Q4 2023 Squarespace Inc Earnings Call

Participants

Clare Perry; Head of IR; Squarespace, Inc.

Anthony Casalena; Founder, President, CEO & Chairperson of the Board; Squarespace, Inc.

Nathan Gooden; CFO & Treasurer; Squarespace, Inc.

Matthew Pfau; Analyst; William Blair & Company L.L.C.

Andrew Boone; Analyst; JMP Securities LLC

Sitikantha Panigrahi; Analyst; Mizuho Securities USA LLC

Ken Wong; Analyst; Oppenheimer & Co. Inc.

Chris Jane; Analyst; UBS

Naved Khan; Analyst; B. Riley Securities, Inc.

Alexei Gogolev; Analyst; JPMorgan Chase & Co

Presentation

Operator

Good morning. My name is Tamika, and I will be your conference operator today. At this time, I would like to welcome everyone to Square spaces. Fourth quarter 2020 13 earnings conference call. All lines have been placed on mute to prevent any background noise. After the prepared remarks, there will be a question and answer session. You would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I will now hand the call over to your host as Squarespace clear peri clear, please go ahead.

Clare Perry

Good morning, and thank you for joining square spaces. Fourth quarter 2023 earnings conference call. This is Claire Perry, Head of Investor Relations. I'm joined by Anthony Castellana, Squarespace as founder and CEO, and Jonathan Goodman, CFO. After their prepared remarks, we'll open the call to your questions. Earlier today, we posted a press release and shareholder letter to the Investor Relations section of our website. On today's call, we will 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 and shareholder letter. These measures should not be considered in isolation from or substitute for GAAP reporting. We will make forward-looking statements pursuant to this 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, our strategies and our ability to integrate new technology into our core platform.
These forward looking statements are subject 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, February 28, 2024. We undertake no obligation to update these statements as a result of new information or future events except where required by law. Please also note that all comparisons are on a year-over-year basis unless we state otherwise. I will now turn the call over to Anthony.

Anthony Casalena

Thank you, Claire, and good morning, everyone. 2023 with a strong year for Squarespace, both strategically and financially. We crossed $1 billion in revenue for the first time, growing 17% for the year. Our unlevered free cash flow margin expanded to 24%. This top and bottom line performance puts us in a Rule of 40 territory for the year. Q4 was an excellent finish to 2023 with faster bookings and revenue growth than we thought for the full year. Also aided by the addition of our customers coming over from Google made last year was also an important year for laying the foundation for accelerating multiyear growth. We began rolling out Squarespace payments in Q4, a key strategic initiatives supporting our commerce aspirations.
And I'm delighted to share today that payments is now fully rolled out to new customers in United States. We invested significantly in our Domains business as we welcome customers over from Google Domains and establish ourselves further in this space. We also launched dozens of new products and features in 2023 that make it easier than ever for entrepreneurs who lost their businesses and stand out online by leveraging in both distinctive design capabilities anywhere in our industry.
The main drivers of our business moving forward into 2020 for our first enabling small business, which is inclusive of the essential services and entrepreneur needs to get started, namely a domain website and e-mail second, commerce, where we offer powerful tools to enable customers to engage and transact via their online presence. And finally, third, international, where we're making great progress in expanding our brand and presence in both existing key markets and new ones with respect to enabling small businesses to key highlights this year with the build-out of our domains business and the launch of Squarespace blueprint, forfeit domains is now the fourth largest registrar in the world.
Renewals from migrating Google customers are going better than expected, and we're now poised to grow adoption of our broader offering as we capitalize on it, wider customer funnel and larger customer base. Major updates to our platform to interface or are launching as soon as next week and what our customers want to go to website many are onboarding is, of course, this blueprint also available in select international markets.
Blueprints guided interactive design experience enhances our users, the ability to rapidly create a distinct personalized website, and that is a natural place for us to inject an array of January of AI. Features that help guide customers through setup will be releasing these improvements throughout the year under the banner of design intelligence, which you will find a home on our prototype.
Turning to commerce, we're now offering a comprehensive set of tools that enable our customers' digital content, physical goods and services. Acuity scheduling has proven to be an important driver of GMV growth and underscores our increasing focus on services, what we believe we will offer meaningful product differentiation. Top closed out the year with a record Q4 its best revenue quarter ever, and we saw an uplift in seasonal GMD.
We believe that the product enhancements, new integration patient and an improved IOS app, further separate talk the leading hospitality solutions for restaurants and diners alike. Our largest Squarespace payments in Q4 serves as a cornerstone of our commerce capabilities. Enabling merchants to collect money directly through our native solution will be central to enhancing the power of our platform by growing GMV and driving customer growth and retention with payments now 100% rolled out in the U.S., we're turning our attention.
The key international markets payment is getting great early feedback from customers, and we look forward to building payments discount for our current customers and our broader plan offering as we move throughout the year, marking the first time we will have the ability to do that. Finally, we are excited to the efforts we have put into expanding our international offering are showing up in our performance. Our largest international markets continue to grow, and we've seen double-digit subscription growth across all key markets.
In 2023, we added 18 and currencies enabling more customers to pay in the ways most convenient for them. As we enter other decade scores basis in a better position than ever to empower more entrepreneurs online. We're looking forward to even more strong product releases in 2024 as we continue to refine the go-to market for much of what we are able to release in 2023.
Today, we're also announcing it will be holding an Investor Day at our offices in New York City on May 15th, where nascent and RT Squarespace leaders will dive deeper into our market positioning and growth drivers and opportunities for the future. Thank you all for your support. And now I'll turn it over to Nathan.

