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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________
FORM 10-Q
_________________________________
[Mark One]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number: 001-40393
SQUARESPACE, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
20-0375811
(I.R.S. Employer
Identification No.)
225 Varick Street, 12th Floor
New York, New York
(Address of Principal Executive Offices)
10014
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (646) 580-3456
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share
SQSPNew York Stock Exchange
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of September 30, 2022, the registrant had 88,984,890 shares of Class A Common Stock, 47,844,755 shares of Class B Common Stock, and no shares of Class C Common Stock, each with a par value of $0.0001 per share, outstanding.



TABLE OF CONTENTS
PAGE

1

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that reflect our current views with respect to, among other things, future events and our future business, financial condition and results of operations. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or phrases or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not statements of historical fact, and are based on current expectations, estimates and projections about our industry as well as certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, which you should consider and read carefully, including but not limited to:
•     our ability to attract and retain customers and expand our customers’ use of our platform;
our ability to anticipate market needs and develop new solutions to meet those needs;
our ability to improve and enhance the functionality, performance, reliability, design, security and scalability of our existing solutions;
our ability to compete successfully in our industry against current and future competitors;
the impact of the COVID-19 pandemic on how we, our providers, and consumers operate and its impact on the global economy, and the duration and extent to which the pandemic will affect our business, future results of operations, and financial condition;
our ability to manage growth and maintain demand for our solutions;
our ability to protect and promote our brand;
our ability to generate new customers through our marketing and selling activities;
our ability to successfully identify, manage and integrate any existing and potential acquisitions;
our ability to hire, integrate and retain highly skilled personnel;
our ability to adapt to and comply with existing and emerging regulatory developments, technological changes and cybersecurity needs;
our compliance with privacy and data protection laws and regulations as well as contractual privacy and data protection obligations;
our ability to establish and maintain intellectual property rights;
our ability to manage expansion into international markets;
the expected timing, amount, and effect of our share repurchases; and
•     the other risks and uncertainties described under “Risk Factors.”
This list of factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Quarterly Report on Form 10-Q. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q, and our future levels of activity and performance, may not occur and actual results could differ materially and adversely from those described or implied in the forward-looking statements. As a result, you should not regard any of these forward-looking statements as a representation or warranty by us or any other person or place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
In addition, statements that contain “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that this information provides a reasonable basis for these statements, this information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
2

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed as exhibits to the Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by the cautionary statements contained in this section and elsewhere in this Quarterly Report on Form 10-Q.
3

PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
SQUARESPACE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
September 30, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$200,480 $203,247 
Restricted cash40,831 30,433 
Investment in marketable securities27,748 31,456 
Accounts receivable, net10,014 7,969 
Due from vendors2,928 1,828 
Prepaid expenses and other current assets46,766 67,099 
Total current assets328,767 342,032 
Property and equipment, net52,379 52,839 
Operating lease right-of-use assets88,893  
Goodwill435,601 435,601 
Intangible assets, net46,778 60,138 
Other assets10,396 8,939 
Total assets$962,814 $899,549 
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Deficit
Current liabilities:
Accounts payable$10,637 $26,533 
Accrued liabilities68,797 60,861 
Deferred revenue261,192 233,999 
Funds payable to customers43,074 30,137 
Debt, current portion32,627 13,586 
Deferred rent and lease incentives, current portion 2,095 
Operating lease liabilities, current portion11,170  
Total current liabilities427,497 367,211 
Debt, non-current portion484,475 513,047 
Deferred rent and lease incentives, non-current portion 32,348 
Operating lease liabilities, non-current portion112,595  
Other liabilities356 422 
Total liabilities1,024,923 913,028 
Commitments and contingencies (see Note 11)
Redeemable convertible preferred stock, par value of $0.0001; zero shares authorized as of September 30, 2022 and December 31, 2021, respectively; zero shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
  
Preferred stock, par value of $0.0001; 100,000,000 authorized as of September 30, 2022 and December 31, 2021, respectively; zero shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
  
Stockholders’ deficit:
Class A common stock, par value of $0.0001; 1,000,000,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively; 88,984,890 and 90,826,625 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
9 9 
Class B common stock, par value of $0.0001; 100,000,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively; 47,844,755 and 48,344,755 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
5 5 
Class C common stock (authorized March 15, 2021), par value of $0.0001; zero shares authorized as of September 30, 2022 and December 31, 2021, respectively; zero shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
  
Class C common stock (authorized May 10, 2021), par value of $0.0001; 1,000,000,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively; zero shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
  
Additional paid in capital886,602 911,570 
Accumulated other comprehensive loss(5,611)(208)
Accumulated deficit(943,114)(924,855)
Total stockholders’ deficit(62,109)(13,479)
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit$962,814 $899,549 
The accompanying notes are an integral part of these financial statements.
4

