BigCommerce IPO: Ecommerce Platform Files to Go Public
Investors knew a BigCommerce IPO would come. After rumors of a confidential filing, the company publicly announced its plans to go public. Now the question is when investors can expect BigCommerce stock to hit the market.
But is BigCommerce a good investment? Here’s what we know…
BigCommerce IPO: The Business
BigCommerce is a technology company founded in 2009. It provides software as a service (SaaS). The platform allows the company’s customers to create and use online stores. BigCommerce focuses on ease of use, enterprise functionality and flexibility. At the company’s founding, it targeted small businesses. But as of June 1, 2020, BigCommerce serves close to 60,000 stores in 120 countries. It was ranked the world’s second most-used SaaS platform. It’s in the top five of a million global sites.
We provide a comprehensive platform for launching and scaling an ecommerce operation, including store design, catalog management, hosting, checkout, order management, reporting and pre-integration into third-party services like payments, shipping and accounting. All our stores run on a single code base and share a global, multi-tenant architecture purpose-built for security, high performance and innovation.
Over the years, many stores have focused on having a greater online presence. With services like Amazon around, it’s important for businesses to be able to compete with the ease and comfort of e-commerce. And since the coronavirus quarantines, online retail has become more popular than ever.
That’s why the timing of the BigCommerce IPO is almost perfect. The industry’s growth and future could make BigCommerce stock a good investment opportunity.
The Industry: E-commerce Platforms
Analysts estimate that U.S. consumers will spend almost $710 billion on e-commerce in 2020, an increase of 18% from 2019. Brick-and-mortar spending is expected to decline 14% as a result of the coronavirus. In 2017, eMarketer predicted that e-commerce would make up 21% of global retail spending in 2023. But it’s likely that the coronavirus shutdown has accelerated this growth. In 2020, global e-commerce is expected to reach $3.9 trillion, 17% of total retail spending. It’s expected to be worth $6.9 trillion in 2024.
BigCommerce notes the effect of coronavirus on its sector and sales. From March to May, the company saw an increase in Essentials plans. These are designed for small businesses and consist of Standard, Plus and Pro. BigCommerce saw year-over-year growth of 33%, 106% and 86% in March, April and May, respectively.
2020: Year of Small Businesses
According to The Washington Post, about 70% of small businesses applied for a PPP loan under the CARES Act. Many of these small businesses suffered as a result of quarantines and struggled to build and maintain online stores. For most, this is the only way to stay in business until the economy fully reopens.
And BigCommerce is well-positioned to help. The company stated:
BigCommerce empowers businesses to turn digital transformation into competitive advantage. We provide a comprehensive platform for launching and scaling an ecommerce operation, including store design, catalog management, hosting, checkout, order management, reporting and pre-integration into third-party services like payments, shipping and accounting. All our stores run on a single code base and share a global, multi-tenant architecture purpose-built for security, high performance and innovation. Our platform serves stores in a wide variety of sizes, product categories and purchase types, including business-to-consumer (B2C) and business-to-business (B2B).
In the past, B2B e-commerce wasn’t as popular or as easy as B2C. But that’s no longer the case. B2B sellers are looking for digitalization for both efficiency and sales effectiveness. In a Digital Commerce 360 survey of 200 B2B companies, 50% had an e-commerce site. Of the 50% that didn’t, 75% had plans to have one within the next year or two. Currently, B2B sales make up 33% of total global spending on e-commerce platforms. But Forrester estimates it will be 17% by 2023.
So, BigCommerce is in a growing and trending industry. It’s not a surprise the company is launching BigCommerce stock after a successful wave of offerings. But if you’re interested in investing in the BigCommerce IPO, you want to look at the financial data.
BigCommerce Stock: The Finances
Financial data is a big factor when deciding whether to invest. If a company doesn’t have a good financial future, neither do its investors. Fortunately for BigCommerce, the company has seen growth in sales.
In 2018, BigCommerce recorded $91.9 million in revenue. That number went up to $112.1 million in 2019, a year-over-year growth of 22%. And although there aren’t numbers for the 2020 fiscal year, the company did present data for the three months ended March 31, 2020. In 2019, first quarter revenue was $25.6 million. For 2020, revenue increased nearly 30%, to $33.2 million. If BigCommerce can manage its growth, this trend will hopefully continue.
On the other hand, BigCommerce doesn’t have a strong record in improving net loss. In 2018, the company’s reported net loss totaled $38.9 million. And in addition to its increase in revenue, BigCommerce’s expenses increased as well. Total operating expenses increased from $107.9 million in 2018 to $126.1 million in 2019. This led to an increase in net loss for 2019, to $41 million.
But the company saw a decrease in net loss for the three months ended March 31, 2020. In the first quarter of 2019, BigCommerce recorded $10.5 million in net loss. For 2020, net loss was $4 million.
For more information on BigCommerce’s financial data, you can read the company’s prospectus on the SEC site here.
Proceeds from selling BigCommerce stock combined with the increase of sales during the COVID-19 pandemic could help the company see net profit. BigCommerce plans to use the proceeds to pay its Series F Dividend in cash. The company stated:
We intend to use the remainder of the net proceeds from this offering for working capital and general corporate purposes, including sales and marketing, research and development, general and administrative matters, and capital expenditures. We may also use a portion of the net proceeds from this offering to acquire, license or invest in products, technologies or businesses that are complementary to our business.
So, that leads us to the question, “When will BigCommerce IPO?“
BigCommerce IPO: The Details
Renaissance Capital claims that the company confidentially filed on January 9, 2020. But it wasn’t until July 13, 2020 that BigCommerce publicly announced its filing. The company has yet to set terms or a price for its IPO. However, it currently has a $100 million placeholder for total offering sales.
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BigCommerce stock will trade on the Nasdaq under the ticker symbol BIGC. It’s unknown when the company will go public. But investors think the BigCommerce IPO will come before the end of the third quarter 2020.