Commerce.com, Inc.

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. RA 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 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 confidence 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 replatform. 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 OpenSaaS 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 and 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 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 BigCommerce and Feedonomics in addition to providing APIs and data sets that will enable WPP agencies to develop unique insights for clients across products, 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, balanced 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.