BigCommerce Holdings, Inc. (NASDAQ:BIGC) Q1 2024 Earnings Call Transcript

BigCommerce Holdings, Inc. (NASDAQ:BIGC) Q1 2024 Earnings Call Transcript May 9, 2024

BigCommerce Holdings, Inc. misses on earnings expectations. Reported EPS is $-0.08342 EPS, expectations were $0.03. BigCommerce Holdings, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Ladies and gentlemen, thank you for standing by. And welcome to the BigCommerce First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to turn the conference over to your first speaker today, Tyler Duncan, Senior Director of Finance and Investor Relations. You may begin.

Tyler Duncan: Good morning, and welcome to BigCommerce’s first quarter 2024 earnings call. We will be discussing the results announced in our press release issued today before market open. With me are BigCommerce’s Chief Executive Officer and Chairman, Brent Bellm; and Chief Financial Officer, Daniel Lentz. Today’s call will contain certain forward-looking statements, which are made pursuant to the Safe Harbor’s provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning financial and business trends, our expected future business and financial performance and financial conditions and our guidance for the second quarter of 2024 and the full-year 2024. 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. During the call, we will also discuss certain non-GAAP financial measures, which are not prepared in accordance with Generally Accepted Accounting Principles.

A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, as well as how we define these metrics and other metrics is included in our earnings press release, which has been furnished to the SEC and is also available on our website at investors.bigcommerce.com. With that, let me turn the call over to Brent.

Brent Bellm : Thanks Tyler, and thanks everyone for joining us. Over the last two years, our business has dramatically improved its ability to deliver profitability and positive operating cash flow. As of 2024, our focus shifts to efficient revenue growth, and that imperative is front and center across every team in the company. We have yet to achieve the full growth potential of this business, but we pursue it with urgency and confidence. I will focus my remarks today on improvements underway in how we go to market, key success metrics we’re monitoring and improving, and an exciting leadership addition. I will also touch on product innovation that unlocks growth potential. Let me start by briefly summarizing key financial results on the quarter.

Q1 results reflected a good start to the year relative to our top and bottom line plans. Revenue finished just above $80 million, up 12% year-over-year. Adjusted EBITDA came in just over $4 million, or approximately 5% of revenue. We also had a solid start to the year from a cash flow perspective, improving free cash flow by more than 25 points as a percentage of revenue year-over-year. Turning now to growth, we recognize the importance of reaccelerating our top line growth profitably, and we are laser focused on accomplishing that. Let me move into a more detailed discussion of improvements we are making to realize our growth potential. As a reminder, BigCommerce was originally founded to serve the needs of small business customers. In my nine years as CEO, we have radically improved our product and service capabilities on behalf of the complex needs of midmarket and enterprise businesses, and we have successfully moved our customer base up-market as a result.

As part of that progression, certain legacy behaviors, metrics and systems reflective of our roots must advance to incorporate the best practices of world-class enterprise software companies. I’ll now describe three examples of these advancements. First, we reorganized our business teams and leadership structure to introduce clear and unified end to end ownership of the customer. Sales, customer success, marketing, and our business development teams have congruent and clear targets that unify their efforts around customer success and growth. In Q4 we centralized end to end customer success ownership under our company President. Our company President now oversees all go-to-market efforts across the business, including the platform product, , and PSR.

Second, our internal performance metrics and goals have improved to better reflect our move up market. As we discussed on our last earnings call, our previous metrics and goals prioritized new customer acquisition as the primary means to fuel top line growth. New customer acquisitions remains a priority of course, but it is now balanced with a strong focus on customer retention, satisfaction, and growth. Target metrics now balance gross retention, net retention, and new customer growth, including a greater focus on portfolio cross-sell of Feedonomics and partner solutions. Third, we are optimizing our data and operational systems to improve the management of net retention and sales pipeline. A new customer master data management system will unify disparate partner and prospect data.

