Mark your calendars because BigCommerce is expected to go public this Wednesday, August 5.
The company is a competitor of Shopify (NYSE: SHOP) — a company that you’ve probably heard mentioned once or twice. Shopify is a multinational e-commerce company that is headquartered in Ottawa, Ontario. The company has reported that more than a million businesses in about 175 countries use its platform. Understanding Shopify’s successes could give us some insight into what we can expect from BigCommerce and its IPO.
Based in Austin, Texas, BigCommerce provides companies of all sizes with software-as-a-service (SaaS) e-commerce solutions. So what does that mean? Well, with its platform, large and small businesses can create attractive and engaging online stores that are easy for customers to navigate, giving those businesses flexibility when selling their brand and products. BigCommerce also allows for cross-channel connections to other popular online marketplaces, social networks, and offline point-of-sales systems. Its platform offers a variety of tools and e-commerce products that give its clients the ability to ship, market, accept payments, and track sales. Its software seamlessly integrates with search engines and social media sites like Google, Facebook, Instagram, Amazon, and eBay.
As of June 1, 2020, the company reports it has served about 60,000 online stores across industries in about 120 countries. Due to the COVID-19 pandemic, the way people buy and sell products has changed, affecting businesses of all sizes. With people not going out to storefronts, those businesses have had to focus on making it easier for customers to shop online. E-commerce allowed businesses to stay afloat. For some, it was the only way to survive the pandemic.
Even before COVID-19, the e-commerce market was growing — it’s just easier to shop online sometimes (at least, that’s how I feel). You can avoid crowds. You can research and take the time to decide if a product is really the one you want to buy. There’s no pressure to buy it and no lines to stand in.
According to a 2020 market research report by Grand View Research, the global e-commerce market was valued at $6.2 billion in 2019 and is expected to reach $18 billion by 2027. Yes, you read that right — $18 billion. That’s a CAGR of 16.3% from 2020 to 2027.
Some of BigCommerce’s clients include Ben & Jerry’s, CamelBak, Sharp Electronics, Skullcandy, Murad, Bliss, Dremel, Sony, and Toyota, just to name a few. The company is growing its client base with well-known brands. If these types of companies trust BigCommerce with their online stores then why shouldn’t a small or medium-sized company?
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BigCommerce plans to raise about $198 million from its IPO. The proposed price range of $21 to $23 per share would put the company’s valuation somewhere near $1.4 billion.
It has been able to raise over $200 million from investors like SoftBank Capital and American Express. Its new investor, Tiger Global Management, is expected to purchase 20% of the shares in its offering. Its underwriters for the IPO include Morgan Stanley, Barclays, Jefferies, KeyBanc Capital Markets, Canaccord Genuity, Needham & Company, Raymond James, and SunTrust Robinson Humphrey.
The company’s S-1 states how it plans to use the net proceeds from its IPO:
We intend to use a portion of the net proceeds from this offering to pay in cash the Series F Dividend, which is expected to total $16.4 million as of the closing of this offering… We intend to use the remainder of the net proceeds from this offering for working capital and general corporate purposes, including sales and marketing, research and development, general and administrative matters, and capital expenditures.
As of March 31, 2020, the company had $33 million in cash and $118 million in total liabilities. During this period, its free cash flow was -$43.8 million. It appears that BigCommerce has been able to grow its topline revenue, gross profit, and gross margin. This growth could accelerate as the COVID-19 pandemic continues. Customers will continue to go online, and that means their favorite businesses will need a platform to power their online stores since they will be reliant on online sales.
Earlier in July, BigCommerce’s competitor, Shopify, saw its stock surge because of the growth of the e-commerce market. Shopify’s shares were even up an astounding 145% in one day. That gives us some idea of what we can expect for BigCommerce. The market for SaaS e-commerce companies is massive and growing, so it’s the perfect time for the company to make a name for itself.
BigCommerce plans to begin trading on Wednesday, August 5 on the Nasdaq under the ticker symbol “BIGC.” If you’d like more information about its IPO and similar IPOs, click here.
Until next time,
Monica Savaglia
Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.
