Q1 2023 BigCommerce Holdings Inc. Earnings Call

May 4, 2023

Yeah.

Ladies and gentlemen, thank you for standing by and welcome to the Big Commerce first quarter 2023 earnings call.

Time, all participants are in a listen.

Okay.

After the speaker's 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 over to your first speaker today can you Lynch head of Investor Relations you may begin.

Good afternoon, and welcome to Big Commerce as first quarter 2023 earnings call, we will be discussing the results announced in our press release issued after today's market close with me are 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 provision.

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 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.

<unk> 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.

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

Thanks, Danielle and thanks to everyone for joining us on today's call I will walk through our first quarter results and share my perspective on our progress thus far in 2023 alright.

Alright, well later share greater detail on our financial results and conclude the call with a discussion on updated guidance what's.

Let's discuss the details.

In Q1 total revenue was $71 $8 million up 9% year over year, our Q1 non-GAAP operating loss was $6 4 million, which was well ahead of our quarterly guidance and a strong step toward our goal of reaching breakeven on an adjusted EBITDA basis in Q4 of this year. We concluded Q1 with an annual revenue run rate.

$316 $7 million.

Up 13% year over year that represents a sequential growth in IRR of 5.0 million.

Enterprise account <unk> with $228 8 million up 21% year over year enterprise accounts now represents slightly over 72% of our total company <unk> on our previous earnings call. We noted that we are aiming for enterprise <unk> growth in 2023 at or above 20% year.

Over a year, which we believe will be offset by non enterprise account are our contraction in the mid single digits Q1 results net does call non enterprise account <unk> was 87 $9 million up slightly on a sequential basis compared to Q4 and down slightly year over year as expected as we take actions.

Build a scalable more self serve small business segment I would like to elaborate on a few areas in particular that demonstrate our progress.

Our shift of go to market focus from small business to the enterprise segment is showing positive results sales pipeline as of the start of Q2 for this segment is approximately 20% higher than where we were at this time last year when rates remains strong sales.

Sales cycle times, and the lower end of the segment are largely unchanged, while larger enterprise opportunities have seen an increase of approximately 50 days between first engagement with our merchant and closed compared to this time last year.

Before I elaborate on how we are responding to these dynamics I'd like to clarify what we mean by enterprise accounts and the parts of the market. We serve we sell for different ecommerce planned types to merchants. The first three standard plus and pro are collectively our essentials plans geared towards small businesses are.

Our enterprise plants have richer feature set customize pricing and terms and are typically sold to merchants and what we deem the midmarket and enterprise customer segments, we consider merchants doing between 1 million to $50 million per year in online gross merchandise value or GMB, our mid market segment and merchants doing more than 50 million.

And online GMB per year are large enterprise segment, we consider any account buying at least one enterprise plan and enterprise accounts and we include select financial metrics from these accounts in our quarterly results as a result, our enterprise account metrics reflect a mixture of mid market and large enterprise segment merchants.

We are responding to the sales cycle time dynamics I mentioned previously by further prioritizing channels and products that deliver strong ROI with faster time to close we are increasing our investment in lead generation with our agency partners and in the mid market segment. As these opportunities tend to have shorter sales cycle times and a strong LTV.

<unk> finally, we are seeing strong success with feed and Omics, which offers our customers incredible ROI with fast time to merchant value and also high ROI for commerce. All merchants are actively seeking ways to increase revenue and improve their return on AD spending and fee dynamics can help merchants running on many different platform.

<unk> see strong results without the need to re platform.

The genomics continues to win accolades and customer satisfaction and deepened big Commerce as relationship with key partners and merchants, 30% of the top 1000, Internet retailers Trust <unk> to optimize their product catalogs and expand their market reach in Q1 <unk> issued their spring grid report.

That measure overall customer satisfaction and market presence. If you did not much was in the leadership position and three E Commerce software categories multichannel retail catalog management and online marketplace optimization tool.

<unk> also rolled out its own native integration into Amazon multichannel fulfillment during the quarter, enabling thousands of merchants to take advantage of Amazons fulfillment services for orders that originate on non Amazon channels.

<unk> also continues to support merchant adoption of key global channel program, including Macy's Dot Com Meadows, Facebook and Instagram shop and shop.

Sure.

Our platform and Omnichannel products drive scalable cost effective growth foreign merchants. We are confident that we will continue to broaden our mid market base, even as we invest in expansion further into the enterprise segment as well.

We also saw healthy stabilization in our non enterprise our retail accounts. While this portion of our business was down 4% year over year and showed sequential growth for the first time since Q4 2021.

As we have shifted focus towards more established small businesses adjusted planned pricing to encourage prepayment and decrease the volume and depth of sales promotion. We have seen improved net retention results in this portion of our business and encouraging signs of stabilization.

We expect results from this portion of the business to benefit from our recent pricing changes as well we will not see the full effect of the February pricing action on our base retail accounts until June but early results are strong new merchant bookings remained consistent and we are also seeing a higher mix of prepaid annual plans as well.

Finally, our Q1 results reflect progress on our path towards profitability to be clear adjusted EBITDA breakeven in Q4 is not a finish line at the starting.

Starting line in our business from which we will drive profitable growth for our shareholders Q1 was a strong step toward that goal.

Despite the prevailing caution among businesses regarding the near term economic outlook established in mid market and enterprise merchants continue to demonstrate interest in long term investments in our ecommerce platform and omnichannel capabilities. Although acquiring these larger merchants may come at a greater financial costs and require a longer time to close deals.

Significantly higher long term value.

These merchants have impressive retention rates greater cross selling potential and healthier unit economics. There are also more likely to adopt technologies and omnichannel integration that helps sustain and accelerate their growth, which drives significant revenue for us. These merchants are central to our strategic and financial success, and we will continue to balance the need to invest.

First in winning these segments, while also improving profitability and cash flow.

Our average revenue per account or ARPA for enterprise accounts was a little over $39000 in Q1, which was up steadily from 35000 in Q1, 2022 and $32000 in Q1 2021.

Consistent growth we have seen in this metric reflects our progress moving up from our historical base and small business into the mid market segment and now early progress in the enterprise segment as well.

This move into enterprises, succeeding as is evidenced by merchants such as care Ology cons home, plus and Harley Davidson launching with us in Q1 as I will discuss more later and also by merchants such as Coldwater Creek picking us as our new ecommerce provider.

This go to market focus on the Midmarket and enterprise segments does not mean that we are walking away from small business merchants, we continue to acquire and serve small businesses on our platform and we are committed to helping them build their business with the commerce, but we have optimized our go to market approach to small businesses to be more self serve with less sale.

And marketing demand generation investment the goal is to build a small business segment with a scalable LTV to CAC are recent standard plus and pro pricing action and prioritization of annual prepayment is an example of the adjustments, we're making to build this segment into a profitable and more scalable business.

Our ecommerce and Omnichannel solutions are designed to be flexible compose the bulk and scalable providing unmatched versatility for both <unk> and <unk> clients alike.

Earlier this week, we announced the latest update the <unk> addition, our comprehensive suite of BTB functionalities that enhanced the online selling experience for suppliers manufacturers distributors and wholesalers.

The new release introduces multi storefront compatibility.

<unk> buyer portal and help us support.

Next level. <unk> addition, functionality to allow merchants to manage quotes invoices and buyer approval workflows BW.

<unk> additions open and intuitive solution transforms the way sellers and buyers do business, turning legacy <unk> practices into a modern agile and nimble digital operation with a <unk> foundation ready to scale with the business.

These enterprise grade capabilities provide <unk> brands with a flexibility and customization they need to elevate online selling experiences launch new brands and expand into new regions.

In addition to strengthening <unk> addition, the commerce continues to release features and product enhancements that resonate with our target market in March we launched buy online pick up in store functionality also known as click and collect giving merchants more options to meet shoppers', where they are and provide frictionless shopping experiences.

Previously only available for enterprise merchants, we expanded our multi storefront offering in Q1 as a self service feature accessible to small and mid size bed commerce merchants running on our retail plants. The ecommerce merchants of all sizes now have the advantage to manage multiple storefronts to grow sales in new regions streamline operations for multiple brands and customers.

Various customer segments to drive global growth.

In Q1, we announced a new strategic partnership with W. P. P to offer Omnichannel solutions to help WPB 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 feed and Omics. In addition to.

Riding Apis and datasets that will enable WP agencies to develop unique insights for clients across product trend and purchasing data.

Given the attractiveness of the joint bid commerce and feed genomics value proposition to enterprise brands, we continue to be focused on engaging activating and enabling many other global agency partners to serve mutual merchants with these market leading capabilities across advertising marketplace and branded commerce channels.

We also announced a new global partnership with Info track systems, a leading provider of commission software and distributor tools for direct sales companies.

The new info tracks powered by Big Commerce solution will give thousands of direct selling customers access to more innovative and sophisticated commerce capabilities, including the ability to launch omnichannel sales strategies using feed and Omics. In addition, tht ingenuity. The complete Commerce division of Tht plc, and the commerce intent.

Develop a U S and EMEA focused complete commerce solution that would bring together big Commerce is composed of all ecommerce storefront with Ingenuities fully integrated technology stack and operational capabilities.

Earlier in Q1 in partnership with Amazon, We launched the buy with prime that for Big Commerce, a new self service integration for U S merchants to easily enable buy with prime on their big Commerce storefront with no coding required with shopping benefits that millions of prime members know entrust, including fast free shipping by with <unk>.

