Squarespace, Inc. (SQSP) Q2 2021 Earnings Call Transcript

Squarespace, Inc. (SQSP -0.72%)
Q2 2021 Earnings Call
Aug 09, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good evening. My name is Christian, and I'll be your conference operator today. At this time, I would like to welcome everyone to Squarespace's second-quarter 2021 earnings conference call. [Operator instructions] Christopher Chiou, you may begin your conference.

Christopher Chiou -- Head of Investor Relations

Good afternoon, and thank you for joining us for Squarespace's second-quarter 2021 earnings call. My name is Christopher Chiou, and I'm the head of investor relations and corporate development. With me today are Anthony Casalena, founder and CEO; and Marcela Martin, CFO. We'll share some prepared remarks and then open up the call for questions.

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 any metrics discussed on this call, including a reconciliation of GAAP to non-GAAP measures in today's press release, which can be found in the investor relations section of our website. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. The matters we'll be discussing include forward-looking statements pursuant to the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995, which include but are not limited to those related to our future financial results, new product introductions, and the company's marketing strategy.

These forward-looking statements are subject to risks and uncertainties that are discussed in detail and are reconciled with the SEC. Actual results may differ materially from those contained in forward-looking statements. Please take a look at our filings with the SEC for discussions and the factors that could cause the results to differ. Any forward-looking statements we make on this call are based on assumptions as of today August 9, 2021, and we undertake no obligation to update these statements as a result of new information for future events.

I'm now going to turn the call over to Anthony.

Anthony Casalena -- Founder and Chief Executive Officer

Thank you, Christopher. Good afternoon, everyone, and welcome to our first-ever quarterly earnings presentation as a publicly traded company. My name is Anthony Casalena, founder and CEO of Squarespace. Thank you for joining us today as we report a strong quarter of growth for Squarespace.

Before we get started sharing the details that led to the financial results. Some of you may be new to the Squarespace story. I'd like to remind our audience of why we exist. For those on the webcast, I would refer you to the slides.

First, our vision and mission. Squarespace exists to help people with creative ideas stand out and succeed. As more and more people choose to turn their passions into adventures, we strive to be the best company to support them as they differentiate themselves, grow their audience, and most importantly, transact with their customers. I created Squarespace because I want to build a blog and couldn't find anything that would help me look professional and be easy to use.

Since then, we've helped millions of customers build their brands. We believe strongly in the power of brands to build connections with customers and create loyalty. We believe that design is a powerful tool to visually emotionally express your brand. Today, there are over 800 million small businesses and self-employed ventures globally, and they need to do two things to succeed, build their brands and transact directly with their customers.

We focus on both. Squarespace helps million show beautifully and consistently across the touchpoints with Mattermost, and then sell anything, products, services, content, or community. The Squarespace journey began in 2003, and over the last 18 years, we've grown to become one of the leading website building companies in the world. With over 1,400 employees of global workforce and customer base, we are now publicly traded company.

We've achieved significant scale with over 3.9 million unique subscriptions as of June 2021, and our last 12 months of revenue is over $710 million, nearly all of which is subscription-based. Our revenue is growing approximately 30% year over year on a trailing 12-month basis. We've achieved this with strong gross margins, which speaks how efficiently we operate our business. Strong returns on our spending has always been important as illustrated by a positive unlevered free cash flow margins.

We also have differentiated common offerings that go far beyond physical goods to help our customers sell anything online, from selling their time and expertise with our scheduling product, to selling exclusive content and community with our members area product. This has translated into commerce revenue of $118 million over the last 12 months. We think that commerce enablement is a significant opportunity and continues to be an increasing part of our business. We believe that the combination of scale, growth, and profitability, places us in an elite class of technology companies with compelling financial profiles.

Our market opportunities. We believe our total addressable market is massive and continues to expand, It's highly fragmented, which is an advantage to us given our scale, and isn't a winner-take-all environment that other companies may face. We believe that we have ample runway ahead of us and we'll be able to maintain significant growth at scale. The overall market is largely based on a top-down approach.

We believe that there are other ways to view the market opportunity. If you look at various products that Squarespace offers today, be it our member areas product, our restaurants and hospitality products via Tock, websites or social presence products with Unfold, online stores, or professional industry with Circle. Each of these components address incredibly large markets. We believe this further underpins sizing our large and growing addressable total market opportunities.

Macro trends. This market opportunity is being driven in part by the intersection of several secular trends that will allow us to continue to expand our customer base. In the United States, new business formation grew at 62% in the second quarter of 2021 according to the U.S. census.

On entrepreneurship, Squarespace also commissioned a poll that concluded the Gen Z's is the most ambitious generation to date. The vast majority, 92% of Gen Z's plan to start their own businesses. We believe this will contribute to the continued growth in the unique subscriptions. We are benefiting from the shift to online versus offline.

According to the same poll, 60% of Gen Z's and 62% of millennials believe how you present yourself online is more important in how you present yourself in person, with more than half, 57% of Americans being polled, believe that it is more important for a business to have a well-designed online store or website than a brick-and-mortar location. Finally we believe that social commerce remains a high-growth industry segment to which we are well-positioned to capitalize on in the future. Our platform and six key pillars we believe differentiate us. First, we have an all-in-one platform.