We are also rearchitecting our CRM and marketing automation systems to put our platform and Feedonomics sales and marketing teams under one unified architecture built for account expansion, cross-sell, and multi-product sales growth. We expect these systems investments to be complete by mid-2025, and we are making tactical changes in the meantime to build momentum in our current architecture. We are excited about the growth potential these investments can enable, and we included the associated costs in our financial plans at the outset of the year. These changes are by no means the only enhancements to our go-to-market strategy and operations, but they are illustrative of our transformation in pursuit of becoming a world-class enterprise software company.

To help lead this transformation, I’m pleased to welcome Travis Hess as our new company President. Travis brings more than 15 years of exceptional enterprise ecommerce leadership experience involving many of our top platform competitors, and his expertise in service and implementation, ecosystem partnerships, and competitive selling and positioning will help drive our go-to-market transformation and success. He has served on partner advisory boards for Shopify, Klaviyo, SAP/Hybris and Rackspace, and he most recently worked at Accenture as a Managing Director leading their direct-to-consumer ecommerce offering and go-to-market strategy. Travis will target resources and attention on categories in which we are seeing the greatest customer traction and success, including apparel, home and garden, sports and outdoors, and B2B.

We have many outstanding customers in these focus categories. Companies such as Coldwater Creek, Francesca’s, Harvey Nichols and White Stuff in apparel and accessories. Burrow, One Kings Lane and Houzer in home, garden, and furniture. Marucci, Level 9 Sports and Tottenham Hotspur, who recently hosted our EMEA BigSummit, in sports and outdoors. MKM Building Supplies, Imperial Dade and United Aqua Group in B2B. We also continue to be a great fit for brands and B2B businesses in health and beauty, food and beverage, electronics, and other arenas spanning both B2C and B2B. Our R&D investments continue to deliver industry-leading innovation on behalf of our customer promise of “enterprise ecommerce, simplified.” A few weeks ago, we unveiled our inaugural “Next Big Thing,” an extraordinary collection of more than 100 platform enhancements, new features, and partner integrations.

I won’t go through all 100 here of course, but I do want to call out a few examples of industry-leading innovation on behalf of our customers and ecosystem partners. I’ll start with Catalyst, our next-generation storefront technology which we announced in Q1. Catalyst provides a simplified starting point for customers, agency partners, and ecommerce developers to easily and quickly build beautiful, high-performing stores using a headless, composable architecture. It combines a streamlined GraphQL client optimized for the latest version of Next.js and React server components with a reference storefront featuring industry-leading Google Lighthouse scores of 100 out-of-the-box. Catalyst is the culmination of more than 4,000 headless and composable builds on BigCommerce since 2016.

It represents the fastest and simplest path to developing extraordinary customer experiences leveraging the world’s highest performing and most popular front-end storefront technologies. Catalyst lowers the technical requirements and complexity of a composable implementation, making it far easier for customers and agencies to realize the store design and performance benefits of composable without added implementation cost and complexity. Customers using Catalyst will set high standards for shopper UX, site performance, and conversion rates while benefiting from faster, higher quality development. Simply put, with Catalyst, we aim to make composable as easy to use as our native hosting and theming framework, Stencil. Modere, White Stuff, Conn’s HomePlus, Brompton, and Bestway Europe are but a few examples of recent launches leveraging BigCommerce’s expertise in composable builds.

White Stuff in particular saw an immediate 80% improvement in site speed and 100% on its mobile site after launching its composable store on BigCommerce. Another major area of product innovation featured in Next Big Thing is multi-geography selling leveraging our multi-storefront product capabilities. Our multi-geo and multi-language functionality enables multi-storefront localizations such as language, content, pricing, payment methods, and promotions. Customers and partners can configure unique checkout experiences for every storefront, all while maintaining one centralized backend for easy and efficient management. We also announced our new Open Source B2B Buyer Portal. Open-sourcing B2B Edition’s Buyer Portal equips enterprise suppliers, manufacturers, distributors and wholesalers with the tools to deliver a bespoke buyer experience throughout the entire buyer lifecycle from product discovery to sale, service and warranty, directly from a single portal.

