Q1 2021 Bigcommerce Holdings, Inc. Earnings Call

May 11, 2021

[music].

And.

Ladies and gentlemen, and thank you for standing by and welcome to the two Big Commerce as first quarter 2021 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 will now.

Like to turn the conference over to your first speaker today, Daniel Lynch head of Investor Relations. Thank you. Please go ahead.

Okay.

So and chairman, Brent Bella and CFO.

And 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 1095 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 second quarter of 2021.

And the full year of 2021. These statements can be identified by words, such as expect anticipate intend plan believe seek will or similar words. 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 that 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 discuss 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 other metrics is included in our earnings press release, which has been furnished to the SEC.

And is also available on our website at investors and that Big Commerce Dot com with that let me turn the call over to Brent.

Thank you Daniel and thank you everyone for joining us on our first quarter earnings call. During today's call Robert and I will detail results from Q1 and provide an update on our 2021 full year guidance.

We'll also provide updates on our strategy customer and partner traction product enhancements and overall industry possession.

Let's kick off with a few highlights from our Q1 financial results.

We experienced a robust first quarter with Q1 revenue growing to $47 million up 41% year over year.

Annual revenue run rate for <unk> grew to $196 3 million up 43% year over year.

This marked a substantial acceleration compared to the 27% growth rate and Q1 2020.

We saw continued momentum and our target market, a fast growing complex and established doesn't happen.

And our from accounts with greater than $2000 and annual contract value for HBV finished at $163 $7 million growing 51% year over year, while enterprise account AOR growth further accelerated to 58% year over year, finishing at $112 4 million.

All Q1 growth rates referenced so far represent acceleration from growth rates in Q1, 2020.

It is notable that full year 2020 was our third successive year of revenue growth rate acceleration and.

With Q1 2021 after the strong start we've now posted accelerating growth rate and our fourth successive year and.

Common trajectory of accelerating momentum reflects the traction and differentiation of our offering and the global ecommerce market.

Robert and I have spoken on previous calls about our commitment to growing the company the right way by prioritizing customers first thinking long term and making smart investment decisions and grow revenue, while maintaining our commitment to achieve profitability. Our first quarter demonstrated progress in this area with adjusted EBITDA margins.

And <unk> to negative 5%, a 12 point improvement versus Q1 2020.

We see a tremendous addressable market for big Commerce, and we are positioned to capitalize on the opportunities in front of US we will continue to make strategic investments and areas selected to generate strong returns on invested capital.

Focusing on the full year 2021 profit guidance, we outlined back in February.

The ecommerce market share growth and the mid market and large enterprise segments continues to strengthen customers see the value proposition and differentiation of our platform.

Our open SaaS platform and partner ecosystem enabled companies of all sizes to quickly and successfully established and online and Omnichannel sales problem.

It gives our merchants access to multiple channels and marketplaces, where consumers can discover and buy their products all while keeping costs flow through the total cost of ownership benefits of multi tenant SaaS software.

Time, we believe on premise software and closed enterprise SaaS offering will find it increasingly difficult to compete with the best of breed Pope and SaaS approach.

In summary, our strategy is simple and has three key elements.

One we pursued textbook disruptive innovation by.

Sending the capabilities of our platform to serve ever larger merchant, thereby disrupting the legacy incumbent platform leaders and the Midmarket and large enterprise segments.

Two we continuously innovate to deliver the world's best hope and fast E Commerce platform with best of breed functionality and a massive amount and flexibility for a SaaS platform using API software development kit and Tech partner extension. This open strategy and provides fast growing and complex businesses.

The ability to optimize our approach to e-commerce for the unique business needs.

Great and we will grow our business using a repeatable playbook that is based on the retention and growth of existing merchant.

Acquisition of new customers and an ever expanding range of segments like <unk> tablets and large enterprise.

Expansion geographically.

And finally, the growth of supplemental partner and services revenue.

Now I'd like to shift focus to some notable new customer site launches and <unk>.

Q1, we saw a diverse roster of notable brands use our native and headless commerce capabilities to launch and Big Commerce. Some examples ban.

Black Diamond equipment, a leader and mountain adventure gear and pop 1000 online retailer launched a headless site implementation using bad commerce and Prisma CMS.

This combination and powers, it's marketing team to deliver and experience first site design, while maintaining the operational coordination necessary to support and extensive product catalog.

U S cutter another top 1000 online retailer that offers the largest selection of vinyl cutters and the industry embraced that consumers desire for freedom of choice by providing a wealth of payment and shipping options at checkout, including buy online pickup and store functionality.

The Bristol British Association of restaurants bars, and independents in the U K leverage headless commerce, and the launch and delivery App to help dozens of independent food venues and Bristol State and business post Lockdown.

Saudi propellers, and GE Aviation company and manufacturer of integrated propeller system launched a new site with extensive <unk> functionality.

Lexisnexis and the world renowned provider of legal regulatory and business information now provides its customers and Australia, the ability to create and buy their own bundles of legal module and contained materials from different areas of their offerings.

Just this week the commerce finalized the deal with wind direct debt I am personally thrilled to share for.

For those not familiar wind direct provides end to end technology solutions to help winery and sell directly to consumers and through this partnership Winder X 2000, plus wineries roughly 15% of all U S. Wineries, we'll be able to power their online storefronts through big Commerce.

And Q1, we also announced nearly a dozen new product features and welcomed several new partners to our platform.

Within Omni channel, we partnered with Walmart to give U S vendors access to over 120 million unique consumers visiting Walmart Dot com monthly.

Merchants can now seamlessly connect their ecommerce storefronts to Walmart dot com, giving walmart consumers convenience and a wider selection of products.

We collaborated with our tech partner random retail to launch buy online pickup and store capabilities across small and medium sized merchants with and easily configured solution and advanced version operating more customization and features such as curbside pickup is also available for mid market and enterprise customers.

Promotions manager is a powerful and flexible tool designed to help mid market and enterprise customers.

And their marketing and inventory management is highly customizable and has received extensive praise from our customers and industry analysts like Forrester.

We introduced new platform capabilities and accelerate our international expansion.

Control panel and self service tools were launched and several additional languages.

Merchant and speak these languages can now purchase a big commerce subscription onboard and manage their stores and their native languages.

Per omni channel merchants, we announced our native integration to square point of sale, which enables merchants to sell products online and offline using square. This makes it easy and efficient to coordinate product catalogs and inventory automatically helping merchants to better optimize their supply chain.

Finally, we launched a payment provider software development kit or SDK for credit card providers.

Introduction of this capability is an important step and our international expansion.

SDK allows local payment processors, and our systems integrators to integrate payment gateways into big Commerce. This will in turn enable our business development team to identify and sign new payment partners around the world reduce our partners time to integrate and accelerate the commerce adoption and new geographies.

As we look forward to the coming months and quarters, we see many areas of opportunity to invest and grow our business.

And our product roadmap will continue to target platform enhancements and extension that deliver high customer value and return on investment.

External and we will prioritize partnerships and agreements that present opportunities to enhance value for our customers beyond what our product roadmap and can accommodate.

And our focus remains on extending our platform's capabilities without fundamentally changing our core open SaaS strategy.

As we've discussed before unlike our closest competitors, we do not aspire to compete and an ever expanding number of new software vertical categories and.

We focus our efforts on building the world's most open flexible and capable SaaS platform, while partnering with best of breed leaders and adjacent software and service category.

We will look for opportunities to deliver great value to our customers without compromising our open platform and partner centric strategy.

Before I turn it over to Robert I'd like to thank all of you who follow and invest in debt commerce, we aspire to shape the future of E Commerce, and we're grateful for everyone, who contributes to our mission with that I'll turn it over to Robert.

Thanks, Brent and I appreciate everyone joining us on our call today I'll review, our most recent quarterly results in detail and provide an update on our full year 2021 guidance.

Overall, we're very pleased with our most recent quarterly results and we are encouraged by our team's strong performance across all of the markets that we serve.

Though still early in the year, our kpis are tracking well compared to our expectations we.

We saw strong momentum and continued acceleration in Q1, and we see strong underlying trends and our business. We generated total revenue in Q1 of $46 7 million up 41% year over year total revenue and the U S grew 35% and Q1, while we also delivered another quarter of strong international growth.

Annual revenue run rate or <unk> grew to $196 3 million up 43% year over year.

International revenue grew 65% year over year with 80% year over year revenue growth in EMEA, and 52% year over year revenue growth and APAC.

We're also excited about the strength and resilience of online consumer spending and merchant activity that we saw in Q1, especially given that we historically see slight decreases and transaction volume coming out of the Q4 holiday season.

Now I'll break down the results of our subscription and partner and services revenue.

<unk> revenue grew 36% year over year. This acceleration was primarily driven by continued strength and net revenue retention with additional momentum building and new merchant bookings as well.

Partnering services revenue was up over 52% year over year. This was driven by continued strength and same store sales and the associated revenue that we believe was partially driven by government stimulus checks and March and the United States.

Our enterprise accounts grew 58% year over year to $112 4 million and Q1.

And enterprise accounts represented 57% of <unk> as of March 31, compared to 52% last year. This year, we will continue to maintain our focus and investment on growing our share and the enterprise segment.

Including the large and enterprise as demonstrated by our recently announced partnership with wind direct which enabled direct to consumer wine sales of over $2 billion and 2020.

We are confident that we can compete and win similar opportunities as we continue to meet the needs of large enterprise accounts.

Work here is clearly paying off and accelerating the pace of growth and our enterprise plans next I'll cover the total number of accounts with annual contract value or HCV greater than $2000. At the end of Q1, we had 10509 customers over the 2000 dollar threshold and increase of 1521.

Accounts or 17% year over year our.

Our sales team is making steady progress and consistent market share gains within the mid market and enterprise segments currently accounts for and HCV greater than $2000 now make up 83% of our total <unk> and Q1.

Another key metric, we track and ARPA or average revenue per account.

It gives us an indication of our portfolio mix and growth potential.

<unk> for accounts with HCV graded and $2000 for Q1 was 15000 and $582 up 29% year over year.

This was driven by strong sales mix of enterprise plans and higher <unk>.

Which is composed of revenue sharing agreements across payments shipping omni channel tax and other ecosystem verticals.

Let's move on to discuss the remainder of the income statement. Please note that unless otherwise noted all references to our expenses operating results and share count are and our non-GAAP basis.

Our gross margin profile continues to strengthen with margins now north of 80%.

In Q1, non-GAAP gross profit was $37 8 million, which was up 47% year over year. This translated to a gross margin of 81%.

That was and nearly 300 basis point increase in gross margin compared to Q1 2020.

Accelerating growth and our SaaS subscription sales and continued strength and the PSS revenue drove the improvement in margins.

Moving on to sales and marketing expenses in Q1, we reported $19 2 million equating to 41% of total revenue compared to $15 5 million and 47% a year ago.

As we previously guided we continue to ramp up our efforts and hiring within our go to market efforts, particularly to support our international expansion plans.

Our subscription mix growth continues to trend towards enterprise plans and we continue to see high quality leads for these larger size accounts coming from our inbound marketing efforts and partner referrals.

In Q1, and research and development expenses were $12 3 million or 26% of revenue.

Compared to $10 6 million and 32% a year ago.

Creating disruptive and innovative features for our merchants as key within the ecommerce space as technological requirements and opportunities are evolving rapidly. We will continue to look for opportunities to invest in this area, while continuing to drive leverage as we ramp our offshore development teams.

For the quarter General and administrative expenses were $9 5 million or 20% of revenue.

Compared to $6 1 million and 18% of revenue a year ago.

Growth and G&A was in line with our plans and primarily tied to items related to supporting our operations as a public company.

We see G&A as a percentage of sales gradually declining over time as we continue to scale our business.

We reported a non-GAAP operating loss for Q1 of negative $3 1 million or a negative 7% operating margin.

