Commerce.com, Inc. (CMRC) Earnings Call Transcript & Summary

Thanks so much for being with us this afternoon. I'm Gabriela Borges. I have the emerging software vertical here at Goldman. I'm delighted to have on stage with me Brent Bellm, CEO of BigCommerce; and Daniel Lentz, SVP of Finance and Investor Relations. So thank you all for joining us.

Welcome. Thanks for coming, everybody.

Let's go ahead and we can adjust as we go. So I want to start out with what you all would describe as your core competitive differentiation. If I think about the value proposition of being true native SaaS, an environment that has a more mixed group of competitors, that's obviously played out successfully to date and in a number of other software verticals as well. As you think about how BigCommerce is positioned relative to e-commerce, what do you view as your core competitive differentiation beyond what I think a lot of us are already familiar with, with native cloud being better TCO, more flexibility, easier deployment, all that good stuff?

Yes. If you go back just 7 years, the world's largest platform by far was Magento, which is on-premise open source software. And if you can't get this adjusted in the back, we'll switch over to the...

Sounds good. It's okay.

It does?

We're good.

Oh, okay. It's just feedback we are getting up here. So Magento, which is open source on-premise software, now Adobe was the leading platform in the world. And when you think about what differentiates us today, if Magento is that largest platform, we're native multi-tenant SaaS. And that, therefore, has all the benefits of SaaS, including built-in high performance, ease of use, easy deployment, et cetera. And in the enterprise evaluations for e-commerce software, really the only 2 enterprise-ready, multi-tenant SaaS platforms are BigCommerce and Salesforce, formerly Demandware. The difference between us and Salesforce is that we were built starting in 2009. We're a far more nimble, modern architecture, far more open and flexible than they are, they're originally Intershop software from the late 1990s. It's an archaic version of SaaS. And inevitably, when customers are comparing the 2 of us, we have maybe 90% to 95% of the functionality that Salesforce has, but it's the 90% to 95% you want. It comes at a radically lower cost of ownership, easier deployment, higher performance, et cetera. And so in enterprise software, this is why Forrester, basically in the Forrester B2C evaluation of our competitive set, we were the closest of any platform to being rated a leader. We were rated ahead of Salesforce, ahead of Adobe, ahead of SAT, ahead of commercetools, far, far, far ahead of Shopify Plus, which really is an enterprise software. So it's that combination, ultimately of multi-tenant SaaS, but with all of the enterprise functionality and openness that complex businesses, larger businesses need to succeed.

It leads nicely to our question on thinking about the customers where BigCommerce does well. If we think about your core cohorts, you're neither positioned at the very low end, which is very much Shopify, nor are you positioned at the very high end. So maybe help define for us what do you view as a good BigCommerce customer? And what are the limits of those cohorts?

Well, I'm going to say all of the above. And if you're scratching your head and saying, well, yes, that's not a focus, in contrast, this is classic textbook disruptive technology. And I say this having been a student of Clay Christensen's back in 1997 when he was writing The Innovator's Dilemma and coining the term every single case study in his books of disruptive technology is technology that like us started at the low end of the market, the underserved low end of the market who wanted something cheaper, faster and easier. So that's BigCommerce's origins. We started in 2009 as a SaaS platform for small business, $30 a month, everything you needed built-in, you could be live within 2 hours with a store that then keeps scaling. So all disruptive tech according to Clay Christensen starts at the low end of the market, something cheaper, faster and easier. It becomes disruptive only if it then says, we're going to outperform this. We're going to add functionality and you go after the mainstream of the market. In our case, that happened starting in 2015 when I took over for the founders and I said, we're doing the same thing as Shopify. We were the world's second largest SaaS platform, but Shopify had already IPO-ed. They had a 5-year head-start. They were 3x our size. I realized there was no version of continuing to go head-to-head with them where we would beat them at the low end. And I said instead what the world needs is a SaaS successor to Magento. It's kind of criminal that the world's mid-market and large enterprise in the year 2015 doesn't have a SaaS alternative to Magento. They've got to go and manage their own software. It's crazy in 2015. So it was in 2015 that we began this focus up market. And we said we're going after Magento. And systematically, over time, we added the enterprise capabilities, the enterprise openness for SaaS for the first time, compete against Magento. And for many years, people said, oh, you're the mid-market leader. And yes, we think that is true. But we're also fully competitive at large enterprise today. Procter & Gamble, world's largest CPG company, almost every single one of their global e-commerce stores, small, medium and large is on BigCommerce as are many of their CPG competitors, many of the world's largest consumer electronic companies, many leading apparel companies, industrial companies, they're doing business with us. And we have one store about to go live and selling in the billions in online e-commerce. And as far as I'm concerned, there's really no max on the size of store or the size of the company we're capable of serving. There may be functionality limitations for some, but there's not a scalability challenge. If anything, we have that built-in. So I'm giving you this provocative answer that says we continue to sell $30 a month stores all day long and we think we actually have the world's most feature-rich SMB platform for $30. You're getting the same thing for $30 a month that Procter & Gamble pays us many, many, many multiples of and you never grow off it. That's true disruptive technology, something, again, that starts at the low end and scales all the way up to the world's largest business. I actually think that those behemoth software companies that have at the very high end of the market, not the mainstream, but the high end, which is where Adobe took Magento, which is where Salesforce took Demandware, which is where SAP has always been with Hybris, that's where commercetools is, I think there are all that may be commercetools sitting docks. They're trying to charge 10x what we do for lower performance.

