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

All right. We're going to go and get started. If everybody can take a seat. All right. We're good to go. All right. Good afternoon, everybody, and welcome to BigCommerce's 2025 Investor Day. For those of you who don't know me, my name is Tyler Duncan. I'm the VP of Finance and Investor Relations here. We have a lot of good content. We're really excited to share it. But before we do, a couple of housekeeping items. One, if you need the WiFi, it's BigCommerce is the one to join. Password is BIGC2025, all capitals. Second one is, for those of you who are in person here, we do have a reception afterwards. We hope that you can make it. It's going to be downstairs in the fourth floor. We'll give you some more information afterwards, but I hope you can make it. And then last one before we get started, the lawyers here need me to read a statement. So I'm going to read this. It's going to be very riveting. Today's conference will contain certain forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning their financial and business trends as well as our expected future business and financial performance, financial condition and our guidance for future periods. These statements can be identified by words such as expect, anticipate, intend, plan, believe, seek, committed, will or similar words. These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date, and we do not undertake any duty to update these statements. Forward-looking statements, by their nature, address matters that are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to the risks and other disclosures contained in our filings with the Securities and Exchange Commission. All right. Everybody got that. All right. Best part of the presentation right there. All right. So we have 4 sections that we're going to go through today. It's going to be about 3 hours long. We're going to have a 10-minute break in between to give you a little bit of a break, grab some water, go the restroom, et cetera. We'll have 4 speakers today. First one is going to be Travis Hess. He's our CEO; Daniel Lentz, who is our CFO; Doug Hollinger, who is our SVP of Strategy; and Lance Owide, who is our VP and GM of B2B. So with that, we're going to go and get started. I'll send it over to Travis.

