BigCommerce Holdings, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the BigCommerce fourth quarter and fiscal year 2021 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker, Daniel Lentz, Head of Investor Relations. Thank you. Please go ahead.

Good afternoon and welcome to BigCommerce's fourth quarter and fiscal year 2021 earnings call. We will be discussing the results announced in our press release issued after today's market close. With me are BigCommerce's president, CEO and chairman, Brent Bellum, and CFO, Robert Alvarez. Today's call will contain forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning financial and business trends, our expected future business and financial performance and financial condition, and our guidance for the first quarter of 2022 and the full year 2022. These statements can be identified by words such as expect, anticipate, intend, plan, believe, seek, will, or similar words. These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date. and we do not undertake any duty to update these statements. Forward-looking statements by their nature address matters that are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to the risks and other disclosures contained in our filings with the Securities and Exchange Commission. During the call, we will also discuss certain non-GAAP financial measures. which are not prepared in accordance with generally accepted accounting principles. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, as well as how we define these metrics and other metrics, is included in our earnings press release, which has been furnished to the SEC, is also available on our website at investors.bigcommerce.com. With that, let me turn the call over to Brent.

Thanks, Daniel, and to everyone who's joining us today for our fourth quarter and fiscal year 2021 earnings call. It was an exciting year for our team, and I'm proud of the incredible progress we've made since our IPO in the middle of 2020. On today's call, I will provide updates to our strategic plans, new and current priorities, and recap our notable achievements over the past year. I want to frame our progress against our key priorities and why RA and I are so bullish in about the investments we're making in this business. I'll begin the call with a brief review of Q4 and our 2021 full-year results. Overall, we had another outstanding quarter and year. Revenue increased at $64.9 million, up 50% year-over-year, including $8.4 million from feedonomics. Full-year 2021 revenue grew to $219.9 million, up 44% year-over-year. This represents the fourth consecutive year of accelerating revenue and subscription growth rates. Annual revenue run rate, or ARR, rose to $268.7 million, up 48% year over year. ARR for accounts with annual contract value, or ACV, greater than $2,000, was up 59% year over year to $237.2 million. Our enterprise segment, in particular, posted exceptional growth. ARR from enterprise accounts grew by 72% year-over-year to $172.9 million, and enterprise accounts accounted for 64% of our ARR as of December 31st compared to 56% in 2020. We posted a full-year non-GAAP operating loss of $22.8 million, which was an improvement of nearly 800 basis points in non-GAAP operating margin versus 2020. I would like to highlight our financial progress over the last year. We initially guided to full year revenue of $189 million to $191 million against a non-GAAP operating loss of negative $34.5 to negative $33.3 million in 2021. We finished the year at $219.9 million against a non-GAAP operating loss of negative $22.8 million. far outperforming our original expectations for both top-line growth and full-year operating leverage. On an organic basis, revenue finished at nearly $206 million, surpassing our original guidance by over 8%. To help guide you through how I view our current progress as a company, I want to discuss three specific areas in our business. The pillars of our company strategy, one of which is new that I will introduce today, how we are working to expand our monetization model in a manner congruent with those strategic pillars, and our progress against each strategic priority. We speak often with investors and partners about our first two strategic pillars, open SaaS and disruptive innovation. Our differentiated open SaaS technology approach combines the flexibility and customization potential of open source software with the performance, security, usability, and value benefits of multi-tenant SaaS. This combination helps businesses turn digital transformation into competitive advantage. Whereas our software conglomerate competitors attempt to lock customers into their proprietary suites, we focus on the configurability and flexibility of our open platform, enabling each business to optimize their e-commerce approach based on their specific needs. Our next strategic pillar, disruptive innovation, is the business strategy to extend up market propelled by an ever higher performing product at a lower total cost of ownership than established incumbents. Our R&D efforts build innovative technology that enables high-end merchants to expand faster and further at a much lower cost, while also providing enterprise functionality to the small business base that allows them to grow big without ever having to replatform. Today, I would like to introduce our third and newest strategic pillar, commerce as a service. Commerce as a service is an umbrella term we use to describe our ability to enable technology and agency partners to create and sell customized commerce solutions powered by our platform technology. Commerce as a service encompasses many different use cases and demonstrates the composability and configurability of our platform, not just for merchants, but also for partners who can package and distribute BigCommerce's platform capabilities in unique ways. In Commerce as a Service, either the core