Squarespace, Inc. (SQSP) Q2 2022 Earnings Call Transcript

Squarespace, Inc. (SQSP -3.74%)
Q2 2022 Earnings Call
Jul 25, 2022, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning. My name is Charlie, and I'll be your conference operator today. At this time I'd like to welcome everyone to Squarespace's second quarter 2022 earnings conference call. [Operator instructions] I'll now hand the call over to your host, Robert Sanders, head of investor relations at Squarespace.

Robert, please go ahead.

Robert Sanders -- Head of Investor Relations

Good morning. Thank you for joining us. Robert Sanders, head of investor relations. With me on the call today: Anthony Casalena, Squarespace founder and CEO; and Marcela Martin, our 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 in the investor relations section of our website with additional information related to our Q2 results. On today's call, we'll be referring to 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.

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 relating 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 filings with the Securities and Exchange Commission.

Any forward-looking statements that we make on this call are based on assumptions as of this day, July 25, 2022. We undertake no obligation 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. I hope everyone had the opportunity to read our shareholder letter issued this morning, which is available at our investor relations website. It brings to life the topics we will discuss on this call. Squarespace benefits from 4.2 million unique subscriptions on our platform.

As we think about the massive market opportunity in front of us, it's imperative that we continue to invest in our platform to remain a leader in the areas we operate. We will continue to develop new tools and refine our existing platform to help the next generation of creators and entrepreneurs build a brand and transact with their customers online. This quarter, we delivered a fundamental upgrade to the core part of Squarespace's content management system. This new design system, called Fluid Engine, lets us push forward a platform that is both more usable and expressive than our previous system.

This benefits both our users who are just getting started and not familiar with web development, as well as our professional circle members who will find that the platform lets them do even more without resorting to custom code or complex tools. Fluid Engine is currently live to all customers using our 7.1 platform, and anyone signing up for Squarespace today. We have some great demo videos and more up on our homepage for anyone interested. To enable the billions of transactions of all types we envision our platform, we also are investing in an integrated payment solution, Squarespace Payments.

We look forward to sharing more in future calls about the opportunities we see, enabling our customers to transact in more ways and in more places on our platform. Momentum around Tock, our unique solution for hospitality and time-slotted businesses, continues to build. And we're making significant investments to support Tock's future growth. We launched a new global brand campaign, Delicious Starts Here, to showcase the range of businesses using Tock's platform.

The campaign includes strategic advertising across digital print and partnership channels. Tock is also beginning to draw large enterprise hotel groups as clients and is expanding to hospitality groups of hundreds of locations because of the ROI it presents in the ability for those groups to own the relationship to their end customer. It's been a bit over a year since our direct listing. One, reason we chose a direct listing versus a traditional IPO was because we were cash-generative and did not need to raise primary capital, but rather wanted our diverse stakeholders to have the ability to transact in the public markets.

Our public listing also enables us to return the cash we generate to shareholders in the form of share buybacks. I'm delighted to report that under our $200 million repurchase program, we've bought over 1.5 million shares at an average price of $20.73 per share through the end of the second quarter. Our CFO search is underway, and we've met with a number of quality candidates. In the interim period, I'm confident in our finance leadership -- our finance leadership team's ability to execute.

Marcela was gracious enough to join us for one more call before her departure. Please join me again in thanking her for her work at Squarespace. Recently, economists reports in the press have forewarned of an economic slowdown. While no two recessions are necessarily equivalent, Squarespace has historically fared well during times when individuals are seeking lower-cost alternatives to custom web development.

Squarespace will continue to operate by balancing revenue growth with strong cash flow as we move throughout this period. Finally, I'd like to thank all of our employees who work tirelessly to provide our customers and to deliver innovations that underpin our future success. Now, I'd like to turn the call over to Marcela to take you through the financials.

Marcela Martin -- Chief Financial Officer

Thank you, Anthony. Good morning, everyone, and thank you for being here today. I will talk about some of the highlights of the second quarter performance and provide further details on guidance for the rest of the year. We executed well as we deliver revenue ahead of our estimated high end of guidance when adjusted for the impact of the stronger dollar versus what we had originally anticipated.

Revenue of 213 million grew 9% year over year as reported, and 12% on a constant currency basis. Breaking revenue further down presence grew 11% and commerce grew 16% year over year in constant currency. These results were driven by new, unique subscriptions and strong customer retention across our base. Our business model and relentless focus on cash flow and profitability have driven unlevered free cash flow to 36 million in the quarter, representing a 17% unlevered free cash flow margin and adjusted EBITDA to 44 million and 21% margin.