By leveraging this customizable starting point, B2B brands can tailor their site experience to the unique needs of their business, their customers, and their operational cost minimization. The open sourcing of our B2B Buyer Portal represents another example of the industry-leading flexibility of BigCommerce’s platform. Just as our platform-wide APIs and open checkout brought industry-leading flexibility to B2C ecommerce for a SaaS platform, the open sourcing of our Buyer Portal has now done the same for B2B ecommerce. For us, Open SaaS is a philosophy, the foundation of our product strategy, and a major source of competitive advantage. Finally, we announced Instant Commerce from Feedonomics. Instant Commerce represents the enablement by Feedonomics of same-day fulfillment and delivery of orders.

Feedonomics provides the catalog, inventory, order, and fulfillment data connectivity between brands and retailers and the third-party marketplaces, like Amazon and Walmart, through which they sell and fulfill. It also supports same-day delivery apps and driver services. For same-day delivery and/or in-store pickup, inventory must be held in a store or warehouse within delivery service proximity of the consumer. As the popularity of same-day delivery explodes, Instant Commerce from Feedonomics connects brands, retailers, and businesses to the leading marketplace and delivery services that enable it. I’ll conclude my remarks with a few observations on the macro environment in ecommerce. Consumer spending remains resilient across our major markets, though aggregate ecommerce is growing at lower rates than during and before the pandemic.

I’m encouraged overall by the underlying consumption signals that we are seeing in our business. The consumer health that we observed in the 2023 holiday period held up well in Q1, which is a good sign both for 2024 and long-term ecommerce growth. We believe platform investment spending will inevitably improve, and we’re transforming our go-to-market capabilities to capitalize on that. Overall, I am encouraged by our start to the year and see a path to growth reacceleration fueled by our go-to-market transformation and continued industry-leading product innovation. We already see encouraging improvements in gross and net retention since initiating operational changes in Q4. Our competitive advantage in total cost of ownership is stronger than ever, thanks to price increases taken by our competitors.

Our product continues to receive strong reviews and advocacy by customers and partners. With strong competitive advantages in product and service, combined with significantly improved sales, marketing, and service practices, BigCommerce can achieve its full potential for growth and profitability. With that, I’ll turn it over to Daniel.

Daniel Lentz: Thanks, Brent, and thank you, everyone, for joining us today. During my prepared remarks, I will cover our Q1 results, and give additional detail on our key areas of operational focus, and provide updated guidance and our outlook for both the second quarter and for the remainder of the year. As Brent just outlined in his prepared remarks, we are pleased with our execution in the quarter and feel we are off to a good start in 2024. Revenue exceeded the high-end of our guidance range, and non-GAAP operating income also came in above the top of our expected range. We believe we are well-positioned to improve upon these results and advance our execution in the quarters ahead. In Q1, total revenue was $80 million, up 12% year-over-year.

Subscription revenue grew 13% year-over-year to approximately $61 million, while partner and services revenue or PSR was up 8% year-over-year to just over $19 million. Revenue in all of the Americas was up 12%, while EMEA revenue grew 15% and APAC revenue was up 11% compared to the prior year. We continue to make positive strides on our commitment to running a profitable growth business. Our Q1 non-GAAP operating income was just over $3 million versus a loss of $6 million a year ago. These results represent a nearly 13 point year-over-year improvement to non-GAAP operating margins, increasing from negative 9% in Q1 2023 to positive 4% in Q1 2024. As we communicated last quarter, we expected operating margins to finish sequentially lower in the first quarter due to strong Q4 holiday results in partner and services revenue and planned spending in Q1.

I want to give you an update on where the three strategic priorities I called out on our last call currently stand. First, we made a commitment to drive efficient revenue growth. Brent spoke in detail to efforts underway with respect to go-to-market improvements and transformation, so I won’t restate the details that he outlined previously. What I will add is that we are already beginning to see encouraging progress in only the first quarter since initiating many of those improvements. Q1 gross and net retention rates improved versus the prior quarter, and I see greater focus on customer success and growth than I have at any other time during my nearly six years with BigCommerce. Second, we committed to improve our operating leverage and grow profitability.

