Earnings call transcript: Commerce Q2 2025 sees stock surge on steady earnings

Commerce, formerly known as BigCommerce, reported its Q2 2025 earnings with revenue slightly surpassing expectations at $84.4 million compared to the forecasted $83.3 million. The company met its earnings per share (EPS) forecast precisely at $0.04. Following the announcement, the stock saw a notable pre-market increase of 8.37%, reflecting investor optimism. According to InvestingPro analysis, the company currently appears undervalued, with analysts maintaining an average price target suggesting 46% upside potential.

Key Takeaways

• Revenue for Q2 2025 exceeded expectations by $1.1 million.
• EPS met forecasts exactly, with no surprise deviation.
• Stock price surged 8.37% in pre-market trading.
• The company rebranded to Commerce and launched new AI-driven features.
• Full-year 2025 revenue guidance is set between $339.6 million and $346.6 million.

Company Performance

Commerce demonstrated a solid performance in Q2 2025, with revenue growing 3% year-over-year to $84.4 million. The company has rebranded and is focusing on AI-driven data optimization, a move that aligns with the ongoing transformation in the e-commerce sector. The firm’s ability to slightly surpass revenue expectations, coupled with its strategic innovations, has positioned it well against competitors in the B2B market.

Financial Highlights

• Revenue: $84.4 million, up 3% year-over-year.
• EPS: $0.04, matching forecasts.
• Non-GAAP Operating Income: $4.8 million, representing a 6% margin.
• Operating Cash Flow: $13.6 million, an increase of nearly $2 million from the previous year.
• Cash and Equivalents: $136 million.

Earnings vs. Forecast

Commerce’s Q2 2025 earnings results were in line with expectations, with EPS meeting the forecast at $0.04 and revenue slightly exceeding projections by $1.1 million. This performance marks a steady continuation of the company’s growth trajectory, reflecting consistent financial management.

Market Reaction

Following the earnings announcement, Commerce’s stock experienced a significant pre-market rise of 8.37%, reaching $5.18. This increase indicates positive investor sentiment, likely driven by the company’s revenue beat and strategic initiatives in AI and data optimization. The stock is trading closer to its 52-week low of $4.73 but remains below the high of $8.27. InvestingPro data shows the company maintains strong liquidity with assets exceeding short-term obligations, though it’s worth noting the stock has declined about 41% over the past year. For comprehensive valuation analysis and detailed financial metrics, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

Commerce provided a revenue guidance range of $85 million to $87 million for Q3 2025 and a full-year forecast between $339.6 million and $346.6 million. The company is focusing on expanding its AI-driven commerce capabilities and expects continued momentum in its B2B operations.

Executive Commentary

CEO Travis S. highlighted the transformative impact of AI on e-commerce, stating, "E-commerce as we know it today is about to undergo radical change." CFO Daniel Ents emphasized the importance of data in the new AI-powered shopping landscape, noting, "In AI powered shopping, data is the new storefront."

Risks and Challenges

• Potential market saturation in the e-commerce sector.
• Dependence on AI adoption and integration for competitive advantage.
• Macroeconomic pressures that could impact consumer spending.
• Technological disruptions and the fast-paced evolution of AI.
• Maintaining differentiation in a competitive B2B market.

Q&A

During the earnings call, analysts inquired about the impact of tariffs, to which the company reported no significant effects. Questions also focused on the urgent market demand for AI discoverability solutions and the company’s efforts to help merchants optimize for answer engines, highlighting the potential for significant revenue growth through data optimization.

Full transcript - Bigcommerce Holdings Inc (BIGC) Q2 2025:

Conference Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Commerce Second Quarter twenty twenty five 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, Vice President, Finance and Investor Relations.

You may begin.

Tyler Duncan, Vice President, Finance and Investor Relations, Commerce: Good morning, and welcome to Commerce’s, formerly BigCommerce’s, Second Quarter twenty twenty five Earnings Call. We will be discussing the results announced in our press release issued before today’s market open. With me are Commerce’s Chief Executive Officer, Travis S. And Chief Financial Officer, Daniel Ents. Today’s call will contain certain forward looking statements, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward looking statements include statements concerning financial and business trends as well as our expected future business and financial performance, financial condition and our guidance for both the 2025 and the full year 2025. 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 Travis.

Travis S., Chief Executive Officer, Commerce: Thanks, Tyler, and good morning, everyone. I’ll open my remarks today by providing a quick update on our second quarter results, and then I’ll transition into some details behind the company branding and name change we announced this morning. Given the announced changes, we’re going to have a number of partners and industry analysts on our call today as well. So there’ll be some unavoidable technical jargon we will cover related to changes in our industry. First, let’s start with a quick overview on the quarter.

Q2 represented solid progress for the business in a number of areas. We delivered non GAAP operating income of nearly 4,800,000 a three thirty five basis point margin improvement year over year. Annual revenue run rate or ARR reached nearly $355,000,000 a year over year improvement of 3%. Revenue reached $84,400,000 in the quarter growing 3% year over year and operating cash flow came in at approximately $13,600,000 an improvement of nearly $2,000,000 year over year. Both revenue and non GAAP operating income exceeded the high side of our guidance range.

While these results are encouraging in a number of areas, the business is capable of much more. I will spend the majority of my remarks today discussing where we’re taking the business and why the changes we announced today will help us get there. E commerce as we know it today is about to undergo radical change. The advent and rise of answer engines and generative AI is driving an unprecedented evolution in consumer behavior, shifting search and browse to conversational queries that surface contextual shopping intent, answer engines like Perplexity, ChatGPT, Gemini and Copilot are profoundly reshaping how we search, get things done and how we shop. This significant shift is redefining how consumers discover and engage with businesses of all kinds, but most especially the brands, retailers and B2B companies out there competing for traffic, customers and conversions every day.

Merchants of all sizes and across all industries must rethink how they show up in the era of AI driven agentic commerce. To remain competitive in this new paradigm, merchants must leverage partners who can help them harness their data for enhanced visibility, relevance and performance across AI driven channels. We are uniquely suited to serve the market through this transformation. Q2 was a defining period. The strategy, product and go to market engine we have built over the past year came together behind a singular focus powering an AI driven commerce ecosystem at scale.