This means having a fully integrated suite of online tools, an entrepreneur needs to show up online, build their brand, connect with customers, and sell anything. Second, we believe in beautiful design being consistent everywhere. Design is the core of all of our products, and we make it easy to keep the brand consistent across multiple touchpoints. Third, our platform lets our customers sell anything.

Our commerce platform goes far beyond just selling physical goods. With Squarespace, you can also sell time, expertise, or content. Fourth, we believe in power with simplicity. Simplicity is one of our corporate values, and our products deliver professional-grade results quickly and easily.

Fifth, we're built from modern use cases. We intend to continue to evolve as we always have from beyond websites, to broad commerce capabilities, to marketing tools, social tools, to whatever is next that will make a difference for our customers. And sixth is our investment in customer support. Our award-winning customer support team is one of the best in class and we've always invested in having a high-quality in-house support team.

Our customer journey. We seek to provide tools for every step of our customer's journey through having their ideas come alive and grow online. From the very moment when our customers have an idea since flashing their brand online, to growing and scaling, Squarespace has products that are part of every piece of that journey. Presence.

We are a leader in website design with customers across nearly all industries and verticals. Our tools allow our customers to create websites that often might otherwise require a digital agency and can cost tens of thousands of dollars. With Squarespace, you get a professional-quality product right out of the box, and of course, we help you set up a domain and everything else you might need to get you seen online. We're also a retailer Google workspace so our customers can get branded you know in their domain as well for larger customers we have a relatively new offering called Enterprise which combines our most advanced features with dedicated priority supplier bulk purchasing and custom contracting and payment methods that larger organizations might otherwise require.

With Unfold, our app that lets people improve their brand across their social presences, we are acknowledging that not every journey starts with a website. This exciting acquisition expands our funnel and allows our customers to maintain a consistent brand on social media. Social presence. with the acquisition of Unfold, we enable creators and small and medium businesses to stand out and keep their brand consistent across social media.

Unfold is a top 10 graphics and design app in dozens of countries and has been downloaded 55 million times, and has led to the creation of over 1 billion stories. Recently, within Unfold, we launched Bio Sites, which are small websites intended to exist in user social media bios and act as a hub to link to deeper experiences across the web. Selling anything our commerce offering provides tools for our customers to transact in a way that works best for their business. We believe that we have one of the few commerce solutions that support a diverse set of business models, with the bread to capture the entire online commerce market, beyond just physical commerce.

We enable customers to sell subscriptions, content, and services, all within the same platform. Our acquisition of Acuity Scheduling added a robust appointment scheduling solution that works for almost any industry. While our Member Areas product lets our customers monetize private content beyond paywalls, the ability for our customers to transact in multiple ways on the same platform. All launching brand consistency is a key differentiator for us.

Today, we're processing billions of dollars with a GMV and believe our commerce solutions will continue to be a significant revenue driver. Finally, with Squarespace, brands have access to powerful marketing tools allowing to better engage their audiences and stand out online. The real value of our platform though is that all aspects of the classroom are fully integrated, so our customers can share data and brand assets across every touchpoint they manage in Squarespace. Additionally, with our integrations and extensions marketplace, we're able to offer functionality to our customers via partnerships, whether it's shipping and fulfillment services or synchronization with third-party accounting systems.

We're an engineering and design company with a technology stock that is modern agile and built to scale. Our best-in-class platform, there's billions of pages use per month. We've invested hundreds of millions of dollars over the years to build both broad and deep functionality. Our company was established in the heart of New York City, which continues to inspire us as we scale our business, innovate on our products, and serve a growing diverse customer base.

That said, we've made significant progress in expanding our global footprint, and have begun the process of opening locations in London, Amsterdam, and Sydney, to capitalize on our growing international opportunity. On March 31st, we acquired Tock, a leader in providing reservation online ordering services for the hospitality industry. We've been successful in our approach to pass integration and are taking care to make sure this one is successful as well. We decided to take a very thoughtful approach toward integration, across people, processes, and technologies, considering that's our largest transaction to date.

I hope you enjoyed this overview of our business. And with that, I will pass along to Marcela, our CFO, who will walk you through the financials.

Marcela Martin -- Chief Financial Officer

Thank you, Anthony, and thank you, everyone, for being here today. We are very excited about our first-quarter earnings as a public company and even more excited about the state of our business. Before we walk you through the Q2 financial results, I would like to remind the audience of our business model. As a SaaS company, we've had a recurring, predictable and transparent business model.

As of the end of Q2 2021, 91% of the revenue is subscription-based. We sell monthly and annual subscriptions to our presence and commerce plan. And approximately 70% of our customers opt to subscribe on an annual basis. Non-subscription or volume-based revenue primarily relates to the revenue share agreements from partnerships with payment processors that assist our customers with their transactions and the payment processing business from our recently acquired company, Tock.

Our operating model is highly efficient, resulting in a strong gross profit margin. Our financial discipline has also allowed us to deliver attractive cash flow markets, which gives us the opportunity to continue to invest organically and inorganically. Overall, our business model allows us to scale and expand with minimal incremental cost. Let's talk now about our second-quarter performance.

