BigCommerce Holdings, Inc.

at investors.bigcommerce.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 results for the quarter and year, share my thoughts on the e-commerce business climate, outline progress against our five strategic priorities, and finally share perspectives on our approach to 2023. RA will also share some of the assumptions on which we have built our 2023 financial plan He will conclude with our high level expectations for 2023 in his discussion on full year guidance. In a challenging year for global e-commerce, BigCommerce grew faster than the broader e-commerce industry. And our Q4 results showed strong progress in both profitability and operating cash flow. We also delivered on our full year opening guidance set last February, highlighted by our 27% full year top line revenue growth. Let's discuss the details. In Q4, Total revenue grew to $72.4 million, up 12% year over year. Full year 2022 revenue grew to $279.1 million, up 27% year over year. Our Q4 non-GAAP operating loss was $9.4 million, and the full year was $47 million. We concluded Q4 with an annual revenue run rate, or ARR, at $311.7 million, up 16% year over year. That represents a sequential growth in ARR of $6.4 million. Enterprise account ARR was $224 million, up 30% year over year. The enterprise segment now represents 72% of our total company ARR. Let me now share some perspectives on our results. Without a doubt, 2022 was a challenging year in global e-commerce. As macroeconomic conditions deteriorated in the first half, We took decisive action to reduce planned spending and focus efforts on our enterprise business. I am confident these choices are yielding the proper balance between necessary tactical adjustments to near-term economic conditions and steady long-term investments in the strategic initiatives that will drive profitable growth in the years ahead. Our results reflect this challenging climate and our response to it. We continue to see market progress moving upmarket into larger, more complex enterprise opportunities. However, as a reflection of the macro economy, enterprise opportunities have longer sales cycle times and reduced aggregate deal pipeline relative to before 2022. Those are two common themes we all hear across many enterprise software segments. Inflation and consumer spending also remain difficult to predict, and RA will discuss this later in his remarks. Overall, our results demonstrated the resiliency of our business and the commitment and competence of our team to deliver, even in a tough economy. Most importantly, by growing 27% for the year and restructuring for profitability in 2023, we firmly positioned ourselves for continued healthy e-commerce leadership in the years ahead. As we look ahead to 2023, the economic conditions of 2022 motivated us to prioritize profitability as our number one goal by year end. Obviously, rising inflation and interest rates have made the cost of growth funded by operating losses unattractive, to both us and our shareholders. Whereas we began 2022 with a plan to achieve profitability by the second half of 2024, we have now restructured our operations to target profitability in Q4 of this year, 2023. The restructuring has already made us a better company. Our go-to-market spend now focuses entirely on our highest ROI segments like enterprise, B2B, and omni-channel. Operations throughout the company have been streamlined unnecessary and excessive expenditures have been eliminated, company focus and alignment are better than ever. In sum, we believe we are an even stronger company, operationally and financially, than we were prior to the December restructuring. Longer term, we reiterate our belief that our business can achieve operating profit margins of 20% or higher, thanks in part to our strong gross margins of 75% plus. As RA will outline, This operational excellence and rapid path to profitability is reflected in our guidance for 2023. Next, I'll provide an update on the substantial progress relative to our core strategic initiatives in 2022. At this time last year, I walked through our three strategic pillars, open SaaS, disruptive innovation, and commerce as a service, and the five strategic priorities that support them. Today, I'll briefly review those and discuss the progress we made in 2022 as well as our commitment to these areas this year. Our differentiated Open SaaS technology approach is our first strategic pillar. It combines a truly modern approach to API-first composability with the inherent benefits of multi-tenant SaaS, including built-in performance, security, usability, innovation, and lower total cost of ownership. This combination helps businesses turn digital transformation into competitive advantage. our software conglomerate competitors attempt to lock customers into their proprietary suites. In contrast with Open SaaS, we provide a configurable and flexible platform that enables complex businesses to adopt best-of-breed technology solutions and customize their e-commerce approach to their specific needs. Our next strategic pillar, disruptive innovation, is the business strategy to extend upmarket propelled by an ever-higher performing product at a lower total cost of ownership than established incumbents. Our enterprise capabilities enable high-end merchants to expand faster and further at a much lower cost, while providing advanced functionality to smaller businesses that allows them to grow and scale without ever having to re-platform. Our final strategic pillar, commerce as a service, describes our ability to enable partners to create and sell customized commerce solutions powered by our platform technology. We aim to leverage our Open SaaS platform to empower our ecosystem, not compete with it. And through commerce as a service, our partners can combine the power of our platform with their unique use cases and competitive offerings to create comprehensive solutions for their target markets. The three pillars of Open SaaS, disruptive innovation, and commerce as a service remain core to our strategy in 2023. We are laser focused on two big objectives this year. achieving global leadership in enterprise and reaching profitability on an adjusted EBITDA basis in Q4. By prioritizing our investments in staffing to focus on enterprise growth, we are confident we can both grow our enterprise e-commerce leadership position and accelerate our profitability timeline. The continued success of an investment in our five strategic priorities will be critical to deliver these goals. In 2022, We delivered our biggest advancements to date in terms of true enterprise-grade functionality and composability. Our launch of multi-storefront capabilities was a major milestone. This enables businesses to easily launch and manage multiple storefronts from a single BigCommerce backend. Customers can now launch additional brands, geographies, and customer segments, such as B2B in addition to B2C, at much lower operational costs and complexity than with distinct infrastructures for each storefront. We also bolstered flexibility for enterprise merchants through our launch of multi-location inventory APIs. These APIs enable customers to execute more complex order fulfillment scenarios, including buy online, pick up in store, and multi-warehouse shipping optimization. Major new brand launches during 2022, including Ted Baker, Taste of Chicago, One Kings Lane, Ollie Pets, Mountain Equipment Company, and Lifetime Brands, Leverage enterprise capabilities like these to power their growth. Our omnichannel offering helps customers advertise and sell successfully through more channels than they could on competitive platforms. In 2022, we made remarkable progress following our 2021 acquisition of Feedonomics, the industry's best solution for managing product catalog integrations at scale into more than 100 of the world's foremost search, advertising, social network, and marketplace channels. Major channels enabled include Amazon, Walmart, Target+, Google, Microsoft, MercadoLibre, Facebook Instagram, TikTok, and most recently, Snap. Just last week, we announced a new strategic partnership with WPP to offer omni-channel solutions to help WPP clients drive growth and maximize sales across hundreds of advertising channels and marketplaces. This innovative partnership will give WPP priority access to new product tools on both BigCommerce and Feedonomics, in addition to providing APIs and data sets that will enable WPP agencies to develop unique insights for clients across product, trends, and purchasing data. New Feedonomics customers added in 2022 included Tottenham Hotspur, a marquee English Premier League football club for both advertising and marketplace channels, Landmark Group, one of the largest retail and hospitality conglomerates in the Middle East, Africa, and India, and Les Mills, a $150 million-plus fitness company headquartered in Auckland, New Zealand, as well as many others across multiple e-commerce platforms. Feedonomics is a platform-agnostic solution. We will continue to invest in Feedonomics' ability to meet the needs of the world's largest merchants and advertising and marketplace partners, whether they are using big commerce or competing e-commerce platforms. Within BigCommerce, we launched our new certified omnichannel partner programs, both for agency and technology partners. This enterprise-focused initiative gives partners new ways to generate revenue by helping merchants on any e-commerce platform achieve omnichannel success. Armed with numerous tools, services, and exclusive channel partner programs, partners can educate and guide merchants on how to strategically expand into new channels that can drive more traffic with higher shopper intent improve return on ad spend, and generate more GMV. We welcomed Amazon Buy with Prime into the program, and in January, BigCommerce became the inaugural partner for the launch of Buy with Prime, which allows BigCommerce merchants to easily sync their existing catalog across Amazon and BigCommerce and deploy the Buy with Prime button on their sites. In January, we also started a new partnership with Microsoft Ads and Listings, allowing big commerce merchants to create and manage ad campaigns across Microsoft's extensive properties. B2B e-commerce has gone through a major evolution over the last few years. B2B buyers increasingly expect a modern experience similar to what they see in consumer-focused e-commerce. That means B2B businesses must provide speed and ease of use without compromising the complexity and uniqueness of the B2B buying journey. Building on the 2021 launch of B2B Edition, our 2022 acquisitions of Bundle B2B and B2B Ninja completed a foundation for BigCommerce to become the world's most flexible and easy to deploy B2B platform. Bundle B2B powers the functionality of our B2B Edition and B2B Ninja offers best-in-class B2B quoting capabilities. By incorporating this range of functionality natively within BigCommerce, we have made B2B e-commerce practical and attractive for businesses of all sizes. Our B2B offering has achieved widespread industry recognition from leading analysts including Gartner, Paradigm, and Forrester. We further enhanced our international footprint with notable 2022 country launches in Germany, Austria, Spain, Denmark, Norway, Sweden, Mexico, and Peru. Expansion markets contributed to revenue growth of 34% in EMEA and 42% in Latin America. Notable international brand launches included British Airways IAG Loyalty, Jimmy Brings, MKM Building Supplies, Industrial Tool Supplies, and Mexico's Chivas Soccer Club. In addition, we collaborated with partners to grow our presence in markets including China, Korea, Poland, India, and UAE. The last of our five strategic priorities is composable commerce, of which headless is an important subset. Composable commerce gives merchants the freedom to mix, match, and combine best-in-breed tech vendors to create a customized and robust technology stack. With BigCommerce's open commerce approach and commitment to mock alliance principles, B2B and B2C merchants can make smart technology investments that are agile, functional, and flexible. In an unpredictable economy, flexibility and composability are especially important. Our open platform is unrivaled in its ability to let merchants build the technology stack that best serves the needs of their customers and their businesses. Finally, I'd like to conclude by speaking at a high level about our plans and operating focus for this year. How we are investing and winning in market has not changed. Our strategic focus and initiatives have not changed. We have a great product and leadership position in global e-commerce. I believe continued leadership requires commitment, discipline, and resolve, staying on strategy, even as market conditions may require tactical adjustments from one year to the next. We intend not to overreact or overcorrect in a way that disrupts long-term growth. Our actions over the last several months reflect this. We chose to focus our time and go-to-market spend on the superior economics of the enterprise segment. Last quarter, we shifted sales and marketing resources away from non-enterprise prospects with shorter sales cycles to enterprise prospects with longer sales cycles. We did this knowing it may impact bookings growth in the first half of 2023 because the superior retention profile of enterprise businesses makes this the right priority for the medium and long term. We saw that effect in our Q4 results as well. In addition, we restructured elements of the business to accelerate our timeline to profitability in the Q4 of this year while still maintaining key investments in our long-term strategic priorities. These were not easy decisions, but they've already made us an even stronger company with an accelerated timeline to profitability. In conclusion, a challenging operating climate requires leadership to adapt, improve, and strengthen both strategy and execution. I believe our team successfully rose to the challenges of 2022 while positioning us for continued success in 2023 and beyond. Our plans reflect the prioritization of improved operating margins and cash flow, balance with focused investment and enterprise such that we continue to grow our leadership position in global e-commerce. Profitability and enterprise focus are the commitments of our leadership team to our customers, partners, and shareholders. We remain proud and excited to serve you all. With that, I'll turn it over to RA.

