Commerce.com, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to BigCommerce's first quarter 2021 earnings call. At this time, our 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, Daniel Lentz, Head of Investor Relations. Thank you. Please go ahead.

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 second quarter of 2021 and the full year 2021. These statements can be identified by words such as expect, anticipate, intend, plan, believe, seek, will, or similar words. These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date, and we do not undertake any duty to update these statements. Forward-looking statements by their nature address matters that are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to the risks and other disclosures contained in our filings with the Securities and Exchange Commission. During the call, we will also discuss certain non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, as well as how we define these metrics and other metrics, is included in our earnings press release. which has been furnished to the SEC and is also available on our website at investors.bigcommerce.com. With that, let me turn the call over to Brent.

Thank you, Daniel, and thank you everyone for joining us on our first quarter earnings call. During today's call, Robert and I will detail results from Q1 and provide an update on our 2021 full-year guidance. We will also provide updates on our strategy, customer and partner traction, product enhancements, and overall industry positioning. Let's kick off with a few highlights from our Q1 financial results. We experienced a robust first quarter with Q1 revenue growing to $46.7 million, up 41% year-over-year. Annual revenue run rate, or ARR, grew to $196.3 million, up 43% year-over-year. This marked a substantial acceleration compared to the 27% growth rate in Q1 2020. We saw continued momentum in our target market of fast-growing, complex, and established businesses. ARR from accounts with greater than $2,000 in annual contract value, or ACV, finished at $163.7 million, growing 51% year-over-year, while enterprise account ARR growth further accelerated to 58% year-over-year, finishing at $112.4 million. All Q1 growth rates referenced so far represent accelerations from growth rates in Q1 2020. It's notable that full year 2020 was our third successive year of revenue growth rate acceleration. And with Q1 2021 off to this strong start, we've now posted accelerating growth rates in a fourth successive year. This uncommon trajectory of accelerating momentum reflects the traction and differentiation of our offering in the global e-commerce market. Robert and I have spoken on previous calls about our commitment to growing the company the right way by prioritizing customers first, thinking long-term, and making smart investment decisions that grow revenue while maintaining our commitment to achieve profitability. Our first quarter demonstrated progress in this area, with adjusted EBITDA margins strengthening to negative 5%, a 12-point improvement versus Q1 2020. We see a tremendous addressable market for big commerce, and we are positioned to capitalize on the opportunities in front of us. We will continue to make strategic investments in areas selected to generate strong returns on invested capital while focusing on the full year 2021 profit guidance we outlined back in February. Big commerce market share growth in the mid-market and large enterprise segments continues to strengthen. Customers see the value proposition and differentiation of our platforms. Our open SaaS platform and partner ecosystem enables companies of all sizes to quickly and successfully establish an online and omni-channel sales presence. It gives our merchants access to the multiple channels and marketplaces where consumers can discover and buy their products, all while keeping costs low through the total cost of ownership benefits of multi-tenant SaaS software. Over time, we believe on-premise software and closed enterprise SaaS offerings will find it increasingly difficult to compete with a best-of-breed open SaaS approach. In summary, our strategy is simple and has three key elements. One, we pursue textbook disruptive innovation by extending the capabilities of our platform to serve ever-larger merchants, thereby disrupting the legacy incumbent platform leaders in the mid-market and large enterprise segments. Two, we continuously innovate to deliver the world's best open SaaS e-commerce platform with best-of-breed functionality and a maximum amount of flexibility for a SaaS platform using APIs, software development kits, and tech partner extensions. This open strategy provides fast-growing and complex businesses the ability to optimize their approach to e-commerce for their unique business needs. Three, we will grow our business using a repeatable playbook that is based on the retention and growth of existing merchants. Acquisition of new customers in an ever-expanding range of segments like B2B, headless, and large enterprise. Expansion geographically. And finally, the growth of supplemental partner and services revenue. Now I'd like to shift focus to some notable new