As we anticipated, we deliver strong revenue growth this quarter and both bookings and revenue came in ahead of expectations. Revenue was 196 million in the quarter, an increase of 31% over the same quarter last year, driven by strong performance across both presence and commerce. Our commerce revenue reached $59 million, representing a 72% year-over-year growth, which includes also Tock's revenue. Bookings have grown 23% during the same period, and annualized run rate revenue of 778 million as of the end of Q2 is 28% higher than the prior year.

Continued strong revenue bookings and annual run-rate revenue were driven by growth in our unique subscriptions of 15% year over year and growth in ARPU. ARPUs grew 6% to a 193 million due to a combination of growth in commerce, including the scheduling, and the addition of hospitality services through Tock. We delivered adjusted EBITA of 43 million, which represented 22% margin and unlevered free cash flow of 10.3 million or a 5% margin. Our strong revenue growth of 31% accelerated from 27% growth in Q2 2020.

This quarter presence revenue grew 19% year over year, and our commerce revenue experienced a 72% year-over-year growth. We break down our revenue into presence and commerce. Presence comprises our personal and business plans, our social presence to Unfold, the resale of Google Workspace, which we account for on a net revenue basis, and the sales of domains and enterprise solutions. Our commerce business comprises our basic and advanced commerce plan, as well as the scheduling, member areas, campaigns, hospitality services subscription, the revenue shared from payment processors that handle the customer's payment, and the payment processor revenue related to hospitality services provided by Tock.

Our commerce revenue continues to grow faster. We delivered 59 million in commerce revenue this quarter, which grew 72% versus Q2 2020. Organically and without the inclusion of the Tock revenue, commerce would have grown approximately 50%. On top of our strong commerce revenue, the commerce contribution over the total revenue continues to grow and gaining share of the overall pie.

As of the end of Q2 2021, commerce represented 30% of our total revenue. The total transactional or non-subscription revenue represents 28% of the total commerce pie, growing 200 basis points from last year. Non-subscription revenue continues to grow as a percentage of revenue as the GMV that flows through our platform continues to increase. GMV has grown 40% this quarter versus last year on the back of merchants, continuing to increase, sales on our platform as well as new merchants joining Squarespace.

Overall, our take rate has also increased mostly due to the addition of payment processing services through Tock. We are very excited about our growing revenue base. Our total annual run-rate revenue has grown to 778 million or 28% higher than their annual run-rate revenue at this same time last year, and it represents a 40% increase compared to Q1 2020. We continue to be very excited about our opportunities in markets outside the U.S.

and our international expansion is one of the most important areas of growth and focus. Our international revenue reached almost 55 million for the quarter, representing a 22% year-over-year growth rate and 28% of the total revenue pie. Much of the growth was driven by the performance in English-speaking countries, such as Australia, UK, and Canada. But in addition, we continue to invest to expand our offerings to other non-English speaking countries.

Unique subscriptions grew 15% year over year, reaching 3.9 million. As a reminder, a unique subscription may account for both presence and commerce revenue, as it represents the one single count of what could potentially be in multiple offerings. This growth was complemented by a 6% year-over-year increase in average revenue per unique subscription, or ARPU, to $193 versus $182 in the prior year. Squarespace has strong fundamentals included an attractive margin profile.

Gross profit margin was 83.4% in Q2, slightly below Q2 2020, mainly due to the consolidation with Tock where payment processor fees represents the largest component of revenue. Our strong gross profit margins allow us to continue to invest in R&D, which grew 36% year over year to 49 million, and marketing and sales up 38% versus prior year to 71 million. G&A expenses were impacted by the one-time inclusion cost of the direct listing, an organic growth as we continue to invest in our corporate services. Adjusting for one-time direct listing costs components, G&A grew almost 155% year over year to 30 million.

We expect to continue to make investments in engineering, talent, and marketing, both in absolute dollars and as a percentage of our revenue. Our strong fundamentals are also reflected in non-GAAP margins and profitability measure. Adjusted EBITDA was 43 million in the second quarter versus 40 million a year ago. Our unlevered free cash flow margin decreased this quarter from the prior year, driven by the following factors.

Our cash flow from operations has been impacted by the direct listing expenses and the timing of prepayments, in particular D&O insurance. Normalizing for approximately 25 million in one-time direct listing fees related to financial advisory audit and legal expenses, unlevered free cash flow would have been 36 million or approximately an 18% margin. We had a strong and healthy balance sheet. Cash in investments reached almost 200 million at the end of the quarter.

And our net leverage is about 2.6 times the last 12 months adjusted EBITDA. Squarespace continues to deliver its financial goals and remain focused on execution. Our opportunities are significant. Our key areas of focus are geographical expansion, continued expansion of our multimodal commerce, enterprise solutions, expert communities, and targeted strategic acquisitions.

Let's move on now to talk about third-quarter guidance on what we are expecting in the full year of 2021. In Q3 2021, we expect to achieve total revenue between 193 million and 198 million and unlevered free cash flow between 21.3 million and 24.5 million. Unlevered free cash flow is comprised of cash flow from operating activities between 24 million and 27.5 million, capital expenditures of 5.5 million and 6 million and cash paid for interest expenses net of associated tax benefits between 2.8 million and 3 million. For our full-year guidance, we have increased both our total revenue expectation to between 772 million and 780 million from 764 million to 776 million previously, and our unlevered free cash flow between 102 million and 116 million from 100 million to 115 million that we had previously reported.