Compared to a negative $6 4 million or negative 19% operating margin in Q1 2020.

Adjusted EBITDA was negative $2 4 million or a negative 5% adjusted EBITDA margin.

A 12 point improvement from a negative 17% adjusted EBITDA margin a year ago.

Non-GAAP net loss for Q1 was negative $3 1 million or negative <unk> <unk> per share compared to a net loss of negative $7 4 million or negative <unk> 40 per share a year ago.

Our goal is to generate consistent long term growth as we develop the best opened SaaS platform and the market.

And with the ultimate goal of being profitable and the timeline we've committed to.

We are aiming to reach EBITDA breakeven as we exit 2022 and.

And we are on track to hit that target.

When we have opportunities to reinvest and the business in order to accelerate our strategic initiatives, while sticking to that timeline, we will do so.

Turning to the balance sheet and cash flow statement, we ended Q1 with $208 million and cash cash equivalents and marketable securities.

Operating cash flow was negative $12 8 million compared to a negative $10 million a year ago.

Free cash flow was negative $13 2 million or a negative 28% free cash flow margin.

Compared to negative $10 6 million and a negative 32% free cash flow margin in Q1 2020.

Now I'll shift to discussing guidance for Q2 and for the full year of 2021.

As Brett and I have said, we are encouraged by our results from Q1, and we believe this shows the growing momentum building and our business.

Even as we reinvest back in the business to capitalize on this we are taking a prudent approach to our guidance for the remainder of the year.

Our guidance assumes a reasonable level of growth and normalization and consumer spending on line throughout the year.

And meaningful shift and the broader macroeconomic environment and e-commerce spending.

Cause us to modify our guidance higher or lower and.

And we will continue to provide our best view of these trends and future earnings calls.

For the second quarter of fiscal 2020, one we expect total revenue and a range of $46 4 million to $46 9 million translating into a year over year growth rate of 28% to 29%.

Our non-GAAP operating loss is expected to be $8 1 million to $8 $6 million.

For the full year 2021, we currently expect total revenue between $196 7 million to $198 2 million translating into a year over year growth rate of 29% to 30%.

Our non-GAAP operating loss is expected to be between $31 million and $32 5 million.

With that Brett and I are happy to take any of your questions operator.

Thank you.

And at this time.

And to ask a question you will need to press star one on your telephone and to a draw your question, especially the pound key police and viable and compile the Q&A roster.

Our first question will come from the line of Brent and <unk> from Piper Sandler you may begin.

Hi, This is Clarke Jeffries on for Brent.

First question, Brent you mentioned and the annual letter the company has an ambitious roadmap and capabilities and integrations plan for from your customer base I just wanted to ask where do you see the best opportunities for open path going forward and and where do you think by partnering as an opportunity to create something really differentiate and and potentially move faster.

In terms of bringing something to market as opposed to a vertically integrated approach.

Thanks for the question Clarke, our open SaaS strategy will still benefit from incremental product investments and both the enterprise functionality.

Of our platform as well as the enterprise endpoints and flexibility of it.

I would add though that the other strategic expansion dimension that we frequently talk about like seem to be.

Headless Omnichannel international expansion and.

And enabling partners to succeed in conjunction with US are all big opportunities for investment.

As with most companies in every given year, we've got budgets that we have to live with and we look at what are the highest priorities that we can't afford within our budget and then for those opportunities that we see that we can't get too and the short term, we look for partner opportunities to expand and accelerate the.

And the capabilities that we and our ecosystem deliver to merchants. So the short answer is that we are looking for both FERC and other internal investment.

And partner ecosystem enablement on those key expansion themes that we frequently talk about publicly.

Great and then alright, and enterprise continues to accelerate and 58% <unk> growth and see.

And even on a subscription and <unk> basis, we're seeing an acceleration in that as well I guess, just what's resonating. Most when you think about the 50 million <unk> customers are both above and.

Where would you assign most of that contribution upside, we're seeing between new brands and and order volume driven and outside and existing customers. Thank you.

Yeah, I think it's.

Our open sales approach is definitely resonating, especially with the larger enterprise accounts. When you think about the complexity of larger accounts, that's where we really shine.

If youre going to sign a five to seven year agreement.

And Youre thinking about your future E Commerce platform. We believe we're the most future proof e-commerce platform in the market.

And the pace of innovation, that's going to happen and the next five to 10 years is going to be Cray.

Crazy in terms of.

The speed and in and the offerings from our partners and so if you are and enterprise merchant you love the customer ability.

The ability to customize your love the flexibility, but you also love the best of breed solutions that we can bring to you in a native way and so when you look at our pipeline, we're seeing a higher mix of larger accounts wind direct is a great example of the really large accounts.

We are winning and we expect to win more large accounts going forward and again the openness is really resonating the best of breed solutions that we bring to bear really resonates and whether.

And whether it's had less whether it's b to b.

And the components of our platform that are flexible, but also the ones that you know if you're if you're in the merchant shoes, they really view us as the ones that are going to be able to bring the most innovative technologies around e-commerce for many years to come.

Alright, thank you and encouraging to hear.

Our next question comes from the line of Josh Beck from Keybanc capital you may begin.

Thank you for taking the question maybe to start with Greg I'm, just curious what you see happening with respect to.

Really building the pipeline and conversion and it certainly seems like the.

The message around modernizing ecommerce platforms has.

Become stronger and the last year, certainly being a public company and I imagine is it.

And is providing a bit of a halo and number of great partnerships just curious maybe how those conversations have.

Bold and really how you're thinking about COVID-19.

<unk> contribution from new cohorts, which really seems to be stepping up every year as we want as we go through 'twenty one.

Hi, Josh Thanks for the question typical evolution for <unk>.

A technology like ours, and a company like ours that pursues a disruptive strategy and you start at the low and like we did 12 years ago, meaning our focus on Smbs you.

<unk> outperformance and functionality you earn the right to start competing for mainstream mid market customers and now what we're seeing.

The successful evolution of our ability to compete even for the largest of enterprises and so the part of our pipeline that I would say has grown the most and the last 12 months pre and post.

IPO has been the large enterprise segment of our.

Of our.

Pipeline and of our sales capabilities, we really do believe that as we keep.

Further enhancing the platform capabilities, both native functionality and enterprise level flexibility and openness that we are in many cases, the best multi tenant SaaS alternative for large enterprises, who used to have to go to on premise software.

Oracle, Atg, and magenta hose and Ibm's and SAP.

Options of the world or even custom most companies. These days realize that's the last place they want to have to be either custom developing more custom managing licensed software they want to be on south. The question is is there a SaaS platform that has enough enterprise functionality and flexibility to let them real.

Optimized for their business needs and we believe that's increasingly and uniquely where we are today, therefore able to build and and serve pipeline and all three segments that we compete and.

Yeah.

Really helpful and then maybe a follow up for you.

And certainly a really nice beat and the quarter I think it was a little more than $4 5 million on revenue and you are taking the full Europe I think by close to seven and a half million. So maybe just help us understand within that upward revision is it really related to.

The momentum you're having on the subscription side I know you mentioned you want to keep a.

A balanced view and really think about normalizing and consumer spending and post the stimulus. So maybe just help us understand how some of those factors played into the guidance.

Yeah, Hey, Josh, Yes, I mean, the 36% subscription growth and Q1 was great to see.

We feel strong strongly that we can maintain that level of growth into Q2 for subscriptions, we've got that pretty dialed in at this point, where we have to be careful is really around PSA and as you know last year.

Q2 was a full quarter of the elevated and <unk> that ran through the platform.

And so you know we're kind of balancing out our views carefully around where <unk> goes from here as things start to open up but you know if he's kind of split apart subscription and <unk>, we feel great about the growth and subscriptions really across the board retail plans enterprise plans.

Across the U S and international so subscriptions, we feel strongly that Q2 will be kind of and at 36% range and then where do you see some conservatism and will be and the <unk> line.

Really helpful. Thanks, Steve.

Net.

Our next question will come from the line of Tom Roderick from Stifel May begin.

Hi, It's actually Parker Lane on for Tom and Thanks for taking my question as I look at the roster of new partners that were added during the quarter and a lot of interesting organizations. There can you give me a sense of how many of those organizations joined the ecosystem. As a result of you know if you're acquiring new customers versus your own efforts to really expand the ecosystem.

And continue to differentiate your open science approach.

When you say partners are you referencing which.

And you're talking about the customers or are you talking about partners like.

Well like Brian Yeah, and commerce looking like yeah, like a content stack pay stack dynamic yield some of those organizations that you outlined and the presentation.

Well I Love <unk>.

Talking about for example, how the open SaaS strategy is essential to being able to win big partnerships like what we've done with one and direct and Commerce Bank of Australia and both of those cases, if you think about why and direct they had a custom platform that Theyre 2000, plus wineries we're on.

But they can't differentiate and compete on the core platform elements of it.

Were they really differentiate are the wine industry specifics like managing mailing less allocations.

And shipping compliance.

Tasting room visit and stuff like that.

And so.

Our platform in order to be able to take over the core of e-commerce, and yet seamlessly integrate with them for all the category specific things that they do better than anybody else requires the ultimate and flexibility and really where the natural for that type of partnership similarly with commerzbank.

Well.

We're not a competitor of theirs, they they want to serve merchants.

And and give them the full suite of banking services payments commercial banking lending buy now pay later and unlike some of our competitors. We don't compete in all or any of those we park and that makes us the natural for them to want to go to market and really become a leading force.

In Australia and <unk>.

Digital and e-commerce, and so I would say across the board. The open SaaS strategy that we have is inherently partner centric.

For everything that is beyond the core platform, it's all the adjacent verticals and category after category.

We don't look to compete with our partners, we look to make them more successful in conjunction with us than their offerings would be on any other platform and especially those platforms and so often do compete with them.

That is really the core to what we are trying to do and it leads to very innovative and novel partnerships like some of the ones we've announced recently.

Got it very helpful. And then maybe a product question how far along would you say that your customers are today and their promotions and customer loyalty journeys and so when you look at things like promotions manager, which it seems like Youre investing and right now how does that really differentiate the platform versus some of the other competitors you've talked about and the pass I guess the question is.

And it was that an area that you really think you can set yourself apart from some of those competitors and make yourself and the most attractive offering out there.

And our promotions manager is a big deal.

And the flexibility and power of the various combinations that are available and it and you think about all of the criteria that you might add to a promotion like how much you buy what categories you buy what items your bi frequency you buy the account and your.

And your card with all the different types of promotions.

Dollars off a free or discounted shipping percentage off.

Buy one get one as well as sort of the layered characteristics and only on full price items doesn't include sales can you stack promotion all of these permutations are extraordinarily complex and.

And we think that natively our platform can handle that variety better really don't have.

Any other SaaS platform that we know this matters and awful lot to a wide range of businesses either because they are.

Promotion savvy and need and want that flexibility or because they have just unique combinations that arent available on a bunch of competitive alternatives. So the rollout of this promotions manager is very very advanced and sophisticated functionality to mate.

Promotions simple easy and powerful for our customers and debt you know some of the leading pack analysts industry analysts like Forrester and Gartner they understand the nuances of what our platform can or can't do and they call out what we've now brought to market.

Very much leading edge.

Alright, thank you.

Thank you.

Our next question comes from the line of some odd Samana from Jefferies. You may begin.

Hi, good evening and thanks for taking my questions.

First maybe one for Ferrari when I think about the accounts of ACB granted in 2000.

The growth there actually continue to accelerate nicely in March is there anything you can maybe help us understand how much of those were customers kicking into that tier that we're already on the platform versus a.

New customer acquisition and the quarter.

Yeah, Hey, Mike I would say mostly from net new.

But we also saw him some upgrades, but I'd say that most part as gross new net new.

What we're also seeing is continued strength and our unit economics across the board.