More specifically, we aim to expand non-GAAP operating margins in the mid-single digits on a full-year basis in 2024. Q1 non-GAAP operating income and margin finished roughly double our guidance expectation, reflecting the hard work and continued spending discipline that we will exhibit across the year. This includes discipline on stock-based compensation and equity incentives as well. Q1 stock-based compensation expense finished more than 400 bps lower as a percent of revenue compared to Q1 2023. We have moved a significant portion of our 2024 executive equity awards to performance-based stock units to further increase alignment between management incentives and shareholder returns. As our go-to-market efforts drive top line growth acceleration, the business has the potential to grow margins at an accelerated rate as well.

Put simply, we have made material improvements to spending and cash discipline, even as top line growth rates did not meet our expectations in 2023. That discipline puts the business in a position to see strong gains to profitability as revenue growth rates improve. Third, we committed to healthy cash flow generation and cash management. I am very encouraged with our progress in this area, and we continue to evaluate all of our spending to look for opportunities to drive improvements in cash flow. Our investments in internal systems and controls along with discipline around accounts receivable and collections are paying off in terms of our working capital and accounts receivable. Deferred revenues have increased year-over-year by $12 million, from $23 million to $35 million, while annual plan subscription deferrals have increased $12 million, from $8 million to $20 million.

The current portion of remaining performance obligations or CRPO, saw a $18 million year-over-year increase, or up 21%, from $87 million to $105 million. Operating cash flow was approximately negative $3 million in Q1, while underlying operating cash flow was around positive $3.5 million apart from sizable software prepayments and annual employee payments made in the first quarter. Again, this was a solid start to the year. I’ll now turn to our non-GAAP KPIs. We concluded Q1 with an annual revenue run rate, or ARR, of approximately $340 million, up 7% year-over-year. That represents a sequential growth in ARR of nearly $4 million. Enterprise account ARR was approximately $248 million, up 8% year-over-year. As of the end of Q1, enterprise accounts represent 73% of our total company ARR.

Accounts using exclusively our essentials plans, which we refer to as “non-enterprise accounts,” finished with ARR slightly over $92 million, or up 5% year-over-year. At the end of Q1, we reported 5,970 enterprise accounts, up 142 accounts or 2% year-over-year. ARPA or average revenue per account for enterprise accounts was $41,581, up 6% year-over-year. Before we move on to guidance, I’d like to share some high level thoughts on our performance to start the year and how I see 2024 shaping up going forward. Overall, I was pleased with results in Q1 relative to our financial plan. We’re off to a good start on revenue, profit, and cash flow, and that builds confidence as we approach the mid-year line. ARR results in Q1 reflected both cause for optimism and highlighted the criticality of the go-to-market transformation Brent outlined in detail earlier.

Gross and net retention results beat our internal plans, which reflected early signs of progress in the changes we are making in our go-to-market transformation. We also continue to see challenges in sales cycle times and platform investment spending, which will require continued focus and effort by our team throughout the year. I’ll now shift to our outlook and guidance for the second quarter and the full-year 2024. For the second quarter, we expect revenue in the range of $79.8 million to $81.8 million, implying a year-over-year growth rate of 6% to 8%. For the full year, we expect revenue between $329.7 million to $335.7 million, translating to a year-over-year growth rate of approximately 7% to 9%. Note that we are increasing our full year revenue outlook, balancing our overall confidence based on a good start to the year with maintaining prudent conservatism with respect to full year guidance.

For Q2, our non-GAAP operating income is expected to be between $200 thousand and $1.2 million. Note this is slightly lower than Q1 non-GAAP operating income sequentially due to planned salary increases taking effect out of our annual spring merit and promotion cycle during Q1. For the full year, we expect non-GAAP operating income between $10.2 million and $14.2 million, which also reflects an improvement to our full year outlook based on progress through Q1. Again, I would like to thank everyone for joining us today. As Brent said at the start of the call, our business has delivered notable improvements to profit and cash flow over the last two years. Now is the time to do the same in go-to-market and top line results, and our entire team is laser focused on that goal.

