Squarespace, Inc. (SQSP) Q1 2022 Earnings Call Transcript

Squarespace, Inc. (SQSP -1.71%)
Q1 2022 Earnings Call
May 12, 2022, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning. My name is Harry, and I'll be your conference operator today. At this time, I would like to welcome everyone to Squarespace's first quarter 2022 earnings conference call. [Operator instructions] Robert Sanders, you may now begin your conference.

Robert Sanders -- Head of Investor Relations

Good morning. Thank you for joining us. My name is Robert Sanders, head of investor relations. With me today are Anthony Casalena, Squarespace Founder and CEO; and Marcela Martin, CFO.

They will share some opening remarks and then open the call to your questions. Earlier today, we issued a press release and posted a shareholder letter to the investor relations section of our website with additional information related to our Q1 results. 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 these metrics, 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 a substitute for our GAAP results. We will make forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which include but are not limited to statements related to our future financial performance. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are further defined in our most recent Form 10-Q filings with the Securities and Exchange Commission.

Any forward-looking statements that we make on this call are based on assumptions of this day, May 12, 2022. We undertake no obligations to update these statements as a result of new information or future events, except where required by law. I'll now turn the call over to Anthony.

Anthony Casalena -- Founder and Chief Executive Officer

Good morning, and thank you, everyone, for joining us today. We are quite pleased with our first quarter results, which exceeded our guidance in multiple ways. We currently support 4.2 million unique subscriptions across our product categories, representing significant traction among the audience of entrepreneurs and creators we provide tools for. Late last year, we introduced our Everything to Sell Anything campaign, which is a fantastic way to understand where Squarespace is headed and the value we provide to our customers.

Our marketing campaign centered around this concept has delivered record impressions in the first quarter. Thank you to our marketing and creative teams for elevating the Squarespace brand and powering our growth. I hope you had the opportunity to read our shareholder letter we issued this morning and take in some of the enhancements our product team has been delivering, which will help us realize our long-term goals for the business. Related to our commerce offering, we added new features to help sellers grow their customer base and are encouraged by the momentum building on Tock, our unique solution for hospitality and time-slotted businesses.

We believe our efforts to expand our international revenue are supported by the global rollout of our Everything to Sell Anything marketing campaign and enablement of website language translation within our platform. One highlight coming up this summer I'd like to tease are some fundamental enhancements to our core content management system or CMS which will enhance Squarespace's core usability and expressability to a wide range of users. We'll be talking about that over the next few weeks. As always, we continue to operate Squarespace by balancing our strong cash flow with sustainable growth, both of which Marcela will cover in more detail.

Given how we are situated, we're delighted to announce that our board has approved a $200 million share repurchase program, which underscores the confidence we have in our business and our opportunities for future growth. Lastly, I'd like to thank Marcela for her leadership at Squarespace. She's been a great partner to me, helping execute on our public listing and aligning our taxable goals with our long-term priorities. I'm pleased she'll with us through July, and we wish her the best in her next endeavor.

Now I'll pass it to Marcela to share some financial highlights.

Marcela Martin -- Chief Financial Officer

Good morning, everyone, and thank you, Anthony. We are delighted to share results with you this morning that exceeded our guidance for the first quarter of 2022. Our strong customer retention, the adoption of higher-value subscriptions and new customer actions fueled our top-line results. Unlevered free cash flow outperformance demonstrates our commitment to deliver value to our shareholders as we continue to empower our loyal customer base of 4.2 million unique subscriptions.

We exceeded the high end of our revenue guidance by approximately $2.8 million. A portion of this outperformance was a result of nonrecurring drivers, including the accelerated delivery of new features at Tock and higher-than-anticipated GMV. Increased transactional revenue signals a growing contribution from commerce, which further validates our investments. We expect these transactional revenues to increase them further when we deliver our white-label payment solutions later in 2023.

Some notes on the quarterly financials that we have presented in our shareholder letter. We anticipate marketing and sales expenses will decrease significantly compared to Q1 in the second half of the year. Q1 represents a high level of spend as we lean into seasonality and kick off the year with an extension to our macro everything to sell anything campaign at the Super Bowl. Research and development expenses increased in Q1 as we analyzed the headcount that was incorporated last year.