Prime has shown to increase conversion by 25% on average.

This week, we also announced that we have expanded our global footprint into Poland, Romania, India, The UAE and South Africa with an expanded engineering team in Poland to partner led entities in eastern and Central Europe , and new country leader in India.

In Q1, we continued to grow our roster of leading notable brands and merchants on our platform.

Innovative health and beauty brand <unk> launched a beautiful new storefront leveraging our Netsuite ERP partnership.

Urology store with its ERP for product and inventory data thinking.

On home, plus a leading retailer of furniture appliances, and electronics with more than 160 stores across 15 U S. States recently launched on Big Commerce, using a natively hosting stencil storefront and accustomed commerce checkout, taking advantage of integrations with custom financing solutions and location based pricing.

Tottenham Hotspur one of the world's top football clubs is leveraging big commerce platform to further enhance its popular online stores capabilities and sand experience not only at home in the U K, but also in APAC and North America, where the club has a significant and growing fan base.

Also avoid a global leader in door opening solutions used in many of the world's blocks and security installations is revolutionizing its customers' experience by integrating its broad product catalog and using our <unk> addition solution to customize the shopping experience.

Iconic motorcycle brand Harley Davidson launched a new line of lifestyle apparel utilizing big Commerce API is to build a full suite of custom integrations with backend system and leveraging that commerce is stencil framework to build a chic front end.

Diamond's direct a worldwide leader in Diamond sourcing selection education and value launched a new store with a headless digital experience front end and big Commerce backend to deliver a seamless intuitive shopping experience, including custom ring builder options.

<unk> also signed many new customers on the quarter as well with highlights, including Chico's 10 del Raffi.

<unk> as well as signing new agreements with existing big commerce customers, such as solo brands, D&O Houser and badgley Mischka among many others.

To conclude our 2023 plan that is focused on three primary goals first continued topline growth in the Midmarket and enterprise segments.

Breakeven in Q4 on an adjusted EBITDA basis, and third further efficiencies in our business to improve operating cash flow. We are laser focused on delivering these commitments.

We set up our business for strong profitable growth in 2024, we are operating from a position of strength in the mid market segment and building momentum in the enterprise segment as well, we have a winning product in a growing market with a diverse partner ecosystem invested in our success. We are encouraged by results. Thus far in 2023 and we are commit.

To deliver healthy returns to our shareholders.

Next I'd like to turn it over to <unk> to discuss our financial results in more detail and conclude with our updated guidance for Q2 and 2023.

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

During my prepared remarks, I'll cover our Q1 results in detail and provide additional commentary on some of our key goals for the year and finally conclude with updated guidance.

In Q1 total revenue was $71 8 million up 9% year over year subscription revenue grew 12% year over year to $53 8 million, while partnering services revenue or <unk> was down 1% year over year to $17 9 million.

Revenue in the Americas was up 7%.

EMEA revenue grew 27% and APAC revenue was up 1% compared to prior year.

As I mentioned on the last earnings call. We built our 2023 financial plan, assuming conservative net bookings growth, particularly in the front half of the year.

We also assume further moderation in consumer spending which would impact volume driven pricing upgrades in PSM.

Q1 results were largely in line with these assumptions and I am encouraged by the progress that we showed in the quarter.

I'll now review our non-GAAP PPI.

<unk> argued at $316 7 million up 13% year over year.

That represents a sequential growth in total <unk>.

$5 million.

Enterprise account <unk> was $228 8 million up 21% year over year.

Subscription <unk> was up $5 1 million versus Q4, and up 15% year over year as.

As we mentioned last quarter, we are aiming for enterprise <unk> growth in 2023 at or above 20% year over year.

Which we believe will be offset by non enterprise account a contraction in the mid single digits.

Q1, non enterprise results exceeded our expectations.

We believe improving cohort health and recent pricing changes will offset the degree of contraction risk we outlook at the beginning of the year.

At the end of Q1, we reported 5828 enterprise accounts up 463 accounts or 9% year over year.

ARPA or average revenue per account for enterprise accounts was $39260.

Up 11% year over year.

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 on a non-GAAP basis.

Q1 total cost of revenue was $16 3 million down approximately $1 million sequentially from Q4, Q1 total operating expenses were $61 9 million down $2 $7 million sequentially from Q4.

Q1, gross margin was 77% up 192 basis points from the previous year.

Gross profit was $55 5 million up 11% year over year.

This gross margin expansion is notable in that we drove healthy margin expansion, even low growth and high gross margin <unk> was challenged.

We're making deliberate decisions on automation staffing and other cost drivers to drive sustainable margin improvements over time.

In Q1 sales and marketing expenses totaled $31 2 million up 2% year over year.

This represented 43% of revenue down 297 basis points compared to last year.

Search and development expenses were $17 3 million or 24% of revenue down 366 basis points from a year ago and down $1 $7 million sequentially from Q4.

General and administrative expenses were $13 4 million or 19% of revenue.

Down 121 basis points from a year ago.

In Q1, 2023, we reclassified certain costs that we had previously included in general administrative expenses and sales and marketing expenses.

To maintain consistency between comparable periods.

Class $1 $5 million from general and administrative expenses and sales and marketing expenses for the period ending March 31.

2022.

This change in classification had no effect on the reported results of our operations or cash flow.

In Q1, we reported a non-GAAP operating loss of $6 4 million.

A negative 9% operating margin.

This compares with an operating loss of $12 4 million or negative <unk> 18, 7% operating margin in the prior year and an operating loss of $9 4 million or a negative 13% operating margin in the prior quarter.

Adjusted EBITDA was negative $5 5 million of negative seven 6% adjusted EBITDA margin.

Compared to a negative $11 6 million and a negative 17, 5% adjusted EBITDA margin in the prior year.

non-GAAP net loss for Q1 was negative $4 9 million or <unk>.

<unk> <unk> seven per share.

Compared to negative $13 2 million, where and again at <unk> 18 per share last year.

We ended Q1 with $283 5 million in cash cash equivalents restricted cash and marketable securities.

For the three months ended March 31 2023.

Operating cash flow was negative $20 8 million compared to negative $22 million a year ago.

We reported free cash flow of negative $21 9 million or negative <unk>, 31% free cash flow margin.

This compares to negative $23 3 million and a negative 35% free cash flow margin in Q1 2022.

Q1 operating cash flow results included a number of one time impacts that contributed to the difference between cash flow and our non-GAAP operating loss results.

These differences include an approximately $4 million between severance related to our December restructuring and normal year end bonus payments.

$6 million in Q1 revenue from a payments technology partner, which was paid in early April and will be reflected in our Q2 operating cash flow.

Apart from these timing related impacts operating cash flow would have been between negative $10 million to $11 million on the quarter.

I'd also note that Q1 is the quarter in which we have no loans prepaid software obligations as well, which also contributes to the difference between operating cash flow and the underlying operating results during the period as well.

As Brent mentioned, our 2023 plan is focused on three primary goals first we are investing to continue to win in the Midmarket and enterprise segments.

Topline revenue results in net bookings in Q1 were a positive first step.

We saw strong growth in the mid market segment, and Peter and Omics and we are encouraged by the sales pipeline heading into Q2.

We continue to see strong win rates in our key segments as well.

However, we are also seeing fewer volume driven pricing upgrades and additional conservatism with respect to software spending from our existing merchants, which is in line with the expectations on which we built our plans.

Second we are operating with discipline to reach breakeven by the end of Q3 on an adjusted EBITDA basis.

And remain confident in our ability to deliver positive EBITDA for the full quarter in Q4 of this year.

Q1 results reflect our continued progress.

<unk> indicated that we're on track to meet this goal we have.

Also how do we focus on driving operating leverage further as we scale the business.

One important item to note with respect to GAAP net loss is how the August 2021.

$145 million.

The acquisition of fee dynamics is accounted for in our financial statements.

Our Q1 net loss includes over $6 million in expenses from third party acquisition costs and intangible asset amortization from that transaction.

We expect the majority of third party acquisition costs to be fully recognized by the end of Q2 of this year.

Our focus on scaling this business, while balancing topline and bottomline growth and we will continue to manage our spending in a financially disciplined way to accomplish that including cost to run the business.

So evaluation of potential acquisitions, and partnerships and equity grants to employees.

Third we are taking steps to prioritize cash flow improvements to drive healthy consistent cash flow generation.

As I mentioned before apart from onetime impacts in the quarter.

Operating cash flow would have finished between negative $10 million to $11 million.

We are taking numerous actions to drive cash flow improvements.

Such as prioritizing advanced billing on new subscriptions investing in our quote to cash systems and processes and.

Maintaining tight discipline around accounts receivable and collections.

We will see the full effect of our February pricing action on our base of customers and retail plans beginning in June . So we expect to see further improvements in operating cash flow from annual payments from our base of merchants in June through the end of the year.

We believe these initiatives will ultimately yield a better customer experience higher deferred revenue and long term improvements to dsos as well.

I'll now conclude with an updated view on our outlook and guidance for the second quarter and full year 2023.

For the second quarter, we expect total revenue in the range of $72 1 million to $74 1 million, implying a year over year growth rate of 6% to 9%.

Note that we expect subscription revenue in <unk> to grow in the mid single digits similar.

Similar to the growth reflected in the guidance range for the quarter.

For the full year 2023.

