Q4 2021 Squarespace Inc Earnings Call
Are based on assumptions as of this date March seven 2022.
We undertake no obligation to update these statements as a result of new information or future events, except where required by law.
Now I'll turn the call over to Anthony.
Good morning, everyone. Thank you for joining us on the call today, Robert welcome to square space.
Like many of you we are friends family colleagues, there either directly or indirectly touched by the conflict in Ukraine, Our heart goes out to them and we hope this conflict and soon square footage have provided and will continue to provide assistance to our employees and customers in that region.
I am proud of what our customers are achieved during recent months and I'd like to thank our employees, whose work has enabled our success every day.
Some highlights from our most recent quarter in our shareholder letter.
Our integrated platform is used by millions to establish a world class online presence and our advanced commerce functionality is enabling our customers to transact online and a myriad of ways are everything to sell anything campaign as an embodiment of this mission and we are looking forward to pursuing it even further in 2022 I'll hand, the call to Marcellus to take us through guidance.
Thank you Anthony.
We are delighted to share results with you. This morning that exceeded our guidance for Q4 2021, driven by strong adoption of our commerce plan.
Our durable business model is balanced to generate both growth and profitability as weakness by our outperformance in the fourth quarter.
While it's important to recognize the success. We believe we are still in the early stages of addressing a large and growing global addressable markets for our tenants.
Our platform has the ability to continue to scale.
Millions of customers.
As we look forward to the coming year I would like to provide you with details on how we deal with guidance for 2022.
For the first quarter of 2022, we expect revenue to be in the range of $203 million to $205 million, representing 13% to 14% growth year over year.
We project, our Unlevered free cash flow to be in the range of $39 4 million to $41 million. We can place on Unlevered free cash flow margin of 19, 7% at the midpoint of the range.
For the full year 2022, we expect revenue to be in the range of $862 million to 878 million, representing 11% year over year growth at the midpoint of the range.
We expect Unlevered free cash flow.
Will be between $149 3 million and $165 5 million, representing again, a 19, 1% margin at the midpoint.
When thinking about our guidance, it's important to remember that we have recognized revenue associated with the telco precision beginning in the second quarter of 2021 asset.
I said, we sold our year over year growth assumptions in Q1, 2022, do not overlap with the talk of recession, whereas the remaining quarters of 2020 to do on either side of that closing.
In 2022, our revenue growth will be driven by a combination of the following.
Strong adoption of our newer products such as the scheduling member areas and email campaigns, which will continue to grow at higher growth rates compared to a website and domain subscriptions.
Strong retention of our existing loyal customer base of $4 1 million unique subscriptions.
We expect unique subscriptions to grow moderately in 2022, mainly due to the tough comp versus 2021, and the waning of the positive effects of Colby.
And we expect expansion of new revenue lines, such as stock, which continues to grow at higher double digits.
We expect Q2 to be the trough from a revenue growth perspective, and revenue to reaccelerate throughout this year and into 2023.
Let me walk you know through our operating expenses on a non-GAAP basis, and the areas, where we plan to deploy our investments.
Our gross margin we continue to be strong.
Recall that our mix is shifting towards commerce revenue, whereas the transactional portion of that revenue has lower margin.
Friction revenue.
We believe we can continue to scale, our EF 14 marketing this fiscal year last year for the first time in the history of the square space, we successfully deliver bespoke marketing campaigns in several countries outside the U S.
As we think about our internal expansions and efforts abroad, we will be mindful of the demand landscape when deploying marketing resources.
As a result, we anticipate that marketing and sales expenses expenses will be in the range of 30% to 35% of total revenue on a non-GAAP basis as long as demand remains as expected.
This is our plan as we see the market today, and we will adjust according to the environment as we move through the year.
Turning now to R&D, we expect that continued investment in our platform as we deliver additional services and new features to our customers with an exciting product roadmap.
In 2022, we expect R&D expenditures to increase as a percentage of revenue versus 2021, as we continue to invest in initiatives that will drive higher growth in 2023 alone.
Such as the investments in payments, finding new products and innovation.
Specifically, we are heavily investing to the Q&A double digit millions on the top platform and the products, we announced during Investor day.
As we believe there is an enormous opportunity to continue to grow in the hospitality sector.
Therefore, we expect that R&D will be in the range of 25% to 30% of 2022 revenue.
