Business context and reporting period
BigCommerce Holdings, Inc. (NASDAQ: BIGC) filed this unaudited Form 10-Q for the quarter and six months ended June 30, 2022. The filing identifies BigCommerce as the registrant; this differs from the company name in the request metadata. BigCommerce provides a cloud-based ecommerce platform and reports as one operating segment.
Financial performance and position
Unless otherwise noted, amounts are in U.S. dollars.
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $68.2 million | $49.0 million | $134.3 million | $95.7 million |
| Gross profit | $51.3 million | $38.8 million | $100.3 million | $76.2 million |
| Gross margin | 75.3% | 79.2% | 74.7% | 79.7% |
| Operating loss | $(39.1) million | $(12.3) million | $(75.3) million | $(20.8) million |
| Net loss | $(39.6) million | $(12.2) million | $(76.6) million | $(20.8) million |
| Net loss per share, basic and diluted | $(0.54) | $(0.17) | $(1.05) | $(0.30) |
| Cash used in operating activities | $(13.9) million | $(4.6) million | $(35.9) million | $(17.4) million |
Q2 subscription solutions revenue was $51.3 million, up 51.0%; partner and services revenue was $16.9 million, up 12.4%. Feedonomics contributed $10.0 million of Q2 subscription revenue and $18.8 million for the first half. Management attributed subscription growth principally to mid-market and enterprise activity and retention, and partner revenue growth to increased partner revenue sharing and improved monetization.
As of June 30, cash and cash equivalents were $220.6 million, restricted cash $1.3 million, and marketable securities $138.1 million, or $360.0 million combined. Current assets were $420.0 million and current liabilities $78.6 million. Total liabilities were $443.6 million. Convertible notes had $345.0 million principal outstanding and a $336.5 million net carrying value; the notes bear 0.25% interest and mature in 2026. Stockholders’ equity was $85.0 million.
At June 30, total ARR was $295.9 million and subscription ARR was $225.8 million. Enterprise accounts numbered 5,418, with $206.6 million of ARR. The company cautions that Feedonomics is included in current-period metrics but not in periods before its July 2021 acquisition, limiting comparability.
Material changes versus the prior comparable period
- Revenue rose 39.2% in Q2 and 40.3% in the first half, with growth reflecting both underlying business expansion and Feedonomics.
- Gross margin declined to 75.3% in Q2 and 74.7% for the half, which management attributed primarily to Feedonomics’ higher service requirements and associated costs.
- Operating expenses increased materially: Q2 sales and marketing rose 55.0%, research and development 52.1%, and general and administrative 46.5%. Acquisition-related expense was $12.5 million in Q2 and $25.2 million for the half, largely tied to contingent compensation arrangements.
- Cash used in operations more than doubled year over year for the first half, to $35.9 million. Cash, cash equivalents, and restricted cash declined $76.8 million from year-end; marketable securities increased to $138.1 million.
Outlook, risks, contingencies, and unusual items
- No specific revenue, earnings, or margin guidance is provided in the supplied filing text. Management expects continued operating losses and negative operating cash flow, but believes existing cash, cash equivalents, marketable securities, and operating cash flows will meet working-capital and capital-expenditure needs for at least 12 months.
- Feedonomics acquisition-related post-closing compensation may total up to $65.0 million. The first $32.5 million installment was paid in cash on August 3, 2022, after quarter-end; a second installment of up to $32.5 million remains, with cash or stock settlement at the company’s election.
- BigCommerce acquired Bundle B2B in April 2022 for $7.7 million, including stock, cash, escrow, and contingent consideration. The acquisition added $7.3 million of goodwill; purchase accounting remained subject to refinement.
- Management cited risks from economic uncertainty, inflation, interest rates, COVID-19 impacts, the Russia-Ukraine war, international expansion, privacy and data-transfer regulation, cybersecurity, competition, and customer spending. It reported that the Ukraine war had not materially harmed the company’s financial performance to date, while warning of potential disruption to personnel and operations.
- Disclosure controls were deemed ineffective as of June 30, 2022, due to an outstanding material weakness in IT program change management affecting financially significant applications. 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.
Important facts for investors to verify
- How much reported revenue and ARR growth reflects organic expansion versus Feedonomics, given the non-comparable pre-acquisition periods.
- Whether gross margin stabilizes as Feedonomics is integrated, and whether operating expense growth moderates relative to revenue.
- Cash burn and liquidity after the August 2022 $32.5 million Feedonomics payment, and the funding method for the remaining contingent payment.
- Progress in remediating the IT change-management material weakness and whether disclosure controls are subsequently assessed as effective.
- Performance against the $152.6 million of remaining performance obligations, of which the company expected approximately 51% to be recognized in the following 12 months.