Guidance on the various components of unlevered free cash flow has changed primarily based on timing of prepayments, such as D&O insurance and other vendor arrangements, and reduce capex spending. Cash flow from operating activities is now between 103 million and 118 million, capital expenditures of 12 million and 14 million, and cash paid for interest expenses net of associated tax benefits to between 11 million and 12 million. We are also pleased to announce that we intend to host our first ever analyst day as a public company in November of this year after we report our third-quarter financial results. We are excited for this event and the opportunity to share more on the Squarespace's story and our future.

So more details to follow. Last, we remain very optimistic on the long-term secular trends in our industry, the large total addressable market, as well as our ability to execute against our plans.

Questions & Answers:

Operator

[Operator instructions] Our first question is from Siti Panigrahi from Mizuho. Your line is open.

Siti Panigrahi -- Mizuho Securities -- Analyst

Hey, thanks for taking my question and congratulations as being a public company. Wanted to ask you about your expectation for Q3. What are the factors expecting to your guidance for Q3? Especially when you think of -- you had a pretty strong growth in Q2 as well in both commerce and presence. So wondering what are your expectation heading into Q3 and second half.

Anthony Casalena -- Founder and Chief Executive Officer

I'll pass it to Marcela.

Marcela Martin -- Chief Financial Officer

Thank you, Siti, for -- thank you, Anthony. Sorry. Thank you, Siti, for your question. We feel confident about our guidance and we are taking a prudent approach both on Tock and Squarespace.

Tock is a newly acquired company that I will remind everyone we close the transaction at the end of March, and a company that is a very strategic asset for us, and we are quite pleased with it. But the world is in a very uncertain place with COVID and the new variant, economies are opening up and shutting down. And we continue to be focused on execution. We are delivering a very strong quarter, and we have never been more excited about the business.

We are highly confident in the guidance that we are providing at this moment, and we are highly confident in the business.

Siti Panigrahi -- Mizuho Securities -- Analyst

OK. Thank you. Thank you for that. And then, Anthony, question about the competition.

Now some of your competitors also updated their product and you guys have the strength in terms of your product quality and aesthetics appeal. So where does it stand? And could you give us some color in terms of competition at this point?

Anthony Casalena -- Founder and Chief Executive Officer

Yes, sure. So I remain very confident in a couple of things about our positioning. One is that within one single design system, we're able to achieve a huge array of very, very good-looking websites from an easy-to-use tool. We really focused on having one design system, not having multiple ones.

And so we have a lot of improvements coming to that system throughout the end of the year, some of which are going to be really unprecedented with regards to the kinds of sites you can create with the platform. So it's really always been the goal for CMS to ensure that you can get these really advanced results without having to resort to code, or more sophisticated design systems, or things like that. So there's a lot of stuff underway there and that I really like. The other thing that I've really focused on is when you look at the different ways people connect, can transact on Squarespace.

We really have a lot of depth in those product offerings, right? So it's not just physical commerce, or donations, or member areas, or scheduling, or hospitality, or reservations, prepaid bookings to go, our offerings are actually really, really deep in those areas. And that's what I think you see starting to appear in the numbers with the uptick in the commerce business. So I think those two things really set us apart. And as we kind of come to the end of all the work required to do this direct listing, I mean, my main focus is going to be on product development and innovation as we always have.

And we've always been a company that, you know, especially from a competitive standpoint and design standpoint has always been in my opinion the real leader there. And so, yes, we have some exciting things coming up. But I couldn't feel -- I feel very good. The other thing I'd like to really briefly mention on that.

You talked about this multimodal commerce opportunity in front of us is we just think there's a huge opportunity in services-based commerce, not just physical commerce. And that's where our appointments our scheduling product comes in. And we've seen a lot of really strong growth there.

Siti Panigrahi -- Mizuho Securities -- Analyst

That's great. Thanks for that color.

Anthony Casalena -- Founder and Chief Executive Officer

Sure.

Operator

Our next question is from Trevor Young from Barclays. Your line is open.

Trevor Young -- Barclays Investment Bank -- Analyst

Great. Thanks. Two for me, first for Anthony, just dovetailing on some of those comments you just made. What are maybe the two or three key areas that you're looking to flush out within your product offering near term? Are there any areas where you actually want to close the gap, if any, versus peers.

And in that same vein, any aspirations to build out or have a point-of-sale presence? Is that an area of investment? And then, just on the commerce side, commerce accelerated three or four points, while GMV accelerated, I think, 12 points. I know the segment has some fixed-fee subscriptions but also some variable components tied to the payment volumes. So can you just help us unpack kind of the moving pieces within commerce? Thank you.

Anthony Casalena -- Founder and Chief Executive Officer

Sure. I'll start with just the product versus peers and sort of where we're investing. We have now almost an eight or a nine-year, probably run an eight-year investment, in specifically the e-commerce components of what Squarespace does and we are going to continue to invest there. And I think we have one of the better platforms out there for running sort of especially I would say in two dimensions, one, just really simplicity if set up with Squarespace, that it's an easy-to-approach tool that you're not making something really, really big.