With regards to G&A. Please note that in 2021, we experienced certain one time costs associated with our data analytics team for around $25 million.
In 2022, we anticipate that G&A will represent approximately 11% of revenue.
Some of these operating efficiencies are allowing us to be initial unlevered free cash flow margin guidance that is above our 2021 results.
In spite of the fact that we are experiencing difficult comparisons in 2022 due to the COVID-19 related demand environment in 2021.
We are very excited and confident about our ability to capitalize on the large market opportunities that we see in front of us.
We are confident that we can retain and grow our subscription revenue as evidenced by the 18% increase in annual run rate revenue and a 9% increase in average revenue per unique subscription or output in 2021.
Both of these metrics point to our ability to sell higher value plans and other services and the power of our recurring subscription model.
In summary, the fundamentals of our business remain strong.
We have a long operating history of profitable growth.
Buying with the large and growing customer base.
We believe the introduction of new products combined with the optimization of existing offerings to packaging and pricing will accelerate our growth as we exit this year and we look to the future.
During the last two years, we have had a tailwind related to the pandemic and over those two years, we have grown 27% on a compound annual growth basis.
Those savings made us even stronger as our customer base has expanded significantly and we continue to serve all of our customers with tools that help them stay in business through the pandemic.
In 2023, and 2024, we expect revenue growth and reaccelerate into the mid to high teens crossing the 1 billion, marking revenues in 2023, while still expanding cash flow margin.
We are very excited about the growth opportunities over the years ahead.
Given our very strong brand presence diverse portfolio of products and multiple ways to reach customers who are just getting started.
<unk> has a wide array of opportunities to win.
Thank you everyone and we sat I will hand, it back to Anthony Thank.
Thank you Marcella.
To recap the building blocks of our platform that gives us confidence in our outlook for 2022 and beyond included our commerce tools, which are designed not only to help our customers sell physical goods, but also the health. We saw time content services and more on mobile we're providing tools for creators who are inventing new business models and starting out on a diverse array of platform.
We are on for platform, we are providing ways for customers to look at it on social but we're also creating tools like bioscience for them to capture and monetize chocolate effortlessly.
Our international expansion is ongoing supportive new languages. The addition of new geographies and the adoption of localized payment methods. We believe there's tremendous opportunity for us to increase our international customer base.
We also see significant opportunities as bundling payments and pricing leverage that can further help us monetize the products that we already have in market across our 4 million plus unique subscriptions.
We remain invested has been sustainable and profitable growth, which we've been doing since our inception, almost two decades ago, we have never had more opportunity to expand our business and serve our customers and I'm excited for what 2022 will bring us.
Thank you operator, please open the line for questions.
Thank you.
You'd like to ask a question. Please press star followed by one on your telephone keypad now if you'd like to remove your question. Please press star followed by <unk>.
Please ensure when asking your question your line is on mute locally.
We take our first question from Sterling Auty from Jpmorgan. Please go ahead Simon.
Yeah. Thanks, Hi, guys. So in regards to the modest growth in.
Subscription additions for 2022, which would be down.
Our deceleration versus 'twenty, one how much of that do you think is just coming from the push from COVID-19 driving existing companies online.
Have to digest that verse.
First is any falloff in new company Cree.
Creation.
Hi.
Sterling. Thank you for the question, we believe that there must be some pull forward demand that as you mention that we will have to digest, but we are.
We have seen also some softness in January and I believe it is a little bit related to new business formation. However.
New business formations is just one factor on where we have to be calling a sense of that.
That factor, but we have plenty of opportunities to continue to grow through the existing customer base that we have which is.
Pretty large and we are still at very nascent stages of doing Upselling cross selling bundling like if you look at the growth that we have had in our pools on a total basis in 2021 has been 9% if you take out the impact of organic.
Excuse me opening organic grow through tells me it's about 6%.
Growth was done with bare bones of initiatives related to bundles or further selling other products that havent worked so nicely for us like the scheduling and remember areas and that has put us actually in a very good and in a leading position on the <unk>.
Servicing time slotted businesses.
That makes sense and then one follow up Anthony the only one where you saw.
The only one thing I would add to Marcellus.
When you look at the raw number of unique subscription from our platform. These are really diverse subscriptions I mean, the main subscription on a web based subscription and unfold subscription or all.
Have really different properties and different kinds of seasonality to them and I just want to underscore that.