commerce platform or integrated components of commerce capabilities are powered by BigCommerce. In short, Commerce as a Service enables partner-driven commerce anywhere. There are a wide range of Commerce as a Service partnerships already in market and in development. I'll highlight a few that have been publicly announced. Our partnership with Wine Direct is an example of tailoring commerce to a category vertical, in this case wineries, served by Wine Direct with commerce powered by BigCommerce. Our partnership with Nuoxatis is an example of integrating commerce powered by BigCommerce into the leading European fulfillment and service capabilities of the CMA-CGM group. A third example is how partners such as Unbound Commerce in the U.S. and J Mango in Europe create commerce-enabled mobile apps powered by BigCommerce. Commerce as a service has grown organically thanks to pull from our partners as they have sought to use our Open SaaS platform to complement and enhance their existing applications or services or to modernize and replace their legacy commerce offerings. We believe this approach is unique to BigCommerce as an Open SaaS platform. As we have often said, we aim to empower our ecosystem, not compete with it. With Commerce as a Service, partners can leverage the dedicated investment we've made in building the world's best open e-commerce platform and couple that with their unique use cases and competitive offerings without concern that we would vertically integrate and compete outside of our core e-commerce platform functionality. We are incredibly excited about the growth this offers to our merchants and partners. Now that we've covered our three strategic pillars, I'd like to address our efforts to expand our monetization model in ways congruent with those pillars. In 2021, we added M&A to our arsenal of growth levers. Feedonomics, our first acquisition as a public company, provided BigCommerce globally leading capabilities for generating demand and selling through the world's leading advertising, social network, and marketplace channels. So far, Feedonomics has been a home run for our company, customers, and partners. Today we'd like to share a major new lever for driving company growth, and that is cross-sell and up-sell enabled by automated billing capabilities that we will release later this year. The first class of products enabled for cross-sell and up-sell will be products and features owned by BigCommerce. Examples include multi-storefront, channel extensions enabled by Feedonomics, and a recently announced acquisition of the leading B2B quoting application, B2B Ninja. The second class of products, that can be up-sold and cross-sold are products licensed from partners. The third and largest class of products for cross-sell and up-sell are third-party applications in our apps marketplace. By utilizing the billing product and APIs currently under development, we will enable these products to be easily added to a single consolidated monthly BigCommerce bill, thereby easing the promotion and adoption of valuable products and features that propel our customers' growth. With this cross-sell and up-sell, BigCommerce will earn direct revenue from our owned and licensed product sales and partner revenue share from third-party applications, thereby growing our aggregate revenue and net revenue retention, or NRR. Historically, our NRR has been fueled primarily by customer order count and GMV growth, which leads to subscription growth adjustments, and secondly, revenue share from technology partner agreements. NRR for accounts with greater than $2,000 in ACV was 116% in 2021, up from 113% in 2020. We now plan to add, over time, a wide range of cross-sell and up-sell products that improve NRR while fueling the growth and success of our merchants and ecosystem partners. We believe cross-sell and up-sell can further sustain and grow NRR, which leads to higher total revenue and LTV to CAC across all of the customers we acquire. Now that we've talked about our strategic pillars and improvements to our monetization model, I'd like to recap our five strategic growth priorities. The first priority is enterprise, and specifically, becoming the world's best Open SaaS platform, serving the world's mid-market and large enterprise businesses. The second priority is international expansion. Building on our expansion in continental Europe in 2021, in January of this year, we formally launched in Latin America, specifically Mexico, Germany, and Spain. Later this year, we plan to formally launch in the Nordics and South America and expand further in the DOC region. Our third priority is omnichannel. We aim to be the world's best platform for omnichannel advertising and selling. As I mentioned earlier, our acquisition of Feedonomics bolstered this priority, and we are investing in a number of exciting new offerings as a result, including the build-out of a self-serve Feedonomics product for big commerce merchants, and Feedonomics for All, which enables digital advertisers, social commerce channels, and marketplaces to ingest, transform, and optimize listing data from any e-commerce platform. Feedonomics ARR finished above $35 million in 2021 and grew over 50% the past year. We couldn't be more excited about the future of Feedonomics business and the exceptional team members leading it. The big commerce platform is renowned for its B2C capabilities, and our fourth priority, B2B, extends our capabilities to B2B and hybrid B2C B2B sellers. We formally launched B2B Edition in June 2021, resulting in strong ratings in B2B platform evaluations by Paradigm and SoftwareReviews.com. Our recent acquisition of B2B Ninja brings in-house the most popular big commerce B2B quoting application. With expanded native B2B functionality and a strong ecosystem of integrated partner applications, BigCommerce is positioned for growth as a leading SaaS B2B