Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the BigCommerce Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded.

I would now like to turn the conference over to your first speaker today, Tyler Duncan, Senior Director of Finance. ahead. go Please

Tyler Duncan

welcome and second XXXX quarter Good to call. earnings afternoon, BigCommerce's

CEO announced discussing close. press BigCommerce's Bellm; be will Lentz. in CFO, With Chairman, Daniel and the are market We today's results our Brent after release me and issued

forward-looking contain the to of which are Securities Litigation Reform Today's the certain made Harbor Safe call statements, will XXXX. provisions Private pursuant Act of

the and intend, include third financial the plan, These business anticipate, these future such our trends, statements. statements our any any our subsequent today and statements and guidance of only update These of as believe, statements and do duty date, and should quarter financial for to and XXXX and views full-year words. at we performance statements business identified concerning financial relied can expect, condition seek, not representing will similar Forward-looking by not undertake expected XXXX. our as as or be reflect views be committed, upon words

address Forward-looking expectations. and results from statements, materially by their to differ cause matters that that could uncertainties subject actual risks to are nature,

the filings of and Commission. discussion risks results, other important the and in refer risks affect Securities our a For actual factors that please contained disclosures and with to other the our could material Exchange

also our other site is press which to release, as and the furnished well we earnings directly certain available call, of reconciliation these our not discuss Web the GAAP with measures, included has During in we which accounting will metrics to on financial principles. A non-GAAP how most investors.bigcommerce.com. these non-GAAP are generally the measures, financial is metrics as comparable at define also been and prepared measures accepted in accordance financial SEC

to the With call Brent. that, let me turn over

Brent Bellm

perspective joining QX, changes. progress the my Thanks, thanks our total I'll our performance just was provide over everyone recent additional point QX by for leadership XX% growth In $XX and on million, detail discussing then and halfway of share at year. on strategy up us. I'll the Tyler, today year-over-year. start revenue and

million, our a just reach was discussion share detail our in results and Our a QX adjusted of confidence $X on operating year. guidance Daniel loss and over this an on will of Later, was the basis which greater ahead EBITDA breakeven conclude non-GAAP QX call strong on our indication to updated guidance. financial of quarterly with

two that the in business I quarter. milestones highlight want achieved to our

and $XX cash First, ended profitability we an the second, delivered reached flow the free adjusted XXXX. free flow basis first positive million the June; of month for second EBITDA under just on driving in cash XX, for quarter of we time, June

starting be To clear, milestones these only. are points

XXXX, would QX response work well, entire to a thank basis deliver long as in was the X,XXX our have a generation and way hard I of go nearly terms profitability, to difficult that ambitious team of flow cash for we that. like BigCommerce climate. flow. compared noting that non-GAAP in of our significant the goals against have revenue to delivered But to to macroeconomic margin cash backdrop operating it reach improvement growth, worth required is We in in improvement and to and points

up growth concluded ARR was ARR, million, account That $XXX Enterprise We XX% of or $XXX up an million. rate, in annual $XX XX% a approximately run year-over-year. over with of represents QX year-over-year. just sequential approximately revenue million, ARR

first year-over-year, and of with non-enterprise company accounts since up up QX compared exclusively our quarter XXXX. "Non-enterprise refer of we our delivering XX% Accounts represent to of just QX, under approximately which QX million total retail ARR finished ARR. our ARR of to accounts," enterprise $X million, $XX of As sequentially end the growth as using XXXX, X% plans,

from between our mix ARR our has differed mid-year to enterprise non-enterprise close expectations. total results the targets, are accounts While and

to of Going we the and retention back-half portion QX, contract going into year. pricing the non-enterprise expected returned of adjustments to the business encouraging momentum into mid this in year, high of Improvements to the cohort to growth by accounts providing single-digits. signs

using two parts ecommerce from the has and GMV. We growing Merchandise mid-market $X-XX TAM part our refer underserved and "Enterprise plans, which large or in merchants to is providers. year we accounts," mid-market market large enterprise as as by and Merchants define market: many a legacy per of million come merchants Value the This doing traditional enterprise. of Gross

XXXX momentum we seen of part the in from strong, relative is strong this have plans. our market Our and and share mid-market to results the

those at least GMV have compared of Large business more to sales including of $X increases cycle in those enterprise billion are segment to experiencing lengthier annually This to $XX tends XXXX. and significant complicated cycles million merchants, sales the up with requirements. more industry or durations

Here effects is account uncertainty enterprise increase in be are ARR most a where slower-than-expected and the of macroeconomic noticeable where seen. can

segment are this have it industry, In for of Although time we size scale take fit our market product we of market this and up complexity. will excellent response, penetration to merchants increasing Daniel in the in and to generation, dynamics we will our these performance. macroeconomic observe challenges fewer later speak remarks as his sales investment in in where well. strong mid-market more detail

five We today. levers have in growth our primary business

ARR. small growing nearly First, at a business $XXX in we have healthy and million

prices promotions, improve of aggressive and sales to efficiency actions our incented We payment, impact to minimal in and portion have business. this We thus has XXX retail rates led scalability with increased advanced average far plans at on health. Day this strong eliminated taken higher time improvements cohort where on we year. cohort This in than our were last retention. numerous retention XX%-XX% are to

sales In this result channels and offer the these business our plans self-serve changes. SMB we the addition, business. a We believe profitability and on features can believe and shifted profitably retail for more improving functionality, rely portion over grow marketing as growth, we of of account as market-leading we enterprise resources time towards we

the grow runway underserved in presence tremendous of and we we have Second, this a to growing share strong portion and mid-market merchants, a with have market.

complexity fit for believe expect and software. the allows part cost this and large at to Our uniquely advantages grow merchants ecommerce This is scale point the price win of of software without of market. enjoy in ecommerce the business. enterprise our positioned their We mid-market enterprise a to legacy the merchants of products product provide the functionality

in investing solutions customers this win platform ecommerce BXC has processes and provide Third, merchants. are the and categories. ecommerce we traditionally value to, market. consumer buying used in for Many delivers reflect been BXB for omnichannel their their underserved to both market-leading to our platforms, are we BXB BXB and shopping merchants experiences adjusting and outstanding by merchants both award-winning are

we recent product launches, upmarket. for features, inventory platform. and Fourth, Key the including are expanding large enterprise multi-storefront reflect market of the opportunity and capability represents a BigCommerce big the us, multi-location growing

utilizing enterprise large merchant In addition, differentiated omnichannel BigCommerce to drive critical Feedonomics' and to technology AI and market-leading capabilities provides channels. ROI through growth many merchants, marketplace advertising