While the small business formation is a factor it really isn't the only factor that we see there, especially when you think of.
When you're talking about creators and them coming online, they're not going to be really represented properly in that small business formation number.
Because it's just it's going to be definitely a real lagging indicator.
As the second sorry, I interrupted you what was what are we going to.
No that's okay last.
Last quarter, Anthony you had talked about that you were going to revisit.
The payments business and I think we'd probably the eye towards deciding whether to change the structure, maybe become more of a payment facilitator instead of a <unk>.
So was there was there a conclusion to that process.
Yeah. So we are going to be pursuing payments and we're expecting to see that kind of entered the market in 2023.
When we pull our customers because we.
What you are referencing.
We had a deal with stripes for a long time, where we're able to capture a portion of our.
We are able to capture profit off the gmg, that's flowing through the platform and I feel it was appropriate for us for a long time when.
When we were smaller and when she was a GMP with smaller et cetera et cetera, when we talk to our customers now.
We think they will get a lot of value from seeing everything in one place and they don't have a particular affinity towards any of any payment infrastructure provider in the space and so we asked them about Hey would you would you want to use square feet payments, they're pretty enthusiastic about saying, yes, we would and we really appreciate everything being in one place. So we think that'll be a better customer experience.
For us as evidenced by the fact that they're asking for it and also it will give us a little bit better economics as we move forward through that deal. So it's absolutely it's being worked on and it's something we expect to see around 2023 and that early part.
And yes, it will be another great driver for our business.
It's something we are very excited we have been working on that for a while and because it also gives us an opportunity to launch a whole array of different products on financial services, which could start really well for the type of customers that we have in our in our customer base.
Understood. Thank you.
The next question comes from Trevor Young from Barclays. Please go ahead.
Great. Thanks, two if I may just first on the <unk> revenue guide of $205 million at the high end implies a modest sequential downtick, whereas historically at least the last few years I think you've seen call. It like 3% to 4% sequential growth can you help us understand what's driving that softer sequential trend I think Marcelo you may be mentioned.
Softness in January any color on that.
Cadence now in February as well and then on the full year revenue Guide you gave some good color on how you expect the trough in Q2, and then a re acceleration.
<unk> dot confidence in seeing the revenue growth Reaccelerate is it just a matter of lapping easier compares or is it an expectation that your efforts to lean in on marketing begin to bear fruit.
Color there would be appreciated.
Thank you Trevor for the question. So we have reflected in Q1, where we have seen so far in the market.
We are very excited about the fact that one.
<unk>.
We are putting on this quarter and the next quarter I believe that the comparisons are going to get a little bit better.
There is some pull forward that I mentioned.
Earlier.
So we have taken a moderate approach on how we would think that Q1 is going to play with regards to the rest of the year. We have been working on some initiatives related to bundles and we believe that we are going to be able to serve our customers in a much.
More simplistic way when they have to make choices on the products that they want to they want to use from a square stake. So we have we are pretty confident about the fact that after we passed Q2 that revenue we get back to accelerate uneven.
Further on we believe in 2023 and 2024 with initiatives that we have in play that we haven't mentioned earlier on payment.
A reminder.
We the vast majority of the revenues that flow through our platform software space and talk.
Is booked on a net basis not on a gross basis and so as we launch payments, we continue to deliver on bundles and new products and innovation and we feel pretty strongly I'm pretty confident about the growth that we will continue to see later in the year just to underscore two points. There one is.
Building won't Marcellus mentioning regarding bundling, we have a lot of different products that we've launched over the past couple of years and I think that we may be under optimized in how we're delivering those to customers. So we talked about remember us talking about E. Mail campaigns. These are all seven comes on the platform and I think we just have a real opportunity to simplify this in the minds of consumers.
And to create a really powerful single subscription that.
I think would really set us apart.
Other thing to mention regarding the later half of the year is just the leverage we have in pricing.
<unk> mentioned on prior calls we've never increased pricing for our existing cohorts.
I think we have an opportunity there was a modest price increase too.
We see a pretty profound result actually.
And also I think as we move into the later half of the year.
While you do see.
We have some of the different revenue lines, where maybe we're seeing less growth on a year over year basis on websites and demand but that.
The COVID-19 situation on the concentrates to offer really negatively impacted our businesses like talk so as we move throughout the rest of the year.
Those to really improve.