Our transformation phase is over. We’ve moved fully into execution and growth and we are proud to reintroduce our company as Commerce. This rebrand as Commerce marks the culmination of a year spent rebuilding the company for where the commerce industry is going for the agentic future. Digital commerce is no longer organized around a single search box or a closed ecosystem. Shopping will be orchestrated by answer engines and other evolving AI driven experiences that favor an open composable approach to support these new buyer behaviors.

In this new world, it is structured data such as title, description, size and color and unstructured data such as size guides, brand guidelines, spec sheets, video content, reviews, customer service transcripts and articles synthesized, optimized and orchestrated across owned and third party channels that will help businesses adapt and succeed in this dynamic landscape. We have spent the last year deliberately rebuilding the company around this future. Our new brand also reflects our broader market position, a flexible, open, partner led ecosystem with infrastructure that powers everything from full stack commerce to data optimization and syndication, working alongside platforms with whom we sometimes compete to enable those customers to meet challenges we are uniquely positioned to solve. Our ability to operate across the stack and ecosystem, sometimes as the platform, other times agnostically as the data orchestration or experience layer is what makes our position in markets so unique and valuable. We help shape how commerce happens, wherever it takes place and most importantly however it best serves merchants and shoppers.

I want to be clear about the intention behind this change. Commerce is more than a parent company rebrand. It’s a deliberate signal that we intend to shape the future of commerce. It reflects our current identity and anticipates the market’s direction driven by a wave of AI powered agentic transformation. We recently announced a series of high impact partnerships that reflect our market leading position in this area, which will help B2B and B2C businesses thrive in the era of AI powered shopping for agentic commerce.

We’ve launched our partnership with Perplexity, a leading AI answer engine to deliver optimized product data directly impacting its AI driven contextual responses. This in turn improves discoverability and visibility for major brands because their data is providing the foundation for trusted answers. Our expanded relationship with Google Cloud is helping merchants stand out across sales channels with AI enriched product data. This delivers richer and more seamless experiences for customers and greater discoverability for merchants. This includes innovations leveraging Google Cloud with Gemini within Commerce’s data enrichment offerings.

Today we also announced a new partnership with PROS, a market leader in AI driven pricing optimization and configure price quoting. We will enable merchants to dynamically optimize pricing, automate complex quotes and deliver real time pricing offers to customers. This partnership will enable us to support more complex use cases, particularly in B2B and expand our addressable market. Many of the world’s top brands have selected Commerce to deliver these capabilities today. Adventure brand Revelist, the parent company of Bell, Bushnell, Carnoldback and Giro, global consumer brand Urban, the parent company of Urban Outfitters, Anthropologie and many others, and Tapestry, the parent company of fashion brands such as Coach and Kate Spade New York and Dell Technologies are already leveraging Commerce’s data integrations to improve visibility, protect brand consistency and boost performance across AI driven search experiences.

These are all exciting customer wins, partnerships and product developments. Operationally, we remain focused on the execution of our go to market transformation plan. We see clear traction from the changes we began in late twenty twenty four. Our pipeline conversion rates are improving as our sales teams are now selling bundled products aligned to specific use cases and verticals across the product portfolio. This is a go to market engine that looks very different from a year ago and it is now structurally aligned to the market for which we have been building.

We need to improve the efficiency of our sales and marketing spending and the changes we have made are focused on that outcome. Let me finish with a few other quick highlights from Q2. We were proud to be awarded 24 out of 24 medals in the twenty twenty five Paradigm B2B Combine for the third year in a row and we also advanced our rankings in five key categories and earned more gold medals in the mid market edition than any other platform. This quarter, we welcome top B2B brands such as Global Experience Specialists, Spear Education and Aero Fastener. In B2C, we saw great wins with LifeWave and Bellamy.

I’m encouraged by the progress that I see and I’m confident we can build on our momentum. Q2 was a pivotal quarter for us, not just in terms of execution, but in how we define and present who we are to the world. Commerce is the culmination of the work we have done to transform our products, go to market, leadership and architecture. It reflects our belief that the future of commerce is intelligent, composable and AI driven, and we are now uniquely positioned to lead that future. After a year of bold foundational change, we are now execution mode.

With that, I’ll turn it over to Daniel to walk through our financials and outlook. Daniel?

Daniel Ents, Chief Financial Officer, Commerce: Thanks, Travis. Our Q2 results demonstrate continued momentum across our key business performance metrics. Commerce currently serves over 5,800 enterprise accounts and tens of thousands of small businesses. ARR reached nearly $355,000,000 at quarter end, a 3% increase year over year, while average revenue per enterprise account rose to 46,403, a 9% increase year over year. We delivered $84,400,000 in revenue in the quarter, up over 3% year over year and non GAAP operating income of 4,800,000.0 Profitability metrics strengthened significantly.

Non GAAP gross margin strengthened to 80%, up two eighty basis points year over year, while non GAAP operating income margin finished Q2 at 6%, improving three thirty five basis points from Q2 twenty twenty four and ten thirteen basis points from Q2 twenty twenty three. We closed Q2 twenty twenty five with a solid balance sheet, including $136,000,000 in cash, cash equivalents and marketable securities. Our operating efficiency gains also continue to improve with quarterly operating cash flow reaching approximately $14,000,000 up $2,000,000 from Q2 twenty twenty four. We have reduced our net debt position to 18,000,000 decrease year over year. Our debt maturity profile remains manageable with approximately $4,000,000 due in 2026 and $150,000,000 due in 2028.

For the three months ended 06/30/2025, we had approximately 80,000,000 common shares outstanding and 81,000,000 fully diluted shares outstanding. Let me provide a brief update on the progress of our other core growth initiatives from our Investor Day. We are on track to release an integrated self serve version of Feedonomics within the BigCommerce control panel by this holiday season. Our self serve version of MakeSwift within the BigCommerce platform and our branded payment solution are also on track to be released in the 2026. These releases will improve customers’ core commerce platform capabilities while also creating new revenue growth opportunities for the business.