Non-GAAP G&A expenses are increasing about $6 million year over year. mostly related to D&O insurance, additional public company expenses, the consolidation of stock and the annualization of added headcount in 2021. Now, turning to guidance for the second quarter of 2022. We expect revenue to be in the range of $208 million to $213 million representing 6% to 9% growth year over year.

As noted on our fourth quarter call, we believe the second quarter we marked the trough in our year-over-year revenue growth comparison and we anticipate accelerating year-over-year revenue growth for the balance of 2022. For Q2, we project our unlevered free cash flow to be in the range of $33 million to $37 million, which implies an unlevered free cash flow margin of 16.6% at the midpoint of the range. Unlevered free cash flow margin is reduced in Q2, mainly due to the timing of payments. We are increasing our guidance for the full year 2022 for both revenue and unlevered free cash flow.

With regards to revenue, we now expect that to be in the range of $867 million to $879 million, representing 11% to 12% year-over-year growth. On our Q4 call, we outlined our expectations for non-GAAP operating expenses for 2022. Today, we are executing well against our plan and we have some updates to these expenses as we look to the rest of the year or further remainder of 2022. We anticipate our non-GAAP gross margin to remain at or close to the first quarter level for the remainder of 2022.

However, if our transactional revenue, which is the lower gross margin [Audio gap] represents a higher percentage of our total revenue, our gross margin will decline slightly. For marketing and sales expenses in 2022, we anticipate a ratio of between 32% to 35% of the total revenue versus the previous guidance of 30% to 35%. For research and development, we expect the expense to revenue ratio to decrease to 20% to 25% versus the previous guidance of 25% to 30% of revenue. This is due to further efficiencies and changes in the ways of working that have caused savings in this expense line.

For G&A, we still expect that will represent approximately 11% of revenue. We expect unlevered free cash flow will be between $156 million to $169 million, representing an 18.6% margin at the midpoint. Our guidance assumes significant free cash flow leverage in the second half of 2022 as we benefit from reduced marketing and sales expenses having preloaded much of our annual spend in the first half of the year. As we referenced during our Q4 earnings call, 2022 is a year of difficult comparisons due to the COVID-related demand environment in 2021 and 2020.

However, we are very excited and confident about our ability to capitalize on the large market opportunity. As a reminder, during the last two years, we have had a tailwind related to the pandemic and have grown our top-line 27% on a compound annual growth basis. Those tailwinds made us even stronger as our customer base has expanded significantly, and we continue to retain and serve our customers with tools that help them stay in business, through the pandemic. We reiterate our expectations for 2023 and 2024 with regards to revenue growth into the mid to high teens, crossing the $1 billion mark in revenues in 2023.

In summary, the fundamentals of our business remain strong and we continue to execute. We have a long operating history of profitable growth, a consistently strong gross margin and with a large and growing customer base. We believe the introduction of new products, combined with the optimization of existing offerings will accelerate our growth in the back half of this year as we look into the future. We now look forward to your questions.

So operator, you can open the line.

Questions & Answers:

Operator

Thank you very much. [Operator instructions] And our first question for today comes from Matt Pfau from William Blair. Matt, your line is now open if you would like to proceed with your question.

Matt Pfau -- William Blair and Company -- Analyst

Hey, great. Thanks for taking my questions, guys. Yeah. Just wanted to ask in terms of how the quarter progressed.

I think on the fourth quarter call, you called out a bit of softness in January. Did you see any change as you went through February, March and April?

Marcela Martin -- Chief Financial Officer

Hi. Thank you for your call. We have delivered according to what we had originally expected in the quarter and what we had guided. We saw a little bit of better news coming into March.

And so far, we are pleased with the growth that we have had in new subscriptions and overall, how the funnel has worked.

Matt Pfau -- William Blair and Company -- Analyst

OK, that's great. And then -- sorry.

Anthony Casalena -- Founder and Chief Executive Officer

On top of that. Go ahead -- sorry. Just on top of that, Squarespace is now comprised of multiple different revenue streams, each of which are kind of reacting differently to different phases of the pandemic in different macro world events. And so while we're really pleased with the quarter, stuff like -- things like the revenues coming in the Tock business are starting to see tailwinds as we really return to something a lot more normal in the geographies where Tock is concentrated right now.

So you're seeing a positive effect there.

Matt Pfau -- William Blair and Company -- Analyst

Got it. And on that, I just wanted to follow up on the reservation fee you introduced for Tock. Just maybe some more details on what you're seeing with that?