Overall, we are pleased with our performance in the second quarter as we continue to execute toward our plans. There are a few specific items that I would like to unpack this quarter. The first item is on net, new subscriptions, new subscriptions for websites and domain were ahead of our own internal forecasts as we had a stronger-than-expected month of May and June, further expanding our loyal customer base of 4.2 million unique subscriptions. This quarter is impacted by a 2021 COVID quarter of the strong growth comparisons and weak new business formation overall, as we had anticipated in our Q1 guidance.

The most impacted product was Unfold, which has the lowest average revenue per unique subscription. The light net new Unfold subscriptions are the result of the shift of social media trends, resulting in a general decline in the photo category in the main platforms where Unfold is distributed. We are incredibly encouraged by the Unfold team's pace of innovation. We continue to deliver new products and features to position Unfold as an essential tool for creators on social media.

We are especially encouraged by developments in Unfold's bio site functionality, which lets our customers create simple websites for their social profiles. The second item relates to the increase in customer acquisition cost per unique subscription. Our overall marketing spend includes investment in our core business and investments in newer revenue streams, such as Tock, international expansion, and enterprise. These businesses are at a different maturity and development level versus our core business.

At the beginning of the year, we talked about the increased marketing, research, and development investment that we are deploying at Tock. These marketing expenses have an impact on the calculation of acquisition cost, though these are not measured through the number of subscriptions that we acquire as they mostly relate to marketing directed to consumer. We are quite pleased with how the business performed so far and the speed of launching new features and products, which has proved, so far, the return on investment that we had expected. We are continually updating our distribution model to evaluate our marketing spend and ensure that we are investing wisely.

We expect to leverage marketing expenses further in the future, though not at the cost of nurturing new revenue streams for our business. Our history of strong cash retention, rising average revenue per unique subscription, and growing customer LTV provides us with that confidence. The third item relates to a spending in a recessionary environment. At the beginning of the year, we took a conservative approach related to our overall spend.

And this allowed us to deliver a strong cash flow margins in the last two quarters, while also repurchasing shares. We continue to pay close attention to macroeconomic headwinds, and we will adjust expenses accordingly. We believe that our company is well-positioned to continue to deliver revenue growth and profitability even in a recession, in part, because we believe that we offer our customers a low-cost solution to maintain a digital presence, both for their business and online presence. We provide essential web tools and sites for people looking to launch their business, transact with their customers, or promote themselves online.

More than 90% of our revenue is subscription-based, and about 70% of the new additions typically pay for annual plans. The fourth item relates to FX headwind, which had an impact on our actual results on our full year guidance as I will explain a little bit later. Besides the impact that we have shown in revenues, bookings of 220 million resulted in a 6% year-over-year growth, but 10% in constant currency. Also, we reached 838 million on annual run rate revenue, growing at 8% year over year as reported.

But because we calculate our annual run rate received in the final month of the period, in this case, June, times 12, the large FX movements we witnessed in June had an outside impact on this calculation. Our balance sheet is strong and ensures that we have the resources to execute our strategies. As of June 30, cash and marketable securities totaled 247.3 million, bolstered by strong cash generation in the period allowing us to return over 35 million in share buybacks to our shareholders, as Anthony noted in his remarks. Turning now to some further details on guidance.

Today, we update our guidance only to reflect changes in foreign exchange rates since we last offer guidance in May, as our business remains on track to deliver on our prior guidance, excluding affects impact. We reduced the high end of our full year guidance range for revenue by 12 million or 1.4% due to our exposure to sales in foreign currency. Our outlook for profitability remains unchanged as we continue to drive toward the full year free cash flow margin -- unlevered free cash flow margin of 18.7% of the midpoint of our guidance. For the third quarter of 2022, we expect revenue to be in the range of 213 million to 218 million, representing a year-over-year growth range of 6% to 8% versus Q3 2021.

We anticipate unlevered free cash flow in the range of 33.7 million to 38.7 million, which implies unlevered free cash flow margin of 16.8% at the midpoint of our guidance range. For the full year 2022, we expect revenue to be in the range of 857 million to 867 million, representing a year-over-year growth rate range of 9% to 11%. We anticipate unlevered free cash flow in the range of 156.5 million to 166.5 million. In Q1, we outlined our expectations for non-GAAP operating expenses in 2022.

We are executing well against our prior comments and expect our non-GAAP expenses ratios to remain within the following ranges: gross margin at our current level, so no changes to report. Previously, we noted expectations of marketing and sales expenses at a range between 32% to 35%. We now believe we will hit the high end of the range because of the exposure that we have to foreign currencies. While we are expanding our international presence with entities in Australia, U.K., and Netherlands, expenses denominated in foreign currencies are still lower than the revenues that we generate outside the U.S.