With that, Brent and I are happy to take any of your questions. Operator?

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Q&A Session

Operator: [Operator Instructions] And today’s first question comes from Ken Wong with Oppenheimer & Company. Please go ahead.

Ken Wong: Fantastic. Thanks for taking my question. The first one is for you, Brent. When we think about some of the things that might have kind of held back BigCommerce, I think macro being one of them second maybe just transition in sales leadership here. You guys recently hired Travis. How should we think about that potentially releasing some of the bottleneck? And you mentioned changes to go to marketing Q4, I mean, should we worry that there’s going to be another change in terms of how Travis might want to go to market?

Brent Bellm : Hi, Ken. We’re incredibly excited about the addition of Travis heads as our Global President, as well as Thom, our new VP of Enterprise Sales in the US. They bring decades of experience in ecommerce serving all of the leading platforms including our top competitors. And so, it really bolsters our team with some of the transitions including unexpected ones over Q4, Q1. We were down to a single senior sales leader in the Americas who is a VP or higher level. Now we’re back to full strength with the addition of those two. But in particular, with more industry experience than we have ever had in our history in the Americas. And so, I’m very bullish on the leadership and the experience that they can bring to our customers and to our partners I think that will help us to re-accelerate new sales.

In terms of the actual go-to-market changes, any presence going to come in and have some level of tweaks and enhancements, but fundamentally we committed to a true best-in-breed enterprise go-to-market model during Stephen’s tenure at the end of last year. This is the first year we are implementing that model. And so, it’s only this year that you will start to see the results of that and we’re already seeing it and things like gross retention, net retention. And we’re very excited about the prospects of potentially reaccelerating gross news sales. So, all of these trends are putting us in a better place starting this quarter and going forward than we would have been a couple of quarters ago. Now I think you’ve absolutely asked the right first question.

So thanks for that, Ken.

Ken Wong: Thank you, Brent. And then, Daniel, just a follow up. You touched on a lot of improving KPIs. I think maybe the one I wanted to dig into was CRPO up 21%. And this can be a bit of a choppy metric, but should we do this as a good leading indicator for future ARR revenue growth or would you steer us another direction?

Daniel Lentz: Yes, I would say that it is. I think what I think has been really key in some of the changes that we’ve been making over the course of the last year to two, not just on the go-to-market side, but also how we’re approaching contracts and agreements with our customers. I would say the translation from bookings to revenue, revenue to profit, and profit to cash flow is the strongest we’ve seen in this business in the six years that I’ve been here. And that’s because we’ve been prioritizing stronger contracts, longer duration, I would say, stickier terms and also involving prepayment as a priority. And I think in a lot of ways our contracts are much more looking like best practice from an enterprise software point of view and that’s playing out in what you see in RPO.

You see that in deferred revenue and ultimately it gives us a lot of confidence as we look at the changes that, Brent just highlighted on the go-to-market side. The business is really positioned to capitalize as we start to see better revenue growth and acceleration with really strong leverage in cash flow that comes out of that due to the changes that we’ve been making. And then I think CRPO is a useful indicator. It’s not perfect for the reasons that you described, neither is deferred revenue or other metrics, but now that we’re really adopting a lot of these best practices, I think CRPO and deferred revenue are going to become a better leading indicator of where we are from the booking itself, than where we’ve been in the past.

Ken Wong: Great. Thank you so much.

Operator: Thank you. And our next question comes from Koji Ikeda with Bank of America. Please go ahead.

Koji Ikeda: Yeah, hey guys. Thanks so much for taking the questions. I wanted to maybe follow up on Ken’s question here and ask in a different way. You did talk – call out changes in the sales organization or some potential changes in the sales organization, definitely some changes to internal systems, but also commitment to operating leverage. And all that sounds good for efficiency and margins, but it does seem like the business is on an upward trajectory here. And so, how are you thinking about balancing profit, while making sure you’re not leaving money on the table of the demand environment quickly, just positively in BigCommerce’s favor.