Thanks, Brent, and thank you, everyone, for joining us today. During my prepared remarks, I'll walk through our Q4 results. provide details on some of the key assumptions behind our 2023 plans, and conclude with discussion on our Q1 and full-year revenue guidance. In Q4, total revenue was $72.4 million, up 12% year-over-year. Subscription revenue grew 14% year-over-year to $53.3 million, while partner and services revenue, or PSR, was up 6% year-over-year to $19.1 million. For the full year 2022, revenue finished at $279.1 million, up 27% versus 2021. Subscription revenue and PSR were up 33% and 13%, respectively, year over year. In Q4, revenue in Americas was up 12%, while EMEA revenue grew 22%, and APAC revenue was down 6% compared to prior year. For the full year 2022, Americas and EMEA revenue were up 28% and 33% respectively year over year, while APAC grew 9% year over year. 2022 was a tough environment for e-commerce and SaaS software. Despite those headwinds, we posted solid growth in subscription revenue, especially in the Americas and EMEA where we launched in new markets. We also generated PSR growth that outpaced consumer spending in e-commerce as a whole. I'll now review our non-GAAP KPIs. Our ARR grew to 311.7 million, up 16% year-over-year. That represents a sequential growth in total ARR of 6.4 million. Enterprise account ARR was 224 million, up 30% year-over-year, and is up more than 2.2 times from where it was just two years ago. As we have outlined previously, the change in total subscription ARR which can be calculated by subtracting the trailing 12 months of PSR from total ARR, is a good indicator of our underlying change in net bookings during the period. Subscription ARR was up $5.3 million versus Q3 and up 17% year-over-year. As Brent mentioned, like many other enterprise software companies, we continue to see longer sales cycles and a tighter deal pipeline. QCOR subscription ARR growth reflected the challenges of that dynamic. Again, we are confident that the investment choices we are making are the correct ones, focusing on long-term profitable growth with enterprise accounts. We expect subscription ARR growth rates to improve in time as our pipeline investments and prioritization choices are fully realized and as we close larger and larger accounts. At the end of Q4, we reported 5,786 enterprise accounts, up 750 accounts, or 15% year-over-year, including phenomics. ARPA, or average revenue per account, for enterprise accounts was $38,708, up 13% year-over-year. Enterprise ARPA was approximately flat quarter-over-quarter as sales cycle times at some enterprise merchants lengthened. We have built our 2023 plans conservatively in line with this dynamic. Finally, net revenue retention, or NRR, from enterprise accounts was 111% in 2022 compared to 118% in 2021. 2022 NRR was impacted by tightening consumer spending that led both to PSR growth rates below that of 2021 and fewer orders driven subscription upgrades. I'll now shift to the expense portion of the income statement. As a reminder, unless otherwise stated, all references to our expenses, operating results, and per share amounts are on a non-GAAP basis. Q4 gross margin was 76%, up 57 basis points from the previous year, while gross profit was $55.2 million, up 12% year over year. In Q4, sales and marketing expenses totaled $30.5 million, up 10% year over year, This represented 42% of revenue, down 69 basis points compared to last year. Sales and marketing expenses were down 1 million, sequentially from Q3, driven by expense reductions and demand generation activities focused on the non-enterprise segment of the business. Research and development expenses were 19 million, or 26% of revenue, down 147 basis points from a year ago, on approximately flat spending sequentially from Q3. We have prioritized product roadmap initiatives that aim to bring greater enterprise functionality to merchants of all sizes. And we are working diligently to maintain the investments needed to fuel enterprise product improvements, while also realizing better operating results on the bottom line. Finally, general and administrative expenses were 15.1 million, or 21% of revenue, down 224 basis points from a year ago. This is down $1.8 million sequentially compared to Q3 due to lower staffing costs and continued operational improvements. In Q4, we reported a non-GAAP operating loss of $9.4 million, a negative 13% operating margin. This compares with an operating loss of $11.6 million, or a negative 17.9% operating margin in Q4 2021. and an operating loss of 11.5 million or a negative 15.9% operating margin in the prior quarter. Recall that we guided to a non-GAAP operating loss range for the quarter of 12.3 to 14.3 million. We delivered strong underlying cost reductions apart from any restructuring efforts, which reinforces our confidence that we will achieve profitability on an adjusted EBITDA basis in Q4 as we announced in December. Adjusted EBITDA was negative $8.6 million, a negative 11.9% adjusted EBITDA margin, compared to negative 16.8% in Q4 of 2021. Non-GAAP net loss for Q4 was negative $7.7 million, or negative $0.10 per share, compared to negative $12.1 million, or negative $0.17 per share last year. We ended Q4 with $305 million in cash, cash equivalents, restricted cash, and marketable securities. For the three months ended December 31, 2022, operating cash flow was negative $2.7 million compared to negative $8.8 million a year ago. We reported free cash flow of negative $3.7 million or a negative 5% free cash flow margin. For the 12 months ended December 31, 2022, Operating cash flow was negative $89.4 million, declining from negative $40.3 million a year ago. We reported free cash flow of negative $94.6 million, or a negative 34% free cash flow margin. Note, both full-year operating cash flow and free cash flow results include $32.5 million paid in Q3 as part of the Fedonomics first anniversary acquisition-related payments. These full-year results compare to negative 43.6 million and a negative 20% free cash flow margin in 2021. The remainder of my remarks focuses on our outlook and guidance for 2023. For the first quarter, we expect total revenue in the range of 69.7 million to 72.7 million, implying a year-over-year growth rate of 6% to 10%. For the full year 2023, we expect total revenue between $301 million to $313 million, translating to a year-over-year growth rate of approximately 8% to 12%. I'll now discuss some of the expectations underlying this top line guidance. Q4 subscription ARR grew at a slower pace than we have seen in recent quarters. We have built our financial plans assuming similar conservative bookings growth in 2023. We believe we can generate 20% or higher enterprise ARR growth rates in 2023, which we expect to be offset by the contraction in the non-enterprise segment of our business in the mid to high single digits. This guidance also includes the estimated impact of announced pricing changes to take effect across Q1 and Q2. While we were encouraged by the resiliency in consumer spending that we observed in Q4, We observed moderation in platform orders and GMV as we exited Q4. This is consistent with recent economic reports, including recent U.S. Department of Commerce data highlighting lower e-commerce growth in Q4 than in recent years. While we are hopeful that macroeconomic forecasts and consumer spending will prove conservative, we have built our 2023 financial plan, assuming a modest deceleration in same-store platform GMV and order growth year-over-year. We expect this to impact subscription pricing upgrades and PSR growth, and we have tightened budgeted spending accordingly. For Q1, our non-GAAP operating loss is expected to be $8.2 million to $12.2 million. For the full year, we expect a non-GAAP operating loss between $15.7 million and $22.7 million. Our entire industry faces an uncertain macroeconomic climate. Consequently, 2023 will be a year focused on driving profitability while focusing our go-to-market resources on enterprise accounts. Our plans anticipate strong spending discipline across our business while accounting for prudent top-line growth assumptions. Hiring will remain limited compared to prior years. We are not planning material expansion into new countries or geographies in 2023. Rather, we will focus our international investments on gaining scale in existing, recently launched countries. We are confident that the expense reduction actions we have taken, combined with limited hiring and tight expense management, will enable us to deliver our commitment and hit profitability in Q4 of this year. We see strong, durable, underlying health in the business that gives us great confidence in the success of these efforts. Enterprise retention rates and LTV to CAC results remain strong. Win rates remain healthy. The complexity and size of deals in our pipeline continue to move upmarket. We have an outstanding product, gaining widespread recognition across our industry. We have more excitement and momentum with our agency and technology partners than ever before. We have a strong balance sheet, and our business is heavily concentrated in established merchants with enterprise requirements. These are strong, healthy merchants that prove durable even in down economic cycles. As I said earlier, we believe we can generate 20% or higher enterprise ARR growth rates in 2023, which we expect to be partially offset by contraction in the non-enterprise segment of our business in the mid to high single digits. We also believe enterprise accounts could represent nearly 80% of total ARR by the end of 2023 or early 2024. Our plan puts us on a path to end the year with a strong base of enterprise accounts and sales pipeline as a profitable company, all while maintaining a strong balance sheet. This is a strong profile on which to base our 2023 plan. Finally, I'd once again like to thank all of our incredible employees, merchants, and partners. 2022 was not an easy year. Our results reflect the resilience and dedication of our employees, and the care and attention that we feel for our merchants and partners. I'm proud of our results in a tough climate, and I'm very excited about the progress this business will make in 2023. With that, Brent and I are happy to take any of your questions. Operator?

We will now begin the question and answer session. To ask a question, I press star, the one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To reply to your question, please press star then two.

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

Our first question will come from Gabriella Borges with Goldman Sachs. You may now go ahead.

Good afternoon. Thank you. I appreciate the detail on the two impacts to your bookings in the first half from cost reallocation plus macro. I want to better understand the rate of change. Are you still seeing further deterioration in bookings as we speak, or are you seeing stability at a lower multimeter level?