Nathan Gooden

Thank you, Anthony, and good morning, everyone. 2023 was a tremendous year. Squarespace ecosystem of products and solid execution fueled our strong financial results. We exceeded our top line and unlevered free cash flow guidance, which culminated in full year revenue growth of 17% and a 24% unlevered free cash flow margin over 400 basis points of improvement. We are driving meaningful top line growth, improving our profitability and delivering strong incremental cash flow, a powerful formula for long-term value creation.
We continue to balance our strong cash flow with sustainable top-line growth. Today, we announced a $500 million share repurchase program. This authorization underscores the strong financial momentum of our business. Our robust balance sheet and cash flow generation provide us with the flexibility to repurchase shares while continuing to execute against our long-term strategy.
We view share repurchase programs as an integral part of our capital allocation strategy, a key topic, which I will discuss more at our upcoming Investor Day in May. Turning now to the strong financial results driving our business. Q4 bookings of $286 million grew 23% as reported and 22% in constant currency. Our acquired domain assets consisting of single domain subscriptions originally sold by Google as part of our acquisition of Google Domains, drove about half of the growth during the quarter, followed by contribute from Web sites, both in presence and commerce related to our acquired domain assets. Renewal rates from this customer base have surpassed our expectations.
As a reminder, we acquired Google Domains in September 2023. This is an asset purchase with no deferred revenue. There are two primary components of the acquisition, which include the acquired domain assets and a partnership. Squarespace is the exclusive domains provider for any customer purchasing a domain, along with our workspace subscription from Google directly for a minimum of three years.
Additionally, we see benefits from Google referral pages, which direct traffic to Squarespace domains, unique subscriptions and RPUs do not include our acquired domain assets. Full year 2023 bookings were $1.1 billion, growing 19% and 18% in constant currency. The primary driver of growth during the year. With the strong retention and growth of unique subscriptions, legacy price increases across several of our website plans were another driver of our full year bookings growth. In addition to contributions from our acquired domain assets, we are delighted by the momentum we achieved through 2023, with bookings growth accelerating quarter after quarter and driving $169 million. The incremental growth in the year. Revenue of $271 million exceeded the high end of our guidance of $261 million to $264 million in the fourth quarter, which represents 18% growth and 16% in constant currency.
In addition to positive contributions from foreign exchange, we saw stronger new subscription acquisition since from websites. We continue to see a positive halo effect following our acquisition of Google Domains, where we see robust referral traffic to Squarespace.
Increases in premium plan mix and new unique subscriptions. As of year end, our customer base represented over 4.6 million unique subscriptions, up 10% and representing a net increase of 427,000 unique subscriptions over the 12-month period.
Q4 2023 revenue highlights included presence revenue of $188 million, growing 20% and 18% in constant currency and $82 million of commerce revenue, growing 14% and 13% in constant currency presence. Revenue grew from the acquisition and retention of unique subscriptions and also benefited from legacy customer price increases are acquired. Domain asset also contributed to presence revenue growth during the quarter. Revenue recognition of our acquired domain assets, where generally domain subscriptions, our annual and paid upfront is recognized ratably over the course of 12 months.
Therefore, we see greater contributions from this important customer base and our presence revenue. In 2024, Squarespace has built a strengthening diverse commerce portfolio to support our customers e-commerce needs, including physical goods and service sellers as well as hospitality customers, commerce websites, subscriptions, Acuity scheduling and talk were primary drivers of commerce revenue growth. In Q4, we saw positive contributions to GMV related revenue sharing across commerce capabilities.
In Q4, GMV was approximately $1.7 billion, growing 6%. We saw strength in acuity scheduling this quarter and talk had a great finish the year with strong seasonal uplift in reservations, leading to a record high GMB and solid subscription revenue contributions from customers. As Anthony highlighted, our full year 2022 revenue reached approximately $1.01 billion, up 17% and 16% in constant currency. We exited the year with annual run rate revenue of $1.01 billion up 19% or all $174 million year. We saw strength from websites, the largest driver of our growth, both from retention of existing, an acquisition of new subscriptions.
For the full year 2023 unique subscriptions contribute $87 million, representing 60% of our top line growth. Price increases across our subscription offerings contributed $39 million representing approximately 27% of our top line growth, with renewal rates supporting strong cash retention.
Price increases had an outsized impact on our presence revenue during the year. In 2023. The growth of unique subscriptions and legacy price increases drove record cash retention to 88%, 400 basis points of improvement versus 2022. As of year end, RPUs accelerated 9% to $228, primarily the result of the increase in revenue associated with our unique subscriptions and price increases across several of our subscription plans.
International revenue was $286 million, growing 17% and 14% in constant currency and representing 28% to our total revenue during the full year period. Strong growth in web sites across the target markets contributed to our revenue growth. In 2023, we increased our currency options five times, which alongside growing our support languages, bolsters our ability to support our international customers.