Connectivity drive of omnichannel alone Other quality is not and enough. for connectivity, world. the feed in and together data the best data but connectivity Feedonomics' merchants, deliver results AI-driven capabilities solutions one platform-agnostic, competitors offer optimization

growth revenue. market, platform return fact, market. Feedonomics or customer can this more spend, a than large disrupt in QX enterprise believe and conversion, more our XX% reported their In XX% survey, omnichannel XXXX to customers in in We ad of up improvements are and on committed the we their to

and expansion past countries to two over our growth as marketing represents twelve presence a the significant international opportunity us years. for well. Finally, new sales We expanded

on an we EMEA, to Our legacy, particularly expansion where been has expensive see more win from ecommerce focused opportunity providers. share

markets. have launches marketing sales of pace investments we country not slowed existing and have While new changed in the of significantly we recently, the amount

surface on building is focus scratching the in recently-launched scale are near-term Our we markets, potential. our and our of growth where truly just profitability

to solutions improved also Merchants while discuss on AI, choose profitable in that technology as their suit the our BigCommerce It have expect freedom well. Feedonomics flexible, to the international ecommerce among omnichannel ROI continue solution market-leading a and is in commerce moment. can company. a We way. an years which fundamentally means expansion partner-first using in including open, our growth drive partner other platforms merchants efforts coming businesses, disciplined, further we'll

both for delivers for market partner-first go Being merchants. improved better and BigCommerce results to performance

the of breed, example strategy are this an best results performance open, our checkout for of Our partner-first merchants. advantages of

May XX.X% and checkout. a For Commerce a XXXX, example, was as Enterprise PayPal checkout This Braintree, result all exceptional from one-page or that checkout native processor a flagship data PayPal our of Platform, BigCommerce rate. merchant and storefront, using Adyen, stores conversion delivers one when average page Pay, June validated such Apple checkout the Stripe, examining and our we payment native Wallet

these the of We a third results in coming review party superior validation independent to checkout expect and publish weeks.

Chung as teams, relevant technology changes time at back our Steven fuel now on our teams growth. being our is sales to Earlier acquired. go-to-market the to brings time served PagerDuty, President. when this addition and our to strategy. experience leader ecommerce. better mid-market and sales, leadership will There like two ecommerce Steven from I lead industry role and will and our that no global and spend in services I'd moved execute at person global they this his fill he announced prior aligning Demandware of to as recent Steven scale some marketing and help previously upmarket leader enterprise Delphix veteran sales week, we business leadership our oversee company believe enterprise and

doubt experience in left at for is sales as to a but replacing roles since in as this has who excited Dell fill, Alvarez Daniel extensive that that shoes Daniel, of my leader mind absolutely him our make in of company at as also position no well-rounded across members recently and business. & Gamble the business our there that Daniel Lentz retired I'm highlight our Few a our Robert variety and or he our CFO, holding new minds best enterprise well RA the finance is to after job. experience XXXX. big Procter person board know

confidence to to every ability the in have long-term We steer company success. his

enterprise gears couple to like a examples on resonates with focus merchants customers. open, strategy I'd our partner-first shift great of and to Now, are mid-market how that of

they partner, Feedonomics combination just presence Coalition BigCommerce new was days. Creating Sinks The first the a U.S. and Houzer, to XX solid consumer launched BigCommerce powerhouse decades. and agency support sinks on Technologies, our and direct presence, faucets stack is a wanted and Houzer, to three over they omnichannel of that found They Houzer had turned needed. tech their in and to a BXB vital they was a kitchen strategy. for modern for store supplier an

the XXX growth drive to With and speed, Coalition dramatically a complex presence. without orders price increase the of all power and Houzer high helped its channels, tag. manage omnichannel its ability BigCommerce a growing products site over Houzer and Feedonomics maintaining migrate across gave while to quickly omnichannel portfolio products

enlisted with the in personalization Building BigCommerce match England, XXX BigCommerce online origins a over MKM Brave Wales. an the to and that a with that to merchant notable to the U.K. presence. up has the neighborhood in Bison digital supply experience front-end largest market-leading Supplies, representative implement and composable shop Bison, With seamless its commerce transformation keep collaborated drive branches merchant with solution is Bloomreach MKM and builder's trends. U.K., the Another across offline independent Scotland Storefront now fully Vue realized architecture with headless needed Brave MKM global to it as agency storefront provider site. delivers experience across Partnering

saw Just after MKM live, online accounts and increases new increased site in weeks value, order performance, revenue. orders, plus customer average going

going In with the moving of ecosystems composable. for from advocating group and from dedicated June, a Impact legacy infrastructure tech honored independent BXB technology Award Alliance, companies when MACH was best-of-breed MKM open, to a MACH

operational using and Last Merchants our efficiency We more platform and elevate also features operational year. product partnership to announced customer sales. streamline and reduce costs week, help features continuous These Google discovery innovation. to with time-to-market. and product will this by workflows, efficiencies, AI new drive improve we improve save remain accelerate later to AI-powered can productivity cycles, experiences, add committed enhance to accelerate algorithms merchants a time development

In Google, respect to privacy. committed using and we're and AI data, to our partnership responsibly user brand, merchants' with

essential We to ensure that use is merchants We is for brand a in to principles these transparent. and unbiased are protected. will believe AI their enterprise fair, continue way that

to a be scalable already We over well. solutions, even to build add our functionality ecommerce will marketplace, new Our as as for our as open AI, native app and integrated AI approach platform. they our into AI applications us be platform leading continue positions we partners easily in XX have

notable pieces recently. recognition platform received two Our of

the XX rankings world. XXXX we First, the for XX Mid-market in Major Digital categories. around Commerce Paradigm providers the We medals high and total our out XXXX Digital Enterprise Commerce placement Contender increasing assessed Combines BXB commerce achieved of in also awarded PEAK which Solutions XX digital Everest six Platform of Group's Matrix, Editions, in were