<unk> total revenue between $303 million to $311 million.

Relating to a year over year growth rate of approximately 9% to 11%.

For Q2, our non-GAAP operating loss is expected to be between $5 5 million and $9 5 million.

For the full year, we expect non-GAAP operating loss between $14 million and $20 million.

While we are encouraged by progress thus far in the year, we intend to remain conservative in our guidance.

And the macroeconomic uncertainty in our industry.

We believe this is a reasonable approach at this time.

Note that the midpoint of this guidance range for Q2, non-GAAP operating loss is sequentially down slightly compared to Q1 results.

This is primarily due to some onetime expense benefits in Q1 and select investments planned for Q2.

Let me elaborate on this just for a moment.

Q1, non-GAAP operating loss of approximately $2 1 million of onetime expense benefits to the quarter from two primary sources.

<unk>.

We regularly reserve for doubtful accounts under our normal practice and we made good progress in collections on a number of outstanding accounts in Q1 that contributed a $1 million expense benefits in the quarter.

Second our increased sales and marketing spending towards the mid market and enterprise segments ramped a little more slowly than expected as we added resources in new marketing channels, which contributed approximately $1 $2 million of benefit to the quarter.

We also plan to make small investments in select initiatives in sales and marketing in Q2.

To capitalize on opportunities we are seeing in the marketplace and continue to build a strong sales pipeline for the back half of the year.

Apart from the effect of the Q1 items in this small investment increase in Q2.

On a non-GAAP operating loss outlook at the midpoint would have been sequentially better as we work towards breakeven by the end of Q3.

While we may make additional changes or investments as the year progresses, we plan to keep spending relatively flat across the remainder of the year.

<unk> is to reach breakeven in late Q3 with full quarter of positive adjusted EBITDA in Q4.

We remain incredibly bullish about the potential of this business.

We have the product.

<unk> opportunity and partner ecosystem to build our presence further in the mid market and expand upmarket into the enterprise segment.

We have many paths for growth.

<unk> BDC BTB, Composedly commerce, and headless international growth cross sell with our existing customers.

Omnichannel expansion across merchants using both big Commerce and other e-commerce platforms.

We also have the organizational focus necessary to win in these segments, while driving the operational improvements necessary to profitably scale, the business and generate strong returns for our shareholders.

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

Operator.

Thank you we will now begin the question and answer session.

To ask a question you May press Star then one on your touch tone.

If you're using a speakerphone please pick up your handset before pressing the speeds to withdraw your question. Please.

Star then two.

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

Okay.

First question will come from Terry Tillman with Charles Please go ahead.

Oh, great. Thanks. This is actually Conor bestseller on for Terry I. Appreciate you taking the questions maybe.

Maybe just to start I would love to kind of dig deeper into the progression of speed and Alex It sounds like it's continued to do really well with some nice wins with some large versions I'm. Just curious if you could share anything directional on what the growth expectations are upbeat dynamics and maybe the size of that business versus fixing the hole and then also maybe what are the puts and takes on the sales cycles here.

But what is the typical sales cycles look like for sito.

Yeah I'll jump in here.

As we always thought <unk> would grow at or above the pace of our enterprise business.

I think in terms of performance they've definitely done that and we've also integrated feed and omics in a lot of different ways with the launch of our Omnichannel certified partner program. Our agency partners Tech partners have definitely embraced <unk> and we're seeing really great demand signals in terms.

Interest from their merchants as highlighted with WP.

I think we are.

Now it really enabling our ecosystem to.

To self economics across their base of merchants, whether they are on big commerce or not and if you think about the selling cycle our go to market.

<unk> four.

E Commerce versus what <unk> does I think that.

995% of merchants out there are looking for ways to increase top line revenue increase their return on AD spend and so I think collectively between big Commerce, now really exposing our ecosystem <unk> dynamics, we're seeing really great.

<unk> signing up.

New accounts gross new sales are strong.

Sales cycles are actually less than our enterprise sales cycles, which is good and we couldnt be more excited and more bullish about genomics going into this year.

Yes.

Great. That's really helpful. I appreciate the color maybe just a quick follow up on international So just wanted to ask around the recent entries into Poland, Romania, India, a few others.

What did you see in these regions kind of gives you the confidence to invest there was that kind of partners pulling you towards them or maybe just low hanging fruit in terms of being able to get in there with.

It opened south platform for some of the enterprise sellers there.

Yes clarify as we launch in these markets, we're launching a marketing presence not a head count.

Focus.

<unk>.

Our presence in those markets, we're relying especially on partners and organic traffic, but the reason we picked these markets.

Is that they are among the very top performing markets in the world for us that did not already have their own dedicated country landing pages and website, so Poland, Romania had been top performing countries for us.

The middle East, particularly UAE top performing country for us in India as well, so putting now marketing presence in those countries, where we can better coordinate lead volume in conjunction with our best partners.

Really a ROI no brainer to help further accelerate growth in those countries. So the biggest thing is just organic preexisting business tells us that they are very attractive markets for big Commerce and of course, it helps as well that India. The.

UAE and South Africa can all be supported with English language website.

Great. Thank you.

Thank you and our next question will come from Rob Morelli from Needham <unk> Company. Please go ahead.

Hey, Thanks for taking my question on for Scott Berg here.

With this too.

Hi, Carolyn without question, what's the pace of this new country entry with those recently announced.

Pensions are are there any other regions or markets that you see an opportunity.

Nearby thanks.

And the long term, absolutely, we really want to be.

Competing effectively.

Every country around the world in the long run where our differentiated opened SaaS platform conserve a meaningful part of the market, but for this year priority number one is achieving.

Profitability on an adjusted EBITDA basis in Q4, so warehouse.

In prior years, we had full market entry that included.

A meaningful build out a sales solution ing business development in countries that we entered this year. We're focused on those markets that were already established and not adding not really adding head count into new markets. What were excited to see is just how much we.

Can accelerate.

Countries, where we don't have a big.

Human presence with marketing support.

These five and if that works then conceivably there are quite a few other countries around the world that we'll look to.

2020 core to expand in a similar way thanks for the question.

I think the other thing I would add I mean, just while we're on the international topic in case nobody else asked about it. It was notable that if you break out the.

Growth rates for the various regions, we saw an increase in the quarter on quarter.

So the year on year growth rate in Q1 relative to Q4 and all of our <unk>.

Non U S geographies APAC improved by 7% EMEA growth rate improved by roughly 5% non U S. Americas by roughly 12%. So it was very strong quarter and strong momentum continuing around the world for us.

And the next question will be from Parker Lane from Stifel. Please go ahead.

Yeah, Hi, guys. Thanks for taking the question.

Brian I know self serve small business is a smaller part of the business from an IRR perspective, but with the changes <unk> been making what are some of the signals. We see from this channel and what are your growth expectations. There going forward under this new model.

The price change has not had.

Assuming we negative impact on volume.

New business coming on our small business plan since we turned off the heavy marketing and sales they get.

In Q4, so what we are seeing is a very positive trend that a higher percentage of folks signing up for the plans are picking annual prepay.

So that their price doesn't change relative to before and of course those picking monthly are now paying.

Meaningfully more and so we get the benefit on ROI from the small business segment on bolt ons where bolt.

Making more money.

Each new sign up and getting more upfront prepayments, where we don't get that Dan we're spending less money to acquire the plan. So the business is much healthier on an LTV to CAC standpoint than ever before and so we're very encouraged by that.

As we as we look to continue to grow at around the world.

Got it understood and then touching on multi storefront real quickly salvi.

You expanded that.

Beyond the enterprise merchants down to small and medium sized merchants.

When I think about the enterprise is obviously a lot more complexity there given their size and scale.

How do we think about the addressable opportunity in the adoption patterns, you're seeing in multi store front outside of that enterprise market, where are you where you brought this tool to.

Well as you mentioned, it's less than a quarter new for the small business plans, but there are plenty of businesses that have complexity. Historically, they would have been faced with the choice of either not launching additional stores or having them on their own completely independent account with us.

Set of integration.

That's a lot more work so we make it easier to add additional brands and sub brands additional geographies and or additional segments like b to B plus b to C.

Any other platform and have democratized that all the way down a nice thing is that each time, a small business customer clicks a button.

Adds another storefront their revenue to us goes up very substantially relative to what they were paying before so yes.

<unk> real enterprise functionality of great benefit even to small businesses.

Yes.

Value for us.

Value for the customer in a big revenue boost for US every time, it's chosen.

Understood. Thanks for the color I appreciate it.

And the next question is from Raimo <unk> from Barclays. Please go ahead.

Hi, This is <unk> on for Raimo. Thanks for taking the question could you speak a little bit to what youre seeing with the new changes in the <unk> segment rollout and any increased traction.

Or early feedback based on these new functionalities. Thank you.

Yes, youre referencing the updated release for our <unk> addition, that only went out a couple of business days ago and there are.

Very few product releases in our history that are as exciting as this one so just to let everybody know.

The new.

Updated version of <unk> edition includes full compatibility with our multi storefront and tablets capabilities, which are really market leading.

Capabilities built into the BC core, but very importantly, we have now created a buyer portal.

Set of capabilities that we're getting a lot of feedback from agency partners in early adopt.

Adopter, saying that it is.

Really the best buyer experience on the market that has.

Fully customized purchasing experience.

The.

The region the industry vertical and the needs are basically deliver into the buyer.