If you need to get started and use it, it's easy to use. It's always been one of our main differentiators. And also, with Squarespace, you look better. And if you look better, you're selling more, hopefully, and you're standing out from your competitors.

And we've really focused on doing those two things really well. Being said, in addition to the continued investment in the e-commerce, scheduling platform, everything we're doing to help support Tock's growth, all really big levers for us moving forward. You see that reflected in the commerce results. And really from the presence side of things, of course, it's my opinion, but I think that we really remained the leader there, and this is something we've always been known for.

So it's not about closing the gap with peers, it's about making sure that we're really always in front. And that we're the people -- people are attempting to close the gap when it comes to visual presentation, ease of use, and all that. I may have missed -- there's a part of the question --  you asked about the point of sale as well. We actually do have a point-of-sale product that's built into right now our commerce app, which is merging with our main app into a single app.

It's a very simple point-of-sale solution now. It's not really meant for like, you're running a brick-and-mortar store. It's more, you're an independent seller, you're at a craft fair, you're doing a transaction online or in person. And we have gotten that out a little bit before the pandemic started and sort of due to the lack of in-person transaction, so that started to pause for the thought there.

I think as we get bigger and bigger merchants onto the platform, we'll adapt that product to support their needs. But right now, the simple product is the one that it was really appropriate for our customer base. And could you go back -- was there a third part portion of the question related to, I believe, GMV?

Trevor Young -- Barclays Investment Bank -- Analyst

Yes, just on commerce, just kind of unpacking the pieces there. Because I know a big piece of that segment is fixed-fee subscriptions, but also maybe a payment component that varies with GMV growth. So just trying to understand the growth differential between commerce, which accelerated about three points, versus GMV accelerating 12 points.

Anthony Casalena -- Founder and Chief Executive Officer

Marcela, I would pass it to you.

Marcela Martin -- Chief Financial Officer

Sure. Thanks for the question. Well, overall commerce grew 72%. And out of that, approximately 50% growth that we have seen in Squarespace and the remaining relates to Tock.

With regards to Tock, there are only a couple of dynamics to point out. If you look at the subscription base and the non-subscription base when you compare this quarter, you will notice that subscription-based business is now -- represents 91% of the overall pie. And the main reason for the growth of the non-subscription part of the business, which approximately represents now 9% is basically because of Tock. The large majority of the revenue that relates to Tock is based on payment processing services.

And that has also created an impact on the gross margins. So if you look at our gross margin, the margins have eroded a little. And that is because of this dynamic of adding Tock, but we have been able to find other synergies within the other areas that make that component. And GMV overall for all of the consolidated at Squarespace including Tock has grown 40%.

And as Anthony had anticipated, we see a strong growth mostly on scheduling services and all of the services that we offer through the platform. 

Trevor Young -- Barclays Investment Bank -- Analyst

Great. Thank you. Both.

Operator

Our next question is from Ken Wong from Guggenheim Securities. Your line is open. 

Ken Wong -- Guggenheim Securities -- Analyst

Great. Thank you for taking my question. I wanted to dive into Tock a little more maybe first for you, Anthony, just kind of where are we on the Tock integration efforts? What are the incremental learning since you closed that acquisition? Have we started to flush out some of the other verticals that they had initially intended to expand into? And then also on Tock, I guess my sense is it's about 7.5 million, looks like it's down a little bit from what was previously reported in Q1. Just wondering maybe kind of what were some of the headwind tailwinds there.

And if possible, any sense for what the right contribution for Tock is in fiscal 2021? Thank you.

Anthony Casalena -- Founder and Chief Executive Officer

So to the beginning part of it, I mean, the Tock closed essentially April 1st, March 31st. And so it's very new. We're just in the early phases of integrating. It's been very interesting to watch during COVID, of course, because you're seeing some of the trends from last year unwind, right? You saw in-person dining moved to to-go, which has its own kind of margin profile for us, and then a lot of the to-go is moving back to in-person.

It depends on the geography you're in. And so we're seeing all of that sort of move around as the virus pops up, goes away, and as we all sort of deal with that. That being said, we're adding customers to Tock at a strong rate. So as they shift between those two kinds of purchasing dynamics, yes, we'll see that play out over time.

Tock has some really strong presence in wineries, in event-based businesses, but we haven't yet made additional progress on our integrations there. We're just really in the really early phases of this. I mean, we had a lot to do, closing the transaction. And so, I think, over the next six months, you're going to see a lot more from us.

Yes, very, very early, very early days. Marcela, do you want to take the financial part of that question?

Marcela Martin -- Chief Financial Officer

Sure. Thanks, Ken, for that question. We have seen high double-digit growth on Tock as well for this quarter. As I mentioned earlier, I mean, we're very, very excited about these strategic acquisitions, which fits really well within our portfolio and the type of offerings that we want to delight our customers to.

In terms of margins, the Tock was not at the same stage in, I would say, in the life or from the span of a company as it was in Squarespace. And we expect that through time, we will be leveraging more than the businesses as we continue to integrate. As Anthony mentioned, we are in very early stages of integrations, but really exciting so far. And we are quite pleased with the growth that we have seen in this business as well.