Thanks, everyone, for coming. I'm surprised you don't have that memorized at this point. But very nice to meet many of you that I haven't met before. I will make this as entertaining as possible. We're going to move through at a brisk pace. I know everyone is waiting for the event afterwards. And starting for those, just a couple of slides just to orient everybody who's not familiar with the business. BigCommerce, $350 million in total ARR, about $262 million of that on the Enterprise side, representing about 75% of our total revenue we contemplate as or consider as Enterprise. So any customer that owns at least one Enterprise account -- or plan, rather, we would classify as Enterprise. And just a little bit of history, starting back, obviously, the Kangaroo in Australia back in 2009, started as really a SaaS, small business, B2C commerce platform offering, quickly evolved into mid-market and more complex B2C, inorganically and organically grew into B2B. That was by way organically of just evolving some of the capabilities based on demand from our customers as well as acquiring some of those capabilities and integrating the platform. On to the Feedonomics acquisition we made about 3.5 years ago, ingesting AI product and channel optimization, we felt, was paramount to kind of our journey. And then lastly, on the Makeswift acquisition side, I think we acquired it in December of 2023 from a visual editing perspective. We'll talk about that here in a minute. And then most recently, we launched Catalyst here in January at the National Retail Federation show, which is really an accelerated reference architecture, which was the first step of that ingestion of Makeswift into our core platform that we'll talk about here a little bit more in depth. So again, to orient everybody to what it is we carry in the bag, what it is that we sell. We've got basically 3 core products. Our flagship product is BigCommerce, we would define as one of the world's largest e-commerce SaaS platforms for both B2B and B2C. On the Feedonomics side, we would say is a leading AI product and channel optimization engine and also a managed service. We'll get into more depth there. And then Makeswift, as I just alluded to, we would define as a next-generation visual editor. So this is the visual editing that allows business users and marketers to create immersive experiences and capabilities without the need of developers, which we'll get into more in detail. From a credibility perspective, we've been widely recognized by industry analysts, well respected, starting with IDC, marking us as a Leader across B2B, B2C and headless for enterprise in mid-market back in 2024. Paradigm B2B, 24 total medals as well as being ranked as the #1 B2B mid-market commerce platform last year. TrustRadius, last year rated us as one of the top-rated platforms out there for customer satisfaction and experience. Forrester, well known, obviously, in 2023, ranked us as a Strong Performer. And then Gartner in 2023 also ranked us as a Challenger. I think that next survey is coming out here shortly. And then collectively, we really power mostly branded manufacturers, retailers, manufacturers themselves and distributors of a variety in shapes and sizes and industries and vertical markets. An eclectic mix. We'll talk more about kind of the offering model that we've ingested into the business and orient folks a little bit more succinctly to where we're talking about. But this goes across our entire product portfolio today that probably represents some of the work that we're doing. And I won't spend a lot of time on myself. If people are really that interested, we can talk more at the reception. But wanted to at least give folks a backdrop of who I am, where I kind of came from. I would describe myself as probably an unorthodox CEO in the software space. I've been in commerce for 20 years, but I grew up and spent the majority of time in my career as an agency guy on the services side. Starting back at least in senior leadership roles, back in 2010 with Amplifi Commerce, who is the world's largest consultancy oriented to AGT, which ultimately became Oracle Commerce. They bought them in December of 2010 and ingested that business into both the retail side of that business and the CX side of that business. From there, I went on to run another publicly traded agency, LiveArea, which is owned by PFSweb. I was the Chief Revenue Officer of PFSweb at that time and as well as the General Manager and ran the LiveArea business, which at the time was the largest Demandware and subsequently Salesforce Commerce Cloud agency in the world globally. They're now part of Dentsu. We're also one of the largest SAP hybris B2B partners in the world and also a large Adobe and Magento partner. So we spanned across almost every other major commerce platform at the time through that duration. From there, I exited and went to go run an agency called, BVA, which was a frontier agency in the Shopify ecosystem. They were 1 of the 4 founding agencies that started at the same time Shopify Plus came out. I think we acquired one of them that predated me. So we were 2 out of the 4. It was owned by private equity, came in to clean that business up, run it, sold it to another private equity firm that owned a retail-oriented agency called The Stable, which was essentially a lot of ex Walmart, Target and Amazon folks that we're really known for bringing digitally native brands into those big-box retailers and optimizing revenue and sales within it. Think of them as almost a broker model in their original days. They were getting a lot of demand on that spectrum with a lot of wholesale-oriented brands wanting to go digital and go direct to consumer, a lot of digitally native brands wanting to go more wholesale just given the cost of acquisition and some of the complexities. And as a result, those kind of 2 businesses came together, integrated the businesses, 6 months later, wrapped it all and sold it to Accenture. It was the largest acquisition Accenture Song has done to date. And I would say it's something that Accenture Song does a lot of. They bought Acquity Group back in, I think, 2012. This was bigger than the Acquity Group acquisition, almost double the size. So it was a massive investment by Accenture. And by way of that acquisition, I went over to run the direct-to-consumer go-to-market and strategy for Accenture Song within the commerce practice as well as run the Shopify partnership and relationship globally. So I spent a good 5 years running the largest Shopify agency in the world, obviously working with all of that leadership team and kind of watching their growth and participating and then lived through that orientation all the way into the ingestion of Accenture and then in June of last year came to BigCommerce. And again, I get asked this probably more than anything. Why -- what would have motivated you? You sell your agency. I'm in the middle of an earn-out. Why would I go to BigCommerce? What sort of things did I see? And I try to make this as simple as possible because I think it's interesting. One of the things I really noticed at Accenture and just given the size of organizations that they work with, And it's all around digital transformation, whether that's a global branded manufacturer, large enterprise, CPG or whatnot, this desperate need for organizational agility to thrive in today's economy. And what I mean by that is organizationally embracing the ability to go where customers are in ways that drive value and immersion and remove friction. And as simple as that sounds, it is really, really hard to accomplish, especially with how complicated things have gotten. Another thing that we noticed was this giant proliferation of channels that we'll talk about here a lot. This is back 15 years ago in the ATG days. You had retailers trying to turn on digital channels that mimicked those differentiators and that value proposition of what consumers would have experienced in store, right? And just getting that right took 18 to 24 months. It took an army of people. Everything was built on-prem. It took a long time. And then that evolved into early on omnichannel where it was can I buy something online and have it picked up in store. And then it evolved from there where branded manufacturers discovered SaaS with Demandware and started selling globally direct-to-consumer while also selling through retail channels. And then obviously, that moved on into the digitally native vertical brands that obviously Shopify and us and others kind of rode that all the way up through COVID and things like that. But now there are hundreds of channels. This has gotten wildly more complicated. I'll talk a little bit more about this in a minute. And then lastly, you've got AI and agentic commerce that's massively disrupting market. I think 20% now of all product searches start in some capacity with AI or some sort of AI bot or ChatGPT. And I'll share a couple of really quick stories. One, on the AI and agentic side, thinking through the use cases, 20% of all product searches are starting there. Obviously, those tools are serving up product. At some point, people are going to be aligning a wallet to such product and not even go to a website, not peruse a brand site in the way that they once perused it. And you can imagine the complexities that, that creates, specifically for some of our competitors as well to be able to monetize that if you're not controlling someone going to a platform. And I think the openness and the agility that's going to be required now and into the future is going to map to that very, very interestingly. And then lastly, I'll share -- I won't name the client, but think of a large CPG, of which Accenture plays with many, and the dynamic of, say, a pet food company, front and center, that historically sold through traditional channels, big-box channels, right? Whether that was Target or it was grocery or it was specialty retail, PetSmart, Petco or even online specialty retail like a Chewy's, they historically sold through these channels. And that was their model for a long time. But as Chewy's, as an example, has digitally transformed themselves from just serving -- selling pet food and whatnot, they've gotten into veterinary care. They've gotten into nutraceuticals. They've gotten into pet insurance. They've got all the data on my dogs, their birthdates, their medications. They know when they've been euthanized. And they send a personalized note when that happens. They know everything there is to know about my animals. And Purina or IAMS, or pick a pet food company, knows very, very little by definition because of the way that customers have engaged through retailers like Chewy's, which is a competitive disadvantage, obviously. And I think Chewy's has not been shy in becoming a branded manufacturer and publicly announcing what their growth goals are and actually going to market and private labeling products. And Chewy's, by definition, is in a much better opportunity and situation to go take market share based on all the customer data that they have available to them. And they're going to take that market share from established players, which then creates this unique challenge. And pick your CPG. Pick your pet food brand. They all face the same challenge. They have 0 organizational agility. They have only sold through these third-party channels, and they now somehow need to be able to go out at scale with value. And I don't mean setting up profitable supply chains where they're going to profitably ship dog food. I don't think that's going to happen. I think they need to accept the fact people are going to buy that where they want to buy it. But they've got to reach those customers at scale. They've got to reach them with value and immersion. They have to influence that loyalty. And they are not set up to do it from a data standpoint. They're not set up from a technology perspective, and they're certainly not set up from a supply chain standpoint. And so all these things, sort of pondering these use cases in these scenarios, you can imagine my role at Accenture with the product that I had spent 5 years with, certainly very proud, giant relationships with the Salesforces and the SAPs and the Adobes. None of these tools we're effectively solving these sorts of use cases and these complexities that are about to get wildly more complex. They don't have the agility, the nimbleness, the ability to go to market at scale and do these things. That was the main crux for me coming to BigCommerce. I felt -- despite its flaws and challenges certainly that have been well publicized, I felt where the product and product suite was and where it could potentially go had the best chance to go appease this white space in the market where we feel like a lot of the business is going. Not saying 80% of the business is going there. This is not a mass market effort, but there is a lot of white space and a lot of opportunities that have these sorts of use cases and these dynamics that we'll get into here more in a minute. And since I've come over, obviously, recognized quite objectively, we had our own stuff to clean up, right? Most notably, we took out 10% of human capital costs last October. 20% cost in total, we reinvested half that cost back into doubling our quota-carrying capacity. We didn't feel like we were set up to go scale and grow with the intention that we needed to go scale and grow. We've also fundamentally rearchitected our entire go-to-market organization. Broad and new leaders will talk about here in a minute, but reoriented everything to best-in-class SaaS and then orienting all of this down towards offerings that Doug and Lance will get into here in a few minutes. We rebuilt almost the entire go-to-market leadership team with the exception of a handful of folks that we'll get to here in a second as well. We've reorganized around those offerings, and then we've really focused on our ideal customer profile, who it is that we're for and why as opposed to trying to be everything to everyone. This is going to be massively important as we execute against the strategy to kind of drive down customer acquisition costs and greater efficacy. And really, what this all boils down to is our #1 goal going forward. We've rearchitected the teams. We've reconfigured the business. We've got the team in place, the strategy in place. It's now about execution. And execution in 2025 is about growing ARR. Like we obviously drove really positive cash flow in Q4. We drove a lot more profitability than even we expected, which is great. And I don't want to steal Daniel's thunder. But at the end of the day, all of this is oriented towards growing ARR. It's basically a put up or shut up kind of moment. And how we're going to do that, just orienting everybody here, right, increasing customer wallet share, which is super important. Leveraging the integrated product suite of both Feedonomics and Makeswift, which was not previously integrated, sets up a very organic and natural opportunity to cross-sell, upsell, increase wallet share by client, decrease churn, improve a little bit more stickiness and differentiating, bundling, and we'll get into this a little bit more, too. Being very deliberate at how we are prebundling capabilities and reference architectures oriented specifically to markets and industries is another thing we're doing deliberately in this model. We're also building out a really robust commercial framework for partners. So again, partners like Accenture and others tend to be interested selfishly in services revenues. So a lot of what happens in transformation is not really around the implementation and enablement of the technology per se. It's really around all the organizational transformation and strategy, which tends to be higher margin profile business at GSIs and consultancies than the traditional SI work. And this maps really well to what it is that we're doing and then really ultimately making this easy, making this commercially, technically and operationally viable for organizations to take advantage of. This can't be super complex. We'll talk a little bit about the current spectrum today of providers and why that's super important to make it simple. Number two is expanding our total addressable market, right? Bring new capabilities to market, right, to expand the TAM. Again, we've got a couple of different ways of doing that. Self-service Feedonomics, I've mentioned on earnings the last couple of times. Feedonomics right now plays very much in that kind of upper 1/3 of enterprise. There's a real opportunity to bring that down market, cross-sell it into our existing installed base of small business and mid-market customers. I would argue the reciprocal is also the case, right? We have a lot of established relationships and value with Feedonomics and deliberately being able to cross-sell and upsell our other 2 products there as well. Precomposed reference architectures like Catalyst are going to be the new norm. So by precomposing things that are oriented to specific maturity sizes and market obviously drives down total cost of ownership, but it also accelerates one's ability to go to market and carry less overhead over a shorter period of time, which is super crucial to what it is that we're trying to do to mitigate risk and drive efficacy. And I think Makeswift as a stand-alone visual editor. At first, we're going to go include it in the core product. And then the last phase of that would be a stand-alone visual editor that again could sit on top of non-transactional non-commerce sites as a visual editor allowing marketers, brand people, business users, in general, the ability to create really immersive experiences independent of commerce anywhere, which is a totally new market that we've never actually addressed. And then lastly, and Lance will talk a bit more about this with a much better accent than mine, doubling down on B2B, which is really our biggest right to win. It's been more than 50% of our net new bookings over the last year. I think the industry expects us to go there. There's many folks in the industry who have been very vocal about kind of get everything into B2B. They tend to be laggards. They're way far behind on the B2C side. It's less commoditized. They tend to be less squeaky. We're really in a unique opportunity to go take advantage of our B2B capabilities. Not to mention our licensing model against our competitors wildly gives us an advantage. B2B conversion and experience is not paramount. Most B2B conversion out of the box is 99.5%. People have to go through a certain portal or punch out. They don't like to pay rev share as a result. And they typically are buying on terms and POs with very complex catalogs, complex contracts, things that lend itself to not only what we're capable of doing in the platform today but what we're setting ourselves up to do tomorrow. So those are the 3 core buckets as it relates to increasing ARR growth. We would say -- and again, you'll hear more about this curation. It shouldn't be complicated, right? It should be curated, and we'll get into that. And I also want to touch really quickly on composability without going down some rabbit hole where we're explaining technical jargon and terms. You'll hear us talk about composability. The best analogy I can give for composability, I will use SuperTarget as an example because everyone, I think, can relate to it. Shopify as an example to me is like SuperTarget. People go there because it's convenient. I'm not saying they're as big as them or they merchandise as well or any of those things. I'm just saying people go to SuperTarget because they can buy pretty much anything and everything they would want to buy at SuperTarget. By definition, they're going there because it's convenient. You can make the same argument for Walmart, whatever, or in the legacy days, a shopping mall. You go once, park, and you spend the day buying everything you could possibly need. I would argue in the new world order, although I can buy produce at SuperTarget or something from the butcher, certainly, I would not describe it as best in class. I'm buying produce there because I'm already there and I've got 3 kids or whatever it is and I'm doing it out of convenience. But if produce is really important to me and I want to -- I care about where it was sourced and how it has grown and I want to support local farmers or other folks in the community, I'm probably going to the farmers' market or I'm going to Whole Foods. Composability, for lack of a better example, makes the ability to go buy what you want at SuperTarget for all the right reasons because it's less expensive and convenient while also making it frictionless and convenient to be able to go buy at the farmers' market independent of how far you live from one. So what we're trying to do is embrace the fact that more disruption and value will come by way of third-party software providers and partners than we could ever possibly generate and build on our own internally. And I would make that same argument for any competitor, as evidenced by the monolithic installed base today. Just look at Salesforce and -- I mean Oracle is the best example. They bought the best commerce platform in the world in Oracle -- ATG rather in 2010. They followed that quickly up by buying the best insight search capability in Endeca, which ironically back in the day was the solo reseller of hybris for those old enough in the room to remember. And as of 1.5 years ago, they were completely out of commerce. They basically packed it in. It's gone like completely because they were not able to maintain, stay ahead of the curve across their full suite of products because the market changes that quickly. I would argue Salesforce is going through a similar model, although better product and easier to maintain, certainly, and probably a better sales motion given what it is that they carry in their bag. They're not winning net new deals. They're holding on to as much turf as they can. SAP obviously won a ton of stuff, lost a lot of stuff for all the right reasons, too. So the argument here is, we've got to align ourselves with best-in-class capabilities with as quickly as the market is changing. And we've got to make it commercially, operationally and technically easy to ingest those capabilities and orient it to specific markets and specific maturity levels. That's it. That's the simplest way I can describe it. So happy to have sidebar conversations on it. But at the end of the day, ultimately, we want organizations to be able to sell anywhere they want, see everything because by going composable, ingesting all of this stuff, maintaining line of sight and visibility in all of that is very important and then ultimately grow profitably on their own terms. That's why people come to us today. They subscribe to us because we provide the best environment for them to grow based on their use cases and their needs, right? It's not one size fits all for everybody. It's why folks have oriented themselves to us, and that's what we're going to continue to invest in, is create an environment that allows them to grow. Really quickly and sort of a very brief history lesson of where this has evolved from. The maturity of the market, for very obvious reasons, has commoditized and democratized commerce in many ways, right? It's gotten really a race to the bottom on the B2C side, but it also made it very available, especially to smaller merchants. And if you look at the legacy, and I kind of alluded to this earlier, all of our previous like type competitors were all acquired by large software providers, starting with ATG with Oracle and hybris with SAP and Magento with Adobe and Demandware with Salesforce. And essentially, you've got 3 primary players left. We're just talking about this in the back of the room. And I would look at this as a spectrum, too, as it relates to monolithic starting on the left. All Shopify is a newer version of the old monolith. They believe -- and I'm not saying it's bad, and I don't mean any disrespect towards it. They believe in building everything themselves. Yes, they will occasionally ingest apps to quickly, in their mind, extend the platform. But at the end of the day, they really want to be the sun, the star and the moon in everybody's lives. And that's philosophically, their right, their approach. I don't think we're going to win an arms race on features and functions against somebody who spends $2 billion a year in R&D. And nor do I think the market wants an arms race for features and function. They want business outcome, period. They want to become organizationally agile to allow themselves to grow profitably given all the changes in the environment. And again, technology costs have been reduced pretty dramatically. Speed to market and agility have become paramount. You've got to do things quickly. You've got to be able to experiment. Even if it is to fail, you've got to do it quickly. And traditional business models have continued to blur. Back to the Chewy food company, pet food company analogy, you've got retailers that have turned into branded manufacturers. You've got brands that have turned into pseudo retailers. Things are getting really complicated, deliberately and undeliberately. It's just the new world order. And as that business and channel model evolution evolves, that organizational agility and that ability to go and ingest best in class very, very quickly and very affordably becomes paramount. The cost of customer acquisition and how folks are acquiring customers or where people are discovering brands has changed dramatically. It's way more expensive now in a cookie-less economy to acquire customers than it was probably 5, 6 years ago. That's completely changed things. And as you can imagine, with the proliferation of channels, having to manage -- profitably manage inventory, peanut butter it across all of these channels and the distribution challenges associated with it, while customer expectations have raised to levels unseen before, a massive sort of challenge in the market. And then you've got this whole disruption around AI and agentic that again is massively disrupting the way people interface with products. It's going to evolve even further as to how they buy products, how they service products and things like that. And again, you're going to have client LLM that need to be ingested. You're going to have third-party ones. This is going to get wildly interesting. And I did borrow this slide from my friend, Brian Walker, formerly of Forrester and SAP hybris. I thought they did -- I don't think it's verbatim, but it's pretty close. This is a slide they produced of another study that they were doing that explains the complexity of where all of this is going. I thought this was the best representation of what articulates what's going on right now. This is -- well, first of all, let's define the fact that customer is the channel. Now all these channels have exploded. Brands, organizations regardless of size, have to go where their customers want to engage them regardless of where they buy their product or service, period. And they need to do it with a value and immersion for all the right reasons. And as a result, you've got -- this is now turned into an orchestration issue. That is not going to be easily resolved by legacy order management platforms and legacy monolithic approaches to commerce because this gets really quick and margins are thin. And so when someone goes through ChatGPT and searches for a remote control and they get served up 6 different products, those 6 different products at some point will be served up based on how I've previously searched or how close I live to where this remote control could be delivered to me based on product availability or what my customer expectation is as far as how quickly that will come to me, model them with any other sort of promotion language. And that has to be done at scale and needs to be orchestrated not just through the buy side but also the return logic and everything else like that. So this is going to get wildly more confusing despite the technology costs coming down and the speed to go to market shrinking dramatically. This whole orchestration challenge is the next wave of what's going on. And back to my original thesis of why I took this job, I felt just like looking at kind of like a house, if you've been house shopping. But it's somebody else's decor, and you've got to kind of suspend the decor, not that the decor here was terrible, but just suspend for a second the decor and look at the bones of the house, appreciate for what it is. I felt unquestionably in market the bones of this house had the best opportunity to go appease these very complicated use cases. And again, not for 90% of the market. I'm not trying to build SuperTarget. There is a large subset of this market that is wildly underserved that will not be addressed through legacy monolith or even newer monoliths. And all of a sudden, you ingest BigCommerce across owned channels, Feedonomics around non-owned channels, Makeswift helping marketers and business users create experiences, personalized at scale, all of which infused by AI. Again, it sounds magical 2 years ago, but those of us that are playing in it today, this is so close to reality. It's crazy how fast this has come as quickly as it's come. And again, I would ask to think of this as basically a spectrum. And let's start with the complex monolith, for example, without getting into an overly burdensome description. This is your typical Salesforce, SAP, Adobe, pick your poison, Oracle. The reason they exist is they had the ability and the capital to go acquire a bunch of complementary things needed at the time. Whether they integrated them or not is debatable. All of them pretend that they do, pretend it's going to be cheaper. But it's really a land-and-expand motion that's existed from the day of time in this space. And they're all dated and old. They're all trying to reinvent themselves and failing miserably. It doesn't scale, and it's anything but agile. The challenge has been there have not been a lot of competitors with enough features and functions to map to feature parity found in a complex monolith that has built those things over a decade of time, hence why composability is so paramount. It doesn't put that same pressure on our product and engineering side of the business to go rapidly produce all these capabilities. It's far easier and faster to ingest many of them from third parties at standard and not within our own walled garden, by the way, as well. So starting there. Now you've got the simple monolith, which is basically Shopify. And I don't mean it disrespectfully. It is rigid and inflexible. But the beauty of Shopify is, out of the box, it addresses, at least in current state, a large portion of the market as they will very aggressively and affectionately tell you like, literally, I feel like I have Harley in my front pocket given my LinkedIn feed and my phone being in my front pocket. They can't stop telling you this, and it's great. Good for them. If you're a digitally native brand or a simple branded manufacturer, that's great. It works for you. But as soon as you start introducing all of the orchestration complexity, all of these things, this proliferation of channels and customers are going to engage the way they want to engage. Their entire model is about monetizing things through Shop Pay. So they've got to figure out how to get that back through that. Again, I think they're great for a certain audience, a very large one. But as soon as you have to extend or customize Shopify, it defeats the purpose for buying it in the first place. The beauty of it is it pieces a lot of use cases. So we are for people that have added needs, added use cases that can't be appeased. If they could, they would have already gone there. It's not like this has been shy or a secret. So for us, we know our ideal customer profile are folks that can't buy or effectively wear off-the-shelf clothing. They need to have it tailored. Some because they can afford to and they're vain and they want to look great, arguably. Others because their legs are too short or too tall and they just need it taken in or taken out. Not everyone can feel good or look good buying off the shelf. And as a result, we've built a nice business around it. That being said, to the other end of the extreme, commerce tools is the best example here. They've struggled because they've targeted a very, very narrow TAM at the very upper end of the market that, by definition, originally started by building custom bespoke platforms because of the complexity and the needs of their particular business. So think really, really large global branded manufacturers, retailers, manufacturers, distributors, I mean, folks that are crazy complicated. They've got hundreds of FTEs running that platform. And to use an easy analogy in LEGOs, they've been building with LEGOs their entire lives, and commerce tools would come to them after pressure from the Board or the CEO and saying, here's the latest and greatest set of LEGOs you can go recreate your framework on. And this will take you into the future. Not an untrue statement, by the way. The downside to it is it takes about 2 or 3 years to go compose everything from scratch, especially in a large, complicated organization like that. I don't care what platform you put in the 4 walls. They were going to struggle, and the TAM is going to be really narrow. And historically, in commerce, it's really hard to start upper enterprise and make it consumable down. It's much easier to start down and go up. And so they've struggled. What we're trying to do is thread that needle. The benefits of composability, I would say this was a spectrum we are right of center. We are closer here than we are there. We've got to make this consumable, digestible and easy. And we've got to orient it to our ICP. And we've got orient it in a way that makes it operationally, technically and organizationally digestible. And that's where really our focus is going forward. And a couple of orientations here around the curated composability side down below. I mentioned this earlier. This couldn't be any more paramount. Embracing the fact that innovation and disruption will come far faster from third parties than we ever will ourselves. Like just accepting that as opposed to trying to get into some arms race that we'd be kidding ourselves around. We also know that most effective solutions, people think of themselves in both sub-industry and maturity, right? So I could have -- let's just use fashion as an example. Fast fashion is a dramatically different business than couture and high fashion, completely different businesses despite both being in fashion, totally different business models, totally different use cases, totally different needs. Within even those sub-industries, there are levels of maturity that will define what it is somebody needs and why and what it is that they can digest. So as we precompose and orient ourselves to specific industries, we're also overlaying that against maturity size, which is super important. And the curation part of this, and it's not at the expense of rigidity, we're not trying to be rigid. We are trying to curate things based on best practices that would orient themselves to specific, again, ICPs, industries. This is based on feedback, tangible feedback from our clients, white space in the space. Innate industries today, we do really well in like MLM as an easy example because by definition, that business is complicated. We're not trying to recreate the complexity of a commission-based system within a multilevel marketing organization. We're trying to allow that technology to be ingested at scale in both the front end and the back end versus some of our competitors that may want to rebuild everything at scale. So just easy use cases there. And then the curation side really amplifies the value all the way around. It amplifies it for us. We're able to take things to market more relevantly faster. Our partners on the GSI and the agency side are able to wrap really high-margin transformational capabilities around this. We'll get into some of the GSI mechanics later, where we believe there's a real model here for them to BPO this and actually run a channel with this as the backbone and the framework on their IP. And we just think, in general, this is going to benefit our customers by being able to take things to market way faster and way less expensively than we historically would have. And with that, I'm going to welcome Doug and Lance up on stage and get into some of the execution. Doug, do you want to come up?