unique, we customized popular continued brand Barbecues grow furniture, tool checkout is its transacting became Galore, stores, free-spirited lifestyle market-leading and BigCommerce's clothing with leading, and merchants outdoor of QX, customized seller an to XXX a customers. in Edition order with more a just to advantage with and taking In of the accessories and live on to platform. BXB women's Australian theme our deliver brands weeks. Multi-Storefront, merchant notable going grills, XX first fashion than accessories products and our Builder of in roster grilling combined Page Francesca's,

to redeemed Raider, Square Enix, of APAC, needs multi-language to America, including including multiple Fantasy, Dragon new franchises multiple in Steam the most and marketplace. customers the EMEA gaming games North behind stores launched company games purchase power world's their digital Tomb through the some popular and Final across platforms, their Quest enabling multi-currency and

the of have Solutions I made. incredibly market that for supplier original stores featuring growth both I ERP bullish the and am proud supplies new inventory BigCommerce. challenging a tech, sync is BMW MINI launch prospects and with progress for leading stores. directly leadership and remain profitable a we about for with throughout UK, year Group the to of partnered XXXX and pricing long-term data integrations Autofixa parts, brands, BMW

team We hard growth is to long to and for shareholders. have needed our way our a to strong and go, deliver committed returns work the

to conclude discuss turn QX guidance our to like detail I'd XXXX. over and Next, more results to our updated in it Daniel for financial with and

Daniel Lentz

everyone remarks, and Thanks, you for Brent, for today. your us joining kind thank

the showing I'll results additional conclude on provide focus detail in remarks, need prepared we are trends both the for CFO. to updated will remainder detail, QX for guidance by I year, our of we progress to cover speaking and year, areas our as provide strengthening my improve, where where my and During the primary

revenue year-over-year grew to million, XX% total XX% prior grew and $XX $XX just was year-over-year Subscription to compared over up revenue, while million. $XX XX% up was revenue X% XX% QX, Americas APAC in up Partner while or PSR, revenue X%, million, and services was over year. all the of In just Revenue approximately year-over-year. up was EMEA to revenue

breakeven for As we flow the reaching important the first of business million in quarter hit in time QX, Brent a on of our delivering XX, XXXX. for basis free adjusted month cash of milestones previously, June for ended second mentioned the an $XX positive couple and EBITDA nearly June

that left To is be clear, our we represent milestones points. points these operating XXXX to financial that have - starting results a recognize lot the do. focus driving making ending These of evidence encouraging are not work plan progress, but we

to committed the of capital to use this long-term are disciplined We that. deliver necessary growth in profitable, business and

KPIs. now I'll non-GAAP review our

or X% the versus end up was reported approximately sequential year-over-year. year-over-year. XXX $XX X% At of Our accounts million, just ARR or XX% represents up ARPA account, accounts Subscription for up $XX XX% enterprise ARR year-over-year. over X% approximately up $XXX and was of grew That up accounts, Enterprise revenue to a total up enterprise in million, average $XX,XXX, X,XXX was year-over-year. we account ARR or $XXX XX% QX million. QX, ARR year-over-year. growth million per

I'll operations. now statement the shift expense the to of of portion

otherwise XX million thousand As was expenses, QX. hundred dollars sequentially a gross reminder, million, previous QX total million, XX%, $X.X year-over-year. cost per up are six operating points gross $XX.X while down a stated, all the were non-GAAP $XX.X results profit expenses to year, XX% basis $XX.X basis. was amounts up operating QX. references margin was unless and sequentially approximately revenue QX up on from QX share of total from million, our from

prior QX. a of and operating QX, of operating X.X% basis down with reported year This million a of administrative development $XX.X revenue, an marketing operating from loss XX% margin. $XX.X XXX represented were $XX.X a down we compares ago. the XX% million or operating XXX and down year Research In loss down points totaled year This in X.X% quarter. XXX and or an ago. margin in of expenses $XX.X a sales and from negative down and basis XX.X% from year-over-year. basis were ago an $X.X or $X.X expenses the million, or million QX, revenue, year of a revenue, million, million margin operating X% expenses operating negative XX% from of In points a points loss prior General negative slightly

QX million the or EBITDA Adjusted share, restricted a $X.X negative compared for $X.X prior $X.XX marketable to cash, securities. negative per net equivalents, EBITDA in loss cash, was negative margin, million year. to $X.XX negative million last ended We share million, approximately negative margin $XX.X EBITDA cash X.X% Non-GAAP per negative in with $XX.X adjusted negative a adjusted or XX.X% was $XXX QX and and year. compared million

June $XX $XX.X to negative months operating For ago. the million, was nearly flow three XX, a ended year million compared XXXX, cash

reported progress We in million now financial QX cash on nearly compares to share of thus my far our our on XXXX which flow and plan $XX view color free XXXX. million, year. the on like additional $XX I'd to negative

making the our improve and economics are to necessary We business. of the stabilize tough underlying non-enterprise decisions

are in the up mid-market marketing market unit of segments. merchants, our channels of focusing investments superior sales and economics towards bulk We merchant and and the new enterprise including spending

would near-term capital results. sales EBITDA in adjusted efficient timeline critical profitability focused, and action Going to most our because shift took our the average to resulting and opportunities. profitable and actions invest We a is that of certain market disciplined, challenges cash areas against performance, despite in way flows. improve it At we took these time, a entail we near-term these cycle into to knew our weighted XXXX, bookings fundamental the therefore time accelerate decisive decisions same impact we

to committed our operating We to while market long-term strategy. are staying adapting changing our environment, a tactics

primary plan three has XXXX goals. Our

seen elaborate on on we each. far the Let have challenges progress me thus and

largely mid-market with stabilizing line win the are investing halfway be First, expected we Revenue portion of to well. ARR of total year. business in point enterprise markets, where to and the we the are and business small our while results as the at in

and quote in than We years, these benefits in of systems. our operating being results. investments investing changes to and and the see discounts are in in our promotions processes more prior are selective sales we and cash We

discipline higher improved in and profitability DSO towards progress we QX, increase sequential is is or flows. to XX bookings, ever days our outstanding which leading operating QX quarter. days to sales strong the and Days cash to XX saw and largest This our in revenue from driving deferred quality revenue by

While largely the year, going our total ARR been non-enterprise and ARR different. mix results are with into has enterprise line in between expectations the

