Q4 2020 Bigcommerce Holdings, Inc. Earnings Call
[music].
Ladies and gentlemen, and thank you for standing by and welcome to be commerce, and as fourth quarter and fiscal.
Here in 'twenty and 'twenty earnings call at this time, all participants are in a listen only mode.
After the Speakers' presentation, there'll be a question and answer session.
Be advised that today's conference is being recorded.
I'd now like to turn the conference over to your first speaker today, Daniel Lynch VP of finance and Investor.
Okay.
Please go ahead.
Good afternoon, and welcome to the Big Commerce's fourth quarter and fiscal year, 'twenty and 'twenty earnings call.
And we will be discussing the results announced in our press release issued after the market close today with me are big Commerce, as President and CEO, and chairman and Brett Pelham and CFO Robert Alvarez.
Today's call will contain forward looking statements, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of.
And 95 forward looking statements include statements concerning financial and business trends, our expected future business and financial performance and financial condition and our guidance for the first quarter of 2021, and the full year 'twenty and 'twenty one.
These statements can be identified by words, such as expect anticipate.
Of 19 intend plan believe seek will or similar words. These.
These statements reflect our views as of today, only and should not be relied upon as representing our views at any subsequent date and we do not undertake any duty to update these statements forward looking statements by their nature address matters.
And are subject to risks and uncertainties that could cause actual results to differ materially from expectations.
For a discussion of the material risks and other important factors that could affect our actual results. Please refer to the risks and other disclosures contained in our filings with the Securities and Exchange Commission.
During the call we will also.
Matters that of certain non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures as well as how we define these metrics and the other metrics is included in our earnings press release, which has been furnished to the SEC and is also available on.
The skylight at investors that big Commerce Dot com with that let me turn the call over to Brent.
Thanks, Daniel and welcome everyone and thanks for joining us today from ice Cold Austin, Texas, I Hope everyone has had a great start to the new year.
Let's jump right into our fourth quarter performance our results reflect the success.
And our Webster and South strategy product innovation execution and best of breed partner ecosystem, We had a strong fourth quarter with Q4 revenue coming in at $43 1 million up 39% year over year and.
And our art of $181 2 million up 41% year over year, our success meeting.
And of early the SaaS growing and large businesses was reflected in the Q for growth in IRR from enterprise accounts, which grew 51% year over year more broadly.
And from accounts with more than $2000 and annual contract value, which includes both enterprise and and pro accounts grew 48% year over year.
Meeting the new for capped off a landmark year and the history of Big Commerce, We completed our initial public offering in August and concluded our third successive year of accelerating revenue growth rate.
Most importantly, our employees and partners worked tirelessly to help our customers one of the storm of the COVID-19 pandemic, we believe the pandemic.
Salaries and the migration to ecommerce and selling online is no longer and nice to have but in Marseille and the <unk>.
Both opportunities before us are greater than ever and I couldnt be more excited to build upon our platform team and partnerships as ecommerce continues to evolve.
Our strategy has three core pillars.
First we are focused on disruptive innovation, adding functionality and performance to our core product that enables us to serve the needs of businesses from the smallest of the world's largest <unk>.
We are pioneering and ecommerce what we call open SaaS.
Hope and south of our strategy for incorporating flexibility configurable.
Figure ability and extensibility and every area of our SaaS platform. So that each customer can easily assemble and optimal approach to E commerce for their specific needs in conjunction with our best of breed partners.
Finally, rebuild our business using a repeatable growth strategy with for components first we invest.
Success and growth of existing customers.
And we acquire new customers across an ever widening range of business category size ranges and use cases.
Third we arent incremental revenue from partners and services on top of our core subscription revenues and fourth we replicate our growth model and geographies.
And the town the world.
For the full year revenue was $152 $4 million up 36% year over year.
Net revenue retention for accounts with more than $2000 and annual contract value finished at 113% and 2020 up from 106% and 2019.
We added new.
These are and the Midmarket and enterprise customers at an estimated LTV to cap ratio of four 9% to one up from $4 four to one and 2019.
We also made continued progress on margins gross margins improved to 78% and 2022 point improvement compared to 76% and 2000.
New ethane.
While adjusted EBITDA margins improved to negative, 16% and 2020, the 16 point improvement compared to the negative 32% adjusted EBITDA margin and 2019.
Let me walk you through the highlights the contribute to the success, we saw in 2020 and provide some.
And 90 sites to the plans we have for the coming year.
We deployed page the are easy to use widget based drag and drop page design tool, which helps merchants tell their brand story and bringing their products to life without the complexity of the editing HTML files for.
Other this tool is open to enable developers to create.
And some widgets, such as AI powered merchandising or social media feeds the.
Plug in the page builder, allowing marketing manager merchandisers to publish rich website pages without having to write any code.
And the area of Headless Commerce, we invested heavily and opening API is the power headless storefronts and shopping.
Customer areas, which gives merchants and developers choice of frameworks and tools to create unique shopping experiences and now have referenced implementations for most major progressive web App content management systems and digital experience platforms.
We also invested and cross border features to help merchants reach.
The new markets and grow their businesses, we introduced support for multi currency across our top payment solutions, which is the ability to display transact and subtle and multiple currencies. We also launched integrations with top global tax providers, such as Apple era, vertex and tax charge, helping merchants collect tax and geographies.
The fees around the globe the compliant way.
To further build our omni channel offering we introduced channel manager, which allows merchants to promote and sell their products wherever consumers are branded ecommerce stores offline stores content site, social networks, such as Facebook, and Instagram and marketplaces, such as Amazon and ebay.
While enabling merchants to discover install and manage these channel centrally.
This enables merchants to drive growth through and omni channel strategy.
And support of this we released our channels tool kit, which allows third parties to build channel integrations in a manner the pills native to our platform using the channels toolkit.
And with partners to efficiently increase selling channels for our customers and partner revenue for Big Commerce.
And social Commerce, we partnered with Facebook to build native integrations to Facebook shops, and checkout on Instagram, which enable our customers to advertise and sell their products to consumers on Facebook and Instagram for merchants.
Orders automatically synchronize that the big commerce for fulfillment and management.
We enhanced our open checkout features by giving developers access to the source code of our feature rich and highly tuned checkout, enabling them to create the spoke checkout experiences, which is important for many large merchants and especially for merchants and the rapidly.
<unk> expanding <unk> market.