My name is Doug Hollinger. I -- when Travis invited me over, I came also from Amplifi. I have a similar -- Amplifi -- Accenture, but I have a similar arc, and that's those same industries and the same platforms that you saw before from the services side. And I also came here because I did see there was a gap in the market that we were kind of expecting BigCommerce to step into, and I want to be part of that change and driving that forward, and we have all the pieces here. So I run the strategy and the offerings group. And one thing we're doing as we're going to market via these offerings with our products is just, again, trying to land on where people buy, why they buy and what kind of problems that they're solving. So again, Lance will talk a little bit about the B2B. Then I'll address the B2C here in a minute. But they're solving for slightly different things just to set the table. So on the B2B, again, solving for digital maturity. They're often an efficiency play, bringing costs down. And again, a lot of these businesses are not yet on digital platforms and solutions. So we're going to have industry and vertical-specific offerings answering those business questions for B2B. And on the B2C side, again, we have a real right to play here. And we have a real offering for these businesses that are trying to solve complexity and differentiation of market, whether that's through the user experience itself or through complex checkout flows, et cetera, for their products. We'll talk about this more here in a minute. But again, we are going to tailor this for both of these audiences. And then we have a small business lead as well who's looking at businesses under $5 million in revenue. A couple of slides here. I'll just touch briefly on why small business on the left there might be such consumers of our enterprise-level offerings, right? These are actually targeted for larger mid-market and enterprise businesses. It's because we still have a lot of small businesses that if they could have gone to a cheaper -- not cheaper, an easier out-of-the-box platform, Shopify or Wix, et cetera, they would have already done it. It's because they have some of the complexities that Travis was talking about. So as we're going forward, we will automate some things here. We'll have precomposed solutions for small businesses to try to again accelerate their ability to deliver. And again, we see this as a growth channel into our other audiences. So with that, I'll turn it over to Lance to talk about B2B.

Thank you, Doug. Just by way of introduction, I'm Lance Owide, General Manager of B2B here at BigCommerce. As you heard Travis say, we are doubling down on B2B. It's an area we've seen huge amounts of success, over 50% of our bookings last year, 12,000 manufacturers and distributors on the platform. And we've been recognized by analysts, IDC, Forrester, Gartner and Paradigm as leaders in this space. What I'm going to do here for B2B and then Doug will do for B2C, I'm going to walk through why we succeed and how we drive success for our customers, how we're competitively differentiated. And then I'm going to talk about what we're doing over the coming years to further drive that competitive differentiation and expand our TAM to win more of the market. And I'm going to start by walking you through some customer examples because nothing tells our success more than that. Meet AHP Medical & Dental. They're a distributor of medical and dental supplies out in the APAC region. They're a family-run business, and they were acquired by a new owner. And the value creation thesis of this new owner was that they could drive profitability, improve margin through e-commerce, through automation, through e-commerce. And that's exactly what they set out to do. They looked at many platforms, including all the competitors that the folks have mentioned. But ultimately, they chose BigCommerce because we offer B2B out of the box. They didn't have to customize the platform to get live. They could meet their complex B2B workflows, the automation and approval workflows, bulk ordering, quoting, invoicing without having to go beyond the platform. And ultimately, when they chose BigCommerce and went live, they went from having 25% of orders online to 75%, a 300% increase. That saved them 11,000 hours of order processing, which was 6 full-time employees. For a mid-market business, that is a huge cost saving, which they were then able to pivot into revenue generation and revenue growth, cross-sell, upsell, new customer generation, which ultimately led to 163% growth in revenue for the business. Meaningful change. This is a really common case in B2B today. You've got a mid-market distributor or manufacturer who may not be online today and is looking to modernize their business and drive efficiencies. They choose BigCommerce because we have B2B out of the box. That doesn't mean that we can't support complex because not all businesses are this simple. Let's meet Bio-Rad. Bio-Rad are a publicly traded life sciences company, multinational, publicly listed, about $2 billion in total revenue. They had a plan. The plan was to grow revenue through international expansion. They are on old legacy platform that just couldn't handle the complexity of their business. They sell in 140 countries with 32 currencies and in many different languages. That's complex. They also have customer-specific pricing and customer-specific catalogs. When you do all the multiplications of the various different regions they're selling into and the different prices, you've got millions of price points there that a customer, when they hit their site, needs to be able to see instantly. Not many SaaS platforms can handle that complexity, but BigCommerce can. They chose our composable architecture to launch. And since going live, they have driven a 56% increase in revenue and a 71% increase in AOV. And they chose that composable architecture because they want to continue to grow. And they want the flexibility to grow on their terms and use best-of-breed technologies and plug them into our core B2B base, our core B2B Edition base. These examples here, Bio-Rad and AHP, are businesses that sell exclusively to other businesses. Their B2B is just selling to businesses. But of course, there's a hybrid cohort in the middle that sells both to consumers and to businesses. Meet MKM Building Supplies. They are the largest independent distributor of construction materials in the U.K. They do about $1 billion in revenue. They sell through 130 warehouses. They have a complex structure. They were on a custom platform that actually they have built themselves, but it couldn't handle the data that they needed to ingest from those 130 warehouses. Their model is that each of their locations is independently owned and operated. So they set the pricing and they set the inventory. And so they need all of that live on the site ready. So when a customer hits that site, they can see the inventory in their local warehouse and get the right price as well as their customer-specific pricing. They also had a vision. They wanted to be a leader in the space. They wanted to build personalization for both B2C and B2B customers. They partnered with one of our technology partners, BloomReach, to drive this, to drive cross-sell and upsell. When you go onto the MKM site and you start typing or place orders for specific brands, the entire experience starts to change. The site will display content relevant to that brand. The marketing will show content relevant to that brand, both through e-mail and through text. So if I was searching for Milwaukee Tools, a BigCommerce customer, my experience starts to change. And ultimately, that has driven a 51% increase in average order value since they came onto the platform. They're also a user of Feedonomics. They send their product data and live inventory to Google Shopping. Why is that important? This is construction. If I'm a contractor and I'm looking to get construction materials, I need them today. If I do that search on Google and I can see, oh, they have the product and they have the inventory at my local warehouse, I am much more likely to click on that MKM advert versus anyone else. Now ultimately, that drove 42% increase in site traffic. BigCommerce is seeing huge amounts of success across mid-market and enterprise B2Bs across all sectors. What's important to kind of understand is that B2Bs that are choosing e-commerce platforms choose it for 3 key reasons. And these are different than B2C, and that's what's really important. In the B2C world, I would have up here, and we will in a minute, conversion and checkout speed. Those would be the most important things. But ultimately, for B2B, the #1 driver of a replatforming is profitability. It's automation of workflows. And they need the tools that BigCommerce B2B Edition offers, quoting, invoicing, approval workflows, complex hierarchies. We've been doing this for years, and we understand it and we have it out of the box. They also do want to grow revenue, and we enable that through Multi-Storefront. That might be growing into new regions like Bio-Rad. You might be launching a direct-to-consumer channel like Houzer sinks did on BigCommerce. Or it could be integrating a new acquisition. We're seeing lots of acquisition in the -- lots of consolidation in manufacturing and distribution. And when you consolidate a brand, you want to get it live fast. And of course, they need to be adaptable. That's what Travis spoke about, right? That's our curated composability and our open architecture, allowing us to pivot fast as buyer demands and trends change. And we understand this. Why do those businesses choose BigCommerce? I'm going to use Sellars Absorbent Materials as an example here. They are a manufacturer and distributor of paper materials, about $250 million in total revenue. They were looking to replatform, and they looked at all of our competitors. Why did they choose BigCommerce? Firstly, speed. They built a proof of concept on BigCommerce in 2 weeks with all of our B2B Edition functionality right out of the box. They were sold. It was incredible. They were sold. And we allow them to automate those processes because they had those features and those functions that they needed. We understood what they needed to get their business live. We then allow them to expand. If they want to sell into new channels, they can do that. They can build the integrations easily into their back-office systems. B2Bs are not using the e-commerce system as their source of truth. They're using an ERP. They've got a CPQ. They've got complex other systems that they are integrating with, and we enable them to do that easily. And ultimately, that gives them the agility to pivot as their business changes and as their buyer demands change. And ultimately, that gives us lower total cost of ownership, right, and faster time to market, faster ROI. So that's what sets us apart. We have the tools that B2B businesses need, and they're available out of the box but ready to customize when they're needed. So why are we so focused here? Travis kind of alluded to this. Today, 35% of B2B businesses aren't online. They're not even transacting. And of those that are online, and the data is a little bit patchy here, somewhere between 20% and 30% are on custom platforms that they built themselves. And they're ripe for a SaaS revolution. They're ripe for a big commerce-led SaaS revolution. And we know that. And as those businesses come online, they're driving huge amounts of growth in manufacturer, distributor, B2B, e-commerce GMV. It's growing at nearly 20% CAGR. So what are we doing to capture more of this? As you know and you heard, we're capturing a huge amount of these businesses today, but we're focused on growing that. And so we're really doing 3 things. With our BigCommerce platform, we are building more functionality to support larger, more complex organizations. There are lots of organizations that are on that complex monolith still or on those custom platforms. We are building technologies to support them more easily. We're taking our Makeswift product and taking it up market and down market to build what I think will be the fastest to launch B2B site. It's also got implications for very large multinationals. We work with a manufacturer of $6 billion in revenue. They got 120 brands. They can build a simple widget, a simple widget that might integrate into their return system. They can then deploy that widget across all 120 brands with ease. That is hugely beneficial. That saves them so much time and effort when scaling across their global business. And finally, Feedonomics. In Feedonomics, we're going to be launching Feedonomics self-serve and bringing the benefits of launching on marketplaces and ad channels and the AI technology that Feedonomics uses to optimize those. We're going to bring that to smaller business B2Bs. And on the top end, we're building AI tech to match B2B attribute data. B2Bs have complex product data, often millions of SKUs in a catalog. Feedonomics is the best data platform out there, and we will be building technology to help those businesses match those data, match that data and get it into the systems that they're using. That's what we're focused on for B2B, where we're doubling down on our great success already. I'll hand to Doug, who's going to take us through our B2C success.