Our partner bundling strategy is progressing well. This strategy enables additional revenue and profit opportunity through reselling core partner products, and it also creates an opportunity to increase distribution of our products through select partners without the burden of associated go to market costs on our side. We anticipate the inclusion of Noibu’s leading error monitoring platform in our go to market team’s sellable product portfolio later this year. Our partnership with PROS will enable them to offer a combined solution to the verticals in which they have deep expertise while also enabling commerce to offer PROS to our core customers as well. We’re also excited to partner with Accenture to create and scale joint commerce and Accenture solutions for customers, particularly focused on AI and AgenTik Commerce.

Before moving to guidance, I’d like to explain how the shift to AI driven commerce will help accelerate our revenue model.

Conference Operator: AI

Daniel Ents, Chief Financial Officer, Commerce: Commerce generates revenue in three ways. First, BigCommerce platform subscription revenue tied to merchant order volume. Second, Feedonomics subscription revenue based on product SKU volume going through our data feed optimization models. And third, partner and services revenue, including certain implementation services and technology partner revenue share. What’s important to understand is that all three of these revenue streams benefit from AI’s acceleration of change in the commerce industry.

For us at commerce, the growth of Answer Engines and AgenTix shopping is the equivalent of a new channel or a new buyer driving order growth and technology partner revenue share. It also makes data optimization more important to customers than before. AdvanSure engines and AI powered shopping require even more sophisticated product data than existing search engines. This, in turn, leads to more account opportunities and SKU volume growth to our data feed optimization models and the associated pricing and revenue growth. AgenTic Search is also a monetizable channel offering and represents a direct revenue opportunity in its own right.

As demand increases for product data conditions specifically for agentic surfaces, we intend to offer paid AI features as well. As AI reshapes how consumers discover and buy, we intend to meet that change head on with value for our merchants and monetization for commerce. In AI powered shopping, data is the new storefront. Our ability to structure and syndicate product catalog data into answer engines is increasingly mission critical for merchant success. As AI agents become the front door to product discovery, merchants who deliver clean, enriched product data will appear more frequently earlier in the buyer journey and with greater contextual relevance.

This drives higher quality traffic, better conversion rates, and increased GMV. And as that GMV scales, ultimately, so does our revenue. Now, let me close with guidance. For Q3, we expect revenue between $85,000,000 and $87,000,000 and non GAAP operating income between $2,300,000 and $3,300,000 For the full year 2025, we expect revenue between $339,600,000 and $346,600,000 and non GAAP operating income between $19,000,000 and $25,000,000 Travis and I will now take your questions. Operator?

Conference Operator: We will now begin the question and answer session. The The first question comes from Raimo Lenschow with Barclays. Please go ahead.

Raimo Lenschow, Analyst, Barclays: Hey, good morning. Great to see the progress here. Travis, can you talk a little bit about like what you’re seeing in the field? Obviously, when we talked ninety days ago after Q1, there was very, very uncertain, consumers were really uncertain and then commerce businesses kind of suffered from that one. How has the world evolved since and what are you seeing from your customers in terms of living in this new tariff world?

Thank you.

Travis S., Chief Executive Officer, Commerce: Hey, Raimo. Thanks for the question. Yes, we’re not seeing a lot of impact thus far from tariffs to be honest with you, at least nothing that’s obvious. I think Daniel can provide some color there as well. I think we’re continuing to see success obviously in demand, particularly in the B2B side.

I think we’ve been pretty transparent about that trend over the last year. And then obviously, with the AnswerEngine proliferation and angst with merchants in space knowing they need to do something, they’re seeing search traffic drop off and obviously want to optimize for that. There’s tremendous amount of demand and sense of urgency around particularly discoverability right now. And obviously a lot of discussion and conjecture around where this is going to evolve to as it relates to actual shopping. But right now, it’s primarily around discoverability and transformation to align to being discovered going forward.

Raimo Lenschow, Analyst, Barclays: Then Daniel, if you think about the rebranding, like how I mean, since we don’t have a lot of experience like but you were kind of dependent on kind of being found by new customers, etcetera. Like can you talk a lot about the puts and takes? Like obviously, you spent some money on it. There’s going to be like an in between period. Like do we need to think about disruption in terms of new customer ads, etcetera?

Like, how how, you know, how is that gonna play out for you? Thank you and congrats for me again.

Daniel Ents, Chief Financial Officer, Commerce: Yeah. No problem. That’s a great question. What I would say is it’s really important to understand that we are not rebranding the individual products themselves. This is a corporate parent brand change and really better represents where we already are playing in the market.

In a lot of ways, for example, a lot of customers are not familiar with the fact that we have Feedonomics as a core product which is specifically built to help merchants optimize for where things are going with AI no matter what platform you are on. And the fact that the corporate name was associated with one of the products and a platform product in particular, I think it led to some confusion and sometimes it can limit opportunities that we saw on the sales side. And so I don’t think that it’s really going to affect deal volume or pipeline build because again this is not impacting the branding of the individual products themselves. What I think it does is it gives us an opportunity to have a much more cohesive message and one that’s much more truly represents what the business is and what exactly it is that we do, in a way that I think broadens our TAM specifically with respect to Feedonomics and that’s really key, to why we did this.

Raimo Lenschow, Analyst, Barclays: Okay, makes sense. Perfect, thank you.

Conference Operator: The next question comes from Ken Wong with Oppenheimer. Please go ahead.

Tyler Duncan, Vice President, Finance and Investor Relations, Commerce: Hi, thanks for taking my question. Somewhat piggybacking off of Raimo’s question, Travis, this past year saw BigCommerce prioritize the reshaping of your exec team go to market alignment with this rebrand as commerce. Do you think the product portfolio is in a place for us on the outside to properly measure success or is that going to have to wait until 2026?

