BigCommerce Holdings, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. The filing registrant is BigCommerce Holdings, Inc. (Nasdaq: BIGC); the request metadata names Commerce.Com, Inc.
Business context
BigCommerce operates a SaaS ecommerce platform for online stores and cross-channel selling. At quarter-end, it served approximately 58,600 stores in about 143 countries. The July 23 acquisition of Feedonomics added product-feed management services.
Financial performance
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $59.3m | $39.7m | $155.0m | $109.2m |
| Gross profit | $46.9m | $31.1m | $123.1m | $85.3m |
| Gross margin | 79.1% | 78.4% | 79.5% | 78.1% |
| Operating loss | $(21.3)m | $(10.1)m | $(42.1)m | $(24.9)m |
| Net loss | $(21.7)m | $(10.9)m | $(42.4)m | $(23.4)m |
| Adjusted EBITDA (non-GAAP) | $(3.1)m | $(6.6)m | $(9.0)m | $(17.7)m |
| Basic and diluted loss per share | $(0.30) | $(0.16) | $(0.60) | $(0.83) |
Q3 revenue rose 49.2% year over year; subscription solutions increased 58.7% to $42.1m and partner and services revenue increased 30.1% to $17.2m. Feedonomics contributed $5.9m of revenue and $0.3m of net loss after acquisition. Management attributed subscription growth primarily to mid-market and enterprise activity and retention, and partner revenue growth to revenue-sharing activity and improved monetization.
- Cash flow: Nine-month operating cash use was $31.5m, versus $23.2m a year earlier. Investing cash use was $126.7m, including the Feedonomics acquisition and $43.5m of marketable-security purchases. Financing provided $303.6m, primarily from convertible notes.
- Liquidity: September 30 cash and cash equivalents were $364.9m, restricted cash $1.1m, and marketable securities $43.5m. Working capital was $411.7m. Management said existing cash and cash equivalents were expected to fund working capital and capital expenditure needs for at least 12 months.
- Debt: The company issued $345.0m of 0.25% convertible senior notes due October 2026; carrying value, net of issuance costs, was $335.1m. It spent $35.6m on capped calls intended to reduce potential conversion dilution. The notes’ initial conversion price was approximately $73.11 per share.
- Other: Total assets were $560.5m and total liabilities $399.3m. Stock-based compensation was $17.7m for the nine months, compared with $5.0m in 2020.
Changes versus the prior comparable period
- Nine-month revenue increased 41.9%; gross margin improved 1.4 percentage points to 79.5%.
- Nine-month net loss widened to $42.4m from $23.4m, reflecting higher operating expenses, including acquisition-related costs, increased stock compensation, and public-company costs. Adjusted EBITDA loss narrowed to $9.0m from $17.7m, but excludes significant items including stock compensation and acquisition-related expenses.
- Cash and cash equivalents increased from $219.4m at December 31, 2020, while total liabilities rose from $59.9m, largely reflecting the new notes. Feedonomics added $41.4m of goodwill and $35.4m of net acquired intangible assets at quarter-end.
Outlook, risks and unusual items
- The filing provides no specific numerical revenue or earnings guidance. Management expects continued investment in sales and marketing, research and development, and growth initiatives, and anticipates operating losses and negative operating cash flows in the future.
- Management said ecommerce demand benefited from the pandemic-related shift from offline to online shopping, but cautioned that it is uncertain whether the trend will continue. Risks highlighted include competition, customer retention and growth, partner dependence, cybersecurity and service availability, privacy regulation, international operations, and the ability to integrate Feedonomics and realize expected benefits.
- Feedonomics’ stated total consideration was approximately $145m: about $80m paid at closing and up to $65m in two anniversary or milestone-linked payments. The latter are tied to continued service and product or financial milestones and may be settled in cash or shares. Acquisition-related expenses were $9.8m in Q3, including contingent compensation expense.
- The company reported no material pending or threatened legal claims known to management, no off-balance-sheet arrangements, and effective disclosure controls as of September 30, 2021. It also said it expected to cease qualifying as an emerging growth company on December 31, 2021.
Important facts for investors to verify
- Whether subscription growth, retention, and partner revenue-sharing trends persist, especially after the pandemic-driven ecommerce acceleration.
- Feedonomics integration progress, its contribution to results, purchase-accounting updates, and the conditions and potential cash or share settlement of the remaining $65m payments.
- Cash burn, liquidity sufficiency, and the effect of the 2026 convertible notes, including conversion dilution, capped-call coverage, and any cash settlement obligations.
- The sustainability of improving gross margin and Adjusted EBITDA, given rising operating expenses and the exclusions in the non-GAAP measure.
- Cybersecurity, platform uptime, third-party hosting and partner dependencies, and exposure to privacy, regulatory, and international risks.