Brent Bellm : On gross retention, I think it’s a combination both of the working through the macro cycle. We talked in a fair number of quarters last year about the let’s call it the post-pandemic trough of customers who had potentially overbought when the economy was locked down during the pandemic. And then wanted to right-size their contracts as the economy reopened and secondarily with high interest rates and a focus on profitability, we saw some subsets of customers basically canceled ecommerce stores and projects that were unprofitable for them or sometimes even canceled planned migrations and launch in order to achieve short-term profitability goals. I think we have worked our way through the trough of that post-pandemic drought.
And that so part of what we’re seeing is just a return to normal. But the second thing that we’re also observing is a real strong focus and ownership of the customer within BigCommerce. We truly are owning customer success and it’s a shared commitment across sales, service and marketing. And so, every time we sign a customer now, job number one is to help that customer get launched and growing as quickly as possible. So that that’s the foundation of their success and our success if we want to earn the right to cross-sell, up-sell or at least get positive referrals and recommendations from our customers. So it’s a combination of those two things. The first one is somewhat out of our control as the economy returns to normal. But the second one is completely within our control and we think there’s still positive upside to come from that.
Parker Lane : Got it. Makes sense. And then, one for you Daniel. Just how significant should we think about the investments around the re-architecting of your CRM and marketing automation systems. And is that largely a 2024 phenomenon or is that extend into ‘25?
Daniel Lentz: That’s 2024 and 2025. In the big scheme of things, that it’s not very mature deals, like it’s not going to swing our numbers we’ve already got a baked into our guidance. It’s material for us. It matters a lot. I mean, it gets, there’s three big legs to this. We’re getting into a master data management system where improving our marketing automation platform. We’re getting all of our sales teams into one CRM. I mean, there’s a lot of really great unlocks that come out of that. But it’s not something that our shareholders need to be worried about from a cash flow or a capital investment point of view. It’s big enough that it matters, but it’s not so big that it’s an outlier that investors really need to worry about.
Parker Lane : Great. Thanks for the feedback.
Operator: Thank you and our next question comes from Maddie Schrage with KeyBanc. Please go ahead.
Maddie Schrage : Hey guys. Thanks for taking the question. I was wondering if you could talk about how you’re thinking about ARPA growth this. Let’s assume with kind of the new go to market and cross-sell opportunities this should help ARPA growth, but just wondering if you could size it for us. Thanks.
Brent Bellm : Yeah, I think that, I mean, we’ve been kind of in the mid-single-digits from an ARPA growth perspective for the last several quarters. The way that we’re building out our financial plans assumes that stays relatively similar throughout the rest of the year. But I do think that there’s upside to that as our systems changes take hold next year and as we’re making a lot of internal changes in the meantime. Obviously, we’re really, really architecting ourselves around account success and growth, which will give us better results in cross-sell which we added Makeswift which gives us the ability to cross-sell that as a part of The Catalyst initiative. So, there’s definitely ways that we can see tailwinds to ARPA growth. I just think it’s going to take some time for that to really take hold and start to play itself through the numbers. But I see that as an upside item for us as we’re exiting the year and going into 2025.
Maddie Schrage : Great. And just a follow-up. I’m wondering if you guys could talk about where you’re seeing the most operational leverage and then, from go-to-market perspective, is there any more senior hiring that you need to do to have a more complete orders or is it everything complete now? Thanks.
Daniel Lentz: Yeah, I would say, on the leverage side, it’s pretty broad based when we’ve gone through restructurings over the course of the last couple of years, that was those were changes felt by all organizations within the company and where we’ve seen leverage is not just in headcount changes, it’s also in whether we’re using a mixture of high and low cost geographies, mixture of contractors and internal employees. We’ve made a lot of changes and improvements that have reduced bad debt expense, our collections and DSO has gotten way better. And so we’re seeing leverage in a lot of areas. We’re also continuing to look at what we can do on the sales and marketing side of things, not necessarily because, we’re aiming to have big decreases in spending.
We want to see better growth out of the dollars that we’re putting in. And we have really great leadership on that side that’s really, really laser focused on that. It’s an area where transparently I think we can do a lot better. And I think it’s something that we recognize is not best-in-class and it’s something that we’re focused on. And we think we can get better top line leverage out of what we’re putting in on the sales and marketing side and we’re excited about that. From a leadership perspective, there may be a couple of roles here and there. And Travis will have a lot a lot to say on that when he joins. But we’re really happy with the team that we have and we think we’re positioned well for success.