2020 also brought market advancements and our international expansion strategy for the launch of new country specific websites, and France, Italy, the Netherlands, and more recently, and Mexico, Germany, and Spain and more to come in 2021.
We continue to invest and our global price.
And and offering native language web experiences that further strengthen our ability to connect more directly with prospects and customers in each region.
The commerce is proud to be a partner centric platform since launching in 2009. The commerce is focused on creating the world's best open SaaS ecommerce platform.
Stages of business growth.
Building on and enhancing the core functionality has and will continue to be our primary focus unlike our closest competitors the.
And the Congress does not act like a conglomerate competing with partners and adjacent categories. We.
We focus instead on building the world's best platform and we partner with.
And for all of the house and every other category.
And 2020, the commerce welcome many new and expanded technology and solution partnerships.
And young Barclays Clover, and deliver Facebook for cell and wish and many others.
And November the Commerce joined the <unk> Alliance.
The World is the newly formed group of independent of Tech companies dedicated to advocating for and open.
The breed technology ecosystem for enterprise E. Commerce that is API first cloud native SaaS and headless enabled.
And 'twenty and 'twenty, we receive significant industry wide recognition the Congress was recognized.
<unk> by a number of influential technology analyst firms, including placement as a leader and I D. CS markets gates for both B to C and headless digital Commerce. We also receive similar placements from Forrester and Gartner and paradigm be debate as.
The company that followed the disruptive innovation model of moving upmarket only after.
And it's building scale, serving small businesses the.
Congress has worked hard to earn tech analysts recognition for our enterprise capabilities with that recognition, we now compete aggressively and with credibility for the E commerce business of the world's largest and most complex companies.
I'd like to turn now to highlight and the sample.
The first sighting new stores that launched in Q4 and.
And established leader and home health and wellness innovations cosmetics migrated three enterprise stores for the commerce thinks of the big Commerce of superior ease of use compared to other platforms.
M D global the official licensee of Nokia brand mobile phones and services.
Chose the commerce for its first direct to consumer offering already H M. D has launched nine regional sites on the commerce include the of Nokia Dot Com slash bumps.
The artisan all spirits company limited owner of the Scotch malt Whiskey society needed and intuitive easy to use E Commerce platform.
For them that could support its business growth and selected big Commerce after receiving a recommendation from a trusted partner.
Phytology one of the fastest growing private space companies in America moved a big Commerce. We believe the selection of Big Commerce will help them gain more control over their comprehensive site experience and enable beat of B and B to C sales.
On the same site.
Pretty much supply of BTB supplier of coffee equipment accessories needed of flexible and scalable platform that would give them the ability to manage complex data and order flows. We believe they selected the commerce for <unk>.
And our ability to support the <unk> b to B workflows and fulfillment process.
Sales, which can give the premise of supply team back time needed to focus on servicing and growing their customer base.
Looking ahead 2021 will be of Europe continued product innovation and global expansion at the heart of the isn't unwavering commitment to the success of our customers, which we believe to be the fundamental prerequisites.
<unk> all components of our business strategy.
The product team has outlined and ambitious roadmap for the year that extends and strengthens our platform for customers of all sizes and our partner team is pursuing new partnerships and unlock innovation growth and flexibility across our ecosystem.
Overtime, I'm, particularly excited about.
The committed the geographic expansion, including current initiatives and Continental Europe, and Latin America.
And by saying a sincere. Thank you 2020 marked a historic year for Big Commerce is nearly impossible to have reached this point without the dedication of our employees, who face the challenging year with both grace and fortitude as well as the <unk>.
About and Bank trust placed in us buyer of amazing customers and partners, who inspire us each and every day now.
Now I'd like to turn it over to Robert for a deeper discussion of our financial results.
Thanks, Brent and thanks, again to everyone for joining us today.
Before discussing our detailed financial results I'd like to point out that.
Ongoing to our GAAP results I'll also be discussing certain non-GAAP results, our GAAP financial results along with the reconciliation between GAAP and non-GAAP results can be found in our earnings release.
Brett mentioned, we generated total revenue in Q4 of $43 1 million of 39% year over year total revenue and.
In addition, <unk> grew 33% and Q4, while we also continue to build on our strong international momentum growing international revenue of 65% year over year, and Q4 with 97% year over year revenue growth in EMEA, and 42% year over year revenue growth and APAC.
Subscription revenue was $29.
The other million in Q4 up 33% year over year and accounted for 69% of our Q4 total revenue.
Led by new merchants subscriptions and growth of adjusted upgrades from existing merchants.
Partner and services revenue was $13 $5 million and Q4 of 54% year over year.
700 for 31% of our Q4 total revenue.
The increase and partner and services revenue was primarily a result of increased E commerce activity across our platform.
Driven by a combination of new and growing merchants the <unk>.
And 19 pandemic related changes and consumer behavior and the related increase.
Switching gears and E commerce adoption.
As well as our continued improvements and the monetization of partner revenue share.
Since the onset of the pandemic, we have generally experienced a shortening of sales cycle time, and and improvement in lead conversion and competitive win rates.
Our teams are also working hard to maintain strong platform performance.
Increases and the uptime necessary to help our merchants and these challenging times.
While we expect the macroeconomic shift towards ecommerce to continue after the COVID-19, pandemic abates and <unk>.
<unk> remains with respect to transaction volumes and associated subscription revenue and partner and services revenue as.
<unk> related restrictions begin to ease.
Given this uncertainty we will continue to take a prudent approach and forecasting the COVID-19 impact to our business, while continuing to make the structural investments necessary to fuel our long term growth strategy.
Moving on to our key business metrics first let's discuss.
<unk> or annual revenue run rate Q.
Q4, <unk> was $181 2 million up 41% year over year, resulting from strong new merchant bookings continued strength and the retention of existing merchants and increase subscription fees from higher merchant sales volume and order volume grew.
The agents.
As we've talked about at length before we focus on providing the best open SaaS solution and the market to disrupt outdated legacy providers and the Midmarket and enterprise segments.
We measure increasing mix shift of our enterprise accounts by tracking our enterprise accounts a R. R.
Our enterprise.
Adjusted EBITDA grew 51% year over year to $100 8 million in Q4.
And enterprise accounts represented 56% of total.
As of December 31, 2020, compared to 52% as of December 31, 2019 for.
Further demonstrating.