The diners increased 250% year over year in 2021, which is a huge opportunity for us as we think about monetizing that.
And also thinking about what their diners and that traffic to explore talk might be when we launched consumer marketplaces and things like that so I think it's important to think that.
We're not relying on my magic marketing or something to cause that re acceleration that we expect to see.
Great. Thank you both.
The next question comes from Paul Jefferies from Piper Sandler. Please go ahead Marc.
Hello, Thank you for taking the question first one.
I was curious maybe if you could share what the cash retention rate was during 2021 or.
Any kind of sense on what youre seeing in terms of retention of the cohorts that signed up with the business. During the first four quarters post pandemic I think trying to right size how much of it.
Ralph comparison is on a overall new business funnel, we're on sort of a net basis of of retention.
Thank you.
For the question. So what we have seen is that.
<unk> cash retention has been.
Very strong in 2021 and better than 2020, and this was mainly driven by our strong cash.
And that we're having in presence and also favorable FX rates, but even if you look at constant FX rates cash. We finished the so if you exclude that impact.
We have seen in 2021 overall cash retention better than what it was in 2020, we also have observed.
The cash.
Retention for one year cohorts like the 2020 cohort, which and we compare that to the one year cash retention that we have seen in 2029 and both sorry in 2019 months 1999, and they are both.
In line. So we are very we are.
Very excited because I keep mentioning I think Colby has made us even stronger because we have been able to grow our customer base.
<unk> is there.
Don't see Charles cash retention is better than what we see we saw in prior years and we have a lot of opportunities to continue to grow.
The <unk> within the customer the customer base that we currently have.
Alright.
Are you for the color maybe another follow up in more of a strategic question.
You outlined some of these growth levers in the business for 2022 and beyond.
One of them that stands out to me is a really an entry into the enterprise space.
<unk> been over 85% of bookings today, just curious on what.
The strategies you want to pursue specifically next year to maybe get more involved in with larger companies.
What are the points of differentiation that you really want to emphasize when entering that segment of business.
The other thing that's interesting to us because again it encompasses a couple of sort of very different things.
The square footage side well. So if you look at the product lines, you've got enterprise and presence and that is mostly one of two things one larger contracts with <unk>.
Particular large companies like.
Nike marketing team might want to use square space, we need single sign on.
Volume customers. So that's us identifying people, who build hundreds of sites on square space in making sure that they are well serviced and that they've got the right controls and a good contract in place.
On the scheduling side of things were.
Once you cross a certain volume size of appointments, we congratulate you into an enterprise space and then within talk a lot of that business is kind of can be classified as enterprise in the sense that they've got a sales team that reaches out and convert customers onto that platform.
It's a little less so it's interesting because with it.
Talk you can identify the targets right.
Thank you.
Restaurant basically using the top size does matter Weiner, if they should be taught in the former in the present category. It's a little harder. So we can go into a customer database and say Hey look we see all these E mail addresses using square states from.
Sticking I guess, an arbitrary example.
Maybe we should be targeting maybe we should maybe they need something more for us and so we're going to be more proactive about really digging into who's using the platform to find those.
And customers.
And then similarly with volume we can really go on and find people who are doing this from a platform really handhold them onto onto what we're doing so we're targeting all of that.
The enterprise business is very very small for square based overall, but we think it has a big potential for US why we keep investing in it and it's just a natural extension for us to be servicing these larger customers who are frankly in a lot of cases already using square feet.
Okay.
I appreciate the color.
Okay.
Our next question comes from City Panic Rossi from Macquarie. Please go ahead.
Okay.
Thanks for taking my question.
Two questions if I may be.
First of all most of it what was the organic growth in 2021.
Todd.
Okay.
Any color on the organic growth.
Yeah sure I mean for <unk>.
2021, we'd have grown overall, 26% and out of that 22% is organic.
And if you have that.
Q4.
For the quarter, we grew 20% and approximately.
The 16% is organic city, Florida for Q4.
Okay. Thanks for that color and then.
I mean, you guys launched.
And.
Last year.
September .
And then also the event.
<unk> features and added a lot of new features there and then.
Everything to sell anything that campaign as well, but despite that we don't this is quite a deceleration like 10% to 12% guidance 2022, I'm wondering how effective is that campaign.
What makes you more confident about.
2023, and beyond besides the payment how youre going to recognize revenue.
So.