As Anthony mentioned, international is a key growth driver for our business. As we look to bring our ecosystem to new markets, we are focusing resources on markets where we see clear synergies with our differentiated design and where our product market fit as well supported, we are investing in product features, targeted marketing campaigns and building ties with Pro users through circle our partner program to deliver growth through our powerful business model we drilled from stability as a result of solid execution and operating improvements, offsetting the temporary gross profit margin impact from our acquired domain assets.
We intend to improve profitability while we continue to invest to support long-term growth and shareholder return. Turning to our margin profile. Our non-GAAP gross profit margin was 81% and full year 2023, a decline of 286 basis points. Cost of revenue increase in the year, primarily due to domain registration fees associated with our acquired domain assets. As legacy Google domain customers renew their domain subscriptions, we pay registry fees upfront, recognize associated revenue ratably over the course of 12 months. As I mentioned earlier, our customer operations costs increased on an incremental dollar basis, but as a percentage of revenue remained in line with 2022, showing that we are able to sustain it efficient model for our business as we scale, we see AI as a continued driver of efficiency in our customer operations, we have been using AI models to bolster parts of our platform and enhance our customer support for the better part of a decade.
We will continue to leverage technology to drive efficiency in our business. Moving to operational expenses, we improved non-GAAP operating efficiency in areas throughout the year, lowering expenses as a percentage of revenue in 2023, non-GAAP R&D expense was $183 million or 18% of revenue, an improvement of nearly 280 basis points, primarily due to efficient spending and cash base payroll with increased capitalization year over year.
During the same period, non-GAAP marketing and sales expenses were approximately $313 million or 31% of revenue, an improvement of nearly 400 basis points. Our marketing attribution model has been efficiently directing the mix of spend the optimal marketing channels helping us drive better ROI. During the year, we prioritize direct response channels and decrease investment in brand advertising. These changes supported increases to our growing subscription base.
Finally, non-GAAP G&A expenses were $9 million or 9% of revenue. We improved non-GAAP G&A expenses both on it dollar basis and as a percentage of revenue more than 250 basis points, primarily due to taxes in 2023, we focus on execution and efficiency, which can be seen across each of the operating expense areas.
Full year 2023, adjusted EBITDA increased 60% to approximately $235 million or 23% of total revenue, nearly 600 basis points of improvement compared to the previous year, driven by our operational discipline for this performance more than offset impacts related to the acquired domain assets and increases in employee expenses.
Turning now to the balance sheet and cash flow statement. We finished Q4 with cash and cash equivalents of approximately $258 million and approximately $18 million of available borrowing. Total debt was approximately $569 million, of which $49 million is current. I remain comfortable with our leverage ratios today with net debt to our trailing 12 month adjusted EBITDA at 1.2 times as of year end, we delivered strong cash flow in 2023, surpassing the high end of our guidance.
Our cash flow from operating activities grew 41% to $231 million. We generated strong unlevered free cash flow of $241 million for the trailing 12 months or 24% of total revenue growth rate of 46%, surpassing the high end of our guidance. The outperformance was primarily due to strong bookings driven by renewals and acquisition of our website business are consistent levels of positive unlevered free cash flow afford us opportunities to innovate and develop new products where we see opportunity to provide more value to our customers and to plant seeds for long-term growth.
In 2023, we returned approximately $26 million of cash to shareholders under our current share repurchase authorization. This represents purchases of approximately 1.3 million shares at an average price per share of $22.17 on the open market at year end, we had approximately $54 million remaining on the current authorization.
The shares repurchased in 2023 and anti-dilutive impact and offset some of our stock based compensation grants. Turning to our guidance for Q1 and full year 2024, we are expecting another year of strong growth for Squarespace, driven by our expanded ecosystem contributions from new in Google domain customers and the continued strong performance of our website business.
In Q1 2024, we are targeting total revenue in the range of $274 million to $277 million. This represents 16% growth at the midpoint. We expect unlevered free cash flow during the quarter to be in the range of $83 milion to $86 million, which implies an unlevered free cash flow margin of 31% at the midpoint of the range.
Our Q1 unlevered free cash flow margin reflects the seasonal strength in bookings, including the added benefit of bookings from our Google Domains asset acquisition. For the full year 2024, we expect total revenue to be in the range of $1.17 billion to $1.19 billion, representing growth of 17% at the midpoint of the range. Unlevered free cash flow is expected to grow through the year to the range of $290 million to $310 million and implies an unlevered free cash flow margin of 25% at the midpoint of the range related to the full year revenue guide, we expect contributions from our Google Domains assets to be in the range of $85 million to $88 million. I want to call out that we are not including any material contributions from either pricing of our core offerings or cross-selling of Squarespace products to our little main customers in our revenue guidance.
Adjusted EBITDA is expected to improve as the year progresses, ultimately showing some leverage to our full year 2024 from improved marketing efficiency in the second half of 2024. Finishing where I started, I couldn't be more proud of our performance in Q4 and 2023. Our teams helped drive steady performance, enabling us to maintain a strong outlook and steadfast execution.
2023 was my first full year as CFO at Squarespace. It is clear that we have a strong foundation and for growth supported by our growing Squarespace ecosystem and suite of products. Thank you to our employees who execute daily to deliver value to our customers. I look forward with confidence and excitement in this new year. With that, operator, please open the line for the Q&A portion of the call.

