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BigCommerce (NASDAQ:BIGC) Exceeds Q4 Expectations But Full-Year Guidance Underwhelms

StockStory - Thu Feb 22, 6:04AM CST

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E-commerce software platform provider BigCommerce (NASDAQ: BIGC) reported Q4 FY2023 results exceeding Wall Street analysts' expectations, with revenue up 16.2% year on year to $84.15 million. On the other hand, next quarter's revenue guidance of $77 million was less impressive, coming in 4% below analysts' estimates. It made a non-GAAP profit of $0.09 per share, improving from its loss of $0.10 per share in the same quarter last year.

Is now the time to buy BigCommerce? Find out by accessing our full research report, it's free.

BigCommerce (BIGC) Q4 FY2023 Highlights:

  • Revenue: $84.15 million vs analyst estimates of $81.5 million (3.2% beat)
  • EPS (non-GAAP): $0.09 vs analyst estimates of $0.05 ($0.04 beat)
  • Revenue Guidance for Q1 2024 is $77 million at the midpoint, below analyst estimates of $80.23 million
  • Management's revenue guidance for the upcoming financial year 2024 is $331.1 million at the midpoint, missing analyst estimates by 1.5% and implying 7% growth (vs 10.8% in FY2023)
  • Free Cash Flow of $12.24 million is up from -$32.48 million in the previous quarter
  • Gross Margin (GAAP): 77.5%, up from 74.5% in the same quarter last year
  • Market Capitalization: $627.7 million

“We have executed a notable financial transformation over the last several quarters,” said Daniel Lentz, CFO 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.

E-commerce Software

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 solid over the last two years, growing from $64.9 million in Q4 FY2021 to $84.15 million this quarter.

BigCommerce Total Revenue

This quarter, BigCommerce's quarterly revenue was once again up 16.2% year on year. We can see that BigCommerce's revenue increased by $6.10 million quarter on quarter, which is a solid improvement from the $2.60 million increase in Q3 2023. Shareholders should applaud the acceleration of growth.

Next quarter's guidance suggests that BigCommerce is expecting revenue to grow 7.3% year on year to $77 million, slowing down from the 8.6% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $331.1 million at the midpoint, growing 7% year on year compared to the 10.9% increase in FY2023.

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Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. BigCommerce's free cash flow came in at $12.24 million in Q4, turning positive over the last year.

BigCommerce Free Cash Flow

BigCommerce has burned through $28.42 million of cash over the last 12 months, resulting in a negative 9.2% free cash flow margin. This low FCF margin stems from BigCommerce's constant need to reinvest in its business to stay competitive.

Key Takeaways from BigCommerce's Q4 Results

It was great to see BigCommerce improve its gross margin this quarter. We were also glad its revenue topped Wall Street's estimates, driven by outperformance in its partner and services segment, where it has key customers such as Nvidia and Paypal. On the other hand, its full-year 2024 revenue guidance was below expectations, suggesting a slowdown in demand. Overall, the results could have been better. The stock is flat after reporting and currently trades at $8.26 per share.

So should you invest in BigCommerce right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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