Non-enterprise account single earnings to in short fell February ARR a account growth full-year digits high to of QX. contract tracking non-enterprise expect is ARR strong. expectations, now at indicated in of non-enterprise Enterprise Non-enterprise has enterprise lighter account low than ARR growing a digits. year-over-year call our tracking expected account QX, what is ARR Sales in expectations, the in This grow our win rate our similar the ARR is We exceeded expectations and pipelines that mid remain rates we We progress. strong our on to continue ahead and grow to X% to basis. ARR on in expectations. discussed single QX. we our

with remain prior prior years. times cycle sales mentioned, As times elevated are while Mid-market years largely cycle line Enterprise compared with in merchants, Brent sales to considerably

this reduce looking volumes we a to been in order increase where of higher QX. than conditions, market platform in an adjustments merchants led saw merchants number by also to expected have existing to and volume of pricing We the spending impacted

We teens to low of continue these the year We account growth estimate the trends the to year. year-over-year. ARR macroeconomic back-half expect finish now the enterprise in in

and strength are recognition rates performance our by healthy, market strong, our remain growing retention Merchant we encouraged the of and of pipeline products. remain sales

will that provide that these We and efficiency are associated improvements improve, we we also spending ensure see well. accountability necessary in and the confident marketing will results as to sales

for to G&A expenses consistent year. this QX full remain and XXX our of basis EBITDA Second, deliver marketing, positive the R&D, we over quarter points bps were each lower the in to, of are year-over-year. than operating in improvement four We delivered improvement confident QX nearly and ability sales XXX over adjusted quarters. X% last QX we XXXX. margin of Operating margin committed down expenses averaging the

improvements prioritize to flow Third, taking we are healthy, flow cash consistent generation. drive to steps cash

existing in on mentioned and pricing tight driving advanced billing cash subscriptions, processes, on our June. we receivable completing customers discipline As around planned and accounts focused maintaining to prioritizing call, quote cash on the systems retail we through collections, flow and QX in have to improvements largely new investing changes

the cash accounts healthy to flow. results and free effects Our actions, revenue, deferred in DSO, improving are positive including growth of receivable these and beginning show

and I Margin, loss believe exceeded results a point better have halfway results exceeded Enterprise Overall, deferred are to to notable expectations, cash account number efficiency performance end improve, and the that and taking must reflect sales has actions areas. Brent revenue cause optimism and as as we improvements revenue our and, at our of for flow, and guidance. Non-enterprise in ARR operating deliver are said, growth encouraging. marketing well.

third quarter I'll an on for and view now outlook updated XXXX. the full-year share and guidance our

PSR For the third total implying rate of to in we and the low XX%. to high revenue in expect quarter, million grow $XX.X subscription year-over-year double to million, of for low we to in the revenue grow range that a digits Note single expect to X% single $XX.X growth the digits.

expect translating a For growth to year-over-year $XXX.X full-year rate between X% we million XX%. revenue total the to approximately million, $XXX.X to of XXXX,

reflects million non-GAAP a our in marketing planned slight QX, operating between is and QX. expected loss increase For which $X.X sales to and million, $X.X in be spending

positive our a in we as and like for operating outlook full-year, expect holding share also $XX.X the full-year. areas million and in are we CFO. momentum revenue prior outlook the focus that midpoint, line my $XX.X now reflecting between priorities I'd at improved Note guidance, our with the loss loss million. full-year an For while to non-GAAP operating

difficult of with this consistent a and focus business my these manage capital and tradeoffs fundamental and responsibilities. requires consider core must highly we capital First, in priorities disciplined and our levers. one core on alignment Directing I in decisions, our core with way growth

to long-term, Second, operating execution and critical are efficiency growth. spending profitable driving

of our business While we we great must have number in where results. are improve we our a making and progress, areas can

closely aligning our of practice what decisions and allocation do the how operate. debt and been we shareholders debt, holders core capital long-term our cash and leadership Finally, of to and continue stock-based team, we to This means long a both has focus tightly compensation, interests net dilution. will this with flow, our managing be

In our of company dedicated, work summary, I I BigCommerce's their would merchants to partners support the business. thank teammates. of a to and to employees and part grow am like this and for tireless honored serve incredible This be this is full new an team caring CFO. as

With of and Operator? take Brent your questions. are happy to that, any I

Operator

question-and-answer Instructions] ahead. session. We will is Gabriela from the Sachs. begin Borges go Please now question of The Goldman first [Operator

Callie Valenti

for on And the question Callie international Valenti on Hi, first me is Gabriela. market. the this for

customer seeing You there. in entered in of what traction new most terms you're Could a Europe? within about overall of And markets lot EMEA? you where seeing the then talk demand you're

Brent Bellm

and Yes, U.K. growth. in original is definitely and market it our powerhouse of EMEA, engine remains the

the we we put see Italy The is good On in investments based the been German-speaking continue year. healthy France, region. really to Nordics Portugal strong is starting us. market Benelux in to board. nicely continue on Spain, continent, the pick particularly to good the for wins And us. board across up region a traction really have very and last on for

we in delighted before reflect Europe marketing organic that continuing. into, even where had getting and Eastern see to Web expanded strong already sites. markets were the traction The East And we newer we're Middle we countries

Callie Valenti

moving of And has you June payments? second has then increase the And you. on been there the went Thank me customers is, been? X, on seeing how churn? initial pricing the effect response that for annual on Are impact back more to any into

Daniel Lentz

very the say negligible to months, over would encouraging. how -- need We churn been But I results far, which question, been Yes, been thus next again, it's two has thanks those so obviously. three impact shake say, far, see very I'd to the encouraging. for has out

the prepay. impact. seeing a And much as the electing seen an merchants to seen have prepay we're that. receivable And or yes, probably were this, factoring in view number versus of approaching that they merchants before. impact that not twice accelerate probably to We where this from point the haven't electing reason clear of about we to many of trying be are to are of big We're is

day in really XX% health that cohort Brent mentioned us. we ultimately gets his had to last about at we've the change the to remarks, really an year, in which retention that uptick were us, what a for versus been for XX% of seen healthy It's where end has cohort

Callie Valenti

right, All Thank you. great.

