Q4 2022 Bigcommerce Holdings Inc Earnings Call

February 23, 2023

Ladies and gentlemen, thank you for standing by and welcome to the Big Commerce fourth quarter and fiscal year 2022 earnings call.

At this time all participants are in a listen only mode.

After the Speakers' presentation, there will be a question and answer session.

Be advised that today's conference is being recorded.

I would now like to turn the conference to your first speaker today Daniel.

Head of Investor Relations you may begin.

Good afternoon, and welcome to the Big Commerce, its fourth quarter and fiscal year 2022 earnings call. We will be discussing the results announced in our press release issued after today's market close with me or Big Commerce, as President CEO , and Chairman, Brent Belem and CFO Robert Alvarez today's call will contain certain forward looking statements.

You 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 first quarter of 2023 and the full year 2023. These statements can be identified.

<unk> by words, such as expect anticipate intend plan believe seek committed 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.

During the call. We will also discuss certain non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles.

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 <unk> Big Commerce Dot com with that let me turn the call over to Brent.

Thanks, Danielle and thanks, everyone for joining us on today's call I will walk through our results for the quarter and year share my thoughts on the E Commerce business climate outlined progress against our five strategic priorities and finally share perspectives on our approach to 2023.

We will also share some of the assumptions on which we have built our 2023 financial plan. He will conclude with our high level expectations for 2023 in his discussion on full year guidance.

In a challenging year for global ecommerce the commerce grew faster than the broader e-commerce industry and.

Our Q4 results showed strong progress on both profitability and operating cash flow. We also delivered on our full year opening guidance that last February highlighted by a 27% full year topline revenue growth.

As discussed in detail in.

In Q4 total revenue grew to $72 4 million up 12% year over year full year 2022 revenue grew to $279 1 million up 27% year over year, our Q4, non-GAAP operating loss was $9 $4 million and the full year was $47 million we concluded.

Q4, with an annual revenue run rate or <unk> at $311 $7 million up 16% year over year that represents a sequential growth and a $6 4 million.

Enterprise account <unk> with $224 million up 30% year over year. The enterprise segment now represents 72% of our total company.

<unk>.

Let me now share some perspectives on our results without a doubt 2022 was a challenging year in global ecommerce as macroeconomic conditions deteriorated in the first half we took decisive action to reduce planned spending and focus efforts on our enterprise business I am confident these choices are yielding the proper balance between necessary tactical.

<unk> to near term economic conditions and steady long term investments in the strategic initiatives that will drive profitable growth in the years ahead.

Our results reflect this challenging climate and our response to it.

We continue to see market progress moving upmarket into larger more complex enterprise opportunities.

However, as a reflection of the macro economy enterprise opportunities have longer sales cycle times and reduced aggregate deal pipeline relative to before 2022. Those are two common themes. We all hear across many enterprise software segments inflation and consumer spending also remain difficult to predict and Ray will discuss later in his <unk>.

Remarks.

Overall, our results demonstrate the resiliency of our business and the commitment and confidence of our team to deliver even in a tough economy. Most importantly by growing 27% for the year and restructuring for profitability in 2023, we firmly positioned ourselves for continued healthy commerce leadership in the years ahead.

As we look ahead to 2023, the economic conditions of 2022 motivated us to prioritize profitability as our number one goal by year end.

Obviously rising inflation and interest rates have made the cost of growth funded by operating losses on attractive to both us and our shareholders, whereas we began 2022 with a plan to achieve profitability by the second half of 2024, we have now restructured our operations to target profitability in Q4 of this year of 2023.

The restructuring has already made us a better company. Our go to market spend now focus is entirely on our highest ROI segments like enterprise B to B and Omnichannel operations throughout the company had been streamlined unnecessary in excess of expenditures have been eliminated company focus and alignment are better than ever.

In sum, we believe we are an even stronger company operationally and financially than we were prior to the December restructuring longer term, we reiterate our belief that our business can achieve operating profit margins of 20% or higher thanks in part to our strong gross margins of 75.

5% plus.

As already will outline this operational excellence and rapid path to profitability as reflected in our guidance for 2023.

Next I'll provide an update on the substantial progress relative to our core strategic initiatives in 2022.

At this time last year I walk through our three strategic pillars opened SaaS disruptive innovation and commerce as a service and the five strategic priorities that support them today I'll briefly review those and discuss the progress we made in 2022 as well as our commitment to these areas this year.

Our differentiated open SaaS technology approach as our first strategic pillar.

Combines a truly modern approach to API first compose ability with the inherent benefits of multi tenant SaaS, including built in performance security usability innovation and lower total cost of ownership.

This combination helps businesses turned digital transformation into competitive advantage.

Our software conglomerate competitors attempt to lock customers into their proprietary suites.

In contrast, with open south.

We provide a configurable and flexible platform that enables complex businesses to adopt best of breed technology solutions and customize their ecommerce approach to their specific needs.

Our next strategic pillar disruptive innovation as the business strategy to extend upmarket propelled by an ever higher performing product at a lower total cost of ownership and established incumbents.

Our enterprise capabilities enable high end merchants to expand faster and further at a much lower cost, while providing advanced functionality to smaller businesses that allows them to grow and scale without ever having to re platform.

Our final strategic pillar commerce as a service describes our ability to enable partners to create and sell customized E Commerce solutions powered by our platform technology.

We aim to leverage our open south platform to empower our ecosystem not compete with us and through commerce as a service our partners can combine the power of our platform with their unique use cases than competitive offerings to create comprehensive solutions for their target markets.

The three pillars of open SaaS disruptive innovation and commerce as a service remain core to our strategy in 2023.

We are laser focused on two big objectives. This year, achieving global leadership in enterprise and reaching profitability on an adjusted EBITDA basis in Q4 by prioritizing our investments and staffing to focus on enterprise growth. We are confident we can both grow our enterprise ecommerce leadership position and accelerate our <unk>.

<unk> ability timeline, the continued success of and investment in our five strategic priorities will be critical to deliver these goals.

In 2022, we delivered our biggest advancements to date in terms of true enterprise grade functionality and compose ability our launch of multi storefront capabilities was a major milestone. This enables businesses to easily launch and manage multiple store fronts from a single bit commerce backend customers can now launch additional brands geographies.

And customer segments, such as <unk>. In addition to BDC at much lower operational costs and complexity bandwidth distinct infrastructures for each storefront.

We also bolstered flexibility for enterprise merchants through our launch of multi location inventory API. These API to enable customers to execute more complex order fulfillment scenarios, including buy online pickup in store and multi warehouse shipping optimization.

Major new brand launches during 2022, including Ted Baker taste of Chicago, One Kings Lane Ali Pets Mountain equipment company and lifetime brands leverage enterprise capabilities like these to power their growth.

Our omnichannel offering helps customers advertising sell successfully through more channels than they could on competitive platforms. In 2022, we made remarkable progress following our 2021 acquisition of fee dynamics, the industry's best solution for managing product catalog integrations at scale into more than 100 of the world.

Foremost search advertising social network and marketplace channels.