And I see with accounts greater than two K you know we know.

You saw the improvement and and our last year and.

That trend continues to improve.

So I you know I think you know what.

It's gross new trends.

Trends in upgrades as well as really improve retention across the board, we're kind of seeing all of those characteristics and that cohort.

Understood and then maybe.

If I think about the assumptions and guidance.

And I totally hear you and the piano charts day, but I'm assuming the net.

The normalization of consumer trends, but what are you assuming if any in terms of improvement in the <unk> take rate in terms of partnering economics.

Going forward for the rest of the year.

Yeah, I mean, what I'll tell you is you know we're actively investing in and ways to make it easy for our merchants to leverage our partners products.

Storage lease payments has been the biggest driver.

And <unk>, but.

But we're definitely starting to see revenue streams from partners outside of payments Omni channel shipping fulfillment.

And really across the board, we're starting to see our merchants, taking on and adopting our partner's products and as we think about this year and going forward, we're going to make that.

Lot easier much more streamlined and we expect that trend to continue.

Perfect and then squeeze one in for Brent maybe just zooming out one of your one of your competitors has been investing.

Early stage or some stage and private companies I'm curious, how you think about maybe investing capital into your partners and and maybe getting a preferred relationship are or if that's something that the company is considering as part of their their partner strategy going forward.

The thing I struggle with and that dimension is how to have integrity around being opened and partner centric if you take and equity investment and a particular player in.

A competitive category I wouldnt have qualms around it and that's a relatively.

One player unique niche but.

And there's a conflict of interest if you have a of an ownership stake in and somewhat and so we haven't done it yet and that's one of the factors that has played into it.

And we've tried to stay true to our partner centric ecosystem centric approach.

Great Congrats and the strong start to the year guys I appreciate the questions.

Thanks.

Our next question comes from the line of Rainbow Loom and show from Barclays. You may begin.

Hey, Thanks for squeezing me in and the two quick questions one for Brent Brent.

If I look at the your comments around enterprise it looks like you're starting to deal with bigger accounts can you remind us like of the sales cycle that we need to be aware off and then as part of debt like what's the pipeline and in that respect in terms of how that's kind of building and what you're seeing and the pipeline and then one for all of its like.

And talking about the partner revenue for a bit and I get it that you're kind of nervous because youre hitting tougher comps, but we.

And now had one quarter, where we start to see the columns and where you see the comments from your competitors like what.

What's your view in terms of like would be.

The level of conservatism you need.

In this line no and.

Like what's the puts and takes as you put it into your comments. Thank you.

Hey, Raimo I'd say typical sales cycle for small businesses under two weeks and.

And our two week trial period, well aligns with that typical sales cycle for mid market is under two months and for large enterprise.

On average it is going to be longer than two months. Although we are pleasantly surprised with some frequency by really big opportunities that come in and very quickly.

Do their diligence and realize hey were perfect for them and they want and move quickly but yes.

Yes, indeed, it is a longer sales cycle and it does make large enterprise a bit tougher to predict it's not law of large numbers.

And the way mid market and small business are and so we and our own planning.

Internally we are.

We loved account and a lot of the bigger deals and that sort of upside relative to hitting our goals rather than a core part of the plant and sales cycles longer for sure.

Yeah, a couple of points right Raimo on PSM and <unk>.

Really happy to see the elevated <unk>.

Transaction volume carry forward through Q1, we did see a spike kind of and then kind of mid March and we.

It was really a spike across the board and same store sales from most of our merchants.

We didn't carry that forward, we don't expect that that spike from the stimulus checks that we believe impacted GMB in March would continue I'd also point out as we start to sign and and bring on.

Really large accounts like line direct it's going to take time for those stores to launch in the <unk> that we expect from large accounts like that is that.

And it hit until later in the year. So those are probably the two main callout suite, we do expect <unk> to remain strong, but the base periods from last year are going to be something that we have to factor in for Q2, and likely Q3 and Q4.

Perfect makes sense.

Congrats and thank you. Thanks.

Thanks Ryan.

Our next question comes from the line of <unk>.

And Lo escape from Morgan Stanley moving again.

Perfect. Thank you so much guys and congratulations on a strong quarter.

And.

Of course.

I wanted to follow up on our Orion most question.

Just and unless you saw that spike in <unk> and in March ish.

And stimulus checks hit.

Is there a way to you.

You kind of cut off that spike and give us a sense for what the normalized <unk> growth.

<unk> would have been in the quarter because.

Obviously, we had Q4 very strong <unk> on the back of the holiday season, and Q1 was actually an even bigger and <unk> quarter.

Yeah.

I guess trying to figure out whats the whats the kind of like the more normalized <unk> growth rate ex the spike.

Yes, the easiest way to do that standards. If you look at Q2.

And we feel great about our subscription revenue growth, we think that we can sustain 36% and so when you kind of back into the Delta you know you'll get to a <unk> number and when you compare Q2 to Q1, you can kind of see that debt that delta I mean, it's not.

And it's not massive but that'd be the best way to get a view of that.

Got it got it and on the.

And I wanted to touch on the international component very strong growth and internationally.

What are you seeing there as far as getting.

There are still lockdowns are happening in various geographies outside of the U S.

But you're you're steering and <unk> seems to be strong growth and their issue and the vaccine is being rolled out more aggressively internationally.

Yeah.

And then what did you see in the quarter.

Outside of the U S and how are you thinking about that part of the business moving forward from the rest of the year. Thank you.

Yes, we're seeing continued very strong sales out of our London office.

Primarily northern European.

Businesses, but also with nice inroads on the continent as we expand.

And we talked about in this and prior earnings releases, we have translations into <unk>.

Quite a few of the continental European languages, and now have marketing and full cycle sign up.

Websites for French German and Italian Dutch.

Spanish so we're really excited about the continental opportunity. Our original market was Australia, that's where the company was founded and so continued strength out of Australia and New Zealand.

Long term.

Weather.

Whether there's a pandemic recovery or or not.

And the upside for our business. When you think about all of the non English speaking geographies and Continental Europe Asia Middle East Latin America Africa, it's enormous and we aspire to be.

And well localized and very competitive platform and countries all around the world and the coming years, and so I think the size of the opportunity completely overwhelms the temporary status of lockdown or not locked down on a country by country basis, and we really.

We do believe international growth will be one of the big drivers for our business for years to come.

Perfect. Thanks, guys.

Thanks, Dan.

Yeah.

Our next question comes from the line of Terry Tillman from tourist Securities you may begin.

Hey, guys. Congrats on the quarter and this is actually Connor best Rolla phone and for Teri and I just wanted to ask about the payment SDK on how the early reception and adoption has been there and then what do you see and the native integration with a player like square is there any cross selling or joint go to market opportunities here, especially.

And in Europe.

Yeah. So two different products releases that we've had for payment SDK.

We're out and sort of a phase one which is based on credit card acceptance and integration.

Not yet full featured in the sense that you can't then integrate alternative payment methods as a complement to.

Basic credit cards, and so it's a it's a specific use case that has been unlocked we have a next phase coming out that is.

Going to expand our capabilities in particular to benefit a lot of emerging markets and the characteristics of payments providers and those and so.

No.

Spec more announcements and more progress with us over time as we unlock partnerships around the world with square for sure and we've done a partner with square for now years, the latest upgrade to our integration is.

By far the best we've had yet in terms of bolt performance and usability.

<unk>.

Hope that that then leads to more visibility within the apps ecosystem for square in terms of joint go to market, there's always going to be.

Some limitation with square because transparently. They bought we believe we believe has a.

And entry level e-commerce platform that might serve the smallest us where merchants successfully and we really they wouldn't really look to us.

They go to mid market and above option for their larger or more complex customers.

Got it. Thank you definitely some helpful. Helpful color. There and then just one quick follow up what are your thoughts on gross churn assumptions across different parts of your business, where our for 2021. Thanks guys.

Yeah, I would say my comment earlier, we're seeing really strong retention trends.

And that Eaton not only on enterprise plans, but really across the board we're doing.

A better job of really bringing on and attracting established businesses and the reality is.

You know the stickiness of the platform is only getting better every quarter. So very encouraged to see retention trends and improving every quarter and cross sell plans.

And our next question will come from the line of David Hynes from Canaccord.

You may begin.

Hey, Thanks, guys and congrats and the results.

One for Brent and and so and then one for our Ray So Brendan and more strategic question.

And as more and more of the E Commerce World goes headless right and and there is more of a focus out there on personalization and how do you guys think about.

Participating on the consumer data and intelligence side of things to enable that.

Is that interesting to big Commerce does that followed the ecosystem partners like where do you what's your view on that.

So it's a combination so what we want to do is be best and the industry at providing data.

And a usable framework for our merchants and and and accessible way for extensions, whether thats headless extension personalization and extensions.

Data analysis extensions et cetera.

And.

One of the capabilities, we have right now which is just.

And just absolutely love and market, leading for our customers is our big query database that exists for every pro and enterprise merchants they got their own Google Big query database, they can add to it a tender and then put.

Data analysis tools free or paid on top of it to do the kind of enterprise level reporting.

You know free or extraordinarily a reasonable cost that you can't do out of the box with other platforms and so I think our data strategy is market, leading and it's one of the.

Unsung heroes of capabilities that we offer to our customers.

Interesting thanks.

And then alright, and can you just remind me how the P. S. Our opportunity on G. M V that comes through the marketplaces differs from sales are directly on a big Commerce site and I guess I'll follow up with debt with to that would be what percent of GMB comes through marketplaces today.

Yeah, Hey, T J, it's a mix.

Some of our marketplace in channel partners.

Will will give us a rev share some won't.

It is a mixed bag, but we're focused on making sure that you are a merchant and again you want to future proof your E Commerce and <unk>.

Where that transactions will continue to happen.

For us all of these omni channel partnerships is really intended to drive success for our merchants that they won't be able to see and any other platform and so some will get Rev share some won't.

But collectively I think it's going to drive further adoption for their retention.

Yeah, Yeah and.

And then marketplace and <unk> today, and it's still pretty smaller.

It's it's still relatively small, but definitely growing for sure. Okay cool alright, thanks, guys. Congrats.

Thanks C J.

Our next question comes from the line of Scott Berg from Needham you may begin.

Hey, guys. This is John Godin on for Scott. Thanks for taking my question and Im just curious if you could provide a little more color on anything.

Around what you're hearing from your customers as far as how they are thinking about the economy is starting to open back up.

And how that relates to E Commerce sales and then second how is the early uptake of the channel manager properties and are you seeing any unique or different trends as it relates to your customers' usage and preferences content channel. Thank you.

Yeah.

Yes in terms of the economy opening up.

I think if you.

Look at the growth of our implied growth coming out of e-commerce platforms or debt.

Department of Commerce Census Bureau data you can see that E. Commerce continues to grow at very healthy rates and.

And it looks like rates higher than where it was pre pandemic, although we haven't gotten to the kind of core of lapsing.

Our customers are always trying to simultaneously maximize book, both what they sell online and if they have any kind of offline business do that as well, but what's more important than ever is the combination of the two and that.

That's why we're so focused on enabling them with great.

Integration capabilities between their online and their offline, including buy online pickup and store functionality like what we.

<unk> and our recent earnings release, so I would say that.

And we're trying to enable them to sell online offline and and integrated way better than ever before.

And how can thrive and this new era.

And then.

And my second question.

Just from the channel manager products and how is the early uptake from booking and interesting and need for different trends as far as the usage of preferences of those various content channels.

Yeah and channel manager is extremely popular and what we're really trying to evangelize.

With all of our customers is to think broadly that maximizing sales online <unk>.

Involves being everywhere their customers might be when they're shopping and so whether it's advertising channels like Google social networking channels, like Facebook and Instagram marketplaces channels, like Walmart and wish and Amazon and ebay.

And.