They can customers can pre set prices and shopping lists for their individual company purchasers incorporate configure price quote into it.

And then have easy reordering, so it's a super slick.

Very <unk> like user interface, but meets all the complex needs of BTB buyers. We think it's a game changer. We think it's the best on the market and we're optimistic that there will be a lot of excitement in the industry, our customers and agency partners take a close look.

Thanks for the question.

And then if I could just follow up with one more quickly can you speak a little bit to the pipeline for new deals comparing to last quarter.

What the trajectory for that is looking like moving forward.

Yes.

Go ahead, Brian .

Alright.

Yeah, I can say through Q1 and into Q2.

Our pipeline for enterprises.

20% higher than it was.

Last year I'd also say month, one of Q2.

<unk> has been stronger than one of Q1, but when we look at the pipeline for enterprise opportunities.

Really we're seeing strength in mid market and we're really starting to build pipeline in those large enterprise opportunities feedback from the launch of <unk>.

<unk> this week.

Overwhelmingly positive with.

Strong presence had BTB online, where we got a ton of great feedback and deal registrations from really large prospects and partners. So.

With that launch we expect that pipeline to continue to grow and once we factor in some of the longer sales cycles, we see we feel pretty confident in the reacceleration that were.

Forecasting and planning for in the second half of this year.

Great I appreciate the color. Thank you.

Yeah.

And the next question will be from Josh Baer from Morgan Stanley . Please go ahead.

Great. Thank you for the question I was just hoping to get your take on Shopify is commerce components.

On the one hand completely validates your open source strategy on the other hand, just wondering how you think or if you think it changes the commerce's competitive environment.

I don't want to comment on their product I will comment on ours, we've been doing hatless and composed of all since our first major customers, including Harvard business Polishing went live in 2016, there is still with US proud to serve them. We were the second platform to enter the <unk>.

Alliance, which is.

Basically an alliance of the leading.

Advocates and providers of <unk> nurse Im on the board of the <unk> Alliance and its a big part of our business we serve thousands of.

<unk> and <unk> customers across all popular front end frameworks and content management system. So it's a very material part of what we do but it's also.

Consistent with our open commerce philosophy and commitment from the very beginning it is not a new way of doing business for us that's a natural competitive advantage that extends off our commitment to openness and why are we still committed to open.

Because that is what enables us to best serve the world's complex midmarket and enterprise businesses and instead of telling them Hey, Here's how we prescribe that you do ecommerce we have the best API and about flexibility for you to optimize your stack around your business.

Requirements. So we're really committed to it we're a leader in tablets and composed of all ecommerce have been recognized as such for years and believe.

More than any other platform, we take the headache away from composed by <unk> is a more complex approach for businesses that requires more coordination across individual components and there is no platform that makes that easier to accomplish.

Across a wide range of front ends and frameworks and commerce.

Perfect. Thank you I wanted to dig in a little bit on the comments on the stronger pipeline.

Is there any way to.

Give more context around how strong is lead generation and qualified leads that are moving into the pipeline versus.

So.

Just like the pipeline could be getting bigger as a function of elongated sales cycles.

How did those two or how did those all work together. Thank you.

Yes.

I would characterize it is high.

High quality I think the quality is getting better as we go.

But also remember where we get a lot of our leads from and when you think about the initiatives that we're really leaning into and getting great demand signals from whether it's omni channel or b to B a lot of those leads are coming from our agency partners Agency in Tech partners are really embracing the differentiation.

That we have around Omnichannel <unk>.

Every month that goes by we're seeing.

Even larger and larger opportunities come our way.

And Brian if you want to add anything.

Alright, great. Thank you got it.

Okay.

Thank you and the next question will be from Brian Peterson from Raymond James. Please go ahead.

Hi, Thanks for taking my question. This is John on for Brian I Am curious if you maybe speak to the growth algorithm here. So enterprise IRR growth. It's been really good with outpaced enterprise accounts curious if you can maybe quantify how the growth has been split between land versus expand are you seeing new merchants come on the platform, maybe larger than you expected and in a similar vein.

I realize we're early in the year, but how is like in our enterprise enter our track versus your expectations and then I have a quick follow up.

Yes, I would say definitely.

Larger in Q1, and we expect that trend to continue.

We have opportunities for sure on expansion and we're working towards that especially around feet and omics, there's definitely ways for us to really improve our cross sell motions with economics, and we're doing that not just in the U S. But in all of our markets, where we have go to market teams and I'll say the reception around <unk>.

And omics in that offering in markets like EMEA and APAC has been incredibly strong so.

Higher quality, probably much larger in terms of opportunities and in terms of cross sell I think that's just.

A big opportunity in front of us.

Thanks, that's great color, there and then I'm curious on social commerce.

This has been appointed emphasis in the past I think you announced a snap integration back late last year can you maybe give any insights into sort of attach rates, you're seeing there increased conversion or <unk> uplift from merchants that integrate e-commerce with social networks like snap and better. Thank you.

We don't have statistics to share, but I would really emphasize the takeaway that for a business wanting to do social commerce, and especially do what the optimal way with <unk>.

Purchasing enabled on those platforms are to do it across many platforms feed anomic is the best solution on the market. It has incredible integrations and the Facebook Instagram into snap into Tech talk.

All of the leading channels and what it less businesses do is not just.

Integrate and optimize their products for sale in those channels, but also track.

The ordering and.

The inventory across the channel. So they can have one view into orders and one view antitrust settlement. So if economics is a market leader in this area, especially in the enterprise segment and our prime partner of each of the major social networks.

Thank you very much.

And the next question is from Daniel Reagan from Canaccord Genuity Genuity. Please go ahead.

Hey, guys. Thanks for taking my question.

Maybe I'll start with <unk>, so it's great to see stabilization in non enterprise retail accounts.

I'm wondering are we out of the woods yet do you think what are your expectations in terms of retail accounts being an acreage of growth from here, especially as we think about the full pricing effects hitting in June .

Yes, it's a great question.

Listen I think we're very pleased with the cohort health.

Non enterprise segment like.

Mike You mentioned I think we're going to know a lot more in early June .

Again, our expectation and assumption that is that most folks are going to want to keep their prices same. So we'll probably get a real benefit for.

Our cash flows, but if that mix changes I think.

We'll have a positive lift to revenue, but in terms of like the health of that cohort I would say that we feel like it's stronger today than we thought it was even three months ago.

Think that with the pricing actions, we took in with what we're seeing we have a chance of that being even better as the year progresses, but we're really going to have to see how that impacted that June 1st rollout goes.

We'll know a lot more but the next time we speak.

Excellent.

And then maybe just one for Brent.

As we think about the setup for 2023 two weeks in the second half, we're expecting non enterprise to be less of an anchor to growth.

And then the mounting enterprise pipeline from the shift in resources should hopefully begin converting.

Got it at a higher level. So my question is where would you say you are compared to your initial expectations. When you set out on this strategic pivot.

And then how are you thinking about close rates of the enterprise pipeline in the second half thanks very much guys.

I think we are on track.

The changing mix in our business.

The impact on gross new sales.

Then the <unk> of that is roughly in line with what we anticipated.

We.

No.

<unk>.

Our platform.

Has really strong competitive advantages relative to our competition in the enterprise segment, but historically thats not where we spent the lion's share of our marketing and lead generation and so we have a lot of.

Confidence that al.

Our enterprise marketing and sales generation motions gain maturity.

We're doing more field marketing in Q1 than we've ever done before by a long shot.

Really getting the word out our agency tech partner ecosystems are rallying around that because they like the enterprise business a lot more to in general and so we're we're quite optimistic about how things can pulled out not just in the second half of this year, which is when we start to see the maturing, but especially in 2020.

For us the only part of the.

The.

Whole equation that we wish were healthier.

Especially in the Americas right now is the sale.

Cycle time for enterprise in the U S.

As mentioned, we're seeing mid market deals.

We continue to close at a normal pace, but the large enterprise deals are still being delayed and the relatively soft economy right now and at some point, that's going to come around and return to normal we look forward to that because that will be an additional accelerator, though we.

It really didn't build that expectation into our plans rates too.

Thank you and the next question will come from Mark Murphy from Jpmorgan. Please go ahead.

Okay.

Thanks. This is already on for Mark Murphy.

First question you guys said that Youre still aiming for the 20% growth for enterprise IRR. This is kind of looking at a little bit of deceleration in the customer adds being about 42 for that category.

What is the overall confidence that you still are you still feeling the same way or has that changed either direction.

No I mean, we're feeling pretty confident that we'll be able to deliver that again, it's 20% for the full year.

Some quarters could be slightly less sensitive to be more but for the full year, we feel really good about our ability to deliver that.

And also I will say that I think that we're on track to exit this year.

Really with a quarter, where we are.

Positive and adjusted EBITDA margins will be in the high <unk> and we will have we are accelerating growth rates for both subscription and <unk> as we exit this year.

All of that is tied to our confidence to deliver those growth rates in enterprise.

Great. That's really good to hear and then just one quick last one in terms of linearity anything change.

Q4 into Q1, and if it did is that something that you expect to continue through Q2 and beyond.

Yes.

The only thing is what we called out was the path to profitability, we had some onetime items in Q1 when.

When you factor that in I think we've got that.

Kind of past nice path to that breakeven point by the end of Q3.

I'll also mention <unk> we.

We had some onetime items in our base period.