Hey, Gabby. Yeah, in terms of bookings, I'll say that it's stabilized on enterprise. In terms of the non-enterprise contraction, we still see it in that kind of mid to high single digits. We did roll out recently, pricing changes to our essentials plans, which really encourages upfront payment, annual prepay. We're focused on profitability this year, but we're also focused on improving our cash flow from operations. There is an element and an option to go monthly. With that monthly price, there is an increase in terms of our standard plus and pro plans. For our base of merchants, that really doesn't take effect until the June timeframe, so really the impact of that isn't going to be seen until the back half of this year. Based on the impact of that pricing, based on the mix of annual prepay or monthly, we're not building in a big impact from that pricing action, but we do think that the second half could potentially get down to the mid to low single digits on non-enterprise. For enterprise, very, very focused on building that pipeline. I think the lead flow since the beginning of the year is encouraging. I think the quality of leads are encouraging, especially with larger accounts. And then in the addition of commerce as a service, where we typically see larger opportunities with partners that also carry some longer sales cycles, we're building in assumptions around the close rates and the timeline to close to where we see uh, better bookings by mid-year and definitely through the back half of 23. Okay.

Thank you for the details. Our next question will come from Scott Berg with Needham.

You may now go ahead.

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

I guess a couple things.

Wanted to first talk about the confidence in the enterprise segment. I was at the NRF conference a month ago, and all the chatter amongst other vendors in the space seems to be enterprise or demand in the enterprise-type segment remains pretty constant versus down-market, smaller customers, which is certainly waning versus boom in the last couple years. I guess when you look at all of that, especially with the macro backdrop, why are you so confident in still being able to grow the enterprise segment of your business at this 20% plus rate here in 23?

Hey, Scott, this is Brent. I'll take that. And it was indeed nice to see you on the floor at NRF, which tends to attract a larger enterprise retail customer set relative to some of the other e-commerce events. We have a lot of confidence in our enterprise momentum and positioning. As you can see, we ended the year at 30% ARR growth for enterprise, which is dramatically higher than the 7% GMV growth in U.S. e-commerce across the course of the year and probably a roughly comparable number globally. So we gained a lot of share in aggregate in this last year. Our product, we think, is The is uniquely positioned in the market because in an environment where enterprises are trying to save money, become more profitable and simplify their approach to e-commerce while excelling, we do that better than anybody. We truly simplify the approach to enterprise e-commerce by having a SAS model with so much ease of use and functionality built in that deploys quickly. and then has the most modern connections in the various omni-channel demand generation channels, increasingly we're being rated the best or one of the very best e-commerce enterprise platforms in the world for both B2C and B2B. You see that with Forrester, Gartner, IDC, eMERS in Europe. And so the outside experts, when they evaluate enterprise platforms, they're saying we're the best or one of the very best. And that is being corroborated by the share gains that we had during the course of the year. So, you know, that's a multifaceted answer to your question. I could go on at length about the product and its capabilities, our partners and theirs, but I think I'll summarize with that.

Thanks, Brent. That's quite helpful. I guess as a continuation on that, I think if we look at your innovation over the last couple of years, whether it's multi-store, multi-inventory, a variety of other things and functionality that you've called out, you seem to believe you're at feature parity today relative to the other platforms or have surpassed them. As you continue to evaluate what's out there, do you feel like you're missing anything to capitalize on those goals today or is what you have plenty of horsepower to meet the next couple of years? Thank you.

I think at the highest level, we have delivered the major components of an enterprise platform, both in terms of functionality and flexibility. There are always both new innovations that are important to the market, as well as individual features that might help us grow in given countries, given industry segments, et cetera. There's a lot of upside from what we're doing in B2B, whereas I would say on the B2C side, we're a very, very, very fully competitive enterprise platform. We will get there during the course of this year as we fully integrate and improve and expand on the functionality of both B2B Ninja and Bundle B2B, which we acquired. I'm really excited to say that we're now multi-storefront compatible with our B2B offering and theme independent. And we have some incredible product releases that I think will be industry leading during the course of this year. So I would say we're 95% of the way to the current market, but the market's always dynamic on B2C and maybe 80% of the way there on B2B, but with a very aggressive agenda for this year.

Thanks for the questions. Thank you so much.

Our next question will come from DJ Hines with Canaccord Genuity. You may now go ahead.

Hi, this is Daniel Reganon for DJ Hines. Thanks for taking our questions. Um, maybe I'll start Brent, uh, as we think about the launch of the new certified omni-channel partner program, are there components of this that would incentivize those partners that might be multi-vendor to bring more business towards. Big commerce. And then second to this, you talk about what the customer expansion strategy looks like at the partner level.

absolutely uh i love that question the answer is yes as background our certified omni channel partner program includes both agency partners and systems integrators as well as advertising agencies and technology partners really anybody who serves businesses in a way that helps them expand they're advertising and selling channels to the leading search engines like google uh and microsoft who we just added the leading social networks facebook instagram tech talk snap etc the leading affiliate networks the leading display ad platforms and the leading marketplaces like ebay and especially amazon where we announced our buy with prime integration so what Feedonomics does. It's the world's best platform for enterprises to get their catalogs not just synced into all of these advertising and selling programs, but also optimized to perform with the keywords and the schema exactly the way that those various channels want them to improve both organic performance as well as return on ad spend. So that's the background. An agency, Feedonomics is not platform dependent. Although we have an incredible integration into BigCommerce, many of their customers are giant enterprises on custom platforms and on competing platforms to BigCommerce. Fedonomics integrates and has integrations into all of them. And so what's relevant is that for any given agency, let's say that X percent of their merchant base is using BigCommerce, it may be 20%, it may be 80%. Feedonomics and the Omnichannel program is not just relevant to 100%. It's actually probably the single highest ROI thing that the agencies can do to help those businesses expand demand generation and improve their return on ad spending. So it's extraordinarily powerful. Of course, most businesses spend a lot more money on their advertising and demand gen than they do their technology stack. So this is a very leveraged way for our omni-channel partners to have a completely independent and incremental way to help their customers and drive business. In answer to your second question, yes. So when a business starts working with feedonomics and starts usually realizing a very significant improvement in their performance within days or weeks, it naturally builds a relationship with the broader big commerce entity. which may or may not lead to other conversations down the road. But it's important to note that we're not compromising Fedonomics' ability to serve all merchants and do that in a way that is respectful of the platforms and the technology stack that those merchants have.

Thanks for the question.

Gotcha. Excellent. Thank you for that, Brent. And then just one for RA, and really appreciate the time. As we largely pass the non-enterprise challenges by the end of 1H, what are your expectations for non-enterprise growth beyond 1H, going into 2H and beyond? What's the strategy for turning non-enterprise business into more of a product-led self-serve motion? I know enterprise has been getting a lot of attention, but maybe you can shed some light on some of the work that's being done there and what your growth expectations might be. Thanks very much, guys.

Sure. I mean, in terms of the second half, we do think that non-enterprise will stabilize. As I mentioned earlier, TBD on the pricing impact, but that could potentially reduce the contraction as we exit 2023. We do believe by early 2024, by then, most of our non-enterprise accounts will be transacting merchants who are established with, you know, have better retention profiles and that by nature is going to improve that contraction level as most non-enterprise accounts would churn, you know, in that first kind of 12-month period. In terms of how do we sign up additional non-enterprise accounts, we're definitely going, you know, tech partner and agency partner, the whole partner ecosystem is is one where it's still going to drive both enterprise and non-enterprise accounts. We also have self-service flows that we're going to continue to optimize. We're just not going to spend a lot of our sales and marketing go-to-market dollars to drive those accounts. I mean, if you think about our initiatives that are so squarely tied to disrupting enterprise, it is omnichannel, it's B2B, it's composable headless commerce. You know, if you peel the onion back on Omnichannel, you know, the vast majority of subscriptions from Fedonomics are enterprise accounts. When you use BigCommerce cross-sells Fedonomics, it's usually enterprise accounts. When you think about B2B, those are majority enterprise accounts and ARR. And if you think about Composable, it's really the same. So Gabby asked the question in terms of our confidence level to deliver 20% or higher enterprise ARR growth throughout the year. It's squarely tied to those initiatives. And the ecosystem that we have, the partners that we have, are all part of building out that enterprise growth for this year and into next year.

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

You may now go ahead.

Hi, this is George McGree, and I'm for Koji. I had a question on, you might have seen Shopify announce today a revamped partner program to incentivize and drive partnership growth and growth through partners. So I was wondering, in light of that, if you had anything to call out in terms of changes in the competitive environment or maybe changes in competition with Shopify specifically.

This is Brent.

Lots of respect for them, obviously, as a company and a competitor. They're very strong. Much of what they're doing is catch up. I mean, with respect to enterprise, their, you know, promotion of both enterprise as a segment of composable and having a certified program for partners are all things that we've been doing for years. We've been doing headless and composable since 2016. Um, we've had partner certifications around development for, uh, you know, quite a period of time. And we've been enterprise focus, uh, for a long period of time to now with our go to market as well, but in our products since 2015. So, um, they're indeed trying to move up market. They like us recognize that the economics in terms of retention, and unit profitability are very strong in that segment so you know they'll keep competing but we have dramatically different offerings to the market we are open and not trying to push a suite to customers instead we're giving them the best enterprise platform in the world and then they for a complex business associate the world's best payment solution shipping and fulfillment point of sale, any other components of a stack to optimize for a complex business rather than a sort of one size fits all suite. So two very compelling offerings and a segment of the market will view us as having the best offering in the world and another segment will pick them. But increasingly, we're really the two lead options out there and well differentiated and distinct from one another in the types of merchants we went and served.

That makes a lot of sense. I had a question on EMEA growth, you know, is robust. And, you know, could you maybe, you know, provide some color on the drivers of that and, you know, maybe how we should be thinking about EMEA as a growth factor over the medium term?

Yeah, we had a very good year of selling in EMEA relative to the internal plan for gross new sales. It's very strong. And during the course of the year, we expanded our footprint to major new regions. We expanded into the Nordics. We expanded in Germany and Austria. And that was all added to existing countries like Italy and France and Spain and the Netherlands, where we already had a presence. In each country, there are a different set of merchants, a different set of partners. It takes a little bit of time to establish a network there and start selling effectively, but we're seeing great traction and great wins and examples in all of those regions that I've mentioned on top of our historic super strong base in the UK. Long term, I think we are extremely well positioned to compete in Europe. Europe has the most complexity because of countries, languages, and currencies. That type of complexity naturally favors a business like ours, a product and platform like ours that has native multi-storefront, full support and leadership in headless or composable. We make it a lot easier and more scalable to add country and serve the complexities of Europe. And then when you can do it both B2C and B2B, even better. So we're very bullish on Europe. We're very proud of the job that team is doing. and expect it to be a continued strong driver of our growth in the years ahead.

Our next question will come from Samad Samana with Jefferies.

You may now go ahead.

