- Needham analyst Scott Berg maintained a Buy rating on BigCommerce Holdings, Inc BIGC, with a price target of $20.00.
- Berg hosted investor meetings with BigCommerce SVP of Finance and IR Daniel Lentz yesterday and was more confident that the company's recent GTM shift upmarket is a long-term winning strategy.
- 2023 is an operating leverage year, and management anticipates breakeven profitability by mid-2024.
- Also Read: BigCommerce's Strong Black Friday And Thanksgiving Sales Data Impresses Analysts
- While 2022 was an investment year for BIGC, management noted that 2023 would likely see positive operating leverage.
- They also discussed their previously announced target of breakeven adjusted EBITDA by mid-2024, which assumes no change in the existing macro environment.
- BigCommerce had much better unit economics, with customers selecting a higher product tier.
- BigCommerse has an LTV: CAC ratio of 8:1 for Enterprise accounts versus 2:1 for non-Enterprise accounts.
- The analyst foresees the company's operating model gaining meaningful leverage in FY23 from this pivot and achieving its stated mid-2024 breakeven Adjusted EBITDA target.
- Gross cash likely troughs near $200 million, but Berg believes that target is beatable.
- Given its focus on driving operational leverage from its significant GTM investments in 2022, the company believes its gross cash level will trough at no worse than $200 million.
- After a big GTM investment year, the company's cash burn has been in focus, especially given the market's current focus on profitability.
- Berg believes upside exists in management's expectations of another $100 million negative FCF before reaching profitability.
- The poor macro also pressured deal volume but not win rates.
- Price Action: BIGC shares traded lower by 1.29% at $9.15 on the last check Tuesday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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