Ager channels enabled include Amazon, Walmart target, plus Google, Microsoft Mercado Libre, Facebook Instagram Tech talk and most recently snap just last week, we announced a new strategic partnership with W. P. P to offer Omnichannel solutions to help WP climb.

Drive growth and maximize sales across hundreds of advertising channels and marketplaces. This innovative partnership will give WP priority access to new product tools on both the commerce and fee dynamics. In addition to providing Apis and datasets that will enable WP agencies to develop unique insights for clients across products.

Trends and purchasing data.

New feed genomics customers added in 2022 included Tottenham Hotspur, a marquee English Premier League football club for both advertising and marketplace channels.

Landmark group, one of the largest retail and hospitality conglomerates in the Middle East Africa and India.

And less mill, a $150 million plus fitness company headquartered in Auckland, New Zealand as well as many others across multiple ecommerce platforms.

<unk> as a platform agnostic solution, we will continue to invest in <unk> ability to meet the needs of the world's largest merchants and advertising in marketplace partners, whether they are using but commerce or competing ecommerce platforms.

Within that Commerce, we launched our new certified Omni channel partner program, both for agency and Technology partners.

Enterprise focused initiatives gives partners new ways to generate revenue by helping merchants on any E. Commerce platform achieve omnichannel success armed with numerous tools services and exclusive channel partner programs.

<unk> can educate and guide merchants on how to strategically expand into new channels that can drive more traffic with higher shopper intent improved return on AD spend and generate more GMP.

We welcomed Amazon by with Prime into the program and in January the Commerce became the inaugural partner for the launch of buy with Prime which allows big commerce merchants to easily sync their existing catalog across Amazon and big Commerce and deploy the buy with prime button on their sites in January we also started a new.

Our partnership with Microsoft Azure, and listings, allowing big commerce merchants to create and manage AD campaigns across Microsoft extensive properties.

<unk> E Commerce has gone through a major evolution over the last few years.

<unk> buyers increasingly expect a modern experience similar to what they see and consumer focused ecommerce that means <unk> businesses must provide speed and ease of use without compromising the complexity and uniqueness of the <unk> buying journey building onto 2021 launch of <unk> addition, our 2022 acquisitions of <unk>.

<unk> and <unk> Ninja completed a foundation for big Commerce to become the world's most flexible and easy to deploy <unk> platform <unk>.

<unk> powers the functionality of our <unk> addition, and B to B Ninja offers best in class V to be quoting capabilities by incorporating this range of functionality natively within Big Commerce, We have made <unk> e-commerce practical unattractive for businesses of all sizes are <unk> offering has achieved widespread industry recognition for.

Leading analysts, including Gartner paradigm and Forrester.

We further enhanced our international footprint with notable 2022 country launches in Germany, Austria, Spain, Denmark, Norway, Sweden, Mexico and Peru.

Expansion markets contributed to revenue growth of 34% in EMEA and 42% and Latin America. Notable international brand launches included British Airways IAG loyalty Jimmy brings.

<unk> building supplies industrial tool supplies and Mexico's Chivas Soccer club. In addition, we collaborated with partners to grow our presence in markets, including China, Korea, Poland, India and UAE.

The last of our five strategic priorities is composed of all commerce of which <unk> is an important subset.

<unk> Commerce gives merchants the freedom to mix match and combined best in breed tech vendors to create a customized and robust technology stack.

With that Commerce is open commerce approach and commitment to Mark Alliance principles B to B and B to C. Merchants can make smart technology investments that are agile functional and flexible.

In an unpredictable economy flexibility and compose ability are especially important our open platform is unrivaled in its ability to let merchants build the technology stack that best serves the needs of their customers and their businesses.

Finally, I'd like to conclude by speaking at a high level about our plans and operating focus for this year, how we are investing and winning and market has not changed our strategic focus and initiatives have not changed we have a great product and leadership position in global ecommerce I believe continued leadership requires commitment discipline and resolve.

Staying on strategy, even as market conditions may require tactical adjustments from one year to the next week.

We intend not to overreact or over correct in a way that disrupt long term growth.

Our actions over the last several months reflect us we chose to focus our time and go to market spend on the superior economics at the enterprise segment last quarter, we shifted sales and marketing resources away from not enterprise prospects with shorter sales cycles to enterprise prospects with longer sales cycles.

We did this knowing it may impact bookings growth in the first half of 2023 because of the superior retention profile of enterprise businesses makes us the right priority for the medium and long term we.

We saw that effect in our Q4 results as well. In addition, we restructured elements of the business to accelerate our timeline to profitability into Q4 of this year, while still maintaining key investments in our long term strategic priorities. These were not easy decisions, but they've already made us an even stronger company with an accelerated timeline to profitability.

In conclusion, a challenging operating climate requires leadership to adapt improve and strengthen both strategy and execution.

And believe our team successfully rose to the challenges of 2022, while positioning us for continued success in 2023 and beyond our plans reflect the prioritization of improved operating margins and cash flow balance with focused investment in enterprise such that we continue to grow our leadership position in global ecommerce.

Stability and enterprise focus.

Are the commitments of our leadership team to our customers partners and shareholders.

We remain proud and excited to serve you well with that I'll turn it over to art.

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

During my prepared remarks ill walk through our Q4 results.

Details on some of the key assumptions behind our 2023 plans and conclude with a discussion on our Q1 and full year revenue guidance.

Q4, total revenue was $72 4 million up 12% year over year subscription revenue grew 14% year over year to $53 3 million.

While partner in services revenue or <unk> was up 6% year over year to $19 1 million.

For the full year 2022 revenue finished at $279 1 million up 27% versus 2021.

Subscription revenue and <unk> were up 33% and 13% respectively year over year.

In Q4 revenue in the Americas was up 12%, while EMEA revenue grew 22% and APAC revenue was down 6% compared to prior year.

For the full year 2020 to Americas, and EMEA revenue were up 28% and 33% respectively year over year, while APAC grew 9% year over year.

2022 was a tough environment for ecommerce and SaaS software.

Despite those headwinds we posted solid growth in subscription revenue, especially in the Americas, and EMEA, where we launched in new markets.

Also generated PSS growth that outpaced consumer spending and e-commerce as a whole.

I will now review our non-GAAP kpis.

Our <unk> grew to $311 7 million up 16% year over year.

That represents a sequential growth in total <unk> $6 4 million.

Enterprise account was $224 million up 30% year over year and is up more than two two times from where it was just two years ago.

As we have outlined previously the change in total subscription <unk>, which can be calculated by subtracting the trailing 12 months of <unk>.

Total <unk> is a good indicator of our underlying change in net bookings during the period subscription.

Subscription <unk> was up $5 3 million versus Q3 and up 17% year over year.

Brent mentioned like many other enterprise software company, we continue to see longer sales cycles, and a tighter deal pipeline.

Q4 subscription <unk> growth reflected the challenges of that dynamic.

Again, we are confident that the investment choices, we are making are the correct ones focusing on long term profitable growth with enterprise accounts.