Hi, good evening. Thanks for taking my questions. Maybe first, RA, I wanted to follow up on the commentary about the contraction for the non-enterprise segment. Should we think about that more as a function of a decline in same-store sales GMV at those customers or more as a function of churn or downgrades of SKUs? I'm just trying to understand what's driving that contraction. Is it more on the downgrade side from SKU levels or more around churn? And what I guess What have you experienced the first couple of months into the first quarter versus what you just guided for that's based into the full year guidance?

Yeah, you saw it in Q4 that's carrying over into Q1. I mean, essentially, it's the retention profiles of enterprise versus non-enterprise accounts. You know, we have a base of non-enterprise accounts that are contracting. We're not... investing a lot in terms of building funnel and spending our sales and marketing dollars to replace any ones that would churn with new accounts. Over time, I think that as those cohorts of transacting, and I want to emphasize that because the non-enterprise accounts who are transacting and are established, they do quite well. Their retention profiles are quite strong. We expect them to not only stay on the platform but grow on the platform We do think that that's going to improve over the course of the year as the maturity of the cohorts that are maybe in the last 12 to 15 months, we find out whether or not they're going to stay or go. But I think overall, going into 2024, we should exit this year with a more stable non-enterprise business. And who knows? I mean, with commerce as a service, We do have tech partners that we go to market with that oftentimes will bring not just enterprise accounts, but non-enterprise accounts to BigCommerce where we're not spending or investing in sales and marketing, but they're selling BigCommerce into their base. And we're not factoring the impact of that, but that could definitely stabilize non-enterprise, if not grow it in the years ahead.

Gotcha. And then maybe just on the overall full-year guidance, I know you gave the total revenue outlook, but should we expect the spread to widen between subscription revenue growth and maybe PSR growth? Or just how should we actually think about – I know you, again, gave commentary around save-store-sale assumptions on GMB and order growth, but just how should we think about subscription revenue versus PSR in that full-year guidance assumption?

Yeah, I would say in the first half, they're going to grow roughly in line with each other. As we close some of our larger deals and we see that kind of impacting mid-year, second half of the year, subscriptions should pick up in terms of revenue. The revenue would recognize on those bookings. On PSR, the biggest driver of growth that we see this year is launching major accounts that we have line of sight to launch. We have a number of accounts that we're excited to launch, and the impact of those accounts are going to drive elevated GMB as well as PSR, you know, in Q2 or by mid-23. Great.

Appreciate you taking my questions. Sure.

Our next question will come from Remo Lenshow with Barclays. You may now go ahead.

Hey, thank you. just quick questions. Like obviously, you know, macro is a problem and there's not that much you can do about it. What do you see? How do you think this will play out in terms of periods? Because obviously the, you know, the online retailers are suffering at the moment. Do you think that that's just a time period? And then once, you know, they all are through that pain, it starts kind of picking up from there again. Do you think that's an ongoing thing as people renew the kind of, you know, they don't need to renew or even lower. Like, how do you see this playing out from your perspective?

Thank you. Hey, Raimo. Go ahead, Brent.

I'll let you go.

Hey, Raimo. I mean, we're building our plans for this year in a way where obviously we want to enter the year with a high level of confidence on the top line. Just like we did last year, you know, the initial guidance we set when we wanted to make sure we were able to achieve that top-line guidance for the year. We're not baking in or assuming improvements in the macro with our plans. We're assuming, you know, the challenging environment persists throughout the year and, you know, building our spend plans accordingly. So high confidence on the top line and then building our spend plans to ensure that you know, we get to that profitability point in Q4.

Okay, thank you. Our next question will come from Josh Baer with Morgan Stanley.

You may now go ahead.

Great, thank you for the question. You had a really strong quarter as far as new enterprise account additions and then the ARPU sequentially was a little bit weaker. Did you mention in the prepared remarks that that was driven by sales cycle times lengthening? I was just wondering if you could expand on that. How does that dynamic impact ARPA?

Yeah, you bet. I mean, some quarters will have a lower number of new accounts, but bigger deals. In some quarters, it'll be a higher volume of accounts, but the size of deals could be lower. I think Q4, we saw a number of deals that... probably more look like in the mid-market range. We had some large enterprise deals that due to sales cycles maybe pushed into Q1. But I think that's more of a mix issue than anything else.

Okay, got it. So a little bit of a mix of customer change in the quarter. But then like thinking ahead to the 20% plus enterprise ARR growth, any context for how that growth is derived between ARPA and new accounts? Thanks.

It's a combination of both. I mean, we build our pipeline looking at size of deals, size of merchants, size of accounts. We are building our enterprise or larger enterprise pipeline nicely. And I think it's going to be one where You may have, again, quarters where we sign really large deals. And if that's the case, the ARPA is going to be higher. Maybe some quarters where we sign both. But I think for us, we're looking at the pipe, looking at kind of size of merchant, size of opportunity. And we're building our pipeline to where we're really now have opportunities to win larger deals, especially with the conviction that our partners have with BigCommerce the opportunities that they see for us with the merchants they work with. So we're going to look at it both, and that mix should continue to affect both ARPA and number throughout the year.

Okay, so there could be some puts and takes in any given quarter as far as ARPU, but the general trend line should still be looking for growth from these levels.

Yeah, for sure. I mean, it goes back to my comment around how our initiatives are squarely tied to driving enterprise accounts and our commerce as a service initiative, how we go to market with partners also drive enterprise accounts. So all of that is factored in.

Thank you. Sure.

Our next question will come from Brian Pearson with Raymond James. You may now go ahead.

Hi, thanks for taking the question. I just wanted to, this is John for Brian. As you guys look at the pipeline of new business, where do you see the biggest share of customers that are migrating to your platform? And I'm curious your view on how the choppy macro maybe impacts migration. Does the TCO savings become a bigger part of the logic for potential customers? Thanks.

Yeah.

In fact, we just had a partner event in both Europe and Australia and here in Austin for North America and a common theme across all of these events is that more than in any prior year profitability and total cost of ownership are absolutely essential and therefore the strongest contributors to migrations to big commerce are going to be the platform the legacy platform options that are most expensive the single most expensive is a custom platform where your engineers are responsible for all the code, all the hosting, managing the hosting, the security, the versioning, the bug fixing, et cetera. The next most expensive will be on-premise software like Magento or legacy platforms, Oracle ATG, IBM WebSphere, SAT, Hybris, and then a long list of old ones. Finally, there are some sort of outdated and antiquated SaaS platforms that are still pretty expensive to maintain because you have to do so much to keep them up to date. And all of those are very good contributors to us and play into our strengths because we provide so much enterprise functionality and ease of use at a very competitive total cost of ownership.

Thanks for the question.

Again, if you have a question, please press star, then one. Our next question will come from Mark Murphy with JP Morgan. You may now go ahead.

Hey, guys. Thanks for taking the question. This is Artie Vuon from Mark Murphy. Just on the pricing change you guys have, any kind of, I know it's early, but any kind of feedback you're getting from customers on that, kind of the elasticity, and any expectation on how it's going to go between the billings and the pricing increase? Am I right to assume that most of the enterprise customers are already on the annual billing?

Well, I'll start there, and it's way too early to tell because it just went out today, but I passed one of our great leaders in the hall, and he said, wow, we sure had a lot of requests come in to switch from monthly to annual billings. on this first day of the announcement. Now, you can't draw a trend line through a single data point, but the good news is when people switch from monthly to annual, the way we've changed the prices, they're paying us basically the same amount, but now we get all the money up front. So it's a wonderful benefit in terms of free cash flow. And with time, we'll see how that peters off, especially when they get to the January 1st date on existing customers where they the new pricing goes into effect. So most of the ones who want to keep their monthly bill the same will switch to annual by that date. And we just don't know what that mix will be. But in either scenario, we're either getting a free cash flow benefit or we're getting a revenue benefit. Both of those are great for our business. In the enterprise area, this set of changes doesn't affect anything there. We have a separate set of incentives uh built into enterprise contracts that incent upfront payment but it's still an opportunity of ours to drive ever higher adoption of that for free cash flow benefits and just to clarify sorry sorry brent just to clarify the uh effective date for the base of merchants that we have is june 1st um not january oh i'm sorry i'm not june 1st you're right yep all good

Great. Thank you. Our next question will come from Ken Wong with Oppenheimer & Co.

You may now go ahead.

Great.

Thank you for squeezing me in. Just one quick question for me. When we think about that second half inflation, I guess what's driving that confidence there? I guess when we think about the puts and takes? Is it purely just easing comps? Is it the pricing? Is it kind of the potential to see some enterprise uptick? We'd just love some color around that, either Brent or RA.

Yeah, I'd say it's, number one, it's kind of visibility into the pipeline in terms of the opportunities that we even see today. I think that it's also a function of a With PSR, it's a function of major account launches. So we do expect some major account launches to happen in the first half, which will impact PSR in the back half. And I think that that's probably the bigger drivers for both subscription and PSR in the second half versus first half.

Got it. Thanks for the clarification. Sure. Sure.

It appears there are no further questions.

This concludes our question and answer session. I'd like to turn the conference back over to Brent Bellum for any closing remarks.

Well, I just want to thank everybody for joining this call and following the company. It was a tough year in the macro economy, but we're really proud of our 27% top line growth. The fact that we were one of the very, very, very few e-commerce companies in the publicly traded world. to have not missed and actually achieved within or above the range of top line and bottom line that we set each quarter as well as for the full year. We gained a lot of share this past year. We know that the global economy is not out of the woods. There's still relatively soft growth and a real focus on profitability that can extend selling time cycles, but we see solid pipeline, and we're more excited than ever about our positioning in the market. We hope for another great year in 2023, and we look forward to the follow-on conversations with all of our investors and followers in the year ahead. Thanks.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Music Thank you. Thank you. Thank you.

Ladies and gentlemen, thank you for standing by and welcome to the BigCommerce fourth quarter and fiscal year 2022 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 like to turn the conference over to your first speaker today, Daniel Lentz, Head of Investor Relations. You may begin.