Operator

is next Berg Company. Please Needham The & from question of ahead. Scott go

Rob Morelli

Morelli Scott Rob enterprise this quarter. this ARR XX% around growth for Hey, on for on Congratulations Berg. the strong Looks was like quarter.

you 'XX, growth to You Thanks. you know, year it of given previously bringing discussed [exiting] visible last quarter? fiscal anticipating XX%, what (ph) now saw around down mid-teens, how is goal that

Brent Bellm

off. us This is I'll start and Brent,

our continue saw in and an one, XX% challenging in a long-run, a like the believe growth We achievable a target is, higher. economy the potentially in healthy economy, us, global to that deals, We current for and the where impacted enterprise in couple some major cycles was they quarter. dynamics in sales One with side achieve elongated, have that the ability close second it. especially didn't the quarter to

is in I with who And dynamic their the they for probably A for the had across limits signing higher And looking have of in profitability software particular happening which spend. this think are, dynamic to in ecommerce, all economy, second ways software; which and companies prioritizing XXXX, days they're sales and and XXXX, go-go signed up larger realized, of us. volumes, and have were since they achieved we merchants up potentially then. anticipated in reduce

we've to and licenses, to such restructure that shocker unnecessary getting my "I contract ourselves. not we all is eliminating a spend them so, said, us, come dynamics reduce That's And of and looked great expenditures, want money have at software now we're And on; unnecessary so, the with contracts P&L of it's both reasons expenditures and our back right why leverage reduce those some gone of back of in BigCommerce." that one impacted.

particular a in can fixate like in wise else. achievement I up particular business. for target think, multi-segment as seeing and in side, discussed, to not quarters we're a we're healthy And some because over-performance make going SMB something have on Daniel we which forward, of the quarterly dynamic that, the

you'd Anything add, Daniel?

Daniel Lentz

this to No, has time to cycle on we into dollars I shifting knew, I think all liked in year. of stubbornly the able I have particular going help we're see. longer We remarks, year by that would But we're up-market, underlying going accelerate started President. as would really sales kind my at very said it we be increase average more he's cycle overall, opportunities that sales to time to we encouraged our in our be excited into think more in larger just, this Steven area. add shift think weighted really was, going about it of up-market like we trends to The as to time. than I starting, where is We're the be the been

based we've and momentum out overall trend in the results. there, our we're We less it starting we're in things bookings QX we're and quality, quality, again, pre-billing. a pick be playing doing of promotions, aggressive on reiterate, and in quality, up going business. from think on getting really And seeing what line year, way what earnings seeing focus show to in that climate, business it's with practice on in prioritizing prudent, is the made about this there's And in revenue macro in the just kind changes lot we're of it's the a that to just I'd

we've from about that where our think not we small away we've think to But mid-market has basis largely walked stable would that. improvement tradeoffs going would in view the And if flow, that cash and margins a growth we and by the Due that show said, we we're changed. exchange in But large we in our in make some year, we there, and it's business; and can long-term be And healthy to had economics. seeing growth enterprise. business. results. less have not it driven maybe the is a actions taken, an here be marginally I for from has We do think outsized in up that into growth quality going to

are vectors us growth So, a excited lot we're there that for about. of quite

Rob Morelli

response, very it. helpful. me. was all the Thanks Got for That's for it

Operator

Genuity. from of is question Please next Daniel go ahead. Reagan The Canaccord

Daniel Reagan

for Hey, on Thanks this question. is for Dan taking my Reagan guys, Hynes. DJ

so just key enterprise, there? discuss background And BigCommerce, the that be you ambitions a So solid sales on mid-market translate a wondering hired in maybe from coming could the PagerDuty. potential and I'm appears his guys have just Chung; starting to how experiences does you Brent, the to Steve or org? drive to with just Demandware really initiatives expect and to to with in him changes you drawing acceleration he if your then

Brent Bellm

and Bohn, A I'm on and Yes, uniquely is as the real time. their brands credibility creating Series backer successfully to leader Larry was BigCommerce. that to Demandware with and experience had Board, still A Steven in software catalyst And the excitement we back they is about buzz, giants to day. in enterprises, backer on and and of Larry playbook against The Steven win and the way the with legacy business XXXX, with Demandware our interest, DNA able right market, top giddy our and into instrumental moving bring as common up the for take really the largest being sales really world's after Series IPO-ed points

that look and to; in are addition to support. building leveraging to going customers unique is a already depth be marketing, and excitement market, existing in credibility, for It's who we customer sales, playbook referenceable have who up the strength others highly

lot activation get many we growing using businesses to And come an he'll Once they're high us, our for not an hopefully consider of opportunity, today, always opportunity had previously look. So, what compete to might have a growing a win more we've to rates. who I'm bring drawn and anticipating take within ecosystem, to in been excitement, partner relative opportunities.

And got lot about a in a he's talked the techniques we've process. recruiting lot and of that of experience individual

started I think he after implement certain more and be to say we'll from quarter changing. ones, started is what to specifically now, able a then about

Daniel Reagan

had just for one Excellent, then that Daniel. thanks for I And color.

to to also, we several in the changes in our QX. about your to I us wondering way wanted Thanks, across team I changes? metrics growth the say impressed great congrats; was see just those ARR you always guys. First, quarters, been work, quantify eventually in And the effect if think you could what's so pricing right has seat. full lap when of pricing then it's help by

Daniel Lentz

question, and Yes, way, great compliment, a the too. for thanks the by that's

In at to that terms pricing due flow rate, of million the around to million $X sequentially, And was you was base And as that maybe then it growth believe. cash roughly, to I look our driven within action. if merchants $X incremental impact, of ARR the bit total chose prepay. non-enterprise the well $X million, quite from a of

of underlying way just that that incremental into of interesting will we into use think investable sure more is the where investment that over the I business, that place what's area. the think, cohort investment to going of it slightly And a be made more I forward, approach sense portion able that the to kind from difficult next and to in was for business. economics time, in making health business best made we and part putting dollar we had put us maybe put what about it the highest that our start

that think -- so confident we of us differentiation quality enterprise, the mid-market I to produce going for small the and in where be business. the have really priority is and in we still

best-of-breed omni-channel portion we're mean, that each expansion, I It's for not geared that. small market. are of platform; single go of the and merchants to open an on like that for we're functionality things with kind looking every interest, business focused

so. gives it I So time, to over us opportunities some think, do

ARR based the of planning just stabilize business plans over that the we can couple the of next think on course going into I But our don't sequentially us portion this we in year. that lot for for a next spending I think more quarters, year. of anticipate adding

we we resources well in much more of in we healthy stable focus that's to the while grow portion that to so continue can then up-market, more way business sales and that us And self-serve and can our having start organically think growth marketing for still cost-efficient of a go-to-market over time.

