Bigcommerce Holdings Inc – Marked a historical revenue growth in FY20.

Bigcommerce Holdings Inc (NASDAQ: BIGC) provides Software-as-a-service (SaaS) e-commerce platform. It serves B2C and B2B enterprises across 120 countries. It is headquartered in Austin and has offices in London, Sydney, and San Francisco.

Investment Rationale – Buy at USD 55.71

• From a technical standpoint, 14-day RSI (32.95) is hovering nearly at the oversold situation, which can bring the share price upsurge in the short-term.
• Over the past three years (FY18 to FY20), the gross margin of BGIC has remained above 75%, while the industry median is 45.9%.
• The impact of the Covid-19 pandemic has accelerated the adoption of e-commerce, and BIGC has the potential to tap the underlying opportunities.
• The Company is exploring the partner ecosystem, growing industry-wide recognition, and building long-term shareholder value.

Risk Assessments

• Any delay or outages in services through the platform due to cyber-attacks or data breach can cause significant business interruptions.
• As the Company has global operations, it is exposed to unfavourable foreign exchange rates and macroeconomic turbulences.

Recent News

24 February 2021: BIGC announced a partnership with Walmart to enable Walmart Marketplace. The partnership shall help BIGC to expand its e-commerce footprints.

Financial Highlights for the period ended 31 December 2020 (as on 22 February 2021)

 (Source: Company Website)

• During Q4 FY20, revenue grew 39% year-on-year, registering a historic growth for the Company, while the annual recurring revenue increased by 41% year-on-year in FY20 against FY19. FY20 revenue rose 36% against FY19.
• The GAAP operating loss for Q4 FY20 increased to US$13.8 million from a loss of US$9.8 million in Q4 FY19.
• The Company also bolstered its product for international markets by undertaking native integrations and strengthened the Open SaaS strategy.
• As of 31 December 2020, cash and cash equivalents equated to US$219.4 million.

Share Price Chart    

 (Source: Refinitiv, chart created by Kalkine Group)

Valuation Methodology: EV/Sales Approach (NTM) (Illustrative)

Conclusion

BIGC has an incredible proportion of annual recurring revenue that provides them with an ability to disrupt the large enterprise market and mid-market. The net revenue retention rate surged from 106% in FY19 to 113% in FY20, while the average revenue per account soared 32% in Q4 FY20 against Q4 FY19. Looking ahead, BIGC aims to lead the e-commerce industry by strengthening open SaaS platform capabilities, acquiring small businesses, entering strategic partnerships, and pursuing further opportunities for the Company. Stock 52 week High and Low were USD 162.50 and USD 51.15, respectively.

Based on the robust annual recurring revenue, industry prospects, business capabilities with support from the valuation conducted above, we have given a “Buy” stance on Bigcommerce Holdings Inc at the closing price of USD 55.71 (as on 17 March 2021), with lower double-digit upside potential based on 26.64x EV/NTM Sales (approx.) on FY21E Sales (approx.).

*All forecasted figures and Peer/Industry Information have been taken from Refinitiv, Thomson Reuters.

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