Ken Wong -- Guggenheim Securities -- Analyst

Got it, great. Thank you -- go ahead.

Anthony Casalena -- Founder and Chief Executive Officer

Yes, the only other thing to add is, this is an example of one of those areas where we really wanted to have something deep. Tock hall is some of the world's best restaurants. It opens up other restaurants' new ordering reservation paradigms. It's got a strong to-go business.

It can flex into events, wineries, many different things. So I think it's really just the beginning of what you're going to see from Tock business.

Ken Wong -- Guggenheim Securities -- Analyst

OK. Got it. Super, super helpful. And if I could maybe squeeze in a quick follow-up.

Anthony Casalena -- Founder and Chief Executive Officer

Sure.

Ken Wong -- Guggenheim Securities -- Analyst

Just on 3Q since it's probably what's bombarding my inbox right now. I think a lot of investors want to understand if there's anything kind of maybe unique in 2Q that might have drove some outperformance that caused more of just a sequential uptick in 3Q. Is there some seasonality component that we should be aware of in terms of how to think about that 3Q guide? Thank you. That's it for me.

Marcela Martin -- Chief Financial Officer

Thanks, Ken. I'm going to follow up with that. Look, I mean, the way that we have forecasted for 2021 is somewhat going a little bit back to the seasonality that we had in the business before COVID. COVID has been a very strange year in terms of seasonality.

But if you look at our financials in the documents that we have filed now and the documents that we have filed in the S-1, you will see how our quarters behave and that's how we have been modeling the guidance for the rest of the year.

Ken Wong -- Guggenheim Securities -- Analyst

Great. Thank you.

Operator

Our next question is from Drew Foster from Citigroup. Your line is open.

Drew Foster -- Citi -- Analyst

Hi, thanks for taking the questions. First one is from Marcela. It looks like your take rate expansion was quite strong in the quarter. I'm assuming Tock is the primary driver there.

Why is Tock a much higher take rate in the underlying Squarespace business? So could you just break down Tock's contribution in the quarter and other puts or takes of your sort of underlying organic take rate expansion, and where you ultimately see that take rate going overtime?

Marcela Martin -- Chief Financial Officer

Thank you for the question. Yes, you have seen a nice stride. The take rate has been higher this quarter, and the majority of that relates to the acquisition of Tock, and the fact that I believe that more than 60% of their business is related to payment processing fees. I mean, with regards to how we see that going forward, I mean, we have been quite excited and pleased with revenue share agreements that we have with payment processors that help our customers with their payments and with their transactions.

And we continue to explore ways where we can expand further into that either through a white label solution like others in the industry have taken, or perhaps even more a hybrid approach. I mean, I believe now that we have Tock in the mix, we do have a hybrid payment model. I mean, Tock charges a fee on GMV, and on top of that the fees that we charge for the payment processing. And internationally, we continue both Tock and Squarespace.

We continue to have revenue share agreements with third parties. But it's an area that we continue to explore.

Drew Foster -- Citi -- Analyst

Thanks a lot, Marcela. And then, Anthony, you made a few acquisitions over the last couple of years, primarily into new verticals. And just wondering how we should think about the pace, magnitude, and any shifts in strategy and how you're thinking about that moving forward.

Anthony Casalena -- Founder and Chief Executive Officer

Sure. I think, look, it's a relatively new muscle for us. I moved around 18 years, and prior to the last three years, we hadn't acquired any companies. They've been really successful for us, at least the two I am thinking about from a couple of years ago, which was Acuity powering scheduling products, almost fully integrated right now, and Unfold, which is healthy with their social presence, which, I mean, the rate of releases we've had there has been fantastic, That product has grown up a lot since we brought it and since they joined the team.

And I think the other thing that I'm proud of there is that we have a good internal culture and I hope one that's supportive of founders. I mean, I can certainly relate to their journeys in many ways and I think that that hopefully means Squarespace is a good place for people to go, and I think we've proven out that it is. So I'm happy with those top very, very -- again, extremely new, so we're just starting that. Again, it's a different scale than we've seen before.

Yes, look, we're going to continue to look around if there is something really unique and high quality out there. I'm definitely looking at things all the time. So I don't have a ton more to say on that strategy. Just I would only maybe mention that always we look at the different ways that customers transact.

It will always be sort of a build versus buy sort of question for us and we're engineering, design and a product-driven company. And so, again, 15 years, my default was to build, but there are some scenarios I'll highlight, too. Unfold, the amount of traction they have and some of that is in the deck. We could have built the same products theoretically, but I doubt we would have ever had traction like what they had achieved on their own.

Or like Tock, I mean, it sounded there has been a veteran in this field for a long time. There's no possible way we'd be able to just simply hire in that sort of expertise either remotely pretend to be able to compete at that level. I mean, they're really an industry leader. So yes, those are scenarios where it's like, yes, I'm proud to be joining forces with such incredible people.

And then there's other parts of the ecosystem, like our e-commerce product or what we've done with member areas, where for various reasons we just thought we could build it ourselves so it was necessary to build ourselves because of the way that product touches the content management system. So hopefully, that's a little bit of color there.

Drew Foster -- Citi -- Analyst

No, that's very helpful. Thanks to both of you, and congrats on the first quarter.