Just showing the kind of breadth of our offering and why we win in the B2C space. The RealReal, some of you are familiar with this, right, high consideration, luxury online marketplace where people can buy and sell authenticated goods. So through -- they take goods in from folks. They sell them on consignment. So the catalog is quite robust, over 50 million products any one time. There's a lot of turnover there because of -- they're, again, working on consignment and over $1 billion in GMV all based on the BigCommerce e-comm platform. A little different use case with Brompton. So a smaller company out of the U.K., selling folding bikes. Why are they here on BigCommerce? A lot of this is because, again, they went off some older technology. They launched 7 websites in 7 months using BigCommerce. They're expanding through growth in the international market. They have 10 international markets on 7 websites. The other thing is that complexity we talked about. So why do people choose us? They can change the functionality. They can extend, in this case, the checkout flow because the U.K. has incentives for you to buy bicycles, I guess, green initiatives, et cetera. So they have incentive schemes that they wanted to take advantage of to drive sales. At the same time, they enjoyed faster site performance by being on BigCommerce and enjoying our modern technology. So again, faster load times, faster page speeds, faster performance, 50% increase in conversion by being able to make these tweaks on the website. And then a Feedonomics case with New Balance. So again, looking at the EMEA market, they are having trouble with some of those -- that channel proliferation we talked about. They couldn't get on all the right channels. Their content was not optimized properly to convert. And so using Feedonomics, they've increased their return on ad spend by 95%. They've almost doubled it. Now they're in more markets, more channels between Google Ads as well as TikTok and other social selling channels, which has led to a 15% increase in conversion and an increase in sales, a 22% increase in sales, 36% reduction in costs. So normally, when we talk about B2C, you think of, or at least I did, the traditional kind of B2C channels, fashion apparel, beauty, skin care, right, pet care. Travis talked about this. They tend to be simpler checkout flows. I've got a product. I put it in my basket. I check out. It's fairly straightforward. And so a lot of other e-comm platforms play in the space and focus on these particular markets. When we talk about B2C, we have a lot of representation as well in other industries and verticals, regulated industries, right, MLM, things that have niche requirements, that might have specialized checkout requirements, specialized payment options or shipping, et cetera. They might have customizable products or be highly subscriptive. And so again, by making our product more flexible and having this composable approach, we allow people to tailor those parts of the business that they need to while still feeling like an integrated composable solution. As opposed to B2B, of course, most B2C businesses, unless they're brand new to the market. If we're going to get them, we're going to have them switch off a legacy platform or a custom platform that they've built. So why would they switch to BigCommerce. And it's the same things we've been talking about. Better performance leads to higher conversion. We have Catalyst's performant at front-end, which, again, for people that need a really unique front-end experience and a better user experience while still maintaining high site performance speeds, they can use that as well as things like specialized checkout flows and package solutions. For growing revenue, again, a lot of our businesses do have both B2B and B2C needs. They might need custom pricing and some of those other features we talked about. And then with Feedonomics again, they can reach new channels and markets at a lower cost of total ownership. I'm going to go a little bit quicker here. So I'll tell you another story here about some of the same things that illustrate why people choose us. Bell's, regional department store chain, right, 660-plus stores in 23 states. $2 billion plus in annual revenue. They migrated one of the platforms Travis didn't show was IBM WebSphere back in the day, if you remember that one. They were an IBM WebSphere. They migrated in 9 months of IBM on to BigCommerce. They had very customized, again, checkout and payment options that they needed to integrate with as well as the legacy back-end order management system on Manhattan. So again, a lot of the same things, looking for agility, speed, flexibility and customer requirements in their checkout and payment processing. Similar B2B, you see the same sort of TAM or ICP here where, again, Feedonomics playing upmarket from mid-market, BigCommerce sitting nicely in both small business and the mid-market and maybe the lower enterprise space. There's still a lot of opportunity in the B2C space for growth, not necessarily the same scale as B2B, but there's still a lot of things here. Where are we going to go? Where can we take this? So again, we'll continue to invest in our platform, expanding our composable and headless offerings. Again, we've talked about self-hosting or like one click headless solutions for the Catalyst. We can also have a Makeswift itself as a visual editor that allows kind of no code editing of your experiences by your business users. We can have also a visual editor marketplace where people can buy and sell composable front-end editable components to extend their capabilities. We can also look at, again, through the bundling that we're talking about, and Daniel will talk about it more and reselling core comprehensive solutions like hosting, could be error monitoring as well as advanced search features, et cetera, that will also expand the addressable market from both BigCommerce and Feedonomics. And then finally, allowing the users to modify our platforms and drive our core capabilities upstream into more enterprise capabilities. Back to Lance for small business.

All right. Thanks Doug. I think more on the beginning of the section, [indiscernible] portion of our ARR is still a small business. And so it's an area that we are continuing to focus on. Small businesses choose us because we can handle their complex needs. You heard Travis say, we're focusing on our ICP. So what is our ICP in small business. Well, let's start with an example. Meet Wheels and Wings. They are a brick-and-mortar retailer out of Canada. Obviously, with small business. You haven't heard of them. They're a smaller business. But they still need to sell online. They sell collectibles. They have a very large product catalog and many of those products are complex. They can be customized. They have a technical team and technical founder who actually built their own custom platform to start with but very quickly realized they couldn't handle the product catalog side, and they couldn't handle the customization of the products and the experience that they wanted to build. So they set about trying to find a SaaS solution. They looked at all of our competitors that you guys will all be very familiar with, but ultimately chose BigCommerce because with BigCommerce, they got the core bones of everything that they needed, but they could customize and build on top of it. And that was what they wanted to do. They knew the experience that their customers wanted and they could build it with BigCommerce but they didn't have to start from scratch, and we could handle their large catalog and the complexity of their products. Since coming on to BigCommerce, in year 1, they drove a 216% increase in revenue. And they haven't quite been on the platform for 2 years yet, but will grow north of 50%, most likely. There are lots of small businesses that look just like this. And that's who we serve. Small businesses under $5 million in revenue that have complex needs and can be supported by the BigCommerce platform, large catalogs, custom integrations. We are focused here because of the size of the businesses that look like this, right? We can go and win them. And we are chosen because of that flexibility. Many of them actually look like B2B businesses, too. They might be small manufacturers, small distributors who may choose to purchase our B2B Edition product or may not be there yet. But they know that they get a product that they can grow into and grow up to B2B Edition. There's a great graduation from small business into our enterprise store plans. And we're focused on growing this cohort. So how are we doing that? We're really doing it in 3 ways. Firstly, product experience. both with our own AI and with partner led AI, we are revolutionizing the onboarding of our customers into the product. We're expanding our TAM, and we actually already spoke about this with Feedonomics self-serve, so bringing all of the power of Feedonomics and Feedonomics AI product optimization to small businesses as well as bringing Makeswift to small businesses to make it easier to build those sites and build content, gripping content into their websites. And finally, bundling and reselling. We have thousands of small business merchants. We know which partner technologies grow those businesses the fastest. And so we will curate bundles of technology partner products that we know are successful for these customers, put them on our paper, create them as a one-click install and integration. Here you go, you're an automotive reseller. Well, these are the 3 partner technologies that we know will help you succeed, and we're going to make it incredibly easy for you to install them and purchase them. That's it for this section of our presentation for B2B, B2C and small business. We're going to take a quick break, and then we'll come back and walk through our growth strategy with Travis and Daniel. So thank you. 10 minutes.

Let me walk you through real quick what we're going to go through in the second half of the time, and then Travis will get started. So we have 2 sections left before we get to Q&A. We spent time talking about strategy, what does Travis think in terms of where he sees the market. We want to pivot now to start getting into specifics about what we're doing with growth initiatives. And then I'll wrap up the time in talking about what that means from a financial point of view, get into unit economics and some things like that, then we'll switch to Q&A. So we'll have about a half hour where Travis and I will tag team talking about what we're doing on the growth strategy side, and then I'll take over from there and dive into the numbers and this normal CFO stuff.

All right. Sounds good. Thanks, Daniel. All right. I talked about breaking some eggs for lack of a better analogy. Early on as I came in and changing up the teams, I wanted to give a visual representation. I mentioned this on earnings because we asked a lot what's going to be different, and we're in kind of an execution state now and we've made material changes to the business particularly around go-to-market, everybody outlined here the white triangle on the bottom right-hand corner is either new in seed or new to the organization. I would love to take a lot of credit for this. I can certainly take some credit. This really wasn't that hard to be candid. And it wasn't that hard because, a, there's a lot of talent in market. and b, for those of us who've been in commerce, I've been in commerce 20 years, many folks here on the screen have been in commerce, 15, 20 years. We've all been kind of hunting for the same thing, searching for the same thing that was not necessarily resolved by the incumbent providers. And again, no disrespect meant. We've had wonderful relationships, myself included with all of them. But given where the market is going and where we all kind of directionally aligned, this was not a difficult challenge to recruit people into the organization, especially many of us in a fairly incestuous industry that all know at least of one another. It was very capable to get folks in seat very, very quickly. But just a visual representation of how many new folks are actually part of the team now. It is a dramatically different team. All of them have a rich history in commerce specifically, which we felt was paramount, especially given the complexity that I alluded to earlier, and where the model is going, having that acumen, having that experience folks that have skin their knees in other ways, we thought was really, really invaluable and important, and that was part of the thesis.

So the next part, we talked about on the last couple of earnings calls, the fact that we've made a lot of changes with how the go-to-market organization restructured, how we're thinking about our customers and how we're staffing our sales roles in particular, according to that. And so what this chart is showing is essentially, we break our customers into 4 groups based upon the size of those customers, whether it's a small business like Lance and Doug talked about that's doing $5 million a year in revenue or less, all the way up in enterprise customers that are doing north of $1 billion. Now if you look at the mix of our total ARR as a business, you can see some of the history of the small business-oriented nature of the platform going back quite a ways, all the way back to our founding in Australia. We have a lot of small businesses on the platform. We have a lot of mid-market customers on the platform. What we needed to fix was how the go-to-market motions that we had both from an efficiency basis and speaking to the right audience, how they tied together. So if you look back at our business over the last few years, we've mentioned this on numerous times in different settings. We really, really were oriented disproportionately towards new account growth as our primary means of driving growth in acquisition. Part of that is just your -- it's before and even during the pandemic, the cost of acquisition for a new customer was significantly lower than where it is today, obviously. And so as we are moving the product upmarket, we hadn't moved the go-to-market motions and the composition of the sales team up market as the product moved. And what we ended up with was in some ways, you had very senior sellers selling to very small accounts. You didn't have sellers that were in place to cross-sell all of these solutions into those accounts. You had Feedonomics, you had Makeswift operating as separate organizations. And we weren't really set up according to SaaS best practice in order to have cost efficient growth, and that's part of why we've made a lot of these changes. For example, if you just look at the sales model today, now our enterprise customers, our largest customers, those are being managed by what we call key account directors. They own the entire customer life cycle from when it lands and renews and maintains and those are the most strategic experienced strategic sellers that we have. If the corporate group, which is up to $1 billion, those are account directors. And then the big change, especially in mid-market was building out an inside sales team as well, so that you can more cost effectively sell to that group. Now we're really proud of this because what it does is it not only allows us to kind of rightsize how we're talking to our customers, but also allowed us to fund doubling the sales capacity over the course of the last 3 months, which is almost substantially complete at this point.