We expect subscription <unk> growth rates to improve in time as our pipeline investment and prioritization choices are fully realized and as we close larger and larger accounts.

At the end of Q4, we reported 5786 enterprise accounts up 750 accounts or 15% year over year, including feed and Omics.

ARPA or average revenue per account for enterprise accounts was $38708.

14% year over year.

Enterprise ARPA was approximately flat quarter over quarter as sales cycle times at some enterprise merchants lengthened.

We have built our 2023 plans conservatively in line with this dynamic.

Finally, net revenue retention or NR from enterprise accounts was 111% in 2022 <unk>.

Compared to 118% in 2021.

2022, <unk> was impacted by tightening consumer spending that led both to PSS growth rates below that of 2021 and fewer orders driven subscription upgrades.

I'll now shift to the expense portion of the income statement as a reminder, unless otherwise stated.

All references to our expenses operating results and per share amounts are on a non-GAAP basis.

Q4, gross margin was 76% up 57 basis points from the previous year.

While gross profit was $55 2 million up 12% year over year.

In Q4 sales and marketing expenses totaled $30 5 million.

Up 10% year over year. This represented 42% of revenue down 69 basis points compared to last year.

Sales and marketing expenses were down $1 million.

Sequentially from Q3, driven by expense reductions in demand generation activities focused on the non enterprise segment of the business.

Research and development expenses were $19 million or 26% of revenue down 147 basis points from a year ago on approximately flat spending sequentially from Q3.

We have prioritized product roadmap initiatives that aim to bring greater enterprise functionality to merchants of all sizes and.

And we are working diligently to maintain the investments needed to fuel enterprise product improvements, while also realizing better operating results on the bottom line.

Finally, general and administrative expenses were $15 1 million or 21% of revenue down.

Down 224 basis points from a year ago.

This is down one 8 million sequentially compared to Q3 due to lower staffing costs and continued operational improvements.

In Q4, we reported a non-GAAP operating loss of $9 4 million or negative 13% operating margin.

This compares with an operating loss of $11 6 million or a negative <unk> 17, 9% operating margin in Q4, 2021, and an operating loss of $11 5 million or a negative 15, 9% operating margin in the prior quarter.

Recall that we guided to a non-GAAP operating loss range for the quarter of $12 three.

To $14 3 million.

We delivered strong underlying cost reductions apart from any restructuring efforts, which reinforces our confidence that we will achieve profitability on an adjusted EBITDA basis in Q4, as we announced in December .

Adjusted EBITDA was negative $8 6 million or negative 11, 9% adjusted EBITDA margin.

Compared to negative 16, 8% in Q4 of 2021.

non-GAAP net loss for Q4 was negative $7 7 million or negative <unk> <unk> per share compared to negative $12 1 million or negative <unk> 17 per share last year.

We ended Q4 with $305 million in cash cash equivalents restricted cash and marketable securities for.

For the three months ended December 31, 2022, operating cash flow was negative $2 7 million compared to negative $8 8 million a year ago.

We reported free cash flow of negative $3 7 million or a negative 5% free cash flow margin for.

For the 12 months ended December 31, 2022, operating cash flow was negative $89 4 million declining from negative $40 3 million a year ago.

We reported free cash flow of negative $94 6 million or a negative 34% free cash flow margin.

Both full year operating cash flow and free cash flow results include $32 5 million paid in Q3 as part of the feed and Omics first anniversaried acquisition related payments.

These full year results compared to negative $43 6 million and a negative 20% free cash flow margin in 2021.

The remainder of my remarks focuses on our outlook and guidance for 2023.

For the first quarter, we expect total revenue in the range of $69 7 million to $72 7 million, implying a year over year growth rate of 6% to 10%.

For the full year 2023, we expect total revenue between $301 million to $313 million translating to a year over year growth rate of approximately 8% to 12%.

I'll now discuss some of the expectations underlying this topline guidance.

Q4 subscription <unk> grew at a slower pace than we have seen in recent quarters.

We have built our financial plans, assuming similar conservative bookings growth in 2023.

We believe we can generate 20% or higher enterprise <unk> growth rates in 2023.

Which we expect to be offset by the contraction in the non enterprise segment of our business in the mid to high single digits.

This guidance also includes the estimated impact of announced pricing changes to take effect across Q1 and Q2.

While we were encouraged by the resiliency in consumer spending that we observed in Q4, we observed moderation in platform orders and GNP as we exited Q4.

This is consistent with recent economic reports, including recent U S Department of Commerce data highlighting lower e-commerce growth in Q4 than in recent years.

While we are hopeful that macroeconomic forecasts and consumer spending will prove conservative.

We have built our 2023 financial plan, assuming a modest deceleration in same store platform TMV and order growth year over year.

We expect this to impact subscription pricing upgrades and PSS growth and we have tightened budgeted spending accordingly.

For Q1, our non-GAAP operating loss is expected to be $8 2 million to $12 2 million.

For the full year, we expect a non-GAAP operating loss between $15 7 million and $22 7 million.

Our entire industry faces an uncertain macroeconomic climate.

Consequently, 2023 will be a year focused on driving profitability.

Focusing our go to market resources on enterprise accounts.

Our plans and anticipate strong spending discipline across our business, while accounting for prudent topline growth assumptions.

Hiring will remain limited compared to prior years we.

We are not planning material expansion into new countries or geographies in 2023.

Rather we will focus our international investments on gaining scale in existing recently launched countries.

We are confident that the expense reduction actions, we have taken combined with limited hiring and tight expense management will enable us to deliver our commitment and hit profitability in Q4 this year.

We see strong durable underlying health in the business that gives us great confidence in the success of these efforts.

Enterprise retention rates and LTV to CAC results remained strong.

Win rates remain healthy.

<unk> city and size of deals in our pipeline continue to move up market, we have an outstanding product gaining widespread recognition across our industry.

We have more excitement and momentum with our agency and technology partners than ever before we have a strong balance sheet and our business is heavily concentrated in established merchants with enterprise requirements. These are strong healthy merchants that prove durable even in down economic cycle.

As I said earlier, we believe we can generate 20% or higher enterprise are our growth rates in 2023, which we expect to be partially offset by contraction in the non enterprise segment of our business in the mid to high single digits.

We also believe enterprise accounts could represent nearly 80% of total <unk> by the end of 2023 or early 2024 are.

Our plan puts us on a path to end the year with a strong base of enterprise accounts and sales pipeline as a profitable company.

All while maintaining a strong balance sheet.

This is a strong profile on which to base our 2023 plan.

Finally, I would once again like to thank all of our incredible employees merchants and partners.

2022 was not an easy year, our results reflect the resilience and dedication of our employees.

And the care and attention that we feel for our merchants and partners.

I'm proud of our results in a tough climate and I'm very excited about the progress of this business will make in 2023.

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

Operator.

We will now begin the question and answer session.

To ask a question Michael Star the one telephone people if you're.

Using a speakerphone please pick up your thoughts will be core.

Keith.

It was part of your question please put stores in too.

At this time, we will pause momentarily to assemble our roster.

Our first question will come from Gabriela Borges with Goldman Sachs. You May now go ahead.

