BigCommerce Earnings Release: It's "Inconceivable" That the Tortoise Will Catch Up to the Hare
One of my favorite parts of the movie Princess Bride is Vizzini saying: "Inconceivable!", followed by Inigo Montoya immediately: "You keep using that word, I don't think that word means what you think it means."
In the earnings call, there were two words that Montoya would take issue with. The first is Enterprise; the second, Profitability.
"Enterprise" first:
Airquotes are appropriate for Bigcommerce’s Enterprise deals. BigCommerce ARPA is $38k, or about $3k/month.
That is less than the average mid-market brand pays for their Reviews platform. BigCommerce is not Enterprise, and will not be soon. Enterprise deals are six-figures plus.
What BigCommerce calls Enterprise, I would call lower mid-market distributors and manufacturers.
Let's move on to "Profitability," the second term.
BigCommerce is focused not on profitability, not on EBITDA profitability, and frankly, not even on FY 2023 Adjusted EBITDA profitability.
What BigCommerce said: "We have moved up profitability to Q4 2023"
What BigCommerce means: "By the end of Q4 2023 we will become Adjusted EBITDA breakeven for that quarter."
Warren Buffett has a famous quote on EBITDA, “Does management think the tooth fairy pays for capital expenditures?” (you can add stock-based compensation) Between us, I'll trust Mr. Buffett over the BigCommerce CFO.
So while BigCommerce moves to default alive and moves up their profitability goal from the "second half of year Never", their growth is moving from 27% to 8% this year, while Shopify predicts high-teens revenue growth. BigCommerce is letting Shopify run far ahead (and gain speed) and hopes they stub their toe.
Let’s go over Q4:
* Total revenue up 12% y/y
* GAAP gross margin was 74%
* GAAP operating loss was ($34.7) million, compared to ($33.8) million in the fourth quarter of 2021.
* Non-GAAP operating loss was ($9.4) million, compared to ($11.6) million in the fourth quarter of 2021.
Full Year 2022:
* Total revenue was $279.1 million, up 27%
* Total ARR up 16% to $311M.
(Shopify ARR = $1.3B and growing 7%)
Looking at this, you would think Bigcommerce will catch Shopify “one day”. However, Shopify is a payment company posing as an eCommerce platform now.... So, nope.
* ARR from Enterprise Accounts as a percent of total ARR was 72% as of December 31, 2022.
* GAAP operating loss was ($140.6) million, compared to ($75.9) million in fiscal year 2021.
* Non-GAAP operating loss was ($47.0) million, compared to ($22.8) million in fiscal year 2021.
-50% net operating loss GAAP
-16% net operating loss non-GAAP
2023 Guidance:
* Prioritized non-GAAP profitability
1Q 2023
* ~8% revenue growth y/y
* non-GAAP operating loss -14%
FY 2023
* ~10% y/y revenue growth up to ~$307M (midpoint guidance)
* non-GAAP operating loss ~19.7M (-6% non-GAAP net operating margin)
* Predicting modest order and GMV deceleration