And you made a comment as part of that competitive analysis on Shopify Plus and whether it's true enterprise-grade or how to think about that. What do you hear from your customers when you go up against Shopify Plus? Give us a little more nuance to that statement.

Yes. I mean, Shopify Plus can and certainly does serve a lot of businesses at scale in terms of GMV. However, it does so most successfully when their needs are simple. An awful lot of their scale that businesses started small and just stayed in the Shopify swim-length. If you are already a complex business, you will find that you can't actually adopt Shopify and there are a lot of proof points wide. There's no multi-storefront capabilities built-in. Every single store needs a separate account, right? That's one of the most basic requirements of an enterprise platform that a complex organization can have lots and lots of stores under one account, one set of integrations on the back end, one admin panel, one set of data. You can't modify their checkout, it's locked down. In many cases, you can't use payments other than their payment provider or else you pay a prohibitive penalty and that's assuming the payment provider you want is even integrated, may not be. Same thing goes with point of sale, right? They've got their point of sale. They're not fundamentally a point-of-sale company, they're not fundamentally a payments company, but they try to make you buy their suite. For a company starting out that pre-integrated really easy-to-use suite is a fantastic way to start and scale a business, assuming that the complexity of your needs doesn't run outside their swim-length. And even large companies will sometimes say, well, my needs are simple. That works for me. But if your needs are complex, you want to do headless, you want to do B2B, you want to do multi-storefront, you want to modify your checkout, you want to have freedom on payments, you want to have freedom on point-of-sale, you want to do complex promotions. These are some of the many ways that our platform is far more enterprise-capable and open.

Yes. Yes, it leads nicely into a question about what you're seeing in the front office stack more broadly because one of the themes that we're picking up on is there's convergence between e-commerce becoming more of a business enablement tool and not just an operations tool. Certainly, when you look at Salesforce and Adobe, one of their big selling points is, hey, you're getting sales, marketing and e-commerce and service and all of the different pieces of front and tech. So would love to hear your thoughts, how do you think that conversion impacts? Do you think that over time Salesforce will be more competitive because they've got all of the different pieces? Do you need to have a sales solution? A little more on how you think about convergence.

Yes. I mean, for sure, sometimes Salesforce is benefited in a competitive situation, if there is a business that we're head-to-head with them on that already has Salesforce CRM. And then they'll argue, hey, this is a pre-integrated compatible solution with our Salesforce CRM and they might be willing to discount, the e-com more than they would be if they were selling it from scratch. However, the counterargument is that when you buy into the Salesforce suite, you're buying into what is fundamentally an archaic version of SaaS in Salesforce Commerce Cloud. You're buying a CRM product that is very significantly overpriced and not as flexible and modern as say a HubSpot on the sales cloud side of things or a Gorgias or a Zendesk on the service side of things. And our open strategy is one where we try to have not just the best partnerships, but the best integrations with those best-of-breed specialists in each area. So whether, again, it's Zendesk and Gorgias and some of the others in customer support or HubSpot and Sales Cloud and other players in the sales side, marketing automation, we want to go to market with the best integrations, best partnerships and make it a choice for a business of more modern software at a better price versus you're paying a high penalty to buy a suite that isn't as modern and high-performing. That would be our counterargument.