Research and development to be at a range between 20% to 25%, and G&A at approximately 11% of revenue. Our second quarter performance brings us closer to these full year projections as we deliver industry-best operating performance. I've had the pleasure of leading the Squarespace finance team since I joined in 2020. In the interim period before a new CFO begins, I feel confident that the highly qualified leaders on the finance team will continue to support the business relative to their areas of expertise.

And now, we would like to open the line to your questions.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Trevor Young of Barclays. Trevor, your line is now open.

Trevor Young -- Barclays -- Analyst

Great, thanks. First one based on that 3Q guide and what that implies for 4Q, it looks like you're assuming a modest uptick, call it 8% to 10% year-on-year revenue growth versus 8% at the high end for 3Q. Can you just help us understand what's informing that uptick? Is there something that you see today that's giving you more confidence later in the year? Is it just some of the pricing initiatives? You started with new subs earlier in the year and pricing for existing subs in the back half of the year. That's the first question.

Marcela Martin -- Chief Financial Officer

Thanks, Trevor, for the question. Yeah, we have -- we are assuming that our GNV trends are going to perform higher than Q2, and that is mainly related to seasonality. And, of course, Q3 is suffering, as Q4, from the impact of the FX headwinds overall. We also talked in the past about, you know, our pricing initiatives that are underway with regards to legacy customers, and later in the year, bundling, which we are excited about the work that we have been doing there.

And we expect to, you know, release some further news, probably in Q3, Q4.

Trevor Young -- Barclays -- Analyst

Great, thanks. And then just a separate one on that bookings growth and your nearly 9-point decel, maybe a little bit less FX, while customers were maybe flattish or down a tad Q-on-Q and GNV was also down. Was all that kind of consistent with your expectations? We're just trying to reconcile those trends and the commentary in the letter that the lower full year revenue guide was really FX-based rather than a change in business fundamentals and growth trajectory.

Marcela Martin -- Chief Financial Officer

Yes, thank you again for the question. You know, as the business continues to grow, bookings will become a less relevant metrics because the transactional portion of the business is growing faster than the rest of the business. What we are expecting, and this is something that we have already outlined in the full year guidance and Q1 much earlier on, is also the growth of Tock. You know, as the business continues to grow because Tock, the vast majority of the business relates to payments, you can expect that it's going to, you know, converge a little bit more.

Not fully, of course, because our business is still heavily relying on on-hand. But for full year guidance, we have only taken into account the impact of exchange rates, which is about $12 million for the remainder of the year.

Trevor Young -- Barclays -- Analyst

Great, thanks Marcela.

Operator

Thank you for your questions, Trevor. Our next question comes from Matthew Pfau of William Blair. Matthew, your line is now open.

Matthew Pfau -- William Blair and Company -- Analyst

Hey guys, thanks for taking my questions. I wanted to ask on the net additions in the quarter, you commented that they came in ahead of your expectations and you saw some strength in May and June. Maybe just some more details on why those are coming in ahead of your expectations and why May and June were stronger would be helpful.

Anthony Casalena -- Founder and Chief Executive Officer

You know, in any given month, it's sometimes a little bit hard to kind of tease out what was going on, especially considering the macroeconomic environment that surrounds us. But, you know, it was pleasing to see that those were a little bit ahead, you know, while Unfold was kind of behind where we wanted it to be. Unfold is more global. I think the Russia situation affects it more, things like that.

But the core business remains strong, and so we were just encouraged to see the positive reversion in seasonality.

Matthew Pfau -- William Blair and Company -- Analyst

Great, and just to follow up. How about any updated commentary around retention and churn? How did those trend in the quarter?

Marcela Martin -- Chief Financial Officer

Yeah, sure. We have not seen any changes in churn. Again, the impact that we had on the net new was mostly related to new, and with that it's mostly related to Unfold. With regards to, you know, retention, cash retention, it's better than prior year.

And we actually -- as you know, we pay a lot of attention to the 2020 and the 2021 cohort to see how they behave, you know, compared to the previous cohorts. So when you look at the 2020 cohort for, you know, the end of the quarter, it performed better than the -- sorry, it performed in line with 2019. But what is exciting is the 2021 cohort is actually performing better than the 2020 and the 2019 cohorts at the same maturity level, right, for the whole year. So, overall, you know, we are pleased, you know, with our customer base and how well they retain as we continue to innovate with products and features and so on.

Matthew Pfau -- William Blair and Company -- Analyst

Great, thanks a lot, guys. Appreciate it.