So I've alluded to this a couple of times and certainly you all met Doug and Lance sitting in the offering group. But one of the biggest changes we made kind of coming into the transformation and just to acknowledge the fact the business has been in the midst of a transformation if we haven't mentioned that before in a public market, which, again, can be challenging, certainly. But without question needed, and needed to be done in an accelerated capacity. And one of the strategies here to accelerate that, both the time and the efficacy was the creation of -- and we'll have a portfolio brand that we'll launch later this summer, we're really excited about. But not to get ahead of ourselves. We really wanted to orient this to the offering model. And just so folks know where this kind of came out of having lived at the largest digital consultancy in the world in Accenture with 750,000 people, obviously, heavily matrixed as an org and they don't necessarily to view the world through the lens of having to go out and acquire net new brands every year. They very much view the world through the lens of we work with almost everyone, how do we sell more valuable things to that installed base. And so the motion there, typically, the folks most empowered Accenture are what they call client account leads or CALs They own the client P&Ls. And you can imagine that motion is you've got every Tom, Dick and Harry that owns an offering or some sort of substance that are constantly kind of pandering to these CALs, trying to wedge in and sell stuff to clients. And that's with the concept of an offering and how succinctly it needs to be built and articulated because your time in front of CALs is very valuable. And if you're not succinct and deliberate and orienting it very specifically to a specific industry or value proposition, obviously, your ability to wedge in there was limited. And so part of the concept of coming here was -- we knew we wanted to integrate both Feedonomics and Makeswift. We know we needed to do that quickly. We also know we needed to kind of orient ourselves around offerings and deliberately large, right, and broad. So B2B, B2C, small business. We've already talked about the kind of the breakout as it represents revenue across all the roughly 1/3, 1/3, 1/3. So we can't alienate any of those. We also need to integrate the products. And so the thesis behind the offering group was to accelerate not only the ingestion of those acquisitions, but also take the demand in from the regions, right? As we have a GM model, we've got a gentleman that runs Americas. We have another one that runs EMEA. We have somebody else that runs APAC. And so broadly, the geographic demand is coming in. It's coming in across not only those 3 offerings, B2B, B2C and small business, but also across all 3 products that are now integrated. And so -- the thesis here was to take in market demand, right, and have that offering group serve as really a prioritization framework, right? So they're synthesizing what's coming back from our existing customers, from our channel partners from our services organization and our product and engineering organization and they're essentially setting the prioritization framework of what it is that we're doing in the road map across not only offerings but across products and then synthesizing that back out to the market. So this is a deliberate effort to not only accelerate the transformation, but also drive this in a more tangible way to go resonate in market, especially given the complexities that we're talking about. So all of this lends itself to doing things faster, less expensively and more effectively, just to orient folks to that offerings group. And on the growth strategy by offering and we'll orient here in the highlighted section across each one of them, starting with B2B. Lance has talked about this a number of times, expanding the TAM right? Investing in Feedonomics and Makeswift, we feel like, especially both upmarket and downmarket, there are really unique use cases there that we feel are applicable in ways that dramatically differentiate us in market to not only get folks up and running quickly and manageable through the way of Makeswift, but also attacking more complicated use cases by leveraging the data optimization and AI capabilities of Feedonomics. I've talked on earnings about bifurcating the teams. I talked a little bit about it earlier on in the meeting here. We have carved out and bifurcated the entire B2B go-to-market team. So we have dedicated B2B sellers. We have a dedicated B2B marketing pod. We have dedicated B2B partner managers. Historically, we've treated B2B as some additional features and functions. We've gone now all in to really crystallize and synthesize what B2B means and how it is we're taking it to market. And then as Lance alluded to earlier, we've had a pretty capable job of upselling B2B into existing installs, right? And now we have the Feedonomics installed base to also do that against, and we're going to continue to accelerate and prioritize B2B features and functions as we move forward, given our right to win there. On the B2C side, we've talked a lot about pre-composition or curation around composability and making this easier, right, operationally organization and technically for our ideal customers to consume. We're also doing the same thing with partners, and we'll talk a little bit more in a few minutes about how we commercialize this in a way that we think is going to be as Russ in the back room likes to use the term nutritious for the business. And I would agree -- we're also aligning with specific GSIs and agencies aligned to specific markets and verticals to allow them to wrap their capabilities and their IP around this to take this to market with us because most of what it is we're doing, because of the speed, the agility and the modernization, this is really impacting organizations materially in ways that's transformative. And again, we as a software provider, are not going to actually do that transformation. We need the GSIs and the agencies to do that. That happens to be higher-margin services for them traditionally than traditional SI type work. So they're enthused by it as well. We're also realigning our ideal customer profiles and demand against these specific nuances and ICP, those that would be most susceptible to this sort of architectural and technological approach. I think we've done a really good job through the offering group and really hammering that down. And then again, continuing to invest in core capabilities. And by core, I mean not only the core features of the product but also going deeper and more open with our APIs to make ingestion that much easier and affordable. And then lastly, on small business, again, Lance alluded to this as well, focusing on highest speed to market upside, right, and expanding into more complex motions that are typically part of our installed base on small business. We feel, obviously, Makeswift eventually being part of that core product, obviously enriches not only the existing installed base, but we think widens the TAM to go attract more businesses just given the visual nature of that product. We think it's an enriched product. We'll talk a little bit about payment being bundled into that as well as whether -- as well as self-service Feedo. On the go-to-market side, right, just being really tighter and very specific about who it is that we're going after and really doubling down on the use cases. I think Lance did a great job highlighting that there are a lot of small businesses that have nuanced use cases and complexities that we do really, really well, doing a better job of amplifying those stories and finding like-type peer-type clients. And then really on the revenue retention side, focusing a lot on user experience and the overall experience, especially as we ingest those 2 other products and a self-service capacity going forward. And if we introduce payment at some point to making that really easy and digestible through the control panel as well. So just removing a lot of kind of getting out of our own way a bit and removing a lot of friction points there. I think I can speak quite tangibly to this slide, and it's not to be forgotten. As I alluded to earlier, having lived on this side of the business, I know what motivates the GSI and an agency. Selfishly, they really only care about profitable revenue, which means utilization, which means some semblance of recurring revenue to the extent that they can, they tend to not like big lumpy projects because big lumpy projects creates a bunch of this that's really hard to optimize utilization around. We feel with our go-to-market motion and approach and orienting it to specific industries, this is an ideal way that GSIs and agencies like to go to market. They tend to build IP capabilities and acumen around specific industries and sub industries. It tends to gravitate to the really high-margin capabilities around strategy and consulting as well. And we think there's some really interesting nuances we can do around licensing and barring particularly with the larger global GSIs as commerce as a service and allowing them to kind of BPO or business process outsource this as an offering and actually run this as a channel for large global organizations, particularly in big CPG, which tends to be one of the most dysfunctional organizations out there. The benefits to us are obvious, right? Aligning both with GSIs generally in market and within specific industries, obviously accelerates our ability to move this product up market, particularly on the BigCommerce side, the platform side by proxy, we will get crediblized far faster by way of GSI is endorsing us and taking us to market. And then this becomes a way more interesting story around transformation. This is not a feature function arms race which is historically the way we've kind of taken things to market, we go way into the weeds around specific technologies. It's not what the market buys. It's not what the market understands. It's not what the market wants. They want business outcome. And by synthesizing that with service providers that kind of fills in all of those gaps. When it's just a software platform talking about it, by definition, its features and functions. And by the way, interesting enough, it's why I hated software, most of my career would never so, I would never go work for a software company as a services person, but I never said I wasn't a hypocrite. I've learned, I've evolved over time emotionally still immature, but I've evolved in other ways. Pricing and monetization strategies. We've talked a little bit about this. Daniel will get into more of the weeds. You're going to see this in mostly 2 waves that kind of first wave right the reselling, the simple pricing, bundling this, again, making it easy, making it consumable. I've talked a little bit now ad nauseam about the GSI offering and how we kind of wrap that the second wave, which will get wildly more interesting, gray labeling, white labeling and variable rate bundling, think of this as a pre-curated reference architecture with multiple partners on the front side of that oriented towards an industry where commercials have already been worked out. We're [ borrowing ] those products. We're supporting those products. We're probably supporting them at a vertical level eventually as we get more depth and to these sorts of things, and you can imagine what that would do to our licensing model. So the hope here is as there continues to be commoditized pressure on platform pricing, which it just will, by definition, we feel like we're going to enrich that by deliberately bundling things. And by the way, some of the biggest complaints we hear in the industry from where I was in my past is the surprises of not knowing you need X, Y and Z to go extend the platform by leaning into this quite deliberately, this turns this into a marketplace, not just for us and our consumers, but also our partners, which is really where we feel the market is going to go. We feel like there is a consortium of partners that will embrace this at scale, and we'll very much view this framework as their ease to basically show off their latest and greatest in what it is that they're trying to do. that's the benefit more than anything of that model. Quickly on the Makeswift expansion side. We've talked a little bit about this earlier. We bought them December '23. The goal was to have this ingested in the core reference architecture and Catalyst. Within a year, we're able to do that, obviously, launching that in mid-January. We've got about 20 clients up in that model today, which was the target and will continue to be the go-to-market muscle short term. We're also looking at integrating Makeswift into the core stencil product, which represents obviously the largest portion of our installed base. We feel like it's massively differentiating in market visually and operationally that, that would be a nice either freemium version early on. Maybe it's something we charge people for down the road. And then lastly, which is really interesting is we've always viewed Makeswift as a stand-alone SKU that if I made the argument that we can optimize revenue independent of channel, BigCommerce on own channels, Feedonomics on non-own channels. You could argue Makeswift is doing that both on own channels as well as non-commerce channels. There's no reason why Makeswift can't be sitting on top of a brand site, somewhere allowing a brand marketer to create unique experiences at scale, independent of transactional commerce, it could be influencing purchase behavior on or off-line down the road and that TAM is massive. It's not a heavy lift to go insert it. It can sit on top of a number of different technologies. We think it's really differentiating and interesting. And on the Feedo side, we'll talk about it as both the premier product and a base product, go-to-market 2025. Obviously, premier will continue to be a sales-led strategy. We've talked a couple of times about self-service premium coming in and being made available to our installed base, both lower mid-market and SMB, which we're really excited about, especially with the proliferation of channels and everything we talked about earlier, near-term growth plan, obviously, cross-selling and upselling B2B and B2C base of Feedo. We've already been doing this. This has become much easier now that we've re-architected the teams, and we've incentivized the right type of behavior for folks to be able to do that. We're also going to continue to target small businesses on the BC platform. And then really the obvious how we're going to do this, really effective digital sales and marketing for manufacturing and distribution, specifically to B2B with Feedonomics and then obviously launching our proprietary AI model for managing large-scale supplier data. We think this is another big unlock in the space. And on the base product, obviously, looking to broaden that TAM over time and capture kind of cross-sell, upsell motion. So looking to increase wallet share, their stickiness, reduce churn, kind of all the goodness that comes out of it.

