Brian Peterson: Thanks Brent.
Operator: The next question comes from Mark Murphy of JP Morgan. Please go ahead.
Mark Murphy: Hi, thank you very much. Brent, I’m interested in how widespread is the trend of accepting lower pricing in downgrades that came up a moment ago. If you could just help us to quantify the number of customers engaging in that, and what is the percentage change you’re seeing in the pricing you’re getting post downgrades?
Daniel Lentz: Mark, this is Daniel. I’ll take that one. We haven’t shared the exact number of customers that are impacted by that – those are specific to those merchants and those contracts. What I would say, we saw the sharpest impact of this in Q2, we’ve seen a moderating impact of this in Q3. Where we’ve seen adjustment, it varies – it could be anywhere from the maybe 10% to 20% difference in price. It’s not that we’re having situations necessarily where the volumes were dramatically off, it’s just the trend line has been a little different than where in some cases customers expected them to be when those agreements were signed during the pandemic. But what we’re seeing is really good success in retaining those customers and landing in a place where we actually have stronger agreements with those customers when we come out of that.
We’ve worked with the customers to help them save money, which is important to them. They’ve worked with us in getting to a place where we have better prepayment terms, and we’re always going to make sure that our pricing is set based upon volumes, so if you’re committed to lower volumes, you’re not going to get quite as advantageous a discount. But these are normal back-and-forths that are–we’re always going to have these types of discussions with customers. When we sign customers, this is a multi-year commitment that we’re making to the success of their business. When I look at the trend line on that, it has been a meaningful impact on the year, but it’s one of two or three ways that we’re seeing the macro play out in the business, but we’re seeing improvements in that and kind of a lessening impact There’s only so much of this that you need to kind of get through your base when you’re making these adjustments, so we factored that into our outlook for next year.
But this isn’t something that is–you know, it’s one factor we’re looking at when we think about planning next year, but it’s not something that’s necessarily keeping me up at night at the greater expense of anything else that we’re thinking through.
Mark Murphy: Okay, yes. That makes sense. Then as a follow-up, I’m wondering if you could just look a little deeper on how you’re reading the health of the consumer in this lead-up to Black Friday and Cyber Monday, because–you know, are you expecting it’s going to be a little tougher season than last year and then pre-pandemic in the context of–you know, we have the student debt loan moratorium ending, there was the autoworkers strike, you’ve got the credit card delinquencies increasing, there’s some bankruptcies that are rising. I think you sounded a little more–maybe a little more calm on that topic than I might have thought, so how are you–what are you factoring into the forecast here for Q4 along those lines?
Brent Bellm: This is Brent, and as a humble economics major 30 years ago, I would say in my 30-plus years of following the American consumer, I would say that there is nothing on planet Earth more consistently powerful than the American consumers’ desire to maintain their living standards and continue spending through economic ups and downs. In every recession we have had, the American consumer has kept spending and kept being the engine of health, not just to our economy but the global economy. That’s happening right now in a high interest rate, high inflation environment, so the American consumer generally stays strong and keeps spending. Now, the big question for us is how much of that spend if offline versus online, and what we have seen since the reopening of the economy is that there is significantly above-trend line growth in point of sale and offline spending, and below trend line spend in ecommerce.
We’ve been single digit, call it 6%, 7% year-on-year U.S. B2C ecommerce growth now for the last, maybe it’s two years running, and the trend line before the pandemic was in the 12% to 15% growth range every year, so ecommerce has not been the beneficiary of consumer strength, store-based retail has been for the last year and a half plus. What are we assuming? No real break in trend line for Q4, and we’re being similarly conservative going into next year. We hope that there can be surprise to the upside on that, but we’re not banking on that. We’re staying conservative.
Mark Murphy: Understood, thank you very much.
Operator: Our next question comes from Ken Wong of Oppenheimer. Please go ahead.
Ken Wong: Fantastic, thanks for taking my question. With this pivot to trying to drive growth in existing customers, I’m wondering if you could maybe give us color in terms of what percentage of customer expansions historically has been driven by moving up utilization bands versus penetrating across more brands and regions with those existing customers, and then any rough sense of what your penetration of your customers’ total GNV might be at this stage?
Daniel Lentz: Hey Ken, I would say the majority, substantial majority of expansion historically for us has been based on organic growth in those customers and the amount of orders that are coming through the platform, number one. Number two is through adoption of more partner products with favorable economics towards BigCommerce. Where we have not had as much expansion in the past, which is atypical, I would say for B2B SaaS, is through product adjacencies or owned and licensed products. The issue that Brent was talking about in terms of the ability to cross-sell Feedonomics, or now Makeswift or these things, it’s been much more you lay in the customer, that customer organically grows. We’ve had some success in expanding regionally with those existing customers, but we have a lot – a lot – of upside available to us in taking our core product to additional brands or additional businesses under the parent companies of the stores that we have, selling other products.