Maddie Schrage : Perfect. Thanks, Daniel.
Operator: Thank you. And our next question today comes from Josh Baer of Morgan Stanley. Please go ahead.
Josh Baer: Just a question. I wanted to double click on the account – the Enterprise accounts sequentially. Just wondering if you could talk a little bit about the gross customer adds versus logo churn as one of it too having more of an impact.
Daniel Lentz: On the quarter, it was more about new logo adds and it was about where we were from a gross churn perspective. And we saw improvements on dollarized gross retention and net retention, which is good. The amount that we saw in terms of exiting the platform is pretty consistent with where we’ve seen in the past. We just we want to see a little bit better results and where we are from the new customer add point of view. But in the long run, again, we’re really trying to get to a better balance between new customer adds and expansion of existing customers. And so, when I think about counts, obviously that’s a great healthy leading indicator for the business. But it’s also the most expensive way of growing the top line, as well.
And so we want to see both doing well. And so, we’re not going to overreact or anything and have some sort of a reflection of correction when we look at the count, we’re steady as she goes and what we’re doing. We’re looking at a good balance between expansion in new customer adds. And as we do that and get better with that especially with bringing in new leadership I think it’s going to turnaround the count as well.
Josh Baer: Okay. Great. That makes sense. That’s helpful. And then, just wanted to ask about the competitive landscape. Any changes that you’re seeing out there? Anything having an impact on the business? Thank you.
Brent Bellm : I think it was quite beneficial to us that our largest competitor raised their plus pricing by as much as 60% last quarter that came as a surprise. It really improves our already strong total cost of ownership position relative to them and really they’re the only competitor that at a store we’ve been in our same advantageous TCO position. So we love that that they increase pricing and we have not and we think our offering super competitive. As a result of that, we’re seeing incoming interest both from their customers and from customers considering both of us that’s helped our win rates against them when we’re head-to-head. So that’s one of the biggest competitive dynamic. The other thing I would really highlight on our site was our next big thing announcement from our guests about three weeks ago where it’s a semi-annual announcement or first time ever of more than a hundred new features that were released across the platform are being released in the first half of this year.
We really think it’s industry-leading innovation in B2C, in B2B, in composable in those target segments where we want to be the best in the world. We don’t see anybody who is introducing as meaningful innovations as we have and I’ve lead that with Catalyst and Makeswift and what we’re doing in B2B. So we think that we’re enhancing our competitive advantage on the product side of things, we’re enhancing our competitive advantage on go-to-market with the experience we’re bringing in to the organization and our competitor – key competitor has gotten more expensive relative to us. So across the board, that bodes well to our ability to compete in the quarters ahead.
Josh Baer: Got it. Thank you.
Operator: Thank you. And our next question comes from Mark Murphy at JP Morgan. Please go ahead.
Santa Clara: Great. Thank you for taking the question. This is Santa Clara on for Mark Murphy. Brent, on the macro environment, you mentioned that consumer spending remains resilient, which is encouraging here. I’m curious if you can drill down on the macro backdrop a little bit more for us. Were there any particular segments or geos that were pockets of strength or weakness relative to others in Q1?
Brent Bellm : Yeah, and when we say resilient, again put this in the context of where ecommerce was pre-pandemic. It was growing in the double-digits, very consistently year-after-year 12% to 15%. And for the last couple of years, I think we’re now in the third straight year, where it’s been growing in the mid to high-single-digits, which is consistent to solid. It’s not where it has it used to be. And our own same-store sales of our merchants, same-store sales meaning, ones that have been with us for more than a year and you’re comparing where they were a year ago to now. It’s growing for us slightly ahead of where it is in ecommerce and as well it’s doing well first quarter this year relative to last year and the year before.
So that’s the resilience that we are seeing. It’s not something that would merit anything stronger word than resilient, meaning it’s on an upswing macro or within our business. But it’s fairly consistent resilient and slight improvements to where we had been. In terms of geographies, America is just an amazing economy, right? It just the consumer keeps spending no matter what happens to interest rates and inflation. Consumer always is strong in America. And so we continue to see good strength in our American base businesses. Europe frankly is a little softer for us on the macro than where it had been in the last couple of years, but we think we can explain that and it’s because the strength that Europe relies on our multi-storefront and multi geography products, that multi-geography product is now being released in its full functionality tells us this year meaning the ability to have different store fronts, serving different countries in Europe each with their own localized content, language, currency, payment methods, tax calculations.