Question and Answer Session

Operator

Matt Pfau with William Blair.

Matthew Pfau

Great. Nice results and thanks for taking my question. First, actually, I too wanted to ask related on payments out migrating existing customers over to Squarespace payments and then into both from score spaces perspective as well as the customer's perspective, what would the advantages be to moving from a third-party payment system and over to Squarespace payments? Thanks.

Anthony Casalena

Sure I can take that. And so one of the things that we haven't talked about up to this point is what the release of payments can do to our plan and offering architecture. So in the past, we've talked about costs experience, which is better. Everything being integrated. They don't have to get more than one place. Obviously, we have some better economics with it. But as we roll this out, we've been spending we can give people on higher SaaS peers and more advantageous take rate than they currently get right now. Via the strike relationship. And so that sort of begins to kind of answer both of your questions at once, right. So your first is about migration in the second is why do it? So you don't see it in the plan architecture now, but that is something we're going to be actively working on and test that we can deploy that.
And if you look across our competitive set and a decrease, take rate is probably in multiple cases, the very first line item on widened. In my opinion, one of the reasons why I think, you know, certain larger sellers are people who would adopt and linking our invoicing products might not use Squarespace might not even be in our ecosystem. So we have a lot coming there, and it's just a huge unlock for us. So right now, we're just we're focused on making sure that the systems we wouldn't be at 100% U.S. rollout and Internet moving into all of our international markets and then integrating that to our plan architecture.
So that's all just frankly, super exciting. And we're all spending a lot of time here looking into it.

Matthew Pfau

Okay. So just to follow hedges, pricing, perhaps what does that meant and customers that have been exposed to Squarespace payments coming into your or your customer ecosystem?

Anthony Casalena

So what I'm talking about is not something you see in production right now. So this is something we have the ability to do and are currently contemplating it in our rebundling and you know, just new new offerings as we as we continue to shape the commerce product that is not currently out.

Matthew Pfau

Great. Thanks for taking my questions.