Travis S., Chief Executive Officer, Commerce: I think it’s a great question, Ken. I think you’re going to see leading indicators certainly as we build pipe and we announce new obviously efficacy with some of the existing clients that we have. Part of the challenge on the AgenTex stuff, A, you’re button up against holiday and obviously we’re dealing with a lot of large manufacturers and retailers coming in. So there’ll be some sensitivity there, but we’re also playing with the pace of these answer engines as well and where they are in their journey of how they’re optimizing, how they’re ingesting data and things like that. So all three are kind of coming together, where the brand itself is, where the answer engines are in particular and then how we’re helping them.

But I would expect to see material signs of optimism and signs of growth that would most notably turn into revenue, probably more so in the early part of next year materially versus second half of this year. But we’ll see other indicators that would be organic and natural that you’d probably see from the outside in as well.

Tyler Duncan, Vice President, Finance and Investor Relations, Commerce: Perfect. Super helpful. And then lots of mentions of new partnerships, and it sounds like that is potentially going to be a more important revenue path going forward? I mean, we anticipate that the pace of new software service partnerships are going to pick up relative to what we’ve seen from BigCommerce historically?

Travis S., Chief Executive Officer, Commerce: I think you’re going to see transformative type partnerships, right? I think the models are shifting. I think we were fairly I was fairly verbose about that in my opening remarks. I think it’s changing the entire dynamic of where folks are placing their bets and how organizations regardless of size or market need to adapt to do that and that by definition will require transformation. So the services side of this, I would expect to shift more broadly into helping these organizations transform and take advantage of that.

And for us, that partnership is a combination of obviously software and services and the services handling the transformation piece. We feel like we’ve got capabilities that would act as more of a catalyst to help spark that transformation and service and help brands get into a better spot to take advantage of obviously the sense of urgency around discoverability right now. And certainly shortly thereafter, this is going to get deeper and more agentic, where this is to turn into shopping. And then that’s going to launch monetization models that again, depending on the answer engine might be slightly nuanced and different that organizations and service providers are also going to need to adjust to. So this is kind of the tip of the spear of what we see as a massive paradigm shift in the space.

Tyler Duncan, Vice President, Finance and Investor Relations, Commerce: Got it. Thanks a lot, Travis.

Raimo Lenschow, Analyst, Barclays: You got it.

Conference Operator: The next question comes from Natalie Howe with Bank of America. Please go ahead.

Natalie Howe, Analyst, Bank of America: Thanks for taking my question. You talked a little bit about your B2B offering, so I wanted to dig in a little more on that, especially as a pillar of ARR reacceleration. So what has been the biggest improvement in the adoption of b to b, and how has it been integrating with the rest of the platform? And what’s the ideal customer for that, whether it’s new logos or customers already in the base?

Travis S., Chief Executive Officer, Commerce: Yes. We it’s a great question, Ali. We’ve seen a lot of momentum there for some obvious reasons and maybe some less obvious reasons. Just the pure capabilities of the platform and just the nature of what we define as B2B, which is more so traditional manufacturing and distribution which tends to have some complexity innately to that business, large complex catalogs, pricing schemas, contractual pricing, punch outs, a lot of back office technology challenges. Oftentimes these large organizations grow inorganically and buy their way to growth and with that inherit a bunch of a tangled mess on the back end.

So a lot of the capabilities in the core platform have lended itself to transformation in that capacity and I think drawn a lot of folks to us. Where we’ve seen the really biggest opportunity short term to expand that TAM is really through CPQ or configure price quote. As you get more complex in these products, obviously, you’re needing to configure them sometimes with tens of thousands of SKUs. And it’s why we partnered with pros. Obviously, they live and breathe in this space.

They dominate some very innately complicated industries and it was just a natural extension. They’ve got far more advanced capabilities than we could ever possibly build ourselves. And it’s just a great use case and example of where partnering and being open makes a lot more sense to accelerate value to our customer base and widen our TAM as opposed to waiting to go build it over time. The challenge is historically, we’ve got to make that easy. And so we’ve been very deliberate about who we’re partnering with, why we’re partnering with it.

We’ve to make that easy commercially, operationally and technically. That’s the spirit behind all of these things.

Natalie Howe, Analyst, Bank of America: Got it. Thank you. And then a quick question on the payment solution. I know it’s not until 2026. You guys want to provide more optionality for your customers, but what gives you the confidence that, you know, some customers will end up using your guys’ payment solution and what’s like the reasoning behind providing it yourselves?

Daniel Ents, Chief Financial Officer, Commerce: This is Daniel. I’ll take that one. I think it’s important to understand that we’re going to be offering an optional an optional solution that’s going to be really focused on small businesses and mid market customers. For a lot of customers within our base, they really are looking for simple solutions that have easy out of box integrations with competitive pricing. And by having a native payment solution that’s fully integrated into our platform, we can make that easy for those customers that don’t need the type of they don’t have multi region complexity.

They don’t need to have a different payment solution depending upon the region. But we’re also going to make sure that, again, we work with a lot of really large complex businesses that do not want to be shoehorned into one payment solution that may benefit us but not benefit them. And so we want to make sure that we’ve got the optionality for customers to pick and choose partners that make sense for them. They may need to work with partner A in Europe and partner B in South America. That’s completely fine for us.

But there’s also a big chunk of our base that would benefit from having a simple out of box solution that’s fully integrated. And we can capture some incremental spread on pricing that we’re offering and deliver that value back to our shareholders without taking on all of the associated complexities on underwriting risk and capital commitments and things like that.

Natalie Howe, Analyst, Bank of America: Great. Thanks so much for that.

Conference Operator: The next question comes from David Hynes with Canaccord. Please go ahead.

David Hynes, Analyst, Canaccord: Hey, good morning, guys. So Travis, look, as the commerce space continues to evolve towards AgenTic or Answer Engines, do you still think BigCommerce’s best opportunity is as platform? Or do you now see a better path to market as that data orchestration’s experience layer? And I guess if it’s the latter, like how does that change how you think about the economics of the business?