Yes, that makes sense.

Sometimes we win, sometimes we lose that.

I wanted to segue into a discussion around the health of the e-commerce ecosystem. We've had a very robust COVID-catalyzed adoption cycle. We're now coming down on the other side of that. Help us think about what the right growth rate is for our models on e-commerce longer term based on some of the conversations that you have with your customers. Is it a 10% adoption curve? Is it slower growth off a higher base? How does it compare to 2019? Your thoughts on e-commerce growth?

I'm not sure I have a better long-term answer than do the firms that you pay to give you these answers. But I'll tell you what they're saying. So e-commerce this year in Q1 and Q2 according to U.S. Census Bureau for B2C in the U.S. grew at 7% roughly each quarter, which is down from the roughly 9%, 10% it was growing at Q3, Q4 of last year. And my interpretation of that is that the impact of the current economy and high inflation has chopped out about 5 points of GMV growth this year from what was already going to be below normal GMV rates as we're lapping lockdown time period. So the question is, when does that come back? eMarketer predicts that we are -- that while they're actually predicting for this year for the full year, it's going to be like 9.5% growth. So they think that Q3, Q4 is going to be higher than the 7% of the first 2 quarters. We'll see. And then they're predicting basically 12% to 13% growth from 2023 through 2026. Statista, which does things globally, actually thinks it's minus 2% globally this year, but that's heavily weighted to China, that's overwhelmingly weighted to China. But they think the global number is back to 14% next year. If you go back in time pre-pandemic, every single year, going back like 10 years, e-commerce was metronomic, it was growing 13% to 15% every single year. No major inflections up or down, maybe other than a blip in the '08-'09 recession. It was pretty metronomic. And I wouldn't be surprised if once we get through this economy, we're back to a metronomic rate. And I don't know if it's 12%, like what eMarketer thinks or whether it's 14% like what Statista thinks, but it's going to be somewhere in that low to mid-teens most likely.

Do you mind if I add just a couple things on that?

Please, yes.

I think something else that's worth clarifying is exactly how COVID affected us because I think it's misunderstood sometimes how exactly. We sometimes get questions about, well, how is post-pandemic going to affect "COVID winners," as an example. And I think there's 2 things that are really important to understand about how that affected our business. One is what we saw in same-store sales. And the second is the mix impact that we saw with respect to enterprise versus small business. I don't think either are necessarily always accurately understood. So what we've seen in our business on a same-store sales basis is we had very consistent growth, a little bit of a premium to general market on a same-store sales basis right up until about March of 2020 and then there was the step change function in March or April, where you saw a big increase in same-store sales and e-commerce. And we've seen steady growth at that higher rate ever since. We've seen a little bit of a moderation in the rate of growth, but no reversion back to where it was before. So where that affects our business is it's a little bit less of a tailwind, what I would say to revenue, but not a headwind, which I think is important. So we just haven't seen a big reversion. We're seeing challenges just like everybody else is, but nothing that would indicate like a reversion. The second thing I would indicate as well is if you look at our mix, we saw in the first quarter or 2, a slight change in the mix that we saw in new merchants joining the platform where we saw more small businesses joining the platform in a little bit less of a high rate of growth in enterprise. But that was a very short thing. I mean once we got to Q3 of 2020, we were back on the same track where we had before, which was heavy, heavy disproportionate mix in enterprise growth and small business kind of going back to a lower percentage of the mix where it had before. So it's hard to say exactly whether or not is that COVID-related. We think that when we saw businesses jumping on the platform because they were caught flatfooted by the pandemic. I think that was more of a small business phenomenon, honestly, in a lot of waste than it is on enterprise. So there's not like a -- maybe as much of this like huge mix difference that we see in our business than maybe if we had been more small business weighted than in fact we are. I mean fundamentally, we're an enterprise e-commerce business. I mean, 70% of our ARR is in enterprise, not in small business.

Daniel, I'm going to have you hold on to the mic and ask you a couple of near-term questions. So recognizing that the majority of your business is not driven by a take rate on GMV. The piece that is, I believe, was enough to revise down your second half guidance, order of magnitude low-single-digits. Talk to us about the near term. Do you think there could be another step down in consumer spending GMV impacting your business? I know you have a lot of internal data teams that's been time looking at this.

