BigCommerce (NASDAQ:BIGC) Misses Q4 Revenue Estimates

Adam Hejl /
2023/02/23 4:14 pm EST

E-commerce software platform provider BigCommerce (NASDAQ: BIGC) missed analyst expectations in Q4 FY2022 quarter, with revenue up 11.6% year on year to $72.4 million. Guidance for the next quarter also missed analyst expectations with revenues guided to $71.2 million at the midpoint, or 3.76% below analyst estimates. BigCommerce made a GAAP loss of $33 million, improving on its loss of $34.2 million, in the same quarter last year.

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BigCommerce (BIGC) Q4 FY2022 Highlights:

  • Revenue: $72.4 million vs analyst estimates of $73.3 million (1.24% miss)
  • EPS (non-GAAP): -$0.10 vs analyst estimates of -$0.19
  • Revenue guidance for Q1 2023 is $71.2 million at the midpoint, below analyst estimates of $74 million
  • Management's revenue guidance for upcoming financial year 2023 is $307 million at the midpoint, missing analyst estimates by 3.88% and predicting 10% growth (vs 28.6% in FY2022)
  • Free cash flow was negative $3.68 million, compared to negative free cash flow of $51.5 million in previous quarter
  • Gross Margin (GAAP): 74.5%, in line with same quarter last year

“In a challenging year for global ecommerce, BigCommerce grew faster than the broader ecommerce industry, and our Q4 results showed strong progress in both profitability and operating cash flow. Our full-year revenue grew to $279.1 million, up 27% year-over-year,” said Brent Bellm, CEO 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 very strong over the last two years, growing from quarterly revenue of $43.1 million in Q4 FY2020, to $72.4 million.

BigCommerce Total Revenue

This quarter, BigCommerce's quarterly revenue was once again up 11.6% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $40 thousand in Q4, compared to $4.19 million in Q3 2022. 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 7.8% year on year to $71.2 million, slowing down from the 41.6% 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 $307 million at the midpoint, growing 10% compared to 26.9% increase in FY2022.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Cash Is King

If you have followed StockStory for a while, you know that we put an emphasis on cash flow. Why, you ask? We believe that in the end cash is king, as you can't use accounting profits to pay the bills. BigCommerce burned through $3.68 million in Q4,

BigCommerce Free Cash Flow

BigCommerce has burned through $94.6 million in cash over the last twelve months, a negative 33.9% free cash flow margin. This low FCF margin is a result of BigCommerce's need to still heavily invest in the business.

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 $831.4 million and more than $303.5 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We struggled to find many strong positives in these results. On the other hand, it was unfortunate to see that BigCommerce's revenue guidance for the full year missed analysts' expectations and it indicates quite a significant slowdown in growth. Overall, it seems to us that this was a complicated quarter for BigCommerce. The company is flat on the results and currently trades at $11.33 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.