Operator

Ikeda The of ahead. go Bank of next question is Please America. from Koji

Unidentified Analyst

but Koji. business is remain in George Hi, EBITDA the profitability Apologies to this in for expectation reaching the for the missed on forward? [indiscernible] EBITDA-positive going I regards is to if June, this

Daniel Lentz

Daniel, we EBITDA, we reason mid-market to one. that, the What Part adjusted got that particularly but just in we That's hiring; that above is for for full breakeven We QX. calling sales for in out wanted on take that bit This quarter. a of not great planned advantage full also still that's the month were June, I'll is the question, of and and George. below being we for of the some had expenditures, is of an increase little take have a marketing zero planned opportunities. anticipate

full breakeven EBITDA sequentially but better expect of loss be above not terms in to and where than the QX, in So, we were we for operating necessarily quarter.

our We I adjusted breakeven are and starting free margins above the for to want business very breakeven very, running about is generation. Brent point. EBITDA cash And about we're think get to long-term we're reiterate, commitment and point confidence a reiterating how this healthy again, flow QX. I When with healthy thinking

from a be it's planning When think that. generation about business, a it cash flow unambiguous where a a milestone. for about to we very think can milestone we be basis. business this But this to is Just path on

track I'm profile, that next that consistent And a not over leverage the continue leverage got so. starting profitability, year. of point, we think excited quarters growth QX, I of goal row. then we on easy, and and a said we've where basis get would, a just approaching to shown can very milestone but just in is particularly for that we're We've for to way average, I'm to we're very in in do points, And of we've into improvements balanced operating in Important, kind QX. It's XXX proud this to year. operating healthy, progress execute, in a confident have we four as we as consistent had going

Unidentified Analyst

if and Yes, awesome. How to I in service this sizable going item? things this about with follow keep line drivers another could there's and question, up revenue. step-up sequential revenue, on And a think mind forward, of in should partners we maybe

Daniel Lentz

Yes, underlying due in were great in improvements question. largely just to that's The a improvements PSR consumption.

the trends volumes. we're what is think GMV line not of it's one much broader growth we've as PSR important does in terms seeing perfectly it's us; before, macro track factor of to But in I understand, many. with for with very probably said

have difficult that fee year-over-year next basis slotting quarter to rate a on a economic have arrangements to which more from lot to of out one little in growth We a the sometimes underlying rev-rec project different other. makes may we one than PSR, a things arrangements from quarter the hit because

single effect where number not can ramped. about lot we of of means between have which we that That's of we having really arrangements example, have more fully attach see see. some by guidance of digits. running as difference we we a PSR. those But one-time get reason, of the as where consumption-driven working in true QX in terms by well, better. large no We in in we rates of where in think a many as We're encouraged mix can can growth versus on is in kind by and that what low we And and holiday, the stuff. we're period think to we see a a We're getting we we can more which QX, of can growth those overall do talked think of well fantastic you for for kind implied Largely terms base recently, anticipate rates, we up merchants well. signed pickup a that it's

So, not we by we where think certainly progress. the can we are but be, encouraged

Unidentified Analyst

Awesome. Thank you.

Daniel Lentz

You're welcome.

Operator

of ahead. The Lane Stifel. go Parker next question from Please is

Unidentified Analyst

the say cohort, Thanks the questions. my momentum pricing Hi, pronounced you on at adjustments for you're would having are start, To on or most you Parker. is for seeing when [indiscernible] logo non-enterprises retention taking this there? impact look

Daniel Lentz

the say I'd combination it's two. a of

QX, was as we've the it pace seen approached that if slowing, QX. we quarters over look even of contraction you to at So, prior the

health pricing, the is QX, You were and went into that. really, And in pricing in Even We that the that's driving that not single on We think positive. saw from giving contract it retention. the year in it the in improvements we the the we're we're digits. thinking improvements can reason digits; moderated seeing. we maybe thought apart seeing single bit. it a the would outlook now mid-to-high for we healthy it's be Into contract really forward that

a about merchants, towards being end which really them get in These types promotions more out of entrepreneurial order And because the in sticky really a marketing we sales product. we're less that about very are to upper businesses has and maybe small-business the mid-market bit that lot little our the of are we're mean of to, small who but disciplined in. spillover bring being spend of I and of effect set, marketing part stable, that in offering is established into lot the we're value business, a a careful directing small we're dollars

just little So, bit underlying Obviously, not the pricing that. impact it's But improvements a of seeing baseline health, we're pricing. it's to a both. is big are

Unidentified Analyst

a cycle there? good have lack that's turn Is the contributing back primary the moving Okay, on elongation hear. or And when back budget expectations been replatforming, of to interest it factors of over that around? issue in then, can of sales any like enterprise and to what category, have to you do kind

Brent Bellm

cycle in sales interest somebody begins expresses migrating. when by Well, definition, elongated any

interest is across market. the Companies companies large to many and are seeing there various in projects enterprise I you're on quite are that we categories. in them. just expensive taking believe that commit negotiate software longer the So, out for imagine

Unidentified Analyst

Okay, thank you.

Operator

from is Schrage The go ahead. Maddie Please of question next KeyBanc.

Maddie Schrage

thanks was about my you say and And those LTV side, question, of of any investments or in you out Would team like the primarily on guys build new the Hey, a differences I in Daniel role. that that to terms to you making taking talk just actually marketing you on congrats push? for is you are BXB. features see need any do customers? more guys, sales the guys it's Thanks. with there R&D if if CAC if is this wondering could

Brent Bellm

teams driver sales, using are of as and sales those. a our overall or of for of merchant few both a customers BXB us our in any on Yes. quite capable of a growing our BXB but keeps sales indeed serving are BXC context,

it's big, they rapid of really they The really the platform. I a as GX product it, expansion one They how buyer of their capabilities. we talented that's advancing is world's into why market-leading invoice and out, go And in favorable on very released engineering And product. it's BXB. all there to you are. is incredible incredibly portal distinction that sales the beginning if of reasons see the compatibility, businesses product an us mean it's frankly very growing the so, storefront QX, soon industry-leading, to love not just a rate go multi incorporation isn't far what that team under BXB that efficient by in at it's as they are on already quickly

two, competition The other of from is nice so we the about experience that flexibility functionality, origins, BXB functionality in market. flexibility have is and winner BXC industry and BXB-specific thing our our the the the is much all very combo legacy user usability from the but have all of much Oftentimes the incredible software. don't platform BXC BXB-only