Anthony Casalena -- Founder and Chief Executive Officer

Thank you.

Operator

Our next question is from Sterling Auty from JPMorgan. Your line is open.

Sterling Auty -- JPMorgan Chase & Co. -- Analyst

Yes. Thanks. Hi, guys. And welcome to the public markets.

Just a question from my side, how has the September quarter gotten started? And the reason why I asked is if you look at some of the domain name addition, data, coming out of VeriSign, definitely, it hits the summer doldrums, which is not that unusual given seasonality in this industry. But I'm kind of curious about the dynamics that you've seen since you've been around for a long time in this space. How would you characterize kind of what's happening from a seasonal perspective there?

Anthony Casalena -- Founder and Chief Executive Officer

I mean, I'll say a couple -- I mean without getting into kind of the future, I mean, stay focused always on Q2. I think a really interesting thing about our business right now is yes, there is the bread and butter of the business, which is domains, websites, not has its own seasonal patterns, usually peaking around Q1, a slight bump in Q3 and then that, of course, had its own dynamic shifts due to COVID, which we've never seen before. But there is always other underlying dynamics that are existing inside Squarespace right now, which is really, really interesting. I mean, the entire dynamics of the scheduling business are slightly different, the dynamics of Tock are certainly different with what kinds of the businesses they're signing up, where they are in that life cycle, and then the kinds of ways that those businesses are transacting considering the macro environment.

So, I mean, look, I think things still kind of if you add it all together, you see the quarterly results, we're quite proud of them. And yes, I mean, it's an interesting world right now with what's going on with COVID. Marcela, anything you'd want to add?

Marcela Martin -- Chief Financial Officer

I would just add that, we tend to focus on the long term. And the situation with COVID and Delta, it puts, I think, the economy's in a very unstable situation. But we are quite confident about the full-year guidance that we are providing, which will represent approximately somewhere between 24% to 26% overall for the full year. And we believe that we are delivering a very strong quarter.

And we are very excited about the business and where we are in our plan. So the entire growth for the year still, I believe, remains strong. And as I mentioned in an earlier call, the way that we have considered our forecast is considering a little bit more of the seasonality that we used to see before COVID. And thanks, Sterling, for the question.

Sterling Auty -- JPMorgan Chase & Co. -- Analyst

Got it. Maybe if I could sneak in one follow-up, if I can. The 3.9 million unique subscriptions, up 15% year over year, can you put that in the context of the annual guide? So in other words, should we see the unique subscription growth kind of stabilize in this level and the incremental growth comes from the revenue per subscription? Or how's that mix going to play out this year, do you believe?

Marcela Martin -- Chief Financial Officer

Yes. Thank you for the question, Sterling. Look, I mean, we have grown unique subscriptions 15%. And this represents the 22nd consecutive quarter of growth overall.

And we typically tend to look at unique subscriptions together with ARPUS, ARPUS or average revenue per unique subscription has grown 6% year over year or 5.2% on an organic basis without Tock. So we think that we have plenty of opportunities to continue to grow domestically and internationally. We also see that cash retention is actually better than last year. And we are very excited about the fact that subscribers continue to do more online, and we continue to capture that value.

From the terms of seasonality, just to remind everyone, seasonality, the stronger quarter that we have is Q1. And that's the time that we tend to spend the most in branding, particularly in the past with the Super Bowl ads. So we are quite pleased with the growth that we have seen so far in our unique subscriptions. And as a reminder to everyone, because of the nature of the way that we count unique subscriptions, it a single count that could include multiple offerings and multiple offerings from both presence and commerce.

Sterling Auty -- JPMorgan Chase & Co. -- Analyst

Great. Thank you.

Anthony Casalena -- Founder and Chief Executive Officer

Hello. Can you hear me?

Marcela Martin -- Chief Financial Officer

I think we lost the operator.

Anthony Casalena -- Founder and Chief Executive Officer

I don't know. How do we get in touch with the operator?

Marcela Martin -- Chief Financial Officer

I think his name is Christian. Are you there? Give it a minute, Anthony.

Anthony Casalena -- Founder and Chief Executive Officer

Yes, we'll give it a second. Hopefully, he's able to reconnect. Chris, do you have another way to contact him?

Marcela Martin -- Chief Financial Officer

We are trying.

Anthony Casalena -- Founder and Chief Executive Officer

OK.

Marcela Martin -- Chief Financial Officer

I really apologize to all of you on the call. We are trying to figure out what is going on. Apologies for that.

Operator

I apologize for the inconvenience. Our next question comes from the line of Ron Josey of JMP Securities. Your line is open.

Ron Josey -- JMP Securities LLC -- Analyst

Great. Thanks for taking the question, and glad everything's working here. I wanted Anthony, Marcela, to follow up on just commerce overall. Anthony, you were talking about Squarespace's six core verticals in commerce.

I think you talked about the ability to sell time, expertise, content, physical goods. Can you just talk maybe your last 12 to 18 months, just how this mix, how this call -- all these ways of selling has evolved on Squarespace? Meaning, are we seeing more mixed of physical goods, understood that now scheduling is a bigger part? Just any insights on that would be helpful. And then Marcela, we're getting questions on just x Tock commerce growth, I think you said it was 50%. But that was down from 78%.