Travis S., Chief Executive Officer, Commerce: Yeah, it’s a great question. Listen, the reality of it is both. The platform is not going to go away for anyone. I mean, people are still going to go to branded sites and shop. I think there’s still a dopamine rush.

People talk about agents buying on behalf of people. Yes, there’s plenty of use cases where that will be very applicable, but people still get a dopamine rush from buying stuff. I don’t particularly enjoy it as much as some others, but a lot of people do. That being said, I think the key here and I said this when I took this gig, there’s a better together story here. There is a time and a place for the platform and I think having an open composable approach, which I felt was paramount to why I took this job was not by accident.

It’s again, I think the acceleration of where we are now and the adoption of AI and these answer engines has probably happened at a pace faster than probably all of us expected, but no doubt it was going to get complicated. So you’re going to need the data layer to ultimately drive a lot of this. The data is going to end up driving a lot more innovation as it relates to the platform as well and as a lot more as it relates to experiences on and off sort of owned channels. So, the mix might change over time. I think there’s an advantage to having more than just the data layer and being able to optimize that and there’s obviously more to than just having a platform and component capabilities.

Mixing and matching that will be very deliberate in orienting to specific industries. But to Daniel’s point earlier, I think clients want optionality and they want agility. They don’t want vendor lock in. They want to be with you because they want to be with you, not because they have to be with you. And I think our challenge is providing best in class capabilities that allow that to happen.

And if it’s just the data piece, so be it. It allows us to widen the TAM without forcing everyone to move to our platform, which again isn’t for everyone. I would be naive to think that it is and vice versa. So that’s the thesis behind it. What that mix is six months from now, a year from now, maybe it’s different and we’ll adjust accordingly, but hard to predict at this point because there’s still so many things in motion.

Even the commercialization of the AgenTeq stuff hasn’t been figured out or hammered out yet by the Answer Engines themselves. So this will continue to evolve as we move forward. Well, one point I would

Daniel Ents, Chief Financial Officer, Commerce: add to this, this is Daniel, and I talked about this in my prepared remarks at length because I think it’s really critical to make sure that our shareholders understand this as we’re making this change. The trends that we are seeing with respect to AI and commerce hit all elements of our revenue model in a positive way. We don’t need to continue, like I would anticipate in the future that the Feedonomics product would grow at a disproportionate rate relative to the platform product. That’s been true for a while. I would continue to expect that to be more so in the future.

What that does is it gives us a great opportunity to drive value for merchants no matter what platform they’re on. And that’s really, really key. As AI gain share and how it influences commerce that puts more SKUs going to our data transformation engines which drives more volume. For the customers where it makes sense to cross sell the platform, we will do that and then that ends up looking like a mix shift and it drives more volume which we capture revenue on order growth and associated revenue share through payments and a whole host of other areas. So from my perspective, from a revenue model, this may change the mix of maybe which product is growing faster than another, but this benefits everything we have within the portfolio.

David Hynes, Analyst, Canaccord: Yep. Yep. Okay. I think that makes sense. And then, Daniel, just based on how you’re modeling the business, like, do you think we might see a return to positive enterprise customer account?

Daniel Ents, Chief Financial Officer, Commerce: That’s a great question. I’d like to see that happening towards the back half of this year, but we don’t know for sure that’s going to happen. I mean, there’s a lot of things that I see in the business right now that I think are really, really positive. We beat the high side of the guidance range on revenue and profit. Revenue growth rate is stabilized.

We have line of sight to acceleration. I’m excited about that. Importantly, enterprise ARPA, our average revenue per account, it was up to 9%, which I think is like our seventh consecutive quarter of accelerating growth in ARPA. And we also had the strongest sequential growth in ARR and bookings that we’ve seen in over a year. I mean our deferred revenue was up 31% on the quarter.

So there’s a lot of signs I’m seeing that are really good. As I’ve said when this comes up on each of our calls over the last few quarters, I’m a CFO. I’m never going to be happy until count and dollar per account are growing together. We’re seeing new account growth that’s really good, really large accounts that we’re really excited about. We’re also just continuing to invest and need to make progress on gross retention with some of our smaller accounts which is why you’re seeing that in the, the unit count number.

So it’s not the core of our revenue model. I’m much more concerned about dollarized retention as I’ve said before than I am unit count but it’s obviously something that we’re focusing on as well.

David Hynes, Analyst, Canaccord: Yeah. Okay, great. Thank you, guys.

Conference Operator: You bet. The next question comes from Parker Lane with Stifel. Please go ahead.

Parker Lane, Analyst, Stifel: Hey, guys. Good morning, and thanks for taking the question. In the prepared remarks, specifically called out improving pipeline conversion rates. And just wondering if you look now that we’ve made those changes to the sales org in late twenty twenty four, how the pipeline build is developing? And how much of that is being driven by this proliferation of agentic commerce versus just blocking and tackling normal course of business?

Daniel Ents, Chief Financial Officer, Commerce: Parker, I would say the pipeline build has been healthy, not exactly where we would want it to be. We’re never satisfied with what we’re seeing but we’ve seen really good indications. The win rates improving are definitely encouraging and I think that’s because we’re doing a better job positioning the brand and positioning the products. And that’s without being able to be out in the market with the change in what we’re doing at the parent company level and all of the changes behind that which is part of why we kind of anticipated the front half of the year being a little bit of a challenge. And you know, it is very much as what we expected.

So we’re really encouraged by what we see. I think reps are doing a better job pitching as a bundle. I think they’re also doing a better job being able to kind of get in the door with accounts regardless of what platform they’re on with the Feedonomics product, and we think that the changes we’ve made here will bolster that.

Parker Lane, Analyst, Stifel: Understood. And then I know you give a model framework back at the Analyst Day in the spring, not explicitly guiding to ’26, but with some of the sales changes and build behind us now and the rebrand behind us, how should we think about the cadence of margin expansion over sort of the midterm? Is there an opportunity to drive a little bit more margin than would be implied in this year?