We're enabling all of them and every time, we introduce a new one theres enormous enthusiasm for example that.

Walmart announcement was met with enormous excitement within our community the story and I like to tell US remember when Walmart was just the store based retailer. They were famous for only serving are trying to serve the top two brands and every category and that means if you're a niche brand and new brand.

And number four number five and you couldn't easily get on the store shelves will now at Walmart Dot com.

And their colossal customer base, they're not limited in terms of <unk>.

SKU count depth of inventory breadth of inventory and these incredibly great brands. We've always wanted to serve the Walmart consumer can get in there today and for the first time do so through their digital footprint. So enormous amounts of enthusiasm and a thing was true with wish for a different type of.

Consumer when we announced that so lots of enthusiasm our strategy really is to try to be the best.

Omni channel enablement platform and.

And industry.

Great. Thank you guys.

Our next question comes from the line of Brian Peterson from Raymond James You May begin.

Hey, good evening, gentlemen, and thanks, Thanks for taking my question and congrats on a really strong results. So first of all and I don't know if Brent or Ray wants to take this and I heard a lot of drivers of the air or acceleration, but I did hear that net new picked up and I'm curious if we could double click on that a bit was that win rates picking up a bigger pipeline of opportunities any increased share donors.

Any thoughts on that.

Yeah, I'll jump in and Hey, B P I.

Say pipeline.

<unk> remains strong and and I think we're entering into a quarter, where our pipeline.

It has never been better.

When you think about net you and we're super pleased with our team's performance on gross new subscriptions, we saw nice trends again and retention. So when you factor in.

Our pricing model. The one thing I failed to mention earlier is as these omni channel partnerships and and as the and <unk>.

Catch rates continue to grow and channel manager.

All of those will drive orders for big Commerce, so whether or not we get Rev share or not they're all going to drive increasing orders and if youre on and enterprise and playing on day Commerce and you exceed your initial order tiers, and then youre going to see those upgrades over time. So we're seeing you know.

Great trends and gross new we're starting to see good trends and upgrades and growth adjustments and Super pleased with the improved retention that we're seeing every quarter.

Yes.

Good to hear it or and maybe just a follow up for you you know we're about halfway through the second quarter. At this point you don't obviously, it's tough with the stimulus checks and we're in a pandemic, but I'm curious what you've seen so far quarter to date and it and how that makes you feel about the PSS revenue. Thanks, guys yeah.

Yeah, So I mean, given where we are in the quarter.

And again makes me feel good about sharing the subscription growth rates at 36% and.

And.

GMB.

The impact of the stimulus we're factoring into our guide.

And so again, the ph and just about a matter of.

And just being careful around what's going to happen and next seven or eight weeks.

Under the same store sales same store sales.

Year to date and we.

We've been very pleased with the debt.

The amount of transactions across all of our merchants.

Good to hear thanks, alright.

Thanks Betty.

Our next question comes from the line of Mark Murphy from Jpmorgan you may begin.

Great. Thank you for squeezing me in here, Robert considering the enterprise traction that Youre speaking to do you see a reasonable opportunity to.

Perhaps continue adding this <unk>.

Level of net new <unk>, which has been it's a pretty tight range of about $14 million to $15 million.

The last four quarters do you think that can continue through this year I guess with.

Vaccinations, reaching a tipping point and and pandemic restrictions easing and so on and so forth.

Hey, Mark Yeah, I think the one thing that we're really excited about is is how well our initiatives are really resonating with these large enterprise merchants. So.

And again, whether it's our headless capabilities, whether it be to be again put your shoes put yourself and the shoes of a large enterprise merchant and.

And you're going to look at us as a way to take advantage of a lot of technologies that are evolving and innovation that's happening across the ecosystem.

Since we are focused on this open SaaS platform and partnering with folks that wake up every day go to bed every night thinking about what's the most innovative technologies. They can develop across the payments across omni channel across shipping and fulfillment.

You name it I think all of that is resonating. So when I think about enterprise I think we're just scratching the surface, especially with large accounts like wine direct and theres going to be a point in time, when we're gonna be signing accounts you know north of the $1 billion of G. M D and E and I think where we're cool.

And now disrupting that large segment of the market.

So I feel really good about it.

If you feel good about that and then Dave <unk> glide path it sounds.

Brent I wanted to just kind of go back to a comment you made earlier.

Are you, saying that you expect some of your recent product introductions, such as buy online and pick up and store to kind.

Continue to drive strong ongoing activity this year, even for accounts that hurried up to go live with Big Commerce last year when the pandemic hit in other words do you think theyre going to kind of continue adopting to some of the consumer behaviors that might be permanently altered.

Yes, I think we're very early days of businesses optimizing their.

Experience for customers and integrating that experience between online and offline.

And what they're really looking for are.

Integrations with their point of sale software as well as functionality enabled through the platform like buy online pickup and store or buy online and local delivery day.

That day.

And that sort of integrate that search functionality of what products are in which stores, how do I look up the stores relative to where I am how do I see my.

Delivery options all of that's advanced level functionality and if you rush online because you got caught flat footed when you re platform, maybe and phase one you haven't gone Fulbright on all those capabilities are the best ones available and you keep upgrading that experience to try to please the rapidly changing.

Consumer expectations. So I think there's a there's a lot of opportunity ahead as businesses keep perfecting that and wanting to work with platforms like the commerce that are really good cash.

The whole point of sale integration side of things and the customer experience for per offline shopping via online.

Understood. Thank you.

Okay.

Our next question will come from the line of Yoga Iranian from Wedbush Securities You may begin.

Yeah.

And some squeezing and yeah.

So a lot of focus on the enterprise side rightfully, so I'm doing a lot of things right, there and as I just wanted to maybe.

And a few minutes on the SMB side.

And just see what you guys are seeing there right now and what not.

Opportunity.

For you guys and they're gonna F&B decided and even kind of evolve and expand and build out the enterprise side and.

And then.

And I guess in addition to that the connected car.

And about the marketplace can be and.

And and expansion marketplaces with Walmart.

And we talk a little bit about Facebook shop, and Instagram shops, what you guys are and they're so far and.

Some of the trends and maybe trajectory from from outside.

Sure So I'll actually connect the two questions together a level of debt.

Our original focus as a company as mentioned was small business out of Australia and we.

We think that our open strategy continues to be particularly attractive to small businesses around the world who want to optimize their ecommerce for their specific business and requirements that includes not just the great functionality and then and the commerce and also.

And what our payments partners can deliver what our point of sale partners can deliver our shipping partners etcetera.

And we really love it.

And partnerships like what we just announced like wind direct and with Commonwealth Bank and Australia enable these types of expansions for example.

Although it's one relationship with line direct they serve more than 2000, and winery and the United States and ultimately it's a.

And it's it's it's a consolidated channel to being able to broadly serve.

And lots and lots and lots of individual wineries. Thanks to the differentiated capabilities of that partner, just like with Commonwealth Bank and Australia.

<unk>, the leading the leading bank and Australia, and with so many relationships and their and our wanting to expand those to what they do digitally and that's a tremendous weighted pain, both marketing reach as well as integrated offering advantages that our competition cant allow and so when you then go to your second question.

Around.

Wish and Walmart et cetera.

And awful lot of small businesses.

And would never dream of having the technical bandwidth for resources to individually integrate into these incredible channels and what and commerce brings to the table.

And as a as a pre integration and native integration that in many cases is free or extremely low cost to add a channel like those and began selling its reaching new customers.

On the brand reach that Walmart, which delivers and they absolutely love that and some of our favorite stories of success, we're gonna be small businesses and addition to the the really large ones who also.

And I want to take advantage of those.

Basic and extensions, but for a small business that's trying to grow trying to reach new consumers and can't spend a fortune on digital marketing.

The platform and I'm sorry, the channel manager is that cost effective way to get in front of an awful lot of buyers that you couldn't otherwise reach.

Great that's super helpful.

And our partners with wood with Facebook and Facebook shops, right and.

And you're seeing any real traction on that side, maybe more of a Instagram side and then the physical side, but any real traction so far there.

Yeah and we.

And we've been partners and integrated with Facebook and Instagram through the evolution of their offering for several years now and we're giant proponents of it what we see as being really successful with Facebook isn't just shops, but also facebooks ability too.

And target and retarget and look alike target.

Consumers and one of the things that we're really excited about is historically, there was sort of a pixel placement and stores that would.

Try to gather the data that a merchant needs to advertise effectively on Facebook and now we have a server integration with them much more scalable.

And much more modern which improves the ability.

As a use case, if a consumer goes from merchant site looks at some items on the purchase well then that business has the ability to look at like target them on Facebook.

And that looks like but re target them on Facebook or run book of light campaign, and then Instagram is really a different use case and one of the most effective ways leasing merchants using it is too.

Basically interact with communicate with their followers and.

Engage with them as they launch new products to help brand story, we have some merchants where theyre Instagram feed is their number one marketing source of orders.

And when you when you can really belt that following so we're we're evangelists for merchants adopting their Facebook and Instagram strategy too.

And what they what they most benefit from and seeing a lot of success with it.

Great that's really helpful color. Thanks.

Our next question comes from the line of drew Foster from Citigroup you may begin.

Hey, guys. Thanks for taking my questions nice quarter and part of a question for Brent and I was hoping you could put a finer point on.

Whether you are starting to hear headless as a central theme and and more of your enterprise conversations versus you know one of one of several considerations where a number of features within some of these legacy solutions are just still.

Has the sense of urgency to move towards those types of architectures picked up.

Yeah.

There's a nuance geographically to that answer I would say in Europe.

For larger enterprises.

<unk> is often at the forefront of consideration and that's because of the complexity of different languages different countries different.

Currencies, you can't easily just how the configuration and a single store you often need multiple stores and you may be selling different products and different countries. So that's where <unk> had less and multi store really come together very effectively and is.

A higher penetration of our higher percentage of our sales opportunities. Then for example, and the U S where a lot of companies just focus on.

American English U S dollar sales, including what they May do on Canada and.

And surrounding geographies however.

And what we think is a leading trend is as businesses want to become.

Experience first and the most innovative on their experience and that's where I had less really shines and.

And that's the other use cases, and we think that's going to keep increasing and.

And even markets like the U S, where the where the language currency country complexity isn't as strong.

That's helpful color I appreciate it.

One one for array.

How should we be thinking about subscription <unk>.

<unk> and in 2021 from transaction related overages, whether it be from either the number of orders or a gym be thresholds being breached I think there are some some of that benefit in 2020 is that less of a tailwind.

And 2021 as you're contemplating the the.

Guidance here.

And you know I would say, we're likely going to have more growth adjustments and upgrades this year than than than last year and.

Especially as our mix continues to shift to these larger accounts as they start transacting and.

You know, we kind of built in a little bit of a buffer in terms of when they exceed their initial order tiers, but.

I think for us as that mix continues to shift more to these enterprise plans all of those enterprise plans have kind of order tiers debt as they mature on our platform.

They exceed so I'm not sure we purposely built out our plan our pricing model that way.

Okay helpful. Thanks.

Uh huh.

And our last question will be from the line of Ken Wong from Guggenheim Securities You may begin.

Great. Thanks for squeezing me in and I'll keep it to keep it to one question.

Just wanted to touch on just agency partners, what kind of growth that you see here.

And as you guys move deeper into enterprise how are you thinking about the types of partners that you guys may need to attract to the platform.

Okay.

Yeah, We're seeing agency partner growth at the greatest at the Bell and the two ends of the Bell curve, So I think that when.

Starting five years ago.

Felt really strong presence and mid market agency and now what we're seeing is.

Tremendous growth for like individual developer shops, one person shops.

For F N b's, especially at the large enterprise level and.

And now being a public company has been a game changer per bed commerce, when I'm not going to name names, but let's say the last press release, we did with me Pam <unk>.

That's an example of this genre of large.

