BigCommerce Struggling with Profitability, Awareness, and Execution: Blames SaaS Headwinds

BigCommerce reported their Q3 2023 earnings today. 3 big issues I would point out for the company:

- Profitability: Despite the company’s claims of reaching profitability goals reached, still laying off employees yearly. No margin for error. When restructuring, better to do it in a bigger way, and once. One even slightly bad quarter, and they could be back here again with layoffs.

- Awareness: There are still many deals BigCommerce is not on the short-list for. The “Pepsi” approach to Shopify “Coke” has long since abandoned, leaving the company to pivot into B2B which is a very fragmented (and crowded) space currently. The company has made some awareness progress in this market, but is far from rolling it up, particularly up-market. This gives other platform players a window.

Relying on analyst firms and impact studies does not seem to be helping their cause. First, analyst firms are irrelevant in their ideal customer profile, so you have a market/message mismatch. In a worrying world, brands trust their own P&Ls over analysts. Seriously, I’ve never seen so many analyst names mentioned in one earnings release.

- Execution: Overall, the company seems to do exceptionally well with partnership motions, but not as well with innovation, marketing, and sales. This will need to improve under Steven Chung’s watch if the company will remain relevant in 5 years.

* Revenue $78M, up 8% y/y (* Compared to Q2 grew 11% y/y and Q1 growth rate of 9%)

* ARR up 9% to $322 million

* Number of “Enterprise” accounts up 7%.

Not good enough in a market where competitors are growing faster.

Good:

* BigCommerce acquires MakeSwift, a visual builder for NextJS websites. They are behind the 8-ball here and behind similar competitive acquisitions. They plan to make this an “upsell” (for how much??) Acquired for $9m cash.

Bad:

* 7% layoffs and workforce restructuring. The recent President hiring makes you think there are perhaps additional considerations to the restructuring other than profitability — i.e, one of approach. It’s sad whenever you hear about layoffs, and my best to all the employees affected 🙁

* Decelerating revenue growth, makes you understand why they are rebooting their goto-market organization with the recent hiring of Steven Chung. Only one issue, what is the plan for dealing with the elephant in the room - Shopify? 🐘 Niche down or scale up?

GTM org will flip from acquiring new to growing existing customers via upsell-cross-sell. Similar to Salesforce approach to the market, as opposed to Shopify who is focused on new logos.

Future:

BigCommerce is moving into an upsell and cross-sell motion rather than trying to sign so many new accounts. I don't feel they have enough additional cross-sell products to move the needle, and I continue to see BigCommerce as part of a Private Equity portfolio rather than stand-alone.