Good afternoon and welcome to BigCommerce's fourth quarter and fiscal year 2022 earnings call. We will be discussing the results announced in our press release issued after today's market close. With me are BigCommerce's President, CEO, and Chairman, Brent Bellum, 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 1995. Forward-looking statements include statements concerning financial and business trends, our expected future business and financial performance and financial condition, and our guidance for the first quarter of 2023 and the full year 2023. These statements can be identified by words such as expect, anticipate, intend, plan, believe, seek, committed, will, or similar words. These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date. And we do not undertake any duty to update these statements. forward-looking statements by their nature, address matters that are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For discussion of the material risks and other important factors that could affect our actual results, please refer to the risks and other disclosures contained in our filings with the Securities and Exchange Commission. During the call, we will also discuss certain non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, as well as how we define these metrics and other metrics, is included in our earnings press release, which has been furnished to the SEC and is also available on our website at investors.bigcommerce.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 results for the quarter and year and share my thoughts on the e-commerce business climate, outline progress against our five strategic priorities, and finally share perspectives on our approach to 2023. R.A. will also share some of the assumptions in which we have built our 2023 financial plan. He will conclude with our high-level expectations for 2023 in his discussion on full-year guidance. In a challenging year for global e-commerce, big commerce grew faster than the broader e-commerce industry. and our Q4 results showed strong progress in both profitability and operating cash flow. We also delivered on our full year opening guidance set last February, highlighted by our 27% full year top line revenue growth. Let's discuss the details. In Q4, total revenue grew to $72.4 million, up 12% year over year. Full year 2022 revenue grew to $279.1 million, up 27% year over year. Our Q4 non-GAAP operating loss was $9.4 million and the full year was $47 million. We concluded Q4 with an annual revenue run rate, or ARR, at $311.7 million, up 16% year-over-year. That represents a sequential growth in ARR of $6.4 million. Enterprise account ARR was $224 million, up 30% year-over-year. the enterprise segment now represents 72% of our total company ARR. Let me now share some perspectives on our results. Without a doubt, 2022 was a challenging year in global e-commerce. As macroeconomic conditions deteriorated in the first half, we took decisive action to reduce planned spending and focus efforts on our enterprise business. I am confident these choices are yielding the proper balance between necessary tactical adjustments to near-term economic conditions and steady long-term investments in the strategic initiatives that will drive profitable growth in the years ahead. Our results reflect this challenging climate and our response to it. We continue to see market progress moving upmarket into larger, more complex enterprise opportunities. However, as a reflection of the macro economy, enterprise opportunities have longer sales cycle times and reduced aggregate deal pipeline relative to before 2022. Those are two common themes we all hear across many enterprise software segments. Inflation and consumer spending also remain difficult to predict, and RA will discuss this later in his remarks. Overall, our results demonstrated the resiliency of our business and the commitment and competence of our team to deliver, even in a tough economy. Most importantly, by growing 27% for the year and restructuring for profitability in 2023, we firmly positioned ourselves for continued healthy e-commerce leadership in the years ahead. As we look ahead to 2023, the economic conditions of 2022 motivated us to prioritize profitability as our number one goal by year end. Obviously, rising inflation and interest rates have made the cost of growth funded by operating losses unattractive to both us and our shareholders. Whereas we began 2022 with a plan to achieve profitability by the second half of 2024, we have now restructured our operations to target profitability in Q4 of this year, 2023. The restructuring has already made us a better company. Our go-to-market spend now focuses entirely on our highest ROI segments, like enterprise, B2B, and omnichannel. Operations throughout the company have been streamlined. Unnecessary and excessive expenditures have been eliminated. Company focus and alignment are better than ever. In sum, we believe we are an even stronger company operationally and financially than we were prior to the December restructuring. Longer term, we reiterate our belief that our business can achieve operating profit margins of 20% or higher, thanks in part to our strong gross margins of 75% plus. As RA will outline, this operational excellence and rapid path to profitability is reflected in our guidance for 2023. Next, I'll provide an update on the substantial progress relative to our core strategic initiatives in 2022. At this time last year, I walked through our three strategic pillars, Open SaaS, disruptive innovation, and commerce as a service, and the five strategic priorities that support them. Today, I'll briefly review those and discuss the progress we made in 2022, as well as our commitment to these areas this year. Our differentiated Open SaaS technology approach is our first strategic pillar. It combines a truly modern approach to API-first composability with the inherent benefits of multi-tenant SaaS, including built-in performance, security, usability, innovation, and lower total cost of ownership. This combination helps businesses turn digital transformation into competitive advantage. Our software conglomerate competitors attempt to lock customers into their proprietary suites. In contrast with Open SaaS, We provide a configurable and flexible platform that enables complex businesses to adopt best-of-breed technology solutions and customize their e-commerce approach to their specific needs. Our next strategic pillar, disruptive innovation, is the business strategy to extend upmarket propelled by an ever-higher performing product at a lower total cost of ownership than established incumbents. Our enterprise capabilities enable high-end merchants to expand faster and further at a much lower cost, while providing advanced functionality to smaller businesses that allows them to grow and scale without ever having to re-platform. Our final strategic pillar, commerce as a service, describes our ability to enable partners to create and sell customized commerce solutions powered by our platform technology. We aim to leverage our Open SaaS platform to empower our ecosystem, not compete with it, And through commerce as a service, our partners can combine the power of our platform with their unique use cases and competitive offerings to create comprehensive solutions for their target markets. The three pillars of open SaaS, disruptive innovation, and commerce as a service remain core to our strategy in 2023. We are laser focused on two big objectives this year, achieving global leadership and enterprise and reaching profitability on an adjusted EBITDA basis in Q4. By prioritizing our investments in staffing to focus on enterprise growth, we are confident we can both grow our enterprise e-commerce leadership position and accelerate our profitability timeline. The continued success of an investment in our five strategic priorities will be critical to deliver these goals. In 2022, we delivered our biggest advancements to date in terms of true enterprise-grade functionality and composability. Our launch of multi-storefront capabilities was a major milestone. This enables businesses to easily launch and manage multiple storefronts from a single BigCommerce backend. Customers can now launch additional brands, geographies, and customer segments, such as B2B in addition to B2C, at much lower operational costs and complexity than with distinct infrastructures for each storefront. We also bolstered flexibility. for enterprise merchants through our launch of multi-location inventory APIs. These APIs enable customers to execute more complex order fulfillment scenarios, including buy online, pick up in store, and multi-warehouse shipping optimization. Major new brand launches during 2022, including Ted Baker, Taste of Chicago, One King's Lane, Ollie Pets, Mountain Equipment Company, and Lifetime Brands, leverage enterprise capabilities like these to power their growth. Our omnichannel offering helps customers advertise and sell successfully through more channels than they could on competitive platforms. In 2022, we made remarkable progress following our 2021 acquisition of Feedonomics, the industry's best solution for managing product catalog integrations at scale into more than 100 of the world's foremost search, advertising, social network, and marketplace channels. Major channels enabled include Amazon, Walmart, Target Plus, Google, Microsoft, MercadoLibre, Facebook, Instagram, TikTok, and most recently, Snap. Just last week, we announced a new strategic partnership with WPP to offer omni-channel solutions to help WPP clients drive growth and maximize sales across hundreds of advertising channels and marketplaces. This innovative partnership will give WPP priority access to new product tools on both big commerce and feedonomics, in addition to providing APIs and data sets that will enable WPP agencies to develop unique insights for clients across product trends and purchasing data. New Feedonomics customers added in 2022 included Tottenham Hotspur, a marquee English Premier League football club for both advertising and marketplace channels. Landmark Group, one of the largest retail and hospitality conglomerates in the Middle East, Africa, and India. and Les Mills, a $150 million plus fitness company headquartered in Auckland, New Zealand, as well as many others across multiple e-commerce platforms. Feedonomics is a platform agnostic solution. We will continue to invest in Feedonomics' ability to meet the needs of the world's largest merchants and advertising and marketplace partners, whether they are using BigCommerce or competing e-commerce platforms. Within BigCommerce, we launched our new Certified Omnichannel Partner Programs, both for agency and technology partners. This enterprise-focused initiative gives partners new ways to generate revenue by helping merchants on any e-commerce platform achieve omnichannel success. Armed with numerous tools, services, and exclusive channel partner programs, partners can educate and guide merchants on how to strategically expand into new channels that can drive more traffic with higher shopper intent, improve return on ad spend, and generate more GMV. We welcomed Amazon Buy with Prime into the program, and in January, BigCommerce became the inaugural partner for the launch of Buy with Prime, which allows BigCommerce merchants to easily sync their existing catalog across Amazon and BigCommerce and deploy the Buy with Prime button on their sites. In January, we also started a new partnership with Microsoft Ads and Listings, allowing BigCommerce merchants to create and manage ad campaigns across Microsoft's extensive properties. B2B e-commerce has gone through a major evolution over the last few years. B2B buyers increasingly expect a modern experience similar to what they see in consumer-focused e-commerce. That means B2B businesses must provide speed and ease of use without compromising the complexity and uniqueness of the B2B buying journey. Building on the 2021 launch of B2B Edition, Our 2022 acquisitions of Bundle B2B and B2B Ninja completed a foundation for BigCommerce to become the world's most flexible and easy to deploy B2B platform. Bundle B2B powers the functionality of our B2B edition and B2B Ninja offers best-in-class B2B quoting capabilities. By incorporating this range of functionality natively within BigCommerce, we have made B2B e-commerce practical and attractive for businesses of all sizes. Our B2B offering has achieved widespread industry recognition from leading analysts, including Gartner, Paradigm, and Forrester. We further enhanced our international footprint with notable 2022 country launches in Germany, Austria, Spain, Denmark, Norway, Sweden, Mexico, and Peru. Expansion markets contributed to revenue growth of 34% in EMEA and 42% in Latin America. Notable international brand launches included British Airways IAG Loyalty, Jimmy Brings, MKM Building Supplies, Industrial Tool Supplies, and Mexico's Chivas Soccer Club. In addition, we collaborated with partners to grow our presence in markets including China, Korea, Poland, India, and UAE. The last of our five strategic priorities is composable commerce, of which headless is an important subset. Composable commerce gives merchants the freedom to mix, match, and combine best-in-breed tech vendors to create a customized and robust technology stack. With BigCommerce's open commerce approach and commitment to mock alliance principles, B2B and B2C merchants can make smart technology investments that are agile, functional, and flexible. In an unpredictable economy, flexibility and composability are especially important. Our open platform is unrivaled in its ability to let merchants build the technology stack that best serves the needs of their customers and their businesses. Finally, I'd like to conclude by speaking at a high level about our plans and operating focus for this year. How we are investing and winning in market has not changed. Our strategic focus and initiatives have not changed. We have a great product and leadership position in global e-commerce. I believe continued leadership requires commitment, discipline, and resolve, staying on strategy, even as market conditions may require tactical adjustments from one year to the next. We intend not to overreact or overcorrect in a way that disrupts long-term growth. Our actions over the last several months reflect this. We chose to focus our time and go-to-market spend on the superior economics of the enterprise segment. Last quarter, we shifted sales and marketing resources away from non-enterprise prospects with shorter sales cycles to enterprise prospects with longer sales cycles. We did this knowing it may impact bookings growth in the first half of 2023 because the superior retention profile of enterprise businesses makes this the right priority for the medium and long term. We saw that effect in our Q4 results as well. In addition, we restructured elements of the business to accelerate our timeline to profitability in the Q4 of this year while still maintaining key investments in our long-term strategic priorities. These were not easy decisions, but they've already made us an even stronger company with an accelerated timeline to profitability. In conclusion, a challenging operating climate requires leadership to adapt, improve, and strengthen both strategy and execution. I believe our team successfully rose to the challenges of 2022 while positioning us for continued success in 2023 and beyond. Our plans reflect the prioritization of improved operating margins and cash flow, balance with focused investment and enterprise such that we continue to grow our leadership position in global e-commerce. Profitability and enterprise focus are the commitments of our leadership team to our customers, partners, and shareholders. We remain proud and excited to serve you all. With that, I'll turn it over to RA.

