Good morning, everyone, and welcome to Commerce Third Quarter 2026 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star Bantu. Please note that this event is being recorded. I would now like to turn the conference over to Tyler Duncan, Senior Vice President, Finance and Investor Relations.

Good morning and welcome to Commerce's third quarter 2026 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 Hess. and Chief Financial Officer and Chief Operating Officer Daniel Lentz. Today's call will contain certain forward-looking statements which are made pursuant to 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 fourth quarter of 2026 and the full year 2026. 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 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 measure 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.commerce.com. With that, let me turn the call over to Travis. Thanks, Tyler.

Q3 revenue was $84.2 million in line with guidance and non-GAAP operating income was $8 million above our guidance range. GMV grew 14% year-over-year to $9 billion following our Q3 results. We are raising our full-year profitability outlook while maintaining our revenue guidance midpoint, which Daniel will walk you through shortly. Our results reflect progress on the strategic operating plan announced in September. We remain on track towards our target of at least 20% full-year non-GAAP operating margins beginning in 2027. We are reducing costs in areas that are not central to our strategy. We are simplifying the organization and using AI and automation to improve productivity. At the same time, we are protecting investment in the products and teams needed to retain customers, improve monetization, and drive revenue growth. The priorities I will discuss today reflect where we're choosing to invest as we execute this plan. Daniel will cover the financial details. I will focus on our strategy and what we are seeing in the business. For investors newer to commerce, we operate across three connected parts of the commerce technology stack. Feedonomics provides technology that helps merchants organize, improve, and distribute product information across traditional and AI-powered commerce and discovery channels. MakeSwift enables merchants to create and manage flexible, engaging digital experiences. and BigCommerce powers transactions and complex commerce operations, particularly for manufacturers, distributors and retailers with sophisticated requirements. Merchants can leverage these capabilities independently or together, giving us multiple ways to serve customers and expand our relationships over time. Our strategy reflects how commerce is evolving. As discovery and purchasing increasingly extend beyond traditional storefronts, Merchants need better product intelligence, more flexible digital experiences, and reliable infrastructure to manage complex transactions. We have differentiated assets across these areas and we are concentrating our investments where we see the clearest opportunities to improve customer retention, monetization, and long-term growth. Let me start with commercial execution. Q3 was our strongest quarter of the year so far for pipeline generation. Our focus is converting that activity into bookings and revenue while improving retention. We are also developing our capabilities for emerging agentic commerce use cases. While we still have work to do translating this momentum into sustained revenue growth, the underlying trends are encouraging. Turning to our four product priorities, I'll start with AI and product intelligence. Agentic commerce is changing how products are discovered, how shoppers make purchasing decisions, and how merchants run their businesses. We are building the product intelligence and commerce infrastructure to support these experiences across BigCommerce and Feedonomics. Feedonomics data enrichment and BigCommerce catalog enrichment are now generally available, and hundreds of stores adopted catalog enrichment as an additional paid feature in its first week. More than 10,000 stores have used BigCommerce Companion since its launch in August to help manage their stores, customize storefronts, and improve discoverability. We also recently opened conversational search to paid BigCommerce stores in the US and Europe. Our shopping agent and B2B purchase order agent are in early access, supporting guided shopping and turning emailed purchase orders into ready-to-checkout carts. We are also expanding the channels through which AI agents can discover and transact with our merchants. Through our partnership with CloudFlare, WebMCP is now live, enabling browser-based shopping agents to interact with BigCommerce storefronts. Feedonomics has launched early access to Amazon Shop Direct, allowing eligible merchants to connect their existing product catalogs to an additional discovery channel. We are also participating in early access to Google's Universal Commerce Protocol with approved BigCommerce merchants already receiving orders. Together, these capabilities help