As the counties enterprise mix shift and growing traction in this segment of the market.
We also track key much ex for accounts with annual contract value or a C V created in $2000 as of the end of the monthly billing period.
These accounts include all merchants and either retail pro plans or enterprise plans as well.
Our ink merchant that may have a combination of retail standard or plus plans, which together exceed $2000 and HCV.
For these accounts, we track total <unk> the number of accounts average revenue per account and what percentage of total AOR. These accounts represent.
We ended Q4.
And with 10180 for customers over the $2000 ACB threshold.
Which was the sequential increase of 407 accounts compared to Q3.
And the year over year increase of 1090 for accounts.
Or up 12%.
Counts above the $2000 ACB threshold represented 80.
Is any of that of our total <unk> and Q4 up from 78% and Q4 2019.
Another key metric we track is ARPA.
The average revenue per account.
And for accounts above the $2000 ACB threshold.
ARPA for accounts above $2000 and HCV for Q4.
Two per <unk> $14615 up 32% year over year, driven by both the mix shift towards higher and retail pro plan.
And enterprise plans as we closed a strong mix of enterprise deals and Q4, and addition to stronger net revenue retention results for the existing accounts.
Net revenue.
For attention for accounts with more than $2000 and HCV finished at 113% and 2020 up from 106%.
In 2019.
In discussing the remainder of the income statement. Please note that unless otherwise stated all references to our expenses operating results and share.
Revenue return on a non-GAAP basis.
In Q4, our gross profit was $33 4 million, representing a gross margin of 77%. This.
And this compares to a gross margin of 74% of year ago, and 79% last quarter the year over year increase and our gross margin.
Was impacted in part by the high margin revenue.
Count that we earned from a subset of our strategic technology partners, which as a reminder, we record on a net revenue basis.
Sales and marketing expenses for Q4 were $18 6 million or 43% of total revenue compared to $15 million and 48% of year ago. We.
We made significant investments.
New share and marketing and 2020 to expand our market reach and the U S and abroad.
Even while investing we've been able to drive leverage because of stronger LTV to CAC metrics and associated sales and marketing efficiencies with the further mix shift towards enterprise accounts, we have.
The new SMB mid market and enterprise.
And sellers at an estimated LTV to CAC ratio of $4 91 up from $4 401 and 2019.
Of our mid market and enterprise leads come from inbound marketing Tech and agency partner referrals as well as our outbound sales motions, which means we expect to continue growing in the segment.
And without having to spend large sums of sufficient variable of digital marketing programs. Our research and development expenses for Q4 were $12 7 million or 29% of revenue compared to $10 7 million and 35% of year ago. We are committed to our disruptive innovation strategy and have invested aggressively and product.
Engineering to add additional enterprise functionality, while also showing improved leverage throughout 2020.
General and administrative expenses for Q4 were $9 7 million or 22% of revenue compared to $6 1 million and 20% of year ago.
This increase was driven largely by public company external cost.
And the associated head count increases.
Operating loss for Q4 was negative $7 6 million or a negative 18% operating margin compared to a negative $8 8 million or of negative 28% operating margin in Q4 and 19.
Adjusted EBITDA was negative $6 eight.
For a negative 16% adjusted EBITDA margin, a 10 point improvement from a negative 26% adjusted EBITDA margin a year ago. These.
These results exceeded our expectations and were primarily driven by the significant increase and high margin partner and services revenue and our ability to manage standard.
Millions of Lee to drive leverage across the areas I previously mentioned.
Non-GAAP net loss for Q4 was negative $8 million or negative <unk> 12 per share compared to a non-GAAP net loss of negative $9 4 million or negative <unk> <unk> per share a year ago.
Turning to the balance sheet and cash flow statement.
Effective weighted 2020, with $219 4 million and cash and cash equivalents.
The remaining performance obligations or RPE O totaled approximately $86 9 million up 82% from 47.8.
$8 million last year.
We expect to recognize approximately 55% or.
<unk> $7 8 million of the total <unk> as revenue over the next 12 months.
Operating cash flow for 2020 was negative $26 5 million compared to negative $40 million a year ago free cash flow was negative $28 5 million or a negative 19% free cash flow margin compared to negative 40.
Or $48 5 million and the negative 41% free cash flow margin a year ago the knee.
Nearly 22 point improvement and free cash flow margin was driven by ability to realize more leverage and the business growth and high margin partner and services revenue and our continued mix shift to enterprise I will now provide a brief summary of.
<unk> 45 of year 2020 results as Brent mentioned revenue totaled $152 4 million up $40 3 million or 36% compared to 2019.
Gross profit was $119 million up $33 7 million or 40% compared to 2019.
This represented a <unk> 70.
Our gross margin in 2020 compared to a 76% gross margin in 2019.
2020, operating loss was negative $27 4 million or negative <unk>, 18% operating margin compared.
Compared to negative $37 8 million or a negative 34% operating margin in two.
The eight person team.
The adjusted EBITDA was negative $24 5 million or a negative 16% adjusted EBITDA margin, a 16 point improvement from a negative 32% adjusted EBITDA margin a year ago.
I will now conclude the call by providing guidance for Q1 and for the full year of 2021.
And for the first quarter, we expect total revenue of the range of $41 8 million to $42 3 million.
Our Q1 guidance assumes that our subscription revenue will grow and the high side of the mid twenties of partner and services revenue is expected to grow and the mid twenties range year over year.
Partner and services revenue has more quarter.
For variability than subscription revenue and we will continue to take a prudent approach to forecasting partner and services revenue given that it is more difficult to predict partner related transaction volumes during the COVID-19 pandemic.
We expect a non-GAAP operating loss and the range of negative $8 2 million to negative $7.
$9 million.
For the full year of 2021, we expect total revenue of the range of 189 million to of $191 million.
For year over year growth rate of 24 to 25, 3%.
We expect our subscription revenue year over year growth rate to accelerate slightly compared to the 25% year over year.
And your subscription growth of 2020.
We expect the non-GAAP operating loss and the range of negative $34 5 million to negative $33 3 million.
Our investment plans for 2021 result, and our non-GAAP operating loss margin of negative 18% at the midpoint of our range roughly the same as our 2020 operating margin.
And we believe continued investment and the business to drive long term growth is the right decision given the acceleration and E commerce, the momentum and our business and our unique position and a large addressable market.
With that Brett and I are happy to take any of your questions operator.
Okay.