Operator

Thank you, Matthew. Our next question is coming from Raquel Betesh of J.P. Morgan. Raquel, your line is now open.

Raquel Betesh -- J.P. Morgan -- Analyst

Hey, guys. Thanks for taking my question. I know you guys spoke a little bit about the deceleration at Unfold this quarter, but presence revenue still accelerated quarter over quarter. So, I'm curious what you guys saw performing well on the presence side of your business.

Anthony Casalena -- Founder and Chief Executive Officer

Can you repeat the second part of that? It was a little soft on the line.

Raquel Betesh -- J.P. Morgan -- Analyst

Yes, sorry about that. I'm curious what you saw performing well on the presence side of your business.

Anthony Casalena -- Founder and Chief Executive Officer

Versus Unfold? I think it was very similar to the other -- what's that?

Marcela Martin -- Chief Financial Officer

It's because of the lower ARPUs. When you look at our combination of revenue streams, you have very, very high ARPU businesses, like Tock, where a subscription may cost you $600, $700 a year with very low, you know, ARPU, or average revenue per unit subscription for Unfold. So, while we have seen the net new, you know, for Unfold coming down, it did not have an impact overall on the revenue. And the other reason, of course, is our presence business continues to, you know, perform very strong, growing at 7% on a year-over-year basis, but 11% on a constant currency basis.

The diversified portfolio of revenue streams that we have, you know, allows for that flexibility that one business may not be performing as expected and may be compensated by the other businesses. But again, Unfold, it's a smaller revenue size overall, and it's a small -- very low ARPU, but in terms of unique subscriptions, it has a significant impact when you look at that because, first of all, the base of customers that has Unfold is pretty large. And for the most part, you know, there is a little -- there is not much attached yet between Unfold and our website. So there's a lot of potential for growth there as well, particularly with bio site.

Anthony Casalena -- Founder and Chief Executive Officer

Yes, I just want to highlight one other thing, because you were, I think, asking about what was going well in the presence business. I mean, obviously one of the highlights in the quarter that we'd point out is the launch of Fluid Engine, which is a core improvement to our content management system. But those kinds of updates are happening really all the time behind the scenes in Squarespace across both presence and commerce. And so I'd like to think that, you know, we are not even close to finished innovating on the core platform.

And I think that we really have an edge right now in terms of what we've got out there from a product perspective in the market.

Marcela Martin -- Chief Financial Officer

Just one thing I want to clarify because I said Tock subscriptions, $600 a year. It's actually $600 a month. Apologies.

Raquel Betesh -- J.P. Morgan -- Analyst

Thank you, guys.

Operator

Perfect. Our next question comes from Ron Josey of Citi. Ron, your line is now open.

Ron Josey -- Citi -- Analyst

Great, thanks for taking the question. I had two, please. Maybe, Anthony, just a follow-up from a prior question around sub growth and why May and June were better than expected. I think the answer was, you know, ebbs and flows.

But maybe could you just talk a little bit more -- I think you mentioned macro in your prepared remarks, how you're prepared for it. But is there anything that maybe stood out in May or June that was better? Or was it maybe around Fluid? I know it just launched, but maybe that or marketing campaigns might have driven a better May and June. Then lastly on Fluid Engine, you just mentioned it, Anthony, but talk to us a little bit more about how web pros benefit from this and the process for just raising awareness among web pros for Fluid Engine. Thank you.

Anthony Casalena -- Founder and Chief Executive Officer

Thanks. You know, I'm not sure I have much more color around, you know, the May-June stuff that was more positive there. You've got -- we advertise across every channel imaginable and some are, you know, depending on a lot of factors, outperforming. And some are underperforming.

We're updating our attribution model and rebalancing our spend, so there was a lot of that. What's interesting from a macro perspective is this is one of the first summers we're starting with really COVID rates in a lot of the areas that we were -- or lower COVID impact, I should say, in a lot of the areas that had it in the past. So these are just interesting years. Sometimes we're the beneficiary, sometimes it's a headwind.

In this case, we're seeing that we're a beneficiary. Second, to your question around Fluid Engine and specifically web professionals. You know, this launch is something I'm really proud of because I think, you know, what you're seeing is us investing in, one, a unified system that really works for both. And so, if you're new to the platform, you're not a pro.

This system is easier to use than what we currently had on the platform for almost the past decade. But at the same time, if you're a web professional and you're comfortable using the tool, the expressibility aspect of the tool matters a lot more to you than maybe the usability does. What's really great about this is, now, within one system, you've got, one, our section-based design system, but Fluid Engine can appear as a section, and web pros can get a lot more flexibility out of this tool. And that means that, you know, they just don't need to resort to either way more complex tools or custom code as much.

