United States securities and exchange commission logo
June 2, 2023
Nathan Gooden
Chief Financial Officer
Squarespace, Inc.
225 Varick Street, 12th Floor
New York, New York 10014
Re: Squarespace, Inc.
Form 10-K for the
Fiscal Year Ended December 31, 2022
Form 10-Q for the
Fiscal Quarter Ended March 31, 2023
Form 8-K filed May
9, 2023
File No. 001-40393
Dear Nathan Gooden:
We have reviewed your filings and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2022
Critical Accounting Policies and Estimates, page 50
1. We note during the
quarter ended December 31, 2022 you reassessed your reporting unit
determination and
recognized an impairment charge of $225 million. Please expand your
disclosure of critical
accounting policies and estimates to address changes in estimates and
judgements made in
accordance with Item 303 of Regulation S-K. Specifically,
regarding goodwill
impairment testing please disclose:
the new reporting
units and describe how goodwill was apportioned to each reporting
unit;
how goodwill was
tested, including whether you performed a qualitative and / or
quantitative test;
the specific
factors and assumptions used to estimate the fair value of the reporting
unit(s);
Nathan Gooden
FirstName LastNameNathan Gooden
Squarespace, Inc.
Comapany
June 2, 2023NameSquarespace, Inc.
June 2,
Page 2 2023 Page 2
FirstName LastName
how changes in these assumptions may impact impairment; and
the percentage by which the estimated fair value of your
reporting unit(s) exceeded
the carrying value and whether goodwill is at risk of impairment.
Provide us with your proposed future disclosure.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies
Operating Segments and Reporting Units, page 63
2. We note your disclosure on page 63 states, "During the quarter ended
December 31, 2022,
the Company revised its operating segments to reflect changes in the
way the CODM
manages and evaluates the business. As of December 31, 2022, the
Company s business
operates in two operating segments which are aggregated into one
reportable
segment." Tell us and disclose the two operating segments that were
aggregated. Tell us
why you believe aggregation is appropriate. Your response should
address all factors
noted in ASC 280-10-50-11, including economic and gross margin
considerations.
13. Commitments and Contingencies, page 86
3. On page 46 you state your principal commitments consist of payments
for our Credit
Facility, operating leases and purchase commitments related to
cloud-computing services.
However, purchase commitments related to cloud-computing services are
not disclosed in
your financial statements. Please disclose your material unconditional
purchase
obligations in accordance with ASC 440-10-50-4.
Form 10-Q for the Fiscal Quarter Ended March 31, 2023
Notes to Consolidated Financial Statements
9. Income Taxes, page 17
4. We note that by analogizing to International Accounting Standards 20,
Accounting for
Government Grants and Disclosure of Government Assistance, you
recognized Ireland-
related research and development tax credits of $276 as a reduction to
research and
product development expense. Tell us how you consider US GAAP
accounting literature,
including ASC 450, when evaluating the accounting for this
transaction.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of operations
Comparison of the Three Months Ended March 31, 2023 and 2022, page 28
5. We note your results of operations discussion does not quantify the
underlying factors that
drove fluctuations between periods. Please revise in future filings to
describe the
underlying reasons for material changes in both quantitative and
qualitative terms in
accordance with Item 303 of Regulation S-K. This detailed quantitative
analysis should be
Nathan Gooden
FirstName LastNameNathan Gooden
Squarespace, Inc.
Comapany
June 2, 2023NameSquarespace, Inc.
June 2,
Page 3 2023 Page 3
FirstName LastName
provided for all material line items discussed in results of
operations, including; presence
revenue, commerce revenue, cost of revenue, gross profit, research and
product
development expense, marketing and sales expense, and general and
administrative
expense. Provide us with your proposed future disclosure.
Benefit from/(provision for) income taxes, page 30
6. We note that your income tax benefit for the three months ended March
31, 2023 is over
106% of your loss before income taxes. However, your disclosure is not
specific and does
not provide readers with an understanding for the material change to
your effective tax
rate. Please enhance your disclosure to explain the underlying reasons
for the material
change to your effective tax rate in both quantitative and qualitative
terms. Also, update
your critical accounting policy and estimates to describe any new
estimates or judgements
made when determining your effective tax rate. We refer to guidance in
Item 303 of
Regulation S-K. Provide us with your proposed disclosure.
Liquidity and Capital Resources, page 32
7. We note your discussion of cash flows from operating activities,
investing activities and
financing activities restates line items from the cash flow statement
but does not provide
an analysis as required by Item 303 of Regulation S-K. Please revise
in future filings to
provide an analysis of your cash flows including describing the
underlying reasons for
material changes in quantitative and qualitative terms. Provide us
with your proposed
future disclosure.
Form 8-K filed May 9, 2023
Exhibit 99.1, page 1
8. You present in the third line of your heading unlevered free cash flow
margin, a non-
GAAP measure, but do not present the equivalent GAAP measure. Please
present with
equal or greater prominence, the most directly comparable financial
measure calculated
and presented in accordance with GAAP. Also, reconcile unlevered free
cash flow margin
to the most directly comparable financial measure calculated and
presented in accordance
with GAAP. Refer to Item 100(a)(1) and (2) of Regulation G.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Inessa Kessman, Senior Staff Accountant at 202-551-3371
or Robert
Littlepage, Accounting Branch Chief at 202-551-3361 if you have any questions.
Nathan Gooden
Squarespace, Inc.
June 2, 2023
Page 4
FirstName LastNameNathan Gooden Sincerely,
Comapany NameSquarespace, Inc.
Division of Corporation Finance
June 2, 2023 Page 4 Office of Technology
FirstName LastName