Commerce.com, Inc.

Ladies and gentlemen, thank you for standing by and welcome to BigCommerce's second quarter 2020 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Rohit Giri, Head of Investor Relations. Thank you. Please go ahead.

Good afternoon, and welcome to BigCommerce's second quarter 2020 earnings call. We will be discussing the results announced in our press release issued after the market closed today. With me are BigCommerce's president, CEO and chairman, Brent Bellum, and CFO, Robert Alvarez. Today's call will contain forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning financial and business trends, our expected future business and financial performance and financial condition, and our guidance for the third quarter of 2020 and the full year 2020. They can be identified by words such as expect, anticipate, intend, plan, believe, seek, or will. 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. Through our discussion of the material risks and other important factors that could affect our actual results, please refer to the risks discussed in today's press release, our final prospectus under Rule 424B filed with the Securities and Exchange Commission on August 5th, 2020, our quarterly report on Form 10-Q for the quarter ended June 30th, 2020 to be filed with the SEC, and our other periodic filings with the SEC. 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.

Thank you, Rohit, and good afternoon, everyone. Thank you all for joining us on our first earnings call as a public company. During today's call, Robert and I will provide details on our Q2 results as well as Q3 and 2020 full-year guidance. We will also spend more time than we will in future earnings calls covering the business, our strategy, and the opportunity ahead, as many of you may be new to the big commerce story. Feel free to grab some popcorn and a beverage. Let's kick this off with a few highlights of our Q2 financial results. Our goal is to deliver the best open SaaS e-commerce platform in the world. We are making consistent progress toward that goal, and that progress was reflected in our Q2 results. We believe we had a strong quarter, with Q2 revenue coming in at $36.3 million, which was up 33% year over year. Total annual revenue run rate, or ARR, was $151.8 million, which was up 32% year over year. Q2 revenue and ARR growth achieved our highest growth rates in 12 quarters, and so far after two quarters, 2020 represents our third successive year of growth rate acceleration. Enterprise account ARR was up 44% year-over-year in Q2, reflecting our continued momentum, serving the needs of mid-market and large enterprise businesses. These customers value our OpenSaf platform's enterprise functionality, flexibility, and lower total cost of ownership. Importantly, we deliver these results while continuing to drive operating leverage across the business, as shown by a 19 percentage point year-over-year improvement to our adjusted EBITDA margin. I am proud of our team, and I would like to acknowledge our BigCommerce employees and partners for their resiliency and dedication to serve and support our customers during these unprecedented times. For those of you who are new to the BigCommerce story, BigCommerce is a software-as-a-service platform that powers some of the world's most interesting and engaging e-commerce stores. We provide everything a business needs to create, manage, and grow an online store, from the design and hosting of the store through checkout, along with the tools that help a business merchandise market operate and grow. We handle the technology, allowing our customers to focus on what matters most to them, their products, their customers, and growing their businesses. e-commerce is participating in one of the largest and fastest transformations in human economic history, the global shift in commerce from offline to online. It took 23 years for e-commerce to go from nonexistent to 10% of all global consumer spending in 2017. eMarketer predicts it will take just six years for this percentage to more than double to 21% of global retail spending in 2023. E-commerce has seen explosive growth in part because it allows businesses to engage with their customers wherever they spend time online. It's no longer just about an online channel versus offline channel. It's about omnichannel, whereby consumers and businesses can shop flexibly across devices, websites, and selling formats. Search engines remain an important but minority starting point for e-commerce shopping journeys. Today, shopping experiences can start in social media or on a content site or on a marketplace or directly on a business's website. The best e-commerce platforms enable their customers to seamlessly and efficiently integrate their branded websites with the main sites their potential customers spend time online and offline. IDC estimates that the global market for digital commerce applications was $4.7 billion in 2019 and is expected to grow at a compound annual growth rate of 11% to reach $7.8 billion in 2024. This global market includes legacy e-commerce platforms and SaaS e-commerce platforms. Legacy on-premise software solutions are declining in store count and in platform spend. In contrast, SaaS e-commerce platforms are driving the industry store count and share gains. As a side note, our total addressable market is actually larger than that for e-commerce platform spending alone due to the additional revenue we earn in partnership with our technology partner ecosystem. We believe there are many underserved segments in e-commerce who are attracted to the big commerce value proposition of speed to launch, ease of use, high performance, and continuously updated benefits associated with multi-tenant SaaS. These include digitally native direct consumer brands, especially those with enterprise requirements, established brands that often have offline complexities, migrating sites that need the flexibility to retain functionality and integrations, multi-channel retailers, and businesses who are selling either B2B directly or in a hybrid B2C and B2B model. BigCommerce wins in the market based on five things that we think we do better than