So, I'm really happy about this launch. I think it underscores really what makes Squarespace special in a lot of ways, that we're able to kind of pull this off in one system. Yeah, at a glance, it may seem like these things are easy to do or create, but they just really aren't, which is why there are so few companies at our scale that have the results we do in websites and are useable by so many millions of people. So, it's really an upgrade across both that DIY and professional audience.

Ron Josey -- Citi -- Analyst

And any plans on specific marketing around Fluid Engine with the launch? Thanks guys.

Anthony Casalena -- Founder and Chief Executive Officer

Yes, actually it's going to show up in a lot of our campaigns. Right now, if you go to Squarespace.com, there's demo videos that can show you how it operates. There's a lot of fancy stuff in those videos, but it's like kind of not faked, that's kind of how it works. It's really good.

So, yeah, you'll see it appear visually in a lot of marketing campaigns, and it's live on our site right now. I think when you think about marketing, it's not -- the core message of Squarespace is not different. This just helps more people get better results and more varied results on the platform, really bridging the gap between some of the higher end tools and, frankly, the usability of some of the simpler tools, right? I think that at times, I'd always thought about Squarespace as having, you know, really, really good expressibility but then maybe for the page, it's like this is not the easiest to use. I think this really lets us turn a corner with that.

So, really happy about it. Again, it's an in-place upgrade, so, you know, it's rolled out to everyone. You can convert your old pages or, if you're signing up for Squarespace today, you will automatically have this platform.

Ron Josey -- Citi -- Analyst

Got it, thank you.

Anthony Casalena -- Founder and Chief Executive Officer

Sure.

Operator

Thank you. Our next question comes from Christopher Zhang of Credit Suisse. Christopher, your line is now open.

Chris Zhang -- Credit Suisse -- Analyst

Hey, good morning. Thanks for taking my question. Your international mix was pretty strong in the second quarter, especially adjusted for FX and on the basis of year-on-year incremental international mix. And that's, perhaps, the first time you've called out the Pacific region.

So, can you talk a little bit about your initiatives there that are driving those trends and what's the relative impact of the Pacific region today versus Euro? Then I'll have a follow-up on GNV.

Anthony Casalena -- Founder and Chief Executive Officer

So, you know, nothing we're doing right now in terms of international is significantly different than what we were doing, you know, from prior quarters. I think you're seeing just the result of many initiatives play out, right -- currency, language, our support queues in multiple languages, multiple ways to check out and pay for Squarespace, localized campaigns that are running internationally. And, you know, I think that we continue to be pleased with the growth outside of the U.S. Obviously, you know, it was mentioned in the prepared remarks, and I think it will probably come up in these questions, you know, when we're investing in marketing, not all of our business lines in all of our regions are as developed as we are in the U.S.

So, when we're investing in Tock and international markets, it's a drag if you look at it on a holistic basis versus what's happening in the U.S. But as you're pointing out, that eventually pays off. And, yes, we continue to, you know, expand globally.

Marcela Martin -- Chief Financial Officer

Yeah, and just to add to that, you know, Christopher, last year we did marketing campaigns for the first time that were localized for certain markets. We continued to do this at the beginning of the year, but, you know, at a much lower scale. Australia is a very good market for us. And we can see now the impact of those marketing campaigns, where we are raising, you know, brand awareness and how they are paying off on the net additions that we are seeing coming, you know, from international.

As Anthony said, it's the combination of all the efforts that we are doing, and also what we had started, you know, last year at a much deeper level.

Chris Zhang -- Credit Suisse -- Analyst

Thanks, Anthony and Marcela. Then as a follow-up on the GNV, which is somewhat weaker than typical seasonality and arguably some of the macro trends that actually were holding off in the second quarter. So, can you unpack the sequential move in the GNV maybe by the underlying categories, such as goods versus services, and particularly how Tock was performing? Thank you.

Anthony Casalena -- Founder and Chief Executive Officer

Sure. So, glad you're calling this out because when you look at our GNV, I think we saw this last quarter, that people expected us to be much more correlated with, you know, just essentially physical goods sales. But in that GNV number we have, there's many categories. So, you've got the scheduling business which operates differently than hospitality and time-slotted based businesses that Tock has, and operates differently than our e-commerce business, and operates differently than our member areas businesses, which, you know, are just starting to grow.

Within there, I think Tock saw a much more normal quarter than they've really seen in the past. I think, you know, two items to highlight there: one, the beginning of adoption by larger chains, which would significantly impact GNV. And then also hospitality industry woes lightening a bit in terms of workforce, ability to open, all those sorts of things. So those things moved in a positive direction for Tock.