Remove that <unk> would have been kind of in line with U S E Commerce growth and we're past those I think onetime items into Q2, if you look at Q2 last year.

The base period effect wont be there this coming quarter.

So anyway, just wanted to call that out for you in terms of trends.

That's helpful.

Thank you and once again, if you have a question. Please press Star then one.

Your next question will be from Ken Wong from Oppenheimer <unk> Company. Please go ahead.

Hi, Thanks for taking the question with E&P on for Tim.

<unk> has been increasing.

Quarter over quarter at Splunk needed here in Q.

So any color you can provide on why that accrued or how we should think about the cadence of the Microsoft going forward.

Yes, it's interesting since our non enterprise segment performed better than we thought.

That mix.

We remain kind of at that 72% Mark had it kind of played out like we thought enterprise would have been roughly 73% I still think throughout the year that mix is going to trend up.

To the high <unk> and I.

I think Q1 was just a matter of the non enterprise are performing much better.

Yes.

And ladies and gentlemen that concludes our question and answer session I would like to turn the conference back over to Glen Ellen President.

Chairman for closing remarks.

Thanks, everybody for joining that wraps up the call for Q1 quarter that we feel very good about most particularly the strong progress that we made toward our goal of achieving positive adjusted EBITDA in Q4, while continuing to.

Successfully execute a organizational focus and growth in the mid market and enterprise segments. So we feel good about the quarter and we look forward to our next conversation a quarter from now till then thanks.

Thank you.

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

Yeah.

[music].

Yes.

Sure.

Okay.

Yes.

Okay.

[music].

Yes.

Sure.

Yeah.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

[music].

Okay.

Yes.

Okay.

Sure.

Yes.

Okay.

Sure.

Yes.

Sure.

Okay.

Yes.

Okay.

Yes.

Thanks.

Okay.

Sure.

Okay.

Yes.

Sure.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

[music].

Yes.

Okay.

Yes.

[music].

Yes.

Sure.

Yes.

Okay.

Sure.

[music].

Okay.

Yes.

[music].

Okay.

[music].

Yes.

Sure.

Yes.

Please.

Okay.

Yes.

Thank you.

Yes.

Okay.

Yes.

Sure.

Okay.

Sure.

[music].

Yes.

Okay.

Yes.

Okay.

[music].

Okay.

[music].

Ladies and gentlemen, thank you for standing by and welcome to the Big Commerce first quarter 2023 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.

Please be advised that today's conference is being recorded.

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

Good afternoon, and welcome to Big Commerce first quarter 2023 earnings call, we will be discussing the results announced in our press release issued after today's market close with me are big Commerce, as President CEO , and Chairman, Brent Bella and CFO Robert Alvarez today's call will contain certain forward looking statements, which are made pursuant to the safe Harbor provisions.

Of the private Securities Litigation Reform Act of 1095.

We're 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 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.

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

Thanks, Daniel and thanks, everyone for joining us on today's call I will walk through our first quarter results and share my perspective on our progress thus far in 2023.

I will later share greater detail on our financial results and conclude the call with a discussion on updated guidance.

Let's discuss the details.

In Q1 total revenue was $71 $8 million up 9% year over year, our Q1, non-GAAP operating loss was $6 4 million.

Which was well ahead of our quarterly guidance and a strong step toward our goal of reaching breakeven on an adjusted EBITDA basis in Q4 of this year. We concluded Q1 with an annual revenue run rate or <unk> of $316 7 million up 13% year over year that represents a sequential growth in IRR of.

Five zero million.

Enterprise account <unk> with $228 $8 million.

Up 21% year over year enterprise accounts now represent slightly over 72% of our total company <unk> on our previous earnings call. We noted that we are aiming for enterprise <unk> growth in 2023 at or above 20% year over year, which we believe will be offset by non enterprise account <unk>.

Contraction in the mid single digits.

Q1 results met this goal non enterprise account <unk> was $87 9 million up slightly on a sequential basis compared to Q4 and down slightly year over year as expected as we take action to build a scalable more self serve small business segment I would like to elaborate on a few areas in particular that demonstrate our pre.

<unk>.

Before I elaborate on how we are responding to these dynamics I'd like to clarify what we mean by enterprise accounts and the parts of the market. We serve we sell for different ecommerce planned types of merchants. The first three standard plus and pro are collectively our essentials plans geared towards small businesses are.

And online GMT per year are large enterprise segment, we consider any account buying at least one enterprise plan and enterprise account and we include select financial metrics from these accounts in our quarterly results.

As a result, our enterprise account metrics reflect a mixture of mid market and large enterprise segment merchants.

Finally, we are seeing strong success with feed and Omics, which offers our customers incredible ROI with fast time took merchant value and also high ROI for Big Commerce. All merchants are actively seeking ways to increase revenue and improve their return on AD spending and feed genomics can help merchants running on many different platforms.

<unk> strong results without the need to re platform.

The genomics continues to win accolades and customer satisfaction and deepen big Commerce as relationship with key partners and merchants, 30% of the top 1000, Internet retailers Trust <unk> to optimize their product catalogs and expand their market reach in Q1 <unk> issued their spring grid reports that measure.

Overall customer satisfaction and market presence.

<unk> was in the leadership position and three E Commerce software categories multichannel retail catalog management and online marketplace optimization tool.

<unk> also continues to support merchant adoption of key global channel program, including Macy's Dot Com and that is Facebook and Instagram shop ads and tech top shop.

Our platform and Omnichannel products drive scalable cost effective growth for our merchants. We are confident that we will continue to broaden our mid market base, even as we invest in expansion further into the enterprise segment as well.

We also saw healthy stabilization in our non enterprise our retail accounts. While this portion of our business was down 4% year over year that showed sequential growth for the first time since Q4 2021, as we have shifted focus towards more established small businesses adjusted plan pricing to encourage prepayment and decrease the volume.

And depth of sales promotion, we have seen improved net retention results in this portion of our business and encouraging signs of stabilization and.

Our Q1 results reflect progress on our path towards profitability to be clear adjusted EBITDA breakeven in Q4 is not a finish line.

<unk> line in our business from which we will drive profitable growth for our shareholders Q1 was a strong step toward that goal.

They offer significantly higher long term value. These merchants have impressive retention rates greater cross selling potential and healthier unit economics. There are also more likely to adopt technologies and omnichannel integration that helps sustain and accelerate their growth, which drive significant revenue for us.

These merchants are central to our strategic and financial success, and we will continue to balance the need to invest in winning these segments, while also improving profitability and cash flow.

Our average revenue per account or ARPA for enterprise accounts was a little over $39000 in Q1, which was up steadily from 35000 in Q1 2022 and $32000 in Q1 2021, the consistent growth we have seen in this metric reflects our progress moving up.

Up from our historical base in small business.

And to the mid market segment and now early progress in the enterprise segment as well.

This move into enterprises, succeeding as is evidenced by merchants such as Karyology cons home, plus and Harley Davidson launching with us in Q1 as I'll discuss more later and also by merchants such as Coldwater Creek picking us as our new ecommerce provider.

This go to market focus on the mid market and enterprise segment does not mean that we are walking away from small business merchants, we continue to acquire and serve small businesses on our platform and we are committed to helping them build their business with the commerce, but we have optimized our go to market approach to small businesses to be more self serve with <unk>.

Sales and marketing demand generation investment the goal is to build a small business segment with a scalable LTV to CAC are recent standard plus and pro pricing action and prioritization of annual prepayment is an example of the adjustments we are making to build this segment into a profitable and more scalable business.

Our ecommerce and Omnichannel solutions are designed to be flexible <unk> and scalable providing unmatched versatility for both <unk> and <unk> clients alike.

Earlier this week, we announced the latest update the <unk> addition, our comprehensive suite of BW functionalities that enhance the online selling experience for suppliers manufacturers distributors and wholesalers.

The new release introduces multi storefront compatibility a brand new BW buyer portal and <unk> support.

<unk> addition, functionality to allow merchants to manage quotes invoices and buyer approval workflows.

<unk> additions opened and intuitive solution transforms the way sellers and buyers do business, turning legacy <unk> practices into a modern agile and nimble digital operation with a Composedly foundation ready to scale with the business.

These enterprise grade capabilities provide <unk> brands with a flexibility and customization they need to elevate online selling experiences launch new brands and expand into new regions.

In addition to strengthening <unk> addition, the ecommerce continues to release features and product enhancements that resonate with our target market in March we launched buy online pick up in store functionality also known as click and collect giving merchants more options to meet shoppers', where they are and provide frictionless shopping experiences.

Previously only available for enterprise merchants, we expanded our multi storefront offering in Q1 as a self service feature accessible to small and midsize big Commerce merchants running on our retail plants to ecommerce merchants of all sizes now have the advantage to manage multiple storefronts to grow sales in new regions streamline operations for multiple brands and cut.

Various customer segments to drive global growth.

In Q1, we announced a new strategic partnership with WP 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 trend and purchasing data.

Given the attractiveness of the joint bid commerce and feeder gnomic value proposition to enterprise brands, we continue to be focused on engaging activating and enabling many other global agency partners to serve mutual merchants with these market leading capabilities across advertising marketplace and branded commerce channels.

We also announced a new global partnership with Info track systems, a leading provider of commission software and distributor tools for direct sales companies. The new info tracks powered by Big Commerce solution will give thousands of direct selling customers access to more innovative and sophisticated commerce capabilities, including the ability to launch.