Anthony Casalena -- Founder and Chief Executive Officer

Positive reception. What we're doing there is in exchange for the booking fee, covering charge backs up to a certain amount for the businesses that are on the other end of that. So far, so good.

Marcela Martin -- Chief Financial Officer

Yeah, and we are actually very pleased with the results that we have seen in Tock this quarter. You may have -- you may remember that we talked in the last quarter about the investments that we were doing and the Tock team has been able to deliver this enhancement ahead of what we had originally expected. So we are very happy with the investments that we are doing there because they are paying off.

Matt Pfau -- William Blair and Company -- Analyst

OK. Great, guys. Appreciate it. Thanks.

Anthony Casalena -- Founder and Chief Executive Officer

Sure. 

Marcela Martin -- Chief Financial Officer

Thank you.

Operator

Thank you. And our next question is from Trevor Young of Barclays. Trevor, your line is now open. Please proceed.

Trevor Young -- Barclays -- Analyst

Great. Thanks. First, on the 1Q guide, 9% growth at the high end I think that would imply steady to accelerating year-on-year growth on an organic and FX basis, I think FX headwinds working here. One is that how you're thinking about it? And two, it looks like a little bit of a wider range for the quarter than in prior quarters about a $5 million spread there.

Is that indicative of a bit greater uncertainty from here?

Marcela Martin -- Chief Financial Officer

Thank you, Trevor, for the question. On your first question, yeah, the answer is yes. And for the second question, look, I mean, what we had anticipated, what we have seen so far versus what we had anticipated is a macro impact and some headwinds coming from FX that has not played in our favor. So we are putting a little bit more conservatism in the second half of the year just because the macro environment is a little bit unstable.

Execution-wise, we have been executing according to what we had expected. So we are quite happy with that. But unfortunately, FX has moved negatively in the first quarter, and that put us -- we want to take a prudent position with that regard.

Trevor Young -- Barclays -- Analyst

Great. That's really helpful. And then just last one. On the $200 million share repurchase authorization, should we expect some accelerated repurchases near term in light of where the stock is trading? And then can you maybe touch on your appetite for M&A right now given that public and private market stands appear to be coming in a bit?

Anthony Casalena -- Founder and Chief Executive Officer

Yeah. We're excited about where the business is situated and are long-term believers in it, and that's the driver behind the share repurchase. We're probably not going to get into the exact strategy of that repurchase, but it's there, and we intend to use it. Regarding impacts on M&A, I think there's three ways you can look at cash, right? We can do a dividend, which is not -- I don't think well-situated to Squarespace right now.

As you mentioned, there's M&A potential, which is definitely still on the table. We don't feel constrained from an M&A perspective, with the authorization of the $200 million repurchase. Most of our MA targets have been kind of sub-$100 million sub-$70 million sort of move -- Tock, obviously, being the exception. But we continue to pursue a number of smaller ideas and tuck-ins, and this doesn't constrain us from that in any way.

So we thought it was -- we were excited to be able to issue it.

Marcela Martin -- Chief Financial Officer

Yeah, the business profile of the Squarespace is really great with regards to delivery of cash. And you can see that on our confidence through the share buyback program and also on the fact that we have increased guidance for the full year.

Trevor Young -- Barclays -- Analyst

Great. Thank you, both.

Marcela Martin -- Chief Financial Officer

Thanks, Trevor.

Operator

Thanks very much. And our next question is from Ron Josey of Citi. Ron, your line will be open now if you'd like to proceed.

Ron Josey -- Citi -- Analyst

Great. Thanks for taking the question. Anthony, Marcela, I wanted to follow up on the subscriber growth and the visibility from what we just talked about. I think coming out of 4Q, you talked about more modest growth.

1Q results were certainly better in terms of sub additions. And Marcela, I think you just said that macro was better, but still unstable. So can you help us understand a little bit more about the visibility in subscriber growth, given 1Q was better, maybe better marketing and the Super Bowl campaign. And then as we think about 2Q and beyond, would it be fair to think about subscriber growth maybe following the revenue growth trajectory that you outlined, Marcela? And then I have a quick follow-up.

Thank you.

Anthony Casalena -- Founder and Chief Executive Officer

I would think that related to the subscriber growth related to revenue growth, I mean the key strategy behind what we've been doing is to give people more ways to sell and to be more involved in our customers' transactions and how they grow their business. So from a macro perspective, a long-term perspective, I think that you should see the revenue growth outpaced the subscriber growth as we get more into GMV, things like member areas, different ways to sell different subscriptions. And so I would think those would diverge a bit.