Thank you.
And for asking the question you will need to press Star then one on your telephone to withdraw your question. Please press the pound key.
Our first question comes from the line of stands Lasky with Morgan Stanley. Your line is now open.
Oh, sorry, he wasn't mute.
Thank you so much for taking my question and congratulations on the strong quarter guys.
And from my end of the the thing and it really kind of stood out to me was.
The the international growth that was a very nice.
Our growth that you guys just put up.
What's driving that especially in.
And in EMEA is there something specifically that's happening in that geography, that's driving such strong adoption.
Hey, it's Dan Brennan here and thanks to everybody on the call for.
Taking and stride the rescheduling of the earnings call. After the giant outages this past week across.
Cross, Texas, and especially here in Austin.
We are grateful that we're back out a couple of days later so.
Internationally.
Our European business really is on fire and has been for quite some time, the ability and particular to sell.
The.
Midmarket and enterprise successfully out of our U K based.
This has been going extremely well.
We're finding kind of success across the board it's simple.
For manufacturers and brands as well as retailers, it's b to B and B to C. The thing Thats a little bit.
Different about Europe for us is that.
Because we formally entered it late in the game and we only put our first people in Europe and mid 2018, we had thousands of customers there, but the at all self served or had signed up.
With American day salespeople.
People ever simply put a team and theyre.
And the demand and need for our products has been.
You know really exceptional and we entered more as the Midmarket and enterprise brand.
And then our origins and SMB solution and so from the beginning they have really put us head to head.
With the Gen toes and the sales forces of the World and we're selling very successfully against those other legacy competitors.
I'm also really excited about continental Europe, so our strength up until now.
He's been out of the U K and northern Europe that we now have as indicated market.
Marketing and self serve websites up and France, Spain, Italy, Germany, Netherlands.
Added new control panel translation and so the continental opportunity is very early days for us and it will be upside there.
Okay, perfect and then maybe.
A quick follow up on on the PSL of revenue in Q4.
Very strong year on year result, obviously, but sequentially.
Going from the <unk>.
$13 2 million to $13 five.
Is there something that happened in Q4, you would've expected a slightly bigger.
Seasonal benefit and on that line was there anything to note maybe from the advertising partnership and renegotiation or is it just you know.
Like the variability quarter to quarter.
Yeah, I'll jump in on that one and Hey, Stan.
Yes, as we mentioned last quarter.
And the timing of.
And the AD revenue under the new agreement was more ratable so.
When you factor that in for Q4, if you actually back out the impact of that or <unk> revenue would've grown north of 70%.
But again, it's just the renegotiation that we went through and the timing of that revenue but.
Super pleased with the performance of the platform and really.
Really the elevated transactions that occurred really throughout the quarter.
Okay perfect. Thank you so much that's really helpful sure.
Thank you. Our next question come from the line of pre dating with Barclays.
Your line is now open.
Okay. Thank you for thank you for letting me ask the question.
Wanted to see if you could give us some more color on the beat of B side of the market.
And what kind of size and get or how fast it's growing versus the the food part.
Yeah, we don't.
Pick out and disclose.
B to B as a segment of customer accounts.
And sometimes it's not even all of that yeah easy to track because you can have somebody selling b to b, but for all intents and purposes. The the type they put.
Is using the product and the same way as the beat of seat merchant would use it but we do know that <unk> was doing extremely well we've been helped and the last year from great reviews from the tech analysts Forrester called us out.
The strong performing enterprise B to B platform, we want and seven out of 10.
Category of awards and the paradigm B to B combine IDC also rated us the strong performer and so we're getting a lot of recognition and traction from the most thorough evaluations of beat of be platforms and that's notable for us because most of our competition our.
And our purpose built meaning exclusively for <unk> platforms and the.
Among the generalist platforms, it's really us and the genco, who seem to be doing the best and those reviews and so that that recognition, but of course, we're a lot easier faster cheaper and.
The simpler to.
And the gentle.
Therefore, there's a big segment of that market, where we're a nice day.
Sure.
Got it thank you and and I guess you know.
Working off of that magenta, the sunset of their two point and one version of June of last year.
And that's happened.
And then I was your growth.
The new business versus replacement kind of shifted a little bit more towards the potential ex customers has that created the opportunity for you.
I think that's been going on.
Yes for years, because the announced sun setting of Magenta one was done.
Here's ago, the the date when they stopped servicing and finally hit last year, but you can go into belt weapon and see that there are still more.
Many many many tens of thousands if not 100000 or more.
The clients that are on versions of magenta, one of our old community edition and that haven't migrated yet.
And therefore.
And that opportunity, though it's been of great tailwind for us so far probably is not done.
Thank you.
Thank you.
Our next question comes from the line of some of the Samana with Jefferies. Your line is now open.
Hi, good evening.
Thanks for my taking my questions and I hope everybody down in Texas is doing okay and glad to hear you guys are doing well on your and specifically as it from Brent maybe one.
Oh definitely and I wanted to start off with the Brent for you and channel manager and clearly an important feature with all of the different third parties.
And the channels that exist I'm curious, how you've seen maybe which of either volume or orders going through those channels. Since the rollout of that feature and and does that change is there a different set of monetization for for volume that goes through these channels versus the the direct website.
Yeah. So channel manager is the part of the Big Commerce product that lets our customers go in and activate.
Different sales channels that are either outside of the commerce where connect into it.
And typically.
Integrated product catalog.
Borders and ability to flow cell.
These channels can be marketplace channels like E Bay, Amazon wish they can be.
Social media channels, like Instagram and Facebook, they can be advertising channels like.
Google shopping.
And.
What we have seen and said every time, we add of new channel or enhance and integration into one like we also recently did and the Facebook, we see a very nice.
Adoption of that because customers are always trying to take advantage of incremental ways.
As the <unk>.
But with <unk>.
Very streamlined and coordinated operations again.
Simple catalogue single view of border single ability to fulfill.
And when we announced wish there were just and.
Enormous amounts of interest immediately after that.
And then we keep adding additional.
Channel into the channel manager and one of the notable things is that we also have the channels toolkit and.
And that channel is toolkit facilitate third party Tech partners think the the satcom vs and <unk> and channel advisors and.
The.
Nam ex of the world too.
Add additional linkages and channels using that common framework and bring the experience and of the control panel rather than the external of the big Commerce and out of our apps marketplace and answer to your question about the economics.
