forward from here.
Anthony Casalena: Thank you for inviting. I’ll touch on three areas. So first off, we just executed that one. Our first ever price test was around the August, September timeframe, going up at a year and a half ago. So this August, September, it will be two years since we’ve raised prices. And the test that you all picked up on in market is one of many tests we do to list prices constantly. So if you’re just loading our pricing page and screenshot of things, you will see differences all the time. So that test is, again, a new customer list price test, very marginal, 5% to 10% over what we have now. And if that is an audio issue…
Operator: Testing. Please stand by as we reconnect our speaker lines. Speaking team, you have been reconnected. Please proceed.
Anthony Casalena: Hi there. Sorry about that. So I’ll take it from the top on the pricing question again. So first off, it’ll be two years since our original price increases in August and September in that time frame. And also referenced was some people picked up on a list price test that we were doing about a month ago. So first off, we’re always doing price testing. We have tons of price tests in the market. The one that was being observed is a pretty slight increase. So I think 5%, 10% across the board, certain plans changing more than others. If something like that ends up being successful and we can move up list prices for new customers in that August, September time frame, that would mean that everyone is then again below list.