Operator

Thank you. Your next question comes from the line of Andrew Boone with J&P Securities. Your line is now open.

Andrew Boone

Thanks, much for taking my questions. I may. Can you unpack the 2020 for guidance, given the fact you've given us kind of domains revenue, is that 8% kind of high single digit number right to think about for 2024? Is there anything else we should consider as we're doing our math? And then Anthony, on domains. Can you just help us understand where you on that cross-sell into other Squarespace products and what the strategy is there? Thank you so much.

Nathan Gooden

Yes. Thanks for the question, Andrew. So for '24 guidance, Jim, we certainly into '23 very strong. It was an incredible year at 17% year over year growth rate, which was driven by the top driver of our core business of the retention of our existing, an acquisition of new against the backdrop of rising electricity prices. So as we go into two 2024 18% growth at the top end of the range is really driven a combination of what we disclosed for Google to name, but that core business coming through. But we are lapping the pricing. And so you will see that impact in the 2024 guide as well. As I said in my opening remarks, we've built immaterial cross-sell for the Google Domains. I'll let Andy talk really the focus of migrating those domains.
Yes. And just to reemphasize, in 2023, we saw some of the strongest quarters ever, including COVID quarters in our core business. And so, you know, I'm sure we'll get to it later, but we've built it and really no material that changes in the '24 guidance due date anymore pricing changes other than an update to some of our customers who are currently not list, that will be at least, but that is that is not a single digit millions sort of thing. We talk about pricing and pricing strategy later. And to your question on domains and cross sell. So right now, the answer is nowhere because we're still in the process of migrating everyone over relief. We have a new interface coming on next week, which to be kind of the foundation for more cross-sell and upsell what we're really just focused on a seamless transition, making sure everything is working perfectly to make sure that no interruptions and we'll be doing after the next couple of months. And then after that, we'll be thinking more about cross-sell and upsell. That being said, we do have a elevated at new stream of new domains coming in.
They we are seeing attach rates into as Googling website products at four, and that is greatly elevated versus last year. And the early results, considering we're literally doing almost nothing is encourage the encouraging that what they're attaching. I mean, the thesis here is not really like to hard hitting all small businesses in the world, need domain, a website and e-mail. And so we're just refining the offering there, and we're going to have plenty of opportunity later and throughout the year and throughout these customers lifecycles to get them into that a trifecta of products.

Andrew Boone

Thank you.

Operator

Siti Panigrahi with Mizuho.

Sitikantha Panigrahi

Thanks for taking my question. And thirdly, and of course, this has been a pioneer in website building on the always differentiate yourself from this crowded market competitive market. So now the question we're getting with this emergence of a new competition to us now leveraging a I am wondering how you're positioning yourself from the pack and all some of the investment you did on the AI side. Could you talk about how the product in our chain changes right now that you're offering? And also in terms of go-to-market what you are doing?

Anthony Casalena

Yes, sure. Thanks for the question. At refresh last year, which is just it really kind of on this a couple of months ago, we have some demo. Video is about how we plan on and have incorporated a I advancement into the product. I mean, Squarespace has always had a machine learning group here and which we use insights from to Thanks in the setup experience.
So I think a couple of things to first of jumping back to your original kind of positioning as Squarespace, which is how I believe we're positioned to, which is that we're really the leader in design and we're the leader in, I believe, quality and all of the things we do. So coming over the next couple of months, you're going to see more ongoing releases compared with the FDA status. And ongoing process were always releasing. Things were always updating things. It's not this big bang. Now a tiered were done sort of situation, but we're going to be releasing and a number of incremental improvements under the banner of sort of design intelligence. We're calling it.
So it's really not just the fact that AI. is there. It's the combination of AI., which us and all these smaller startups have equal access to with a tool and it taste level that is really, really, really incredible. I think you can't just have a I generate the code for your site have no tool, no posting no domains, no order management, no e-commerce capabilities like you have to build all this stuff. And of course, it has an amazing technology stack that we're building on top of. So we're constantly releasing a I improvements into our editor into blueprint into setup. We have new services going online.
They understand the context of your brand and kind of start to help you automatically put that into prompt, you build your site. So a lot of releases. I agree. I take I look at the refresh stuff and then office. Stay tuned for that design intelligence appearing on the front side. That's really how we are going to continue to integrate a I guess anything, but just one more thing on this is that a lot of the magical stuff people see with mid journey attack, GBT. or whatever. We've integrated a lot of that into the interface, which is a convenient staying, but also keep in mind that I think this is directionally correct, don't quote me exactly, but like a third or a third of Americans have used chat GPT. So whatever they're getting there, if that's not augmented with a great tool is just a commodity at this point. So we're looking at and make sure our integration of AI. isn't the same tricks. We see everyone use and is something genuinely useful for our customers.

Sitikantha Panigrahi

That's great color. And then just quick housekeeping one question. So I don't know if you talked about the Google Doman impact on revenue and gross margin in Q4.

Nathan Gooden

Yes, happy to unpack that a little bit there. As a reminder, the for Google Domains, you will see the impact of revenue. We recognize that over 12 months. So you'll see the initial impact in bookings, which we saw 20% year over year. Growth in bookings in Q4, which is predominantly driven by the group, remains that the revenue impact you will see over time, there was an 820 basis points of degradation in our margin, which we were not surprised by that because we recognize the registry cost upfront, whereas revenue is recognized over time. So you'll see that continue in the first half of 2024 (technical difficulty) . And then as we lap the anniversary for both,

Operator

Please standby actually reconnect our speaker line. Speaking to you have been reconnected. Please proceed.

Nathan Gooden

Hey there. Sorry about that. And so I'll take it from the top on the pricing question again. And so first off, I had spent about it. It will be two years since our original price increases in August in August and September in that timeframe and also referenced was at some people picked up on a list price tests that we were doing about a month ago. So first off, we're always doing price testing. We have tons of price tests in the market. The one that was being observed is a pretty slight increase. So I think there's like 5%, 10% across the board. Certain plants changing more than others. It's something like that ends up being successful and we can move up list prices for new customers in that August, September timeframe. That would mean that everyone is then again below list, and we would have another opportunity to hopefully do a really marginal the price increase again.
But of course, this has joined implications and '25 and '26 because it affects millions and millions and millions of people. And just to remind everyone, we saw a really positive back retention dynamics when we did this last time. And so I would like to think that that will be the same or better this time around means it's not the very first price increase. The other thing I would mention is, again, going back to payments and what this can unlock with respect to a broader pricing strategy, us being able to change the take rate as part of the SaaS tiers and contemplate different platform fees on different ways to transact is a huge change, and we couldn't do it before because we didn't have this end market.
And so what are the biggest things that I'm sure because you are watching the pricing picture probably by the test on is on plan is that are differentiated based on take rate and platform fees. And that will hopefully allow us to introduce commerce to basically everyone using the platform and just differentiate based on take rate. So you'll be able to use invoices, donations classes in courts to sell physical product, sell services, book appointments all across Squarespace. And and you just got a lower take rate with a higher Sassy. So that's kind of what we've got in store for pricing. I mean, in my mind, once every two years doesn't feel particularly aggressive with respect to a modest increase in price.
So yes, that's kind of how we're how we're adjusting and it needs. And none of that is built into guidance except for a tape and the cohort of people who are not currently at the previous list price. Correct. But is it immaterial to the 2024 guide at single-digit millions.

Sitikantha Panigrahi

Okay. That's really helpful. A follow-up on the Swiss-based domains experience and some of the work you're doing there. I'll jump in the fourth largest registrar business. Now anymore color you could share around what what that experience like, how it's changed in differentiating as a registrar business to drive more traffic you guys versus US and the other competitors?

Nathan Gooden

Right now, most of our efforts have been on making sure the migration of the successful and also improving our interface for people who were interested in having a domain and e-mail or I know website or multiple domains are worth, yes, domain that forwards elsewhere, our et cetera. So again, I think as early as next week, you may see a new interface starting to rollout, which is just a big upgrade on everything that's going on in the majority of the customers moving over from Google will experience that interface. The migration is and started from. But there is, you know, it's a small percentage of the actual number of domains and have actually moved over right now. We're just being really careful any goal.

Anthony Casalena

I will say since we closed the transaction in September, we are seeing very good retention of the legacy business that continues to exceed the expectations that we had to close the deal. So happy with for all transactions where it's trending.

Sitikantha Panigrahi

Thanks so much, guys.

Operator

Thank you. The next question comes from the line of Ken Wong with Oppenheimer. Your line is now open.

Ken Wong

Great. Thanks for taking my question. I wanted to maybe just kind of dive in on the fiscal '24 revenue guidance. Again, one way I think we typically think about the growth rate of revenue. Is that kind of bookings lead revenue? You obviously exited with it with a really high 23% bookings growth rate. I guess why wouldn't we think of Radian closer to that number? Is there something missing in terms of the all the revenue lag or what might be in bookings versus versus top line?

Anthony Casalena

Yes. A great question can be. So the 23% year over year bookings in Q4 that we saw on the top driver of that was what Google Domains flowing through. The second driver being our core business as that flows through to about '24 because we recognize the revenue from Google over 12 months, you don't see that tick up really until the last half of the year when we lap the the acquisition. And so the last latter part of this year, you will see improvement on that side.

Ken Wong

(technical difficulty) Got it, but at a high level, but all kind of that booking lead revenue shouldn't be too much of a stretch like are granted as maybe some ups and downs depending on quarter. And obviously, you've got some from acquisitions that we have the kind of worked through.

Anthony Casalena

Correct. That is can that is the essence of our model.

Ken Wong

Okay, perfect. And then maybe just a follow-up for you, Anthony, on the again on the on the domain side, now that you guys have harmonized the experience, you get that taken ownership of it from Google, like are you seeing a similar kind of customer funnel coming in? I realize the retention has been really good, but I'm just wondering in terms of kind of a new lead gen and that's been consistent with expectations when you when you purchase the asset.

Nathan Gooden

The new lead gen remains greatly elevated over our stand-alone business from last year. And that elevation has been sustained. I think it and the attach rate on those new customers, we're monitoring very closely, even though we do not have an optimized experienced there just to reemphasize that we have not currently migrated over most Google Domains. We've migrated a minority over and we have an interface out there that does not prioritize cross-sell and upsell that you'll see something appear again within a week or so. It doesn't have much better job at that. So it's in it's just extremely early days on by in terms of how we're positioned. This fits into my mind is that trifecta things, all small businesses need a website, e-mail and the domain. And so we're going to continue to iterate on that experience. But yes, the funnel increase of new customers and really, really encouraging. It'll only get better as we solidify the domains offering and get better as your optimization refined our packaging and offering it. But it's just, you know, it's really, really early days. So I think the revenue in the bookings are seeing are great, but I think the best is yet to come.

Anthony Casalena

And I would layer on that. It is important as you think about the guide because we are very focused on the migration that that is a successful customer experience becoming a Squarespace customer. That is why we've not included the cross-sell impact from these millions of customers coming into the square feet. Yes,

Nathan Gooden

The guidance we're able to cross-sell the air because we just need to observe it.

Ken Wong

Yes, yes. Perfect. Thank you, guys.

Operator

Thank you. Apologies for. The next question comes from the line of Chris Jane, UBS.

Chris Jane

Thanks for taking my question. So I wanted to hear your perspective on the vertical verticalization in less than builders and pretty notably in the POS software industry. And I guess, particularly by some of the leading restaurant POS providers offering less homebuilders for, for example, with on Clover Go to the market with Bendel box post and shift for having recently introduced less of bidders for their restaurant customers. And of course, Square has had quickly and squarely aligned for a while. So those are not their core business, but those are tightly integrated POS off those restaurants used to run their business day in and day out. But maybe can you share with us we've seen an increase in competition from on these types of our vertical software providers, hospitality and maybe some other vertical and also can you discussed in the cross-sell between Park and you're on existing less that product.

Anthony Casalena

Sure. We generally have not observed a large amount of competition, when and e-mail marketing companies or other companies to put us out, companies want to offer a website with their core offerings. In fact, the kind of reverse economics should be true like it certainly isn't Squarespace. I mean, you know if the website right now is, yes, 20, 30, 40 hours in month that talk subscription is 100 and the GMV play into the platform is what's really important and frankly, how a lot of these businesses are driving there. Their choice of tools, right? It's kind of inverted from website first and then the rest of the tools so that we certainly see that. I think what's interesting is for us as we get kind of more vertical scalable tools in place, like, for instance, our email marketing tools and can further integrate those with talk that kind of upsell is much more of what we'd be looking to do versus having, you know, a couple of thousand additional websites from the restaurant customers.
So, you know, I mean, if a vertical provide a status of a few thousand websites, it's really kind of immaterial to us. But that being said, there was always a giant overlap between talking squared. It's just organically and kind of talk restaurants, of course, having their own brand used Squarespace. And so that's where a lot of that came from originally. But the cross-sell we're looking for is more higher margin, higher value products, not now necessarily. Yes, the website, SaaS subscription.