SQUARESPACE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenue$217,696 $200,962 $638,160 $576,618 
Cost of revenue38,907 32,868 112,549 92,777 
Gross profit178,789 168,094 525,611 483,841 
Operating expenses:
Research and product development54,312 48,769 170,469 139,692 
Marketing and sales74,248 80,249 255,897 249,005 
General and administrative38,507 32,091 113,678 336,337 
Total operating expenses167,067 161,109 540,044 725,034 
Operating income/(loss)11,722 6,985 (14,433)(241,193)
Interest expense(5,209)(2,491)(10,977)(8,578)
Other income, net6,869 2,101 14,597 4,493 
Income/(loss) before (provision for)/benefit from income taxes13,382 6,595 (10,813)(245,278)
(Provision for)/benefit from income taxes(3,277)(3,756)(7,446)12,439 
Net income/(loss)$10,105 $2,839 $(18,259)$(232,839)
Less: accretion of redeemable convertible preferred stock to redemption value$ $ $ $(969)
Net income/(loss) attributable to Class A, Class B and Class C common stockholders, basic and dilutive$10,105 $2,839 $(18,259)$(233,808)
Net income/(loss) per share attributable to Class A, Class B, and Class C common stockholders, basic$0.07 $0.02 $(0.13)$(2.90)
Net income/(loss) per share attributable to Class A, Class B, and Class C common stockholders, dilutive$0.07 $0.02 $(0.13)$(2.90)
Weighted-average shares used in computing net income/(loss) per share attributable to Class A, Class B, and Class C stockholders, basic137,832,634 138,625,579 139,106,807 80,746,637 
Weighted-average shares used in computing net income/(loss) per share attributable to Class A, Class B, and Class C stockholders, dilutive139,667,719 143,251,717 139,106,807 80,746,637 
The accompanying notes are an integral part of these financial statements.
5

SQUARESPACE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net income/(loss)$10,105 $2,839 $(18,259)$(232,839)
Other comprehensive loss:
Foreign currency translation adjustment(2,275)(861)(5,113)(1,355)
Unrealized loss on marketable securities, net of income taxes(35)(35)(290)(126)
Total other comprehensive loss(2,310)(896)(5,403)(1,481)
Total comprehensive income/(loss)$7,795 $1,943 $(23,662)$(234,320)
The accompanying notes are an integral part of these financial statements.
6

SQUARESPACE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
(in thousands, except share and per share data)
(unaudited)
Three and Nine Months Ended September 30, 2022
Redeemable
Convertible
Preferred Stock
Class A
Common Stock
Class B
Common Stock
Class C
Common Stock
Additional
Paid in
Capital
Accumulated Other Comprehensive LossAccumulated
Deficit
Total
Stockholders’
Deficit
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at December 31, 2021 $ 90,826,625 $9 48,344,755 $5  $ $911,570 $(208)$(924,855)$(13,479)
Stock-based compensation— — — — — — — — 24,160 — — 24,160 
Stock option exercises— — 343,687 — — — — — 1,141 — — 1,141 
Vested RSUs converted to common shares— — 680,134 — — — — — — — — — 
Repurchase of Class A common stock for tax withholdings upon vesting of RSUs— — (287,455)— — — — — (7,672)— — (7,672)
Net loss— — — — — — — — — — (92,860)(92,860)
Total other comprehensive loss, net of taxes— — — — — — — — — (979)— (979)
Balance at March 31, 2022 $ 91,562,991 $9 48,344,755 $5  $ $929,199 $(1,187)$(1,017,715)$(89,689)
Stock-based compensation— — — — — — — — 27,056 — — 27,056 
Stock option exercises— — 269,064 — — — — — 969 — — 969 
Vested RSUs converted to common shares— — 827,149 — — — — — — — — — 
Repurchase of Class A common stock for tax withholdings upon vesting of RSUs— — (350,156)— — — — — (7,602)— — (7,602)
Repurchase and retirement of Class A common stock— — (1,562,460)— — — — — (35,202)— — (35,202)
Conversion of Class B common stock to Class A common stock— — 500,000 — (500,000)— — — — — — — 
Net income— — — — — — — — — — 64,496 64,496 
Total other comprehensive loss, net of taxes— — — — — — — — — (2,114)— (2,114)
Balance at June 30, 2022 $ 91,246,588 $9 47,844,755 $5  $ $914,420 $(3,301)$(953,219)$(42,086)
Stock-based compensation— — — — — — — — 24,572 — — 24,572 
Stock option exercises— — 29,797 — — — — — 48 — — 48 
Vested RSUs converted to common shares— — 237,846 — — — — — — — — — 
Repurchase of Class A common stock for tax withholdings upon vesting of RSUs— — (97,346)— — — — — (2,060)— — (2,060)
Repurchase and retirement of Class A common stock— — (2,431,995)— — — — — (50,378)— — (50,378)
Conversion of Class B common stock to Class A common stock— — — — — — — — — — — — 
Net income— — — — — — — — — — 10,105 10,105 
Total other comprehensive loss, net of taxes— — — — — — — — — (2,310)— (2,310)
Balance at September 30, 2022 $ 88,984,890 $9 47,844,755 $5  $ $886,602 $(5,611)$(943,114)$(62,109)
The accompanying notes are an integral part of these financial statements.
7