Omnichannel sales strategies using feed and Omics. In addition, tht ingenuity, the complete Commerce division of Tht, PLT and e-commerce intend to develop a U S and EMEA focused complete commerce solution that would bring together big Commerce is composed of all ecommerce storefront with Ingenuities fully integrated technology.

<unk> had operational capabilities.

Earlier in Q1 in partnership with Amazon, We launched the buy with Prime that forbid commerce, a new self service integration for U S merchants to easily enable buy with prime on their big Commerce storefront with no coding required with shopping benefits that millions of prime members know entrust, including fast free shipping by with.

Prime has shown to increase conversion by 25% on average.

In Q1, we continued to grow our roster of leading notable brands and merchants on our platform innovative health and beauty brand Karyology launched a beautiful new storefront leveraging our netsuite ERP partnership to conduct urology store with its ERP for product and inventory data thinking.

<unk>, plus a leading retailer of furniture appliances, and electronics with more than 160 stores across 15 U S States.

Recently launched on Big Commerce, using a natively hosting stencil storefront and accustomed commerce checkout, taking advantage of integrations with custom financing solutions and location based pricing.

Tottenham Hotspur one of the world's top football club is leveraging big Commerce platform to further enhance its popular online stores capabilities and sand experience not only at home in the U K, but also in APAC and North America, where the club has a significant and growing fan base.

Also avalere a global leader in door opening solutions used in many of the world's blocks and security installations is revolutionizing its customers' experience by integrating its broad product catalog and using our <unk> addition solution to customize the shopping experience.

Iconix motorcycle brand Harley Davidson launched a new line of lifestyle apparel utilizing big Commerce API is to build a full suite of custom integrations with backend system and leveraging that commerce is dental framework to build Ashish front F <unk>.

<unk> a worldwide leader in Diamond sourcing selection education and value launched a new store with a headless digital experience front end and big Commerce backend to deliver a seamless intuitive shopping experience, including custom ring builder options.

<unk> also signed many new customers on the quarter as well with highlights, including Chico's 10 del Rappee TN damia as well as signing new agreements with existing big commerce customers such as solo brands <unk>.

Hauser and badgley Mischka among many others.

To conclude our 2023 plan is focused on three primary goals first continued topline growth in the Midmarket and enterprise segments.

Breakeven in Q4 on an adjusted EBITDA basis, and third further efficiencies in our business to improve operating cash flow. We are laser focused on delivering these commitments.

Set up our business for strong profitable growth in 2024, we are operating from a position of strength in the mid market segment and building momentum in the enterprise segment as well, we have a winning product and a growing market with a diverse partner ecosystem invested in our success. We are encouraged by results. Thus far in 2023 and we are.

To deliver healthy returns to our shareholders.

Next I'd like to turn it over to <unk> to discuss our financial results in more detail and conclude with our updated guidance for Q2 and 2023.

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

During my prepared remarks, I'll cover our Q1 results in detail provide additional commentary on some of our key goals for the year and finally conclude with updated guidance.

In Q1 total revenue was $71 8 million up nine.

<unk>, 9% year over year.

Subscription revenue grew 12% year over year to $53 8 million, while partnering services revenue or <unk> was down 1% year over year to $17 9 million.

In the Americas was up 7%.

EMEA revenue grew 27% and APAC revenue was up 1% compared to prior year.

As I mentioned on the last earnings call. We built our 2023 financial plan, assuming conservative net bookings growth, particularly in the front half of the year.

We also assume further moderation in consumer spending, which would impact volume driven pricing upgrades and <unk> <unk>.

Q1 results were largely in line with these assumptions and I am encouraged by the progress that we showed in the quarter.

I will now review our non-GAAP ppas.

Argued at $316 7 million up 13% year over year that.

That represents a sequential growth in total <unk>.

$5 million.

Enterprise account <unk> was $228 8 million up 21% year over year.

Subscription <unk> was up $5 1 million versus Q4, and up 15% year over year as.

As we mentioned last quarter, we are aiming for enterprise <unk> growth in 2023 at or above 20% year over year.

Which we believe will be offset by non enterprise account a contraction in the mid single digits.

Q1, non enterprise results exceeded our expectations.

We believe improving cohort health and recent pricing changes will offset the degree of contraction risks we outlook at the beginning of the year.

At the end of Q1, we reported 5828 enterprise accounts up 463 accounts or 9% year over year.

ARPA or average revenue per account for enterprise accounts was $39260.

Up 11% year over year.

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 on a non-GAAP basis.

Q1 total cost of revenue was $16 3 million down approximately $1 million sequentially from Q4, Q1 total operating expenses were $61 9 million down $2 $7 million sequentially from Q4.

Q1, gross margin was 77% up 192 basis points from the previous year, while gross profit was $55 5 million up 11% year over year.

This gross margin expansion is notable in that we drove healthy margin expansion, even low growth and high gross margin <unk> was challenged.

We're making deliberate decisions on automation staffing and other cost drivers to drive sustainable margin improvements overtime.

In Q1 sales and marketing expenses totaled $31 2 million up 2% year over year.

This represented 43% of revenue down 297 basis points compared to last year.

Search and development expenses were $17 3 million or 24% of revenue down 366 basis points from a year ago and down $1 $7 million sequentially from Q4.

General and administrative expenses were $13 4 million or 19% of revenue down 121 basis points from a year ago.

In Q1, 2023, we reclassified certain costs that we had previously included in general administrative expenses and sales and marketing expenses.

Maintained consistency between comparable periods.

Re class $1 $5 million from general and administrative expenses and sales and marketing expenses for the period ending March 31.

2022.

This change in classification had no effect on the reported results of our operations or cash flow.

In Q1, we reported a non-GAAP operating loss of $6 4 million.

A negative 9% operating margin.

Adjusted EBITDA was negative $5 5 million to negative seven 6% adjusted EBITDA margin.

Compared to a negative $11 6 million and a negative 17, 5% adjusted EBITDA margin in the prior year.

non-GAAP net loss for Q1 was negative $4 9 million or negative <unk> <unk> per share.

Compared to negative $13 2 million or negative <unk> 18 per share last year.

We ended Q1 with $283 5 million in cash cash equivalents restricted cash and marketable securities.

For the three months ended March 31 2023.

Operating cash flow was negative $20 8 million compared to negative $22 million a year ago.

We reported free cash flow of negative $21 9 million or negative 31% free cash flow margin.

This compares to negative $23 3 million and a negative 35% free cash flow margin in Q1 2022.

Q1 operating cash flow results included a number of one time impacts that contributed to the difference between cash flow and our non-GAAP operating loss results.

These differences included approximately $4 million between severance related to our December restructuring and normal year end bonus payments and $6 million in Q1 revenue from our.

Payments technology partner, which was paid in early April and will be reflected in our Q2 operating cash flow.

Apart from these timing related impacts operating cash flow would have been between negative $10 million to $11 million on a quarter.

I would also note that Q1 is the quarter in which we have no loans prepaid software obligations as well, which also contributes to the difference between operating cash flow and the underlying operating results during the period as well.

As Brent mentioned, our 2023 plan is focused on three primary goals first we are investing to continue to win in the mid market and enterprise segments.

Topline revenue results in net bookings in Q1 were a positive first step.

We saw strong growth in the mid market segment and feed and Omics and we are encouraged by the sales pipeline heading into Q2.

We continue to see strong win rates in our key segments as well.

Second we are operating with discipline to reach breakeven by the end of Q3 on an adjusted EBITDA basis.

And remain confident in our ability to deliver positive EBITDA for the full quarter in Q4 of this year.

Q1 results reflect our continued progress.

<unk> indicated that we are on track to meet this goal we.

We are also highly focused on driving operating leverage further as we scale the business.

One important item to note with respect to GAAP net losses out the August 2021.

$145 million.

Position of economics is accounted for in our financial statements.

Our Q1 net loss includes over $6 million in expenses from third party acquisition costs and intangible asset amortization from that transaction, we expect.

The majority of third party acquisition costs to be fully recognized by the end of Q2 of this year.

So the evaluation of potential acquisitions and partnerships and equity grants to employees.

Third we are taking steps to prioritize cash flow improvements to drive healthy consistent cash flow generation.

As I mentioned before apart from onetime impacts in the quarter.

Operating cash flow would have finished between negative $10 million to $11 million.

We are taking numerous actions to drive cash flow improvements.

Such as prioritizing advanced billing on new subscriptions investing in our quote to cash systems and processes.

Maintaining tight discipline around accounts receivable and collections.

We will see the full effect of our February pricing action on our base of customers and retail plans beginning in June . So we expect to see further improvements in operating cash flow with annual payments from our base of merchants in June through the end of the year.

We believe these initiatives will ultimately yield a better customer experience higher deferred revenue and long term improvements in DSO as well.

I'll now conclude with an updated view on our outlook and guidance for the second quarter and full year 2023.

For the second quarter, we expect total revenue in the range of $72 1 million to $74 1 million, implying a year over year growth rate of 6% to 9%.

Note that we expect subscription revenue in <unk> to grow in the mid single digits similar.

Similar to the growth reflected in our guidance range for the quarter.

For the full year 2023.

<unk> total revenue between $3 3 million to $311 million.

Relating to a year over year growth rate of approximately 9% to 11%.

For Q2, our non-GAAP operating loss is expected to be between $5 5 million and $9 5 million.