The scheduling business remains strong and the physical -- yeah, and the members areas business is growing and looks good. And then the -- you know, I think we're all seeing a little bit of movement in a different direction for physical goods. So -- but this is why I like how we're positioned -- I mean, Squarespace has always been about many, many ways to sell. And as we keep strengthening that and grow real business revenue lines there, you know, you will not see us impacted by, hopefully, any one single trend in particular within there.

Chris Zhang -- Credit Suisse -- Analyst

Great. Thanks, Anthony. Really appreciate the color.

Anthony Casalena -- Founder and Chief Executive Officer

Sure.

Operator

Thank you. Our next question comes from Josh Beck of Keybanc. Josh, your line is now open.

Josh Beck -- KeyBanc Capital Markets -- Analyst

Thank you for taking the question. I think on the prior call, you had cited the idea that business formations were a pretty observable headwind. Obviously, we're further along in the year at this point, so I think we all can see the U.S. data quite well, probably have less of a handle globally.

So, maybe if you could just talk about what type of expectations you're embedding there as we think about the second half.

Anthony Casalena -- Founder and Chief Executive Officer

It's interesting -- we've begun to do a little bit of research on our side as well around the correlation with small business formations and what we're seeing in the main products. I would just caution and say in the past, we did see not an extreme correlation but a correlation. In different periods of time, we actually observed that it wasn't as correlated as it used to be. You know, we may be returning to a time of correlation, but, you know, I would just again issue that word of caution that you don't always see it play out the way you might think.

And then, in addition, as our revenue streams diversify and you've got scheduling and member areas and all these ways for creators to interact online and things with Unfold, the correlation there, I think, will lessen. So, that's just kind of how we view it.

Josh Beck -- KeyBanc Capital Markets -- Analyst

OK, very helpful. Then just with respect to the pricing initiatives, it always seems like there's a great opportunity to reap some of the extra value that you've created. You know, also, on the other side, it can, I think, cause churn in some small cases. Obviously it's generally viewed as a net positive.

So just kind of help us think about how you're framing these different factors as we approach the pricing memberships here.

Anthony Casalena -- Founder and Chief Executive Officer

Yeah. So, I'd highlight two areas that I've highlighted in the past. One is our bundling and positioning of the packages, which is -- you know, I'm a believer that Squarespace has a lot of products in market that just due to how we've rolled them out over time, there's just a lot of different subscriptions in there you have to use to access those products. And I think that as we rethink our bundling strategy and how we present those to an end consumer, I think there's going to be a lot of leverage we've got, just giving people more access to the things we've already made, frankly.

That's something we are looking to have happen, you know, later this year or early next. The other point you make and that we've made on the call is just around refreshing pricing for existing users. Now, we have never done that before. And, right now, we are rolling out and we have started rolling out a pretty modest price increase.

We don't anticipate this -- we're monitoring it of course, we don't anticipate this causing a massive amount of churn. The danger there is somebody realizes they didn't, you know, want the website and they're like, "I just wasn't using this." But on the flip side, with a very modest price increase, I mean, to move your website because it costs you $10 or $20 more a year is sort of a -- assuming you want the website, probably not a great use of your time to react to that, especially considering two things. One is that competitors have also raised their prices and so you're not really going to something cheaper. And, two, even within Squarespace, you know, many of our customers that are getting renewal -- their legacy prices updated are still coming in under list price if you just resigned up with Squarespace.

So, we're monitoring that situation, but I think it's not a crazy thing for us to have a modest price increase after, you know, literally never doing it.

Marcela Martin -- Chief Financial Officer

Yeah, just to add to that, we're seeing strength in our platform particularly on solopreneurs and creators and so on, which a little bit speaks also about the new business formations that you asked earlier because most of these businesses, or some of these businesses may start, you know, with a website before even registering themselves. But with regards to the pricing increase in particular, we are doing this in a very thoughtful manner, looking at cohort by cohort, and within the cohorts the prices for each of the sub-cohorts. So, at any point in time, we can stop any increase and really, you know, hold back without any major changes because not everybody is getting the same price increase. We discussed earlier, the fact that it's going to take a significant amount of time to get everybody in the base to listing price according to, you know, the website, because all of the cohorts have different prices and within the cohorts, there are sub-cohorts that have different prices as well.

So, our ability to really monitor and check on churn and so on is very, you know, very high just because we are doing this on a very thoughtful base, you know, to make sure that we protect our revenue base.