Yes. So I can speak to kind of what our going-in expectations were at the beginning of the year and what we've seen thus far that led to us making a revision to guidance. So when we look at on my team, we're actually really, really close to where we thought same-store sales was going to be going in at the beginning of the year. We're not economists, if we were, I'd be an interest rate trader of not working at e-commerce, but we do our best, we're actually getting pretty darn close. Where we've seen impacts, so we beat the Q2 guide on revenue at the midpoint by about $2 million, and then we pulled a total of 2 out of the back half -- and that's about 4 out of the back half, which is largely driven by this issue that we're seeing in spending. So in our business, when we see a little bit of a deceleration in consumer spending, it hits us in subscription pricing because we see fewer upgrades to people going to higher plan types, and we see a little bit less revenue share as well, primarily in the area of payments. Our business is not a consumption-based pricing model or even a rev share model like it is for other folks in our space that either book payments rev share on a gross basis or they price based on basis points on GMV. That's not how the business really flows for us. So I mean, I think we are perhaps maybe a little bit more insulated, at least in terms of size of volatility compared to other folks in the space. Might it still go south a little bit, it's possible. I mean, I don't think any of us know exactly where things are going to go over the course of the next few quarters. Where we are right now we feel good about the guidance that we set. We're just going to continue to try to be as transparent about that as we see factors coming in and be clear about that.

I just want to add one thing because you talked about like the revised guidance for the second half of this year. And it's worth noting for everybody in the room that in Q1, as far as I know, we are the only e-commerce platform or a company in the world that didn't miss its guidance to the street. We grew 40 -- yes, we grew 40 -- yes, in e-commerce. We grew 42% year-on-year in Q1. And the next best out of 15 companies that I saw reported was at 22%, most were flat or negative in Q1. In Q2, we beat again top line bottom line and grew 39%. Our guidance for the full year has not been reset down from where it was at the beginning of the year. We're the only e-commerce company that hasn't been missing. And so yes, we got a little bit more conservative because the GMV headwinds affect our business too and our back half guide, but we're still holding to the guide we started the year with and no other e-commerce company in the world is anywhere close to that as far as I know.

I'll stay on this theme of consistency and predictability of your business model. We had a hypothesis that you'd seen a pull forward in e-commerce innovation or in re-platforming during COVID. And in our discussions, it actually feels like no, it's been a very steady cadence through COVID and now post COVID. So maybe a little bit on what you're seeing in terms of enterprise willingness to invest in re-platforming in e-commerce and whether some of that was pulled forward or not and what -- it's a long way of asking a pipeline question, how healthy is the pipeline?

Yes. I don't know whether there was a pull forward at the enterprise level. I do believe that in an economic climate like today, larger companies are less willing to take on big capital projects like a migration than they would be in normal economic times, and also at the small end of the industry, entrepreneurs are less likely to start new business or be able to get capital to start new business. And so I think there certainly is general softness right now in new business formation and in company willingness to take on big migration projects that are nonessential. I think that's true across the industry. I don't think it's a pull-forward issue as much as it is the general economy isn't strong right now.

While we're on the topic of enterprise re-platforming. So some very interesting product updates that came down the pipe earlier this year with the announcement of multi-store and multi-hub inventory management. So the first part of the question is, why is this technically difficult to do? I know you've spent a lot of R&D resources in getting to this point. You've had the big announcement. There will be iterations on the product over time. So a little bit on the technical difficulty of solving that challenge.

Yes. I think our, in essence, recoding of our platform to be one account, one store to multi-storefront compatible is potentially the hardest single engineering project, an e-com platform has ever taken on because we're multi-tenant SaaS. We had 60,000-ish of the world's companies, including some of the world's largest, basically running their stores. And we had to change ourselves from a bicycle to a car, so to speak, or unicycle to a car with all these extra wheels and not break any of those stores. The whole platform had to be rewritten, like whether it's catalog going from one account, one store to multi-store wear or orders, checkout, tax payments, every single part of the whole platform, how to go from one account, one store to one account in stores compatible. That took us years of planning and years of engineering. And the fact that we pulled it off without a glitch is a bit of a minor miracle and one of my biggest release of this year that we didn't have downtime or bugs. I mean basically the product hit and it was ready for prime time. We kind of already knew that because Nokia phones already in beta at the end of last year had rolled itself out across Europe, Ted Baker in beta of the product had migrated over to us a multi-hundred million dollar online apparel retailers. So we had already kicked the tires really hard. But that's why, I mean, if Shopify were to try to do this, I think it would be a many-year project that would come at the expense of other things and with an awful lot of risk and energy. Will they take it on and do it? I don't know. Maybe they're working on it behind the scenes, but it's a really hard project. If you're on-premise software, you can just do what Magento did and come out with Magento too that recodes the whole platform, and you can say to all your existing customers tough, you've got to migrate over to Magento 2 if you want this. Try doing that on at SaaS. That's really hard. So I think there's a really big moat around that capability for any low-end SaaS platforms.