Daniel Lentz

maybe the BXB planning. mean might it And necessarily a I traditional a to to Nothing in BXB your have transaction bit little doesn't you our little BXC will acquisition LTV see We we opportunity. the material, don't see on good as actually a into between well. flow-through costs as but a CAC I quite on a side, the pay to as PSR. attention they very which credit of LTV address volumes, a has well. BXB CAC bit card are big question to effect to BXC adjust really tend versus it, difference then

from the about I positioned think or future, perspective even building out I BXB opportunities, plans mean excited about equally we're as very they're BXC, think whether I as for we get uniquely So, hybrid. well. Honestly, my

Maddie Schrage

on now that have? Got engine expecting that his how whey you super are that this of the to seeing and the very investments called new And just little the you are bit to to a with Steven you wanted super wondering team top kind large fuel now, weakness most take ramp That's just it. know, kind I obviously helpful. merchants, guess making I long you touch we side, of out about some you're enterprise guys

Daniel Lentz

today them Daniel. It's that where a say where as from longer of one. years for than we sales years. would motion different compared large will been year we've up be improved for are small take will ago upper-end is ramp, pivoting were enterprise example, a That's short this materially in going shifting cycle past into that from dollars different in right. business, and can bit into address ramp now, months. again, And progress times, very to having to Yes, sales an still us. the making and you marketing versus new we things spending business us just that in I than little teams it's channels. very smaller are market a multiple significant are small year, would and five are taking opportunities look When I to they we leads, but the where

about think the going is sales had doing several But So, I where up the clear, is we to across in next But be very than that, going it's of very quarters. over doesn't are do enterprise we is we and leadership with much thinking because to to helpful and something convinced strategy in upper-end change the that are and how going time and be think if win something and year, something be of it think more capital can we long-term. we expected marketing course difficult that Steven's of are moving we're against we to going may and take wisely we improve area, little committed are platform very into think do are customer convinced so. to proud do it's right ecommerce market. we the going a it of again, isn't area, for operate think or just work is but how year of we the to that our we in this are disciplined this This profit back-half are we committed what be we it. we cash share applying team And measured, to are to is is can really support. are that very is the we our are are going doing. an flow. impact win, disruption together to this We build we the is platform that What in. to the we We And

Maddie Schrage

I guys. appreciate Thanks. time, the

Daniel Lentz

You welcome. are

Operator

The next ahead. Stanley. Morgan question is from of Weiss Please Keith go

Unidentified Analyst

Keith. the taking and of sales enterprise Ryan had just now to efficiency curious This relative kind things, from on that you in what of question. for expectations I have was could going Thanks for the into broader how sales quarters a scheme kind benefit incremental here? feel provide, you is few realignment, of about your

Daniel Lentz

right? duration, to pipeline in going in mean change the the quarters you upper-end enterprise. be of as multiple pipeline I are building you money of are -- amount spending Yes, that for would as of said, would marketing we we less strong year, we I were than into I efficiency results last knew year going because the fundamentally clearly the see say, and sales

to there from specific how in it it's was contracts because seeing convinced will be going perspective would a say knew to the is renegotiation customers, And existing of difficult my spoke is not to, I metric we I are but we have continue as of think the so, impact to what year, improve us room our but definite in for of Brent long-term said not rate in as it's best that for it a I are I still to room anyway we improve -- we that downgrade of going decision the mean remarks, to doing we I well. related are it's what that into mean and area, terms expansion we performing in decision made shareholders. and just acquisition. it also

are that So, within things there're focused we and something over can marketing, very, where very of also on better know as our leaders well. it's sales that a number time, and support and

Unidentified Analyst

or Helpful, thanks. a to overall expected growth? just to that is exit year ARR in the the growth the one to say quick And clarify an low-teens, year rate finish when point, as follow-up enterprise

Daniel Lentz

a the full-year end so way exit the essentially actually metric of as metric of the the number The calculate the we spot is same. and the it's year,

Unidentified Analyst

you. thank Helpful,

Daniel Lentz

Welcome.

Operator

from with James. ahead. next Peterson go Brian question is Raymond The Please

Unidentified Analyst

thanks is on for Hi, for my John Brian. taking question. This

in you a investments planned mid-market that could can there? the you any speak if speak then strength to I'm I curious have you And And strength, that maybe noticed areas those were geographically area, investments follow-up. where also the On just outside made? on quick

Brent Bellm

the board we the and healthy, in, it's store it great a mid-market, a on just volume in demonstrates across which what -- beauty the for and every on really very can very apparel, In and United we electronics, we can with with beverage, board complex many people BXB from home of how consumer well shows across there. coming most really in the malls a MKM Building And Francesca's, U.K. seeing BXB examples then very retailer stores, apparel large large, in with it's just great we beauty, job XXX food do enterprise, industrial lumpier States, it large and Supplies sorry, is two footprint. the but category what for go-lives And are I industrial, and it's can XXX-plus of side, leader think then, the enterprise in there highlighting I the more in just a mid-market. were serve than health and locations do the think announced it's large know

Unidentified Analyst

would Daniel, quick forward. I very lever well, a helpful. congratulations a as but follow-up, my thanks, And Okay, moving on have add then, I question as pricing

Thank or the about we a should pricing referenced, I'm you lever? as a we you Given did as move you. realize just forward growth dynamics I retention think pricing increase, how curious

Daniel Lentz

was enterprise for pricing right think action where I impactful a several merchants, think because but based pricing definitely priced until changes pricing this everything that plans the retail it product changes about felt know they're differently perspective retail they're And had. changes minimal just about in plans our and we very on the we and warranted for don't our strong. is lightly, value we we we've for we years. whether Up from were our our had take the launches very talking plans, for you now it

those we off obviously of actually multiple because side, in different more prices list pricing and enterprise opaque, operate enterprise. taken within over several are we've times the last price; the ways pockets a years On far

features do so and to continue will market, also move we We up have and as different launches.