For the full year, we expect non-GAAP operating loss between $14 million and $20 million.

While we are encouraged by progress thus far in the year, we intend to remain conservative in our guidance.

Just on the macroeconomic uncertainty in our industry.

We believe this is a reasonable approach at this time.

Note that the midpoint of this guidance range for Q2, non-GAAP operating loss is sequentially down slightly compared to Q1 results.

This was primarily due to some onetime expense benefits in Q1 and select investments planned for Q2.

Let me elaborate on this just for a moment.

Q1, non-GAAP operating loss of approximately $2 1 million of onetime expense benefits to the quarter from two primary sources.

First.

We also plan to make small investments in select initiatives in sales and marketing in Q2.

To capitalize on opportunities we are seeing in the marketplace and continue to build a strong sales pipeline for the back half of the year.

Apart from the effect of the Q1 items and a small investment increase in Q2.

Our non-GAAP operating loss outlook at the midpoint would have been sequentially better as we work towards breakeven by the end of Q3.

While we may make additional changes or investments as the year progresses.

Plan to keep spending relatively flat across the remainder of the year.

Our aim is to reach breakeven in late Q3 with full quarter positive adjusted EBITDA in Q4.

We remain incredibly bullish about the potential of this business, we have the product market opportunity and partner ecosystem to build our presence further in the mid market and expand upmarket into the enterprise segment.

We have many paths for growth, including BTC, BTB, Composedly commerce, and headless international growth.

Cross sell with our existing customers and omnichannel expansion across merchants using both big Commerce and other e-commerce platforms.

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

Operator.

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchstone.

Each are using a speakerphone please pick up your handset before pressing maturities.

To withdraw your question please.

Sure.

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

Okay.

Question will come from Terry Tillman with Charles Please go ahead.

Oh, great. Thanks. This is actually Connor bestseller on for Terry I appreciate you taking the questions.

Maybe just to start I would love to kind of dig deeper into the progression of speed and omics. It sounds like it's continued to do really well with some nice wins with some large versions I'm. Just curious if you can share anything directional on what the growth expectations are upbeat dynamics and maybe the size of that business versus fixed through the hole and then also maybe what are the puts and takes on the sales cycles here.

But what is the typical sales cycles look like for sito.

Yeah I'll jump in here.

As we always thought <unk> would grow at or above the pace of our enterprise business.

I think in terms of performance they've definitely done that and we've also integrated fee dynamics in a lot of different ways with the launch of our Omnichannel certified partner program. Our agency partners Tech partners have definitely embraced bean and Omics and we're seeing really great demand signals in term.

Interest from their merchants as highlighted with WP.

I think we are just now it really enabling our ecosystem.

<unk> dynamics across their base of merchants.

Whether they are on big commerce, or not and if you think about the selling cycle our go to market motions for.

E Commerce versus what <unk> does I think that.

New accounts gross new sales are strong.

Sales cycles are actually.

Less than our enterprise sales cycles, which is good and we couldnt be more excited and more bullish about Pete and omics going into this year.

Yes.

Great. That's really helpful. I appreciate the color maybe just quick follow up on international So just wanted to ask around the recent entries into Poland, Romania, India, a few others.

What did you see in these regions kind of gives you the confidence to invest there was that kind of partners pointed towards them or maybe just low hanging fruit in terms of being able to get in there with.

They opened south platform for some of the enterprise sellers there.

Yes clarify as we launch in these markets, we're launching a marketing presence not a head count.

Our focus.

Sales.

Our presence in those markets, we're relying especially on partners and organic traffic, but the reason we picked these markets is that they are among the very top performing markets in the world for us that did not already have their own dedicated country landing pages and website, so Poland, Romania had been top.

<unk> countries for us.

The middle East, particularly UAE top performing country for us and India as well, so putting now marketing presence in those countries, where we can better coordinate lead volume in conjunction with our best partners.

Really a ROI no brainer to help further accelerate growth in those countries. So the biggest thing is just organic preexisting business tells us that they are very attractive markets for <unk> commerce and of course, it helps as well that India. The.

UAE and South Africa can all be supported with English language website.

Great. Thank you.

Thank you and the next question will come from Rob Morelli from Needham <unk> Company. Please go ahead.

Hey, Thanks for taking my question on for Scott Berg here.

With this too.

Carry on with a question what's the pace of this new country entry with those recently announced expansions are there any other regions and markets that you see an opportunity in.

Nearby.

And the long term, absolutely, we really want to be.

Competing effectively.

Every country around the world in the long run where our differentiated open SaaS platform conserve a meaningful part of the market, but for this year priority number one is achieving.

Profitability on an adjusted EBITDA basis in Q4, so warehouse.

In prior years, we had full market entries that included.

A meaningful build out a sales solution ing business development in countries that we entered this year, we're focused on those markets that were already established and not adding or.

Not really adding head count into new markets. What were excited to see is just how much we can accelerate.

Countries, where we don't have a big <unk>.

Human presence with marketing support light these five and if that works then conceivably there are quite a few other countries around the world that we will look to two.

<unk> 2020 core to expand in a similar way thanks for the question.

I think the other thing I would add I mean, just while we're on the international topic in case nobody else asked about it. It was notable that if you breakout.

Growth rates for the various regions, we saw an increase in the quarter on quarter.

The year on year growth rate in Q1 relative to Q4 and all of our.

Non U S geographies APAC improved by 7% EMEA growth rate improved by roughly 5% non U S. Americas by roughly 12%. So it was very strong quarter and strong momentum continuing around the world for us.

And the next question will be from Parker Lane from Stifel. Please go ahead.

Yeah, Hi, guys. Thanks for taking the question.

Brian I know self serve small business is a smaller part of the business from an IRR perspective, but with the changes <unk> been making what are some of the signals we see from this channel.

And what are your growth expectations, there going forward under this new model.

The price change has not had a.

Seemingly negative impact on volume of.

New business coming on our small business plan.

Since we turned off the heavy marketing and sales.

In Q4, so what we are seeing is a very positive trend that.

Higher percentage of folks signing up for the plans are picking annual prepay.

But the price doesn't change relative to before and of course those picking monthly are now paying.

Meaningfully more and so we get the benefit on ROI from the small business segment on bolt ons where bolt.

Making more money.

Each new sign up and getting more upfront prepayments, where we don't get that and we're spending less money to acquire the plan. So the business is much healthier on an LTV to CAC standpoint than ever before and so we're very encouraged by that.

As we as we look to continue to grow at around the world.

Got it understood and then touching on multi storefront real quickly.

So that you expanded that.

The enterprise merchants.

Small and medium sized merchants.

When I think about the enterprise is obviously a lot more complexity there given their size and scale.

How do I think about the addressable opportunity in the adoption patterns, you're seeing in multi store front outside of that enterprise market, where you have where you brought this tool to.

Set of integration etcetera, that's a lot more work so we make it easier to add additional brands and sub brands additional geographies <unk> additional segments like B to B, plus b to C than any other platform and have democratized. It all the way down a nice thing is that each time, a small business.

Click the button and adds another storefront.

Their revenue to us goes up very substantially relative to what they were paying before so yes.

It's real enterprise functionality of great benefit even to small businesses with a value for us.

Thank you for the customer in a big revenue new boost for US every time, it's chosen.

Understood. Thanks for the color I appreciate it.

And the next question is from Raimo <unk> from Barclays. Please go ahead.

Hi, This is <unk> on for Raimo. Thanks for taking the question could you speak a little bit to what youre seeing with the new changes in the <unk> segment rollout.

Any increased traction or early feedback based on these new functionalities. Thank you.

Yes, you are referencing the updated release for our <unk> addition, that only went out a couple of business days ago and there are.

Very few product releases in our history that are as exciting as this one so just to let everybody know.

The new.

Updated version of <unk> edition includes full compatibility with our multi storefront and tablets capabilities, which are really market leading.

Capabilities built into the BC core, but very importantly, we have now created a buyer portal.

Set of capabilities that we're getting a lot of feedback from agency partners in early adopt.

Adopters, saying that it is.

Really the best buyer experience on the market that has.

Fully customized purchasing experience.

The.

The region the industry vertical and the needs are basically deliver into the buyer.

They can customers can pre set prices and shopping lists for their individual company purchasers incorporate configure pricing quote into it.

Ken have easy reordering, so it's a super slick.

Barry B to C like user interface, but meets all the complex needs of BW buyers. We think it's a game changer. We think it's the best on the market and we're optimistic that there will be a lot of excitement in the industry as.

Customers and agency partners take a close look at.

Thanks for the question.

And then if I could just follow up with one more quickly could you speak a little bit to the pipeline for new deals comparing to last quarter.

What the trajectory for that is looking like moving forward.

Yes.

Go ahead, Brian .

I can say through Q1 and into Q2.

Our pipeline for enterprises, roughly 20% higher than it was.

Last year I would also say month one of Q2.

Ben is stronger than one of Q1, but when we look at the pipeline for enterprise opportunities.

Really we're seeing strength in mid market and we're really starting to build pipeline in those large enterprise opportunities feedback from the launch of <unk>. In addition, this week has been overwhelmingly positive with.

Strong presence that would be to be online, where we got a ton of great feedback and deal registrations from really large prospects and partners. So.

With that launch we expect that pipeline to continue to grow and once we factor in some of the longer sales cycles, we see we feel pretty confident in the reacceleration that we're at.