Thanks, Brent, and thank you, everyone, for joining us today. During my prepared remarks, I'll walk through our Q4 results. provide details on some of the key assumptions behind our 2023 plans, and conclude with discussion on our Q1 and full-year revenue guidance. In Q4, total revenue was $72.4 million, up 12% year-over-year. Subscription revenue grew 14% year-over-year to $53.3 million, while partner and services revenue, or PSR, was up 6% year-over-year to $19.1 million. For the full year 2022, revenue finished at $279.1 million, up 27% versus 2021. Subscription revenue and PSR were up 33% and 13%, respectively, year over year. In Q4, revenue in Americas was up 12%, while EMEA revenue grew 22%, and APAC revenue was down 6% compared to prior year. For the full year 2022, Americas and EMEA revenue were up 28% and 33% respectively year over year, while APAC grew 9% year over year. 2022 was a tough environment for e-commerce and SaaS software. Despite those headwinds, we posted solid growth in subscription revenue, especially in the Americas and EMEA where we launched in new markets. We also generated PSR growth that outpaced consumer spending in e-commerce as a whole. I'll now review our non-GAAP KPIs. Our ARR grew to 311.7 million, up 16% year-over-year. That represents a sequential growth in total ARR of 6.4 million. Enterprise account ARR was 224 million, up 30% year-over-year, and is up more than 2.2 times from where it was just two years ago. As we have outlined previously, the change in total subscription ARR which can be calculated by subtracting the trailing 12 months of PSR from total ARR, is a good indicator of our underlying change in net bookings during the period. Subscription ARR was up 5.3 million versus Q3 and up 17% year-over-year. As Brent mentioned, like many other enterprise software companies, we continue to see longer sales cycles and a tighter deal pipeline. Q4 subscription ARR growth reflected the challenges of that dynamic. Again, we are confident that the investment choices we are making are the correct ones, focusing on long-term profitable growth with enterprise accounts. We expect subscription ARR growth rates to improve in time as our pipeline investments and prioritization choices are fully realized and as we close larger and larger accounts. At the end of Q4, we reported 5,786 enterprise accounts, up 750 accounts, or 15% year-over-year, including feedonomics. ARPA, or average revenue per account, for enterprise accounts was $38,708, up 13% year-over-year. Enterprise ARPA was approximately flat quarter-over-quarter as sales cycle times at some enterprise merchants lengthened. We have built our 2023 plans conservatively in line with this dynamic. Finally, net revenue retention, or NRR, from enterprise accounts was 111% in 2022 compared to 118% in 2021. 2022 NRR was impacted by tightening consumer spending that led both to PSR growth rates below that of 2021 and fewer orders driven subscription upgrades. I'll now shift to the expense portion of the income statement. As a reminder, unless otherwise stated, all references to our expenses, operating results, and per share amounts are on a non-GAAP basis. Q4 gross margin was 76%, up 57 basis points from the previous year, while gross profit was $55.2 million, up 12% year over year. In Q4, sales and marketing expenses totaled $30.5 million, up 10% year over year, This represented 42% of revenue, down 69 basis points compared to last year. Sales and marketing expenses were down 1 million, sequentially from Q3, driven by expense reductions and demand generation activities focused on the non-enterprise segment of the business. Research and development expenses were 19 million, or 26% of revenue, down 147 basis points from a year ago, on approximately flat spending sequentially from Q3. We have prioritized product roadmap initiatives that aim to bring greater enterprise functionality to merchants of all sizes. And we are working diligently to maintain the investments needed to fuel enterprise product improvements while also realizing better operating results on the bottom line. Finally, general and administrative expenses were 15.1 million, or 21% of revenue, down 224 basis points from a year ago. This is down $1.8 million sequentially compared to Q3 due to lower staffing costs and continued operational improvements. In Q4, we reported a non-GAAP operating loss of $9.4 million, a negative 13% operating margin. This compares with an operating loss of $11.6 million or a negative 17.9% operating margin in Q4 2021. and an operating loss of $11.5 million or a negative 15.9% operating margin in the prior quarter. Recall that we guided to a non-GAAP operating loss range for the quarter of $12.3 to $14.3 million. We delivered strong underlying cost reductions apart from any restructuring efforts, which reinforces our confidence that we will achieve profitability on an adjusted EBITDA basis in Q4 as we announced in December. Adjusted EBITDA was negative $8.6 million, a negative 11.9% adjusted EBITDA margin, compared to negative 16.8% in Q4 of 2021. Non-GAAP net loss for Q4 was negative $7.7 million, or negative $0.10 per share, compared to negative $12.1 million, or negative $0.17 per share last year. We ended Q4 with $305 million in cash, cash equivalents, restricted cash, and marketable securities. For the three months ended December 31, 2022, operating cash flow was negative $2.7 million compared to negative $8.8 million a year ago. We reported free cash flow of negative $3.7 million, or a negative 5% free cash flow margin. For the 12 months ended December 31, 2022, Operating cash flow was negative $89.4 million, declining from negative $40.3 million a year ago. We reported free cash flow of negative $94.6 million, or a negative 34% free cash flow margin. Note, both full-year operating cash flow and free cash flow results include $32.5 million paid in Q3 as part of the Fedonomics first anniversary acquisition-related payments. These full-year results compare to negative $43.6 million and a negative 20% free cash flow margin in 2021. The remainder of my remarks focuses on our outlook and guidance for 2023. For the first quarter, we expect total revenue in the range of $69.7 million to $72.7 million, implying a year-over-year growth rate of 6% to 10%. For the full year 2023, we expect total revenue between $301 million to $313 million, translating to a year-over-year growth rate of approximately 8% to 12%. I'll now discuss some of the expectations underlying this top line guidance. Q4 subscription ARR grew at a slower pace than we have seen in recent quarters. We have built our financial plans assuming similar conservative bookings growth in 2023. We believe we can generate 20% or higher enterprise ARR growth rates in 2023, which we expect to be offset by the contraction in the non-enterprise segment of our business in the mid to high single digits. This guidance also includes the estimated impact of announced pricing changes to take effect across Q1 and Q2. While we were encouraged by the resiliency in consumer spending that we observed in Q4, We observed moderation in platform orders and GMV as we exited Q4. This is consistent with recent economic reports, including recent U.S. Department of Commerce data highlighting lower e-commerce growth in Q4 than in recent years. While we are hopeful that macroeconomic forecasts and consumer spending will prove conservative, we have built our 2023 financial plan, assuming a modest deceleration in same-store platform GMV and order growth year-over-year. We expect this to impact subscription pricing upgrades and PSR growth, and we have tightened budgeted spending accordingly. For Q1, our non-GAAP operating loss is expected to be $8.2 million to $12.2 million. For the full year, we expect a non-GAAP operating loss between $15.7 million and $22.7 million. Our entire industry faces an uncertain macroeconomic climate. Consequently, 2023 will be a year focused on driving profitability while focusing our go-to-market resources on enterprise accounts. Our plans anticipate strong spending discipline across our business while accounting for prudent top-line growth assumptions. Hiring will remain limited compared to prior years. We are not planning material expansion into new countries or geographies in 2023. Rather, we will focus our international investments on gaining scale in existing, recently launched countries. We are confident that the expense reduction actions we have taken, combined with limited hiring and tight expense management, will enable us to deliver our commitment and hit profitability in Q4 of this year. We see strong, durable, underlying health in the business that gives us great confidence in the success of these efforts. Enterprise retention rates and LTV to CAC results remain strong. Win rates remain healthy. The complexity and size of deals in our pipeline continue to move upmarket. We have an outstanding product, gaining widespread recognition across our industry. We have more excitement and momentum with our agency and technology partners than ever before. We have a strong balance sheet, and our business is heavily concentrated in established merchants with enterprise requirements. These are strong, healthy merchants that prove durable even in down economic cycles. As I said earlier, we believe we can generate 20% or higher enterprise ARR growth rates in 2023, which we expect to be partially offset by contraction in the non-enterprise segment of our business in the mid to high single digits. We also believe enterprise accounts could represent nearly 80% of total ARR by the end of 2023 or early 2024. Our plan puts us on a path to end the year with a strong base of enterprise accounts and sales pipeline as a profitable company, all while maintaining a strong balance sheet. This is a strong profile on which to base our 2023 plan. Finally, I'd once again like to thank all of our incredible employees, merchants, and partners. 2022 was not an easy year. Our results reflect the resilience and dedication of our employees, and the care and attention that we feel for our merchants and partners. I'm proud of our results in a tough climate, and I'm very excited about the progress this business will make in 2023. With that, Brent and I are happy to take any of your questions. Operator?

We will now begin the question and answer session. To ask a question, I press star, the one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To reply to your question, please press star then 2.

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

Our first question will come from Gabriella Borges with Goldman Sachs. You may now go ahead.

Good afternoon. Thank you. I appreciate the detail on the two impacts to your bookings in the first half from cost reallocation plus macro. I want to better understand the rate of change. Are you still seeing further deterioration in bookings as we speak, or are you seeing stability at a lower multimeter level?

