Commerce.Com, Inc. — 2022 Q3 Form 10-Q summary
Entity note: The supplied filing identifies the registrant as BigCommerce Holdings, Inc. (Nasdaq: BIGC), not Commerce.Com, Inc. The filing covers the quarter and nine months ended September 30, 2022; amounts below are in U.S. dollars unless noted.
Business context and period
BigCommerce operates a SaaS ecommerce platform, including subscription plans and partner, services, and product-feed management offerings. The company reported 5,560 enterprise accounts at quarter-end. Feedonomics, acquired in July 2021, contributed to year-over-year comparisons; its revenue was included only from the acquisition date in the 2021 comparison period.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $72.4m | $59.3m | $206.6m | $155.0m |
| Gross profit | $54.9m | $46.9m | $155.2m | $123.1m |
| Gross margin | 75.8% | 79.1% | 75.1% | 79.5% |
| Operating loss | $(30.6)m | $(21.3)m | $(105.9)m | $(42.1)m |
| Net loss | $(30.3)m | $(21.7)m | $(106.9)m | $(42.4)m |
| Basic and diluted loss per share | $(0.41) | $(0.30) | $(1.46) | $(0.60) |
| Cash used in operating activities | $(50.8)m | $(14.1)m | $(86.7)m | $(31.5)m |
Q3 subscription solutions revenue was $53.2m, up 26.4%; partner and services revenue was $19.2m, up 11.6%. For the first nine months, subscription revenue grew 41.1% to $152.5m and partner and services revenue grew 15.5% to $54.1m. Management attributed subscription growth mainly to mid-market and enterprise activity and enterprise retention; Feedonomics accounted for $24.0m of the nine-month subscription revenue increase.
At September 30, cash and cash equivalents were $100.6m, marketable securities $206.1m, and restricted cash $1.4m—about $308.1m combined. Current assets were $375.5m and current liabilities $66.3m. Long-term convertible debt had $345.0m principal outstanding and a $337.0m net carrying value. Stockholders’ equity was $65.1m.
Key operating measures included total ARR of $305.3m, subscription ARR of $233.1m, and enterprise-account ARR of $216.2m. Remaining performance obligations were $159.5m; the company expected to recognize approximately 52% in the following 12 months.
Material changes versus prior comparable periods
- Q3 revenue rose 22.1%, but gross margin declined to 75.8% from 79.1%, which management primarily attributed to Feedonomics’ higher-service requirements.
- Q3 operating expenses rose to $85.4m from $68.2m. Sales and marketing, research and development, and general and administrative costs all increased, including higher staffing and stock-based compensation.
- Nine-month net loss widened to $106.9m from $42.4m, and operating cash use increased to $86.7m from $31.5m.
- Cash, cash equivalents, and restricted cash fell by $196.7m in the first nine months. Investing cash use included $169.9m of marketable-security purchases, partly offset by $64.7m of maturities; the company also paid $32.5m in cash on the Feedonomics contingent compensation arrangement.
- The allowance for credit losses increased from $3.9m at year-end 2021 to $9.3m at September 30, 2022. The filing cites higher specific reserves and a higher estimated loss percentage on part of the receivables portfolio.
Outlook, risks, contingencies, and unusual items
- No numerical revenue, earnings, or cash-flow guidance is provided in the supplied filing text. Management expects continued operating losses and negative operating cash flow, but believes existing cash and marketable securities will meet working-capital and capital-expenditure needs for at least 12 months.
- Management expects cost increases in areas including sales and marketing, research and development, and general and administrative expenses. It also notes potential need for additional capital; equity financing could dilute shareholders and debt financing could add obligations and restrictive covenants.
- Up to $32.5m remains payable under the Feedonomics post-acquisition compensation arrangement, within ten business days after the second anniversary of the acquisition or earlier if specified milestones are achieved. Settlement may be in cash or shares at the company’s election.
- Acquisition-related expense was $31.4m for the first nine months, primarily including $30.5m of Feedonomics contingent compensation expense. Q3 acquisition-related expense was $6.3m.
- The filing identifies risks from enterprise-sales execution and longer collection cycles, economic and inflationary pressures, the Russia-Ukraine war and disruption to the Kyiv development center, COVID-19 uncertainty, privacy and data-transfer regulation, cybersecurity, and international operations.
- Disclosure controls were deemed ineffective due to a previously reported material weakness in IT program change management. Management said remediation efforts were ongoing. The filing reports no legal claims expected to have a material adverse effect and no off-balance-sheet arrangements.
- The filing’s MD&A narrative gives a nine-month gross margin of 74.7% and prior-year margin of 79.7%, inconsistent with the financial-statement figures and MD&A table (75.1% and 79.5%).
Investor facts to verify
- Confirm the registrant identity: the filing is for BigCommerce Holdings, Inc., despite the request metadata naming Commerce.Com, Inc.
- Reconcile the inconsistent nine-month gross-margin figures in the MD&A narrative against the financial statements.
- Assess the sustainability of revenue growth and margins, including Feedonomics’ contribution and enterprise retention and expansion.
- Monitor operating cash burn, credit-loss provisions, and the amount and liquidity of marketable securities.
- Review the timing and cash-versus-stock settlement of remaining acquisition compensation, alongside the $345.0m convertible notes due 2026.
- Track remediation of the IT change-management material weakness and any subsequent update to control effectiveness.