Enterprise agency that are now building practices with us, we anticipate more announcements to come or at least partnerships to be built and without announcements where their building practices around us because what the large.

With the largest of enterprise agencies are saying is the days of customers buying the multimillion dollar IBM Oracle and.

P magenta projects are over and they want the benefits of SaaS and they're blown away and just how flexible and powerful what the commerce delivers.

And what the market wants and they see us being able to serve a very meaningful subset.

Yeah.

Of opportunities that used to be far more expensive for the clients that they serve so you know.

The large enterprise agencies are all waking up to us and it's the combination of our transparent public.

Emergence.

You know as a public company. In addition to what now Forrester Gartner IDC paradigm are all saying about the capabilities of our platform. So hopefully much many more success stories to share with you and coming quarters.

Great. Thanks for the color Brad.

Okay.

Thank you.

And then though for the question and in the queue.

To turn the call back over to blend zone, President and CEO and chairman and for any closing remarks.

I wanted to say thanks to all of the investors analysts and folks who followed that commerce for your time your attention your partnership.

And honor to serve you in addition to our ecosystem of partners and customers and we hope for more exciting stories to tell you and the quarters.

Thanks.

Okay.

Today's conference call. Thank you for participating you may now disconnect.

[music].

Yeah.

[music].

I'd like to turn the conference over to your first speaker today, and Daniel and head of Investor Relations. Thank you. Please go and so and Sherman and Brent Bella 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 1995 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 second quarter of 2021.

And the full year 2020. One these statements can be identified by words, such as expect anticipate intend plan believe seek will or similar words. 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.

The call. We will also discuss 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 other metrics is included in our earnings press release, which has been furnished to the SEC and is also available on our website at investors and that Big Commerce Dot com with that let me turn the call over to Brent.

Thank you Daniel and thank you everyone for joining us on our first quarter earnings call.

Today's call Robert and I will detail results from Q1 and provide an update on our 2021 full year guide we.

We will also provide updates on our strategy customer and partner traction.

Enhancements and overall industry possession date.

Let's kick off with a few highlights from our Q1 financial results.

We experienced a robust first quarter with Q1 revenue growing to 40.

$7 million up 41% year over year and.

Annual revenue run rate or <unk> grew to $196 3 million up 43% year over year.

This marked a substantial acceleration compared to the 27% growth rate and Q1 and 2020.

We saw continued momentum and our target market, a fast growing complex and established.

Error from accounts with greater than $2000 and annual contract value for HDD finished at $163 $7 million growing 51% year over year, while enterprise account are our growth further accelerated to 58% year over year, finishing at 112.

$4 million.

All Q1 growth rates referenced so far represent acceleration from growth rate in Q1, 2020.

And it's notable that all year 2020 was our third successive year of revenue growth rate acceleration and.

And then Q1 2021 after the strong start we've now posted accelerating growth rate and our fourth successive year.

Common trajectory of accelerating momentum reflects the traction and differentiation of our offering and the global ecommerce market.

Robert and I have spoken on previous calls about our net net to growing the company the right way by prioritizing customers first.

And long term and making smart investment decisions and grow revenue, while maintaining our commitment to achieve profitability. Our first quarter demonstrated progress in this area with adjusted EBITDA margin strengthening to negative 5%.

<unk> point improvement versus Q1, 2020.

We see a tremendous addressable market for big Commerce, and we are positioned to capitalize on the opportunities in front of US we will continue to make strategic investments in areas and selected to generate strong returns on invested capital while focusing on the full year 2021 profit guidance, we outlined back in February.

The ecommerce market share growth and the mid market and large enterprise segment continues to strengthen cut.

Customers see the value proposition and differentiation of our platform our.

And our open SaaS platform and partner ecosystem enables companies of all sizes to quickly and successfully established and online and omni channel sales problem.

Overtime, we believe on premise software and closed enterprise SaaS offering will find it increasingly difficult to compete with the best of breed opened south approach.

In summary, our strategy is simple and has three key elements.

One we pursued textbook disruptive innovation.

Extending the capabilities of our platform to serve ever larger merchant, thereby disrupting the legacy incumbent platform leaders and the Midmarket and large enterprise.

Two we continuously innovate and deliver the world's best open SaaS E Commerce platform with best of breed functionality and a maximum amount and flexibility for our SaaS platform.

And the API software development kit and tech partner expansion.

Open strategy provides SaaS growing and complex businesses the ability to optimize their approach to e-commerce for the unique business needs.

Great and we will grow our business using a repeatable playbook that is based on the retention and growth of existing merchants.

Acquisition of new customers and an ever expanding range of segments like <unk> and large enterprise.

Expansion geographically.

And finally, the growth of supplemental partner and services revenue.

Now I'd like to shift focus to some notable new customer site launches and <unk>.

Q1, we saw a diverse roster of notable brands use our native and headless commerce capabilities to launch and Big Commerce. Some examples being.

Black Diamond equipment, a leader and mountain adventure gear and pop 1000 online retailer launched ahead looks like and implementation using been commerce and prison expand that.

Combination and powers, it's marketing team to deliver and experience first site design, while maintaining the operational coordination necessary to support and extensive product catalog.

<unk> Kutter another top 1000 online retailer that offers the largest selection of vinyl cutters and the industry embraced that consumers desire for freedom of choice by providing a wealth of payment and shipping options at checkout, including buy online pickup and store functionality.

The Bristol British Association of restaurants bars, and independence and the UK.

<unk> headless commerce, and the launch and delivery App to help dozens of independent food venues and Bristol State and business post Lockdown.

Saudi propellers, and GE Aviation company and manufacturer of integrated propeller system launched a new site with extensive <unk> functionality.

Lets us Nexus.

<unk> renowned provider of legal regulatory and business information now provides its customers and Australia, the ability to create and buy their own bundles of legal module and contained materials from different areas of their offering.

Just this week and commerce finalized the deal with wine direct debt I am personally thrilled to share.

For those not familiar wind direct provides end to end technology solutions to help winery and sell directly to consumers and through this partnership Winder X 2000, plus winery roughly 15% of all U S winery, and we'll be able to power their online storefronts through big Commerce.

And Q1, we also announced nearly a dozen new product features and welcomed several new partners to our platform.

Within Omni channel, we partnered with Walmart to give U S vendors access to over 120 million unique consumers opening Walmart dot com monthly.

Merchants can now seamlessly connects their ecommerce storefronts to Walmart dot com, giving Walmart consumers convenience and a wider selection of products.

We collaborated with our tech partner random retail to launch buy online pickup and store capabilities across small and medium sized merchants with and easily configured solution and advanced version offering more customization and features such as curbside pickup is also available for mid market and enterprise customers.

Promotions manager is a powerful and flexible tool designed to help mid market and enterprise customers improve their marketing and inventory management and is highly customizable and has received extensive praise from our customers and industry analysts like Forrester.

We introduced new platform capabilities and accelerate our international expansion control panel and self service tools were launched and several additional languages.

Merchants that speak these languages can now purchase a big commerce subscription onboard and manage their stores and their native languages.

Finally, we launched the payment provider software development kit or SDK for credit card providers introduction of this capability is an important step and our international expansion.

SDK allows local payment processors, and our systems integrators to integrate payment gateways and so big Commerce. This will in turn enable our business development team to identify and sign new payment partners around the world reduce our partners time to integrate and accelerate the commerce adoption and new geographies.

As we look forward to the coming months and quarters, we see many areas of opportunity to invest and grow our business.

Our product roadmap will continue to target platform enhancements and extension that deliver high customer value and return on investment.

Externally, we will prioritize partnerships and agreements that present opportunities to enhance value for our customers beyond what our product roadmap and can accommodate.

Our focus remains on extending our platform capabilities without fundamentally changing our core open SaaS strategy.

As we've discussed before unlike our closest competitors, we do not aspire to compete and an ever expanding number of new software vertical category.

We focus our efforts on building the world's most open and flexible and capable SaaS platform, while partnering with best of breed leaders and adjacent software and service category.

We will look for opportunities to deliver great value to our customers without compromising our open platform and partner centric strategy.

Before I turn it over to Robert I'd like to thank all of you who follow and invest in <unk> commerce, we aspire to shape the future of E Commerce, and we're grateful for everyone, who contributes to our mission with that I'll turn it over to Robert.

Thanks, Brent and I appreciate everyone joining us on our call today I'll review, our most recent quarterly results in detail and provide an update on our full year 2021 guidance. Overall, we're very pleased with our most recent quarterly results and we are encouraged by our team's strong performance across all the markets that we serve.

Although it's still early in the year, our kpis are tracking well compared to our expectations.

The annual revenue run rate or <unk> grew to $196 3 million up 43% year over year.

International revenue grew 65% year over year with 80% year over year revenue growth in EMEA, and 52% year over year revenue growth and APAC.

Now I'll break down the results of our subscription and partner and services revenue.

Subscription revenue grew 36% year over year. This acceleration was primarily driven by continued strength and net revenue retention with additional momentum building and new merchant bookings as well.

Our enterprise accounts grew 58% year over year to $112 4 million and Q1.

And enterprise accounts represented 57% of <unk>.

And as of March 31, compared to 52% last year and share we will continue to maintain our focus and investment and growing our share and the enterprise segment.

Including the large and enterprise as demonstrated by our recently announced partnership with wind direct which enabled direct to consumer wine sales of over $2 billion and 2020.

We are confident that we can compete and win similar opportunities as we continue to meet the needs of large enterprise accounts.

Our work here is clearly paying off and accelerating the pace of growth and our enterprise plans next I'll cover the total number of accounts with annual contract value or <unk> greater than $2000. At the end of Q1, we had 10509 customers over the $2000 threshold and increase of 1521.

Accounts or 17% year over year.

Our sales team is making steady progress and consistent market share gains within the mid market and enterprise segments currently accounts with HCV greater than $2000 now make up 83% per our total <unk> and Q1.

Another key metric, we track and ARPA or average revenue per account.

It gives us an indication of our portfolio mix and.

And with potential.

<unk> for accounts with HCV greater than $2000 for Q1 was $15582 up 29% year over year.

This was driven by strong sales mix of enterprise plans and higher <unk>.

Which is composed of revenue sharing agreements across payments shipping omni channel tax and other ecosystem verticals.

Let's move on to discuss the remainder of the income statement. Please note that unless otherwise noted all references to our expenses operating results and share count are on a non-GAAP basis.

Our gross margin profile continues to strengthen with margins now north of 80%.

In Q1, non-GAAP gross profit was $37 8 million, which is up 47% year over year. This translated to a gross margin of 81%.

That was and nearly 300 basis point increase in gross margin compared to Q1 2020.

Accelerating growth and our SaaS subscription sales and continued strength and the PSS revenue drove the improvement in margins.

Moving on to sales and marketing expenses in Q1, we reported $19 2 million equating to 41% of total revenue compared to $15 5 million and 47% a year ago.

As we previously guided we continue to ramp up our efforts and hiring within our go to market efforts, particularly to support our international expansion plans.

Our subscription mix growth continues to trend towards enterprise plans and we continue to see high quality leads for these larger sized accounts coming from our inbound marketing efforts and partner referrals.

In Q1, and research and development expenses were $12 3 million or 26% of revenue.

Compared to $10 6 million and 32% a year ago.

Creating disruptive and innovative features for our merchants as key within the e-commerce space as technological requirements and opportunities are evolving rapidly. We will continue to look for opportunities to invest in this area, while continuing to drive leverage as we ramp our offshore development teams.

For the quarter General and administrative expenses were $9 5 million or 20% of revenue compared.

Compared to $6 1 million and 18% of revenue a year ago.

Growth and G&A was in line with our plans and primarily tied to items related to supporting our operations as a public company.

We see G&A as a percentage of sales gradually declining over time as we continue to scale our business.

We reported a non-GAAP operating loss for Q1 of negative $3 1 million or a negative 7% operating margin.