The economic.
Economics.
Are different and the sense that.
Fundamentally what we're selling and our core product is a store for merchants and then the third party connectors.
Our incremental to that and whether we directly get economics are not from the give and channel is always going.
One of the circuit and what we negotiated with and individual partner.
If anything.
Very helpful. And then maybe Robert a follow up for you. This is the the first set of guidance from.
From an annual perspective that we're getting and entering of new year and I just wanted to maybe wanted to see.
How the first couple of months of the year of shaking out.
And we're almost two thirds of the way through the first quarter and just maybe.
Even qualitatively what youre seeing in terms of either activity in terms of order volumes or.
Merchants in terms of activity just to help us think about what's the what's in that.
Beach guidance for for 2021.
Yeah. So you know for the year last year subscription revenue increased a little over 25%, we've got a lots of more visibility into that and heading into 'twenty and 'twenty. One we are guiding to and <unk>.
Accelerating.
The rate that a bit further on the <unk> I mean again, if we're going to provide guidance for PSA or we're going to we're going to set it to a point, where we're very confident that we'll achieve it so.
As far as Q1 goes it's it's reflected in our guidance, we feel we feel.
The really good about where we're setting things for Q1 and for 2021.
Great, Thank you and and and it's nice to see the strong close to the year.
Thanks, and I appreciate it.
Thank you. Our next question comes from the line of Josh Beck with Keybanc. Your line is now open.
Things seem for for doing the call and being flexible with the with the time and help the hope everyone is doing good and we all hope for a swift Swift recovery, there and Texas.
I wanted to ask about yeah and of course, all right I wanted to ask about the the sales cycles.
So it certainly seemed like when the pandemic onset there was of shortening but unclear if that was going to be durable or if it was maybe more transitory, but youre still talking about that commentary. So just maybe help.
And to understand the client conversation and what's going on and secondarily I don't know if the RP O I believe it was up over 80% is maybe a.
The good metric to think about on the enterprise success, but just would be curious on all of those aspects.
I don't yes for <unk>.
And see.
For.
Enterprise leads the close exists and the same way today isn't it did.
Eight and nine months ago.
However in general we are definitely seeing shorter sales cycle.
Today than a year.
Yeah, I just kind of still.
And we are seeing.
More opportunities in the past and or a sale cycle.
Michael and a month or and a quarter and then close within that month or quarter.
So we like those trends both of the win rate and the shorter sales.
Of our ago relative to pre pandemic.
Yes, the only thing I'd add to that Josh is the on the <unk> front.
Appeal for us.
The captures all of our enterprise contracts are the ones that are multi year of two years three years. So not only have we increased enterprise.
Michael and I are at 51% for the quarter, but we definitely added larger enterprise deals that are multi year deals that we have to capture and that <unk> number.
But remember for us if you want to get a view of bookings and the best for your bookings is that change and a R. R.
I would still point you to that change and <unk> is the best measure.
Sure of bookings, but very pleased to see the increase and our P O and and that's a real good indication of the size of enterprise deals that where we're starting to sign.
Okay, so sort of some duration impact there, but that all makes sense and maybe just following up a little bit on <unk> question and thinking about subscription.
<unk> revenue growth for next year, certainly talking about some acceleration, but like you said the.
And the visibility has improved so should I be thinking about maybe the the less and two K a C V as the.
That's an area, where you'd look to be more conservative just just curious on maybe what.
And is driving some of the conservatism around.
Subscription revenue growth.
Yeah, when I was responding to some odd question it was more and on the P. S. Our front book.
But remember our pricing plans for subscriptions include programmatic upgrades from growth of adjustments.
And you know folks exceeding their GMP thresholds. So you know when you factor in a kind of more freedom. The view of of G. M D and how we lapped 2020 that that does impact subscription a bit but.
Most of the conservatism is baked into the piece of our number.
Okay, that's really helpful. Thanks, Dave.
Uh huh.
Thank you. Our next question comes from the line of D. J Hynes with Canaccord. Your line is now open.
Hey, Thank you guys and congrats on the and the strong quarter.
I want to ask about the enterprise pipeline and I and I guess the essence of the question is.
As you know are you of filling it up as fast as Youre, drawing it down right. I mean, we've had three quarters in a row of that two K plus ads is hovering around 400.
So really really strong customer adds and I don't know what the frame of reference might be for for pipeline, but how do you feel about the enterprise pipeline and during 'twenty one.
How should we think about these quarterly.
The customer adds and I'm not trying to hold you the guidance, but just maybe qualitatively and any comments.
Yeah. The D. J. So we are we track our pipeline as a multiple of the numbers that were we're trying to hit and I can say Q4, we entered Q4 with the strong pipeline and it resulted.
<unk> and as you can see really great results that we're proud of and Q1, we had the and equally strong pipeline heading into Q1.
But we measure it based on a kind of a multiple of the where we need of land.
Yeah, Okay that makes sense. So you feel good about coverage ratios Hum.
And then.
And I feel great and feel great about the the enterprise sales teams and reps that we've hired here in the U S and abroad, we gotcha.
Tremendous amount of talent on our enterprise sales teams and they're doing a great job of converting the pipeline.
Yes, good to hear Okay, and then Brian maybe one for you and just a follow up like what categories.
<unk> and the partner ecosystem are you investing and the most and I and I guess like.
Like how aggressive are you.
With respect of that tech partner build out versus those folks coming to you guys because of the momentum that they see big commerce, having and the market.
Yeah.
I mean, we've seen.
And a very material.
Uptick and.
The excitement and commitment and investment.
And the commerce and for the time of.
IPO any ambiguity about whether we were one of the couple of long term winners was erased by that.
Our <unk>.
Partner of our Tech partner team is divided up by category and Consequently, we have really experienced dedicated pros and committed to doing everything we can and all of the major categories of.
Partners and so we have giant.
Programs going with our top payments partners, our top point of sale partners are part of our top channels partners marketplaces advertising.
Social network.
Back office partners ERP are top of shipping and fulfillment partners.
Site tools checkout redirect I mean subscriptions, it's really all of the tablets.
Giant programs with each of them and.
I would just encourage you know.
Yes for the partners and our ecosystem of the more of that they invest and a great integration with us and and coordinated go to.
<unk> the more we'll both get out of everything we do together.
Great. Thanks for the color guys and congrats.
Thanks.
