E-commerce software platform provider BigCommerce (NASDAQ: BIGC) met Wall Street’s third-quarter 2024 revenue expectations, with revenue up 7.3% year over year to $83.71 million. On the other hand, next quarter’s revenue forecast of $86.8 million was less impressive, falling 1.2% below analyst estimates. Non-GAAP earnings of $0.06 per share were 98.2% above analyst consensus estimates.
Is Now the Time to Buy BigCommerce? Find out in our full research report.
Gain: $83.71 million vs. analyst estimates of $83.09 million (in line)
Custom EPS: $0.06 vs. analyst estimates of $0.03 ($0.03 better)
EVENTS: $5.37 million vs. analyst estimates of $2.85 million (88.3% better)
Revenue guidance for Q4 CY2024 is at $86.8 million at the midpoint, below analyst estimates of $87.82 million
Gross margin (GAAP): 76.3%, in line with the same quarter last year
Operating margin: -23%, compared to -28.4% in the same quarter last year
EBITDA margin: 6.4%, compared to -0.1% in the same quarter last year
Free cash flow margin: 5.4%, compared to 13% in the previous quarter
Annual recurring turnover: $347.8 million at quarter end, up 4.7% year over year
Market capitalization: $442.4 million
“BigCommerce is significantly underrepresented in the marketplace relative to the strength of our products,” said Travis Hess, CEO of BigCommerce.
Founded in Sydney, Australia in 2009 by Mitchell Harper and Eddie Machaalani, BigCommerce (NASDAQ:BIGC) provides software that makes it easy for businesses to set up online stores.
Although e-commerce has been around for over two decades and has seen significant growth, its overall penetration in retail still remains low. Only about $1 of every $5 spent on retail purchases comes from digital orders, leaving more than 80% of the retail market still ripe for online disruption. It is these large parts of the retail industry, where e-commerce has not yet taken hold, that are driving the demand for various e-commerce software solutions.
Examining a company’s long-term performance can provide clues about business quality. Any company can perform well for a quarter or two, but the best ones grow consistently over the long term. Unfortunately, BigCommerce’s 18.5% annualized revenue growth over the past three years has been mediocre. This shows that it cannot expand in any important way, which is a difficult starting point for our analysis.
Total BigCommerce revenue
This quarter, BigCommerce grew its revenue 7.3% year over year, and revenue of $83.71 million was in line with Wall Street estimates. Management currently expects a 3.2% year-over-year increase next quarter.
Looking further ahead, sell-side analysts expect revenue to grow by 6.3% over the next twelve months, a slowdown from the past three years. This projection is disappointing and shows that the market believes its products and services will face a number of demand challenges.
Here at StockStory, we certainly understand the potential of thematic investing. Several winners, from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST), could all have been identified as promising growth stories with a megatrend driving growth. So in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, which is available to you for FREE at this link.
Investors interested in BigCommerce should track annual recurring revenue (ARR) in addition to reported revenue. While reported revenue for a SaaS company may include low-margin items such as implementation costs, the ARR is a sum of the next twelve months of contracted revenue purely from software subscriptions, or the predictable, high-margin revenue streams that make SaaS companies so valuable. to make.
Over the past year, BigCommerce’s ARR growth has been downright poor, with an average increase of 6.1% year-over-year and an increase of $347.8 million in the last quarter. This alternative revenue measure has been growing slower than revenue, which likely means the recurring parts of the business are growing slower than less predictable, choppier parts like implementation costs. If this continues, the quality of the revenue base could decline.
BigCommerce Annual Recurring Revenue
Customer acquisition cost payback period (CAC) measures the months it takes a company to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a company can break even on its sales and marketing investments.
BigCommerce is efficient at acquiring new customers and its CAC payback period was 36.8 months this quarter. The company’s performance indicates a relatively solid competitive position, giving it the freedom to invest its resources in new growth initiatives.
We were impressed with how significantly BigCommerce exceeded analysts’ earnings and EBITDA expectations this quarter. On the other hand, next quarter revenue expectations and ARR missed Wall Street estimates. Overall, this was a mixed quarter. The stock rose 5.1% to $5.98 immediately after the results on the profit increases.
Is BigCommerce an attractive investment opportunity right now? When making that decision, you need to consider the bigger picture of valuation, business qualities and most recent earnings. We cover that in our useful full research report which you can read here. It’s free.
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