All right. So we've talked through a lot of the kind of growth building blocks initiatives that we have in the works, whether it's specific vectors on a by-offering basis. We've talked about what we're wanting to do with partners. We've talked about the idea of getting into bundles. We've talked about how we want to work with agencies. I want to spend a little bit of time talking now about what we're thinking right now with respect to payments. We get a lot of questions on this. We have gotten questions on this for many years. I wanted to just start by saying this is one of many future bundles as we're thinking about what the business could look like. Those bundles can be with different technology partners. They can either be integrated into the core product, they could be co-branded. Right now, we are still in the early days in thinking about how we want to take a branded payments product to market. Why are we talking about it now is because you don't have an opportunity every day to answer Q&A and get into this type of thing in detail. So we thought this was the right forum to get into it. But I understand this is something that we're planning on launching at the tail end of this year, potentially early next year. But I want to spend some time talking through what we have in mind, what might this look like also just so our investors can understand how we're thinking about this from a business model point of view because obviously, different competitors -- some of them look in some ways more like a fintech company than an e-comm company depending on how they set this up. So we want to spend some time addressing this now, and we obviously will have time at the end, we can handle more in Q&A. So -- what we are planning to do here, we -- our vision is to create a co-branded solution with one of our flagship payment partners that can be optional and can provide our small business customers and mid-market customers an easy setup with simple commercial arrangements, favorable pricing right out-of-the-box solution that's integrated with the core product. Optional being the key. We always intend to continue to have freedom of choice among flagship partners for customers that have complex use cases. What this might look like, for example, is if we have an opportunity with a mid-market customer that gives us the opportunity to bundle a payments product with the core platform product price them as a package and then go to market as one easy offering together. Whereas if you're talking to a customer that's more higher in on the complexity side, they may need to use different payments partner depending upon the region that they're in, depending on the type of channel within their business, and we will always continue to have that flexibility and openness between our lead partners. This is creating optionality for our customers and ultimately optionality for us. Let me walk you through in this graphic just to kind of explain how we're thinking about the construct of how we would pull this together. So if you think about this almost like a spectrum from left, right. Left side being our current way of approaching payments today, which is kind of a risk-free referral model where we are not co-branding. We are not doing our own version of a payments product. From a monetization perspective, we generate referrals on volume to our payments partners, and in return, we get a revenue share on that. From a merchant risk exposure, we don't have any merchant risk. There's no credit risk today. This is purely net revenue accounting, and it's all no credit risk for us. And on the go-to-market side, like I said, it's a referral motion. The opposite extreme is a full white label payment solution, which is not what we are talking about here, okay? In that world, on the monetization side, the platform is essentially getting a buy rate from the partner, and they are taking on pricing to pricing risk, they can bundle it into how they approach their solutions. But from my perspective, most importantly, they are also owning customer credit risk, whether it's chargebacks and others. That's kind of the far side that we are not looking at right now. And the way we're thinking about this is kind of a middle ground is a first step. What we want to do is to be able to have a solution that allows us to get buy rate pricing that allows us to own pricing risk, capture the incremental spread that can come from that. But we -- what we're not going to be doing though is taking on credit risk exposure. Right? So as a result, we're still working at the details. I anticipate this being net revenue, not gross revenue, which means it's not going to have a material huge change in what our P&L looks like over time. This definitely obviously gives incremental revenue upside, otherwise, we wouldn't be doing it. But the core is we want to keep the optionality in place for our customers and for our partners, right? So what would this look like? There's 2 different paths to growth that we see within payments. That is one of them. There's 2 areas in particular. So if you just go up between the sizes of our customers, we have something on here we call flagship GMV. We have a certain number of customers or partners that we work with that we have the best integrations with. In many cases, they have funded development teams that work with us. That's where we develop things like PayPal Fastlane with PayPal or many other examples like that. These also are the partners where we have our best economics, right? And we see the best retention rates with customers, and I'm going to share some of that later on and get into some of the specific unit economics behind that. So there's 2 different ways when we think about payments as a growth factor for us. Number one, is a mixed management question of getting more volume to those flagship partners and picking up additional revenue share then. But more importantly, I would argue, it leads to better stickiness and retention rates with our customers and ultimately, better growth for our customers, which we've seen demonstrated in our numbers over time, which I'll get to in a minute. The second piece is actually being able to pick up additional revenue potential through this co-branded solution that we would bring to market later this year. So again, really excited about this, but this is one of many examples of the types of bundles that we could take to market. The way that I think about it is this way, if you go back to that slide that Travis showed that talked about kind of the orchestration challenge where you need somebody in the middle to facilitate all the connectivity between all the different parts of the ecosystem. Part of what has made composability challenging to adopt is the commercial complexity of doing so. If you're a mid-market customer and you want to use best-of-breed technology solutions, it is a little bit more difficult if you then have to have commercial arrangements with all of those different technology partners. But if you can bring that together into one commercial arrangement, it makes it easier actually for customers to be able to get the best-of-breed benefits that you get from doing composability. And then it puts us in a position, obviously, where we have a much deeper and more profitable relationship with those customers over time. So payments is the first, but we expect there to be quite a few more coming. It's something that Rob is very excited about and many others in our leadership team. Okay. So what I -- the way that I think about this from the financial point of view is it's a stacking of cross-sell initiatives. And we have many examples in our base of where we've seen this be successful. One example would be uplift desks. So this is an account. It's been on the BigCommerce platform for a while, actually moved to us because they have highly customizable products. They needed something that could grow with them. And they've been on the platform for a long time, but they've over time, added in specific tech partner solutions. They've implemented Fastlane by PayPal. They've implemented Vercel. And the idea is to get more and more of our customers to have more of these stackable cross-sell opportunities, which ultimately increases our retention and economics in a really material way Okay? Okay. All right. Moving on to financials. You're welcome to stay and it's your favorite topic.

I would prefer not to stay on the stage if at all possible, I will likely get away.