Marcela Martin -- Chief Financial Officer

Right.

Anthony Casalena -- Founder and Chief Executive Officer

Yeah.

Marcela Martin -- Chief Financial Officer

Yes, definitely. And regards to Q2, we had anticipated that the trough was going to be for Q2. But the conservatism that we are adding in the second half of the year, is not related to subscriptions and additions. I mean, as I said, we have performed a little bit better.

It's just that we see some headwinds with regards to euro, the impact of the euro. Hopefully 29% of our revenues are denominated in euro. So the underlying growth of the international business is still strong. This quarter has been 16% year over year.

And we are quite happy with the progress that we have been making in countries like Australia, the U.K. Canada, we have also delivered local marketing campaigns this quarter in Germany and France. And so we are firm believers that international is a huge opportunity for us. But as the revenue size is quite significant.

We are just mindful of the headwinds because of the headwinds on FX that we have seen in the first quarter.

Ron Josey -- Citi -- Analyst

Got it. That's very helpful. And my last question is just on pricing, any thoughts or any update on there, given what we just talked about maybe the unstable macro? We talked about bundling new pricing later this year coming out. Thank you, guys.

Anthony Casalena -- Founder and Chief Executive Officer

Yeah, absolutely. So in the first quarter, we completed a series of price tests on new users, and we have another couple of sort of running right now. Some of those were successful, and you see that reflected in the pricing on our on site. That gives us also more leverage when it comes to what you were referring to in the latter half of your question, which is the legacy pricing updates, which we still expect to happen in the second half of this year.

Frankly, it gives us more confidence that they'll be successful because we can now point it, frankly, in our view, quite modest price increases that are actually going to keep a lot of customers still below the list price that you would enter at as a new customer. And the bundling stuff is a longer-term project in full effect, still a really big believer there that we have a lot of products that we have made and are in-market that are just -- just due to our release time line over the years, it's just behind another subscription, another subscription, another subscription, whereas if we took these things that are already there and built, put them in the bundles, made them a little bit more accessible from a getting started perspective so that when you're signing up for Squarespace you're signing up for basically, like -- imagine have a business starter kit. I'm somebody who wants to sell courses. I go and sign up for that and be via a single subscription get access to more of a full suite of Squarespace products, which enables us to then grow you as you use more and more of that suite.

Big believer in that, a lot of complexity there, much more much more difficult for us than just a pricing update or a price test to new customers. So still excited about both of those, but you don't see the impact of either of them in Q1 or Q2 thus far. But they will appear in the second half of the year.

Marcela Martin -- Chief Financial Officer

Yes, and look, I mean, the success that we have had with the scheduling tools and member areas has been quite good. They are very strong products and sometimes the net new unit subscriptions are not truly reflecting the actual growth because we can't unique as actually unique. But these products have been growing really nicely as well as marketing campaigns -- the main growth on GMV, for example, has been driven by the growth in scheduling again. We are -- I believe we are very well-positioned to continue to lead in providing services for customers and for customers that manage time slotted businesses.

Anthony Casalena -- Founder and Chief Executive Officer

Yeah. What Marcela is highlighting there is, I think, a really important point as well, which is that depending on which competitor you picked up, that GMV breakdown is very, very different. And we've said kind of over and over again on these calls and as part of the marketing campaign that -- yes, physical product sales are very, very important to Squarespace. We've got a big investment in that product, that will continue.

But there's so many other ways to transact. The appointments product, the Tock is doing for time-slotted businesses in hospitality. The transactions are happening around the appointments that are flowing through our platform that we see a big opportunity in getting onto our platform. So invoicing, basically, it's all this GMV related to services that we're going to be able to tap into that we're targeting that is a little different than if we were just a pure-play physical product commerce.

Ron Josey -- Citi -- Analyst

Thank you, guys, and wishing you the best, Marcela.

Marcela Martin -- Chief Financial Officer

Thank you.

Operator

Thank you. Our next question is from the line of Ygal Arounian from Wedbush. Ygal, your line is now open if you'd like to proceed now.