Anthony Casalena -- Founder and Chief Executive Officer

And again, just to emphasize it, not all of our customers that are receiving an increase would actually even be moved to our current list price

Marcela Martin -- Chief Financial Officer

Right.

Anthony Casalena -- Founder and Chief Executive Officer

So -- yeah.

Josh Beck -- KeyBanc Capital Markets -- Analyst

Super helpful.

Operator

Perfect, thank you. Our next question comes from Siti Panigrahi of Mizuho. Siti, your line is now open.

Siti Panigrahi -- Mizuho Securities -- Analyst

Thank you. Thanks for taking my question. So, Anthony, unlike many other companies, Squarespace has gone through a recession and even survived, you know, in privatization. So, help us understand a little bit how does the different segments react during recession and how prepared you are.

I mean, '20, post-COVID, it was more of a tailwind for online presence and e-commerce. But in a recession, how prepared you are, that would be helpful.

Anthony Casalena -- Founder and Chief Executive Officer

Yeah, so thanks for asking that. Look -- I said it in the prepared remarks, you know, it's tough for me to -- so one, last time we went through a recession, we didn't have as many diversified revenue streams, so I can't comment on what those might have looked like. I will say, though, that the core business during prior recessions performed well because, one, it's a low-cost DIY tool. So, instead of having to go out there and pay somebody for setup, you might try and set it up -- you know, set the site up yourself, and so we saw a lot of positive usage.

Further, doing a recession, yes, some businesses closed, but, also, some people just lose their job. And so, they set out and try more entrepreneurial things than they might have. I mean, Squarespace actually itself was started in 2003, which was not exactly like a fun time after the tech collapse. So, I think a lot of entrepreneurial initiative happens during these times of constraint.

And so, I'm -- I think we'll well-positioned there. Also, in terms of cutting costs in your business, like, turning your website off is not, like, exactly the place most people start. If they need a website, I mean, Squarespace is not a huge line item expense for people. So, pretty confident there that, you know, things should be OK.

You know, further, in the core business, we love highlighting how profitable we are from a cash flow basis. And so, you know, we have used the period -- you know, we said this in January that, you know, we were starting to look at just making sure we were right size cost-wise in the business from the very beginning. So, I think we're very good at controlling our costs. Obviously, we're investing for growth, so we don't want to turn that off, which is why we're always talking about the balance of revenue growth with profitability.

But, I mean, there's just a lot of flexibility in the core business there. So, we're really confident. I mean, as I look into next year, you know, just taking the free cash flow margin up is what I'm expecting to do. So, I think we're in a good spot there.

Also, worth noting that, you know, there was a reason we went -- and it's related to the cash flow comment, but we did a direct listing because Squarespace didn't need to raise money because it was comfortable. So, you know, we're not, like, out there in the public markets having to raise money. In fact, as you saw from the buybacks, we're just using the time where there's a bit of fear going around right now to say, "Hey, we think the buyback can make sense for us." And so, that's what we executed on. Now, you see all those factors in play.

Siti Panigrahi -- Mizuho Securities -- Analyst

That's great color, and --

Marcela Martin -- Chief Financial Officer

Just to add onto that, one more point on the profitability and the strength of the core business. At the beginning of the year, we talked about the investments that we are doing in younger revenue streams, like Tock, international, and enterprise. And so, you know, we are delivering -- we're expecting to deliver unlevered free cash flow margins that are in the range of 16%, 17% for the quarter, and, you know, even higher of the year, in spite of the fact that we are making those investments in those businesses that are an actual driver to the unlevered free cash flow margins and the EBITDA margins that we have shown.

Siti Panigrahi -- Mizuho Securities -- Analyst

Thanks for that color. And quick clarification, by the way, how much was the Tock revenue this quarter? And, Anthony, I think you talked about Squarespace Payments that you are going to launch this year. Was is this year, or was it planned for next year?

Anthony Casalena -- Founder and Chief Executive Officer

It's planned for next year. And for Tock, we don't split out the revenue specifically.

Siti Panigrahi -- Mizuho Securities -- Analyst

Great, thank --

Marcela Martin -- Chief Financial Officer

Yes, but, Siti, I know you have -- like you know, the revenues for -- you know, we have been talking about organic versus inorganic growth throughout the whole entire year last year when we acquired Tock. And Tock continues to grow nicely. And, you know, in the overall growth rate, it represents approximately 100 basis points on, you know, the growth, just to give you a little bit more color about Tock.

Siti Panigrahi -- Mizuho Securities -- Analyst

Great, thank you.

Operator

Our next question comes from Naved Khan of Truist Securities. Naved, your line is now open.