Daniel Ents, Chief Financial Officer, Commerce: There is. What I would say though is we are prioritizing growth acceleration. I think we said going into the year that we’re aiming for margin expansion in the low mid single digits. I think that’s certainly still possible, but Travis and I are also prioritizing investments in the product, not just in features related to AI. We want to be really clear about this.

This isn’t chasing shiny objects. Like, we’re really investing in our core products, core features and functionality while also building in advancements in AI offerings that we think are important. And so we want to continue to see healthy margins and expansion. I think you see that also even just in the cash flow results. Mean we had almost $14,000,000 in operating cash flow in the quarter which I think is outstanding.

But where we see opportunities to invest back in the product, we are going to definitely do that. We’re also investing a little bit more right now in sales and marketing expense which you’ll see in the numbers which makes sense given the rebrand. But that said, we also are kind of laser focused on where we are from an efficiency perspective because clearly that’s not where we want it to be from a growth relative to spend and that’s going something we’re going to be focusing on as we go into next year. I’ll have a lot more to say on this as we get into our next call once we get through kind of early rounds of planning for next year. It’s a little bit early at this point, Parker, for us.

Parker Lane, Analyst, Stifel: Understood. Thanks again.

Daniel Ents, Chief Financial Officer, Commerce: No problem.

Conference Operator: The next question comes from Maddie Strayge with KeyBanc Capital Markets. Please go ahead.

Maddie Strayge, Analyst, KeyBanc Capital Markets: Question. I just wanted to hit on b to b a little bit. Could you maybe talk about, maybe the amount of new net ads that are joining the platform that are joining for b to b functions and kind of where you see that going this next year? And then my second question for you is just on ARPA. Obviously, we’ve seen a good step up kind of sequentially, or I was gonna say year over year for a while now.

Can you talk to the upside that you’re seeing there, kind of what folks are taking more of or maybe any changes in pricing that are kind of leading to ARPA increasing continually? Thanks.

Travis S., Chief Executive Officer, Commerce: Well, Dan and I will hand and egg this one. Great question. As it relates to B2B, a disproportionate amount of net new bookings has been oriented to B2B, I think, for a myriad of reasons. I’ve talked about this on the last couple of calls. Beginning

Chris Kuntarac, Analyst, UBS: of

Travis S., Chief Executive Officer, Commerce: the year, we bifurcated that entire go to market team to B2B. Think historically, I’ve been critical of the org in treating B2B as like additional features and functions as opposed to a completely different consumption model, business model and ICP, which we’ve been very deliberate about since the beginning of the year. So not so much the added headcount there that’s led to the efficacy, I just think the focus on the depth and to Daniel’s point earlier, the investment we continue to make within that product. I think the PROS relationship is just an accelerated way to drive more value and widen our TAM because as you go up market in B2B in particular where it gets really hairy is around CPQ and obviously pros doing this in their sleep just naturally extends that. And then there’s also a fortuitous sort of distribution model there as well, where them being able to kind of push our product, us being able to push theirs.

So we feel like that’s a natural sort of organic way of doing this. And then obviously, we’ve just been heralded in the B2B paradigm again. So I get we get a lot of credibility there, a lot of juice. And I just I feel like there is a lot of urgency now for particularly manufacturers and distributors to digitize, a lot of pressure to leverage AI. We see a lot of applicability around AgenTic and AI possibly disrupting that market faster than maybe B2C just in less obvious ways that we’re obviously chomping at the bit to take advantage of.

So I think you’ll continue to see that momentum on B2B. I don’t see that changing anytime soon specific to platform. Just it tends to be a little less mature as it relates to B2C and we’re just seeing way more momentum. And I’ll turn it to Daniel for the second question.

Daniel Ents, Chief Financial Officer, Commerce: Yeah. To the question on growth in average revenue per account, this is one that honestly kind of makes me smile because we’re seeing these improvements in average pricing per customer when we haven’t even been able to get to market yet. A lot of initiatives that we have in the hopper that are specifically focused on improving that number further. So I’d say we’ve done a better job with pricing discipline with our sales teams. We’re winning larger and more complex customers which is good.

We’re doing a better job cross selling Feedonomics and the platform customer accounts as an example. But we’ve got a number of things coming that can provide a tailwind to this that are part of why we feel confident that we can reaccelerate growth, whether we can accelerate growth. We have a self serve version of Feedonomics called Feedonomics Surface that we’re planning to have come out by holiday which gives us a chance to increase monetization of existing customers, specifically providing them a way to optimize their data for ads and marketplaces and AI channels. And this is exactly where we need to be and we can do this with existing products. We’re not having to reinvent the wheel in many cases in order to do that.

We’re going to be adding additional offerings within Feedonomics to optimize for LLMs and those types of models. We’ve got a self serve version of MakeSwift with paid features that are coming plus a branded payment solution. And even on the partnership side, we’re close to being able to sell Noiboo as a part of our existing offering. We want to be able to get to the same place with Pros. We’re excited about partnership with Accenture and what that means from a distribution perspective.

Like, there’s a lot of really exciting things that are coming, that give us a lot of bullishness on where we’re going. You know, it doesn’t mean that all of it’s going to pan out in the next quarter. I mean, we still got a lot of work to do to finish getting this rolled out, but we think it provides some really good potential tailwinds to our average deal size that we can see with our, merchants both new and existing.

Maddie Strayge, Analyst, KeyBanc Capital Markets: Awesome. Thanks you guys.

Conference Operator: The next question comes from Brian Peterson with Raymond James. Please go ahead.

Tyler Duncan, Vice President, Finance and Investor Relations, Commerce0: Hey guys, congrats on the quarter. Just one for me. So Travis, if we think about the AI impact, I’m curious actually what you’re hearing from customers in terms of how big of an impact that’s actually making on decisions. And is that impacting sales cycles at all? And I also love to understand, what are you hearing from your competitors?

Because there’s a lot of legacy solutions out there and I’m curious if they’re innovating at the pace of big commerce right now. Thanks, guys.

