Squarespace cuts 19% of staff. The savings and current debt remain unknown

Squarespace cuts 19% of staff. The savings and current debt remain unknown

The CEO says the cut of about 300 jobs is not designed to meet a financial target. The $2.65bn buyout facility is 11.3 times fiscal 2023 adjusted EBITDA. Savings, drawn debt and exit costs remain undisclosed.

Squarespace told staff on Monday that it is cutting approximately 19% of its workforce, around 300 people. Founder and chief executive Anthony Casalena wrote in the memo: "This is not an exercise designed to reach a financial target".

The financial question is how much the cut saves. It depends on the savings after departure costs, on what a smaller product team can still ship, and on whether either matters for the company's financing.

A $2.65bn credit facility supported the 2024 buyout. Its size is not the amount borrowed today. The 11.3 times figure compares that facility with fiscal 2023 adjusted EBITDA. It is not current leverage, and it is not evidence that lenders asked for the cut.

What the memo says

The memo, published in full by Business Insider, describes an operating change. "The way we need to work is changing faster than at any point in our history," Casalena wrote, which means "smaller teams, more player coaches, and a simplified organizational structure". Most of the reductions fall in Product & Engineering.

A company spokesperson said the changes are meant to "simplify how we operate, sharpen our priorities and enable the company to move faster". Neither statement names a cost target, a saving or a one time charge. Even without a stated target, payroll and debt service may still matter to management.

The memo said impacted US employees would receive an email and a meeting invitation within the next twenty minutes. A livestream later that day lasted roughly a minute and allowed no comments, according to Business Insider. A separate all-hands meeting is planned, a spokesperson said. Squarespace is private, so the memo is the main window into the reasoning.

Is 19% the right base?

The fiscal 2023 10-K counts 1,749 full and part time employees at 31 December 2023, of whom 1,530 were in the United States. The company's own 19% implies a base of about 1,580 before the cut. That is CTOL arithmetic on two rounded numbers, not a new headcount.

The two figures describe different dates, so they are not rival measures of one workforce. Nor is 19% of people a 19% cut in pay. Roles, salaries and countries are not specified. The percentage shows scale, not savings.

How the buyout was financed

The 8-K of 13 May 2024 set the Permira price at $44.00 a share in cash. That was a 29% premium to the 90-day volume weighted average of $34.09, in a deal valued at about $6.9bn. Casalena rolled over a substantial majority of his equity and remained chief executive.

The amended merger agreement later raised the tender price to $46.50 a share. The merger closed on 17 October 2024.

Bloomberg reported that day that Blackstone, Blue Owl and Ares would provide a $2.65bn private credit facility. Blackstone held half and the other two a quarter each. It consisted of a $2.1bn term loan, a $300M delayed draw loan and a $250M revolver. At launch the private loan was reported to pay 5 percentage points over its benchmark.

The parts matter more than the sum. The delayed draw loan and the revolver give access to borrowing that may not have been used. The record gives no drawn balance. Counting all $2.65bn as debt assumes full use.

In September 2025 Bloomberg reported that the lenders repriced the facility in two tranches. Banks took a senior slice at around 2 percentage points over the base rate. Private credit funds held a junior slice at around 4. Permira could have refinanced in the syndicated bank market and stayed with its private lenders instead.

Bloomberg described the result as one of the lowest spreads yet for a direct loan to a private equity backed company.

That repricing shows financing terms at the time. It does not show why jobs were cut later. The report gives no reason for the lenders' pricing, and the balances and the current benchmark rate are not given.

The facility equals 11.3 times old adjusted EBITDA

Squarespace's last annual report is the fiscal 2023 10-K, filed before the buyout. Adjusted EBITDA, the company's own adjusted profit measure, was $235.4M in fiscal 2023. The $2.65bn facility is 11.3 times that figure.

This is CTOL arithmetic comparing facility size with old earnings. It is not a reported leverage ratio. Drawn debt, any other borrowing and current adjusted EBITDA are not in any filing, so a current multiple cannot be calculated.

The same filing gives an operating baseline, not a credit verdict. Revenue rose from $784.0M in 2021 to $867.0M in 2022 and $1,012.3M in 2023, growth of 16.8% in the last year. Adjusted EBITDA rose faster, to a margin of 23.3%.

Operating income was $83.7M in 2023, against a loss of $211.8M in 2022 that included a $225.2M impairment charge. The net loss narrowed to $7.1M. Stock compensation was $107.7M in 2023 after $307.9M in 2021.

