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BigCommerce (NASDAQ:BIGC) Exceeds Q4 Expectations But Stock Drops 19% On Weak Guidance


Kayode Omotosho /
2022/02/28 4:18 pm EST
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E-commerce software platform provider BigCommerce (NASDAQ: BIGC) beat analyst expectations in Q4 FY2021 quarter, with revenue up 50.4% year on year to $64.8 million. Guidance for the full year also exceeded estimates, however the guidance for the next quarter was less impressive, coming in at $63.5 million, 0.52% below analyst estimates. BigCommerce made a GAAP loss of $34.2 million, down on its loss of $14.2 million, in the same quarter last year.

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BigCommerce (BIGC) Q4 FY2021 Highlights:

  • Revenue: $64.8 million vs analyst estimates of $61.8 million (4.96% beat)
  • EPS (non-GAAP): -$0.17 vs analyst estimates of -$0.12
  • Revenue guidance for Q1 2022 is $63.5 million at the midpoint, below analyst estimates of $63.8 million
  • Management's revenue guidance for upcoming financial year 2022 is $277.6 million at the midpoint, in line with analyst expectations and predicting 26.2% growth (vs 43.8% in FY2021)
  • Free cash flow was negative $9.92 million, compared to negative free cash flow of $14.7 million in previous quarter
  • Customers: 12,754 customers paying more than $2,000 annually
  • Gross Margin (GAAP): 74.3%, down from 76.3% same quarter last year

“Q4 was another outstanding quarter for BigCommerce as our revenue grew to $64.9 million, up 50% year-over-year. Our full-year revenue grew to $219.9 million, up 44% year-over-year, marking our fourth consecutive year of accelerating revenue and subscription growth,” said Brent Bellm, chief executive officer at BigCommerce.

Founded in Sydney, Australia in 2009 by Mitchell Harper and Eddie Machaalani, BigCommerce (NASDAQ:BIGC) provides software for businesses to easily create online stores.

While e-commerce has been around for over two decades and enjoyed meaningful growth, its overall penetration of retail still remains low. Only around $1 in every $5 spent on retail purchases comes from digital orders, leaving over 80% of the retail market still ripe for online disruption. It is these large swathes of the retail where e-commerce has not yet taken hold that drives the demand for various e-commerce software solutions.

Sales Growth

As you can see below, BigCommerce's revenue growth has been impressive over the last year, growing from quarterly revenue of $43.1 million, to $64.8 million.

BigCommerce Total Revenue

This was another standout quarter with the revenue up a splendid 50.4% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $5.61 million in Q4, compared to $10.2 million in Q3 2021. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Guidance for the next quarter indicates BigCommerce is expecting revenue to grow 36% year on year to $63.5 million, slowing down from the 40.6% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $277.6 million at the midpoint, growing 26.2% compared to 43.8% increase in FY2021.

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Large Customers Growth

You can see below that at the end of the quarter BigCommerce reported 12,754 enterprise customers paying more than $2,000 annually, an increase of 376 on last quarter. That is a bit less contract wins than last quarter and also quite a bit below what we have typically seen over the past couple of quarters, suggesting that the sales momentum with large customers is slowing down.

BigCommerce customers paying more than $2,000 annually

Key Takeaways from BigCommerce's Q4 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on BigCommerce’s balance sheet, but we note that with a market capitalization of $1.83 billion and more than $399.8 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We were impressed by the exceptional revenue growth BigCommerce delivered this quarter. And we were also excited to see that it outperformed Wall St’s revenue expectations. On the other hand, the revenue guidance for next year indicates a significant slowdown and there was a slowdown in new contract wins. Overall, it seems to us that this was a complicated quarter for BigCommerce. The company is down 19.5% on the results and currently trades at $20.84 per share.

BigCommerce may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.