What has the feedback been over the last several months? Are you seeing the number of bake-offs that you get invited to or your win rate change because you now have this functionality?

Yes. I mean there were plenty of businesses for whom the absence of this functionality would have just qualified us from competing. And so then we're in competitive situations against the Adobes and the Salesforces of the world. You won't see Shopify for the most part in those because I can't do this. It will also lead to more win rates because the work around before was a separate account for each one of your stores and now you can do true multi-storefront. So it's definitely helping us. And again, one of the best things about the rollout of this feature was that it was a great -- most complex thing we've ever done. And we've really had no bugs or escalations around it. What we do keep asking for is ever more functionality. There's more things we can do for multi-region, multi-storefront selling, et cetera. There are more iterations coming. But iteration one stuck the landing.

What's the next most complex thing you're trying to do?

I'm going through multiple answers in my head. But I think the next most complex thing is taking our acquisitions in B2B and bringing them into the native product functionality. So the background behind BigCommerce is we started as a business-to-consumer platform. We started being used in a lot of B2B use cases when companies would add on extensions from our apps marketplace. We went all in and basically starting 1.5 years ago, licensed the most popular extension called bundle B2B, which added about a half dozen core B2B selling capabilities to BigCommerce. And then earlier this year, announced that we are acquiring bundled B2B. So now taking that functionality, re-architecting it, building it native and then opening it up the same way that our platform has opened up is probably the most complex set of things we're doing right now. It's our aspiration to be the world's #1 SaaS B2B platform. Magento had a similar trajectory in the on-premise era, built for B2C through extensions became a leading competitor for B2B, and they still are. Now we're trying to do that same model, but as a SaaS platform. And I think it's particularly appealing to industrial companies because many of these industrial companies don't have a technical staff and they don't have the margins to try to compete in managing their own on-premise software. So a huge competitive advantage for us against Magento and the purpose-built B2B platforms, if we can make it simple and easy for the industrial world.

Are you starting to see more momentum build in B2B commerce? And if so, what are some of the catalysts or inflection points that could drive that to be a more meaningful driver of growth for you?

It is building. I mean B2B companies were later to adopt in general, e-commerce and all of the existing forecast suggests that the rate of annual spend on e-commerce platform technology by B2B sellers is about double the growth rate of B2C. So 16% annual growth of platform spend for B2B versus 8% platform spend for B2C. That's expected to continue to a point in, I think it was 2025 or '26 when B2B is supposed to be 42% of the whole platform spend market, B2C being the other 58%. So it's moving towards over time 50-50, and that's one of the areas where we think we've got a real opportunity because we compete for both.

And then since you mentioned the integration of some of the more recent acquisitions, and there have been some pretty interesting strategic moves there. Taking a step back, do you see any gaps in your product portfolio today that you think you would have to potentially go out and either build or buy?

There are always going to be opportunities for platform development that will help us. A lot of the -- we don't have major gaps today. There are little things, like can we do native split payments? The answer is no. I can't do that today. There are a couple of other things for one storefront, but multi-language, multi-currency, multi-language, multi-region on the same storefront, that functionality we're working on right now. So there are things for international selling, things for B2C selling, things for B2B selling. There are lots of capabilities that are still going to unlock use cases and industry segments that we can't optimally serve today. And indeed, M&A is an option for functionality sometimes as it was in B2B. But there are other cases you can't just go buy a split payment solution, right? That's something you've got to build into your core checkout and payment processing. But we're always looking for M&A opportunities. And I would say, in general, since we went public 2 years ago, we made one major acquisition in Feedonomics, which I think is the most interesting acquisition in all of e-commerce in the last couple of years. And then we really moved our ball forward on the 2 B2B acquisitions we did.