merchants participate in emerging shopping experiences Thank you for joining us. Importantly, this win reinforces the role feedonomics can play as a product intelligence layer across the broader commerce ecosystem, independent of a merchant's underlying commerce platform. Second is Surface and MakeSwift. Surface makes feedonomics available to smaller merchants through a self-service product, allowing them to get started without a traditional enterprise sales process. thousands of merchants are now using Surface and early usage data shows higher average revenue growth among those users compared with merchants not using the product. Our focus is converting that adoption into recurring revenue. MakeSwift gives merchants the tools to visually build, customize, and update their storefronts, helping their teams bring differentiated shopping experiences to market faster. As we've mentioned previously, we are launching MakeSwift in early Q1 as the default visual editor and experience layer for our hosted platform, which will also have full backwards compatibility for our existing merchants. These products support our product-led growth strategy. They also create opportunities to introduce additional commerce capabilities to customers over time. Third is big commerce payments. Our platform processed approximately $9 billion in GMV overall during the quarter, growing 14% year over year. That growth continues to outpace our top-line revenue performance, highlighting the opportunity to generate more revenue from commerce already flowing through our platform. Payments is a key part of that opportunity, particularly as we expand our capabilities to support the more complex transaction requirements of B2B merchants. BigCommerce payments Thank you for joining us. These efforts, alongside continued enhancements to the merchant experience, support our opportunity to expand payment adoption and improve monetization of the transaction volume on the BigCommerce platform. Daniel will discuss some of the additional payment capabilities we are evaluating their potential financial implications here shortly. Fourth is B2B commerce. Complex B2B commerce remains an important area of differentiation, particularly among manufacturers and distributors. These customers require capabilities such as contract-specific pricing, quoting, complex inventory management, and integration with existing business systems. Our recent customer announcements show how we are winning in this market. Gutter Supply selected BigCommerce to replace a legacy platform serving contractors and retail customers. Its implementation supports tiered pricing, invoicing, purchasing terms, and an improved customer experience. It also uses Feedonomics to manage its Google Merchant Center feed. Waterco is another example. The manufacturer and distributor moved from phone and email ordering to a digital experience supporting more than 45,000 products, including complex inventory, quoting, and freight requirements. Brompton, the British foldable bicycle manufacturer, launched its new Brompton Partner Portal on BigCommerce B2B Edition, giving its global network of independent retailers a modern ordering experience. Brompton first launched its direct-to-consumer site on BigCommerce in 2024. The new Partner Portal extends that foundation to the wholesale side of the business, which accounts for roughly 75% of Brompton's total sales across over 1,000 retail partners worldwide. These are the types of customers and use cases we are prioritizing. We believe these implementations demonstrate our strength in complex B2B commerce. They also illustrate how we can expand customer relationships across big commerce and feedonomics. Let me close by reaffirming our operating priorities. Our priorities are clear. Convert pipeline into bookings, improve retention, and expand monetization. We are concentrating our resources on these objectives while delivering the more efficient cost structure we've targeted. The next step is demonstrating progress through stronger commercial execution and measurable financial results. Before turning to Daniel, I want to share a leadership update. Daniel has accepted an opportunity to serve as a chief financial officer at another publicly traded technology company and will depart effective November 13th. On behalf of our board and team, I want to thank Daniel for his contributions over the past eight years. He has helped strengthen our financial discipline and balance sheet, and we wish him the best in his next role. Tyler Duncan, our SVP of Finance and Investor Relations, will become interim CFO upon Daniel's departure. Tyler has played an important role in our planning and execution of our operating plan. He knows our business and priorities well and will provide continuity through this transition. Other members of our leadership team will assume the COO responsibilities while the board evaluates candidates for the permanent CFO and COO roles. This transition does not change our strategy or our financial targets. Daniel, I'll turn it over to you.