Ygal Arounian -- Wedbush Securities -- Analyst

Hi. Thanks, guys. I just have a follow up on the last comment. Is there any way to go with one layer deeper and think about the growth in services and scheduling versus what you're seeing in products? Like, are you still seeing growth in kind of more traditional product e-com sales? Obviously, that's been an area that's been under a lot of pressure.

So is there any way to kind of help understand the puts and takes between those two sides a little bit better?

Anthony Casalena -- Founder and Chief Executive Officer

So while we don't break it out, I can make some macro comments. When you're leading into what you saw in various other earnings releases recently, which is that there was sort of a return to some interest in commerce and a bit of a softening in e-commerce, but even though it's still incredibly strong and it's obviously going to be a huge thing over the next decade. So there's that. But part of what makes Squarespace really strong and well-positioned is as -- in so far as you're like so some of the e-commerce stuff is returning to in-person, well, our business is like Tock and time-slotted business, I mean -- and appointments and -- the more we can get the transaction related to that appointment flowing through Squarespace, in many cases which it doesn't right now, that stuff will be countercyclical to that other trend.

And so we've just tried to set ourselves up by serving the needs of a broad array of businesses and ones that operate with services. And I think that, that will -- that positioning will continue to play out very well over the next couple of years, even as these things sort of ebb and flow. Because at the end of the day, I still believe that if you take any one of these topic areas, e-commerce invoicing appointments, scheduling, any area where we operate, I just see them all being bigger and more online and transaction flowing more to online sources over the next couple of years. So I'm really happy with how we're situated there.

Ygal Arounian -- Wedbush Securities -- Analyst

Certainly, the well-roundedness is proving to be beneficial these days. And maybe you could just talk a little bit more about the new features and functionality in the platform. I think you called out a lot in the letter. And then I don't know if you would be willing to add any more color around the CMS enhancements.

But just broadly speaking, what are the areas in within the new features and functionality that maybe have you guys the most excited in terms of how it contributes to the overall product?

Anthony Casalena -- Founder and Chief Executive Officer

Sure. So there's a lot of things. Where to begin? A lot of what happened during the quarter, we frankly don't highlight on these calls because we just do a lot of blocking and tackling a lot of releases all the time that are important features for our customers that people might not see immediately, let's say. So for international, new languages launching, SEPA being kind of fully rolled out, user site translation available, we -- people asked about the insurance coverage and the booking fee on Tock.

That was a great win for us. In the Unfold products, we continue to innovate with Bio Sites, and we're purchasing a large number of those created. And as I was alluding to in the transcript, we have some functionality that hits as the core functionality of the content management system that we've really been working on for some time related to the core page building experience. And it's really important because that functionality is like it hits every customer in every trial going through the website product.

It's the most difficult thing to get right. And it's the most important thing to get right because when you get it right, you increase, again, usability of people using the product and expressibility. And I think that what you'll see as we kind of introduce one of our new page building engines here is that we have a strategy in the core platform of not fragmenting that editing experience. We want fewer kinds of editing experiences with the right level of usability for beginners, but also the expressibility for professional users and Circle members so that they feel comfortable making more advanced sites on the platform.

So some of the functionality is in beta right now. I hesitate to go too on and on about it in the call just because I'd rather show it with visuals because I think that just kind of suits it better. But that kind of stuff is really important to us staying and being a world-class performer in our space. And so I'm really looking forward to that.

Again, it's tough to describe developments at Squarespace for a long time.

Marcela Martin -- Chief Financial Officer

I mean, I would add because I don't want to disclose too much about it. But on the EBITDA, we have our Circle members. We have our Circle members, which is our beloved community of developers that give us feedback and the reception of this product has been great so far what we have seen in their reviews. We have received great feedback.

So we are quite excited about these changes that are coming. And we hope that we can announce them very soon.

Anthony Casalena -- Founder and Chief Executive Officer

Yeah.

Ygal Arounian -- Wedbush Securities -- Analyst

Great. Thanks. Looking forward to hearing more and seeing more.

Marcela Martin -- Chief Financial Officer

Thanks, Ygal.

Operator

Our next question is from the line of Gabriela Borges of Goldman Sachs. Gabriela, your line is now open. Please proceed.

Gabriela Borges -- Goldman Sachs -- Analyst

Hi. Good morning. Thank you for taking my question. Anthony and Marcela, I'm hoping you can share your observations on the folks that joined Squarespace in 2020 and 2021 during the worst of COVID.