Im really happy with that campaign, because I think it embodies everything that we've been talking about on these calls regarding <unk>.
The ways, we help people run their businesses online I mean I think.
Of course, well known for presence.
What we've launched really <unk> go beyond that and to your question around what gives us confidence in.
About the year.
We're lapping we're lapping a really serious coca quarter the effects of that are.
Okay.
Most anticipated on certain parts of the business and other parts of our business like path has not fully come out of Covid and so we're sort of.
Positive view towards that later in the year, but like I was mentioning on the other open and the other question. The Reacceleration I am looking to is not based on like I call. It like magic marketing moments.
Rising leverage it's bundling is.
Can you just us getting more value of the product is frankly already launched.
It's a payments the payments business happening later on.
And just the continued demand for what we do.
<unk>.
Below the surface. The businesses are very different dynamics again, we've mentioned talking on favorably treated by omnicom, but the scheduling business remains very very strong and so.
All of that leads us to be frankly, quite confident and how things look.
In the future.
Look it's an unprecedented time.
Lapping these couple of quarters.
Pretty well.
Thank you.
We have a question from Ken Wong from Guggenheim Securities. Please go ahead.
Great. Thank you for taking my question I wanted to build on <unk> question, just now when thinking about the reacceleration in fiscal 'twenty through 'twenty.
We also mentioned that you are making that change in payments.
It comes with the gross Rev. Rec instead of a net Rev. Reg Sho.
Should we be thinking about that reacceleration happening on an apples to apples basis as well when we look at your business are purely as a byproduct of that accounting change.
Apple.
No it's not.
The growth that we're expecting in 2023 and 2024, that's not purely relate to.
The change in accounting recognition now.
When you move into 'twenty three the adoption of that payments platform will remain small initially right and so he won't immediately have a huge top line impacts even though that changed.
I'm talking about an apples to apples.
<unk>.
Thank you using our pricing leverage introducing bundling and introducing new products as well.
Yes, I'm talking about.
Has that changed yes, we are investing like we mentioned earlier in some products not only on.
The team that is currently working on its where they fall out but the teams that are doing amazing work had a talk and we see a great deal of opportunities there for us.
The investments that we are doing.
Those products to continue to grow on the hospitality sector.
So we've got to attack that.
Yes, really appreciate the clarity I think I think that does make a big difference for folks.
And then and then second tissue I think earlier you mentioned you guys expect talk to grow double digits in 'twenty two.
Awesome.
Kind of a comparator versus the three quarters our talk.
And results.
Relative to the roughly 33 million kind of a third.
Talk type of a dynamic.
The ladder and we expect to continue to grow in double digits going forward in 2022 2020 see on yes, and I think within there I'll just quickly highlight a couple of things.
Again advair.
Our fleet impacted by Amazon and.
We're seeing that dynamic change, but we're introducing changes to booking fees to help monetize the diners, which again increased 250% year over year, we're thinking about events self service Onboarding further strengthened by the integration with square space and then consumer marketplaces.
<unk>.
Take another angle at revenue just dumping that exists right now so we have a lot of a lot of things happening over there as well as a lot of things happening.
The presence businesses scheduling business.
Yes.
We remain really positive on kind of kind of being critical.
Quote unquote more normal year and seeing how.
That business operates.
We serve millions and millions on diners in Intel again.
We are very excited with the products that are coming the way. So that we can continue to grow that business, which is growing really nicely.
Got it got it great. Thank you very much.
Okay.
Our next question comes from Matt <unk> from William Blair. Please go ahead.
Okay, great. Thanks, guys for taking my questions wanted to first ask on the scheduling solution I think you called out in the shareholder letter that.
That was the biggest contributor of organic growth, maybe just sort of unpack, what you're seeing with that product and what's driving the strength there.
Okay.
I can talk you can talk about the product pipeline for anybody just to clarify I think that what we meant to say that it's scheduling is there.
The biggest driver of the organic growth that we saw in average revenue per unique subscription.
And yes, I mean, as we and as we move forward with the scheduling.
I think one of the things that we're excited about is actually that a lot of the.
A lot of the volume of payments volume allows the transacting that occurred around the appointment is currently happening off platform per square foot. So as we introduce things like invoicing and other other features into that platform to kind of make it a more holistic experience for the user we're going to actually be able to generate even more.
More.