Thanks, Travis. Let me start with our financial results for the quarter. Q3 revenue was $84.2 million in line with our guidance range of $82.5 to $85.5 million. Subscription Solutions revenue was $64.7 million, and Partner and Services revenue was $19.5 million. Non-GAAP operating income was $8 million, above the high end of our guidance range of $3.3 to $5.3 million, representing a non-GAAP operating margin of 9.5%. The outperformance was primarily driven by approximately $3 million in savings originally anticipated in Q4 that we realized in Q3. We are maintaining our full-year revenue outlook at the midpoint and raising our full-year non-GAAP operating income outlook, as I'll detail shortly. Non-GAAP gross margin was 74.5%, down approximately 110 basis points sequentially. The decline reflected lower partner and services revenue following the ecosystem changes discussed last quarter, along with continued pressure from AI-related infrastructure costs. Improving infrastructure efficiency remains a priority within our strategic operating plan. We ended the quarter with $162.8 million in cash, cash equivalents, restricted cash and marketable securities, and $154.1 million in outstanding debt. We repaid the remaining approximately $4 million of our 2026 convertible notes at maturity on October 1st. Operating cash flow was $9.4 million and free cash flow was $5.7 million after $3.6 million in capital expenditures. We recorded a GAAP net loss of $3.2 million for the third quarter, including $4 million in restructuring charges associated with our strategic operating plans. Excluding the $4.9 million of restructuring charges recorded year to date, net income would have been approximately $6.6 million compared with the reported GAAP net income of $1.6 million year to date. While the upfront restructuring charges from our strategic operating plan are expected to result in a GAAP net loss for the full year, Our underlying operating performance remains consistent with the trajectory that supported our prior goal of GAAP profitability for the full year 2026 before we initiated the plan previously announced. Turning to operating metrics, GMV grew 14% year over year to approximately $9 billion, highlighting the scale of commerce flowing through our platform and the opportunity to improve monetization. Narrowing the gap between GMV growth and revenue performance through payments monetization, cross-sell, and higher attach rates remains a priority. Our growing B2B mix creates an opportunity to better monetize transactions involving invoicing, payment terms, and other methods beyond traditional credit cards. While we have not finalized our 2027 operating plan, we are evaluating new payments capabilities, including a potential fully white-labeled version of BigCommerce payments to provide a more integrated merchant experience and participate more directly in payments economics. Certain new offerings may introduce gross revenue recognition and associated processing costs rather than our existing net revenue share model. We expect adoption to build gradually, and we believe these initiatives can expand our ability to monetize the substantial GMV already on our platform. Total ARR ended the quarter at $357.6 million, down approximately $2.9 million sequentially, reflecting two distinct factors. Subscription ARR declined by approximately $1.1 million, primarily due to the non-renewal of a single legacy powered by agreement, which both parties mutually elected not to renew. The remaining approximately $1.8 million decline came from partner and services revenue, reflecting our deliberate decision to move away from certain long-tail partner arrangements, as discussed in connection with our updated guidance last quarter. Net revenue retention was 94.7%, compared with 95.8% in Q2, reflecting these same dynamics. Note our ARR methodology includes trailing, variable, and non-recurring revenue, including certain partner contributions. We believe concentrating on higher value partner relationships will improve the durability and quality of revenue over time. We continue to manage stock-based compensation and dilution responsibly. Stock-based compensation was 5.2% of revenue in Q3, Down from 7.5% a year ago and 7% for the full year 2025. For the quarter, we had approximately 83 million common shares outstanding and 83.3 million fully diluted shares outstanding. Turning to guidance for Q4 2026, we expect revenue between 83.4 million and 86.4 million, and we expect non-GAAP operating income between 6.8 million and 8.8 million. For the full year 2026, we now expect revenue between $339 million and $342 million. And we expect non-GAAP operating income between $35.3 million