I wanted to talk a little bit about go-to-market and then margins, and then I will open it up to the audience if folks have questions. So maybe first on the go-to-market. We've talked about the product improvements that you've made for the large enterprise customers. Maybe I'll ask a similar question on the sales and marketing front, which is how is your go-to-market evolving? Do you feel like you need to hire more experienced folks to be able to get into those large enterprises? What are the top 2 or 3 nuances and how you're evolving the go-to-market?

Well, tons of evolution over time since we moved our orientation more up market. I would say today there's a mix shift in our marketing spend, ever more from small business where, let's just be honest, we've reported publicly the LTV to CAC is lower than it is in enterprise. And so we're shifting our marketing mix towards that. We're getting better at things like account-based marketing and outbound SDR selling. We're always working on our technology and agency partner network at the high end, trying to get ever bigger agencies serving the world's largest companies and technology solutions that they like to adopt within our ecosystem. We're working on our land and expand capabilities and we have stores with some of the world's biggest companies. And historically, we didn't really try very hard to go in and take an initial store and a lot of customer happiness and then use that to network to the other opportunities in those companies. That's new for us. We also now have cross ability to work with Feedonomics where we've committed to the market, we're going to be open and platform-neutral at Feedonomics, but a lot of their customers are on custom platforms or on open source platforms, where there's not a competitive dynamic that we or the customer would care about, right, and initiating conversations on the Feedonomics' side about platform technology with all of those. So there are a whole bunch of undertapped growth levers for us on go-to-market. They're going to open up opportunities.

The one thing I would add to that, just to elaborate a bit as well on the point about agency partners and technology partners. It dovetails really nicely with the open strategy that we have as well. So to my knowledge, we're the only one in the system that's not vertically integrating as a way of trying to get into additional revenue growth. We don't have -- we're not going to go off in white label payments. We're not going to go off and come up with our POS system. And a big reason why we do that is we're a smaller competitor that is a pure-play platform or the commerce platform, right? And part of how we do that and kind of box above our weight class is because we partner so closely with our technology partners and our agency partners. In any given quarter, up to half of our new leads -- and we've talked about this publicly, after half of our new leads come from some combination of those partners and those tend to be leads that perform the best. They stay the longest. They bring the most amount of transactions that can lead to the best revenue share. And so for us, it's really important to be partner-friendly. When we say that we are open, we have deliberate choices that we make over and over in our business to make sure that, that go-to-market behavior is consistent with the way that we talk about it publicly. And even if you see like we had our partner summit in Austin, 2 weeks ago, we had our partner summit in Sydney last week. Brent can be at our partner summit in London tomorrow, I believe, as well. It's just -- it's hugely important to our strategy that we continue to be kind of focused on that.

Yes. Our top 5 competitors are suites. Actually, one is not, commercetools. It's the only other open platform, who's a leading player globally. But Shopify is a suite; Salesforce; Adobe; Oracle, soon rest in peace; IBM, definitely rest in peace in commerce; SAP. They're all suites or the open platform when it comes to SaaS. And if you're wondering is one better than the other, well, no, they each have their advantages and disadvantages. But the key thing I want to just emphasize in the on-premise software era, which in e-commerce was really up until 2015, open was what won. Magento and open source was the winner, had 20% share, small, medium and large, all around the world, B2C, B2B. Open and flexible is what won at serving the world's complex businesses. Now that's our strategy in the SaaS era. And we're the only ones that are doing it for a complete platform. We're not trying to grow by becoming a conglomerate and tacking on a whole bunch of adjacent solutions, getting us into adjacent markets that we're not experts in and trying to shove proprietary solutions down our customers' throats. We're the open platform. And if you're a complex business and wants to optimize your stack, we're the best way to go and we're also the best company to partner with in a lot of the major verticals.

The margin question is there's a very natural mix shift from moving towards LTV to cap on the enterprise side, there's a natural benefit from more cross-sell. What are the other 1 or 2 pieces that we should be aware of to get you to breakeven in 2024?