anybody else. First and foremost, we are an open SaaS solution. We offer the benefits of SaaS, but with the APIs and platform openness that allow complex businesses to integrate, modify, and customize their e-commerce stores based on their unique requirements. This resonates in the market with merchants of all sizes, but especially larger companies who have established businesses and require best-of-breed solutions and seamless integrations. Open APIs allow our customers to create a unique and tailored front-end experience, but with the native integrations and best-of-breed tools that store owners need on the back-end. And as a SaaS platform, we seamlessly introduce new features and capabilities on a continuous basis. Merchants automatically benefit from these updates without having to manage disruptive updates of their own static installations of open-source software. Second, we bring unique and native enterprise features and applications to our merchants, including our capability to also serve headless implementations with the world's leading content management systems, including WordPress, Bloomreach, Drupal, Acquia, Sitecore, and Adobe Experience Manager. Headless commerce is a dynamic and growing cross-channel category where we excel. Headless commerce demonstrates the power and flexibility of big commerce, and we power many hundreds of headless sites. Headless commerce involves the decoupling of the technology used to create the front-end user experience of the site with the engine that powers the back-end, including the product catalog, checkout, order processing, and everything that integrates into those. It's best used by sites who are very innovative with their design or marketing and are design-centric. I want to basically manage a unique user experience that differs radically from the traditionally templatized version of e-commerce that comes out of the box. We integrate seamlessly with leading CMSs, digital experience platforms, design frameworks, and custom front-ends. Third, we are a leader in cross-channel commerce. Cross-channel commerce involves the integration of a customer's commerce capabilities with other sites, online and offline, where consumers and businesses make their purchases. Our success is driven by the success of our merchants, so we offer free, direct integrations with leading social networks such as Facebook and Instagram, search engines such as Google, online marketplaces such as Amazon and eBay, and point-of-sale platforms like Square, Clover, Heartland, and Vend. Fourth, we offer lower total cost of ownership and higher return on investment. SaaS can be dramatically cheaper on a total cost basis than on-premise software. With SaaS, merchants save the cost of hiring software and hardware engineers. They save on software licensing costs. They save on hosting costs. They save bug fixing costs, versioning, security patches, upgrading. The BigCommerce platform includes all of these. Our simplicity and ease of use generates ROI for our customers. We offer enterprise stability and security without complexity. We can get customers up and running smoothly and quickly, sometimes in a matter of weeks. We offer developers the agility to innovate on our platform and integrate new solutions while offering best-in-class customer support for merchants of all sizes. Fifth and finally, there is performance and security. We recently completed the rollout of our new storefront architecture, and as measured by Google PageSpeed Insights, our platform benchmarks faster than leading e-commerce sites. Our faster response and page load times benefit customers by improving shopper experience and organic search engine page rankings. Our built-in security, including ISO 27001 certification, is highly valued by our mid-market and enterprise merchants. Businesses using on-premise software to power e-commerce have to manage the compliance and security of their e-commerce store themselves. With BigCommerce, customers get the benefit of the investments that we have made in uptime speed and security. We are proud to see the confidence that our customers continue to place in our Open SaaS platform, and we had a number of fantastic merchants launch with us in the first half of 2020. This includes sites from nine different Forbes Global 2000 corporations, such as Royal Dutch Shell, Diageo, Sharp Electronics, and two of the world's largest consumer packaged goods companies. Let me share a few specific examples of new store launches in the first half of this year that we are really excited about. La Perla is an Italian luxury apparel company who chose BigCommerce because of our open SaaS platform functionality and our cross-border multi-currency capabilities. The National Baseball Hall of Fame in Cooperstown's merchandise store chose our platform because it allowed them to use their preferred payment gateway, integrate with their retail point-of-sale software, and achieve lower total cost of ownership. Yeti Cycles, a high-end mountain bike manufacturer of which I'm a very happy customer, chose BigCommerce because of our Open SaaS platform's headless commerce capabilities, allowing them to take advantage of their existing front-end content management system while reducing total cost of ownership. PayPal QRC, PayPal's Quick Reference Code Store, represents a nice digital goods use case. They chose good commerce because of their robust APIs, which enabled PayPal's custom integrations, low cost, and fast time to market. And finally, Cheryltree, the leading store for all things tree care, chose BigCommerce because of our OpenSaf capabilities, which provided them with both B2B and B2C capabilities on the same site, faster time to market, and more native functionality versus our competition. We continue to invest and innovate to build the best Open SaaS e-commerce platform in the world, supported by and integrated with our extensive network of best of breed technology and agency partners. Some important examples of new product functionality and partner integrations include PageBuilder, which is our intuitive drag-and-drop visual merchandising and design tool. It enables merchants and especially their marketing and brand