Thank you I appreciate the detail.

The clear impact to.

Bookings in the first half.

Cost reallocation plus marker.

But on the front of the right of homes.

Further deterioration in Brooklyn.

Well, our useful to belittle lower on mobile.

No.

Hey, Gabby.

In terms of bookings I'll say that.

It's stabilized on enterprise in terms of the non enterprise contraction. We are still we're still see see it in that kind of mid to high single digits. We did rollout recently.

Pricing changes to our essentials plans.

Which really encourage us upfront payment annual prepay.

Focus on profitability this year, but we're also focused on improving our cash flow from operations.

There is an element and an option to go monthly with that monthly price.

There is an increase in terms of our standard plus some pro plans.

For our base of merchants that really doesn't take effect until the June timeframe. So really the impact of that isn't going to be seen until the back half of this year based on the impact of that pricing based on the mix of annual prepay or monthly.

We're not.

Not building in a big impact from that pricing action, but we do think that the second half could potentially get down to the mid to low single digits on non enterprise for enterprise very very focused on building that pipeline I think the lead flow since the beginning of the year is encouraging I think the quality of leads.

Leads are encouraging, especially with larger accounts.

And then in the addition of Commerce of the service, where we typically see.

Larger opportunities with partners that also carries some longer sales cycles, we are building in.

Assumptions around the close rates and the timeline to close to where we see better bookings by mid year and definitely through the back half of 'twenty three.

Okay. Thank you for the detail.

Our next question will come from Scott Berg with Needham You May now go ahead.

Hi, Brent Thanks for taking my questions and congratulations on all of the hard work in the quarter.

I guess a couple of things.

Just wanted to first talk about the confidence in the enterprise segment.

At the <unk> conference a month ago, and all the chatter amongst other vendors in the space seems to be enterprise.

Enterprise or demand in the enterprise type segments remains pretty constant versus down market smaller customers, which is certainly waning versus the last couple of years I guess when you look at all of that especially with the macro backdrop. Why are you still confident you'll be able to grow the enterprise segment of your business at this 20% plus rate here in 'twenty three.

Hey, Scott This is Brian I'll take that and it was nice to see you on the floor at our App, which tends to Ah.

Track, a larger enterprise retail customers that relative to some of the other e-commerce of them, we have a lot of confidence.

Our enterprise momentum and positioning as you could see we ended the year at 30%.

Our growth for enterprise, which is dramatically higher than the 7%.

<unk> growth in U S e-commerce across the course of the year.

We are roughly comparable number globally. So we gained a lot of share in aggregate.

Last year.

Our product we think is.

<unk> is uniquely positioned in the market because.

In an environment, where enterprises are trying to save money become more profitable.

Simplify their approach to e-commerce, while selling we do that better than anybody we truly simplify.

The approach to enterprise e-commerce by having a SaaS model with.

So much ease of use and functionality built in that deployed quickly and that has the most modern connections into various omnichannel.

Demand generation channels.

Increasingly we're being rated the best or one of the very best E. Commerce enterprise platform in the world for both <unk> and you see that with Forrester Gartner IDC immersed in Europe .

So the outside experts when they evaluate enterprise platform, they're saying, where the basket or one of the very Bob and that is being corroborated by the share gains that we had during the course of the year. So.

Its a multifaceted answer to your question I could go on at length about the product and its capabilities are partners in there, but I think all.

Summarize about.

Thanks, Brent that's quite helpful. I guess as a continuation on that.

I think if we look at your innovation over the last couple of years, whether it's multi store multi inventory right of other things and functionality that you've called out you seem to believe youre at feature parity today relative to the other platforms or have surpassed them. As you continue to evaluate what's out there do you feel like youre missing anything to capitalize on those goals.

Today, or what you have plenty of horsepower to meet the next couple of years. Thank you.

I think at the highest level, we have delivered the major components of an enterprise platform. Both in terms of functionality and flexibility. There are always both new innovations that are important to the market as well as individual features that might help us grow in different countries given industry segments et.

Cetera, Theres a lot of upside.

From what we're doing and B to B, whereas I would say on the BDC side, we're a very very very forward a competitive enterprise platform.

We will get there during the course of this year as we fully integrate and.

To improve and expand on the functionality of both B to B Ninja and bundled VW, which we acquired I'm really excited to say that we're now multi storefront compatible with our <unk> offering and theme independent.

We have some incredible product releases that I think will be industry, leading during the course of this year. So I would say we're yes.

95% of the.

Way to the current market, but the market is always dynamic on BTC, and maybe 80% of the way there on <unk>, but with a very aggressive agenda for this year.

Thanks for the question.

Okay. Thanks, so much.

Yeah.

Our next question will come from DJ Hynes with Canaccord Genuity you may.

Now go ahead.

Yes.

Hi, This is Daniel Reagan on for P. J, thanks for taking my questions.

Maybe I'll start.

Brent.

As we think about the launch of the new certified Omni channel partner program.

Are there components of this that would incentivize those partners that might be multi vendor could bring more business towards.

E Commerce.

And then second can.

Can you talk about what the customer expansion strategy looks like at the partner level.

Absolutely.

I Love that question the answer is yes.

Background are certified omni channel partner program.

Includes both agency partners and systems integrators.

As well as advertising agencies and technology partners really anybody who serves businesses.

Way that helps them.

Expand their advertising and selling channels to the leading search engines like Google.

Microsoft.

Just added.

The leading social networks, Facebook Instagram Tech part snap et.

Et cetera, believing affiliate networks, leading display AD platforms, and the leading marketplaces, like ebay, and especially Amazon, where we announced our buy with prime.

Integration, so what seat Anomic does it's the world's best platform for enterprises to get their catalog not just sink into all of these advertising and selling programs, but also optimize to perform with the keywords in the scheme of exactly the way that those various channel want them to improve.

Both organic performance as well as return on that so.

That's the background.

And agency dynamics is not platform dependent although we have an incredible integration into bed commerce. Many of their customers are giant enterprises on custom platform and on competing platforms, two big commerce feed and Omics integrate and how the integrations and all of them and so.

What's relevant is that for any given agency, let's say that X percent of their merchant base is using bank commerce, maybe 20% maybe 80%.

Cleveland Omics and the Omnichannel program is not just relevant to a 100% it's actually probably the single highest ROI thing that the agencies can do to help those businesses expand demand generation.

To improve the return on AD stomach. So it's extraordinarily powerful of course, most businesses spend a lot more money on their advertising and demand. Gen. Then they do their technology stack. So this is a very leveraged way for our Omnichannel partners to have a completely.

Independent and incremental.

To help their customers and drive doesn't us.

And answer to your second question.

Yes, so when a business starts working with genomics and starts usually realizing a very significant improvement in their performance within days or weeks, yes naturally builds a relationship with the broader big commerce entity, which may or may not lead to other conversation.

Down the road.

But it's important to note that we're not compromising <unk> ability to serve all merchants and do that in a way that is respectful of the platforms and the technology stack that those merchants out.

Thanks for the question.