Forecasting and planning for in the second half of this year.

Great I appreciate the color. Thank you.

Yeah.

And the next question will be from Josh Baer from Morgan Stanley . Please go ahead.

Great. Thank you for the question I was just hoping to get your take on Shopify E Commerce components.

On the one hand completely validates your open SaaS strategy on the other hand, just wondering how you think or if you think it changes the commerce's competitive environment.

I don't want to comment on their product I will comment on ours, we've been doing hatless and composed of all since our first major customers, including Harvard business more thing went live in 2016, there is still with US proud to serve them. We were the second platform to enter the market.

Alliance, which is.

Basically an alliance of the leading.

Advocates.

Had less end composed of bulk customers across all popular front and frameworks and content management system. So it's a very material part of what we do but it's also.

Consistent with our open commerce.

Loss of fee and commitment from the very beginning it's not a new way of doing business for us that's a natural competitive advantage that extends off our commitment to openness and why are we so committed to open.

That is what enables us to best serve the world's complex mid market and enterprise businesses and instead of telling them Hey here is how we prescribe that you do ecommerce we have the best API and about flexibility for you to optimize your stack around your business.

<unk>. So we're really committed to it we're a leader in tablets and composed of all ecommerce have been recognized as such for years and believe.

More than any other platform.

Take the headache away from <unk> is a more complex approach for businesses that requires more coordination across individual components and there is no platform that makes that easier to accomplish.

Across a wide range of front ends and frameworks and the commerce.

Perfect. Thank you I wanted to dig in a little bit on the comments on the stronger pipeline.

Is there any way to.

Give more context around how strong is lead generation qualified leads that are moving into the pipeline versus.

So.

Just like the pipeline could be getting bigger as a function of elongated sales cycles.

How did those two or how did those all work together. Thank you.

Yes.

I would characterize it as high.

High quality I think the quality is getting better as we go.

That we have around Omnichannel <unk>.

Every month that goes by we're seeing.

Even larger and larger opportunities come our way.

Brian if you want to add anything.

Alright, great. Thank you got it.

Okay.

Thank you and the next question will be from Brian Peterson from Raymond James. Please go ahead.

Hi, Thanks for taking my question. This is John on for Brian I Am curious you can maybe speak to the growth algorithm here. So enterprise AOR growth. It's been really good with outpaced enterprise accounts curious if you can maybe quantify how the growth has been split between land versus expand are you seeing new merchants come on the platform may be larger than you expected and in a similar vein.

I realize we're early in the year, but how is like in our enterprise and our track versus your expectations and then I have a quick follow up.

Yes, I would say definitely.

Larger in Q1, and we expect that trend to continue.

We have opportunities for sure on expansion and we're working towards that especially around fee dynamics. There is definitely ways for us to really improve our cross sell motions with economics, and we're doing that not just in the U S. But in all of our markets, where we have go to market teams and I'll say the <unk>.

The reception around fee dynamics in that offering in markets like EMEA and APAC has been incredibly strong so.

Higher quality, probably much larger in terms of opportunities.

And in terms of cross sell I think that's just.

A big opportunity in front of us.

Thanks, that's great color, there and then I'm curious on social commerce.

It's obviously been a point of emphasis in the past I think you announced a snap integration back late last year can you maybe give any insights into sort of attach rates, you're seeing there increased conversion or <unk> uplift for merchants to integrate e-commerce with social networks like snap and better. Thank you.

We don't have statistics to share, but I would.

Really emphasize the takeaway that for a business wanting to do social commerce, and especially due at the optimal way with.

Purchasing enabled on those platforms are to do it across many platforms fee dynamic is the best solution on the market. It has incredible integrations and the Facebook Instagram into snap into Tech talk.

And all of the leading channels and what it less businesses do is not just.

Integrate and optimize their products for sale in those channels, but also track.

The ordering and.

The inventory across the channel. So they can have one view into orders.

And one view antitrust settlement, so Pete and Omics is the market leader in this area, especially in the enterprise segment and our prime partner of each of the major social networks.

Thank you very much.

And the next question is from Daniel Reagan from Canaccord Genuity Genuity. Please go ahead.

Hey, guys. Thanks for taking my question.

Maybe I'll start with <unk>, so it's great to see stabilization in non enterprise retail accounts.

I'm wondering are we out of the woods, yet do you think.

What are your expectations in terms of retail accounts being an acreage of growth from here, especially as we think about the full pricing affect hitting in June .

Yes, it's a great question.

Listen I think we're very pleased with the cohort health.

The non enterprise segment.

You mentioned I think we're going to know a lot more in early June .

Again, our expectation and assumption that is that most folks are going to when it keep their prices same so we'll probably get a real benefit for.

For cash flows, but if that mix changes I think.

We'll have a positive lift to revenue, but in terms of like the health of that cohort I would say that we feel like it's stronger today than we thought it was even three months ago.

And I think that with the pricing action, we took in with what we're seeing we have a chance of that being even better as the year progresses, but we're really going to have to see how that impacted that June 1st rollout goes.

We'll know a lot more but the next time we speak.

Excellent.

And then maybe just one for Brent.

As we think about the setup for 2020 328 in the second half, we're expecting non enterprise to be less of an anchor to growth.

And then the mounting enterprise pipeline from the shift in resources should hopefully begin converting.

Got it at a higher level so.

So my question is where would you say you are compared to your initial expectations. When you set out on this strategic pivot.

And then how are you thinking about close rates of the enterprise pipeline in the second half thanks very much guys.

I think we're on track.

The changing mix in our business the impact on gross new sales.

And then the quarter is <unk> of that is roughly in line with what we anticipated.

We.

No that.

Our platform.

He has really strong competitive advantages relative to our competition in the enterprise segment, but historically thats not where we spent the lion's share of our marketing and lead generation and so we have a lot of.

Confidence that al.

Our enterprise marketing and sales generation motions gain maturity.

We're doing more field marketing in Q1 than we've ever done before by a long shot.

We're really getting the word out our agency and tech partner ecosystems are rallying around that because they like the enterprise business a lot more to in general and so.

We're quite optimistic about how things can pulled out not just in the second half of this year, which is when we start to see the maturing, but especially in 2024.

The only part of the.

<unk>.

Whole equation that we wish were healthier.

Especially in the Americas right now is the sale.

Cycle time for enterprise in the U S. As <unk> mentioned, we're seeing mid market deals.

We continue to close at a normal pace, but the large enterprise deals are still being delayed and the relatively soft economy right now and at some point, that's going to come around and returned to normal we look forward to that because that will be an additional accelerator, though we.

Really didn't build that expectation into our plans rates too.

Thank you and the next question will come from Mark Murphy from Jpmorgan. Please go ahead.

Okay.

Thanks. This is already on for Mark Murphy.

First question you guys said that you are still aiming for the 20% growth for enterprise IRR, just kind of looking at a little bit of deceleration in the customer adds being about 42 for that category.

Is the level of confidence that you still are you still feeling the same way or has that changed the direction.

No I mean, we're feeling pretty confident that we will be able to deliver that again, it's 20% for the full year.

Some quarters could be slightly less sensitive to be more.

The full year, we feel really good about our ability to deliver that.

And also I'll say that I think that we're on track to exit this year.

Really with a quarter, where we are.

Positive and adjusted EBITDA margins will be in the high <unk> and we will have we are accelerating growth rates for both subscription and <unk> as we exit this year.

And all of that is tied to our confidence to deliver those growth rates in enterprise.

Great. That's really good to hear and then just one quick last one in terms of linearity anything change from Q4 into Q1 and if it did is it something that you expect to continue through Q2 and beyond.

The only thing is what we called out with the path to profitability, we had some onetime items in Q1.

When you factor that in I think we're we've got that.

Kind of past nice path to that breakeven point by the end of Q3.

I'll also mention <unk> we.

We had some onetime items in our base period.

Remove that <unk> would have been kind of in line with U S ecommerce growth and we're past those I think onetime items into Q2, if you look at Q2 last year.

Base period effect wont be there this coming quarter.

So anyway, just wanted to call that out for you in terms of trends.

That's helpful.

Thank you and once again, if you have a question. Please press Star then one.

The next question will be from Ken Wong from Oppenheimer <unk> Company. Please go ahead.

Hi, Thanks for taking the question. This is Nancy on for Tom.

Our mix has been increasing quarter over quarter. It was needed here in Q.

Is there any color you can provide on why.

Accrued or how we should think about the cadence of the Microsoft going forward.

Yes, it's interesting since our non enterprise segment performed better than we thought.

That mix.

<unk> kind of at that 72% Mark had it kind of played out like we thought enterprise would have been roughly 73% I still think throughout the year that mix is going to trend up.

To the high <unk> and I think Q1 was just a matter of the non enterprise are performing much better.

Yes.

And ladies and gentlemen that concludes our question and answer session I would like to turn the conference back over to Glen Ellen President.

Armen quick closing remarks.

Thanks, everybody for joining that wraps up the call for Q1 quarter that we feel very good about most particularly the strong progress that we made toward our goal of achieving positive.

Adjusted EBITDA in Q4, while continuing to successfully execute a.

<unk> focus and growth in the mid market and enterprise segment. So we feel good about the quarter and we look forward to our next conversation a quarter from now till then thanks.

Thank you.

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

Q1 2023 BigCommerce Holdings Inc. Earnings Call

Request a DemoDemo

CMRC

Commerce

Earnings