Thank you. Our next question comes from the line of Scott Berg with Needham. Your line is now open.
Hi, Brent Tonight, Congrats and good quarter and thanks.
The market in the questions.
I guess the first question is on your enterprise business, Brent and I know as we've discussed a couple of times in the last I don't know of six or nine months or so.
That business is a little bit slow initially coming out of the pandemic in terms of new customer acquisitions as customers froze a little bit, but it's from starting to heat up obviously pretty significantly the last quarter.
<unk> or two but do you think demand and that area is at pre pandemic levels or is it may be exceeded or maybe trailing what you thought you know 12 to 18 months ago.
Oh I think it was back and ahead of trend line materially by June of last year and.
We wouldn't be growing.
Our year on year.
Enterprise plans and 51% if that hadn't picked up a lot remember you know the.
A R R a.
A year ago was and enterprise lower than that so it just keeps gaining momentum and in particular.
The part that's additive or the.
The large and of large enterprises, we're seeing ever bigger.
<unk> start to consider us ever bigger organizations, and that's really additive to the great strength and health of the Midmarket pipeline, which.
You know has been going gangbusters throughout the pandemic.
Yeah.
Got it helpful and then for my follow up.
Question.
We know the renegotiated marketing contracts and you can be a headwind to the queue for 'twenty.
<unk> revenues and we can calculate and maybe wasn't the approximate impact on that is but how should we think.
About that renegotiated contract in fiscal 'twenty, one does that kind of net neutral to what the <unk> revenues will be maybe it's going to be a headwind for at least the first three quarters don't know the magnitude of just trying to be helping you understand that would be would be great. Thanks.
Yeah, well, it's definitely more predictable based and the terms of the the contract.
And how we're gonna Ratably recognize it I mean I would just characterize it Scott is the <unk>.
Going back to what I said earlier had had that headwind not existed for Q4, right and P. S. R would've grown and the mid mid Seventy's and.
And based on the amount of transactions flowing through the platform and Q4, and then as we think about 'twenty and 'twenty one.
And.
It's all factored into the guidance.
It's what I would say.
Yeah.
Great helpful. Congrats again on the good quarter. Thanks.
Thanks I appreciate it.
Thank you. Our next question comes from the line of Brian Peterson with Raymond James Your line is now open.
Hi, everyone and and I Hope your families are all safe and north for a very very tough week, and Texas, So our thoughts and prayers with you and your families.
But that is for Brent and I, you know a lot of what's been asked but I.
Wondered if you could kind of bifurcate, maybe a little bit between I'd say older retailers that are that are trying.
Reconfigure and really adjusted with the normal versus maybe some of these digitally native brands that are up and coming when you referenced the win rates and the pipeline is there any difference between those two categories or maybe you see the venn diagram of little different just just curious to get your thoughts there.
I mean.
We're finding strength, serving all of the above and if you just take the examples of.
The.
Merchants that we had announced and the earnings script.
See pure play.
Digital native like home medics, you'll see.
The third party retail site like cream of supply selling lots of great coffee equipment, and then a relaunch of the legacy brands and.
The Nokia going direct to consumer for the first time on Big Commerce, So plenty of great examples of.
Across the board of each of the various category.
Our platform.
And flexible and.
Really as the best on the market for any of these various types of businesses, who wants to really optimize their ecommerce.
Strategy and the ecommerce technology stack to their specific business.
Got it.
And maybe one for you so sort of the gist.
It's kind of a follow up for some odd question, but just thinking all of the 'twenty 'twenty, one guy and if I look at the $2 billion range, that's kind of some Steph curry like precision from deep I'm, just curious what kind of visibility.
The 2021 guidance.
Thanks.
Yeah. Thanks, the Pea well subscription a lot of the visibility I mean is that is that our mix continues to shift to <unk>.
The enterprise, we've got a really but you've got a pretty dialed in in terms of the retention profile.
On the.
The true you know churn metrics are.
For the upgrades downgrades.
And where we have to just be careful is and really again, just forecasting GMB and this year, especially as China lap last year and and so.
Subscription and pretty dialed in in terms of the.
And our ability to predict that the visibility that we have on that front.
Potential and then you know P. S ours really since it's so much. It's so much driven by G M D and the number of transactions.
And that's where we just have to be careful.
Great. Thank you.
Thanks, Peter and thank you.
Our next question comes from the line of Terry.
<unk> Hillman with Jewish Securities. Your line is now open.
Hey, guys. This is actually Nick on for Terry and thanks for taking the questions.
The first one of I guess in terms of of recent enterprise play of adoption.
Are you seeing where does the enterprise plan customers, graduating from lower price plans. The result of higher volumes or are these more net new and.
Price customer.
Thanks.
Yeah, we're definitely seeing a good amount of retail plans graduate, but the vast majority of what of this growth that are you're seeing we're seeing is that net new.
Sign ups and then also there's also the factor of enterprise plans that are going because.
Because they're exceeding their initial growth and.
The adjustments and so we're seeing great and you sign ups large merchants sign ups.
As well as the upgrades from the great growth that they're seeing on big Commerce.
Got it that's helpful.
Follow up from Us So I guess.
Customers see any changes and competitive dynamics and then I know of magenta as mentioned earlier, but are you seeing an increasing number of opportunities.
The re platforming overall from on premise potentially less flexible platforms. Thanks.
I think.
That's been a continuous trend for at.
At least the last five years.
And that's why the fastest growing platforms are all SaaS and Paas Shopify and I presume sales force still.
But that's been going on for some time I mean, most businesses would rather be on SaaS them on Prem and.
And especially.
Now that we have become so flexible so open and so adaptable we can serve a very wide range of use cases that.
Historically, our business would have to go to on premise software too.
The implement and and so has there been a meaningful change and the last year.
Yeah.
Clearly our businesses and that's been doing great and and so of Shopify. So how much of that is the shift in share relative to before versus the.
A rising tide and all boats kind of hard to say.
Got it that's helpful. Thank you.
Thank you. Our next question comes from the line of V go around and with Wedbush Securities. Your line is now open.
Hey, guys. Thanks for taking the questions and I want to go back to the kind of front you.
You made about the parts that are additive coming from.
And the larger and larger enterprises.
For considering the commerce and just to think of as Brent maybe and alright.
Can you talk about you know and and you mentioned before about.
The ease of use and and getting signed up and getting the onboard quickly as being one of the reasons, but can you talk about more.
