BigCommerce's Underlying Trends Show Progress Post Mixed Q4, Analyst Says

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  • Needham analyst Scott Berg reiterated BigCommerce Holdings Inc BIGC with a Buy and a $20 price target.
  • BIGC reported mixed 4Q22 results with a slight revenue miss driven by weaker Ecommerce volumes, yet Subscription revenue was in line with expectations. 
  • However, recent profitability improvement efforts drove a ~$6 million profit beat. 
  • BIGC's recent strategic focus on larger customers was in full view in 4Q as its Enterprise segment grew ARR 17% Y/Y while its Retail segment ARR fell 8% Y/Y. 
  • Berg believes the 4Q results highlight the BIGC financial profile over the intermediate term: solid Enterprise segment growth, a slowly melting Retail business, and consistent profitability improvements, which drive positive adjusted EBITDA starting in 4Q23. 
  • Given the company's strategy change, underlying Enterprise growth, and higher profitability, the analyst views the current valuation as attractive even in this digestion period.
  • Piper Sandler analyst Clarke Jeffries maintained a Neutral and lowered the price target from $12 to $10.
  • BigCommerce's 4Q and FY23 guidance were mixed, with revenue below estimates but operating margins above, as the company made two 2023 objectives clear. BigCommerce eyes Enterprise e-commerce leadership and achieve adjusted EBITDA profitability by 4Q23. 
  • Therefore, Jeffries believed the two key metrics to monitor in 2023 are Enterprise ARR growth and adjusted EBITDA margin, reaching breakeven by 4Q23. 
  • With an uncertain and volatile demand environment for e-commerce & consumer spending more broadly, the analyst remained on the sidelines until better visibility into a growth trough across Enterprise & SMB ARR.
  • Price Action: BIGC shares traded lower by 19.51% at $9.12 on the last check Friday.
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