and $37.3 million. At the midpoint, we are raising our full year non-GAAP operating income outlook by $2.3 million relative to the updated outlook we provided in September. While part of our Q3 outperformance reflected savings accelerated from Q4, the remaining benefit increases our expected profitability for the year. Now let me discuss the financial implications of our recently announced strategic operating plan. We continue to target $60 to $80 million in annualized non-GAAP operating cost reductions and full-year non-GAAP operating margins of at least 20% beginning in 2027. In September, we anticipated approximately $3 million or 4% of the annualized savings would be realized in 2026. Based on our progress to date, our updated outlook reflects approximately $5 million of in-year savings with the full annualized benefit in 2027. We remain on track to deliver the targeted savings and to substantially complete implementation by Q2 2027. The actions address staffing, professional services, facilities, software, and infrastructure costs while leveraging AI and automation to improve efficiency. Importantly, we are protecting investment and our highest priority growth initiatives, including payments, economics, product intelligence, and agentic commerce. Our margin target is not based on an assumed acceleration in revenue growth. We believe the plan enables materially stronger profitability from the scale of our current business, while allowing us to continue investing in retention, cross-sell, and monetization. Now, to put the magnitude of the opportunity in perspective, the $60 to $80 million in annualized cost savings represents approximately $0.72 to $0.97 per diluted share, based on our diluted share count for the nine months ended September 30, 2026. While this is not an earnings per share forecast, it illustrates the magnitude of the improvement we are targeting in the underlying earnings power of commerce. We also expect the majority of these savings to translate into incremental free cash flow. Supporting that conversion, we had approximately $353 million in net operating loss carry-forwards and other tax attributes as of September 30th, which we expect to help reduce cash taxes on future earnings, subject to applicable limitations. There are upfront costs associated with implementing this plan. We recorded 4 million in restructuring charges in Q3 compared with our original expectation of 4.2 million to 8.8 million. We continue to expect additional restructuring charges in Q4 consistent with the implementation timeline outlined in September. We now estimate Q4 charges of 4 million to 8.5 million on the quarter compared with our original expectation of 4.3 million to 17.5 million. In addition, we expect to incur restructuring charges of $2.2 to $4.2 million in the first half of 2027 as we substantially complete the implementation of the plan. Our non-GAAP operating income excludes these charges, although associated cash payments will affect free cash flow during the implementation. While we are still finalizing our 2027 operating plan and will provide formal 2027 guidance on our fourth quarter call, Our preliminary planning assumptions contemplate 2027 revenue broadly in line with 2026 levels. Against that backdrop, we remain on track towards our target of full-year non-GAAP operating margins of at least 20% beginning in 2027. Turning to capital allocation, our board authorized a $50 million share repurchase program extending through September 2028. We may pursue repurchases from time to time with timing and amounts dependent on market conditions, liquidity, and other capital priorities. As cash generation improves, we believe we will have greater flexibility to return capital to shareholders while continuing to invest in the business. To close, we are raising our full-year 2026 profitability outlook and reaffirming both our revenue outlook at the midpoint and our target of at least 20% full-year non-GAAP operating margins beginning in 2027. Our priorities are clear. Improve retention and monetization, execute the operating plan, convert the resulting savings into stronger free cash flow, and allocate capital with discipline. Before opening the call for questions, I want to thank our colleagues, customers, and shareholders for their support during my time at Commerce. It's been a privilege to work with this team. Tyler has been instrumental in planning and executing our strategic operating plan. He knows the business and our financial priorities extremely well, and I'm confident in our ability to execute against these targets and priorities with him leading as interim CFO. With that operator, let's open it up for questions. Thank you.