That the aside from that when you're winning from sales force or or other larger providers and youre waiting of those accounts more and more what are the big things that are attracting those customers to big commerce versus some of the other providers in that space.
And we really think that among the.
More broadly leading SaaS platforms Big Commerce has.
The most flexible adore.
Adaptable and scalable set of Apis and so the bigger the enterprise the more they need to really adapt their full E commerce stack not just the platform, but everything integrated.
The two it with legacy system and with so some of that they've been using online offline.
For that really speaks to the SaaS platform that has turned itself into micro services has the API layers everywhere and has the ability to integrate and do.
Things the way and individual enterprise wants to do the you know one of our competitors.
Once these big enterprises to do it their way, we excel at letting them do it and the <unk>.
And that's best for their business and.
Even though I would say sales force.
Larger than big Commerce and.
And the pound.
A lot longer than we have I think as a general rule our platform openness adaptability flexibility.
And is stronger than theirs, and certainly our apps marketplace is much larger.
As well and.
And so for a lot of large enterprises, who just want the nimbleness and adopt.
And that's been a reality with all of the benefits of SaaS, we're the best platform for them.
Thanks, and I wanted to follow up and another comment you made about.
The structural investments and.
Obviously, continuing to invest and the business with.
What we're seeing from E commerce and the <unk>.
The bill.
Talk about the.
As we head into 'twenty, one what you're the biggest investment priorities are over the course of the year, maybe and a little bit more detail ex.
Sure I'll take that one.
And the international clearly you can see the the growth rates.
And they are seeing and the markets that we're in and.
We've got out of a pretty to sync play and in terms of our expansion strategy, which countries, we expand into them and so I think that's number one number two there is an opportunity for us to really improve.
There were some eyes are partner experience as well as all of the different ways, we can monetize transactions across the ecosystem of beer.
And payments today, the majority of PSA is still payments I think at some point you know you can get to 50 50 50 per cent payments 50 per cent all of the things.
Things and.
We're going to make the investments necessary to really one optimize the experience for our partners and make it really easy for our merchants to us.
Adopt intake and take the and get the.
And if it of our partners technologies and solutions.
And.
And you know and that's that goes the.
For all of the different categories beyond payments. So I think those are two important things and and obviously, we're going to continue to invest and our open sad strategy on the platform front, we feel like there's.
And I'm still a lot of the opportunity for us to build out enterprise functionality.
Of the onto the platform.
And so our open stack SaaS investments our platform oriented as well as the on the partnership ecosystem front.
Great really helpful. Thanks, guys.
Yeah.
Thank you. Our next question comes from the line of Ken Wong with Guggenheim.
And how I am Securities. Your line is now open.
Great. Thanks for sneaking me in and I'll try to double off of my question here to save time.
And you guys mentioned.
Net revenue retention for of greater than 2000, and ATB customers went to $1 13 from one O. Six Im just wondering if you can help me and maybe rank order some of the components that.
Drove that whether it's retention programmatic upgrade payments attach of other partner products and then the second question.
<unk> has outpaced revenue growth. The last couple of years is that of dynamic that we should we think should extend into 2021.
And <unk>.
Yeah.
Yeah, so and ours are reflective of our of our bookings.
GAAP revenue is more of a backwards looking.
Forward looking.
And I think for 'twenty and 'twenty, one it's gonna come fairly similar to each other so I wouldn't expect a wide disparity.
Yeah.
Got it and then ask for.
The drivers of of of net revenue.
The retention of any way to help us rank order some of the components there.
Yeah, you nailed it I mean for us.
When you look at our mix of merchants and the retention profile improves every quarter.
It continues to shift to larger merchants, so I think number one.
The retention profile is strong.
In terms of our upgrades as I mentioned, it's programmatic as they succeed we succeed so on both the retail plans if they exceed the GMB threshold build upgrade enterprise plans and we'll upgrade.
As that May sound their order growth adjustments and so what we're seeing is larger merchants and the platform great retention profiles and are and and you know the success Youre seeing on Big Commerce is resulting and upgrades and then the last component is DSR, so as they drive transaction.
The missions to the platform, obviously, the larger merchants drive the more GMB and as we monetize that that that helps on the and our front as well.
Great. Thanks, a lot.
Sure.
Thank you. Our next question comes from the line of drew Foster with Citi. Your line is now.
Open.
Hey, guys. Thanks for squeezing me in and congrats to a strong end of the year, they're glad you're all doing safe.
I had a question on more of the the well known and household name brands. Joining your platform I think last quarter, you mentioned chapstick fiber out of energy H M. D global of this quarter for their direct to consumer channel.
Transact and great for your platform from a market ability perspective, just curious what youre seeing with a lot of these consumer goods products companies.
We're typically cause of the consumers are buying more of these items and like a supermarket or convenience store those brands, having a lot of success with the direct to consumer channel I'm. Just curious how you kind of characterize the performance.
And of them versus you know more of the digitally native companies and what that tells you as a proxy for direct consumer is the distribution channel.
Yeah. They are I mean do you can.
You can go the big Commerce, Dotcom and look and the client examples.
Action and the C well.
Well known.
You know the names many of which we've all grown up with their.
And our selling on big Commerce there.
Achieving the especially as the after the start of the pandemic unprecedented success going direct to consumer but oftentimes what they do is different online than what they do through their third party retail channel.
<unk> prescription is oftentimes.
A big component of what they're trying to do getting on automatic reorders of your razor blades or vitamins your water purifier of supplies your coffee supply stuff like that and other.
Other component is cash.
And learn.
Some experiments with new product releases customization of existing products different ways of marketing and selling and promotional campaigns. There's a lot of innovation going on and it's an exciting time for brand retailers because of the paths they could advertise the consumers.
And they couldn't sell directly to them and they couldnt experiment that way because they were too dependent on the store shelf and activities of the retailers and now they can try things right.
They roll them out more broadly and oftentimes the the retail.
<unk> will benefit from those of innovation.
The big I appreciate the commentary that was really helpful.
Last question for our could and those might be of difficult exercise for you, but any way to help us parse through the IRR growth I'm just.
Specifically as it relates to kind of breaching the the previous G. M D thresholds.
You mean in terms of how much of that is upgrade related yeah.
Yeah.
And now you know, we don't disclose the elements of net new but one thing that might be helpful. For you as against take our a R. R back out the last 12 months of the <unk>, So you're only looking at subscription.
