BigCommerce (BIGC, Financial) has replaced former CEO Brent Bellm with President Travis Hess, following challenges such as slowing growth, declining enterprise accounts, and poor profitability. Despite this leadership change, the market's reaction remains muted, with shares down over 35% this year and over 95% from 2020 highs.
Under new leadership, BIGC aims to revitalize its business. However, economic and competitive challenges persist. The company's balance sheet shows negative cash flows and widening net losses, leading investors to doubt if a new CEO can resolve these issues.
What does BIGC do?
- BIGC offers a software-as-a-service (SaaS) platform for businesses to create online marketplaces, competing primarily with Shopify (SHOP, Financial).
- The company serves enterprises, which account for two-thirds of its revenue, and small to medium-sized businesses (SMBs), contributing the remaining third.
Challenges Facing BIGC
- Competition from SHOP, which has gained brand recognition and achieved 20%+ revenue growth, while BIGC has not surpassed 20% growth since Q3 2022.
- BIGC reported an 8.5% revenue growth in Q2, with stagnant net income and nearly flat year-over-year growth.
- SHOP's success is attracting BIGC's enterprise customers, leading to a decline in enterprise accounts for three consecutive quarters, remaining around 5,900.
- Despite a 7% year-over-year increase in average revenue per enterprise account in Q2, this has not translated into significant top-line growth.
Despite these challenges, Mr. Hess's extensive IT consulting experience, including roles at Accenture (ACN, Financial) and advisory positions with SHOP and other software firms, may lead to significant changes for BIGC. The company is expected to report Q3 results soon.
However, BIGC must demonstrate its capabilities to regain investor confidence amidst intense competition and unfavorable macroeconomic conditions.
