Daniel Lentz: Yes, I’d say overall it’s been steady. It hasn’t been–I think what we’re seeing is for the most part pretty in line with what ecommerce prints that I’ve read in general have been putting out. I’d like to see it a little bit stronger, obviously, compared to where we wanted it to be going into the year, but I don’t think that the trend is getting any worse. I think it’s been pretty consistent with where it’s been throughout the year. We’re cautiously optimistic going into the holiday period, but honestly, until we get through Cyber Week, you really can’t read too much into what’s going on in October. You really need to get to the end of November.
Maddie Schrage: Super helpful, and then my second question for you guys is could you talk a bit about some of the characteristics of the businesses that you’re seeing, that are slowing their implementation or dropping off completely? I know you guys have mentioned that some of it’s some of the smaller businesses, but wondering if also some of the larger enterprise businesses are in that mix. Thanks.
Brent Bellm: For downgrades, the most common scenario is a customer who came on with us in the go-go years of 2020 and 2021, where the pandemic had the economy shut down and there was a temporary over-indexation to ecommerce, for all the reasons we understand. They negotiated contracts with expectations of certain volumes, and of course the higher the contract you negotiate, the lower the cost per transaction per order, and now as we’ve gotten a couple years since then, for those companies who happened to negotiate something that was significantly out of line with the realized volumes, the thing that all companies are doing in and out of ecommerce is going back and looking at their software and renegotiating. BigCommerce wants to always do right by our customers, and when they come to us in those circumstances, we’ll work with them in the spirit of partnership and typically renegotiate in a way that is also favorable to us.
They might get the average monthly cost down, but we’ll get advanced prepayment as we improve our free cash flow and the efficiency of collections, maybe it’s with an increase in revenue per order on our side, but that’s the most typical scenario for a downgrade. The most typical scenario for churn are companies who also in that period contracted to launch a site, and now in their own profit and loss management realize, hm, maybe I’m better off not launching that site and going through the cost not just of the implementation, but then the whole operation, organization to scale up an ecommerce enterprise, they just decide it no longer fits within their P&L for this year, or some companies who’ve launched a site years ago are looking at the profitability of that operation and saying, the profitability isn’t there and I’d rather not own it.
Very, very rarely do we see churn from a live site to a competitor – that is still a very rare exception, and it’s our hope that the downgrades and the churn that we’re seeing are in some ways a temporary reflection of the state of the economy, and the backlog of some of these contracts that were signed a couple of years ago, when companies just over-forecast their own volumes, and if those cycle through and return down to more normal trend lines for downgrades and churn, then that would do wonderful things for our ARR growth rate, so we’re hoping that happens but not factoring that into our forecast in the near term.
Maddie Schrage: Very helpful, thanks guys.
Operator: The next question comes from Josh Baer from Morgan Stanley. Please go ahead.
Josh Baer: Thanks for the question. It sounds like efficiency is one of the main factors that’s driving that change in focus a little bit toward existing account expansion. Just wondering if that’s a permanent shift, even if the macro environment got easier and you eventually saw sales cycles improve and growth accelerate, or is it more of a temporary reaction to the current environment and around efficiency?
Brent Bellm: I think efficiency is one aspect. Effectiveness is the bigger one. Steven really had at Demandware the most effective go-to-market of arguably any enterprise ecommerce platform in history. They were really, really at anchoring on customer success first as the foundation at Demandware and then building land-and-expand off of that. It aligns the company processes and interests with those of the merchant. There’s no gap in that focus on customer success between sales and go-live, and that’s a real partnership between us and the customer. I believe that these changes are absolutely permanent and will be quite effective, because they’re proven in ecommerce and they’re proven across enterprise B2B software companies.
We’re not doing anything that is earth shatteringly new, this is just an evolution, and the final stage of evolution of a company that originally began as an SMB-focused company and shifted to mid market and enterprise, and this is the final step of bringing true enterprise excellence in go-to-market to our organization, so it’s permanent, I think.
Josh Baer: Got it, that’s helpful. Then is there an amount of time that’s needed for Steven and the teams and the up-sell motion to be in a place that’s kind of ready to deliver? Is there still an investment and training path ahead?
Daniel Lentz: Yes, we expect it’s going to take a couple of quarters to kind of make some of these adjustments. These things don’t necessarily happen and change overnight. We’ve factored that in when we’ve kind of given a first look on how we’re thinking about 2024. We’ll be able to talk a lot more in detail about this in February, but yes, it’s going to require some new training but we have a really good team here that’s long tenured, that we are really excited about, that I think is really going to be able to really thrive in this. We think that that is going to play itself out in our numbers in acceleration and good things for next year. We’ll need some time, but it’s normal over time.
Operator: The next question comes from Brian Peterson of Raymond James. Please go ahead.
Brian Peterson: Hi, thanks for taking the question. I’ll keep it to one. It sounds like the Feedonomics deals this quarter were–or the bookings were pretty strong. I’d love to get an update on that cross-sell opportunity or maybe how penetrated Feedonomics is into the base, and how do you think about that cadence of potential cross-sell going forward? Thanks guys.
Brent Bellm: The opportunity is huge, and we’re still relatively early days. One of the things I like a lot about Steven’s mindset coming in is he is absolutely chomping at the bit to go from solid but still modest penetration to very high penetration. When he was at Demandware, it was a one-product company. All they had to sell was Demandware, and when he came in, he’s like, I’ve got at least three massive products to sell: a BigCommerce subscription, a Feedonomics subscription which helps companies grow their top line through all major ad and marketplace channels, and then partner solutions, especially payments and shipping. Makeswift now makes a fourth as we’ve added that, so that’s going to be a big focus in his revised go-to-market model in really encouraging us and every one of our material mid market and enterprise customers to explore the advertising channels and/or the marketplace channels that are most important to each merchant, doing consultations on what Feedonomics might be able to do to lift their top line traffic and sales generation through those channels, and helping those merchants to figure out how to optimally adopt Feedonomics, so big potential upside still there.