Any observations around those cohorts relative to your older cohorts, either in terms of churn willingness to grow and expand with the Squarespace platform? Just curious what you're seeing relative to history in those cohorts specifically.

Marcela Martin -- Chief Financial Officer

Thanks, Gabriela, for the question. I'm going to kick off, and Anthony if you want to add later. So let me talk first about the 2021 cash retention. Because what we have seen for subscription, cash retention is that it was stronger in 2021 versus what it was in 2020.

And even at a constant FX basis, the retention was actually better. I mean, of course, as you can imagine, 2020 and 2021 are really big cohorts. So we are paying attention to how they behave. What we have also looked at is at the 2020 cohort and how that has performed in a two-year cash retention basis, actually a little bit less than that because it hasn't been fully two years for all of the cohorts, but how those have performed compared to 2019.

And they have performed slightly better even than 2019. So we are quite pleased with the way that so far, these cohorts have been behaving which, as I said, represent a large number of customers. And I think that this retention is a testament of the stickiness of our platform and the loyal customer base that we have. With regards to churn, we have not seen changes in churn overall.

And I think one more piece of information perhaps is that we have seen this year more -- sorry, more people coming directly to commerce versus what we saw at first in 2020, where there was people moving more from personal to commerce. But we have seen a larger adoption of commerce versus what we saw in the past with regards to upgrades.

Gabriela Borges -- Goldman Sachs -- Analyst

That's very helpful color.

Anthony Casalena -- Founder and Chief Executive Officer

No. I mean, to summarize what Marcela is saying, it's -- they're not weird cohorts. It last better, right?

Marcela Martin -- Chief Financial Officer

Right. 

Gabriela Borges -- Goldman Sachs -- Analyst

Right. Understood. And Marcela, I know it's early days, but any guidance on how we can think about the payments revenue stream in 2023 and how to model that?

Marcela Martin -- Chief Financial Officer

Look, I mean, we are at the later stages of choosing our partners. We have been going on due diligence for a while. And the reason is because we really have amazing partners that -- and potential partners, the companies that we are talking to are really, really good companies. So we have to make a tough decision there.

However, we have been developing payments from I believe we started last year, sometime in October. And the teams have been showing us a lot of progress so far. So we are confirming that we will launch payments in 2023, most likely it's going to be in the second half of the year. But the piece that we have yet to figure it out is what's going to be our commercial policy because as you see in the market, there is a wide range of some payments and -- sorry, processing fees you know that different processes charge.

And so I can't talk too much about how that's going to plan. We've been working on the plans behind the scenes, but those decisions are still yet to be made because we have a year to go and we have to continue to look at market conditions and so on.

Gabriela Borges -- Goldman Sachs -- Analyst

OK. We'll stay tuned. Thank you.

Marcela Martin -- Chief Financial Officer

Thank you.

Operator

And our next question is from the line of Josh Beck of KeyBanc. Josh, your line is now open. Please proceed.

Josh Beck -- KeyBanc Capital Markets -- Analyst

Thank you for taking the question. I had a little bit of a question, just maybe high level, about presence in commerce revenue. And trying to put some guardrails. Obviously, there's been a large gap on commerce revenue outgrowing presence revenue between 20% and 40%.

Obviously, we're going into a period where we'll be lapping Tock, and there's obviously some changes there. So I imagine we'll converge to some degree, but just any guidance you can give us just on how to build out these two businesses for the remainder of the year.

Anthony Casalena -- Founder and Chief Executive Officer

So without getting in the -- I think you can maybe take some of -- piecing together some of what we've answered in other -- in some of the other questions and sort of think about -- all right, Squarespace is obviously very interested in attracting customers that are transacting. And we wouldn't be a part of that transaction. And then there's different macro trends that are going to influence people's attraction to those various business models and the performance of those various business models within the platform. So I don't know if I have any like very specific guidance on how to...

Marcela Martin -- Chief Financial Officer

Yeah. Look, I mean, what I can tell you is we provided a goal in investor day last year, and we are -- from our perspective, we are on track to deliver on that goal. If there are significant changes that are going to move in between 2022 and -- sorry, in 2022 between presence and commerce, I mean I don't expect that it's going to be quite dramatic. But look, I mean, we are very, very happy and excited with the growth that we have in presence as much as the one that we have in commerce because anybody -- once we have that customer into our platform, we can move that customer that decides to transact into different plan.