Compared to a negative $6 4 million or negative 19% operating margin in Q1 2020.

Adjusted EBITDA was negative $2 4 million or a negative 5% adjusted EBITDA margin.

A 12 point improvement from a negative 17% adjusted EBITDA margin a year ago.

Non-GAAP net loss for Q1 was negative $3 1 million or negative <unk> <unk> per share compared to a net loss of negative $7 4 million or negative <unk> 40 per share a year ago.

Our goal is to generate consistent long term growth as we develop the best open SaaS platform and the market.

And with the ultimate goal of being profitable and the timeline we've committed to.

We are aiming to reach EBITDA breakeven as we exit 2022 and.

And we are on track to hit that target.

When we have opportunities to reinvest and the business in order to accelerate our strategic initiatives, while sticking to that timeline, we will do so.

Turning to the balance sheet and cash flow statement, we ended Q1 with $208 million in cash cash equivalents and marketable securities.

Operating cash flow was negative $12 8 million compared to a negative $10 million a year ago.

Free cash flow was negative $13 2 million or a negative 28% free cash flow margin.

Compared to negative $10 6 million and a negative 32% free cash flow margin in Q1 2020.

Now, let's shift to discussing guidance for Q2 and for the full year of 2021.

As Brett and I have said, we are encouraged by our results from Q1, and we believe this shows the growing momentum building and our business.

Even as we reinvest back in the business to capitalize on this we are taking a prudent approach to our guidance for the remainder of the year.

Our guidance assumes a reasonable level of growth and normalization and consumer spending online throughout the year.

And meaningful shift and the broader macroeconomic environment and e-commerce spending.

Cause us to modify our guidance higher or lower and.

And we will continue to provide our best view of these trends and future earnings calls.

For the second quarter of fiscal 2021, we expect total revenue and the range of $46 4 million to $46 9 million translating into a year over year growth rate of 28% to 29%.

Our non-GAAP operating loss is expected to be $8 1 million to $8 $6 million per.

For the full year 2021, we currently expect total revenue between $196 7 million to $198 2 million translating into a year over year growth rate of 29% to 30%.

Non-GAAP operating loss is expected to be between $31 million and $32 5 million.

With that Brett and I are happy to take any of your questions operator.

Thank you.

At this time.

And so that's a question you will need to press star one on your telephone and to withdraw your question press the pound key police and violets the Q&A roster.

Our first question on income from the line of Brent and <unk> from Piper Sandler you may begin.

Hi, This is Clarke Jeffries on for Brent.

First question Brent you mentioned the annual letter the company has an ambitious roadmap and capabilities and integrations plan for from your customer base I just wanted to ask where do you see the best opportunities for open SaaS going forward and and where do you think by partnering there is an opportunity to create something really differentiated and potentially move faster in <unk>.

And bringing something to market as opposed to a vertically integrated approach.

Thanks for the question Clarke, our open SaaS strategy will still benefit from incremental product investments and both the enterprise functionality.

Of our platform as well as the enterprise endpoints and flexibility of that.

I would add though that the other strategic expansion dimension that we frequently talk about like <unk> has.

<unk> Omnichannel international expansion.

And enabling partners to succeed in conjunction with US are all big opportunities for investment.

As with most companies in every given year, we've got budgets that we have to live with them and we look at what are the highest priorities that we can't afford within our budget and then for those opportunities that we see that we can't get too and the short term, we look for partner opportunities to expand and accelerate the.

And the capabilities that we and our ecosystem deliver to merchant. So the short answer is that we are looking for both for internal investment.

And partner ecosystem enablement on those key expansion themes that we frequently talk about publicly.

Great and then alright enterprise continues to accelerate and 58% <unk> growth and it seems even on a subscription and <unk> basis, we're seeing an acceleration that is well I guess just what's resonating. Most when you think about the 50 million <unk> customers are both above and.

Where would you assign most of that contribution upside, we're seeing between new brands and order volume driven upside and existing customers. Thank you.

Yes, I think it's our.

Our open sales approach is definitely resonating, especially with the larger enterprise accounts. When you think about the complexity of larger accounts, that's where we really shine.

And if youre going to sign a five to seven year agreement.

And Youre thinking about your future E Commerce platform. We believe we're the most future proof e-commerce platform in the market.

And the pace of innovation, that's going to happen and the next five to 10 years is going to be.

Crazy in terms of.

The speed and the offerings from our partners and so if you are and enterprise merchant you love the customer ability.

The ability to customize your love the flexibility, but you also love the best of breed solutions that we can bring to you and a native way and so when you look at our pipeline, we're seeing a higher mix of larger accounts wind direct is a great example of the really large accounts.

We are winning and we expect to win more large accounts going forward and again the openness is really resonating the best of breed solutions that we bring to bear really resonates and.

Whether it's had less whether it's b to b.

And then.

And the components of our platform that are flexible, but also the ones that if your if youre in the merchant shoes, they really view us as the ones that are going to be able to bring the most innovative technologies around e-commerce for many years to come.

Alright, thank you and encouraging to hear.

Our next question comes from the line of Josh Beck from Keybanc capital May begin.

Thank you for taking the question maybe to start with Greg I'm, just curious what you see happening with respect to <unk>.

Really building the pipeline and conversion and it certainly seems like.

And the message around modernizing ecommerce platforms has become stronger and the last year certainly.

Company I imagine is is providing a bit of a halo.

Great partnerships, just just curious maybe how those conversations have.

Bold and really how youre thinking about the potential contribution from new cohorts, which really seems to be stepping up every year as we want as we go through 'twenty one.

Hi, Josh Thanks for the question typical evolution for.

A technology like ours, and a company like ours that pursues a disruptive strategy you start at the low and like we did 12 years ago, meaning a focus on Smbs you.

<unk> outperformance and functionality you earn the right to start competing for mainstream mid market customers and now what we're seeing.

The successful evolution of our ability to compete even for the largest of enterprises and so the part of our pipeline that I would say has grown the most and the last 12 months pre and post IPO has been the large enterprise segment of our.

And <unk>.

And of our.

Pipeline and our sales capabilities, we really do believe that as we keep.

Further enhancing the platform capabilities, both native functionality and enterprise level flexibility and openness that we are in many cases, the best multi tenant SaaS alternative.

And the large enterprises, who used to have to go to on premise software.

Oracle Atg and.

<unk>.

IBM and SAP.

<unk> of the world or even custom.

Most companies. These days realize that's the last place they want to have to be either custom developing more custom managing licensed software they want to be on SaaS and the question is is there a SaaS platform that has enough enterprise functionality and flexibility to let them really optimized for their business needs.

And we believe that increasingly and.

And uniquely where we are today, therefore able to build and serve pipeline and then all three segments that we compete in.

Really helpful and then maybe a follow up for you.

Certainly a really nice beat and the quarter I think it was a little more than $4 5 million on revenue and you are taking the full Europe I think by close to $7 $5 million. So maybe just help us understand within that upward revision is it really related to.

And the momentum you're having on the subscription side I know you mentioned you want to keep.

A balanced view and really think about normalizing and consumer spending and post the stimulus. So maybe just help us understand how some of those factors played into the guidance.

Yeah, Hey, Josh, Yes, I mean, the 36% subscription growth and Q1 was great to see we.

And we feel strong strongly that we can maintain that level of growth into Q2 for subscriptions, we've got that pretty dialed in at this point, where we have to be careful is really around <unk> as you know last year.

Q2 was a full quarter of the elevated <unk> that ran through the platform.

And so we're kind of balancing out our views carefully around where <unk> goes from here as things start to open up but.

And kind of split apart subscription and <unk>, we feel great about the growth and subscriptions really across the board retail plans enterprise plans.

Across the U S and international so subscriptions, we feel strongly Q2 will be kind of and at 36% range and then where do you see some conservatism and will be and the <unk> line.

Really helpful. Thanks, Steve.

You bet.

Our next question comes from the line of Tom Roderick from Stifel May begin.

Hi, It's actually Parker Lane on for Tom Thanks for taking my question.

Look at the roster of new partners that were added during the quarter and a lot of interesting organizations. There can you give me a sense of how many of those organizations joined the ecosystem as a result of acquiring new customers versus your own efforts to really expand the ecosystem and continue to differentiate your open SaaS approach.

When you say partners are you referencing.

And you.

You're talking about the customers or are you talking about partners like.

<unk> line, Brian Yeah, and commerce looking like like a content stack a paced dynamic yield some of those organizations that you outlined and the presentation.

Well I love talking.

Talking about for example, how the open SaaS strategy.

Central to being able to win big partnerships like what we've done with one and direct.

And Commerce Bank of Australia, and both of those cases, if you think about why and direct they had a custom platform that Theyre 2000, plus wineries and we're on.

But they can't differentiate and compete on the core platform elements of it.

Were they really differentiate are the wine industry specifics like managing mailing lists allocations tax and shipping compliance.

Tasting room does that stuff like that.

<unk>.

And so.

<unk> in order to be able to take over the core of e-commerce, and yet seamlessly integrate with them for all the category specific things that they do better than anybody else requires the ultimate and flexibility and really where the natural for that type of partnership similarly with commerzbank.

We're not a competitor of theirs, they they want to serve merchants.

And give them the full suite of banking services payments commercial banking lending buy now pay later and unlike some of our competitors. We don't compete in all or any of those we partner and that makes us the natural for them to want to go to market and really become a leading force in Australia.

And digital and e-commerce, and so I would say across the board. The open SaaS strategy that we have is inherently partner centric.

For everything that is beyond the core platform, it's all the adjacent vertical and category after category.

That is really the core to what we are trying to do and it leads to very innovative and novel partnerships like some of the ones we've announced recently.

Got it very helpful. And then maybe a product question how far along would you say that your customers are today and their promotions and customer loyalty journeys and when you look at things like promotions manager, which it seems like Youre investing and right now how does that really differentiate the platform versus some of the other competitors you've talked about and the pass I guess the question is.

Is that an area that you really think you can set yourself apart from some of those competitors and make yourself and the most attractive offering out there.

And our promotions manager is a big deal.

And your card with all the different types of promotions.

Dollars off three or discounted shipping percent off.

Buy one get one as well as sort of a layered characteristics and only on pulp price items does include sales can you stack promotion and all of these permutations are extraordinarily complex.

And we think that natively our platform can handle that variety better really.

Any other SaaS platform that we know this matters and awful lot to a wide range of businesses either because they are.

Promotions simple easy and powerful for our customers and debt some of the leading tech analysts industry analysts like Forrester and Gartner they understand the nuances of what our platform can or can't do and they call out what we've now brought to market.

Very much leading edge.

Alright, thank you.

Thank you.

Our next question will come from the line of some non Samana from Jefferies. You may begin.

Hi, good evening and thanks for taking my questions.

Maybe one for Ferrari when I think about the accounts of ACB granted in 2000.

The growth there actually continue to accelerate nicely in March is there any if you can maybe help us understand how much of those were customers kicking into that tier that we're already on the platform versus.

New customer acquisition and the quarter.

Yeah, I would say mostly from net new.

But we also saw.

And some upgrades, but I'd say that most part as gross new net new.

And what we're also seeing is continued strength and our unit economics across the board.

Specially with accounts created into cash.

And you saw the improvement and our last year.

That trend continues to improve.

I think what.

It's gross new.

Friends and upgrades as well as really improved retention across the board, we're kind of seeing all of those characteristics and that cohort.

Understood and then maybe.

If I think about the assumptions and guidance.

I totally hear you on the <unk> day, but.

Assuming the debt.

And the normalization of consumer trends, but what are you assuming if any in terms of improvement and the <unk> take rate in terms of partnering economics going forward for the rest of the year.

Yes, I mean, what I would tell you is we're actively.

Vesting in ways to make it easy for our merchants to leverage our partners products historically.