Got you excellent. Thank you for that brand and then just one one ferrara.

Really appreciate the time.

As we largely pass the non enterprise.

<unk> by the end of one H.

What are your expectations for non enterprise growth beyond.

One H going into two H and beyond.

What's the strategy for turning non enterprise business into more of a product led self serve motion.

I know enterprise has been getting a lot of attention, but maybe you can shed some light on.

Some of the work that's being done there and what your growth expectations might be thanks, very much guys.

Sure I mean in terms of the second half, we do think that non enterprise will stabilize as I mentioned earlier TBD on the pricing impact, but that could potentially reduce the contraction as we exit 2023, we do believe by early 'twenty four.

By then most of our non enterprise accounts, we'll be transacting merchants, who are established.

Have better retention profiles.

By nature is going to improve that contraction level as most.

Non enterprise accounts with churn in that first 12 month period in terms of how do we sign up additional non enterprise accounts.

We're definitely going Tech partner, an agency partner the whole partner ecosystem is one where it's still going to drive both enterprise and non enterprise accounts. We also have self service flows that we're going to continue to optimize we're just not going to spend a lot of our sales and marketing go to market dollars to.

Drive to drive those accounts I mean, if you think about our initiatives that are so squarely tied to disrupting enterprise it is omnichannel.

<unk>, it's composed of both headless commerce.

If you Peel the onion back on Omnichannel.

Asked majority of subscriptions from fee dynamics, our enterprise accounts.

When you see Big Commerce cross sell speed and Omics, it's usually enterprise accounts.

When you think about <unk>, those or majority enterprise accounts and IRR and if you think about <unk>, it's really the same so <unk>.

Maybe ask the question in terms of our confidence level to deliver north of 20% or higher enterprise <unk> growth throughout the year.

<unk> tied to those initiatives in the ecosystem that we have the partners that we have.

Our all.

Part of building out that.

Enterprise growth for this year.

And into next year.

Sure.

Our next question will come from Koji Ikeda with Bank of America.

You May now go ahead.

Hi, This is George <unk> on for Koji.

Just a question on you might have seen shopify announced today.

<unk> partner program to incentivize and drive partnership growth and growth through partners.

So I was I was wondering in light of that if you had anything to call out in terms of.

Changes in the competitive environment or maybe changes in competition with shopify specifically.

This is Brent.

Lots of respect for them, obviously as a company and a competitor they are very strong.

Much of what they're doing is catch up.

With respect to enterprise.

Promotion of both enterprise out okay.

Okay segments.

<unk> and having a certified program for partners are all things that we've been doing for years, we've been doing <unk> since 2016.

We've had partner certifications around development for.

Quite a period of time.

And we've been enterprise focus.

For a long period of time to now with our go to market as well, but in our products in 2015. So.

They are indeed trying to move up market. They like us recognize that the economics in terms of retention and unit profitability are very strong in that segment.

<unk>.

Keep competing but we have dramatically different offerings to the market we are open.

<unk>.

Not trying to push a suite.

Two customers instead, we're giving them the best enterprise platform in the World and then they for a complex business associate the world's best payment solutions shipping and fulfillment point of sale any other components of our stack optimized for a complex business rather than a sort of one size fits all suite. So two very compelling offerings.

On a segment of the market will view us as having the best offering in the world in another segment will.

Pick them, but increasingly we are really the two reed.

Options out there.

Well differentiated and distinct from one another.

The types of merchants, we went and sir.

That makes a lot of sense.

Hi, I had a question on EMEA growth is robust.

Could you maybe.

Some color on the drivers of that and maybe how we should be thinking about EMEA growth sector over the medium term.

Yes, we had a very good year of selling in EMEA.

Relative to the internal plan for gross new sales, it's very strong.

And during the course of the year, we expanded our footprint to major new regions. We expanded in the Nordics, we expanded in Germany and Austria.

Yes.

And that was all added to existing countries, like Italy, France, and Spain, and the Netherlands, where we already had a presence.

In each country. There are a different set of merchants of different set of partners. It takes a little bit of time to establish a network there and start selling effectively but we're seeing great traction and great win. An example, and all of those reasons that I've mentioned on top of our historic Super strong.

The U K.

Long term I think we are extremely well positioned to compete in Europe Europe has the most complexity because of countries languages in currency that type of complexity naturally.

Favors a business like ours, a product and platform like ours that has native multi storefront full support and leadership in <unk> or composer Bowl.

Make it a lot easier and more scalable to add country and serve the complexities of Europe and then when you can do at both <unk> and <unk> to be even better. So we're very bullish on Europe . We're very proud of the job that team is doing and expect it to be a continued strong driver of our growth in the years ahead.

Our next question will come from Samantha Samana with Jefferies. You May now go ahead.

Hi, good evening, Thanks for taking my questions maybe first.

Wanted to follow up on the commentary about the.

The contraction for the non enterprise segment.

Should we think about that more as a function of a decline in same store sales GMP at those customers are more of a function of of churn or downgrades of Skus I am just trying to understand.

What's driving that contraction is it more on the downgrade side from SKU levels are more around churn in it.

What have you experienced the first couple of months into the first quarter versus what you just guided for.

Taken to the full year guidance.

Yes, you saw.

In Q4.

<unk> carrying over into into Q1, I mean, essentially it's the retention profile.

Enterprise versus non enterprise accounts, we have a base of non enterprise accounts that are contracting.

We're not investing a lot in terms of building funnel and spending our sales and marketing dollars to replace any ones that would churn with new.

New accounts.

Over time, I think that as those cohorts of transacting and I want to emphasize that because the non enterprise accounts, who are transacting in our established they do quite well there retention profiles are quite strong.

We expect them to not only stay on the platform, but growing the platform we.

We do think that that's going to improve over the course of the year as this.

Maturity.

The.

The cohorts that are maybe in the last 12 months to 15 months.

We find out whether or not theyre going to stay or go but I think overall going into 2024, we should exit this year with a more stable.

Enterprise business, and who knows I mean with commerce as a service we do have tech partners that we go to market with that oftentimes will bring not just enterprise accounts, but not enterprise accounts to big Commerce, where we're not spending or investing in sales and marketing, but theyre selling big commerce into their basin.

We're not factoring the impact of that but that could definitely stabilized non enterprise if not grow it in the years ahead.

Sure.

Got you and then maybe just on the overall full year guidance I know you gave the total revenue outlook, but should we expect the spread to.

To widen between subscription revenue growth and maybe <unk> growth or just.

Should we actually think about I know you again gave commentary around same store sales assumptions on.

<unk> and order growth, but just how should we think about subscription revenue versus <unk> in that full year guidance assumption.

Yes, I would say in the first half they're going to grow roughly in line with each other as.

As we close some of our larger deals and we see that kind of impacting midyear second half of the year subscriptions.

Subscriptions should.

Pick up in terms of revenue the revenue was recognized on those bookings.

<unk> the biggest driver of growth that we see this year is launching major accounts that we have line of sight to launch.

A number of accounts that were excited to launch and the impact of those accounts are going to drive elevated GMB as well as <unk>.