All right. So let's dive into what this means for us from a financial point of view. First, let's just start with the basics. I know maybe for the folks in the room, I know many of you for and have known many of you for years. There's a lot of folks that are going to be dialing in that may not know a whole lot about BigCommerce. So I want to start from just the ground level of how we make money, what are our products, what's the monetization model behind those products? So I think it's important to understand this to then know how the growth strategy broadens that out. So again, we have 4 products today, essentially 3 owned and then one is the revenue share element, which I'll get to in a minute. So first, you have the BigCommerce SaaS e-comm platform. That is a SaaS software subscription, the sales motion behind that, that's direct sales targeting mid-market and larger customers. The self-serve motions also exist today that focuses on small businesses. So the platform product today has both sales-led growth vectors and a self-serve. Makeswift is a subscription-based managed service. It's software, but it's born out of agency actually. And when you buy Feedonomics, you are getting the actual managed service to do all the data transformations to increase your return on ad spend. That today is also sold through direct sales, mid-market and large customers, on average, much larger customers than what you see on the platform product, which I'll get into in a moment, but there is no self-serve version of Feedonomics today. We have tens of thousands of customers on the BigCommerce platform today. And the way that we sell to them is by generating a cross-sell referral over to a seller on the platform side. What we are working on is actually integrating a freemium version of Feedonomics into the core platform so that all of our customers can get a benefit from that. And as Doug was showing earlier, it actually allows us to bring down the average price point of Feedonomics to a point that actually makes it much easier for our small business customers and our mid-market customers to do as well. We're targeting late this year for the release of that product. The goal is to get that up and launched before holiday. Makeswift is also a SaaS software subscription model. It has limited direct sales today. When we bought Makeswift, it was fairly small, still is. kind of job one, as Travis walked through on the growth initiative for Makeswift. Job one was to help it build out Catalyst as that reference architecture. Step 2, as he talked about, was introducing a freemium model version of Makeswift in the core platform. So all BigCommerce customers can take advantage of that product. And then from that, we think it has the capability to be sold in market as an independent product unattached to the platform. That version of kind of the core built into the platform of Makeswift, we're targeting early 2026, maybe ended this year, but we're still working on that, okay? So Feedonomics self-serve end of this year, Makeswift into the core platform early at the beginning of next year. And then the final part of the business is partner and services revenue. This is the referral model that I was describing. Payments is one example of many arrangements that we have with technology partners oversimplifying it, we refer volume to our tech partners and in exchange, we get a revenue share back from them. takes a lot of different forms. It could be we get a percentage of GMV. We get a certain amount of dollars for new to file advertisers. There's a whole lot of different economic arrangements within that, but it's fundamentally a referral and revenue back. Sales-led motion, as I said, that's co-sell, self-serve motion. We will be introducing that when we launch a future BigCommerce payments product. If you think about all of the decisions that we've made over the course of the last several years, it's been very deliberately with the idea of expanding our core target addressable market beyond the kind of starting point of B2C SaaS ecommerce platform. If you look, we -- when we bought Feedonomics that expanded us into omnichannel, the acquisitions in B2B, as Lance talked about, expanded further Makeswift got us into content. Now we're talking about an optional version of BC Payments that would get more into fintech. And then ultimately, what I'm really excited about is this idea of putting together bundles in a way that actually gets us into the world where we can be making it commercially easier for customers to have a best-of-breed solution and ultimately increase distribution for a lot of our technology partners by giving them access to the tens of thousands of customers that are on our platform without fear of us white labeling their solution or coming up with our own version to try to expand into their area because, again, we want to be open and best-of-breed and partner-friendly. Okay. So let's spend some time talking through a little bit of unit economics. This is a normal thing. We like to -- any time you have an Investor Day, there's always some extra stuff that you can talk about in terms of metrics. So let's go through a few of these things. As we talked about, Doug's team runs the offering group. Travis talked about how that's something that was very common when he was at Accenture and other places. I want to spend a little bit of time talking through what the unit economics look like for each of these. I get a question a lot on earnings calls "hey, Daniel, can you help me understand, is your take rate on partner and services revenue, the same for a B2B customer as it is for a B2C customer? "If you're mixing more towards B2B, what long term is that going to mean for your economics. So just a quick snapshot. This is showing -- each of the 3 offerings and the data that's shown here for small business is specifically referring to customers that are paying annually in advance. From our perspective, that's kind of our target small business. If they're an established business with complex use cases, paying 12 months in advance is usually very, very palatable for them in exchange for a discount, obviously, that we offer. And so I wanted to compare the kind of core economics of the 3. Starting on the right, small business is about 1/3 of the business from an offering perspective. That offering is 1/3. For customers that are prepaying annually in advance, their average NRR is 99%, which is quite good for a small business customer. Obviously, it's different if you're paying month-to-month. That's a totally different level of intent. And on average, those customers are doing about $31,000 a year in revenue. Again, customers that are prepaying. On B2B, which is where we've been mixing more towards, obviously, it's a large portion of the mix, has higher NRR but not quite as high as where we are in B2C, has slightly lower average revenue per account. Reason for that, 2 things, number one, Feedonomics traditionally has had a bigger base within B2C. We're expanding what Feedonomics can offer, so we can expand it further into B2B and obviously, B2B customers do fewer credit card transactions. So there's fewer -- there's less PSR per account there than what we have seen traditionally in B2C. We're working on that as well by establishing flagship partners within B2B so that we can have better solutions for B2B customers that also come with better take rate. So this is something we're also actively working on because as we mix towards that portion of the business more, we want to make sure the unit economics are strong behind it. And then B2C has our highest NRR and our highest average revenue per account. A lot of that, as I said, is driven by payments processing and the presence of Feedonomics as a cross-sell within B2C. Okay. So why are we looking specifically at these particular growth initiatives? And how does that relate to the data that we've seen on the unit economics within our customers. So what this is showing is, as you stack, some of the more important initiatives that we're talking about here, how does it change the unit economics of customers we have in our base today. So for example, if you start with customers on our platform today that are not buying Feedonomics, they are buying the BigCommerce platform alone. At month 12, those have a 94% net revenue retention rate, and that's about 1/4 of our ARR in total. That same customer, when you add a flagship payments partner, again, these are our best integrations. They have our best tech -- technology. Now the NRR jumps to 104%, and that's a little over half of our ARR today. So the inclusion of a flagship payments partner is how you get access to things like Fastlane by PayPal, which is highly performant, great on the platform, and it's designed to help grow customer revenue better. So when I talked about mixing towards flagship being a greater portion of the volume that's going to the site, this is the economics behind that, that get us excited to do so. Not only do we capture better revenue share, but the customer is actually stickier and they grow. And if you then layer on top of that, customers that are working with a global systems integrator, that are taking part of that growth initiative. Now all of a sudden, the retention rate is even better. They're more complex customers. That's why they tend to need an agency and they take a little longer to implement, but they're very, very sticky, but you can see how big of an opportunity we have to increase the amount of participation and partnership that we have with systems integrators. And then finally, with Feedonomics if they've done platform, payments, they're working with an agency and they've been successfully cross-sold Feedonomics. Net revenue retention is really, really strong, right? So the goal is to get more and more and more of our customers further and further down on this chart, right? And this is the heart behind all of the initiatives that we're pursuing. Okay. So let's talk then about what's the difference in customers between the BigCommerce platform product and Feedonomics? What we've been talking about is the fact that Feedonomics typically has -- our average customers running Feedo tend to be a little larger than what we've seen historically with BigCommerce. We believe that there's an opportunity not only to bring Feedo downmarket to cross-sell to the platform customers, but also to bring the platform up. So if you just look at the difference in customer size and mix, you can see that for Feedonomics customers that have revenue north of $20 million, over half of all Feedonomics customers are that size. You compare that to the platform product, which is legacy small business at our founding, they tend to be smaller customers. That's why we're saying there's opportunity to kind of meet in the middle on both of them. When you then look at the same data, but you look at, are they working with one of our lead global systems integrators. You see where we have these services partners involved, these are also tend to be larger customers. The larger the customer, typically, the better economics we see as well. So part of the reason we're driving cross-sell, and we're spending so much time thinking about how do we make this a wildly profitable product for agencies to implement. It's because that helps us move up market and get into larger deals that are stickier with better retention and unit economics. Okay. So where are we -- why are we confident that we can execute this. We know that we need to grow faster than we have. We know we need to reaccelerate growth rates and there have been areas where we've really shown strong progress over the last few years and the way that we've been operating with financial discipline. I'll call out a few. Number one, if you just look at what we've done with operating expense. Over the course of the last 3 years, we've had a 25-point improvement to OpEx as a percentage of revenue. And that's while not getting to the revenue growth targets that we are aiming for. I tell our team internally all the time. We did this the hardest way you can imagine, right? If we can reaccelerate growth, you actually are going to see a lot more operating leverage a lot faster than this. and we're something we're particularly proud of. What we've also been focusing on not only is cost discipline, but it's also in how we're thinking about working capital and the quality of the bookings that we're driving. So we've been talking for the last couple of years about the fact that we're really actively looking to get customers into longer duration contracts that are paying in advance, which is more typical of B2B SaaS and what this chart on the left is showing is what percent of our base of enterprise accounts are prepaying and that they could be paying quarterly in advance or annually in advance. But you can see the progress that we've made over the course of the last 3 years has been really substantial, Throughout 2/3 of our enterprise accounts are prepaying. There's still additional runway on this for us from a working capital perspective as well because many of them have maybe switched to semiannual or they've switched to quarterly, and we have pretty low, we have pretty low CapEx as well, which is part of why we're so bullish on the fact that we can continue to have such strong cash flow growth even as we're expanding profitability. But this is something we've been really proud of. And what I say a lot on our earnings calls is the flow-through from ARR to revenue and profit and cash flow is the strongest it's been in the 6.5 years that I've been here. And this focus on high-quality bookings, which you see in RPO, you see this in deferred revenue is a big driver behind that. Third, we've made a lot of progress on balance sheet, right? We have swapped out our debt. So we've delevered the absolute amount of debt that we have, shifted out the maturities into 2028. For now, we're down to, I think, a little less than $30 million in net debt overall, which is something that we're really proud of, and we have more than enough cash to run the business and invest. And then finally and most importantly, from a cash flow basis, from cash -- operating cash flow as a percent of revenue 3 years ago to now is a 38-point swing. If you look at last year alone, we had over a $50 million improvement in operating cash flow in 1 year. The profit improvement was roughly half that. And in other words, we're getting $2 of cash flow improvement for every $1 of profit. And that's because we've been really, really, really wise about where we're investing in capital and also what we're doing in prepayment and working capital. Okay. So what does this mean then from a medium-term growth model perspective? And I want to spend some time on this because there's some nuances to this, I think, are worth spending some extra time on. So what I've included here, just 4 areas: revenue growth, ARR growth, gross margins and operating margins. What I've included in the middle column is what we have is our opening guidance for 2025. We spoke about this a few weeks ago on our most recent earnings call. We think this is a good conservative opening guide to see where the year shakes out. There's a lot of uncertainty still in markets this year, but we feel good that this is a number for us to go after this year. What I'm calling out then are where are we thinking about this from a medium-term target perspective. I'm calling that 3 to 5 years, including 2025, right? So from a revenue growth perspective, we're aiming for mid- to high teens in a sustainable growth basis. We don't think we're going to get there next year. We might. It depends on how successful we are in a lot of the transformations that we're doing. But that's not how we're thinking about building out and modeling the out years in the business. We think there's going to be a build to that level of growth rate over this time period. And what we're aiming for is $500 million in ARR. The question is how long does it take us to get there? Similar growth between ARR and revenue on a gross margin basis, we're calling out that we're focused on margin stability. Why is that? I think we can expand gross margins. But we also, as we introduce bundling with third parties, that's going to have a little bit of a downward pressure on gross margins. And so we want to be able to offset that through other cost savings, such that we see it staying in the high 70s, low 80s over time. It's going to take work, but we think that, that's something that we can maintain. And then finally, from a profitability perspective, aiming for mid- to high-teens growth margins over time, we could go higher than that. But we want to be reinvesting in further growth acceleration over this time period. And Travis talked about this in Q&A on our last earnings call as well. We really believe that the best outcome that we can get to here is reaccelerating growth. And where we see good ROI, we intend to reinvest down into the business. But we think that this is something that we can sustainably shoot for. It's just going to take us a little bit of time as we execute a lot of these transformations and changes in order for us to get there. Okay. Last one, and then we'll switch over to Q&A in the time that we have left. We've gone kind of fast because I know for some of you, you had another one of these this morning, so I want to be respectful of that. Where does this put us overall for the business? We think there is a differentiated value proposition here, right? We are not going for 100% of the market. I'm not going to restate that Travis covered this already. We believe that we are differentiated for a core group of customers that need a partner that can handle more complexity. And just as importantly, we think where the market is going is going to require a company that has the ability to composably and flexibly allow customers to benefit from best-of-breed technology solutions and not have the burden be on the platform provider to spend all of the R&D to do all of the innovation themselves. right? And we believe that we can sustainably defend and articulate that. I don't think we've done a great job of doing that over the course of the last several years, which is something that obviously we're taking very seriously in fixing. Behind that, we think there's upside from branding. Travis alluded to this. We're still thinking about how we think about parent company branding, more to come on that over the next several months. And again, focusing on an open business model. We've talked about go-to-market transformation and the economics. Ultimately, the focus -- everything that we're focused here is on driving shareholder return. We haven't delivered returns to shareholders that we need to. That's just bar none. We've made really big progress in profit. We made big progress and cash flow. That is a start, but we must reaccelerate top line growth, and that's 100% of the focus that we have. And we recognize that it's going to take some time. We recognize that we need to show it, not talk about it, but we believe confidently we can do that. We have a lot of things we want to go through today, some of which are alluding to what's coming, but hasn't been launched, but we wanted to take advantage of the opportunity to do this live and cover it off in detail here. So thank you very much for your time. We'll switch to Q&A. If that's all right. Why don't you guys grab the chairs.

We're actually going to take a 10 minute break before Q&A. Gabriela has priorities. So she's getting the first question. So 10 minutes real quick, go the restroom, grab some water, whatever you need. We'll have our 4 speakers come up in about 10 minutes. [Break]

All right. We're about to get started with Q&A. There we go. If you have a question -- we're going to start with Gabriela, so she heads this. But if you have a question, please raise your hand when you get it, please introduce yourself -- when you get the mic, please introduce yourself, who you're with and then ask your questions. So first one, we'll start with Gabriela, hovering you back the mic.

Thanks so much for having us. It's really good to see you all. Thanks for all the detail in the presentations. So Daniel, you spent the time walking us through all of these granular by segment, net retention numbers and unit economics. And then there was sort of the magic trick on $500 million growing mid-teens, high teens. So maybe just bridge that for us. Did you do -- do we do the granular math on like multiplying each of the percentages out and get to mid-teens? Or how did you...

If you want to do a really elegant sum product in Excel. I mean, I think what we're trying to get at with that was, look, there's 2 things that I think we're trying to accomplish here in talking about the math. Number one, where we think we can be and should be isn't where we expect to be this year. So then the question is how long does it take you to get there? And what are the -- the growth building blocks behind what it would take to get you there. So there's a couple of things that I want to do accomplish and going through that discussion. Number one was talk through all of the kind of growth initiatives that we have and how related they are to what we're already doing because we're not trying to do anything brand new to the world that we've never touched in one way or another before. We also aren't doing anything that we don't already have customer examples of them already having done. The issue is we don't have enough customers that are doing all of these different solutions, right? If you go down that chart, for example, you take the platform product then add on a flagship payments partner and working with a top agency and having successfully implemented Feedonomics as well. It got to a smaller and smaller number as you go. I look at that and say that's a huge opportunity for us and why we needed to restructure all of our sales teams and the way we think about marketing and organizing around offerings is because all of those things, we believe, will better equip us to be able to get more and more customers down into that profile with those better economics. The second thing that we needed to accomplish today though is to understand, be realistic about the time line and what it would take in order to get there. We don't believe or I don't believe that we're going to be getting to mid- to high-teens growth next year. We might get there if we have really, really strong ARR acceleration, but that's not what we're planning right now. We're expecting this year to be difficult. We're metabolizing a lot of change under new leadership and a lot of people in new roles. And so as I'm thinking about our business, and I'm thinking about the growth in those numbers, I am gradually kind of building a gradual endpoint there and thinking about how can we make steps now that are bold and decisive that are focused on doing it faster. But what I don't want to do is say, well, I think it's going to take exactly this amount of time because some of this is, to a certain extent, out of our hands. Some of it depends upon what's the climate for replatforming, how do we think things are going to go on a macroeconomic basis. But we want to show we have confidence we can get there. We've demonstrated that it can work, and we see it in our own base. And we think it's going to take some time to get there gradually based on the speed and the size of the change that we're going through.

And when you gave us the net retention numbers, can you talk through what is the CAC associated. There's no LTV to CAC discussions. So help us fill in the blanks on that.

Yes. So if you look at one of the areas where very transparently, we must, must improve is in our sales and marketing expense efficiency. If you look at -- whether you look at Magic number or a payback period, the reciprocal, pick, however you want to do the math, right, for the amount of money that we've been putting into the business over the last couple of years, we have not gotten growth that we should have gotten for that amount of spending. We talk about this constantly internally as like one of the #1 highest accountability of things that we need to get stronger at. When I look at CAC within the business, I almost like to bifurcate it between what we're spending to land a new account and then what are we spending to get the same amount of growth from an existing account. And if you just look at sales commissions alone, we've gone through and looked at the math, we spend 3x as much in sales commissions to land a brand-new to the company account as we spend to get the same amount of MRR growth or PSR growth from an existing account, which is why when we went through and did the restructuring, we say, all right, we're going to double the amount of sales capacity we have in the company. That increase in sales capacity is disproportionately weighted towards account management teams focused on our base because that's where we see a lower CAC, right? You can't new account your way into the growth rates that the business needs to be growing at and is capable of growing at, if you're having to pump the amount of money in the marketing and sales that we have in the past trying to do it, so heavily weighted towards new account growth. So we didn't put CAC on here because it's very different, whether you're looking at a new account versus existing. But when you look at the sales and marketing efficiency numbers, it's very telling, it must get better. And that's one of the core responsibilities that I have that Rob has and Russ has and everybody else that's in a leadership role on the go-to-market side of things.

Brian Peterson from Raymond James. So as we think about that longer-term growth profile that you laid out, how do we think about what the implied NRR would be there? And versus what you guys have today, what do you see even qualitatively is the biggest kind of opportunities? Is it mix, cross-sell, just let unpack that a bit.