These figures end before the buyout. They cannot show whether Squarespace is under financial pressure now.

Interest as a possible channel

Interest expense was $36.8M in 2023, up from $18.2M in 2022, on a term loan of $571.4M that the buyout replaced. Adjusted EBITDA covered that expense 6.4 times. That measures the old public company debt. It is not cash interest cover on the buyout facility and not a covenant test.

Debt service is one way operating savings could matter. It cannot be measured without current drawings, interest terms, cash generation and required payments.

One conditional sensitivity helps with scale. A move of one percentage point in the rate on a fully drawn $2.65bn is $26.5M a year, or 11.3% of fiscal 2023 adjusted EBITDA. This is not a forecast. If less is drawn, the effect is smaller. The 11.3% repeats the earlier ratio by construction, so it is not extra evidence of stress.

What 300 jobs might save

The saving from 300 jobs cannot be sized from the filings. The 10-K gives no pay data by function. Research and product development cost $242.2M in 2023, or 23.9% of revenue. That line includes stock compensation and is two years old. Revenue per employee of about $579,000 in 2023 measures productivity. It cannot establish payroll costs.

The announcement does not give the number of affected product staff, average pay, replacement hiring or outside spending. A cut in headcount does not translate into an equal cut in that expense line.

The departure terms are the one set of costs the memo lists. Severance is at least 16 weeks of base salary plus extra weeks by tenure. The memo also covers the 20 November vesting of the legacy RSU cash award and benefits through May 2027. The vesting date is not necessarily a payment date, and the memo gives no amounts.

Avoided salaries and departure payments may overlap. The memo does not say when savings could exceed the cost of the exits.

Four possible explanations and how to test them

Four explanations are possible, and the evidence supports them unequally. They can overlap. Evidence for or against one explanation would not, on its own, show what management intended.

An operating redesign is management's stated case. It would gain support if a smaller Product & Engineering organisation shipped on a clearly faster cycle than before. A single launch would not prove that.

A shift of product work toward AI is plausible. Forma is described as an upcoming AI native platform on a waitlist, and Squarespace launched Blueprint in 2024. A Forma release would show the direction taken after the cut, not whether AI caused it. The memo does not mention AI.

A financing response is less supported. The facility exposes the company to rates, but the 2025 repricing does not show lender distress or any instruction to cut staff. A disclosed amendment that ties cost cuts to financing terms would move this explanation up.

Weaker customer demand is unproven. No recent subscriber or revenue figures exist in the record, so it cannot be inferred from the staff percentage or from rivals' announcements.

A website builder market under pressure

Competition is context, not an explanation of the memo. A 2 November report notes that Wix bought Base44 for $80M in 2025, that Lovable raised $400M in August at a $13.3B valuation and that Google launched Stitch. These show investment in other ways to build websites. They do not measure lost Squarespace customers.

The useful contrast is what another chief executive said. Wix reduced its team by roughly 20%, about 1,000 of just under 5,300 people, in late May. Chief executive Avishai Abrahami cited the fast evolution of AI capabilities, a flatter organisation and the strengthening shekel, according to Business Insider's report of his memo.

Business Insider also reported Wix shares down 23% since the start of the year, as of 28 May.

Squarespace's memo gives a narrower reason: the operating model has to change, and there is no financial target. It does not name AI or demand. Wix is listed and Squarespace is private, so the evidence is not comparable. The similar percentage is not a base rate for AI layoffs.

CTOL view and what to track

CTOL's conclusion is limited by what has been disclosed. A leveraged buyout owner is making a large organisational cut whose stated reason is operational. The record does not support calling it an AI led layoff, a cut imposed by lenders, a profitability programme or a debt crisis.

The calculation establishes only this: $2.65bn of facility divided by $235.4M of old adjusted EBITDA is 11.3 times, and that does not convert into current leverage or savings.

CTOL's judgment, with low confidence, is that organisational redesign, not a lender instruction, is the main explanation. It rests on the memo's own words. A company or lender document that names staff cuts as a financing condition would overturn it.

The checks that would matter most are a disclosure of cash restructuring costs and recurring expense changes, a lender document with balances and terms, and dated evidence of what Forma does and when it ships. None is promised by a private company.

One weak signal is the New York State WARN dashboard. It lists notices from covered employers in New York State only, not the whole United States and not every job loss. In 2023 the US held 1,530 of 1,749 employees, so a proportional US share of 300 would be about 262.

That is CTOL's assumption, not a reported figure. The dashboard cannot test it or split the cut between the United States and other countries.