Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BigCommerce Holdings Inc (BIGC, Financial) reported Q2 revenue of just under $82 million, up 8% year over year.
- Adjusted EBITDA came in at $3 million, approximately 4% of revenue, indicating improved profitability.
- The company achieved strong operating cash flow of just under $12 million, showcasing financial health.
- BigCommerce Holdings Inc (BIGC) announced significant customer wins, including The RealReal and Bell's, demonstrating the platform's appeal to large enterprises.
- The company is leveraging AI technology to enhance customer growth, with tools like Big AI Copywriter and product recommendations powered by Google AI.
Negative Points
- Despite revenue growth, the number of enterprise accounts added was only 32, indicating slower customer acquisition.
- The European market showed stalled growth, attributed to the economic environment and delayed functionality rollout.
- The company is facing challenges in improving go-to-market efficiency and pipeline growth.
- BigCommerce Holdings Inc (BIGC) restructured its debt, resulting in higher interest costs, which could impact future profitability.
- The macroeconomic environment remains uncertain, with single-digit e-commerce growth rates and cautious consumer spending outlook.
Q & A Highlights
Q: Congrats for another solid quarter. My first question is on the go-to-market changes and the cadence. How long will it take for these changes to translate into pipeline and revenue? Also, why swap a 0.25% convertible into a higher interest rate vehicle now?
A: (Brent Bellm, CEO) You're already seeing some improvements in gross and net retention. We expect more changes to further enhance these metrics. Our new website content, which went live recently, should improve small business adoption. We are refining our ideal customer profile and targeting marketing spend accordingly. (Daniel Lentz, CFO) We aimed to lower overall leverage, space out maturities, reduce net debt, and minimize market execution risk and potential dilution. The new debt instrument reflects our confidence in the business's long-term prospects.
Q: B2B was a particularly strong segment. Is this an area you plan to lean into?
A: (Brent Bellm, CEO) Absolutely. B2B includes manufacturers, wholesalers, distributors, and professional services firms. Our platform is highly adaptable and offers a fresh, modular approach. We have been recognized as a leader in B2B by industry experts, and we see enormous potential in this segment.
Q: Can you provide more color on the inbound inquiries and the decision to remain independent?
A: (Daniel Lentz, CFO) We received inbound interest and evaluated our options. We see significant upside in remaining independent and are confident that our operating plans will maximize shareholder value.
Q: Can you walk us through the sales process and implementation for RealReal?
A: (Brent Bellm, CEO) RealReal chose a phased approach, starting with BigCommerce for checkout and cart. This allows them to integrate with existing systems and gradually migrate more components. We also have examples of rapid rip-and-replace implementations, like Bell's, which completed a full migration in just three months.
Q: How would you stack rank enterprise, SMB, and PSR revenue as growth drivers over the next 12 months?
A: (Brent Bellm, CEO) Enterprise is our primary growth driver, especially with our complete enterprise offering now in place. However, we are also optimistic about small business growth with our new messaging and positioning.
Q: Can you talk about execution in EMEA and how you're positioned in that market?
A: (Brent Bellm, CEO) The European economy has been slower, but we are seeing early signs of demand returning. Our multi-geographic selling capabilities are now fully functional, which positions us well to capture growth in Europe.
Q: How are your AI capabilities differentiated relative to your e-commerce peers?
A: (Brent Bellm, CEO) Feedonomics, our subsidiary, uses AI to optimize product data, delivering significant sales lifts for customers. We also offer AI-powered tools like Big AI Copywriter and product recommendations, enhancing customer growth and operational efficiency.
Q: Any notable trends in consumer spending and macro backdrop?
A: (Daniel Lentz, CFO) Consumer spending has been resilient but not significantly improving. Our cautious optimism is reflected in our guidance. We are seeing healthy trends in retention and contract quality, which gives us confidence.
Q: Which e-commerce platforms are customers most commonly migrating away from?
A: (Brent Bellm, CEO) At the upper end, we see migrations from custom platforms, Magento, and Shopify. For SMBs, it's a mix of platforms. We are now well-positioned to replace legacy tech stacks for complex use cases.
Q: How should we think about enterprise ARR as a percent of the mix?
A: (Daniel Lentz, CFO) The mix towards enterprise is progressing, albeit slower than anticipated due to a stabilizing small business segment and a tough migration environment. However, we remain confident in the long-term trend towards enterprise.
Q: How is the adoption of headless commerce tracking in the industry?
A: (Brent Bellm, CEO) Composable commerce is gaining traction, especially in North America. Our new reference architecture, Catalyst, is a market leader, and we expect it to drive significant growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