Daniel Lentz: Great question. I would say that, what we’re really focused on right now is, how can we operate and run in the most efficient manner that we can, so that we are growing efficiently and identifying the areas in the business where we’re seeing strong ROI and organizing ourselves in a way to capitalize on that ROI where we see it. So that as we start to see improving demand signals particularly on platform spending. We’re in a position to take advantage of that and capitalize on that. And while – I agree with you. I do think we’re in an upward trajectory. We also are not satisfied with what we’re seeing from a growth rate perspective. We think there’s a lot of room to improve. The efficiency and the returns that we’re getting from the dollars that were putting in and we’re really confident that we’re going to be able to do that and we think Travis’ leadership is really going to accelerate that, as well.

But I would just say, we are really looking for is balance. There’s a reason why we’re talking about efficient revenue growth. We’re not going to go back to the times where it was chasing revenue growth at any cost. We are going to run a business that’s going to grow profitably. We’re going to expand margins. We’re going to focus on cash flow and we’re going to run this in a disciplined healthy way. That’s our commitment and that’s not going to change.

Koji Ikeda: Got it. Thank you, Daniel. And just to follow up here on the guidance. When looking at the second quarter guidance and also comparing it to what we purpose on other of the commerce vendors out there. I look at your guidance and it’s calling for a sequential growth of about $400,000 at the midpoint. Growth is a big deceleration from first quarter. So just trying to understand what’s embedded in the guidance from a market dynamic play versus just your typical conservatism? Thank you.

Brent Bellm : Yeah, great question, I think part of the difference on the sequential basis when looking at the year-over-years the fact that we actually had pricing actions in the base period both in 2023 and 2022. So you get a little bit of noise in the year-over-years and that plays itself out sequentially. And then I think that’s part of why we’re there. I mean, in years past, I think we’ve gotten a little bit more of a sequential bump in Q2 versus Q1 versus what I would probably deem as normal. I’d say, for where we are that far on the year. Very encouraged by what we’re seeing in terms of consumer volume and spending. There’s a reason why we chose to describe it as resilient. It’s not where it was a pre-pandemic necessarily, but we’re still seeing healthy signs there and we’re still growing on the same-store GMV basis I think at a premium to ecommerce as a whole.

So I’d say, that’s encouraging. That gives me optimism going into the back half of the year. We’re also continuing to see some of the same challenges and opportunities on platform investments spending in bookings that are making us really, really be focused on the changes that we’ve been talking about. So, that’s an area where we want to see things doing a little better than what we’ve seen so far. We expected that to be a challenge. There’s a reason why we’re making the changes that we’re making. But I just think overall it’s kind of a balanced good start to the year, but we have a long way to go still.

Koji Ikeda: Thank you. Thank you so much.

Operator: Thank you. And next question comes from DJ Hynes with Canaccord. Please go ahead.

DJ Hynes: Hey, good morning guys. Thanks for taking the question. Brent, you called out the cross-sell opportunity for Feedonomics and some of the changes being made there to better capitalize on the opportunity. When I hear about changes, it makes me think that’s something isn’t going great. I didn’t think that was the case of Feedonomics. So I guess the question really is like, has that business been performing up to expectations?

Brent Bellm : Yes, Feedonomics has been performing up to expectations. It hasn’t been beating expectations, but it continues to deliver both top-line growth and bottom-line profitability overall relative to what we would have expected at the time of acquisition has absolutely performed above what I would say, would have been reasonable expectations. It’s the market leader globally in both the enablement of high ROI ad spending, as well as marketplaces expansion for the biggest brands all around the world. It’s true Enterprise leader and it gives us what none of our other platform competitors have, which is a compelling argument that we can drive top-line sales growth for our customers both through the world’s largest ad channels and largest marketplace’s channels.

DJ Hynes: Got it. Thank you. And then Daniel, follow-up for you. It’s like, I hear the comments on improving gross retention improving net retention. But I look at the Enterprise customer count, it declined sequentially, right? It’s the first time I’ve ever seen that in the model. So just can you unpack what’s going on with customer count at the Enterprise level?