customer site launches. In Q1, we saw a diverse roster of notable brands use our native and headless commerce capabilities to launch in big commerce, some examples being Black Diamond Equipment, a leader in mountain adventure gear and top 1,000 online retailer, launched a headless site implementation using BigCommerce and Prismix CMS. This combination empowers its marketing team to deliver an experience-first site design while maintaining the operational coordination necessary to support an extensive product catalog. U.S. Cutter, another top 1,000 online retailer that offers the largest selection of vinyl cutters in the industry, embraced its consumers' desire for freedom of choice by providing a wealth of payment and shipping options at checkout, including buy online, pick up in store functionality. The Bristol British Association of Restaurants, Bars, and Independents in the UK leveraged Headless Commerce to launch a delivery app to help dozens of independent food venues in Bristol stay in business post-lockdown. Dowdy Propellers, a GE aviation company and manufacturer of integrated propeller systems, launched a new site with extensive B2B functionality. LexisNexis, the world-renowned provider of legal, regulatory, and business information, now provides its customers in Australia the ability to create and buy their own bundles of legal modules that contain materials from different areas of their offering. Just this week, BigCommerce finalized the deal with Wine Direct that I am personally thrilled to share. For those unfamiliar, Wine Direct provides end-to-end technology solutions to help wineries sell directly to consumers. And through this partnership, Wine Direct's 2,000-plus wineries, roughly 15% of all U.S. wineries, will be able to power their online storefronts through BigCommerce. In Q1, we also announced nearly a dozen new product features and welcomed several new partners to our platform. Within Omnichannel, we partnered with Walmart to give U.S. vendors access to over 120 million unique consumers visiting Walmart.com monthly. Merchants can now seamlessly connect their e-commerce storefronts to Walmart.com, giving Walmart consumers convenience and a wider selection of products. We collaborated with our tech partner, Random Retail, to launch buy online pickup and store capabilities across small and medium sized merchants with an easily configured solution. An advanced version offering more customization and features such as curbside pickup is also available for mid-market and enterprise customers. Promotions Manager is a powerful and flexible tool designed to help mid-market and enterprise customers improve their marketing and inventory management. It's highly customizable and has received extensive praise from our customers and industry analysts like Forrester. We introduced new platform capabilities that accelerate our international expansion. Control panel and self-service tools were launched in several additional languages. Merchants that speak these languages can now purchase a big commerce subscription on board and manage their stores in their native languages. For omni-channel merchants, we announced our native integration to Square point-of-sale. which enables merchants to sell products online and offline using Square. This makes it easy and efficient to coordinate product catalogs and inventory automatically, helping merchants to better optimize their supply chain. Finally, we launched a payment provider software development kit, or SDK, for credit card providers. Introduction of this capability is an important step in our international expansion. This SDK allows local payment processors and or systems integrators to integrate payment gateways into big commerce. This will in turn enable our business development team to identify and sign new payment partners around the world, reduce our partners' time to integrate, and accelerate big commerce adoption in new geographies. As we look forward to the coming months and quarters, we see many areas of opportunity to invest and grow our business. Our product roadmap will continue to target platform enhancements and extensions, that deliver high customer value and return on investment. Externally, we will prioritize partnerships and agreements that present opportunities to enhance value for our customers beyond what our product roadmap can accommodate. Our focus remains on extending our platform's capabilities without fundamentally changing our core Open SaaS strategy. As we've discussed before, unlike our closest competitors, we do not aspire to compete in an ever-expanding number of new software vertical categories. Instead, we focus our efforts on building the world's most open, flexible, and capable SaaS platform while partnering with best-of-breed leaders in adjacent software and service categories. We will look for opportunities that deliver great value to our customers without compromising our open platform and partner-centric strategies. Before I turn it over to Robert, I'd like to thank all of you who follow and invest in BigCommerce. We aspire to shape the future of e-commerce, and we're grateful for everyone who contributes to our mission.