SQUARESPACE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
(in thousands, except share and per share data)
(unaudited)
Three and Nine Months Ended September 30, 2021
Redeemable
Convertible
Preferred Stock
Class A
Common Stock
Class B
Common Stock
Class C
Common Stock
Additional
Paid in
Capital
Accumulated Other Comprehensive IncomeAccumulated
Deficit
Total
Stockholders’
Deficit
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at December 31, 2020104,446,332 $131,390 8,903,770 $1 14,368,532 $1  $ $9,043 $2,455 $(675,706)$(664,206)
Stock-based compensation— — — — — — — — 9,873 — — 9,873 
Stock option exercises— — — — 900,476 — — — 707 — — 707 
Vested RSUs converted to common shares— — 525,920 — — — — — — — — — 
Repurchase of Class A common stock for tax withholdings upon vesting of RSUs— — (270,089)— — — — — (13,416)— — (13,416)
Issuance of Class C common stock, net of issuance costs— — — — — — 4,452,023 — 304,409 — — 304,409 
Issuance of Class C common stock for acquisition— — — — — — 2,750,330 1 188,178 — — 188,179 
Accretion of redeemable convertible preferred stock— 969 — — — — — — (969)— — (969)
Net loss— — — — — — — — — — (1,146)(1,146)
Total other comprehensive loss, net of taxes— — — — — — — — — (1,327)— (1,327)
Balance at March 31, 2021104,446,332 $132,359 9,159,601 $1 15,269,008 $1 7,202,353 $1 $497,825 $1,128 $(676,852)$(177,896)
Stock-based compensation— — — — — — — — 250,534 — — 250,534 
Stock option exercises— — 1,201,066 — 874,695 — — — 2,962 — — 2,962 
Vested RSUs converted to common shares— — 588,786 — — — — — — — — — 
Repurchase of Class A common stock for tax withholdings upon vesting of RSUs— — (247,120)— — — — — (12,319)— — (12,319)
Conversion of convertible preferred stock to Class A and Class B common stock in connection with the direct listing(104,446,332)(132,359)54,862,435 6 49,583,897 5 — — 132,348 — — 132,359 
Conversion of Class B common stock to Class A common stock in connection with the direct listing— — 17,382,845 1 (17,382,845)(1)— — — — —  
Conversion of Class C common stock to Class A common stock in connection with the direct listing— — 7,202,353 1 — — (7,202,353)(1)— — —  
Net loss— — — — — — — — — — (234,532)(234,532)
Total other comprehensive income, net of taxes— — — — — — — — — 742 — 742 
Balance at June 30, 2021 $ 90,149,966 $9 48,344,755 $5  $ $871,350 $1,870 $(911,384)$(38,150)
Stock based compensation— — — — — — — — 23,932 — — 23,932 
Stock option exercises— — 194,360 — — — — — 527 — — 527 
Vested RSUs converted to common shares— — 240,360 — — — — — — — — — 
Repurchase of Class A common stock for tax withholdings upon vesting of RSUs— — (95,248)— — — — — (4,142)— — (4,142)
Net income— — — — — — — — — — 2,839 2,839 
Total other comprehensive loss, net of taxes— — — — — — — — — (896)— (896)
Balance at September 30, 2021 $ 90,489,438 $9 48,344,755 $5  $ $891,667 $974 $(908,545)$(15,890)
The accompanying notes are an integral part of these financial statements.
8

SQUARESPACE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September 30,
20222021
OPERATING ACTIVITIES:
Net loss$(18,259)$(232,839)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization23,773 23,906 
Stock-based compensation75,051 284,099 
Deferred income taxes (13,755)
Non-cash lease expense2,258  
Other700 871 
Changes in operating assets and liabilities:
Accounts receivable and due from vendors(3,099)(35)
Prepaid expenses and other current assets(11,514)(18,930)
Accounts payable and accrued liabilities6,034 7,937 
Deferred revenue38,035 34,954 
Funds payable to customers12,936 13,261 
Other operating assets and liabilities(798)8,698 
Net cash provided by operating activities125,117 108,167 
INVESTING ACTIVITIES:
Proceeds from the sale and maturities of marketable securities22,740 25,605 
Purchases of marketable securities(19,444)(20,385)
Purchase of property and equipment(8,852)(6,744)
Cash paid for acquisitions, net of acquired cash (202,170)
Net cash used in investing activities(5,556)(203,694)
FINANCING ACTIVITIES:
Principal payments on debt(10,189)(10,189)
Payments for repurchase and retirement of Class A common stock(85,580) 
Taxes paid related to net share settlement of equity awards(17,334)(29,877)
Proceeds from exercise of stock options2,158 4,196 
Proceeds from issuance of Class C (authorized on March 15, 2021) common stock, net of issuance costs 304,409 
Dividends paid (367)
Net cash (used in)/provided by financing activities(110,945)268,172 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(985)(159)
Net increase in cash, cash equivalents, and restricted cash7,631 172,486 
Cash, cash equivalents, and restricted cash at the beginning of the period233,680 57,891 
Cash, cash equivalents, and restricted cash at the end of the period$241,311 $230,377 
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents$