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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
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Good morning. My name is Alex, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Squarespace's Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] After the prepared remarks there will be a question-and-answer session. [Operator Instructions] Thank you.
I will now hand the call over to your host of Squarespace, Clare Perry. Clare, please go ahead.
Good morning, and thank you for joining Squarespace's fourth quarter and fiscal year 2022 conference call. I'm Clare Perry, Investor Relations Manager. And with me today are Anthony Casalena, Squarespace's Founder and CEO; and Nathan Gooden, CFO. After their prepared remarks, we will open the call to your questions.
Earlier today, we posted a press release and shareholder letter to the Investor Relations section of our Web site. On today's call, we will be referring 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, which can be found in the Investor Relations section of our Web site. These measures should not be considered in isolation from, nor a substitute for our GAAP reporting.
We will make forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, which include, but are not limited to, statements related to our future financial performance. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are further defined in our most recent 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, March 7, 2023. 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 specifically noted otherwise.
I will now turn the call over to Anthony.
Good morning, and thank you for joining us today. 2022 was an extraordinary year for Squarespace, and I'm proud to announce very strong Q4 results alongside a positive outlook for 2023. During Q4, we achieved record bookings of $232 million, growing over 18% year-over-year in constant currency. This growth speaks to the enduring ways our products help our customers succeed online at a moment when digital presence is central to how entrepreneurs engage with our audiences. Commerce revenue grew to three-year CAGR of 42% bolstered by new commerce subscription growth as a view to prioritize tools and features for entrepreneurs everywhere.
The growth in our commerce revenue continues to outpace our presence revenue growth. Our Q4 unlevered free cash flow was more than triple the amount last year, resulting in an overall unlevered free cash flow margin of 19% for 2022. We plan on continuing our disciplined approach to balancing cash flow growth and revenue growth, and improving this margin in 2023 by continuing to improve operations, growing our product lines, and continuing to invest both domestically and internationally. Our outstanding results are a testament to the power of our products. They are influenced by our rapid pace of innovation as we delivered new technology and drove improvements across our entire platform throughout the year.
In September, we introduced Squarespace Refresh, our annual recap of product releases. This year, we highlighted more than 100 improvements across the platform. These releases included Fluid Engine, a new design system for building pages on Squarespace which represents one of the biggest changes that we've brought to our content management system in a decade. Fluid Engine drove measurable usability improvements for our customers and pro community while also expanding the number of designs our customers are able to create. We've been consistently updating it since launching over the summer, and continue to receive positive feedback from our customers.
We believe with the improvements we've made to the platform in 2022, that we are both the easiest to use and most expressive content management system on the market. Last week, Fast Company named Squarespace as one of the world's most innovative companies in 2023 for our ecommerce improvements. Custom merchandize, our print-on-demand service, video hosting, and our expanding payment tools provide digital-first entrepreneurs with the technology they need the monetize content and create new revenue streams. Our decade-plus investment in digital commerce helps customer retool their businesses with Everything to Sell Anything.
Our product investments for service-based sellers have improved immensely in 2022, and we're delighted by the recognition. Our growing set of products and corresponding investments in new go-to-market initiatives continue to strengthen the underlying drives of our business. Our commerce capabilities, international expansion, enterprise initiatives, and our pro user community circle remain key to our future growth. We made progress on advancing each throughout 2022. Our commerce revenue growth continues to be an important driver of our business. Commerce Web site subscriptions represent an increasing percentage of our total Web site subscription mix and its mix shift to commerce is one of the main attractors why average revenue per unique subscription increased by 3% year-over-year to $209, in 2022.
This continued remix to higher value services will continue to boost Squarespace's business in 2023, and beyond. Tock, our platform for managing hospitality and time-slotted businesses also had a standout year. It processed record levels of GMV on its platform, and tens of millions of diners booked reservations through Tock in 2022. Matt Tucker, former President and COO of Olo, joined at the end of the year to drive Tock's next stage of growth. And I'm excited about the progress he's already made in his short tenure. Acuity Scheduling, our product for customers managing calendar-based businesses also had a fantastic year.
We recently welcomed Dan Chandra, who brings over 15 years of experience with time management software and payment solutions to our team to lead Acuity to its next stage of growth, and we're excited for what's to come. Acuity benefits greatly from the integration with and funnel from the Squarespace platform, and we look forward to continuing both these integration efforts as well as growing Acuity as a standalone brand. Many large customers may not use Squarespace as their Web site provider, and we want to make sure our product lines can grow independently of one another when we have that opportunity.
International remains a greenfield opportunity for Squarespace. Last year, we expanded language support with three new languages, and added the ability to host multilingual Web sites on our platform. International customers represented about 30% of our total bookings. Throughout the year, we developed tailor-made marketing campaigns for key markets, and we anticipate continuing to scale investment in these markets where we saw opportunities to grow.
Our professional partner community, Circle, also had a great year, and we hosted our first Pro User Day, in 2022, for our Circle members. Over a thousand members participated in the event, with 150 joining us live in New York. We continue to invest in tools for this community as pro users have always been important to our growth. Currently, our Circle community accounts for over 9% of new sites created on our platform. Releases like Fluid Engine do not just target consumers, our Circle community uses the same tool to produce a wide variety of sites for clients, and we're delighted to hear their positive feedback. 2022 was a building year in Enterprise. We strengthened our team, advanced our sales enablement assets, and released new product features to support enterprise clients.
We launched a shared template store, new dashboard features which included additional functionality around permissioning and analytics, and improved features related to single sign-on, used by many enterprise customers. Progress toward Squarespace Payments continues, and we're still on track on launch our service in the back-half of 2023. As we continue to move more payment volume on to our platform, Squarespace Payments represents an important piece of the customer experience we ultimately want to deliver. 2023 is set up to be a fantastic year for our company. As Squarespace, we see a future where everyone can be entrepreneur, and we remain excited to continue to deliver exceptional products that help millions as they embark on that journey.
I'll now turn it over to Nathan to go through the financials.
Thank you, Anthony. Today, we reported a strong fourth quarter, which culminated in a strong year for Squarespace. Both our full-year 2022 and Q4 results exceeded our top line and unlevered free cash flow guidance as we closed 2022 with revenues of $867 million, up 11% and 14% on a constant currency basis, with a 19% unlevered free cash flow margin. These achievements speak to Squarespace's solid financial profile. We are driving growth and generating positive cash flow, a combination that affords us the opportunity to deliver more to our customers in 2023, and continuing to deliver for investors.
I can tell you after working with the team these past five months leaves me energized by the incredible opportunity ahead of us today. I am confident in the vision we have guiding Squarespace, one which prioritizes innovation for the benefit of customers, and empowers their entrepreneurial aspirations with the tools they need to stand out and succeed. Q4 bookings, of $232 million, grew by 15% as reported and 18% in constant currency, a sequential increase from the 10% and 14% constant currency booking growth in the third quarter of 2022.
Full-year 2022 bookings, of $906 million, increased 11% as reported and 15% in constant currency driven by growth in unique subscriptions and in our hospital services through Tock, as well as the successful implementation of price increases for both new and existing customers. We are delighted by the momentum we achieved in 2022 as bookings increased through the year. Revenue of $229 million exceeded the high end of our guidance of $219 million to $224 million in the fourth quarter, which represents growth of 14% in constant currency. Since providing guidance in November, foreign currency fluctuations positively impacted our fourth quarter revenue by $1.6 million.
Our Q4 results were driven by strong customer retention and acquisition, along with the continued success of legacy pricing initiatives which we initiated for existing customers at the end of Q3. We continue to see better-than-expected retention from our stable base of over 4.2 million subscriptions as we methodically roll out that price increase. Our product offering, more powerful than ever before, provides an essential service to our customers.
International revenue was $244 million for the year, representing 2% growth, and comprised 28% of total revenue. Excluding the FX impact, international revenue would have comprised 30% of total revenue, and grown at 14% on a constant currency basis. From a product and partnership standpoint, we are making consistent progress in our efforts to drive new international customers. We are now supporting multilingual extensions in 100% of our target markets. We have localized payment mechanisms, and we have added other localization features that fine-tune our platform's suitability to the needs of entrepreneurs globally.
Though we are still in the early stages, as we look forward, international expansion will be a key growth driver for our business. As Anthony said, commerce continues to be a driver and focus at Squarespace as we roll out more solutions to help our customers transact online and engage with their audiences, enabling the sale of merchandise, time-based services, and content.
In Q4, Commerce revenue was $72 million, growing 12% and 14% in constant currency. Commerce subscriptions, Tock, and our scheduling product drove growth in the quarter. Our Commerce revenue includes contributions from GMV-related revenue share resulting from the value of services, merchandize, and digital content. GMV was $1.6 billion in the quarter, down 11% due to lower transaction volume from our scheduling product and commerce Web site subscriptions.
This result is consistent with the guidance we provided during the last quarter and in line with our expectations. Scheduling showed particular strength in Q4 2021 setting up Q4 2022 for a tough comparison. Despite the slowdown from scheduling in the quarter, we saw strength from Tock. Tock had its highest quarter ever for GMV as more businesses choose Tock to help manage time-based reservations and events.
We believe we have a significant opportunity to provide further value for service-based businesses selling through digital channels as we prioritized investments in Tock and scheduling products in 2023. We are encouraged by the continuing trends we are seeing within our Web site subscriptions with a greater proportion of customers using our higher valued plans compared to prior years.
We believe this demonstrates a greater intent to sell as these offerings include fully integrated ecommerce options and other features that enable digital sales. I believe ARPU is a useful metric in evaluating our ability to sell higher high value plans, add-on subscriptions, and hospitality services. At the end of 2022, ARPU was $209 representing an increase of 3% from $203 in 2021.
Growth in ARPU is due to an increased mix of higher tier plans across our Web site subscriptions, planned pricing increases, and the continued growth of our commerce offerings and attached products. As well, as the addition and subsequent growth of Tock which began impacting revenue in Q2 2021 following its acquisition. Our model benefits from our ability to sell more to customers and also from new customers joining our platform.
Unique subscription surpassed $4.2 million at the end of 2022, growing 3%. We have noted softness impacting overall unique subscription growth throughout the year from Unfold, our product that helps customers manage their social media presence. Unfold subscriptions are substantially lower in dollar value than other subscriptions we offer. Unfold's application has been impacted by increased competition in the App Store and a greater evolution of trends on social media.
Despite this slowdown, we are excited about Unfold's Bio Site product. Bio sites are mobile first one-page Web sites. With a Bio site, customers can create a simple web presence, accept payments, connect across social platforms, and grow their audiences with one URL. Full-year adjusted EBITDA grew to $147 million representing a 17% margin. A 106 basis points of improvement compared to the previous year and 18% growth driven by our operational discipline.
As a result of our annual impairment analysis, we incurred a $225 million non-cash goodwill impairment charge primarily due to market values deteriorating subsequent to our acquisition of Tock in March 2021. The impairment charge impacted our operating expenses for the quarter and year. Moving beyond top line metrics, we delivered non-GAAP gross margin of 84%. Down approximately 130 basis points year-over-year as we prioritized faster and more scalable deployment through cloud-first delivery.
Gross margins are also impacted by Tock's hospitality business on account of its payments business. In 2022, we delivered a non-GAAP operating margin of 17% which represents expansion of approximately 430 basis points compared to the previous year. And excludes the impairment charge we incurred in Q4. We improved non-GAAP operating efficiency as we reduced marketing and sales expenses throughout the year, and in part by focusing our investments in areas that drives subscriptions and continuously adjust for demand.
We drove efficiencies in our marketing and sales spend throughout the year. And, delivered over 600 basis points of year-over-year improvement on a non-GAAP basis in 2022 where non-GAAP marketing and sales represented approximately 35% of revenue. Additionally, we reduced G&A expenses by 75 basis points to 11.5% of revenue on a non-GAAP basis.
We realized this operating leverage while still investing in our future growth as we increased our R&D spend to 21% of revenue on a non-GAAP basis, up 125 basis points over 2021 and in line with the outlook we provided last year. Throughout the year, we took a disciplined approach to our expenses with intent to drive improvements from our 2021 expense allocation in line with where we saw opportunity for future growth.
Turning now to the balance sheet and cash flow statement, we finished 2022 with cash and cash equivalents of $197 million and investments of $32 million. Our total debt was $514 million of which $41 million is current. Our cash flow from operating activities grew 33% to $164 million. In Q4, we generated strong unlevered free cash flow of $41.5 million for the trailing three months or 18% of total revenue, a growth rate of 217% to surpass the high end of our guidance. The outperformance was due to higher bookings, driven by strong customer retention associated with Lexi pricing increases and favorable FX rates combined with operational efficiencies. We continued our share repurchase program authorized by our Board of Directors in May, which underscores the confidence, leadership has in our business and Squarespace's opportunity for future growth.
As of December 31, 2022, we returned over $120 million of cash to shareholders under the current authorization. This represents purchases of approximately 5.5 million shares at an average price per share of $21.28 on the open market. At year-end, approximately $80 million remained available for repurchase. The shares we purchased in 2022 had an anti-dilutive impact and more than offset our stock-based compensation grants net of forfeitures and expiration.
Turning to our guidance for Q1 and full-year 2023, in Q1 2023, we are targeting total revenue in the range of $232 million to $234 million. This represents 12% growth at the midpoint. We expect unlevered free cash flow during Q1 to be in the range of $63 million to $65 million, which implies an unlevered free cash flow margin of 27% at the midpoint of the range.
For the full-year, we expect total revenue to be in the range of $955 million to $970 million, representing growth of 11% at the midpoint of the range. Unlevered free cash flow is expected to grow throughout the year to the range of $183 million to $198 million, and implies an unlevered free cash flow margin of 20% at the midpoint of the range. This outlook is constructed from our stable recurring revenue model, 92% of revenue coming from subscription revenue and our continued commitment to operate our business with a focus on balancing profitability and investment.
In constructing our guidance, we assumed continued positive impacts from our legacy price increases and a customer demand trajectory, which continues at a similar rate. We also assumed FX rates as of the end of February. We look to sustain profitable growth for our business and expect to maintain a 2023 non-GAAP gross margin similar to the strong margin we delivered in '22.
We expect to see continued improvements in our marketing sales expense throughout the year. We balance this efficiency with increased R&D expense as a percentage of revenue as we invest for growth, we are always keeping an eye on the bottom line to rationalize spend, and ensure our resources are aligned with strategic priorities.
Operating through the lens of scalable and profitable growth remains true to Squarespace's core and is evidenced through our financial results. We believe we are in the early stages of addressing a large and growing global opportunity for our services and our technology has the ability to scale and empower millions more customers in the future.
Our results demonstrate our customer's commitment to our platform and our ability to deliver both top line growth and bottom line margin expansion. We are inspired by the opportunities available to us today and see those opportunities expanding over the years ahead as we optimize our platform and launch additional services for our customers. Our singular focus on our customers is driven by the talented people who work at Squarespace.
I will now open the call for any questions.
Thank you. [Operator Instructions] Our first question for today comes from Trevor Young of Barclays. Trevor, your line is now open. Please go ahead.
Great, thanks. First for Anthony, we're hearing a lot about AI across Internet and software, and even some of the web tools, players are looking at it for chatbots to complement, self-serve customer support, and the like, as well as maybe generative AI for making product descriptions to go on Web sites. Can you talk a little bit about your ambitions with AI; is it something that you're looking at? Is it an opportunity? Is that something you want to lean in on some investments there?
And then for Nathan, on the revenue guide, implying a bit of a deceleration later in the year. Is there something that you're seeing that informs why you think growth maybe slows from here versus the 1Q guide or is that just some conservatism given the macro uncertainty?
Hey, Trevor, thanks for the question. You know, we're no stranger to AI, and have been following developments related to it for probably eight or nine years now. Eight or nine years ago we had smaller competitors that tried to really differentiate by making essentially like a Squarespace clone, but starting with AI. And I think what we sort of found through that process is that AI is best used to augment tools like Squarespace and help with, in our case, a lot of the initial setup, not necessarily do the entire thing and pretend that tools like Squarespace don't exist.
For instance, ChatGPT doesn't replace Microsoft Word; you still need the tool even if they're going to pre-populate it with a really nice starting point in terms of initial content. So, as we've moved along we've seen startups I'm referencing eight years ago now, two other competitors integrating it to their setup process, and that's really what we're focused right now, to take things like DALL-E, ChatGPT and help people with sort of what we call the content not ready problem. So, when you start a Squarespace Web site, the biggest reason why people don't sign up is content not ready.
So, if -- and every time you're presented with a blank text box or you're presented with a blank image field, if we can give you an AI solution for that that is something we will absolutely do, and we're currently working on it. You mentioned actually a customer service chatbot implementation as well. We actually have had a AI-assisted chatbot for, don't quote me on the exact amount of time now, and I think over two or three years helping with customer support, and that's been really successful for too in improving the efficiency in customer operations. So, yes, it's definitely not something new to us. And I think tools like us are going to be in a fantastic position to capitalize on what's available in AI because, again, you're going to need a platform the run the business, to edit the site, to make changes, it can't just be kind of an AI card trick.
Hey, Trevor, this is Nathan. Good to talk to you again. On revenue, this is reflective of the price increases. You'll recall we did a legacy price increase for the first time in Q3 -- the end of Q3, in 2022. And as that rolled out, then you see the effect of the timing of that. Our biggest renewal period for pricing is in Q1, which we saw, we just came through January and February, and continue to see the strong customer retention that we had seen in the end of 2022 that caused us to exceed our guidance. And so, as that timing wraps, that's just the essence of the price increase.
That's really helpful, thank you both.
Thank you. Our next question comes from Ken Wong of Oppenheimer. Ken, your line is now open, please go ahead.
Great, fantastic. Anthony, I wanted to touch on Tock. You guys talked about record GMV. And that was definitely a business that surged during the pandemic, and you guys were able to pivot to where it still remains successful. Just wonder if you can maybe just talk through some of those pivots, and what's been driving the outperformance here? And you also touched on the next stage of growth for Tock. Would love a sense for kind of how you envision that product evolving in '23?
Sure. Yes, as you mentioned, Tock was in an interesting position over the pandemic in the sense that they had to kind of rapidly shift to Tock to go, and that left them -- helped people remain in business and generate revenue during the pandemic period. And over the past year, what you've really seen is us to shift back to sort of a business is normal sort of scenario. We greatly expanded Tock's sales team in 2022. We have a new leader there, Matt Tucker, who just basically got started in December-January. He was the president of Olo for about a decade and saw them through their IPO. So, we're really excited to be back in a business is normal kind of growth mode, where we hope continued pivots aren't necessary.
So, we're continuing to focus on the core product there, make improvements for the existing businesses we've got. And really updating our go-to-market, and making sure that the sales people are trained and up to speed. But we're happy with the performance, and looking forward to 2023. We're also going to try and probably closer to later '23, start to activate on some of those cross-sells that I think are going to be possible with Squarespace as we abstract some of our toolset and make them available to Tock customers. So, all stuff I'm excited about.
Got it, fantastic, thanks for the color. And then, Nathan, just a follow-up on just the solid ARPU performance here, any way to help us dissect what the impact from the mix is in terms of movement up to commerce versus the pricing impact from -- that you guys initiated in Q3?
Yes, thanks for the question. And yes, we are seeing continued increase in our ARPU as from the pricing increases you mentioned, customers going to higher value plan. As we look forward, in '23, I think that the pricing increase will have a higher impact as we rolled that out the end of 2022. So, I would expect that to have a more concrete impact in '23 versus '22. And we're increasing to higher tier plans, we're also increasing the mix to commerce as we increase the attach rates of our existing products of the scheduling product and other things that will also help to increase our ARPU.
Got it, great. Thanks a lot. Fantastic quarter, guys.
Thank you. Our next question comes from Andrew Boone of JMP Securities. Andrew, your line is now open, please go ahead.
Thanks so much for taking my questions, and good morning. I wanted to ask about two things. You talked about the slowdown in ecommerce as well as the opportunity within services. Can you just double-click on what you're seeing in services and where you guys are pushing? And then, Nathan, I think you mentioned more S&M, sales and marketing discipline as we think about 2023. Can you just expand on that? Thanks so much.
Sure. So, our GPV, the amount of payments flowing through the platform is a mix between physical commerce, which we all saw surge during the pandemic, and has weaned a bit, and we've been talking about that dynamic, and multiple companies have been talking about that dynamic for the past couple quarters. We've got services-based commerce, so those are people selling services. There's the appointment-based stuff that's flowing through Acuity, and then there's the hospitality and bookings fee area of things which is flowing through Tock. Our focus has been more on the services, appointment-based, and advance and booking fee area versus just focusing on physical commerce.
We have an almost 10-year investment in physical commerce. And so, I think when you were referring to softness in the overall GMV number, it's mostly from the physical side. And also, I'd like to say, during '23, we've got a lot of changes coming out that will be our product changes that benefit service-based sellers. And so, those will start to roll out during the year. And then, of course, later in the year, hope to have merchants onboarding the Squarespace payments for the first time, which is just -- I mean, obviously, there's a financial impact there to us, it's positive, but there's really also a customer experience impact that was very positive. So, we hope that all those changes will continue to bolster our presence in that space.
Good morning, Andrew. Your question on the marketing ER, I might step back a little bit first and say, the -- we are taking a very maniacal approach as we think about driving the profitability and investing in growth. And marketing is certainly a key lever there. In 2022, we were constantly assessing the return on our marketing dollars to make sure that we were making conscious decisions of where we were investing. And you saw in the latter half of the year, we did pull back and continue to see strong return from our core subs, and in Q3 and Q4 we saw that acceleration in our core business. As we look to 2023, I would expect that same discipline and similar ratios on the ER for marketing and sales, but we will keep an eye on the spend there to make sure that we are most efficient in getting the highest return for what we're spending.
Great, thank you so much.
Thank you. Our next question comes from Ygal Arounian from Citi. Your line is now open, please go ahead.
Morning, guys. And just, Anthony, a follow-up on the comment you just made on the products that are launching this year that'll benefit the sellers. You talked about a really strong product pipeline in '22, one of the best you've ever had. Maybe so just expand a little bit on what's to come next, maybe broadly, but specifically to following up on that service seller comment too?
Sure. So, we were named one of Fast Company's most innovative companies in retail and ecommerce in 2022 -- well, so for 2023, which we talked about in the release. And that really highlights the attention we get for a number of the things we announced during Squarespace Refresh, so a lot of improvements to the existing platform. When you look forward into 2023, without giving too much away, there is improvements to the appointment system within Acuity, we're reinvesting in that as a standalone brand. We've got giant investments in classes and courses, and a lot of updates coming there.
We're looking at project-based sellers, so somebody who has a Squarespace site with a contact form, maybe they're a wedding photographer, and they get an inbound lead, how do we help them with that inbound lead coming in from product proposal to initial charge, to finally sending the invoice to them to collect payment. So, lot's happening there. And then finally, Squarespace Payments, which we're making great progress on and expect to have towards the end of the year, which will further improve that whole end-to-end experience for people selling services on the platform.
Thanks. And you guys also talked about the enterprises, kind of one of the positives here. Can you talk a little bit more about that, like maybe how much Enterprise represents right now in terms of bookings to revenue and some of the factors that you look to implement to get that business to grow from where it is right now? Thanks.
[Technical difficulty] opportunity is actually kind, of course, to continue that because that customer base needs it, but then also move to a DIY model starting, hopefully, with events. So, yes, that's kind of an overview of the landscape, but right now this is not a large percentage of our revenue.
Very helpful, thank you.
Thank you. Our next question comes from Matthew Pfau from William Blair. Matt, your line is now open, please go ahead.
Hey, great, thanks. Wanted to ask on the transaction volume in the quarter, you called out some softness around scheduling or at least difficult comps there. Maybe just help us understand what was going on there, and is this sort of a one-time issue?
Yes, thanks for the question. So, scheduling had an outsized impact in 2021. So, comparing quarter-over-quarter is an anomaly, if you will. Scheduling, overall, if you look at 2022, had a very good year, we did see strong growth. But what I was calling out there is just the comparison year-over-year, and because of what happened in 2021.
I'd like to just add that I think we see the volume opportunity there as just -- the volume is just a giant opportunity for us. I mean, most of Squarespace's revenue is still coming from SaaS and subscription. So, when we see fluctuations in the platform volume, we're still sort of getting used to the scale. And honestly, it could be so many multiples larger that it sort of doesn't -- I don't think it's not that concerning to us when it's slightly down, slightly up, just considering the new seasonality that we're getting used to with it.
Got it. And then on Unfold, any update to your thinking on the strategy there, how you plan to move forward with that business?
For sure, I think that the strategy there can be summarized in basically that we're focusing on Bio sites. So, Unfold is a great product. It's been in market for a number of years now, lot of competition in that space. Nothing really new to my dialog there, but what seems really exciting you don't see it in any of the numbers -- the subscription numbers we have because these are not necessarily paid subscriptions yet. But there has been over hundreds of thousands of Bio sites that have been created.
We recently launched the ability to create a Bio site from the web in addition to being able to create one in the Unfold app. And we think there is a huge amount of opportunity there from monetization. I mean considering our numbers and due to the hundreds of thousands of sites created and spreading virally with very, very little marketing spend just due to the nature of the product, I am really excited about future monetization opportunities there. And that dovetails very nicely with things we would do in the future on Squarespace payment, upsell to the main -- upsell to perhaps a larger Web site, everything we are doing for services-based sellers.
So, that's really the crux of where we see the future within that product in addition to continuing investing in Unfold products and making sure we are updating it, but there is not really a world I see where we have some macro strategy that triples the amount of Unfold subscribers or anything like that. So, it's a great deployment -- it's a great product, solid revenue stream for us, and a really really great deployment mechanism for Bio sites.
Got it. Thank you. Appreciate it.
Thank you. Our next question comes from Gabriela Borges from Goldman Sachs. Gabriela, your line is now open, and please go ahead.
Good morning. Congrats on the quarter. Anthony, I wanted to ask are you seeing any macro impact on the business, the KPIs across the board, studies are improving, clearly the number of company-specific drivers at play here, but given your unique line to the installed base, what are you seeing in the terms of the health of the service of the economy? Thanks.
Well, we continue to see strength across our product lines. I think lot of the questions that we are kind of always getting is around if the economy goes to more of a decline that is recession, what happens to Squarespace. And we have run some internal analysis and also lived through a past recession, anyway so much smaller at that time, but it would seem to us that we still have some co-relation to small business formation that is not as strong as it was pre-pandemic for whatever reason, maybe due to the diversity of services or a move towards to create our economy.
So, we think we are well-positioned there. I think if you look at even the results from the price increase, I really think it shows the power of the product and the importance of the product even in times of uncertainty, right? Churn was much lower than we expected. It was definitely full-forward in churn as opposed to a lot of net new. And so, we think it's well-positioned. I think I am less able to comment on things like what was brought up in the prior question around GMV and macro flows related ecommerce cyclicality or what's happening with our service-based sellers which are sort of just getting started. But for the core business, I think it's well-positioned in a downturn. And, I don't think we will be able to show a lot of what we showed in Q4 and continue in the Q1 if that wasn't true, hopefully.
Gabriela, I might just add that the -- our core business is seeing strength. As I said, Q3 and Q4 we are starting to see the acceleration. So, even in this environment we are performing well. As Anthony said, our pricing increased. We saw strong customer retention. And continue to see that in Q1. So, with 92% of our revenue coming from the sac side of the business, I would say we feel fairly strong about our '23 guidance.
Yes, that makes sense. Thank you. And Nathan, the paraphrase to you on understanding how bookings not to up essentially, so you talked about the impact from the pricing increase and how that flows through the year, you also talked about expecting customer demand to remain at similar level. So, if we pile up that together, if you are able to continue to deliver bookings growth in the mid teens, high teens range, are there any other reasons why you wouldn't be able to show that kind of number, quote, 15% to 18% for the full-year understanding that it's early in the year and visibility to that.
So, as you know we rolled out the Q3 -- or the pricing in Q3 of last year. And so, the bookings increase that we saw in '22 has obviously been reflected in the revenue growth in '23. I do think if I step back though as we look at the growth of this business, the core area of the business is continuing to see strong growth. The talk business had a very strong Q4, which flows into our '23 guidance. Scheduling performed well. So, I do feel good that, as I look forward beyond '23 even as we increase the attach rate of our existing services and grow these various other services with GMV being such a small part of our business today and launching payments at the end of this year. Beyond '23 I think I feel very good about strong growth for our revenue.
Thank you for the call.
Thank you. Our next question comes from Siti Panagrihi from Mizuho. Your line is now open. Please go ahead.
Thank you. Thanks for taking my question and great cash flow generation and congrats Anthony and Nathan. So, wanted to ask you on the cash flow, like 300 Bps expanse on how sustainable is that, and also was thinking about, what are you thinking about capital allocation from here and if buyback should be is thought about as a consistent part of your capital allocation framework?
So with regards to the margin sustainability, it's incredibly sustainable and it's my goal to continue to improve free cash flow margin into, well into the mid and upper-20s over the next couple of years. So, that's absolutely a goal of the company. What was the second part of the question again?
Capital allocation for -- [multiple speakers] yes.
Yes, I mean, look, we reevaluate our stance on where to allocate capital, really I mean every single month. And so, I think that there will always be some room for an authorized buyback program whether or not we're executing on that, it's going to depend on other opportunities we see in the market. So, as we move into this year, depending on what we see from an M&A front, we may decide to allocate it there but yes, I mean we're believers in the equity of the business, and so far as we can return capital to shareholders, that is one way we'll continue to do it.
Okay, great. And then, one follow-up that I'm getting questioned, today, your unique subscription does only grew 4,000 and you talked about the weakness and unfold, so I think it'll be helpful to unpack, what was your gross increase and maybe help us like what the churn was and how much of that unfold maybe it'll be helpful, and how should we think about this unique subscription growth in 2023?
So, as you noted, not all unique subscriptions in that number are created equal. We've got talk subscriptions in there that have tens of thousands of dollars in LTV, you've got unfold subscriptions in there, which are more like a domain name to us, like a $100 a year type subscription. So, as I mentioned the previous, one of the previous answers, there's some things we can do to change the unfold term, but not, it's not going to be like in a macro way, correctible in some giant sense. And we're really focusing on buyer sides a bit more there. But look, I mean overall the churn properties of the business are stable to, they remain really, really positive. Again, the pricing increase, it's first time we've ever affected something like this. And we were in a very pleasantly surprised with what we saw from a churn standpoint.
Yes, I would just layer on there. We are seeing strong retention of our stable customer base. Though we don't disclose beyond the breakdown of the 4.2, I can't tell you that the core business did see acceleration in Q3 and Q4, which that does flow through to our '23 guidance. Our churn levels are lower than our 2020 levels, so we feel very good about where the core business is relative to our subscriber base.
Great. Thank you.
Thank you. Our next question comes from Chris Zhang of Credit Suisse. Chris, your line is now open. Please go ahead.
Thanks for taking my question. So, you've highlighted higher bookings and less churn than anticipated from the legacy price increase. We understand that you've tried to keep the increases less than 20% to not give customers a shock, but at the same time, there seem to be lack of customers that are still paying well below the list price. So, my question is, are you planning on continuing to reach their prices each and every year, they renew until you bring their prices to the list price, or are you planning on a pause at some point? And if you could also give us a rough sense of the portion of the logistic subscriptions, that'd be very helpful. And I'll have a quicker follow-up.
Yes, it's actually a fantastic question. So, our current price increases were targeted at USD customers only, so we didn't look the international, anything internationally. And as you mentioned correct, there's a number of customers, hundreds of thousands of customers that are still under list price and some substantially. So, I mean, when you don't raise prices for a decade, we've gotten, we had plan levels a long time together, $8 a month. And so, yes, we've raised these a little bit. It's given us some confidence to understand the dynamics of what happens when we do that. And yes, I think there's no, I don't know the exact frequency at which it's going to be reasonable to do those raises, but yes, there's hundreds of thousands still below list price in U.S. dollars. So, we want to raise, we want to get everyone a list over time, but I don't want unduly hits them to the 50% price increase or something crazy like that, which wouldn't make any sense.
Yes, Chris, we will take a longer-term holistic approach to the pricing as we think about it as a growth side of our business. In addition to the core business, we also have never rates pricing on talk or on scheduling. So, we will look at all different areas of the business as we think about pricing strategy.
And we have a number of new hires starting this year as we develop a more sophisticated pricing discipline, especially considering how many different product lines we have and how many different brands are we going to be supporting.
All right. Thank you, Anthony and Nathan, both of you for the great color. And my follow-up is for Nathan. Last quarter you mentioned there's $8.7 million of tax refund that was not in the fourth quarter guide, but pushed to 2023. Could you confirm that was, well that's realized in the fourth quarter or is that still in 2023 guide and whether that's in the first quarter, if that's the case?
Yes, thanks, Chris. Yes, the tax flows, obviously there's up and downs, puts and takes that we have built into the '23 guidance. What I referenced in the November call, we do expect to receive in 2023, it was not received in Q4 of '22.
Got it. Thank you very much.
Thank you. Our next question comes from Deepak Mathivanan from Wolfe Research. Deepak, your line is now open. Please go ahead.
Great, thanks for taking the questions. A couple of ones from us, so first on the marketing front, are you seeing improved returns from sort of the marketplace getting more efficient because a lot of the competitors are also pulling back marketing spend currently? Is the customer acquisition cost coming down or is it kind of your more optimizations that's driving good leverage currently? And then, Anthony wanted to ask about long-term margins. You refer to kind of free cash flow margin reaching mid-to-high 20s, is that sort of the right way to think about long-term targets? Can you provide your updated thoughts on how to think about that, that would be great. Thanks so much.
Sure. With respect to marketing efficiency, we're certainly not trying to indicate that, on a quarter-to-quarter basis, it's getting cheaper to acquire customers. But that being said, a lot of what you're seeing a shift is two things. One, a movement of brand spend to pre-pandemic levels, but also the benefit of having done that brand spend. So, you've got more people typing in Squarespace than how to build a Web site. And so, the continued strength there, even though that was done in a past continues to benefit us. The other thing you're going to see is more of a remix of that spend to international markets as opposed to just focusing it in the U.S. which externally will cause a, it dilutes the efficiency that we do have in the U.S. Yes, and also in the past quarter, we've affected some strategic changes and how we've gone about just certain methods that we were pursuing in the company that we just wanted to change course on. And so, yes, lots of changes under the hood. But yes, I wouldn't say it's cheaper to acquire customers right now than before.
But we do look at it by specific product line within the business. And we do have strong attribution models that help us drive the right spend across each of those channels and make sure that we are most efficient in getting the return that we want. And we do consistently shift dollars as we see the attribution model out.
Yes, that's a good point, we did launch a new attribution model in August, what we've been talking for a long time but really took effect in something like August, September of last year which will have more nuance look at our channel spend and rebalance between them.
So, with respect to the question on long-term margins in mid to upper 20s, yes, I mean I'm not giving a specific timeframe to that, but you're going to hopefully see a very consistent pattern of us increasing that margin every single quarter but definitely every single year. I see no reason why we can't achieve upper 20s free cash flow over time.
Great, thank you so much.
Thank you. I hope it is the final question for today. This concludes today's call. Thank you so much for joining. You may now disconnect your lines.