number we're something super as a from advantage, are don't moving we how have to TCO at as growth moving enterprise. a are going to going to very we up-market, TCO us, in pricing manage view to is are we as compelling closely. it's lever that be much have a get we obviously I So, order well and we further frankly, carefully up It's we for up-market aggressively but further going and that a side to we something and and look separable expecting are have just as probably price something it. to It strong in advantage and really where not

We the going that So, a that we of to are also on strike balance advantage. opportunities good while that. value want we maintaining maximize to get obviously the

Unidentified Analyst

much. very you Thank

Operator

Please from is go Morgan. question J.P. of Mark next The ahead. Murphy

Unidentified Analyst

for on answered this the Mark. you and quarter, is, overall, showing the taking (ph) side, that first you on taken by My go-to-market, not to on Brent, role. kind cetera, right? of [Ardie] with segment question it et Hey, in kind terms directly, this, mostly this upside have the seems Thanks are but ask you doing guys I just is guys for demand is new pricing, Daniel better in that of non-enterprise be congrats the indicating to think driven terms actions of really question, of

Daniel Lentz

are due we we and still dollars seeing very enterprise. which to we think I are it's sales pocket and what I pricing. and I be is sales growth just a shifted would think because our marketing clear, say of do of excited we're it's a health. is volume of retention, about, are to mean today. cohort improvements marketing our lot there I to there, But there get spending The I in demand and that deliberately indication good out say drive continuing encouraging, to into not mid-market would like resources we

and We are focusing resources, enterprise. and those mid-market,

Unidentified Analyst

Got it.

having spending, the it bit spread when different, bit they're performing larger just improvement how of specifically who their evenly question, of you is to on kind on their cycles is adjust customers own. that the little some sales then, I the there? who also about a of the dynamic mid-market know in or and second the put re-forecasting spending the segment, more it's enterprise, end little guys in are And maybe sales of the towards Enterprise are talked So, these but are just adjustments. in

Daniel Lentz

number businesses evenly, that tech licenses, fee operate companies I think on spread it's way I And spend us playing I is seeing in fee exactly it's the talked about they're lots Brent mean in orders where millions frank, out, own I and the contracted mean we year, our to pulled licenses, and out to case. vendors. think with I be doing same are pretty of our thing have this this changes of whether like our own of

-- reflecting different this that little was degree our about And widely -- as expected, spread base, as that saw part to bit it's back-half something more that within that something be well. think outlook conservative are not I think pretty a we we it's it the of think that we think the the was is So, only I QX. in I

Unidentified Analyst

for insight. thanks Perfect, the

Daniel Lentz

welcome. are You

Operator

next The go Oppenheimer. Please of is question ahead. from Ken Wong

Ken Wong

maybe run of trajectory, is to go? just downward arguably wanted I to on in to flat I rate, floor with you I a wanted low-teens, a so guess more there exit check fantastic. guess or to the that think of diagnosis in is Great, downward so we this kind at guys, I as

Daniel Lentz

I can take that one, Ken.

a it's think reasonable expectation. I

on of to than good there it well. differently, is think more out accelerate always as about I the that conditions how out just that and of could turn a of into back-half we do to about change We see of is of that really floor right it's important what thinking lot year we conservatively next we downside. things think for a that better going and year. or also a based are us opportunity that and the but kind There reflect lot of it macro that as have can number, now, feel than we think

into perspective, do going the part pretty on portions had we again, improvements are non-enterprise focused there're think to wanted what here, significant and the big as we pleased think going things that some changes, and the really obviously from had And we we We business. going will and maintain flow. year, in we we profitability year are with our better. But in are I of cash we three the to we I seeing can growth see into wanted mentioned, up-market, are other really

think have we done that. I

we as are about this, and but are want to about is I track, on going satisfied. definitely or much there's the thinking to year, think and balance be make the that, to where impression to one profitable make be we don't important. of a not way a growth rates striking to lot we where other. the sure growth, in between But good clear, know concentrated do Brent and focused this you're maintaining that's areas But of I the articulate pretty to a give but we're think are done profitability. We that's I very of we very thinking a We on was about investments and think, I improve. so way When going business, going and can that the it a power disciplined can to balance into we trajectory growth really far, we've and want that. we're overcorrecting job

Ken Wong

a any deliberate to Are things any whatnot. should be the optimizing lot drive we workloads vendors, that their that deliberate there Got it. there down, as mechanical, or maybe largely volumes And spend, are reduction obviously, cloud out to in they'll of down transactions come thinking in we in down should like to customers terms down, try then you view actions, with a -- -- come reach sales probably be that about? spend hear as price so and might that second, customer platform as a the doing

Daniel Lentz

folks trailing similar but change just hearing way from were the describe talk actions, to deliberate up what we're those ourselves. or calling changes obviously, it's dynamics also basis, us, and is very some us. through things doing And us, both, you Ken. It's other kind for to you the organic cost-saving of volumes of similar the on seeing XX-month We're we're in very with more again seeing, places, where down, making for as are

Ken Wong

trailing a end obviously just year emerging, we're the of seeing everyone, now that then more last front-end just are for And front the last, of it. because Got on kind it? on volumes. on or bad you was we Would year catch-up of the detail or just say we're that of a

Daniel Lentz

a That's question, great Ken.

not I think renegotiate, in the it some was in order trend. acceleration downward change reaching to deliberate to was macro-related QX observed sort from out that an merchants of more we volume related actions

there much very going year, of and on not going renegotiations into expected of merchants. underlying deliberate what's our the has really been think erosion. what on I behalf line we in sort some more with It's of

Ken Wong

Got it.

guys. color, the for Thanks fantastic. Okay,

Daniel Lentz

Welcome.

Operator

would conference This concludes turn question-and-answer to Brent over for the our session. to I Bellm closing remarks. like

Brent Bellm

on of cash from growth who full transformation years forward towards ahead growth And first just adjusted move profitability. to to flow. the from company finish to and thanks step growth-centric significant for much QX quarter very in us QX see a we everybody profitability. balancing us to, strong a EBITDA Yes, this our high achieving look is that of free I our very with and us. one you'll solid has the saying now, quarter in of one forward extremely profitability reiterating our joined ever-expanding We're want a first full was confidence where by

So, forward to thanks a talking from quarter again now. and again, look

Operator

is conference for The today's Thank you presentation. now attending concluded.

You may now disconnect.

BigCommerce (BIGC) 3 Aug 232023 Q2 Earnings call transcript