Historically payments has been the biggest driver and <unk>.

But we're definitely starting to see revenue streams from partners outside of payments Omni channel shipping fulfillment.

And really across the board, we're starting to see our merchants, taking on and adopting our partner's products and as we think about this year and going forward, we're going to make that a lot easier and much more streamlined and we expect that trend to continue.

Perfect and then squeeze one in for Brent maybe just zooming out one of your one of your competitors has been investing.

Early stage or some stage and private companies I'm curious, how you think about maybe investing capital into your partners and maybe getting a preferred relationship are or if that's something that the company is considering as part of their their partner strategy going forward.

The thing I struggle with and that dimension is how to have integrity around being open and partner centric, if you take and equity investment and a particular player in.

A competitive category I wouldnt have qualms around it.

Relatively.

One player unique niche but.

And there's a conflict of interest if you have.

And ownership stake in <unk> and somewhat so we haven't done it yet and Thats one of the factors that played into it.

And we've tried to stay true to our partner centric ecosystem centric approach.

Great Congrats and the strong start to the year guys I appreciate the questions.

Yes.

Our next question comes from the line and the railroad and show from Barclays. You May begin.

Hey, Thanks for squeezing me in two quick questions one for Brent Brent price.

And you look at the your comments around enterprise it looks like you're starting to deal with bigger accounts can you remind us like of the sales cycle that we need to be aware off and then as part of debt like what's the pipeline and in that respect.

In terms of how that's kind of building and what youre seeing in the pipeline and.

And one for all of US like we've just been talking about the partner revenue for a bit and I get it that you're kind of nervous because youre hitting tougher comps but.

And we now had one quarter, where we start to see the columns and where you see the comments from your competitors like what's your view in terms of like would be.

And the level of conservatism you need.

And this line no and <unk>.

What's the puts and takes as you put it into your comments. Thank you.

Hey, Raimo I'd say typical sales cycle for small business is under two weeks and.

Our two week trial period, well aligns with that typical sales cycle for mid market is under two months and for large enterprise.

On average it is going to be longer than two months. Although we are pleasantly surprised with some frequency by really big opportunities that come in and very quickly.

Do their diligence and realize hey were perfect for them and they want to move quickly, but yes.

Yes, indeed, it is a longer sales cycle and it does make large enterprise a bit tougher to predict it's not law of large numbers.

And the way mid market and small business are and so we and our own planning.

Internally we.

We loved account and a lot of the bigger deals and that sort of upside relative to hitting our goals rather than a core part of the plant and sales cycles longer for share.

Yeah, a couple of points on CSR.

Really happy to see the elevated.

Transaction volume carry forward through Q1, we did see a spike kind of and then.

And in mid March and we.

It was really a spike across the board and same store sales from most of our merchants.

And we didn't carry that forward, we don't expect that that spike from the stimulus checks that we believe impacted GMB in March would continue and.

I'd also point out as we start to sign and bring on.

Really large accounts like line direct it's going to take time for those stores to launch in the <unk> that we expect from large accounts like that.

Perfect.

Congrats and thank you. Thanks.

Thanks Ryan.

Our next question comes from the line of <unk>.

And the loss came from Morgan Stanley moving again.

Perfect. Thank you so much guys and congratulations on a strong quarter.

And.

Of course.

I wanted to follow up and Ryan most question.

Just wondering if you saw that spike in <unk> and in March ish.

And as stimulus checks hit.

Is there a way to you.

You kind of cut off that spike and give us a sense for what the normalized <unk> growth.

Would have been in the quarter because of.

We had Q4 very strong <unk> on the back of the holiday season, and Q1 was actually an even bigger and <unk> quarter.

I guess trying to figure out whats the whats the kind of like the more normalized PSS growth rate ex the spike.

Yes, the easiest way to do that standards. If you look at Q2.

We feel great about our subscription revenue growth, we think that we can sustain 36% and.

So when you kind of back into the Delta Youll get to a <unk> number and when you compare Q2 to Q1, you can kind of see that debt that delta I mean, it's not.

It's not massive but that'd be the best way to get a view of that.

Got it got it and on the.

And I wanted to touch on the international component very strong growth and internationally.

What are you seeing there as far as getting there.

And there are still lockdowns are happening in various geographies outside of the U S.

But you're still and you're seeing strong growth and there as you know and vaccine is being rolled out more aggressively internationally.

And then what did you see in the quarter.

Outside of the U S and how are you thinking about that part of the business moving forward from the rest of the year. Thank you.

Yes, we're seeing continued very strong sales out of our London office, primarily northern European.

Businesses, but also with nice inroads on the continent as we expand.

We talked about in this and prior earnings releases, we have translations and too.

Quite a few of the continental European languages, and now have marketing and full cycle sign up.

Websites for French German and Italian.

Sure.

Spanish so we're really excited about the continental opportunity. Our original market was Australia, that's where the company was founded and so continued strength out of Australia and New Zealand.

But long term.

Weather.

Whether there's a pandemic recovery ore or not.

And the upside for our business. When you think about all of the non English speaking geographies and Continental Europe Asia Middle East Latin America Africa, it's enormous and we aspire to be.

And well localized and very competitive platform and.

Countries, all around the world and the coming years, and so I think the size of the opportunity completely overwhelms the temporary status of locked down are not locked down on a country by country basis and.

We really do believe international growth will be one of the big drivers for our business for years to come.

Perfect. Thanks, guys.

Thanks, Tim.

Our next question comes from the line of Terry.

Tailwind from tourist Securities you may begin.

Hey, guys. Congrats on the quarter and this is actually Connor best Rolla filling in for Terry and I just wanted to ask about the payment SDK on how the early reception and adoption has been there and then what do you see and.

And the native integration with a player like square is there any cross selling or joint go to market opportunities here, especially in Europe.

Yes, so two different products releases that we've had for payments SDK.

We're out and it's sort of a phase one which is based on a credit card acceptance and integration that's not yet full featured in the sense that you can't then integrate alternative payment methods as a complement to.

Based on credit cards, and so it's a it's a specific use case that has been unlocked we have the next phase coming out that is.

Going to expand our capabilities in particular to benefit a lot of emerging markets and the characteristics of payments providers in those and so.

So.

More announcements and more progress with us over time as we unlock partnerships around the world with square for sure. We've got a partner with square for now years, the latest upgrade to our integration.

By far the best we've had yet in terms of both performance and.

Usability.

<unk>.

Hope that that then leads to more visibility within the apps ecosystem for square in terms of joint go to market. There is always going to be.

Some limitation with square because transparently. They bought we believe we believe has a and.

And entry level E Commerce platform that Mike served the smallest us where merchants successfully and.

We really they really look to us.

Hey go to mid market and above option for their larger or more complex customers.

Got it thank you definitely us and helpful. Helpful color. There and then just one quick follow up what are your thoughts on gross churn assumptions across different parts of your business.

And for 2021, thanks, guys.

Yeah, I would say my comment earlier, we're seeing.

And really strong retention trends.

Not even not only on enterprise plans, but really across the board we're doing.

A better job of really bringing on and attracting established businesses and the reality is.

The stickiness of the platform is only getting better every quarter. So.

Very encouraged to see retention trends and improving every quarter and cross sell plans.

And our next question comes from the line of David Hynes from Canaccord.

You may begin.

Hey, Thanks, guys and congrats and our results.

And one for Brent and then and then one for already so Brendan and more strategic question.

And as more and more of the E. Commerce World goes headless right and there is more of a focus out there on personalization and how do you guys think about.

Participating on the consumer data and intelligence side of things to enable that.

Is that interesting to big Commerce does that followed the ecosystem partners like where do you what's your view on that.

It's a combination so what we want to do does the best and the industry at providing data.

And a usable framework for our merchants and and and accessible way for extensions, whether thats headless extensions personalization extensions.

Data analysis extensions et cetera, and.

One of the capabilities, we have right now which is.

And just absolutely love and market, leading for our customers is our big query database that exists for every pro and enterprise merchant they've got their own Google Big query database. They can add to it a tender and then put day.

Data analysis tools free or paid on top of it to do the kind of enterprise level reporting.

Free or extraordinarily reasonable cost that you can't do out of the box with other platforms and so I think our data strategy is market, leading and it's one of the.

Unsung heroes of capabilities that we offer to our customers.

Okay interesting.

And then alright, and can you just remind me how the <unk> opportunity on DMV that comes through the marketplaces differs from sales are directly on a big Commerce site and I guess I'll follow up with debt with to that would be what percent of GMB comes through marketplaces today.

Yes, Hey, Vijay so mix.

Some of our marketplace in channel partners.

We will give us a rev share some won't.

It is a mixed bag, but we're focused on making sure that you are a merchant and.

And again, you want to future proof your.

E Commerce and.

Where that transactions will continue to happen.

And for US all of these omni channel partnerships is really intended to drive success for our merchants that they won't be able to see and any other platform and so some will get Rev share some won't.

But collectively I think it's going to drive further adoption for their retention.

Yes, yes and.

And then marketplace and <unk> today is it still pretty smaller.

It's still relatively small, but definitely growing for sure. Okay cool alright, thanks, guys. Congrats.

Thanks C J.

Our next question comes from the line of.

Scott Berg from Needham you may begin.

Hey, guys. This is John Rodi and on for Scott. Thanks for taking my question. Just curious if you could provide a little more color on anything.

Around what you're hearing from your customers as far as how they are thinking about the economy is starting to open back up and.

And how that relates to ecommerce sales and then second how is the early uptake of the channel manager properties and then are you seeing and you'd need for different trends as it relates to your customers' usage and preferences content channel. Thank you.

Yes in terms of the economy opening up.

I think if you.

Look at the growth of our implied growth coming out of e-commerce platforms or debt.

Department of Commerce Census Bureau data you can see that E. Commerce continues to grow at very healthy rates and.

Well it looks like rates higher than where it was pre pandemic, although we haven't gotten to the kind of core of lapsing.

Our customers are always trying to simultaneously maximize book, both what they sell online and if they have any kind of offline business do that as well, but what's more important than ever.

The combination of the two and that's why we're so focused on enabling them with great integration.

Integration capabilities between their online and their offline, including buy online pickup and store functionality like what we announced and our recent earnings release so.

I'd say that were.

We're trying to enable them to sell online offline and integrated way better than ever before.

And help them drive and this new era.

And then remind me second question.

Just from the channel manager products, how is the early uptake them book, and if youre seeing unique or different trends.

And the usage of preferences of those various content channels.

Yes channel manager is extremely popular and what we're really trying to evangelize.

With all of our customers is to think broadly that maximizing sales online and.

Involves being everywhere customers might be when theyre shopping and so whether it's advertising channels like Google social networking channels, like Facebook and Instagram marketplaces channels, like Walmart and wish and Amazon and ebay.

And.

We're enabling all of them and every time, we introduce a new one theres enormous enthusiasm for example.

Wal Mart announcement was met with enormous excitement within our community.

And the story I like to tell US remember when Walmart was just the store based retailer. They were famous for only serving are trying to serve the top two brands and every category and that means if you're a niche brand and new brand.

Number four number five you couldnt easily get on the store shelves will now at Walmart Dot Com and <unk>.

Colossal customer base, they're not <unk>.

Limited in terms of SKU, count and depth of inventory and breadth of inventory.

And these incredibly great brands and we've always wanted to serve the Walmart consumer can get in there today and for the first time do so through their digital footprint. So enormous amount of enthusiasm and a thing was true with wish for a different type of consumer when we announced that so lots of enthusiasm our strategy really is.

Try to be the best omni.

Omni channel enablement platform and.

Industry.

Great. Thank you guys.

Our next question comes from the line.

And Peterson from Raymond James You May begin.