Naved Khan -- Truist Securities -- Analyst

Yeah, hi. Thanks a lot. We are hearing about the consumer wallet kind of shifting more toward experiential spend, whether it's travel or other things. And just wondering how it affects your GNV number, because your GNV, as you pointed out today, there was five streams between bookings and everything else.

So, just talk to us about that and how we should think about -- I mean as we look in the back half and maybe for next year, how we should be thinking. The other question I have is around opportunities for M&A. As valuations continue to adjust, Anthony, can you maybe just talk about what are you seeing out there with respect to potential bio site acquisitions.

Anthony Casalena -- Founder and Chief Executive Officer

Sure, so, first off, with respect to consumer spending, I think what's interesting is we sort of -- we capture a bit of that, you know, when we kind of go through our GNV commentary, and if you think about, "Hey, OK, I'm not going to buy this wallet. I'm going to go and invest in experience." You know, we're perfectly situated to capture that demand with things like Tock, which is about time-slotted businesses and will eventually be about events. And so, you know, I think that's just going to highlight the power of the diversified revenue streams that we have. What was your second question? Oh, it was around M&A opportunities? Yeah, so our M&A strategy remains unchanged.

I think we're in integration mode right now with the products -- or with the platforms that we currently are bringing together. You know, the share buyback does not prevent us from executing on M&A within a target range that we have, and so we'll remain opportunistic. But, look, Squarespace is also really good at building things, too. So, a lot of times, when you see a company might have to resort to M&A to buy something, you see us flexing our build muscle.

I mean, Squarespace didn't execute on any M&A for 15 years or so of its existence. Again, we like having the muscle, but it's just an opportunistic thing for us.

Naved Khan -- Truist Securities -- Analyst

Got it, thank you.

Operator

Our next question comes from Clarke Jeffries of Piper Sandler. Clarke, your line is now open.

Clarke Jeffries -- Piper Sandler -- Analyst

Hello, thank you for taking the question. Anthony, you briefly mentioned some of the up-market momentum in Tock could impact GNV significantly. You know, how are you feeling about the pipeline there for other up-market brands and feeling comfortable investing in that platform? And is there anything driving that up-market traction beyond some of those macro factors you called out in the hospitality vertical?

Anthony Casalena -- Founder and Chief Executive Officer

Well, the interesting thing about Tock versus the Squarespace, many of the other Squarespace brands, is -- and Tock really started very up-market and is moving down with the events product that we're working on and other things, to be -- to move to a broader base. So, I mean, the up-market spot is their sweet spot. So, yeah, that's kind of how it's oriented.

Clarke Jeffries -- Piper Sandler -- Analyst

All right, great. And then, you know, clarifying a little bit of, you know, how we should think about Fluid Engine, could you maybe give some color on the portion of users that will be getting access to Fluid engine here over the next quarter, what portion of subscribers are on an eligible version to get that innovation?

Anthony Casalena -- Founder and Chief Executive Officer

It's 100% of new subscribers today. And if you want -- I don't have an exact number for you off, like, on the 7.1 platform, how many are enabled today? I would just say this -- in terms of business impact, it's going to have a much bigger impact for new sites than existing sites, because if you have an existing site, you've kind of created those pages already. And so, this might be better, and you might use it to get more expressive layouts at times. But it's really around that new build experience that I think you're going to see it shine, especially people putting sites on the platform that otherwise would have had to go to different tools because the expressibility isn't there, right, and you're always limited by that.

So, hopefully, it's TAM-expanding for us, which is really important. I mean, at the end of the day, if you can't make the site you wanted using the platform tools, you're going to be on another platform or you're going to go to custom code, or you're just going to settle for what's on the platform. So, I really -- I think the team has done just a fantastic job with this release, and it was -- again, we've been testing it for a while. And so, now, it's out to everybody.

Clarke Jeffries -- Piper Sandler -- Analyst

Perfect, thank you very much for the color.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Robert Sanders -- Head of Investor Relations

Anthony Casalena -- Founder and Chief Executive Officer

Marcela Martin -- Chief Financial Officer

Trevor Young -- Barclays -- Analyst

Matthew Pfau -- William Blair and Company -- Analyst

Raquel Betesh -- J.P. Morgan -- Analyst

Ron Josey -- Citi -- Analyst

Chris Zhang -- Credit Suisse -- Analyst

Josh Beck -- KeyBanc Capital Markets -- Analyst

Siti Panigrahi -- Mizuho Securities -- Analyst

Naved Khan -- Truist Securities -- Analyst

Clarke Jeffries -- Piper Sandler -- Analyst

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