Executive Summary

Q3 2023 revenue was $257.1M (+18% YoY) with adjusted EBITDA of $66.5M; GAAP diluted EPS was $(0.12). Revenue beat third‑party consensus, while EPS missed amid a larger income tax provision .
Management raised FY23 guidance to revenue of $1,002–$1,006M and unlevered free cash flow (UFCF) of $232–$236M; Q4 guidance set at revenue of $261–$264M and UFCF of $56–$60M, reflecting continued momentum and Google Domains synergies .
Presence revenue grew 20% YoY to $179.5M; Commerce revenue grew 15% YoY to $77.6M; KPIs improved with ARPUS +10% YoY to $226.05 and unique subscriptions +5% YoY to 4.4M .
Gross margin pressure in Q3 stemmed from Google Domains onboarding (upfront registry costs against ratable revenue recognition); management expects normalization over time, with cross‑sell into Squarespace’s suite as the transformative driver .
Stock catalysts: revenue beat, FY guidance raise above prior ranges, and narrative on payments rollout and domain cross‑sell opportunity .

What Went Well and What Went Wrong

What Went Well

Record quarter with 18% topline growth; adjusted EBITDA rose to $66.5M (≈26% of revenue). CEO: “We are on track to exceed $1 billion in total revenue by the end of 2023.” CFO: “Strong customer demand and retention” drove outperformance .
Presence revenue +20% YoY; ARPUS +10% YoY to $226.05, supported by pricing and mix shift to higher‑value plans .
Raised FY23 revenue/UFCF guidance and set Q4 guidance reflecting momentum, payments rollout, and Google Domains go‑to‑market synergies .

What Went Wrong

GAAP diluted EPS $(0.12) vs external consensus expectations for positive EPS; management cited a larger income tax provision driving GAAP net loss .
Gross margin compressed sequentially due to Google Domains onboarding costs recognized upfront versus revenue recognized ratably over 12 months .
Commerce GPV/GMV softness vs estimates; GMV was $1.50B vs two‑analyst average of $1.54B, and ARPUS slightly below two‑analyst average estimates ($226.05 vs ~$229.36) .

Financial Results

Headline P&L and Cash Flow (Quarterly)

Metric	Q1 2023	Q2 2023	Q3 2023
Revenue ($USD Millions)	$237.0	$247.5	$257.1
Diluted EPS ($USD)	$0.00	$0.03	$(0.12)
Operating Income ($USD Millions)	$1.5	$36.7	$27.6
Gross Profit ($USD Millions)	$194.1	$204.4	$205.3
Adjusted EBITDA ($USD Millions)	$30.9	$73.4	$66.5
Cash from Operations ($USD Millions)	$64.2	$52.5	$53.3
Unlevered Free Cash Flow ($USD Millions)	$67.1	$54.8	$54.1

Segment Revenue

Segment Revenue ($USD Millions)	Q1 2023	Q2 2023	Q3 2023
Presence	$164.4	$172.1	$179.5
Commerce	$72.6	$75.5	$77.6

KPIs

KPI	Q1 2023	Q2 2023	Q3 2023
Unique Subscriptions (000s)	4,264	4,305	4,404
ARPUS ($)	$212.76	$219.42	$226.05
Total Bookings ($USD Millions)	$265.8	$256.1	$267.0
ARRR ($USD Millions)	$990.5	$980.8	$1,013.5
GMV ($USD Millions)	$1,534.1	$1,525.5	$1,498.2

Actuals vs External Consensus (Q3 2023)

Metric	Consensus (Seeking Alpha)	Actual
Revenue ($USD Millions)	$251.9	$257.1
Primary EPS (GAAP Diluted) ($USD)	$0.29	$(0.12)

Note: Alternative third‑party source showed consensus revenue $252.1M and EPS $0.12 . S&P Global consensus was unavailable due to a mapping error in our CIQ integration; therefore, we relied on public third‑party sources.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	FY 2023	$969–$981 (issued May 9, 2023)	$987–$995 (raised Aug 8, 2023)	Raised
Revenue ($USD Millions)	FY 2023	$987–$995 (Aug 8)	$1,002–$1,006 (Nov 7)	Raised
UFCF ($USD Millions)	FY 2023	$192–$207 (May 9)	$217–$225 (Aug 8)	Raised
UFCF ($USD Millions)	FY 2023	$217–$225 (Aug 8)	$232–$236 (Nov 7)	Raised
Revenue ($USD Millions)	Q3 2023	$250–$253 (Aug 8)	n/a (actual reported) —	n/a
UFCF ($USD Millions)	Q3 2023	$47–$51 (Aug 8)	n/a (actual reported) —	n/a
Revenue ($USD Millions)	Q4 2023	n/a	$261–$264	New
UFCF ($USD Millions)	Q4 2023	n/a	$56–$60 (CFO bridge: CFOps $53–$57; capex ≈$5; interest net tax ≈$7.5)	New