Payment volume through that platform as well as reduced the need to look at external tools. So a lot of that is going to happen. This year, we're really excited by it and it's actually it's a really big opportunity out there.
Great and then as you think about investing.
Outside of North America, and the new geographies for two.
<unk> 2022 any.
Specific areas that you would call out and besides some marketing campaigns any other additional changes that need to be made from a platform perspective.
Well the targets are similar to what they were last quarter in the sense of it's English speaking non U S and then France, Germany.
The region.
The only product changes.
What we've done differently is one localized campaigns and then two payment methods and so things like SAP being introduced to the platform should hopefully.
Prove our ability to convert in those in those markets.
Yes.
Great. Thanks, guys.
Our next question is from Josh Beck from Keybanc. Please go ahead.
Hi, there. Thank you for taking the question I wanted to ask just a little bit about the return on marketing efficiency that you see could you maybe characterize.
What channels are productive for you and how youre approaching that as we go into 'twenty two.
So we've kept marketing spend on a year over year basis basically flat.
And what we're what we're what we're looking at there is just trying to make sure that we're teasing out.
What was happening during COVID-19 and what goes we're getting from that and what goes we really getting from driving our internal.
Internal result, as you know from previous calls we have a mix between direct response and brand advertising. The brand advertising component is of course important to us because we need to be top of mind when people want to come and create website or.
<unk> or <unk>.
She's been some essential so we always balance those two things, but we have taken a modest approach to the increase this year as we.
Really just wanted to always keep an eye on the balance within the business square feet as always.
Been about sustainable growth.
Positive cash flow margins and so we wanted to we just want to make sure. We're in that we are.
Doing well.
We're doing a good job there and so.
We're reducing brand a little bit while keeping <unk> high and <unk>.
Thinking about how we're deploying $8 internationally, so that's kind of what.
You might want to think about regarding that.
Very helpful and maybe a follow up on just how to think about subscription for the year. It sounds like with a bit of a slow start, but obviously, we have Q1 guidance.
That's really.
A lot of the growth.
More so from the commerce side. So as you start to model out the back year should we think about trying to incorporate more of it.
<unk> on the subscription side.
Bundling changes or should we hold off on that and any other guidance you saw how to think about subscription and how to model that throughout the year.
Sure.
Yes. Thank you Josh Yes, I think you are on the right path on your thinking on how to model.
How to think about where that revenue growth is going to come later on our excitement around how it is going to Reaccelerate later in 2022 on getting into 2023 and 2024.
Excellent. Thank you both.
The next question comes from Alan <unk> from Raymond James. Please go ahead.
Great maybe a couple of questions can you talk a little bit about mix the growth the growth you're seeing in 'twenty, one and maybe thats sufficient for 'twenty, two kind of worsening that sounds like some of the companies would be and maybe also talk about the <unk>.
Mid 20 cohort and kind of in the 21 cohort and the retention you're seeing there and just any thoughts on kind of international trends, you're seeing as well. Thank you.
Yes sure.
I was talking a little bit earlier about how we see cash recession, which has.
Being has overall on a year to day basis and based on subscriptions 800 performed better.
Than previous year previous year, and what wireless Phil mentioned earlier is that we have not seen any change in churn.
Naturally in 'twenty 'twenty was any elevated higher at the very beginning and.
And then when we went away but in 2021, our cash retention is pretty similar to what we have seen previously in 2019, and we looked at the 2020 cohorts.
And we see that those are performing in line with.
With 2019, so overall we are.
We are very happy with what we see the stickiness that we see in our in our platform and how they.
The whole array of products that we launched in between 2019 in 2019, how they are paying off we see really amazing great growth in products like email campaigns lender area to scheduling.
I believe it has put us in a position to either in services in the market.
Got it and then if you can figure as to international trends, maybe opportunities you see internationally in 2022 as well.
I think that we are building on our existing base and our existing investments as you know.
When you go into one of these markets initially.
Some of it easier for us because some of our some of our AD spend like and pod casting is kind of global by nature people are listening to the same podcast.
They are in the U S.
In many instances.
And then is that is it.
Tom's hardware to go into non English speaking, we don't get that kind of.
Organic halo from from the U S base activities, so continuing to pursue localized efforts.
The markets you already kind of know us in as is.
What is what we're doing.
Yes of course.
With the recent events.
Taking a closer of active approach with regards to the growth, but we are we have a platform.