Hey, Gabby. Yeah, in terms of bookings, I'll say that it's stabilized on enterprise. In terms of the non-enterprise contraction, we still see it in that kind of mid to high single digits. We did roll out recently pricing changes to our essentials plans, which really encourages upfront payment, you know, annual prepay. You know, we're focused on profitability this year, but we're also focused on improving our cash flow from operations. There is an element and an option to go monthly. With that monthly price, there is an increase in terms of our standard plus and pro plans. For our base of merchants, that really doesn't take effect until the June timeframe, so really the impact of that isn't going to be seen until the back half of this year. Based on the impact of that pricing, based on the mix of annual prepay or monthly, we're not building in a big impact from that pricing action, but we do think that the second half could potentially get down to the mid to low single digits on non-enterprise. For enterprise, very, very focused on building that pipeline. I think the lead flow since the beginning of the year is encouraging. I think the quality of leads are encouraging, especially with larger accounts. And then in the addition of commerce as a service, where we typically see larger opportunities with partners that also carry some longer sales cycles, we're building in assumptions around the close rates and the timeline to close to where we see uh, better bookings by mid-year and definitely through the back half of 23. Okay.

Thank you for the detail. Our next question will come from Scott Berg with Needham.

You may now go ahead.

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

I guess a couple things.

Wanted to first talk about the confidence in the enterprise segment. I was at the NRF conference a month ago, and all the chatter amongst other vendors in the space seems to be enterprise or demand in the enterprise-type segment remains pretty constant versus down-market, smaller customers, which is certainly waning versus boom in the last couple years. I guess when you look at all that, especially with the macro backdrop, why are you so confident in still being able to grow the enterprise segment of your business at this 20% plus rate here in 23?

Hey, Scott, this is Brent. I'll take that. And it was indeed nice to see you on the floor at NRF, which tends to attract a larger enterprise retail customer set relative to some of the other e-commerce events. We have a lot of confidence in our enterprise momentum and positioning. As you can see, we ended the year at 30% ARR growth for enterprise, which is dramatically higher than the 7% GMV growth in U.S. e-commerce across the course of the year and probably a roughly comparable number globally. So we gained a lot of share in aggregate in this last year. Our product, we think, is The is uniquely positioned in the market because in an environment where enterprises are trying to save money, become more profitable and simplify their approach to e-commerce while excelling, we do that better than anybody. We truly simplify the approach to enterprise e-commerce by having a SAS model with so much ease of use and functionality built in that deploys quickly. and then has the most modern connections in the various omni-channel demand generation channels, increasingly we're being rated the best or one of the very best e-commerce enterprise platforms in the world for both B2C and B2B. You see that with Forrester, Gartner, IDC, eMERS in Europe. And so the outside experts, when they evaluate enterprise platforms, they're saying we're the best or one of the very best. And that is being corroborated by the share gains that we had during the course of the year. So, you know, that's a multifaceted answer to your question. I could go on at length about the product and its capabilities, our partners and theirs, but I think I'll summarize with that.

Thanks, Brent. That's quite helpful. I guess as a continuation on that, I think if we look at your innovation over the last couple of years, whether it's multi-store, multi-inventory, a variety of other things and functionality that you've called out, you seem to believe you're at feature parity today relative to the other platforms or have surpassed them. As you continue to evaluate what's out there, do you feel like you're missing anything to capitalize on those goals today or is what you have plenty of horsepower to meet the next couple of years? Thank you.

I think at the highest level, we have delivered the major components of an enterprise platform, both in terms of functionality and flexibility. There are always both new innovations that are important to the market, as well as individual features that might help us grow in given countries, given industry segments, et cetera. There's a lot of upside from what we're doing in B2B, whereas I would say on the B2C side, we're a very, very, very fully competitive enterprise platform. We will get there during the course of this year as we fully integrate and improve and expand on the functionality of both B2B Ninja and Bundle B2B, which we acquired. I'm really excited to say that we're now multi-storefront compatible with our B2B offering and theme independent. And we have some incredible product releases that I think will be industry leading during the course of this year. So I would say we're 95% of the way to the current market, but the market's always dynamic on B2C and maybe 80% of the way there on B2B, but with a very aggressive agenda for this year.

Thanks for the questions. Thank you so much.

Our next question will come from DJ Hines with Canaccord Genuity. You may now go ahead.

Hi, this is Daniel Reganon for DJ Hines. Thanks for taking our questions. Um, maybe I'll start Brent, uh, as we think about the launch of the new certified omni-channel partner program, are there components of this that would incentivize those partners that might be multi-vendor to bring more business towards. Big commerce. And then second to this, you talk about what the customer expansion strategy looks like at the partner level.

absolutely uh i love that question the answer is yes as background our certified omni channel partner program includes both agency partners and systems integrators as well as advertising agencies and technology partners really anybody who serves businesses in a way that helps them expand they're advertising and selling channels to the leading search engines like google uh and microsoft who we just added the leading social networks facebook instagram tech talk snap etc the leading affiliate networks the leading display ad platforms and the leading marketplaces like ebay and especially amazon where we announced our buy with prime integration so what Feedonomics does. It's the world's best platform for enterprises to get their catalogs not just synced into all of these advertising and selling programs, but also optimized to perform with the keywords and the schema exactly the way that those various channels want them to improve both organic performance as well as return on ad spend. So that's the background. An agency, Feedonomics is not platform dependent. Although we have an incredible integration into BigCommerce, many of their customers are giant enterprises on custom platforms and on competing platforms to BigCommerce. Fedonomics integrates and has integrations into all of them. And so what's relevant is that for any given agency, let's say that X percent of their merchant base is using BigCommerce, it may be 20 percent, it may be 80 percent. Feedonomics and the Omnichannel program is not just relevant to 100%. It's actually probably the single highest ROI thing that the agencies can do to help those businesses expand demand generation and improve their return on ad spending. So it's extraordinarily powerful. Of course, most businesses spend a lot more money on their advertising and demand gen than they do their technology stack. So this is a very leveraged way for our omni-channel partners to have a completely independent and incremental way to help their customers and drive business. In answer to your second question, yes. So when a business starts working with feedonomics and starts usually realizing a very significant improvement in their performance within days or weeks, it naturally builds a relationship with the broader big commerce entity. which may or may not lead to other conversations down the road, but it's important to note that we're not compromising Feedonomics' ability to serve all merchants and do that in a way that is respectful of the platforms and the technology stack that those merchants have.

Thanks for the question.

Gotcha, excellent. Thank you for that, Brent. And then just one for RA, and really appreciate the time. As we largely pass the non-enterprise challenges by the end of 1H, what are your expectations for non-enterprise growth beyond 1H, going into 2H and beyond? What's the strategy for turning non-enterprise business into more of a product-led self-serve motion? I know enterprise has been getting a lot of attention, but maybe you can shed some light on some of the work that's being done there and what your growth expectations might be. Thanks very much, guys.

Sure. I mean, in terms of the second half, we do think that non-enterprise will stabilize. As I mentioned earlier, TBD on the pricing impact, but that could potentially reduce the contraction as we exit 2023. We do believe by early 2024, by then, most of our non-enterprise accounts will be transacting merchants who are established with, you know, have better retention profiles and that by nature is going to improve that contraction level as most non-enterprise accounts would churn, you know, in that first kind of 12-month period. In terms of how do we sign up additional non-enterprise accounts, we're definitely going, you know, tech partner and agency partner, the whole partner ecosystem is is one where it's still going to drive both enterprise and non-enterprise accounts. We also have self-service flows that we're going to continue to optimize. We're just not going to spend a lot of our sales and marketing go-to-market dollars to drive those accounts. I mean, if you think about our initiatives that are so squarely tied to disrupting enterprise, it is omnichannel, it's B2B, it's composable headless commerce. You know, if you peel the onion back on Omnichannel, you know, the vast majority of subscriptions from Fedonomics are enterprise accounts. When you use BigCommerce cross-sells Fedonomics, it's usually enterprise accounts. When you think about B2B, those are majority enterprise accounts and ARR. And if you think about Composable, it's really the same. So Gabby asked the question in terms of our confidence level to deliver north 20% or higher enterprise ARR growth throughout the year, it's squarely tied to those initiatives. And, you know, the ecosystem that we have, the partners that we have are all, you know, part of building out that enterprise growth for this year and into next year.

Our next question will come from Koji Ikeda with Bank of America. You may now go ahead.

Hi, this is George McGree, and I'm for Koji. I had a question on, you might have seen Shopify announce today a revamped partner program to incentivize and drive partnership growth and growth through partners. So I was wondering, in light of that, if you had anything to call out in terms of changes in the competitive environment or maybe changes in competition with Shopify specifically.

This is Brent.

Lots of respect for them, obviously, as a company and a competitor. They're very strong. Much of what they're doing is catch up. I mean, with respect to enterprise, their, you know, promotion of both enterprise as a segment of composable and having a certified program for partners are all things that we've been doing for years. We've been doing headless and composable since 2016. Um, we've had partner certifications around development for, uh, you know, quite a period of time. And we've been enterprise focused, uh, for a long period of time to now with our go to market as well, but in our products since 2015. So, um, they're indeed trying to move up market. They like us recognize that the economics in terms of retention, And unit profitability are very strong in that segment. So, you know, they'll keep competing, but we have dramatically different offerings to the market. We are open and not trying to push a suite to customers. Instead, we're giving them the best enterprise platform in the world. And then they, for a complex business, associate the world's best payment solutions, shipping and fulfillment. point of sale, any other components of a stack to optimize for a complex business rather than a sort of one size fits all suite. So two very compelling offerings and a segment of the market will view us as having the best offering in the world and another segment will pick them. But increasingly, we're really the two lead options out there and well differentiated and distinct from one another in the types of merchants we went and served.

That makes a lot of sense. I had a question on EMEA growth, you know, is robust. And, you know, could you maybe, you know, provide some color on the drivers of that and, you know, maybe how we should be thinking about EMEA as a growth factor over the medium term?