platform. Finally, our fifth strategic priority is headless commerce, which refers to the experience-driven technology approach of decoupling front-end architecture from the back-end commerce engine. Our Open SaaS platform is highly customizable and composable, while providing out-of-the-box features and functionality that make BigCommerce simpler to implement and operate in a headless or composable commerce approach. Switching now to customer updates. Over the past year, we've added a number of brands with regional and global prominence. In the coming days, we will launch a new custom-tailored online store for Ted Baker, a UK-based global apparel brand. Using our multi-storefront and headless capabilities, Ted Baker manages their global online presence from a single store to power 12 regional storefronts that are fully localized, enabling the luxury fashion brand to meet the needs of its expanding customer base while offering a modern and frictionless customer experience tailored to the needs of each market. Shoppers will have the flexibility to shop in their preferred language, including English, French, German, and Spanish. Additionally, purchases can be made using consumers' preferred currencies, including pounds, dollars, and euros. Leveraging our Open SaaS platform, agency partner Wunderman Thompson Commerce seamlessly integrated BloomReach's content management and search and merchandising solutions into the Ted Baker store to create better shopping experiences. Additional merchants recently launched on BigCommerce include Draper Tools, one of the largest wholesale hardware stores in the UK, Dermaviduals, an Australian skincare company, Denagi, an Italy-based wine and spirits company, Jay Parker's, a UK-based mail order horticultural supplier of bulbs, plants, and shrubs, and a personal favorite, King Arthur Baking Company, best known for its flour. King Arthur migrated to BigCommerce to improve maintenance efficiency, speed the introduction of new features, and optimize the end user experience for stronger engagement and improve shopper conversion. We continue to work hard to show all our customers how much we appreciate them. Last week, we received some nice recognition that the feeling is mutual when we were honored with a 2022 Most Loved Award from Trust Radius. BigCommerce was one of just 101 winners out of over 25,000 products considered. and we were the only e-commerce platform on the list. Shifting to the new product launches, we bolstered our omnichannel offering with several partnership integrations. I'll give two examples. In partnership with Google, we launched Google Ads and Listings to help our merchants in the U.S. connect their stores to the Google Merchant Center and add products for free. The new products allow merchants to seamlessly list their products for free across Google Shopping, Search, and Images, directly from their BigCommerce control panels. This service enables merchants to improve the efficiency of their advertising spend via smart shopping campaigns. We launched and incentivized TikTok advertising coupon program to invest in and help our merchants succeed on TikTok for business. TikTok continues to attract a large audience and is an increasingly important channel for merchants to reach new customers and grow their businesses. In partnership with Chargeify Commerce and Abysseo, we announced a new integration providing our B2B and B2C merchants with a comprehensive solution to manage, track, and analyze subscription activity in one centralized location. We also announced a direct integration with Digital River that provides an all-in-one solution that fully manages payments, tax, fraud, and compliance to simplify cross-border selling and accelerate global expansion. As a result, merchants can easily deploy entry into new markets in as little as six weeks, simplify cross-border selling processes, and decrease operational costs by up to 30%. As we cited on our last call, we are very excited about the release of native multi-storefront capabilities to big commerce merchants, which we expect to be generally available by the end of Q1. We expect this to be a transformational step forward in our enterprise product offerings. We are also investing in multi-location inventory capabilities, enhancing our commerce as a service offering, and exploring ways to expand crypto and NFT-related capabilities on our platform. I'd like to close with why I believe we are at an inflection point in our business, reinforcing my conviction and confidence in investing for growth. I believe that our market, our business, and our team can deliver durable growth for years to come if we invest boldly to do so. The time is right, our product is ready, and the unit economics support smart investment to accelerate initiatives that are clearly working. While we recognize that these investment plans come with a short-term decline in margins, we are convinced that this is the right long-term decision for our business, and most importantly, our merchants and ecosystem partners. Both 2020 and 2021 demonstrated our ability to drive significant leverage in our business, and we are confident that we can replicate leverage gains against a larger revenue base after making these investments. Most importantly, we are investing to win. In the years ahead, we want to be the world's most innovative e-commerce platform, one that thrives globally, serves merchants small, medium, and large, enables omnichannel demand generation and selling better than any platform on earth, serves B2B as well as B2C, empowers the world's best headless and composable user experiences. We are bullish about the strategy and growth prospects for big commerce, and I'm fired up for 2022 and the e-commerce leadership it enables. With that, I'll pass it over to RA to discuss our results in more detail and provide additional color on our investments and guidance for 2022.