Earnings Call Themes & Trends

Topic	Q1 2023 (May 9)	Q2 2023 (Aug 8)	Q3 2023 (Nov 7)	Trend
AI/technology initiatives	Discussed integrating LLMs and new onboarding “Blueprint”; record trials from product updates	Continued product improvements; momentum in presence/commerce; pricing success	“Squarespace Refresh 2023” as one of strongest release years; payments rollout to a single‑digit % of U.S. customers	Rising feature depth; packaging work ahead
Google Domains acquisition	Definitive agreement announced June 15; not yet closed in Q1	Guidance noted proposed impact excluded; acquisition pending	Closed Sep 7; bookings uplift; near‑term gross margin dip from registry costs; long‑term cross‑sell expected	Synergies materializing
Pricing/mix and ARPUS	Pricing success; UFCF margin 28%	ARPUS up 7% YoY; higher value plan mix	ARPUS up 10% YoY; continued shift to higher‑value website plans	Positive mix shift
Macro/demand	Strong demand, bookings growth	Retention + new demand; bookings +16% YoY	Demand and retention strong; ARR exceeded $1B	Stable to improving
Commerce/GPV	GMV down YoY in Q1; focus on commerce roadmap	GMV roughly flat YoY	GMV $1.50B; slightly below estimates; payments rollout continuing	Mixed
Margins	High UFCF; operating efficiency	EBITDA margin strong	Near‑term gross margin compression from domains onboarding; normalization expected	Temporary pressure

Management Commentary

CEO: “We are on track to exceed $1 billion in total revenue by the end of 2023, a significant milestone… Squarespace Refresh 2023… marks one of the strongest years of product releases in our history” .
CFO: “We delivered another record quarter with 18% topline growth, exceeding our revenue and unlevered free cash flow expectations, achievements fueled by strong customer demand and retention” .
CFO on Google Domains margin impact: onboarding new domains recognizes registry costs upfront while revenue is ratable, causing temporary gross margin impact; margins expected to normalize; cross‑sell is the transformative opportunity .

Q&A Highlights

Gross margin dynamics: sequential dip (~380bps referenced by analyst) tied to domain registry cost timing vs ratable revenue recognition; normalization anticipated over time .
Product packaging/pricing: management plans to simplify and verticalize packaging around personas to better surface specialized functionality; payments rollout underway (single‑digit % of U.S. customers) .
Google Domains overlap: substantial portion of ~10M acquired domains are not overlapped with existing Squarespace subs, supporting net new cross‑sell potential .

Estimates Context

Revenue beat: Actual $257.1M vs Seeking Alpha consensus $251.9M; Zacks reported $252.1M consensus; implies ~$5.0–$5.1M beat .
EPS miss: GAAP diluted EPS $(0.12) vs third‑party consensus ranging $0.12–$0.29; miss driven by higher income tax provision per company .
S&P Global consensus was unavailable due to a CIQ mapping error; results above rely on external public sources.

Key Takeaways for Investors

Revenue momentum and raised FY guidance signal durable growth; presence segment strength and ARPUS gains support mix and pricing power .
Near‑term gross margin headwind from Google Domains onboarding is mechanical; focus should be on medium‑term cross‑sell opportunity and payments attach to acquired domain cohorts .
Adjusted EBITDA and UFCF remain robust despite GAAP EPS volatility tied to taxes, underlining cash generation capacity into Q4 and FY23 .
Commerce KPIs (GMV) were softer vs estimates; monitor payments rollout pace and commerce packaging in 2024 for inflection .
Narrative catalysts: “Refresh 2023” product year, payments rollout, international expansion, and Google Domains synergies—all underpinning FY guidance raise and potential estimate revisions higher on revenue/UFCF .
Secondary offering (Nov 15) by a selling stockholder increased float; no primary proceeds to the company—neutral to cash but relevant for trading dynamics and supply .

Additional sources used for trend and transcript references: Q2 press release (Aug 8) ; Q1 press release (May 9) ; Q3 transcript excerpts .

Squarespace, Inc. (SQSP)·Q3 2023 Earnings Summary