Josh Beck -- KeyBanc Capital Markets -- Analyst

OK. OK. That's helpful. And then maybe just following up on the prior question about the branded Squarespace payments offering.

Question a little bit more on the go-to-market. I appreciate that it's early and you're still working on the commercial arrangements. But once you do get that offering live, are you thinking about it as most likely that new customers coming to the platform will be the most likely candidates to adopt? Do you think you can go back to the existing base that may have a different arrangement in place and get them to adopt it? Just I realize it's early so it's probably fairly preliminary, but just curious on the go-to-market there.

Anthony Casalena -- Founder and Chief Executive Officer

Sure. So no-brainer for us to make it the default for all new customers coming to the platform. I think we're going to aggressively incentivize existing customers to switch over to the payment stack. I think for the most part, the feedback we've heard from people is that they kind of prefer to have everything in one place.

They don't want different vendors. They trust Squarespace. They want one relationship. So insofar as they kind of want that from a product experience, and we can make it beneficial for them to switch over from a commercial side of things.

Yes, I mean, I think it would be our goal to have 100% of all of our customers eventually using our payment stack.

Josh Beck -- KeyBanc Capital Markets -- Analyst

Excellent, Anthony, Marcella.

Marcela Martin -- Chief Financial Officer

Thank you, Josh.

Anthony Casalena -- Founder and Chief Executive Officer

Thanks.

Operator

Thank you. our next question is from the line of Brad Erickson of RBC. Brad, your line is now open. Please proceed.

Brad Erickson -- RBC Capital Markets -- Analyst

Hi. Thanks. Just a couple of follow-ups on the subscription business. I think given the macro factors going on, there's just a lot of worry right now about the health of the overall SMB out there.

What do you think you guys are seeing from your core, call it, SMB pipeline? And what have you sort of qualitatively built into your guidance in terms of SMB headwinds potentially getting worse, staying the same or maybe even improving from recent levels? That's one. And then secondarily, just on subscription, how do you think you guys are doing market share-wise lately in that part of the business?

Anthony Casalena -- Founder and Chief Executive Officer

Sure. So one thing to keep in mind regarding Squarespace and kind of SMB formation is that there is going to be some correlation there, but there are a lot of people who are using Squarespace that are not really going to get picked up in that number because they're either part of like a creator economy and their formation of their business is going to lag like incorporation and all that. So just kind of getting started either with like unfolded Bio Sites or a regular Squarespace website, but they're testing member areas and things like that. So we service a large number of business models on Squarespace.

And again, like not all of them are going to get picked up in these SMB formation numbers, and I think -- and then what was the second thing, Marcela?

Marcela Martin -- Chief Financial Officer

The second part of your question with regards to guidance. I want to reiterate that the reason of the additional conservative versus the guidance that we provided during the previous call, is related to FX headwinds that we saw in Q1. But we remain with the same plan that we had with regards to subscriptions -- yes, subscription and new customers.

Anthony Casalena -- Founder and Chief Executive Officer

Yeah. Again, for the full year, we've baked in all of...

Marcela Martin -- Chief Financial Officer

Right. Yes, it hasn't changed compared to the previous guidance that we have provided earlier.

Brad Erickson -- RBC Capital Markets -- Analyst

Got it. And then maybe just a quick comment on how you've been doing market share-wise?

Anthony Casalena -- Founder and Chief Executive Officer

All right. Very interesting. A number of ways to kind of track that from a just -- I mean, there's CMS reports out there that talk about how many URLs are powered by which platforms and all that. I think we've been doing.

I think we're doing good. I keep thinking more about what is happening behind those URLs and the value versus necessarily like are there 5 million sites or 6 million sites or 7 million sites, right? I mean you could be powering the top 20,000 most valuable sites in the world, each of which process $1 billion in GMV. And that would be very, very valuable versus like the next million presence websites that may not be transacting. So I think about what kind of customer we attract, I think about getting people in that entry level that have a high appreciation for quality and an aptitude to grow into those bigger kind of customers over time.

And so that's kind of how my mindset has been with regards to that. I think that -- and I referenced it earlier verbally on the script and also as an answer to one of the questions, I'm really confident that with what we're releasing in the CMS and the unification of all the commerce packages together into one sort of bundle over time that -- and call me biased, but I really think this is the best product in the market. And I think that it's going to be -- just the usability and expressability of what we do, how we push the market forward from a visual and creative standpoint remains really, really important. So I have more confidence than ever in the main tool.