Q2 or by mid <unk>.

23.

Great I appreciate you taking my questions.

Sure.

Okay.

Our next question will come from Raimo <unk> with Barclays. You May now go ahead.

Thank you.

Just a quick one it seems like obviously macro is a problem and there is not much you can do about it.

What do you see how do you think this will play out in terms of periods. The crews obviously the online retailers.

Suffering at the moment do you think that that's just a time period and then once.

Through that pain is kind of picking up from there again do you think that ongoing think as people renew the kind of.

The dual meter of new revenue and lower like how do you see this playing out from your perspective. Thank you.

Hey, Ryan.

Ahead, Brian go ahead.

I'll, let you go.

Hey, Raimo I mean, we're building our plans for this year in a way, where obviously you want to enter the year with a high level of confidence on the topline just like we did last year the guidance initial guidance we set.

We wanted to make sure we were able to achieve that top line guidance for the year.

We're not baking in or assuming improvements in the macro with our plans we are assuming.

The challenging environment persist throughout the year.

And building our spend plans accordingly, so high confidence on the topline.

And then building our spend plans to ensure that we get to that profitability point in Q4.

Okay. Thank you.

Our next question will come from Josh Baer with Morgan Stanley .

You May now go ahead.

Great. Thank you for the question.

You had a really strong quarter as far as new enterprise account additions and then the Arco sequentially. It was a little bit weaker I think you mentioned in the prepared remarks that that was driven by sales cycle times lengthening I was just wondering if you could expand on that how does that dynamic.

Packed ARPA.

Yes, you bet I mean, some quarters will have.

Lower number of new accounts, but bigger deals in some quarters it'll be.

A higher volume of accounts, but the size of deals could be lower I think Q4, we saw a number of deals.

Probably more look like in the mid market range, we had some large enterprise deals that due to sales cycles, maybe pushed into Q1.

But I think thats more of a mix mix issue than anything else.

Okay got it so a little bit of a mix.

Of customer change in the quarter, but then thinking ahead to the 20% plus enterprise.

Our growth.

Like any any context for how.

That growth is derived between ARPA and.

And new accounts.

<unk>.

It's a combination of both I mean, we've got we build our pipeline looking at size of deal size of merchant size of accounts.

Our building, our enterprise or larger enterprise pipeline nicely.

And I think it's going to be one where you may have again quarters, where we sign really large deals.

If that's the case the ARPA is going to be higher maybe some quarters, where we signed both but I think for US. We're looking at the pipe looking at kind of size of merchant size of opportunity and we're building our pipeline to where we are really now.

Have opportunities to win larger deals, especially with the conviction that our partners have with big commerce the opportunities that they see for us with the merchants they work with.

So we're going to look at it both in that mix should continue.

Affect both ARPA number throughout the year.

Okay. So there could be there could be some.

Puts and takes in any given quarter as far as <unk>, but the general trend line should still be.

Looking for growth from these levels.

Yes for sure I mean, it goes back to my comment around how our initiatives are squarely tied to driving enterprise accounts.

Our comments as a service initiatives, how we go to market with partners also drive enterprise accounts. So.

It's all of that is factored in.

Thank you.

Sure.

Our next question will come from Brian Peterson with Raymond James.

You May now go ahead.

Alright, Thanks for taking my question.

Yes.

I just wanted to this is John <unk> for Brian .

As you guys look at the pipeline of new business, where you see the biggest share of customers that are migrating to your platform and I am curious your view on how the choppy macro babies impacts migration does the TCR savings become a bigger part of the larger potential customers right.

Yeah in fact, we just had.

Partner events in Europe .

Australia and he.

Here in Austin for North America, and a common theme across all of these events is that more than in any prior year.

Profitability and total cost of ownership are absolutely essential and therefore.

The strongest contributors to.

Migrations to bed commerce are going to be the platform, but legacy platform options that are most expensive the single most expensive.

Custom platform.

Our engineers are responsible for all the code all the hosting managing the hosting security the burgeoning the bug fixing et cetera.

The next most expensive will be on premise software like the genco for legacy platforms, Oracle Atg IBM Websphere E.

Hi, Bryce.

And then a long list of old one finally, there are some sort of outdated and antiquated SaaS.

SaaS platforms that are still pretty expensive to maintain because you have to do so much to keep them up to date.

And all of those are very good contributors.

To us and play into our strengths because we provide so much enterprise functionality and ease of use at a very competitive total cost of ownership.

Thanks for the question.

Again, if you have a question. Please press Star then one.

Our next question will come from Mark Murphy with Jpmorgan you May now go ahead.

Hey, guys. Thanks for taking the question. This is already go on for Mark Murphy just on the pricing changes you guys have any kind of I know, it's early but any kind of feedback you're hearing from customers on that kind of the elasticity and any expectation on how it's going to go between the billings and the MD and the price increase my right to assume that most of the enterprises are enterprise customers.

Excuse me already on the annual Bill.

I'll start there and it's way too early to tell because it just went out today, but I pass one of our great leaders in the hall and he said Wow, we sure have a lot of requests come in to switch from monthly to annual billing.

On this first day of the announcement now you can't draw a trend line through a single data point, but the good news is when people switch from monthly to annual.

The way we've changed the prices, they're paying is basically the same amount, but now we've got all the money upfront. So its a wonderful benefit in terms of free cash flow.

And we will.

With time, we will see how that Peters off, especially when they get to the January 1st date on existing customers where.

They.

The new pricing goes into effect. So most of the ones who want to keep their monthly build the same will switch to annual by that date and we just don't know what that mix will be but in either scenario, we're either getting a free cash flow benefit where we're getting a revenue benefit.

Both of those are great for our business in the enterprise area.

This set of changes it doesn't affect anything there we have a separate set of incentives.

Built into enterprise contracts that.

Upfront payments, but it's still an opportunity of ours to drive ever higher adoption of that for free cash flow benefits.

And just to clarify sorry, sorry, Brent just to clarify the effective date for the base of merchants that we have is June 1st.

Not January .

Oh, I'm, sorry, I'm not doing first you're right yes.

Good.

Great. Thank you.

Our next question will come from Ken Wong with Oppenheimer <unk> co.

You May now go ahead great.

Thank you for squeezing me in I'll, just just one quick question for me when we think about that second half inflation I guess whats the whats driving that confidence there I guess, when we think about the puts and takes as it is it purely just easing comps is it the pricing is it kind of the potential to see some some enterprise.

TIK would just love some some color around that are there other brent or already.

Yes, I'd say its number one its kind of visibility into the pipeline in terms of the opportunities that we even see today.

I think that it's also a function of.

With <unk>, it's a function of the major account launches. So we do expect some major account launches to happen in the first half, which will impact <unk> in the back half.

And I think that Thats, probably the bigger the bigger drivers for both subscription and <unk> in the second half versus first half.

Got it thanks, Thanks for clarification.

Sure.

It appears there are no further questions. This concludes our question answer session.

I'll now turn the conference back over to Brent for any closing remarks.

Well I just want to thank everybody for joining this call and following the company it was a.