Hey, good evening, gentlemen, and thanks, Thanks for taking my question and congrats on a really strong results. So first of all and I don't know if Brent or Ray wants to take this and I heard a lot of drivers of the acceleration, but I didn't hear that net new picked up and I am curious if we could double click on that a bit was that win rates picking up a bigger pipeline of opportunities any increased share donors.

Any thoughts on that.

Yeah I'll jump in.

And I'd say pipeline.

Remained strong and and I think we're entering into a quarter, where our pipeline.

And that has never been better.

When you think about net you were super pleased with our team's performance on gross new subscriptions, we saw nice trends again and retention so.

When you factor in.

Our pricing model. The one thing I failed to mention earlier is as these omni channel partnerships and and as the.

Attach rates continue to grow and channel manager.

All of those will drive orders for big Commerce, so whether or not we get Rev share and not theyre, all going to drive increasing orders and.

If youre on and enterprise and playing on day Commerce and <unk>.

Feed your initial order tiers, and then youre going to see those upgrades over time, so we're seeing.

Great trends and gross new we're starting to see good trends and upgrades and growth adjustments and Super pleased with the improved retention that we're seeing every quarter.

Goodyear and it or and maybe just a follow up for you we're about halfway through the second quarter at this point.

Obviously, it's tough with the stimulus checks and we're in a pandemic, but I'm curious what you've seen so far quarter to date.

And that makes you feel about the PSS revenue thanks, guys.

Yeah, So I mean, given where we are in the quarter.

And again makes me feel good about sharing the subscription growth rates at 36%.

And we.

GMB.

The impact of the stimulus we're factoring into our guide.

And so again, it's just a matter of.

And just being careful around what's going to happen and the next seven or eight weeks.

Under the same stores sales same store sales.

Year to date.

We've been very pleased with the debt.

The amount of transactions across all of our merchants.

Good to hear thanks, alright.

Thanks Betty.

Our next question comes from the line of Mark Murphy from Jpmorgan you may begin.

Yes.

Great. Thank you for squeezing me in here, Robert considering the enterprise traction that Youre speaking to do you see a reasonable opportunity to.

Perhaps continue adding this.

Level of net new IRR, which has been it's a pretty tight range of about $14 million to $15 million less.

The last four quarters do you think that can continue through this year I guess with this vaccinations, reaching a tipping point and pandemic restrictions easing and so on and so forth.

Hey, Mark Yeah, I think the one thing that we're really excited about is is how well our initiatives are really resonating with these large enterprise merchants. So.

And again, whether it's our headless capabilities, whether it be to be.

Yeah, again put your put yourself and issues of a large enterprise merchant.

And youre going to look at us as a way to take advantage of.

Lot of technologies that are evolving and innovation that's happening across the ecosystem.

We are focused on this open SaaS platform and partnering with folks that wake up every day go to bed every night thinking about what's the most innovative technologies. They can develop across the payments across omni channel across shipping and fulfillment and <unk>.

I think all of that is resonating so when I think about enterprise I think we're just scratching the surface, especially with large accounts like wine direct.

And there's going to be a point in time, when we're going to be signing accounts north of the $1 billion of GMB and and.

I think we're clearly now disrupting that large segment of the market.

So I feel good about it okay.

If you still feel good about that and then <unk> glide path it sounds.

And I wanted to just kind of go back to a comment you made earlier are you, saying that you expect some of your recent product introductions.

It says buy online and pick up and store too.

And a continued to drive strong ongoing activity. This year is in four accounts that hurried up to go live with Big Commerce last year, when the pandemic hit in other words.

Do you think theyre going to kind of continue adopting to some of the consumer behaviors that might be permanently altered.

Yes, I think we're very early days of businesses optimizing there.

<unk> for customers and integrating that experience between online and offline and.

And what they're really looking for are.

Integrations with their point of sale software as well as functionality enabled through the platform why buy online pickup and store or buy online and local delivery that.

That sort of integrate that search functionality of what products are in which stores, how do I look up the stores relative to where I am how do I see Mike.

Delivery options all of that's advanced level functionality and if you rush online because you got caught flat footed when you re platform may be and phase one you haven't gone Fulbright on all of those capabilities are the best ones available and you keep upgrading that experience to try to please.

And the rapidly changing consumer expectations. So I think there is all.

There's a lot of opportunity ahead.

Businesses keep perfecting that and wanting to work with platforms like the commerce that are really good at.

The whole point of sale integration side of things and the customer experience for per offline shopping via online.

Understood. Thank you.

Yeah.

Our next question will come from the line of Yoga Iranian from Wedbush Securities You may begin.

Okay.

And some squeezing and your.

So a lot of focus on the enterprise side right.

Briefly so.

And a lot of things right, there and I just wanted to.

Maybe.

And a few minutes on the SMB side.

And just see what you guys are seeing there right now and what the opportunity.

For you guys and they're gonna F&B side as you continue to kind of evolve and expand and build out the enterprise side and then.

And then on.

And I guess and addition to that connected talked a lot about the marketplace TMT and.

And expansion marketplaces with Walmart.

Talk a little bit about some shops and Instagram shops.

What you guys and they're so far and.

Some of the trends and maybe trajectory from from that side. Thanks.

Sure so.

Actually connect the two questions together a level debt.

Our original focus as a company as mentioned was small business out of Australia and we.

We think that our open strategy continues to be particularly attractive to small businesses around the world who want to optimize their ecommerce for their specific business and requirement that includes not just the great functionality and then and the commerce that also.

And what our payments partners can deliver what our point of sale partners can deliver our shipping partners et cetera.

And we really love it.

Partnerships like what we just announced like wind direct and.

And with Commonwealth Bank, and Australia enable these types of expansions for example.

Although it's one relationship with wine direct they serve more than 2000, and winery and the United States and ultimately SA.

It's a consolidated channel to being able to broadly serve.

And lots and lots and lots of individual wineries. Thanks to the differentiated capabilities of that partner, just like with Commonwealth Bank and Australia.

Leading the leading bank and Australia, and with so many relationships and their and our wanting to expand those to what they do digitally and that's a tremendous weighted pain both marketing reach.

Well, our integrated offering advantages that our competition can't allow and so when you then go to your second question around wish and Walmart et cetera.

And awful lot of small businesses.

Would never dream of having the technical bandwidth or resources to individually integrate into these incredible channels and what and commerce brings from the table.

And as a pre integration and NATO integration that in many cases and free or extremely low cost and a channel like those and began selling its reaching new customers.

On the brand reach that Walmart, which delivers and they absolutely love that and some of our favorite stories of success, we're going to be small businesses and in addition to the really large ones who also.

I wanted to take advantage of those.

Basic and extensions, but for a small business that's trying to grow trying to reach new consumers and can't spend a fortune on digital marketing.

The platform and I'm sorry.

Channel manager is that cost effective way to get in front of an awful lot of buyers that you couldn't otherwise reach.

Great that's super helpful.

And our partners with Facebook.

Facebook and Facebook shops right.

And you're seeing any real traction on that side, maybe more of a instagram side than the physical side, but any real traction so far there.

Yeah and we.

We've been partners and integrated with Facebook and Instagram through the evolution of their offering for several years now and we're giant proponents of it what we see as being really successful with Facebook isn't just shops, but also facebooks ability too.

Target and retarget and look alike target.

And consumers and one of the things that we're really excited about is historically there was sort of a pixel placed and stores that would.

Sort of gather the data that a merchant needs to advertise effectively on Facebook and now we have a server integration with them much more scalable.

And much more modern which improves the ability.

And the use case, if a consumer goes from merchant site looks at some items and purchase well then that business has the ability to look alike target them on Facebook.

Alright, not look alike, but re target them on Facebook or run light campaign and.

And Instagram is really a different use case and one of the most effective ways leasing merchants using it.

And two.

Basically interact with communicate with their followers and <unk>.

Engage with them and launch new products to help brand story, we have some merchants where their Instagram feed is their number one marketing source.

Of orders.

When you can really and felt that following so we're we're evangelists for merchants.

Opting their Facebook and Instagram strategy to.

What they what they most benefit from and seeing a lot of success with it.

Great that's really helpful color. Thanks.

Our next question comes from the line of drew Foster from Citigroup you may begin.

Hey, guys. Thanks for taking the questions nice quarter part of a question for Brent I was hoping you could put a finer point on.

Whether you are starting to hear headless as a central theme and more of your enterprise conversations versus one of one of several considerations where a number of features within some of these legacy solutions are just still.

How is the sense of urgency to move towards those types of architectures picked up.

Yeah.

There is a nuance geographically to that answer I would say in Europe.

And larger enterprises.

Headlights is often at the forefront of consideration and thats because of the complexity of different languages different countries different.

A higher penetration of our higher percentage of our sales opportunities than for example in the U S where a lot of companies just focus on.

American English U S dollar sales, including what they may do on Canada and surrounding geographies. However.

What we think is a leading trend is as businesses want to become.

Experience first and the most innovative on their experience and Thats, where <unk> really shines and.

And that's the other use cases, and we think that's going to keep increasing.

And even markets like the U S, where the where the language currency country complexity isn't as strong.

That's helpful color I appreciate it.

One one for array.

How should we be thinking about subscription.

<unk> and 2021 from transaction related overages, whether it be from either the number of orders or <unk> thresholds being breached I think there is some some of that benefit in 2020 is that less of a tailwind.

And 2021 as you're contemplating.

Guidance here.

I would say, we're likely going to have more growth adjustments and upgrades. This year, then and then last year and.

Especially as our mix continues to shift to these larger accounts as they start transacting.

And we kind of built in a little bit of a buffer in terms of when they exceed their initial order tiers, but.

I think for us as that mix continues to shift more to these enterprise plans all of those enterprise plans have kind of order tiers debt as they mature on our platform they will likely exceed so and.

Gotcha and.

Purposefully built out our plan a pricing model that way.

Okay helpful. Thanks.

Yeah.

And our last question will be from the line of Ken Wong from Guggenheim Securities You may begin.

Thanks for squeezing me in and I'll keep it to keep it to one question just wanted to touch on just agency partners, what kind of growth that you see here and as you guys move deeper into enterprise. How are you thinking about the types of partners that you guys may need to attract to the platform.

Yes, we're seeing agency partner growth at the greatest at the Bell and the two ends of the Bell curve. So.

I think that when.

Starting five years ago, we felt really strong presence and mid market agency and now what we're seeing are.

Tremendous growth for like individual and develop our shops, one person shops.

For Smbs, but especially at the large enterprise level and.

And now being a public company has been a game changer per bed commerce, when I'm not going to name names, but let's say the last press release, we did with E mail.

That's an example of this genre of large.

Enterprise agency that are now building practices with us, we anticipate more announcements to come or at least partnerships to be built and without announcements, where they're building practices around us because what the large.

With the largest of enterprise agencies are saying because the days of customers buying the multi million dollar IBM Oracle.

Magenta projects are over and they want the benefits of SaaS and they're blown away and just how flexible and powerful what the commerce delivers.

And what the market wants and they see us being able to serve a very meaningful subset.

Yeah.

Of opportunities that used to be far more expensive for the clients that they serve so the.

The large enterprise agencies are all waking up to us and it's a combination of all.

Our transparent public.

Emergence.

As a public company and addition to what now Forrester Gartner IDC paradigm are all saying about the capabilities of our platform. So hopefully much many more success stories to share with you and.

Coming quarters.

Great. Thanks for the color Brad.

Yes.

Thank you.

There are no further questions in the queue I'd like to turn the call back over to blend zone, President and CEO and chairman and for any closing remarks.

Wanted to say, thanks to all of the investors analysts and folks who followed the commerce for your time your attention. Your partnership it's an honor to serve you. In addition to our ecosystem of partners and customers and we hope for more exciting stories to tell you and the quarters.

Thanks.

Okay.

Today's conference call. Thank you for participating you may now disconnect.

Q1 2021 Bigcommerce Holdings, Inc. Earnings Call

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