We will now begin with the question and answer session.

To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, Please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to a similar roster. Your first question comes from Ken Wong with Oppenheimer. Please go ahead.

Great, thanks for taking my question. And for Daniel, congratulations and farewell. This has been a sweep. We've been here since the beginning, and we wish you the best. Thanks, Ken. Travis, maybe for you, you guys didn't really touch too much on what you're seeing in the pipeline and sales cycles. The last quarter, that was a dynamic where you guys called out extending sales cycles. What are you seeing today? How should we think about the conversion of that pipeline going forward?

Yeah, that's a good question, Ken. Good morning, by the way. I would say pipeline increased significantly. Substantially, it's the best pipeline we've had this year, obviously, and most of that pipeline is centered around where we've been placing our investments. Think B2B, think retail in the spirit of regulated industries, MLM and direct selling, things along those lines. Traditional B2C direct-to-consumer remains soft. We've seen that from the beginning of the year, but that's not particularly an area that we've been over-indexing on. Conversion rates are largely the same throughout the year, although we've seen better conversion and retention in those areas that we've been focusing on, so consistent with that as well. But certainly encouraging with the Lipton pipeline, and obviously the focus now is on converting that pipeline into bookings and revenues.

Perfect. And Daniel, when thinking about the revenue trajectory going forward, any other notable powered by or PSR arrangements in the coming quarters that we should be aware of that could potentially pressure NRR revenue or ARR revenue?

No, nothing material or substantial. We've got what we anticipate baked into the guidance, but no outliers like the agreement that we had to... that we had to deal with this quarter. All right. Thank you.

Thank you.

Our next question comes from the line of Scott Berg with Needham. Please go ahead.

Hi, everyone. Thanks for taking my questions. Travis, I wanted to follow up on the pipeline commentary. You know, the company obviously released its first version of payments earlier this year. But as you look through some of the pipeline improvements that you have, are you able to tie any of it to your new payment strategy or given where your priorities are, is that really still more focused on B2C on the payment side?

Thanks. It's a great... Good morning, Scott. Thank you for the question. It's both. I would say probably too soon to tell if that strategy is impacting net new pipeline. A lot of the focus has been on obviously existing customers, and it's been very well received and has exceeded sort of expectations on our side. I think the other thing I didn't mention in Ken's question previously, I think the other part of the pipeline where we've seen a lot of demand for some time now is around the feedonomics product intelligence side. with Agentic. And I think you'll see more and more of that as product comes to market and that broader market matures into more commercializable sort of offerings. I would expect to see that continue to improve over time. And that's particularly strong Scott, I would add to that maybe two points. I would say our focus on that product is

about monetization and retention, I would argue, first and foremost, even more so the new client acquisition. We've seen very encouraging results in customer stickiness getting better and retention getting better when they're using BigCommerce payments, which is what we are hoped for and what we are seeing. So that's encouraging. As we look forward, we think there's a lot of continued opportunity in this space in B2B and B2C. I mentioned this in my remarks as we're kind of thinking about next year and thinking through what our next version of BigCommerce payments would be. We do anticipate that we are going to continue to have that be a more integrated solution into the core product where we are going to take on more of the processing burden. We would take on more of the support burden associated with that. As we finalize what our plans look like for next year, that may come with a change in how we need to treat the accounting on that. That's not 100% set yet, but we think it's at least likely enough, and I think it's encouraging as an upside point for us. We think there's additional economics to capture in that and spread to capture in that. So that's something we're considering. I think that affects card transactions, especially on the B2C side. But as we mentioned in the script, there's also a lot of things we're looking at on the B2B side and how we can get a lot better economics through invoicing, processing your purchase orders, and a lot of other areas. So this is, I would say, probably one of the top two highest priorities that we have next to agentic in terms of how we're thinking about growth going into next year.

Understood, and Daniel, it's been a lot of fun. It's been, you know, six plus years since the IPO. Looking forward to you staying in touch. My follow-up question, though, is kind of tangential to your commentary you just said about potential rep rec changes around payments. Big part question one, if I think about the 20% non-GAAP operating margins in the next year, do you expect the company to report full year 20% operating margins, or is this a run rate as you exit second quarter when the rest of those charges are taken. And then the second part of that question is, what does that look like if you change the rev rec policies on payments? My guess is given what the gross margins of that structure look like, 20% is probably not the right bail to look through.

Yeah, Scott, that's a great question. I would say first, that's a full year commitment that we're talking about. We expect to have some ups and downs on a quarterly basis, but that's a full year commitment. probably build, I think, as we go through the year. To your point, once we get some of the restructuring charges behind us, I think that starts to become easier, certainly in how it flows down to net income. What I would say is if we do end up making a change in the payments product and it moves towards gross revenue recognition, it's not like we're all of a sudden going to flip 80% of our GMV base into that model over time. We are going to continue to give our customers choice on the payments products that they would be using. And If it makes sense to them to use an embedded payments partner that is not our branded payment solution, we would encourage them to continue to do so and that will continue to be booked net, not gross. and so I think we're going to as we head down this path we're going to be communicating a lot more about what mix looks like among payment solutions including BCP so that investors have a little bit of line of sight into what that mix effect looks like over time. We're still working out what that's going to look like because you don't need to share too much obviously but we think at least for the first year or two as we go down that path we don't anticipate that from a mix perspective to be such an immediate step side change that all of a sudden makes the P&L looked different, such that we would need to revisit the 20% commitment. We took that dynamic into account when we set that commitment originally in September.