<unk> in the macro economy, but we're really proud of our 27% topline growth.

The fact that we were one of the very very very few e-commerce companies.

Publicly traded world to have not enough and actually achieved.

Within or above the range of topline and bottom line that we set each quarter as well as for the full year. We gained a lot of share. This past year, we know that the global economy is not out of the woods are still relatively soft growth and a real focus on profitability that.

Can't extend the selling time cycle, but we see solid pipeline and we're more excited than ever about our positioning in the market.

We hope for another great year in 2023, and we look forward to the follow on conversations with all of our investors and followers in the year ahead.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

[music].

Ladies and gentlemen, thank you for standing by and welcome to the Big Commerce fourth quarter and fiscal year 2022 earnings call.

At this time all participants are in a listen only mode.

After the Speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

I would now like to turn the conference to your first speaker today, Daniel Lynch head of Investor Relations you may begin.

Good afternoon.

And welcome to Big Commerce, its fourth quarter and fiscal year 2022 earnings call. We will be discussing the results announced in our press release issued after today's market close with me or Big Commerce, as President CEO , and Chairman, Brent Pelham and CFO Robert Alvarez today's call will contain certain forward looking statements, which are made pursuant to the safe Harbor for.

<unk> of the private Securities Litigation Reform Act of $19 95.

Forward looking statements include statements concerning financial and business trends, our expected future business and financial performance and financial condition and our guidance for the first quarter of 2023 and the full year 2023. These statements can be identified by words, such as expect anticipate intend plan believe seek committed.

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 <unk>.

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 Dot Big Commerce Dot com with that let me turn the call over to Brent.

We will also share some of the assumptions on which we have built our 2023 financial plan. He will conclude with our high level expectations for 2023 in his discussion on full year guidance.

In a challenging year for global ecommerce the commerce grew faster than the broader e-commerce industry and our Q4 results showed strong progress in both profitability and operating cash flow. We also delivered on our full year opening guidance that last February highlighted by a 27% full year top line revenue growth.

Let's discuss the detail.

In Q4 total revenue grew to $72 $4 million up 12% year over year full year 2022 revenue grew to $279 1 million up 27% year over year, our Q4, non-GAAP operating loss was $9 $4 million and the full year was $47 million we concluded.

Q4, with an annual revenue run rate or <unk> at $311 7 million.

Up 16% year over year that represents a sequential growth in IRR of $6 4 million.

Enterprise account <unk> with $224 million up 30% year over year. The enterprise segment now represents 72% of our total company.

Sure.

<unk> to near term economic conditions and steady long term investments in the strategic initiatives that will drive profitable growth in the years ahead.

Our results reflect this challenging climate and our response to it.

We continue to see market progress moving upmarket into larger more complex enterprise opportunities.

However, as a reflection of the macro economy enterprise opportunities have longer sales cycle times and reduced aggregate deal pipeline relative to before 2022. Those are two common themes. We all hear across many enterprise software segments inflation on consumer spending also remain difficult to predict and Ray will discuss later in his <unk>.

Remarks.

As we look ahead to 2023, the economic conditions of 2022 motivated us to prioritize profitability as our number one goal by year end.

The restructuring has already made us a better company. Our go to market spend now focus is entirely on our highest ROI segments like enterprise <unk> and Omnichannel operations throughout the company had been streamlined unnecessary in excess of expenditures have been eliminated.

<unk> focus and alignment are better than ever and some we believe we are an even stronger company operationally and financially than we were prior to the December restructuring.

Longer term, we reiterate our belief that our business can achieve operating profit margins of 20% or higher thanks in part to our strong gross margins of 75% plus as already will outline this operational excellence and rapid path to profitability as reflected in our guidance for 2023.

Next I'll provide an update on the substantial progress relative to our core strategic initiatives in 2022 at.

At this time last year I walk through our three strategic pillars open SaaS disruptive innovation and commerce as a service and the five strategic priorities that support them today I'll briefly review those and discuss the progress we made in 2022 as well as our commitment to these areas this year.

Our differentiated open SaaS technology approach is our first strategic pillar. It combines a truly modern approach to API first compose ability with the inherent benefits of multi tenant SaaS, including built in performance security usability innovation and lower total cost of ownership.

Combination helps businesses turned digital transformation into competitive advantage.

Our software conglomerate competitors attempt to lock customers into their proprietary suites.

In contrast, with open SaaS.

We provide a configurable and flexible platform that enables complex businesses to adopt best of breed technology solutions and customize their ecommerce approach to their specific needs.

Our next strategic pillar disruptive innovation as the business strategy to extend upmarket propelled by an ever higher performing product at a lower total cost of ownership than established incumbents.

Our final strategic pillar commerce as a service describes our ability to enable partners to create and sell customized E Commerce solutions powered by our platform technology.

Three pillars of open SaaS disruptive innovation and commerce as a service remain core to our strategy in 2023.

Stability timeline, the continued success of and investment in our five strategic priorities will be critical to deliver these goals.

Graffiti and customer segments, such as <unk>. In addition to BDC at much lower operational costs and complexity bandwidth distinct infrastructures for each storefront. We also bolstered flexibility for enterprise merchants through our launch of Multilocation inventory API. These API to enable customers to execute more comp.

Plex order fulfillment scenarios, including buy online pick up in store and multi warehouse shipping optimization.

Our omnichannel offering helps customers advertise and sell successfully through more channels than they could on competitive platforms. In 2022, we made remarkable progress following our 2021 acquisition of fee dynamics, the industry's best solution for managing product catalog integrations at scale into more than 100 of the world.

Foremost search advertising social network and marketplace channels may.

Major channels enabled include Amazon, Walmart target, plus Google, Microsoft Mercado Libre, Facebook Instagram Tech talk and most recently snap.

Just last week, we announced a new strategic partnership with W. P. P to offer Omnichannel solutions to help WP clients drive growth and maximize sales across hundreds of advertising channels and marketplaces.

This innovative partnership will give WP priority access to new product tools on both the commerce and fee dynamics. In addition to providing Apis and datasets that will enable WP agencies to develop unique insights for clients across product trends and purchasing data.

New feed genomics customers added in 2022 included Tottenham Hotspur, a marquee English Premier League football club for both advertising and marketplace channels Landmark group, one of the largest retail and hospitality conglomerates and the Middle East Africa, and India, and less mill, a $150 million plus fitness.

<unk> headquartered in Auckland, New Zealand as well as many others across multiple ecommerce platforms.

Within <unk> Commerce, we launched our new certified Omni channel partner programs, both for agency and Technology partners. This enterprise focused initiatives gives partners new ways to generate revenue by helping merchants on any e-commerce platform achieve omnichannel success.

With numerous tools services and exclusive channel partner programs partners can educate and guide merchants on how to strategically expand into new channels that can drive more traffic with higher shopper intent improved return on AD spend and generate more GMP.

Partnership with Microsoft ads, and listings, allowing bed commerce merchants to create and manage AD campaigns across Microsoft extensive properties.