And at our core, we're a product company and we invest in that and have always invested in that. And that's why I'm excited about the road map and what's coming out.

Brad Erickson -- RBC Capital Markets -- Analyst

Got it. Thanks.

Marcela Martin -- Chief Financial Officer

Thank you. 

Operator

Our next question is from the line of Naved Khan of Truist Securities. Naved, your line will be open if you'd like to proceed.

Naved Khan -- Truist Securities -- Analyst

Yeah. Thanks. A couple of questions. So Anthony, you mentioned earlier that you did some price tests and then some of them were kind of the ones you take, then continue to kind of do more work there.

But just can you just give us some color on what kind of tests these are? And are these kind of just for the new customers, meaning new customers do not -- in the sign ups, may not be getting as big of a discount as it might have in the past? Or is there generally an increase in the subscription pricing as well for the existing ones?

Anthony Casalena -- Founder and Chief Executive Officer

Sure. So the tests I'm referring to are for new customers only. The -- any adjustments that we're making to any existing subscriptions is going to happen in the later half of this year, so none of those did. The kinds of tests we do, just to give you some color on it, remerchandising, changing plan counts, changing the difference between annual and monthly, changing the intra price, changing the difference between the prices between plans, changing that on an international basis versus a U.S.

dollar basis. So looking through the multiple currencies and testing elasticity there. We have other ideas around prior tech support offerings that we're going to be seeing if people have an attraction to. And so yes, I hope I gave some color on kind of what we've been doing.

And we sort of do this all the time, right, to try and figure out what the optimal point is in the market for us.

Naved Khan -- Truist Securities -- Analyst

Got it. But it also sounds like the existing customers will start to pay a little bit more in the back half. Is that a fair statement? And how big of a hike that might be?

Anthony Casalena -- Founder and Chief Executive Officer

Can you -- what was the second? What was the last thing you said?

Naved Khan -- Truist Securities -- Analyst

How big of an increase they might see there in this thing?

Anthony Casalena -- Founder and Chief Executive Officer

Yeah. So correct, in the second half, we'll be targeting existing customers. I think what we've proven it, I hope we can infer, is that because people were -- new people coming in were good with an even higher price, that we'll be able to say, hey, look, we're not going to necessarily increase everyone to those prices, but we can kind of inch things up a little bit. And say, look, you've still got some -- in many cases, some version of a grandfathered price.

But I think that was -- you would prove out somewhat of a willingness to pay on the top end.

Naved Khan -- Truist Securities -- Analyst

Good. Excellent. Thank you.

Marcela Martin -- Chief Financial Officer

Thank you.

Operator

And our next question is from the line of Aaron Kessler of Raymond James. Aaron, your line is now open. Please proceed.

Aaron Kessler -- Raymond James -- Analyst

Thank you. Well, all of the questions have been asked. But can you just maybe just talk a little bit about some of this performance of the verticals? I think talk a little about e-commerce. I mean, talk about restaurant performance as well, especially as the economy continues to reopen and any other verticals you would highlight?

Anthony Casalena -- Founder and Chief Executive Officer

Yeah. Actually, you're touching on one that I would highlight, which is that the performance within Tock has seen tailwinds as of late as we've returned to a bit of a more normal environment within the hospitality space. So we're really encouraged by what we're seeing there. And yes, I'd say there's definitely strength there.

I think in terms of headwinds people pointed out on this call just what's happening in physical e-commerce, but then Squarespace has that offset by services-based commerce and appointments and other revenue streams. So that's a bit of a feel for kind of what we're seeing.

Operator

[Operator signoff]

Duration: 49 minutes

Call participants:

Robert Sanders -- Head of Investor Relations

Anthony Casalena -- Founder and Chief Executive Officer

Marcela Martin -- Chief Financial Officer

Matt Pfau -- William Blair and Company -- Analyst

Trevor Young -- Barclays -- Analyst

Ron Josey -- Citi -- Analyst

Ygal Arounian -- Wedbush Securities -- Analyst

Gabriela Borges -- Goldman Sachs -- Analyst

Josh Beck -- KeyBanc Capital Markets -- Analyst

Brad Erickson -- RBC Capital Markets -- Analyst

Naved Khan -- Truist Securities -- Analyst

Aaron Kessler -- Raymond James -- Analyst

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