Understood. Thanks for taking my questions.

Thank you. Again, if you have a question, please press star, then 1. Our next question comes from Brian Peterson with Raymond James. Please go ahead.

Thanks, guys. And Daniel, congrats. Really will miss working with you. So just maybe to start, there's obviously been a lot of buzz on agentic commerce and Muse, I think, has been the latest topic. I'd love to understand how your merchants and potential customers are thinking about that. And are they leveraging some of the catabolic capabilities that you're referencing and that's really drawing them to you? Or I could also see an environment where maybe that's extending sales cycles as they try to think through those dynamics. So, Travis, I'd love to understand maybe how you're thinking about agented commerce utilization and maybe what that's doing to sales cycles.

Yeah, Brian, good morning. Thanks for the question. Yeah, I would say Muse is a great use case and an example of a horizontal agent. Then you'll see many others like it that actually maps to our strategy quite nicely. Those agents at their core need to consume enriched data for the purposes of the user leveraging that agent, which obviously is provided not only by Feedonomics from a product catalog perspective, that enrichment's being enriched for the specific schema and service by which it's going to be consumed. including Muse as an example. That doesn't go away, by the way, and that's not a one and done. And so think of it more as strategic product intelligence infrastructure regardless of agent that needs to be consumed. And then on the transaction front, sort of same sort of scenario, the transaction orchestration is those agents are consuming, you know, what products are available under what circumstances, under what guidelines, under what context. Are they eligible for a promotion? Can they stack promotions? Can they be shipped in time for the contextualized rationalization, be that a human or an agent itself doing that discovery, that purchase? So I think you're seeing more and more of this. I would encourage... Everyone to think of this as strategic infrastructure around product data that's continuously enriched by schema and surface and protocol that will continue to evolve. The experience, to the extent a human is involved, needs to be orchestrated and governed in many capacities. And then from a transaction, independent of where that transaction takes place, be that on an agentic surface, be that in a marketplace, Social Commerce, and Own Domain. That needs to be done with trust and accuracy, obviously, to maintain brand guidelines and transaction protocols so that things are being done the right way as we would expect on an own domain. So I would expect to see this continue to evolve and think of us as kind of the backbone of the infrastructure providing what these agents would consume, if that's helpful.

I appreciate the perspective. Maybe just a follow-up on the pipeline bill that you referenced. Is there really to kind of segment that between B2C and B2B? I know B2B has been pretty steady, at least that's my stance on it. But is the incrementality more on B2C or ramp up in B2B? Any color on that?

Yeah, it's a good question. I would say, as I alluded to, I think, in Ken's question earlier, it is directionally where we are investing, which is a mix. primarily B2B around manufacturing distribution. We've gave several examples in my opening remarks. And on the B2C side, you're seeing it primarily in regulated industries, multi-level marketing, direct selling, industries that lend itself to complexity, which is where we've got some really durable differentiation and we'll continue to over-index there and invest. It's not been from areas that I kind of alluded to earlier that have been soft, I think, at least for us, and I assume with other folks in market in the traditional D2C sort of models. That's the stuff that's been probably softer than it was a year or two ago when I first got here. But from our perspective, that's been intentional, at least with where we're spending our money, energy, and efforts and narrowing the focus.

Thanks, Charlie. You bet.

Thank you. This concludes our question and answer session. I would like to turn the conference back over to Travis Hess, CEO, for closing remarks.

Thanks. And thanks, everyone, for joining this morning. I think we're very pleased about where we are as an organization, obviously, deep in execution. I think that's reflected in the forward guidance that Daniel shared earlier. We look forward to speaking with you next quarter as we continue to execute against the plan. And thank you all for joining. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.