Yeah, we had a very good year of selling in EMEA relative to the internal plan for gross new sales. It's very strong. And during the course of the year, we expanded our footprint to major new regions. We expanded into the Nordics. We expanded in Germany and Austria. And that was all added to existing countries like Italy and France and Spain and the Netherlands, where we already had a presence. In each country, there are a different set of merchants, a different set of partners. It takes a little bit of time to establish a network there and start selling effectively, but we're seeing great traction and great wins and examples in all of those regions that I've mentioned on top of our historic super strong base in the UK. Long term, I think we are extremely well positioned to compete in Europe. Europe has the most complexity because of countries, languages, and currencies. That type of complexity naturally favors a business like ours, a product and platform like ours that has native multi-storefront, full support and leadership in headless or composable. We make it a lot easier and more scalable to add country and serve the complexities of Europe. And then when you can do it both B2C and B2B, even better. So we're very bullish on Europe. We're very proud of the job that team is doing. and expect it to be a continued strong driver of our growth in the years ahead.

Our next question will come from Samad Samana with Jefferies.

You may now go ahead.

Hi, good evening. Thanks for taking my questions. Maybe first, RA, I wanted to follow up on the commentary about the contraction for the non-enterprise segment. Should we think about that more as a function of a decline in same-store sales GMV at those customers or more as a function of churn or downgrades of SKUs? I'm just trying to understand what's driving that contraction. Is it more on the downgrade side from SKU levels or more around churn? And what I guess What have you experienced the first couple of months into the first quarter versus what you just guided for that's based into the full year guidance?

Yeah, you saw it in Q4 that's carrying over into Q1. I mean, essentially, it's the retention profiles of enterprise versus non-enterprise accounts. You know, we have a base of non-enterprise accounts that are contracting. We're not... investing a lot in terms of building funnel and spending our sales and marketing dollars to replace any ones that would churn with new accounts. Over time, I think that as those cohorts of transacting, and I want to emphasize that because the non-enterprise accounts who are transacting and are established, they do quite well. Their retention profiles are quite strong. We expect them to not only stay on the platform but grow on the platform We do think that that's going to improve over the course of the year as the maturity of the cohorts that are maybe in the last 12 to 15 months, we find out whether or not they're going to stay or go. But I think overall, going into 2024, we should exit this year with a more stable non-enterprise business. And who knows? I mean, with commerce as a service, We do have tech partners that we go to market with that oftentimes will bring not just enterprise accounts, but non-enterprise accounts to BigCommerce where we're not spending or investing in sales and marketing, but they're selling BigCommerce into their base. And we're not factoring the impact of that, but that could definitely stabilize non-enterprise, if not grow it in the years ahead.

Gotcha. And then maybe just on the overall full-year guidance, I know you gave the total revenue outlook, but should we expect the spread to widen between subscription revenue growth and maybe PSR growth? Or just how should we actually think about – I know you, again, gave commentary around save-store-sale assumptions on GMB and order growth, but just how should we think about subscription revenue versus PSR in that full-year guidance assumption?

Yeah, I would say in the first half, they're going to grow roughly in line with each other. As we close some of our larger deals and we see that kind of impacting mid-year, second half of the year, subscriptions should pick up in terms of revenue. The revenue would recognize on those bookings. On PSR, the biggest driver of growth that we see this year is launching major accounts that we have line of sight to launch. We have a number of accounts that we're excited to launch, and the impact of those accounts are going to drive elevated GMB as well as PSR, you know, in Q2 or by mid-23. Great.

Appreciate you taking my questions. Sure.

Our next question will come from Remo Lenshow with Barclays. You may now go ahead.

Hey, thank you. just quick questions. Like obviously, you know, macro is a problem and there's not that much you can do about it. What do you see? How do you think this will play out in terms of periods? Because obviously the, you know, the online retailers are suffering at the moment. Do you think that that's just a time period? And then once, you know, they all are through that pain, it starts kind of picking up from there again. Do you think that's an ongoing thing as people renew the kind of, you know, they don't need to renew or even lower. Like, how do you see this playing out from your perspective? Thank you.

Hey, Raimo.

Go ahead, Brent. I'll let you go.

Hey, Raimo. I mean, we're building our plans for this year in a way where obviously we want to enter the year with a high level of confidence on the top line. Just like we did last year, you know, the initial guidance we set when we wanted to make sure we were able to achieve that top-line guidance for the year. We're not baking in or assuming improvements in the macro with our plans. We're assuming, you know, the challenging environment persists throughout the year and, you know, building our spend plans accordingly. So high confidence on the top line and then building our spend plans to ensure that you know, we get to that profitability point in Q4.

Okay, thank you. Our next question will come from Josh Baer with Morgan Stanley.

You may now go ahead.

Great, thank you for the question. You had a really strong quarter as far as new enterprise account additions and then the ARPU sequentially was a little bit weaker. Did you mention in the prepared remarks that that was driven by sales cycle times lengthening? I was just wondering if you could expand on that. How does that dynamic impact ARPA?

Yeah, you bet. I mean, some quarters will have a lower number of new accounts, but bigger deals. In some quarters, it'll be a higher volume of accounts, but the size of deals could be lower. I think Q4, we saw a number of deals that... probably more look like in the mid-market range. We had some large enterprise deals that due to sales cycles maybe pushed into Q1. But I think that's more of a mix issue than anything else.

Okay, got it. So a little bit of a mix of customer change in the quarter. But then like thinking ahead to the 20% plus enterprise ARR growth, any context for how that growth is derived between ARPA and new accounts? Thanks.

It's a combination of both. I mean, we build our pipeline looking at size of deals, size of merchants, size of accounts. We are building our enterprise or larger enterprise pipeline nicely. And I think it's going to be one where You may have, again, quarters where we sign really large deals. And if that's the case, the ARPA is going to be higher. Maybe some quarters where we sign both. But I think for us, we're looking at the pipe, looking at kind of size of merchant, size of opportunity. And we're building our pipeline to where we're really now have opportunities to win larger deals, especially with the conviction that our partners have with BigCommerce the opportunities that they see for us with the merchants they work with. So we're going to look at it both, and that mix should continue to affect both ARPA and number throughout the year.

Okay, so there could be some puts and takes in any given quarter as far as ARPU, but the general trend line should still be looking for growth from these levels.

Yeah, for sure. I mean, it goes back to my comment around how our initiatives are squarely tied to driving enterprise accounts and our commerce as a service initiative, how we go to market with partners also drive enterprise accounts. So all of that is factored in.

Thank you. Sure.

Our next question will come from Brian Pearson with Raymond James. You may now go ahead.

Hi, thanks for taking the question. I just wanted to, this is John for Brian. As you guys look at the pipeline of new business, where do you see the biggest share of customers that are migrating to your platform? And I'm curious your view on how the choppy macro maybe impacts migration. Does the TCO savings become a bigger part of the logic for potential customers? Thanks.

Yeah.

In fact, we just had a partner event in both Europe Australia and here in Austin for North America and a common theme across all of these events is that more than in any prior year profitability and total cost of ownership are absolutely essential and therefore the strongest contributors to migrations to big commerce are going to be the platform the legacy platform options that are most expensive the single most expensive is a custom platform where your engineers are responsible for all the code, all the hosting, managing the hosting, the security, the versioning, the bug fixing, et cetera. The next most expensive will be on-premise software like Magento or legacy platforms, Oracle ATG, IBM WebSphere, SAT, Hybris, and then a long list of old ones. Finally, there are some sort of outdated and antiquated SaaS platforms that are still pretty expensive to maintain because you have to do so much to keep them up to date. And all of those are very good contributors to us and play into our strengths because we provide so much enterprise functionality and ease of use at a very competitive total cost of ownership.

Thanks for the question.

Again, if you have a question, please press star, then one. Our next question will come from Mark Murphy with JP Morgan. You may now go ahead.

Hey, guys. Thanks for taking the question. This is Artie Vuon from Mark Murphy. Just on the pricing change you guys have, any kind of, I know it's early, but any kind of feedback you're getting from customers on that, kind of the elasticity, and any expectation on how it's going to go between the billings and the pricing increase? Am I right to assume that most of the enterprise customers are already on the annual billing?

Well, I'll start there, and it's way too early to tell because it just went out today, but I passed one of our great leaders in the hall, and he said, wow, we sure had a lot of requests come in to switch from monthly to annual billings. on this first day of the announcement. Now, you can't draw a trend line through a single data point, but the good news is when people switch from monthly to annual, the way we've changed the prices, they're paying us basically the same amount, but now we get all the money up front. So it's a wonderful benefit in terms of free cash flow. And with time, we'll see how that peters off, especially when they get to the January 1st date on existing customers where they the new pricing goes into effect. So most of the ones who want to keep their monthly bill the same will switch to annual by that date. And we just don't know what that mix will be. But in either scenario, we're either getting a free cash flow benefit or we're getting a revenue benefit. Both of those are great for our business. In the enterprise area, this set of changes doesn't affect anything there. We have a separate set of incentives built into enterprise contracts that incent upfront payment, but it's still an opportunity of ours to drive ever higher adoption of that for free cash flow benefits.

And just to clarify, sorry, Brent, just to clarify, the effective date for the base of merchants that we have is June 1st, not January.

Oh, I'm sorry. I meant June 1st. You're right.

Yep, August 1st.

Great. Thank you. Our next question will come from Ken Wong with Oppenheimer & Co.

You may now go ahead.

Great. Thank you for squeezing me in.

Just one quick question for me. When we think about that second half inflation, I guess what's driving that confidence there? I guess when we think about the puts and takes? Is it purely just easing comps? Is it the pricing? Is it kind of the potential to see some enterprise uptick? We'd just love some color around that, either Brent or RA.

Yeah, I'd say it's, number one, it's kind of visibility into the pipeline in terms of the opportunities that we even see today. I think that it's also a function of a With PSR, it's a function of major account launches. So we do expect some major account launches to happen in the first half, which will impact PSR in the back half. And I think that that's probably the bigger drivers for both subscription and PSR in the second half versus first half.

Got it. Thanks for the clarification. Sure.

It appears there are no further questions.

This concludes our question and answer session. I'd like to turn the conference back over to Brent Bellen for any closing remarks.

Well, I just want to thank everybody for joining this call and following the company. It was a tough year in the macro economy, but we're really proud of our 27% top line growth. The fact that we were one of the very, very, very few e-commerce companies in the publicly traded world. to have not missed and actually achieved within or above the range of top line and bottom line that we set each quarter as well as for the full year. We gained a lot of share this past year. We know that the global economy is not out of the woods. There's still relatively soft growth and a real focus on profitability that can extend selling time cycle, but we see solid pipeline, and we're more excited than ever about our positioning in the market. We hope for another great year in 2023, and we look forward to the follow-on conversations with all of our investors and followers in the year ahead.

Thanks.

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