Chris Jane

Got it. That's very helpful, Anthony. And I guess a follow-up would be maybe just can you talk about the top of funnel strength in the core less deposits so far this year, given Q1 is such an important quarter? Yes, it's really strong.

Anthony Casalena

And you know, again, I mentioned multiple times that last year, we had some of our best quarters ever from new trust of trials created. We're just kind of where what we are two-thirds through Q1, and it's a it's been really positive sign. So we're on track.

Chris Jane

Great. Thank you.

Operator

Naved Khan with B. Riley Securities.

Naved Khan

Good. Thanks a lot. So two questions. one on on on your marketing spend as a percentage of revenues, which was elevated versus Q4 of '22, is that just the privately leaning into marketing because you see opportunity? Or is it more of a channel mix? Just wondering what's going on or maybe associated with the push into acuity and so that's that's one. The other is just unknown, our new markets. Jonathan, the any thoughts on like maybe going into any new international markets home in 2024?

Nathan Gooden

And so I'll start with your on the marketing and sales question specifically on Q4, there are several things rolling through there. The amortization of the additional expense related to the Google acquisition roll through their seasonality. We do on Q1 is historically a high dose. And so we spend into that in Q4. Obviously that's not a surprise, but I would encourage you to look at the annual for marketing to help lead our ratios because there is seasonality within each quarter. But on an annual basis, you'll see a marked improvement both on golf GAAP and non-GAAP.

Operator

Please ensure your line is unmuted if there is a follow-up.

Naved Khan

Yes, I do that as a follow-up for Anthony. Tom, just about any plans to enter a new international market in 2024.

Operator

Apologies, Snohvit and participants, please hold as we reconnect our speaker lines. Once again, please hold as we reconnect our speakers lines. Now that please restate your question. Our speakers have rejoined the line.

Naved Khan

Yes. My second question was for plant about if you have any plan to add a new market, a new deal in 2024.

Anthony Casalena

Yes. I think nascent nascent comments apply that to the spend overall. So I'll bridge into international or just kind of comment on because generally, you see inefficiencies in our spend. It is because of us trying to grow and international market where we don't have the same spend dynamics and presence as in the US. And yes, we're looking at a couple of different Asian markets, one in particular, as we go into 2024 or it's a heavier lifting in terms of translation, but should be an exciting one for us.

Naved Khan

Thank you.

Operator

Thanks. The next question comes from the line of Alexi Coke left with JPMorgan. Your line is now open.

Alexei Gogolev

Hello, everyone. I was wondering if you could possibly comment and what was the contribution of payments business on that basis than the fourth quarter? And what do you expect the contribution for the payments business on a net basis to be in 2024?

Anthony Casalena

Yes, both for 2023 and 2024, it is immaterial onto the results and to the guide, we are focused on that, you know, exposing it to have first, the U. S new customers as we have successfully done in the rules, allowed international markets and '24 and then open up to exist. So you won't see a material impact until '24.

Alexei Gogolev

Okay. Thank you for that. Thanks, And then Anthony, I had another very high level question around the the comment of your capital allocation. Obviously that the $500 million buyback sounds very impressive. I was wondering if first of all you have any thoughts on the potential cadence where whether it will be front loaded or evenly split over a certain period of time?
And then what's your thinking around the potential impact on free float, which is relatively lower versus some of the peers?

Nathan Gooden

Sure. So we have the $200 million authorized from a year-and-a-half two years ago, which is expiring. So this is our refreshing and it's more is opportunistic. And if we see things floating into certain levels, much like you saw with over two years, yes, we're able to show our support for the stock and buy into it. And there is no specific cadence that there's no, there's nothing around that that that's being contemplated,
And I should also emphasize that this will probably be an ongoing portion of the house Squarespace operates in terms of return of capital, and it shouldn't be viewed as being instead of something else. It's not instead of us buying something. It's not instead of us growing headcount as you've seen over the year as we've been really, really disciplined about moving free cash flow up. And it's just one of the many things we can do with that. Also, I think they've been quoted are net debt leverage ratio earlier. It's very, very low. So we're not stopped from doing anything because of this, and it's just a component of how we're going to operate in addition to expanding margins.

Anthony Casalena

Yes, I would layer on that. I'd like to say you should we would do the share repurchase program. And as an integral part of our overall capital allocation strategy Investor Day in May, we will talk more about our overall philosophy around capital allocation.

Alexei Gogolev

Thank you, Bill.

Operator

Thank you. this will conclude today's conference call. Thank you all for joining, and you may now disconnect your lines.