<unk> E Commerce has gone through a major evolution over the last few years <unk> buyers increasingly expect a modern experience similar to what they see in consumer focused E. Commerce that means <unk> businesses must provide speed and ease of use without compromising the complexity and uniqueness of the <unk> buying journey.

Building on the 2021 launch of <unk> addition, our 2022 acquisitions of bundled <unk> and <unk> Ninja completed a foundation for big Commerce to become the world's most flexible and easy to deploy <unk> platform.

Bundled <unk> powers the functionality of our <unk> addition, <unk> Ninja offers best in class V to be quoting capabilities by incorporating this range of functionality natively within that commerce, we have made <unk> e-commerce practical and attractive for businesses of all sizes are <unk> offering has achieved widespread industry recognition.

From leading analysts, including Gartner paradigm and Forrester.

We further enhanced our international footprint with notable 2022 country launches in Germany, Austria, Spain, Denmark, Norway, Sweden, Mexico and Peru.

Spansion markets contributed to revenue growth of 34% in EMEA and 42% and Latin America. Notable international brand launches included British Airways IAG loyalty Jimmy brings.

MK and building supplies industrial tool supplies and Mexico's Chivas Soccer Club. In addition, we collaborated with partners to grow our presence in markets, including China, Korea, Poland, India and UAE.

The last of our five strategic priorities as <unk> commerce of which headwinds as an important subset.

<unk> Commerce gives merchants the freedom to mix match and combined best in breed tech vendors to create a customized and robust technology stack.

With that Commerce is open commerce approach and commitment to Mark Alliance principles <unk> merchants can make smart technology investments that are agile functional in flexible.

Finally, I'd like to conclude by speaking at a high level about our plans and operating focus for this year, how we are investing and winning and market has not changed our strategic.

Focus and initiatives have not changed we have a great product and leadership position in global ecommerce I believe continued leadership requires commitment discipline and resolve staying on strategy, even as market conditions may require tactical adjustments from one year to the next.

We intend not to overreact or over correct in a way that disrupts long term growth.

Our actions over the last several months reflect us we chose to focus our time and go to market spend on the superior economics of the enterprise segment last quarter, we shifted sales and marketing resources away from not enterprise prospects with shorter sales cycles to enterprise prospects with longer sales cycles.

We did this knowing it may impact bookings growth in the first half of 2023, because the superior retention profile of enterprise businesses makes us the right priority for the medium and long term we.

In conclusion a.

Challenging operating climate requires leadership to adapt improve and strengthened both strategy and execution.

I believe our team successfully rose to the challenges of 2022, while positioning us for continued success in 2023 and beyond our plans reflect the prioritization of improved operating margins and cash flow balanced with focused investment in enterprise such that we continue to grow our leadership position in global ecommerce.

Stability and enterprise focus.

Are the commitments of our leadership team to our customers partners and shareholders.

We remain proud and excited to serve you well with that I'll turn it over to Ara.

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

During my prepared remarks, I'll walk through our Q4 results.

Because my details in some of the key assumptions behind our 2023 plans.

And conclude with discussion on our Q1 and full year revenue guidance.

In Q4 total revenue was $72 4 million up 12% year over year subscription revenue grew 14% year over year to $53 3 million, while partner in services revenue or <unk> was up 6% year over year to $19 1 million.

For the full year 2022 revenue finished at $279 1 million up 27% versus 2021.

Subscription revenue and <unk> were up 33% and 13% respectively year over year.

In Q4 revenue in the Americas was up 12%, while EMEA revenue grew 22% and APAC revenue was down 6% compared to prior year.

For the full year 2020 to Americas, and EMEA revenue were up 28% and 33% respectively year over year, while APAC grew 9% year over year.

2022 was a tough environment for ecommerce and SaaS software.

Despite those headwinds we posted solid growth in subscription revenue, especially in the Americas and EMEA, where we launched in new markets. We also generated PSS growth that outpaced consumer spending and e-commerce as a whole.

I will now review our non-GAAP kpis.

<unk> grew to $311 7 million up 16% year over year.

That represents a sequential growth in total or $6 4 million.

Enterprise account.

It was $224 million up 30% year over year and is up more than two two times from where it was just two years ago.

As we have outlined previously the change in total subscription <unk>, which can be calculated by subtracting the trailing 12 months of <unk> from total.

<unk> is a good indicator of our underlying change in net bookings during the period subscription.

Subscription <unk> was up $5 3 million versus Q3 and up 17% year over year.

As Brent mentioned like many other enterprise software company, we continue to see longer sales cycles, and a tighter deal pipeline.

Q4 subscription <unk> growth reflected the challenges of that dynamic.

Again, we are confident that the investment choices, we are making are the correct ones focusing on long term profitable growth with enterprise accounts.

We expect subscription <unk> growth rates to improve in time as our pipeline investment and prioritization choices are fully realized and as we close larger and larger accounts.

At the end of Q4, we reported 5786 enterprise accounts up 750 accounts or 15% year over year, including feed and Omics.

ARPA or average revenue per account for enterprise accounts was $38708.

14% year over year.

Enterprise ARPA was approximately flat quarter over quarter as sales cycle times at some enterprise merchants lengthened.

We have built our 2023 plans conservatively in line with this dynamic.

Finally, net revenue retention or NR from enterprise accounts was 111% in 2022 <unk>.

Compared to a 118% in 2021.

2022, <unk> was impacted by tightening consumer spending that led both to PSS growth rates below that of 2021 and fewer orders driven subscription upgrades.

I'll now shift to the expense portion of the income statement as a reminder, unless otherwise stated.

All references to our expenses operating results and per share amounts are on a non-GAAP basis.

Q4, gross margin was 76% up 50.

<unk> 57 basis points from the previous year.

Gross profit was $55 2 million up 12% year over year.

In Q4 sales and marketing expenses totaled $30 5 million.

10% year over year. This represented 42% of revenue down 69 basis points compared to last year.

Sales and marketing expenses were down $1 million.

Sequentially from Q3, driven by expense reductions in demand generation activities focused on the non enterprise segment of the business.

Research and development expenses were $19 million or 26% of revenue down 147 basis points from a year ago on approximately flat spending sequentially from Q3.

We have prioritized product roadmap initiatives that aim to bring greater enterprise functionality to merchants of all sizes and.

And we are working diligently to maintain the investments needed to fuel enterprise product improvements, while also realizing better operating results on the bottom line.

Finally, general and administrative expenses were $15 1 million or 21% of revenue down.

Down 224 basis points from a year ago.

This is down one 8 million sequentially compared to Q3 due to lower staffing costs and continued operational improvements.

In Q4, we reported non-GAAP operating loss of $9 4 million or negative 13% operating margin.

Recall that we guided to a non-GAAP operating loss range for the quarter of $12 three.

To $14 3 million.

Adjusted EBITDA was negative $8 6 million a negative 11, 9% adjusted EBITDA margin.

Compared to negative 16, 8% in Q4 of 2021.

non-GAAP net loss for Q4 was negative $7 7 million or negative <unk> 10 per share compared to negative $12 1 million or negative <unk> 17 per share last year.