Platform is a very modern platform, where we can continue to expand in languages above and beyond the ones that we have and so we have.
Great deal of opportunity to continue to expand in other areas. Besides cereals, like Asia or Latin America as well.
But obviously with the recent events in Europe I mean, we are we remain cautious about the growth.
Coming from from that particular area.
Great. Thank you.
Our next question is from Brad Erickson from RBC capital markets. Please go ahead.
Thanks.
First I guess just on the free cash flow guidance here for 'twenty, two I guess it looks like it's bumping up fairly close to the long term targets you gave at the end of last year, and so I guess Marcello.
You mentioned the further expansion I believe to free cash flow in 'twenty three 'twenty four so curious if you just want to maybe update anything relative to that long term target model today, and then I have a follow up.
Okay.
Yes, I mean look we feel.
The way that we look at our business.
Got it.
Great space I always say to cash machine, we have an amazing profile and.
Historically, we have always tried to be very educated about the investments that we do and we aim to continue to you know.
Making investments that are going to drive returns. So if we wanted to if we suddenly see that.
Perhaps growth that is not there we can easily pull levers to continue to increase margins, but what we see at the moment in 2020 one.
In 2024 and on and on like we see an opportunity to continue to expand our revenue base. We see we can continue.
We aim to grow and Thats why we are investing.
And investing heavily in some areas.
More perhaps than others as we see.
We see opportunities there so I don't see a reason why.
Our free cash flow margins could not expand even further than what we see this current year.
Yes, I mean, just to reiterate what Mark Saad, saying, I mean square faces almost two decades old down until we've been about sustainable growth.
Operating cash flow breakeven for 14, 15 years, and then flipped over to profitability a few years ago.
And.
When we talk about free cash margin in the low twenty's mid twenties again, if we for some reasons thought which we don't that.
We're we're more limited in how we can grow.
The cash generation of square spaces is unbelievable I mean, we could flip to our long term target within a quarter or two if we wanted to be very aggressive about hiring marketing and all that stuff, but I would just I was just kind of a long term potential I think what we're seeing within the campaigns.
And everything we sell anything campaign I, just think that's a really strong message in a really strong position and I think we would be.
We do not invest in it.
We're really well positioned to capture.
A lot of these ways people are transacting and we have and that's why we're selling what we're showing with regards to kind of our business is related to commerce revenue.
Yeah got it that's great and then second and uptick in revenue.
One tiny day timing I'll be keeping in mind, just regarding cash generation in the future. We have so much coming from existing cohorts that have very very stable churn properties right. So stable kind of changing during the <unk>.
Pandemic.
Charles also mentioned positive cash retention properties. So.
Sure.
All right that stuff just kind of.
There continues and so it's not dependent upon.
Whatever we're doing in any given quarter to add.
And whatever or add some certain incentive net new subscribers or push <unk> to the platform right now.
This is a very stable core, yes, and I think that the beauty of Macquarie space is that there are so many different levers to pull that.
This is still in so many ways for business that <unk> seen in very native patients at stages of growth in many areas International and enterprise.
Commercial frame.
We are quite excited about the future.
Got it and then.
No. This is a little bit of a difficult question to ask just around Russia, Ukraine, but we are seeing companies in adjacent markets, you're halting operations changing guidance in some cases here. This morning, maybe.
Maybe if you could just give a quick attribution on those markets and then obviously Anthony your general philosophy around the continuity of operations in that part of the world.
Yes sure obviously.
Terrible terrible situation.
For us, we do not have major customer basis, and either Ukraine or Russia.
We do have.
We do have.
And from an employee based perspective, we have a couple of we had a couple of contractors and Ukraine not very many at all but were immediately helping them relocate its actually our Ireland office.
Doing what we can there and turning Ukrainian customers were providing credits for hardship and things like that so yes.
Yes.
I do.
I hope, we don't see much more of a disruption from that but we have pretty limited exposure there.
Yeah, that's clear thank you.
Okay.
Okay.
That's it.
Okay.
Yes.
Yes.
All right.
Operator are there any more questions in the queue.
So quick question Q&A session for today.
Okay.
Thank you all for the thoughtful questions and for joining us today.
Looking forward to 2022, and everything that we're going to be able to do so thank you.
Thanks.
Thank you all for joining this now concludes today's call. Please disconnect your lines.
Yeah.
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