Travis S., Chief Executive Officer, Commerce: Great question. I can’t speak to the level of innovation with our competitors. Certainly, I think as it’s noticed to everybody, everybody’s in the AI game now. It’s a lot of hand waving and things like that. The fortunate thing for us is Feedonomix in its current state, let’s go back five months ago, was already doing a lot of this work.

We weren’t very hand waving We were very deliberate about trying to bundle this all up and come out with it at once as opposed to kind of trickling it out. So like for us, the angst in market, the demand in market right now, particularly with B2C merchants of varying shapes and sizes is around discoverability. It’s almost a Y2K type urgency for those on the call old enough to remember the urgency leading up to that. People needed they know they need to do something.

They didn’t know exactly what it was and it facilitated just a tremendous amount of transformation and service streams. I think there is more validity to what this represents. This is certainly one of the fastest adaptive technology in the history of mankind and people are racing to adapt to it. So the demand in pipe and sort of engagement is how do I become discoverable in this new world order of how behavior is changing. And again, this is nuanced differently across all of these different answer engines, right?

The way that Gemini does it is differently than Perplexity and ChatGPT is different as well. So for us, already doing this optimizing and synthesizing both structured and unstructured data and syndicating it bespokely across different channels at scale to optimize results was already in place. This is a natural extension of that and there’s a lot of work that’s been going on kind of behind the scenes. We haven’t been hand wavy about that naturally fits us. And we’re also doing it with 30% of the IR, the Internet real 1,000.

So large enterprise brand manufacturers and retailers. So that already existed. This is an expansion. That’s where most of the demand is coming. I think everyone is trying to infuse AI.

This was not an attempt to be buzzy. It sounds buzzy just because it’s AI, but the practicality of it and the applicability of it is obviously very organic given where we were in the business. And I think you’re going to start seeing that efficacy come out over the next couple of quarters. It’s going to start with discover discoverability. It’s then going to quickly move into orchestration, which is going to be wildly complicated as folks are able to shop across these channels, which then again serves up inventory challenges, personalization, all sorts of things on the back end to maintain or exceed customer expectations that’s going to get wild.

And wild in a good way for us, we to Daniel’s point, we feel like this plays ideally into our hands with the three assets that we have in the product. So we’re excited about it. I think you’ll see it organically take deeper shape. Where we have this call six months ago or six months from now, I think it will make more sense to the public for all of us as this continues to mature in front of our eyes.

Tyler Duncan, Vice President, Finance and Investor Relations, Commerce: Thanks, Travis. You

Conference Operator: The next question comes from Gabriela Orgist with Goldman Sachs. Please go ahead.

Tyler Duncan, Vice President, Finance and Investor Relations, Commerce1: Hey, good morning. Thanks for taking my question. I find this dynamic around agentic search particularly interesting. Travis, maybe tell us a little bit more about a, are you already seeing customers see a negative impact from agentic search such that it’s catalyzing them to engage with your product suite. B, you mentioned AI powered shopping requires even more sophisticated product data.

Maybe just give us some examples there. In what ways does the product data need to be more sophisticated? Thank you.

Travis S., Chief Executive Officer, Commerce: You bet, Gabriella. To answer your first question, the answer is yes, substantially. It’s not just us. I talked to obviously, I have lots of friends in the service industry, having spent a large part of my career there. They’re getting the same questions.

There is a dire need and angst amongst large brand manufacturers and retailers in getting ahead of this. And many of them aren’t necessarily set up to do this at scale per se, which is also creating a fair amount of angst and demand in markets. So obviously, like I alluded to earlier, both us on the feederomic side as well as the services side, this is facilitating a lot of transformation, which I think is good for the industry. Where we’re seeing it nuanced, listen, I mean historically, we’ve been synthesizing and optimizing and syndicating structured data, like data enrichment. Think about that and syndicating across hundreds of channels with the answer engines with the LLMs, not all of them yet, but some of them now have the ability to synthesize both structured and unstructured data.

So there’s still a tremendous through AI, tremendous amount of extension of structured data that we’re optimizing. But where this gets really interesting is when you’re combining it with unstructured data and synthesizing that and not to mention the data we already have on behalf of customers. So we are sitting in the kind of epicenter with access to some of the most valuable data in the world as it relates to improving these queries and improving those experiences in partnership with these LLMs. So you can imagine why that would be a natural fit for us. We’re also not abided to try to get this through our checkout rails either.

So as this moves into shopping, we are very agnostically supportive of supporting whatever mechanism and whatever rails make the most sense for our merchants, which gives us, I think, an added advantage to go commercialize this and take it at scale. That’s kind of the heart of a lot of these conversations. It’s still early days. I think for those that play in the engines and I know I do all the time, the shopping piece is not there. It’s obviously very immature.

The results are spotty at best that will materially get better and this will move into more of those conversations. But the discoverability is top of mind right now. It’s starting there, then it will evolve into experiences and inventory orchestration and back office type stuff that’s going to get wild and interesting. I think this is the biggest change to this industry since responsive design, which was probably less sexy. But, facilitate a lot, as you know, a lot of transformation, a lot of change.

Tyler Duncan, Vice President, Finance and Investor Relations, Commerce1: And so do you already have customer examples that you can train your salespeople with where customer has seen traffic or conversion or top of funnel getting hit. They then go and buy pedonomics and then and some of the more interesting price to court options that you’ve been talking about and then see sort of, well, kind of like a before and after from a statistics standpoint.

Travis S., Chief Executive Officer, Commerce: Yes, I think we alluded to it in both the press release and my opening remarks with I think four or five of the brands that we mentioned, large recognizable brands. And those are existing clients by the way. So we’re in closed beta and some fairly sophisticated stuff with a handful of clients right now that will evolve into something more publicly available. Yes, this is all going to be about evangelizing the efficacy. Obviously, I think it’s a pretty easy thing to measure, but it’s also fluid, right, as these answer engines become more nuanced, as they add more capabilities, because again to my point earlier, they don’t all operate the same way.

