BigCommerce Holdings, Inc. (Nasdaq: BIGC) — Q1 2022 Form 10-Q
The filing identifies the registrant as BigCommerce Holdings, Inc., although the request metadata names Commerce.Com, Inc. The reporting period is the three months ended March 31, 2022; comparisons are with Q1 2021. BigCommerce provides a subscription-based ecommerce software platform. Results include Feedonomics, acquired in July 2021, so year-over-year comparisons are not fully like-for-like.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $66.1 million | $46.7 million |
| Gross profit / margin | $48.9 million / 74.1% | $37.4 million / 80.2% |
| Operating loss | $36.2 million | $8.5 million |
| Net loss | $37.0 million | $8.5 million |
| Net loss per share, diluted | $0.51 | $0.12 |
| Cash used in operating activities | $22.0 million | $12.8 million |
- Revenue grew 41.6%. Subscription solutions revenue rose 49.9% to $48.0 million; partner and services revenue rose 23.2% to $18.1 million. Feedonomics contributed $8.8 million of subscription revenue.
- Gross margin declined 6.1 percentage points. Cost of revenue increased 84.9%, reflecting higher hosting and personnel costs and Feedonomics expenses.
- Operating expenses totaled $85.1 million, including $12.7 million of acquisition-related expense and $2.0 million of acquired-intangible amortization. Stock-based compensation was $9.0 million.
- At March 31, cash and cash equivalents were $250.9 million, restricted cash was $1.2 million, and marketable securities were $125.2 million. Together these totaled approximately $377.3 million. Total assets were $535.0 million and current liabilities were $64.8 million.
- Long-term debt, net of issuance costs, was $336.0 million. It represents $345.0 million principal amount of 0.25% convertible senior notes due October 2026. The notes have an initial conversion price of approximately $73.11 per share.
Material changes and operating indicators
- Revenue increased by $19.4 million year over year, driven by subscription growth, partner revenue, and Feedonomics. Management cited mid-market and enterprise activity and strong overall retention.
- Sales and marketing expense increased 54.6% to $32.2 million; research and development increased 54.7% to $20.9 million; and general and administrative expense increased 49.1% to $17.3 million.
- As of March 31, 2022, ARR was $280.4 million, versus $196.3 million a year earlier. Accounts above $2,000 ACV totaled 12,972, versus 10,509. The company cautions that acquired Feedonomics activity is included after its acquisition date and periods before that date exclude it.
- Remaining performance obligations were $153.5 million; the company expected to recognize approximately 50% in the following 12 months.
Outlook, risks, and unusual items
- No specific revenue or earnings guidance is provided in the supplied filing text. Management expects ongoing operating losses and negative operating cash flow, but believes existing cash, cash equivalents, marketable securities, and operating cash flows will cover working capital and capital expenditure needs for at least the next 12 months.
- Feedonomics-related contingent compensation may total up to $65.0 million, generally in two installments of up to $32.5 million, subject to service and product or financial milestones. Payments may be made in cash, stock, or a combination; $12.2 million of related compensation expense was recognized in Q1 2022.
- On April 26, 2022, after quarter-end, BigCommerce announced completion of its acquisition of Bundle B2B. Purchase accounting was not yet finalized.
- Management identified the Russia-Ukraine war as a risk to its Kyiv development operations, employees, cybersecurity exposure, and the broader economy. The filing also cites uncertainty from COVID-19, inflation, economic conditions, international expansion, and competition.
- Disclosure controls and procedures were deemed ineffective because of a previously reported material weakness in IT program change management. Management said remediation efforts would continue through 2022.
- Management reported no pending or threatened legal claims expected to have a material adverse effect and no off-balance-sheet arrangements.
Key facts for investors to verify
- Whether reported revenue growth and ARR trends persist after accounting for Feedonomics’ contribution and the acquisition-related comparison effect.
- How gross margin and operating losses evolve as hosting, staffing, product-development, and marketing costs increase.
- The cash-versus-stock settlement choice and timing of Feedonomics contingent compensation, and the integration and financial impact of Bundle B2B.
- Progress in remediating the IT control weakness and the operational impact of the Ukraine conflict on the Kyiv development team.
- Liquidity and cash-burn trends relative to the company’s stated expectation of funding needs for at least the next 12 months.