And are are over a quarter over quarter and that's a pretty good proxy for kind of net new booked within that quarter and upgrades and just be a component of that most of the our net and you is gross new gross and we sign ups. That's the the biggest element and.
But I would.
And do that calculation. So you can tennessee, the momentum, we're getting and subscription and <unk>.
Yeah, Okay. Thanks.
Sure.
Thank you. Our next question comes from the line of Parker Lane with Stifel. Your line is now open.
Yeah, Thanks Parker on for Tom Roderick.
Just wanted to dive into the <unk> opportunity a little bit more so I was wondering if you could talk about.
The opportunity to leverage your core.
And B to C partner network that you have today and that's something that you need to develop a little bit more for these b to be use cases and could you talk about how the deal sizes compare from B to C to B b.
Indeed, the <unk>.
The use cases for b to b or much more varied.
And then they are in BDC, because you know here, because the selling entity and manufacturer of raw goods company and distributor of wholesaler.
Finished goods manufacturer and as the buyer any one of those different types of service organization, you get such varied supply chain elements and.
So the the use cases are quite varied and this was one of the places where we.
Try to do.
And do like a 2080 strategy, where we've got the 20% belt and the big commerce that essentially needs to be there and then for the adaptation of the various use cases, we rely a lot on our technology partners who.
Integrate and additional <unk> functionality that will help serve the various.
And of cases now.
During the course of time, we will add and more b to b functionality and the big Commerce, and we'll come up with additional ways to deliver partner capabilities to merchants and a seamless way and as we do that I think you'll also see.
The.
The the <unk> sales and that component of our total business continue to rise as we become ever more full featured.
Yeah, that's really interesting and maybe just staying on the part of the same for a second a lot of great ads and EMEA and APAC last year do you feel like you have a full capacity there and the partner front internationally.
Later, we're going to continue to see pretty solid growth there into 'twenty one.
Yeah.
On the partner side, both agency and technology I think we have terrific penetration in northern Europe and.
Especially out of the U K and in Australia, and New Zealand, but when it comes to.
Continental Europe and Asia. It is very early days for us and there's really enormous upside and the years ahead, if we can.
Partner and sell and expand and grow in Asia, and Continental Europe, and the same way that we have out of the U K and northern Europe again out of Australia of music.
Zealand.
Got it thanks Scott.
Yeah.
Thank you.
Last question comes from the line of Brian placement with Piper Sandler Your line is now open.
Good afternoon, and thanks for squeezing me in here the last Brent I wanted to go back.
To the Q4 subscription growth rate I mean this is the.
The highest growth rate that we've seen and two plus years at least and our model very clear of the enterprise and international are the big levers here, but trying to understand the sustainability of the momentum here.
What type of new customers.
<unk> is the open SaaS resonating the most with US at BBB is the beta see how does that change or not change as we think about anniversarying, the pandemic and and just as you think about this whole move to head list.
Is the appetite for partner revenue I E.
The payment specifically changing with some of these larger customers. So just wanted to drill down into that acceleration and sustainability of just think about the momentum right now and enterprise.
Well I think one of the things that you'll pull out when you look at.
Our disclosures from various angles of that.
All parts of the dose and us.
Our.
Growing at a very nice rate and that rates that are much higher than last year or the year before and we were gonna be and our third straight year of accelerating revenue growth this year and even absent the pandemic, but all of them have ticked up so.
On the E R R.
<unk> you were referring to subscription revenue, which is.
Backwards looking at the actual revenue but.
And the enterprise exited the year of 51% and ACB above 2000 was out 48.
And do the math across the board, you'll still see the small business.
It was growing at a pretty nice rate to all of those ticked up and the last year for us and I would say all three.
Small business mid market large enterprise are.
The healthier than at any point in time.
Arguably and our history of core for small business since the early day.
And of the company.
And then could you rephrase the question that you had around.
Yeah, and just I was wondering as we think about onboarding larger customers is that going to change or payment of attach rate and would that potentially over time change the director of <unk> of <unk> revenue I know already.
Is that at some point 50, 50% of <unk> can actually come from non payment, but just trying to understand you know.
The 2021 impact of of larger enterprise customers and could there be a lower attach rate of payments and I E lower lift two P. S. R.
A couple.
All of thoughts here.
First is that the great strength of.
Of our platform is that we are super well integrated into a wide variety of the worlds best payment processors for a large merchants whether that Paypal Braintree strike.
And yen Chase Barclays.
Check out dot com.
Cybersource authorized dot net and we have best of breed integrations and to all of those and more and unlike one of our competitors and tries to put of proprietary solution.
And on the every large merchant most of these big companies have a very strong reason to pick one or another and with US you get the tech those with the best of breed and integration of no penalty for doing so.
And we get Rev share from.
The vast majority of our payment partners and integrate.
Solution and so it doesn't really matter, which one of merchant chooses.
Sometimes the Rev share is going to be much thinner because of the larger the merchant the.
Closer they negotiate too.
You know price relative to interchange however, the volumes are.
Massively higher and so for a really.
<unk> volume business, you know, let's say doing in the hundreds of millions and online volume. It may be a center Rev share spread that we get with the payments partner that that large merchant chooses but its on so much higher volume that it still ends up being very big numbers of Rev share.
How are us and really a great deal for the client because theyre getting the pick the best payments processor for their needs get great pricing on it and get the best of breed integration. So we we really consider this to be.
One of the strength of our platform.
And also a.
A.
Sure you know of Great P S. Our generator for us even on the largest of account types.
That's helpful color I'll leave it there and and hope the the Stow continues to melt and the power continues to come back on.
Thanks, so much I appreciate it.
Yes.
Thank you. This concludes today's question and answer.
And I would now and turn the call back to Brent Pelham, President and CEO and chairman and for closing remarks.
I just want to thank everybody for the continued research coverage on the commerce, we have really enjoyed our first couple of quarters as the public company and the conclusion of the most exciting.
Citing year and our history, you know not just the third straight year of accelerating revenue growth, but and acceleration and that acceleration that we could've never ourselves the anticipated at the beginning of the year. So we close it out with.
With the best momentum and our history and couldn't be more excited about what we can do for the market and all of our.
<unk> in 2021, so we look forward to talking again and our next quarterly update three months from now until then and be well.
Hum.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[music].