So maybe some slightly tougher comps in 2Q. But is this maybe some extended seasonality that you were getting questions on prior? Or anything else that would have driven this detail? Thank you, guys.

Anthony Casalena -- Founder and Chief Executive Officer

I'm not sure how much we get -- Marcela, how much do we get to breaking down the mix? I think I can say that some of the things are very new, right? Like member areas is very, very new. And so that's more of a bet on the future versus something that's a huge driver for us right now, but still something we find really important. The point is it's been growing very, very well. And of course, the main e-commerce business, you're starting to wrap on some of the COVID effects but remains incredibly strong, right? I mean, e-commerce and the ability to sell on our platform has been the biggest feature request for a decade.

And so we've really, always focused on it. Tock is new and growing, and we'll get benefits from the synergies there soon. Yes. Marcela, anything you'd like to add?

Marcela Martin -- Chief Financial Officer

Well, I would also add that definitely, there are tough comps compared to last year, but we are quite excited with the growth that we have had. I mean, 50% of growth organically, it's a pretty good growth. And as I mentioned earlier also, we see growth on average revenue per subscription, about 6% or 5% on an organic basis, and cash retentions better than prior year. GMV growing 40%.

So definitely we are in the right path for our continued growth with all of the opportunities that we see ahead of us in the markets where we operate, which are quite large.

Ron Josey -- JMP Securities LLC -- Analyst

Great. Thank you.

Operator

Our next question comes from the line of Nat Schindler of Bank of America. Your line is open.

Nat Schindler -- Bank of America Merrill Lynch -- Analyst

Yes. Anthony and Marcela, thank you for taking my call, and welcome the public markets, and all that. Just wait, don't worry about that dead airtime. It's not like the radio, no one will mind.

Going back, trying to understand and I know this is probably belaboring the point from Sterling and something that Marcela said earlier about seasonality. Really, what happened with COVID and trying to understand that number? And obviously, looking at revenue is not that helpful in the SaaS model because it's very blended across long periods. So if you look at bookings, we did see a fairly -- I mean, it's really hard for me to know because I don't have quarters of booking data. But I have last quarter year over year, and that was like, I believe 28%.

And that seems to have gone down to 25%. Is that because Q2 last year during the height of COVID, there was a tough comp, people swarmed on? Help us out on figuring out what's going on there?

Marcela Martin -- Chief Financial Officer

Sure. Thank you for that. Yes, bookings actually grew 23% year over year. And there are a few things about bookings.

First is that we are coming out of COVID with a tough comparable, because in Q2 2020 was just when the pandemic was starting, so a lot of the business were trying to figure out a way to get an online presence. So when you look at the net ads year over year, you will see that there is a larger than increase in Q2 2020 versus Q2 2021. Second is that, of course, Q1 is a month of the highest acquisition for us and good time to make the largest investment. But the other we actually use is annual run rate revenue, which has grown 28% year over year, reaching $778 million.

And then the last, I think, dynamic that is playing if with regard to bookings is that there has been a larger shift from subscription to non-subscription this quarter, as we have added Tock in the mix. And currently, 9% of the revenue represents non-subscription revenue, where at the end of 2020, only 4% represented non-subscription revenue. So overall, we do expect that bookings and annual run-rate revenue will remain strong for the rest of the year.

Nat Schindler -- Bank of America Merrill Lynch -- Analyst

OK, but should this trend line that we saw from Q1 28% bookings revenue to 23% this quarter? Is that going to trend down as the revenue moderates some 31% this quarter down to your guidance level for the year? Or is it going to stabilize out and basically revenue is going to come closer and closer to bookings? Or I'm thinking your --

Marcela Martin -- Chief Financial Officer

Right. We believe that in the long term, bookings is going to come closer to revenue just because of the shift that we see in the subscription versus non-subscription business.

Nat Schindler -- Bank of America Merrill Lynch -- Analyst

OK. Thank you.

Anthony Casalena -- Founder and Chief Executive Officer

OK. Chris, was that the last one?

Marcela Martin -- Chief Financial Officer

I think the operator --

Operator

Thank you for all your questions. I am now turning the call back over to Mr. Anthony Casalena.

Anthony Casalena -- Founder and Chief Executive Officer

Thanks again for the great questions. Thank you, Marcela and Chris. Thank you to our employees for the strong quarter. I'll just leave you with this.

Squarespace is really in a unique position. We've got great revenue growth combined with great profitability. Really excited about the long term, amazing depth, and breadth of the products we sell. And so looking forward to interacting with you all in the years to come.

Thank you very much.

Duration: 61 minutes

Call participants:

Christopher Chiou -- Head of Investor Relations

Anthony Casalena -- Founder and Chief Executive Officer

Marcela Martin -- Chief Financial Officer

Siti Panigrahi -- Mizuho Securities -- Analyst

Trevor Young -- Barclays Investment Bank -- Analyst

Ken Wong -- Guggenheim Securities -- Analyst

Drew Foster -- Citi -- Analyst

Sterling Auty -- JPMorgan Chase & Co. -- Analyst

Ron Josey -- JMP Securities LLC -- Analyst

Nat Schindler -- Bank of America Merrill Lynch -- Analyst

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