That's a wonderful question. Okay. When you go back and you look at from, call it, 2020 through 2022, our average NRR was, I think, 113. Don't quote me on that, but it's pretty close, right? I view that, and I try to explain this to all of our employees internally. That's like the floor growth rate of the business. The first thing that I look at when I look at the health of our business is gross retention rate. What is the retention dollarized of your existing customers? And then what are you doing to expand beyond that. Over the course of the last couple of years, that number has come down considerably as it has across SaaS, I don't think we're unique in that respect. I think what is an issue that we need to fix is that I don't think we recovered as much in NRR as some other folks in the space did over the course of the last year to 1.5 years. The question is why, right? A lot of it is because, again, we were organized around new account acquisition as the primary means of growth. We weren't orienting our internal vernacular, the way we build teams, the way we were setting goals and quotas, weren't around existing account expansion. So to your specific question about kind of those medium-term growth rates. I would like to get to a point where there's almost an even mix between NRR and new account acquisition because I think that's how it fuels the operating margin expansion, ultimately, so that we can, as I say, to our teams, you top line your way to a better bottom line. It's a lot easier to get profit leverage when you're growing really fast. We've been doing it a really hard way. But I'd like to see a much better balance in that and do that in the long term. I think it's just a good internal way of talking, but that's easy for our teams to remember.

Scott Berg at Needham. Thanks, everyone, for joining us. I always love to hear these stories. Lots of questions, but I'll pick on the small business one. Let's go there because I'm sure it's not top of minds at least. I think you went over the last year, maybe 18 months, really kind of deemphasizing the smaller customer in general. This was certainly a kind of a market change in kind of that messaging. I guess why the change there? What's different? And then as a follow-up question, why now to do something for payments versus 3 years ago or 3 years from now?

Well, I can't speak to things that predated me certainly. So...

I could. Why don't you answer first, and then I'll touch that part quick.

About the future...

Yes.

I mean I think Daniel walked through the numbers, obviously, small business still represents a large portion of the business. So to alienate or ignore would be irresponsible. And two, I think now with the ingestion of Makeswift and Feedonomics, we actually have a legitimate upsell, cross-sell motion that never existed before, right? The only motion before was, okay, maybe we upgrade you from a small business plan to an enterprise plan, great, and you could debate how good and how effective we were doing that around feature gating and things like that. That's why you see a lot of small business customers using enterprise plans, but now with Makeswift and Feedonomics, especially launching a self-service version of Feedo, we think that's a massive unlock. We think Feedo is going to be just as massive, but for different reasons, just being so visually oriented and thinking of small business running with very small teams and small development. That's a game changer. And then you add payment to that as well. We think not only does it enrich the existing installed base and certainly, we see some wallet share increases there. We think we can actually go grab more net new business in that space in ways we've never been able to grab before, quite frankly. Because before that, it was really a feature-function conversation. It was like this how much more or less do you get by going to us versus some of the competitors and a bit of a race to the bottom. I think the reason it's 1/3 of our business is kind of Lentz alluded to earlier, there's just hair on a lot of these small businesses. They just have unique requirements. So they live in industries that are innately complicated for whatever reason, you could argue that's limited or that's expansive, but the reality of it is it's not like our competitors haven't made like aggressive, poised to go steal that customer base, it's legitimate. I think we see a real growth angle there with the -- with Makeswift and Feedo. And I think it's something that, especially on the small business side, you're also going to see a lot of greenfield come into play to that, has a lot of similar dynamics, small teams, small budgets, just a lot of sensitivity to price. We feel like we can go do that profitably and at scale.

Just to address the history a little bit, I think part of this has been deliberate and part of this, I think it was a little bit of missteps on my part and how I've talked about this even over the course of the last couple of years. I mean if you think about it, 2 or 3 years ago, our unit economics on small business look materially different than they do now, right? We've taken pricing up -- we have now 3 -- almost 1/3 of all of our bookings on small business are paying annually in advance. Like we've really shored up kind of the LTV -- portion of LTV to CAC. That was kind of step 1. Then the piece -- the second part of that for it to become a more investable business is what are you doing on the cost of acquisition? What we did and where I think there were some missteps on how I've talked about this is we were really focusing on moving dollars up market towards more mid-market and lower end of enterprise customers and looking for that spend to halo into the upper end of small business. But I think the way that it came across was if we were deemphasizing it when really, a lot of what we were doing was saying, we need to get the LTV to CAC of that portion of the business into an investable place. We've done that successfully over the course of the last couple of years, and now by integrating all of the assets the way that we have and changing the way that the sales team is orienting, now all of a sudden, there's more that we can introduce into expansion for those customers, whether it's a freemium version of Makeswift and introduction of BC payments and a freemium version of Makeswift. Now all of a sudden, the volume game and a small business type of thing, it makes more sense for us. We are always going to be focused on complex customers with complex use cases. Some of them will be in small bids, some will go further up. We are not going to be going after digitally native start-ups and spending a ton of money competing with that area. It's pretty saturated. There's a lot of really good competitors that go there. But what we are going to do is say, all right, that type of use case with that type of customer, we're absolutely going to speak to. And now we feel that we have an economic model in place that becomes something that can be sustainably invested in and grow by primarily still directing dollars that market, but having it spill over into a more favorable LTV to CAC with small business. So it's just -- we're in a different place now than we were a couple of years ago.

One thing I'll add one last thing. I think divorcing ourselves from the fact that we're trying to compete in maybe our largest competitor's ICP, is simple. We're just not going to win. And just being honest with...

It's not what we're built for.

No, I think it's liberating to just let that go and move on, and it's okay. They're really good at that. And they deserve to win. We do not, and it's just not our core focus. And I think just letting that go has just oriented the broader business to go kind of double-click into what it is that we are important for specifically in the offering group within small business. It's synthesized around who it is that we're for not just broadly speaking, small business and bringing in a competitive landscape that we have no business competing against.

Josh Baer with Morgan Stanley. On that topic of kind of letting some business go and Travis, how you frame the competition and the landscape, I think you made a comment that 90% of brands might be okay with a simple solution and then you have commerce tools like in their niche up market. So I'm wondering like what -- how you do define your TAM. How big is this market that you're going after. And then also, if you've put together framework for thinking about how that market is going to grow over the next 3 to 5 years, essentially, I'm wondering in your assumption of mid-teens to -- yes, is the TAM there, but also like what does that imply for market share gains?

Yes. I'll touch that one briefly at the end.

Okay. So let's delineate between B2B and B2C because I think they're different. On the B2C side, although Shopify has sucked all the air out of the room, Salesforce and Adobe still have the majority of the installed base. I mean that is where everyone is kind of -- it's like the carcass that everyone is kind of picking off of, although they're not dead -- and I don't expect large global branded manufacturers and retailers who will rip out those installs on a whim. They're there for a reason. And for certain clients, I think it fits them really well even today. But there is a large subset of that installed base that we're going after, our competition is going after that we do think fits this really well. And as the landscape kind of complicates as I've alluded to earlier, around orchestration. I think you're going to see more of a need of particularly, maybe not so much retail. I think retail is a different animal -- but I think larger branded manufacturers that need to sell across multiple channels and deal with that inventory and orchestration complexity, I think, lend itself to the model that we're approaching. Because many of them now we're in deals today on those legacy platforms, big massive global deals today that I don't want to get ahead of ourselves on, but they're embracing us because of our approach to composability and openness. They've already philosophically kind of gone down that route. Again, that's not everyone. I don't -- if I said that earlier, I apologize, I don't think 90% of the market is simple. I think digitally native brands are simple by definition for a myriad of reasons. I think our competition's ICP tends to lean in with simple use cases, smaller than normal catalogs, not very robust promotions, not a lot of really complicated omnichannel. And I don't mean that disrespectfully, the fact that they've gotten some more complicated brands to dumb down their model to fit their infrastructure. And that's happened with brands that are strong enough to grow on their own. I think every commerce platform, probably ourselves included, have taken way more credit for a brand's growth than what we deserve. You're seeing a lot of that market today. Well, those brands aren't growing at a hockey stick rate like they were before, and there's going to be a lot of pressure to distinguish themselves and go in different directions. I think we're going to see that as well on the B2C side. On the B2B side, I think the vast majority have got a couple of different TAMs there. You've got legacy SAP and Adobe sitting legacy for reason on the SAP side, big complicated as we expand sort of our capabilities around CPQ and doing more things globally, that will broaden that TAM, people wanting to come off that platform. SAP is also forcing people into their microservices architecture that's going to be a big lift and people are wondering whether or not they should do that or not. And Adobe has just not invested in Magento at the level that I think folks expected them to. They're focused on other things. And I think just atmospherically, most folks running Magento have an appreciation for the way that we've developed the product and we're going. We think culturally, that's a really good fit where we've had a lot of success. And I think you're going to see that. And then you're going to see a lot of greenfield B2B, too, that are traditional legacy distributors and manufacturers that have never digitized that are looking to do that, but you're going to see that with very, very small budgets, very quick go-to-market. Lentz kind of alluded to a couple of those. That's an area we've been -- I mean, we're seeing more -- I mean, you could speak more tangibly than me, we're seeing a lot of a burst of those sorts of opportunities because the thesis in B2B is to really drive out cost. It's to drive out manual labor cost and synthesize the back end and make it less complicated. Most of those folks are running multiple sources of truth. And most of them want a framework by which they can acquire new assets into and stand up and standardize sooner rather than later.

To your question on TAM too. To your question on TAM too. From a market share perspective, we're pretty small today. Even if you say the type of customer that we're going after just within the platform space, say it's 1/3, 40%, pick your number or whatever, that's multiples of growth beyond where we are. And I would argue the decisions that we've been making have been specifically designed to not have to win a bunch of competitive switches in a head-to-head competitive share gain world, right? We can expand Feedonomics and that's broadening the category, right? We can get thousands of our existing customers using Feedonomics. We're not displacing anybody. We're just expanding the category, right? Same thing if you start looking at bundles, right? If we have a deal with the customer, maybe it has an annual contract value of $100,000, right? And then you start adding in technology partner solutions that are bundled into that as a recurring subscription in the same commercial agreement. Well, now maybe that contracts up to $120,000, $150,000. And for many of those partners, part of the reason they're so interested in working with us on this is it's category expansion for them. It's effectively, it's a growth in distribution, right? That is powering revenue growth without us required to win more head-to-heads in a competitive share basis. So we're trying to be very deliberate about not needing to get into an arms race in order to get to sustainable growth that are better growth rates, and I think we definitely can do that.

Hi Arti here on behalf of Mark Murphy from JPMorgan. Great presentation. The first one is you guys have been emphasizing a lot the B2B motion. I think a lot of great statistics around it. And one of the interesting ones is the fact that there's a greenfield opportunity there with some of these customers who don't even have an online channel. So on that front, is this -- is the catalyst for them to go to that channel just hey, it's been long enough, they realize that need is there? Or are you guys kind of going out and evangelizing that? And then number two, real quick, just on the macro. It's a favorite question, I'm sure, but we've seen all these airlines come out, cut guidance, a lot -- plenty of stuff going on in the headlines every day. Any thoughts on that and kind of what you see right now?

Let me take that one.

I'll take the first one around B2B first. It's a bit of both, is the on-site question. But if you think about the buyer, the B2B buyer has changed. They are a younger buyer who is used to shopping online. And when they go and place an order on behalf of their company, they expect to be able to do that online, and they will switch buyers if they can't. They're not loyal anymore in the way that the previous generation were. They're not looking for in-person lunches and dinners. They want efficiency of processes, efficiencies of shopping of making those purchases. And so manufacturers and distributors that don't move online fast enough are just going to lose market share. So that's kind of the push. That's pushing manufacturers and distributors to move online. There is also an education piece. Right? Whether you go and look at the associations and buying groups, so like National Association for electrical distributors, they have a specific team within their association that's dedicated to digitization of their members because they know how important it is. So it's a mixture of both. But the buyers are pushing it, and we are educating manufacturers and distributors on just how important this is for them to make that transition and the kind of margin expansion and profitability that they can drive through digitization and e-commerce.

And on the macro question, yes, no change in the sentiment or point of view since our last earnings call. There's enough uncertainty that's going around. We see the same thing. We think we factored that into how we've approached the year as well as we could. Would it be nice if we had a little less macro volatility? Sure. But like I said on our last earnings call, we're not going to be over our skis in how we think about growth rates, banking on a huge tailwind on the macro side. We went into the year expecting this to be a tough year, not just from any time you have new fill-in-the-blank administration, consumer sentiment, whatever, right? There's always going to be the type of uncertainty, but also with the kind of endogenous stuff that we were doing within the business already with the level of transformation that we're going through, we definitely took an approach assuming this year is going to be a challenging year. It's going to be focused on execution. My point of view is the same. No change to what we've issued as our latest guidance.