staff to build differentiated shopping experiences and tell their brand story with a simple drag-and-drop editor without entering a single line of code. Merchants can preview pages before publishing and make changes on the fly. The tool is open and allows developers and partners to innovate and extend it by building custom content widgets. We rolled out our order refunds API, which allows merchants and agencies to integrate third-party order management solutions with BigCommerce. We launched two new control panel languages, Italian and Spanish, for merchants who want to operate their stores in those languages. As we invest to build the world's best open SaaS e-commerce platform, we also invest to integrate and partner with best-of-breed technology extensions and services. I'll provide a few examples from the first half of this year. In B2B, we signed two new preferred technology partners. The first is System, who provides enterprise-grade insight into a merchant's inventory, orders, invoices, and more. The second is Bundle B2B, who provides B2B sellers with the seamless ability to review transactions and manage customer accounts. In payments, we completed a number of integrations to support our global merchants, including Elevon, Adyen, and WeChat Pay. We upgraded integrations with Klarna Multicurrency, PayPal Vaulting, and Google Pay on Authorize.net and BorrowClickCard. By partnering with these best-of-breed companies, we enable our merchants to pick the partner that best suits their unique requirements in the U.S. and abroad. We added additional multi-currency support for PayPal Express Checkout, Braintree, Elevon Converge, Klarna, Adyen, and BlueSnap. In cross-channel, we enhanced our existing strategic partnership with Facebook and Instagram, as we announced a couple of weeks ago. This partnership enables our merchants to easily connect their e-commerce storefront catalogs to Instagram and give customers the ability to buy from their favorite brands directly on Instagram. In other articles, we launched the second phase of our square point-of-sale integration. We improved non-U.S. tax automation by adding global support for Avalara AvaTax. Our partner, Acumatica, completed the integration of the ZRP solutions for finance, inventory, and fulfillment. Our open SaaS strategy resonates with merchants around the world and enables our continued international expansion efforts. In Q2, we delivered 55% year-over-year revenue growth in EMEA and 38% revenue growth in APAC. International expansion continues to be a core strategic focus for big commerce. We recently launched international marketing sites in France, Italy, and the Netherlands in order to better reach and serve merchants in continental Europe. We see enormous opportunity for international expansion and will continue to invest in our international product and go-to-market capability for years to come. Looking forward, we are pursuing multiple growth levers. We grow when our merchants' businesses thrive and grow on our platform. The pricing on our essentials and enterprise plans are designed to adjust as our customer sales volumes increase above thresholds. We also grow when customers purchase additional stores to serve additional brands, geographies, and use cases. We grow by acquiring new merchants of all sizes, from SMB to mid-market to large enterprise. We also seek to extend our sales and share in high-potential industries, customer segments, and use cases. A major industry example is B2B, which generates roughly a third of all e-commerce platform spend and is faster growing than B2C. We estimate that about 10% of our customers globally are primarily B2B sellers. A major segment example is large enterprise sites, which we define as having gross merchandise e-commerce sales in excess of $50 million. Our recent favorable reviews by leading industry analysts like Gartner and Forrester Research have favorably positioned us to grow share among the large enterprise implementations. A major use case example is Headless Commerce, as described above, whereby we serve customers who utilize popular content management systems, progressive web apps, and or custom design frameworks in conjunction with BigCommerce. Third, we grow by expanding our product and go-to-market capabilities in geographies around the world. BigCommerce serves the needs of merchants in over 120 countries in a wide variety of languages and currencies, self-serve usability in new geographies by translating our control panel into local languages and enabling the integration of local payment processors. We support the growth of mid-market and large enterprise customers around the world by expanding our regional sales and marketing capabilities. We continue to invest in Europe, Latin America, and Asia. Our strong revenue growth rates outside of America show these investments are working, and we seek to continue this for years to come. Finally, we grow by expanding our technology ecosystem and the revenue we earn in partnership with it. In contrast to our largest competitors, we are not a software conglomerate. We seek to be the platform industry leader at collaborating with, not competing against, the broader e-commerce ecosystem. Our apps marketplace is one of the largest of any e-commerce platforms. It includes payments, shipping, tax, accounting and ERP, marketing, fulfillment, and cross-channel commerce partnerships. As we add partners to our network, we provide our customers with choice and best-in-class capabilities. As our customers adopt those partner solutions, we often generate revenue share from our partners, especially in categories like payments, shipping, and advertising. In conclusion, we are thrilled to join the public markets. We are excited to expand our product offerings and earn the trust of businesses of all sizes as the shift to e-commerce continues to accelerate. We believe our Open SaaS strategy offers a compelling solution for our businesses and partners around the world and excited to lead this company into the next phase of growth. I will now turn the call over to Robert to talk about our financial results. Thanks, Brent, and thanks again to everyone for joining us today.