BigCommerce Holdings, Inc. (NASDAQ:BIGC) is leading the charge in the ecommerce industry, empowering brands and retailers of all sizes to build, innovate, and grow their online businesses. With its open SaaS and composable platform, BigCommerce is redefining the ecommerce landscape, providing its customers with sophisticated enterprise-grade functionality, customization, and performance, all while maintaining simplicity and ease-of-use.
In the fiscal year 2023, BigCommerce reported annual revenue of $309,394,000, a testament to the company's strong market position and growing customer base. However, the company faced some challenges, reporting a net loss of $64,671,000 and negative operating and free cash flows of $24,243,000 and $28,422,000, respectively. These financial results reflect the company's ongoing investments in product innovation, go-to-market strategies, and operational improvements to drive long-term growth and profitability.
Business Overview
BigCommerce's platform simplifies the creation of engaging online stores by delivering a unique combination of ease-of-use, enterprise functionality, and flexibility. The company empowers both its customers' branded ecommerce stores and their cross-channel connections to popular online marketplaces, social networks, and offline point-of-sale systems. BigCommerce's comprehensive platform allows merchants to build their ecommerce solution their way, with the flexibility to fit their unique business and product offerings.
The company's platform serves stores in a wide variety of sizes, product categories, and purchase types, including business-to-consumer (B2C) and business-to-business (B2B). As of March 31, 2023, BigCommerce served 5,970 enterprise accounts, which may have more than one Enterprise plan or a combination of Enterprise plans and Essentials plans.
BigCommerce's differentiated "Open SaaS" technology approach combines the flexibility and customization potential of open-source software with the performance, security, usability, and value benefits of multi-tenant SaaS. This unique approach helps businesses turn digital transformation into a competitive advantage, enabling them to optimize their ecommerce strategy based on their specific needs.
Financials
Quarterly Performance
In the first quarter of 2023, BigCommerce reported revenue of $80,360,000, up 12% year-over-year. Subscription solutions revenue increased by 13.3% to $60,959,000, while partner and services revenue grew by 8.1% to $19,401,000. The company's gross margin improved to 77.1%, up from 75.7% in the prior-year period, driven by cost-cutting measures and operational efficiencies.
However, the company's net loss for the quarter was $6,392,000, compared to a net loss of $22,120,000 in the same period last year. This improvement in net loss was primarily due to a reduction in operating expenses, including a 4.8% decrease in sales and marketing expenses and a 4.1% decrease in research and development expenses.
Liquidity
BigCommerce's cash and cash equivalents, including restricted cash, stood at $62,012,000 as of March 31, 2023, a slight decrease from $62,187,000 in the prior-year period. The company's liquidity position remains strong, with a current ratio of 4.93 and a quick ratio of 4.93, indicating its ability to meet short-term obligations.
Go-to-Market Transformation
To drive efficient revenue growth and improve profitability, BigCommerce has undertaken a significant go-to-market transformation. The company has reorganized its business teams and leadership structure to introduce clear and unified end-to-end ownership of the customer, aligning sales, customer success, marketing, and business development teams around customer success and growth.
As part of this transformation, BigCommerce has also improved its internal performance metrics and goals to better reflect its move upmarket, balancing gross retention, net retention, and new customer growth, including a greater focus on portfolio cross-sell of Feedonomics and partner solutions. Additionally, the company is optimizing its data and operational systems to improve the management of net retention and sales pipeline, with investments in a new customer master data management system and a unified CRM and marketing automation platform.
To lead this go-to-market transformation, BigCommerce has welcomed Travis Hess as the company's new President. Hess brings over 15 years of enterprise ecommerce leadership experience, including expertise in service and implementation, ecosystem partnerships, and competitive selling and positioning. Under Hess's guidance, the company will target resources and attention on categories with the greatest customer traction and success, such as apparel, home and garden, sports and outdoors, and B2B.
Product Innovation
BigCommerce's commitment to innovation is evident in the launch of its "Next Big Thing" initiative, which unveiled more than 100 platform enhancements, new features, and partner integrations. Among the key innovations are:
1. Catalyst: BigCommerce's next-generation storefront technology that provides a simplified starting point for customers, agency partners, and ecommerce developers to build beautiful, high-performing stores using a headless, composable architecture.
2. Multi-Geography Selling: BigCommerce's multi-storefront and multi-language functionality enables localized experiences for customers, including language, content, pricing, payment methods, and promotions.
3. Open Source B2B Buyer Portal: BigCommerce has open-sourced its B2B Edition's Buyer Portal, equipping enterprise suppliers, manufacturers, distributors, and wholesalers with the tools to deliver a bespoke buyer experience.
4. Instant Commerce from Feedonomics: This solution connects brands, retailers, and businesses to leading marketplaces and delivery services, enabling same-day fulfillment and delivery of orders.
These innovations demonstrate BigCommerce's commitment to providing its customers with industry-leading flexibility, performance, and customization capabilities, further strengthening the company's competitive position in the ecommerce market.
Outlook
Despite the broader ecommerce industry experiencing lower growth rates compared to the pandemic period, BigCommerce has observed resilient consumer spending across its major markets. The company believes that platform investment spending will improve, and it is transforming its go-to-market capabilities to capitalize on this opportunity.
For the second quarter of 2024, BigCommerce expects revenue in the range of $79.8 million to $81.8 million, representing a year-over-year growth of 6% to 8%. For the full year 2024, the company expects revenue between $329.7 million and $335.7 million, translating to a year-over-year growth of approximately 7% to 9%.
In terms of profitability, BigCommerce expects non-GAAP operating income between $10.2 million and $14.2 million for the full year 2024, reflecting the company's commitment to improving its operating leverage and growing profitability.
Risks and Challenges
While BigCommerce has made significant strides in its go-to-market transformation and product innovation, the company faces several risks and challenges that investors should consider:
1. Competitive Landscape: BigCommerce operates in a highly competitive ecommerce platform market, with established players and new entrants vying for market share.
2. Macroeconomic Conditions: Fluctuations in consumer spending and platform investment spending could impact the company's revenue growth and profitability.
3. Execution Risks: The successful implementation of the company's go-to-market transformation and operational improvements is critical to achieving its growth and profitability goals.
4. Regulatory and Compliance Risks: BigCommerce must navigate a complex regulatory environment, particularly in areas such as data privacy and security.
5. Integration and Acquisition Risks: The company's ability to successfully integrate and leverage acquired businesses, such as Feedonomics, is crucial to its long-term success.
Conclusion
BigCommerce is at the forefront of the ecommerce industry, leveraging its open SaaS and composable platform to empower brands and retailers of all sizes to build, innovate, and grow their online businesses. The company's commitment to product innovation, go-to-market transformation, and operational improvements positions it well to capitalize on the growing demand for flexible and customizable ecommerce solutions.
While BigCommerce faces some near-term challenges, including a net loss and negative cash flows, the company's strong liquidity position, improved profitability, and promising outlook for revenue growth suggest that it is well-positioned to navigate the evolving ecommerce landscape and deliver long-term value for its shareholders.