So there's a couple of things I would focus on. G&A and R&D, in particular, are areas where we expect to see quite a bit of leverage. We had to scale up G&A a fair amount when we went public, just like every other company, anybody can figure out how to spend less on D&O insurance, I am all ears because that was a lot. R&D, we also stepped up investment in a number of areas this year behind investments we were doing in headless and B2B and a bunch of things like that. We don't -- we're not going to have a higher burn rate in those areas, we expect to see leverage coming from that. And even also I would argue in the sales and marketing side as well when you look at sales efficiency, we have room to improve, I think, in that area as well. And one thing that I point out to investors sometimes when we look at this, Brent and I are pretty transparent, I think, about the areas where we feel like we need -- we still have opportunity to improve. We're going to be pretty open about that. And one of the areas where I think we have a lot of leverage we can continue to see is that in that area of kind of land and expand or expansion revenue, right, which actually your initiation report, I think you've been pointed this out when you first started on our stock. I think if you look at our revenue growth still comes disproportionately through the acquisition of new logos on the subscription side of things. We have partner and services revenue where we pick up revenue share for the activity that they do on the platform. But on the subscription side, we see growth from growth in pricing as same-store sales is increasing. But a small amount of our revenue on the subscription side of things is coming from just extra things that we are selling that are still core to the platform with our existing base. This is something Brent mentioned earlier we're focusing on. I think this is an area where we have a lot of potential to also gain efficiency in sales and marketing and improve over there as well. So I mean, we're committed to aim for mid-2024 for breakeven. It's not going to be easy. A lot of it, we're going to see how things shake out over the macro climate over the course of the next 1.5 years. But we're really very determined to do that. When we looked at our investment levels this year, it was a step up, not a permanent change in where we were from a burn perspective and we feel really good about sticking to that time line that we've set.

Questions from the audience. Please, yes. Go for it.

You talk a lot about the partnerships. What's your approach to partnerships with IT services vendors and all the kinds of companies implementing digital transformation within your clients?

So generic term or agency partners and at the low end of the market, SMBs. SMBs can create their own store in our platform and maybe only 20% of the time. Do they get an outside developer or agency to help them? And enterprise, it's the opposite, 80% of the time, they're going to hire an agency and maybe only 20% of the time will they do it themselves with their own IT staff for some combo of strategy, designing the frontend systems integration, you name it. And roughly about 35% of our sales leads in the enterprise side are sourced by our agency network. And we'll source the other 65% and many of those will then end up adopting one of their solutions. And so the point is if our customers 80% of the time in enterprise are using an agency, we want to have the best agency network and the best agency partnerships in the world. It's part of the reason why I'm excited about this conference this week in London, our conference 2 weeks ago here in North America, I sold out at 500. I mean it was really incredible. So we're trying to be both the best technical and collaboration people partner to the world's best agencies and build that out with focus, even at the small end of the market where we have not focused our agency efforts in recent years. And I think we've sort of left opportunity on the table because a lot of sole-proprietor developers and small shops could be doing a lot more with us than they have historically.

I wonder, Brent and as we're doing, you and I back after a long time, you're very sophisticated at whether or not the company is maybe leading a little bit on the table in terms of price. And in the dedicated, there's -- they got a massive cash balance in all of this. So I'm just wondering if you think about pricing strategy going forward, where it is and what you've got to do, especially given just how far you've come [indiscernible].

Yes. So when it comes to price, the one part that's kind of fixed competitively is monthly subscriptions for small business. Our $30 a month, $80 a month, $300 a month price points have been the same for 7 years. That's where Shopify is. I think if we were to move or they were to move, you would see a lot of price elasticity. Enterprise, which is 70% of our subscription revenue or overall revenue, there's no public pricing. It's all negotiated. And so in situations like this year, when we see inflation and/or we see our own competitive advantages increasing, we will significantly ramp up the pricing tables that we give to the salespeople to negotiate. We also now have built-in annual, let's call it, inflation that we roll out to new enterprise plans. But the biggest pricing lever we have is automated billing. We're rolling out this year for the first time ever our ability to bill on behalf of our apps marketplace applications. So when that happens, you can add the price to the bill, we'll recognize the net revenue or rev share that we've gotten off the gross, but our ability to cross-sell is dramatically improved when you can just add it to the BigCommerce bill. It's not another billing relationship and even place to the extreme for some of the best partnerships, we'll start licensing that. And when we license a partner's technology, we can set the pricing, we can get a lot more margin. That's what we did with bundled B2B before we bought it. That's what we're doing with some other product lines. And so just think of the full potential of what Apple has done in the apps marketplace where everything has to go through your Apple Pay account. We're not going to try to force this on everybody, but there's a lot of revenue potential from the apps marketplace and Shopify is several years ahead of us in doing that.

I think we will end up there. Brent, Daniel, thank you so much. We appreciate your time.

Thanks, everyone.