Daniel Lentz: Yeah, when we’re talking about gross and net retention improvements, I’m looking at it on a dollarized basis, which is the key way that we look at it. I want both to be doing better and obviously we were – we’re not satisfied with what we saw from account basis on the quarter. Part of that is a mix effect as we’re mixing up a little bit. But part of that’s just the dynamics that we’ve been seeing in ecommerce as a whole where we’ve had some downgrades. We’ve had some project cancellations. We’re continuing to see good growth in mid-market and the lower end of Enterprise. We’ll keep focusing there. And we’re confident that the changes and improvements we’re making on the go-to-market side are going to also pull up where we are from account basis as well. But obviously not satisfied with that and laser focused on making the improvements that will turn that around.

DJ Hynes: Yeah, very clear. Okay, thank you guys.

Operator: Thank you. And our next question comes from Raimo Lenschow with Barclays. Please go ahead.

Raimo Lenschow: Hey, thank you. And if you think about the changes to you have done to the business, there’s obviously the action and then there is a result. And there is usually a time lag in terms of having the whole organization kind of running at the kind of the new speed. Like we’re we on that journey in terms of like you’ve done all the changes. But in terms of kind of hitting your full potential where are we on that journey? And then I have one follow-up.

Daniel Lentz: Yeah, I’d say, we’re already seeing positive results in the journey on gross retention. We’re saying relative to last year, real improvements in year-on-year gross retention in terms of churn and downgrades. We’re also seeing already early signs of improvement in our ability to cross-sell within our existing merchant base, which improves net revenue retention. That’s not something that’s historically we focused on for really incented sales or customer support fully. Where we have the most gained is in gross new sales. And as I mentioned in a prior comment, we were really down in terms of sales leadership in the US, down to one senior leader. We’re now back to full strength with the addition of Thom and with Travis.

And so, that upside is all still to come in terms of how they help us sort of throw both top of pipeline and conversion over the next year. So if I were to put it on a percentage basis, in terms of both how we have instrumented the new go-to-market motions, as well as results probably no more than a quarter of the results would actually be appearing and that we anticipate in our current numbers. We expect to get a lot more out of all these go-to-market changes in the quarters ahead.

Raimo Lenschow: Okay. Perfect. And then that’s a follow-up actually, if you think about it and you talk a lot about profitable growth, once you are up in all swing like, I guess the assumption is that we are growing at this faster rate, like how do you think about growth? And obviously, you can’t give a number because you’d guide them, but like, how do you think about your growth versus kind of the industry growth and it’s all done and dusted? Thank you and congrats from me, as well.

Brent Bellm : I think based on where we are, our expectation and our ambition is to be growing at a premium to the market that represents a healthy growth in market share in the areas where we are choosing to focus and compete. I think that that can get back to growth rates in the teens and approach 20%. That continues to be our goal and our ambition. We think that that is sustainable especially at our size. There’s a lot of growth runway ahead of us. We’re not hitting a scaling issue where you’re trying to run into the law of large numbers. We’ve got a long way to go and a lot of upside opportunity here that we’re excited about. And when we look at where we’re investing and where we’re spending and we see opportunities all over the business to really, really fully take advantage of the amazing staff that we have here and the leadership that we have here, we think that there’s just a lot of growth that we can unlock with the outstanding people that we have by taking better care of our customers and really focusing on their growth and their success and giving them the freedom to choose solutions that work for their business and not try to pigeon hold them into things that they don’t need.

And we think that that can really unlock a lot of growth and with the changes that we’ve made in the way that we’re operating that in turn will turn to profit and cash flow in a way that’s very, very healthy for the business and we’ll deliver good returns for our shareholders.

Raimo Lenschow: Okay. Perfect. Thank you. Good luck.

Operator: Thank you. And our next question comes from Parker Lane at Stifel. Please go ahead.

Parker Lane : Yeah, hi guys. Thanks for taking the question this morning. Brent, how would you classify the improvements you are telling gross to net retention rates, over the quarter here? Is that more reflective of the consumer health you guys called out the prepared remarks or the internal changes or a combination of both?