And some have advantages over others, like you look at Google for the obvious answer, they have consumer facing apps that have AI embedded in a lot of behavior. They also have a fairly popular browser, that they track a lot of behavior on as well. You’re seeing some of the other answer engines launch browsers now. So again, you’re going to see more and more of this sort of evolution and disruption that’s going to slightly change how these things are handled. But it just again, I think maps back to our existing relationships and our ability to go synthesize and optimize and syndicate this data.

We’re just in a very natural position to take advantage of it and proven and we’re doing it with some of the largest brands in the world. So it’s not like we’re just down market trying to come up to Daniel’s point. What’s also exciting is we want to bring these same capabilities in a self-service capacity to our installed base and smaller merchants because they’re going to need just as much help as the big guys. They obviously don’t spend as much, their catalogs aren’t as big or as complex, but they still need to be discovered. People are still going to the answer engines independent of brand size.

They’re not discriminating based on size. So that is just as important, and you can kind of play that forward. That addressable market independent of commerce platform is massive. We feel this as a nice catalyst to start having those conversations Super

Tyler Duncan, Vice President, Finance and Investor Relations, Commerce1: interesting. Thanks so much for the detail.

Tyler Duncan, Vice President, Finance and Investor Relations, Commerce: You bet.

Conference Operator: The next question comes from Chris Kuntarac with UBS. Please go ahead. Excuse me, Chris Contaritz, your line is open. Please go ahead with your question. Your line is open.

Hello Chris?

Chris Kuntarac, Analyst, UBS: Can you hear me? Can you hear me?

Conference Operator: Please go ahead. We can hear you now. Go ahead please.

Chris Kuntarac, Analyst, UBS: Great. Yeah, I just wanted to stick with the AgenTek team. Thanks for taking the question. Just I wanted to focus on the B2C side here. I think I kind of understand that we’re seeing this acceleration in this trend, but anything you could do to further dimensionalize the amount of discovery today coming from the agentic engines versus either like the start of the year or this time last year?

And just how is that differing versus either brands that have leaned into this theme and ones that haven’t or across certain verticals? Just anything you can share there to help further dimensionalize this. Thanks.

Travis S., Chief Executive Officer, Commerce: Yes. No, it’s a great question. The general percentage that I’ve heard in multiple corners is 20% drop off in organic search for a lot of brands. Now don’t quote me on that in the sense that it may vary based on brand and what it is that they’re doing. We’re not quite at a point yet where you’re to be able to see where that was six months ago versus now and where it’s going to be in three months.

I think a large majority of folks have seen a drop off obviously with folks. Think, depends on who you ask again. I think, what, a billion weekly users now, I think or more leveraging these answer engines on a weekly basis and growing exponentially. I think you’re going to see this come more and more front and center as more and more capabilities are available within them. So I would expect in the next quarter probably to have maybe a bit more data as it relates to what we’re seeing tangibly from these folks.

Right now, it’s a we’ve seen a drop off. We know we need to do something. We need to optimize our data around discovery right now. And in parallel behind the scenes, we also need to prepare for the orchestration complexities that are going come by way of shopping through these channels. And then obviously, there’s a future state where you’re to have agents negotiating with other agents and buying and things like that.

And again, I don’t want to get all hand wavy There’s use cases. But again, I think this is top of mind for a lot of organizations. It doesn’t mean they’re going to solve it all right now. I think more importantly, they need to stem the bleeding on the discovery drop off and they at the same time need to prepare themselves as an organization to take advantage of where this goes now and in the future.

And that’s where we’re seeing most of the conversations around, less around like what it’s already done in some of the efforts that they’ve made.

Chris Kuntarac, Analyst, UBS: Got it. Maybe just one quick follow-up. Just thinking about it versus other sources of traffic, is it now larger than maybe email or SMS? Just curious kind of where it’s falling within the stack rank for big commerce customers.

Travis S., Chief Executive Officer, Commerce: Yeah. I wouldn’t know an actual number. It’s certainly growing at a faster pace than the others. And I think a lot of this is going to be as a result of trust. Right?

Obviously, that’s the thesis behind a lot of these answer engines and the companions is how much do you trust the answers. Trust, last time I checked, is built over time. So I think as it gets better, I think the adoption will get deeper and I think more efficacy will be driven. But we’ve got ways to go there. I think the focus, I would think of this in phases right now, it’s really around discoverability.

As people have conversations with these answer engines, as they’re contextually asking things, how do brands remain relevant and front and center as part of those contextual conversations. And then this will move into more of an experience conversation of okay, now that have been discovered where does shopping take place? Are we sending them back to an own channel? Are we sending them to marketplace? Are they checking out in line within that experience within that particular incident engine?

And if so, what’s happening behind the scenes is what we’re serving up as it relates to SKUs and availability based on customer expectations, right? As an easy example, am I willing to take a discount to receive such product two weeks later or am I willing to pay a premium to receive it today and in what channel or mechanism do I expect to go interface with that product? So all of that stuff also is being figured out kind of behind the scenes, but it’s going to begin and end with the data. The data is going to be the most valuable aspect of this and then it will be in combination with some of the other assets.

Chris Kuntarac, Analyst, UBS: Appreciate the color. Thanks, Travis.

Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Travis Hess for any closing remarks.

Travis S., Chief Executive Officer, Commerce: Listen, I want to thank everybody, obviously for showing up. We’re clearly excited. This has been a long time coming. We’ve obviously orchestrated and metabolized a tremendous amount of change over the last year. I certainly appreciate the patience for those that follow us.

We’ll continue to lead and communicate in a transparent way. Appreciate the questions. We’re excited to move into the execution phase and get out of transformation. I think we’re all a little fatigued from all of the change obviously. And listen, long story short, I said this early on taking this job, there was an obvious better together story here.

We needed to build that comprehensively to scale and authentically. We feel like there’s a really inexpensive AI play here with the product suite that we already have. That’s the thing that we’re most excited about here in the near term. I’ve talked about getting into more rooms and communicating in a more articulate way and focus. We feel like combining these elements into this brand and articulating that in a clear and concise way and now measuring sort of those success factors going forward.

We’re excited to share more with you guys going forward. So thank you all. Look forward to talking to you next quarter.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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