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What changed in Commerce.com, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Commerce.com, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+339 added−333 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in Commerce.com, Inc.'s 2023 10-K

339 paragraphs added · 333 removed · 253 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeSeasonality We have historically experienced higher revenue in our fourth quarter compared to other quarters in our fiscal year due in part to seasonal holiday demand. Additionally, new product introductions can significantly impact revenue figures, product costs and operating expenses.
Biggest changeWe believe our current facilities are suitable for the composition of our staff, and additional space is available as needed to accommodate any such expansion of our operations. Seasonality We have historically experienced higher revenue in our fourth quarter compared to other quarters in our fiscal year due in part to seasonal holiday demand.
Item 1. Bu siness. Overview BigCommerce is leading a new era of ecommerce. Our software-as-a-service (“SaaS”) platform simplifies the creation of beautiful, engaging online stores by delivering a unique combination of ease-of-use, enterprise functionality, and flexibility. We power both our customers’ branded ecommerce stores and their cross-channel connections to popular online marketplaces, social networks, and offline point-of-sale (“POS”) systems.
Item 1. Bu siness. Overview BigCommerce is leading a new era of ecommerce. Our software-as-a-service (“SaaS”) platform simplifies the creation of engaging online stores by delivering a unique combination of ease-of-use, enterprise functionality, and flexibility. We power both our customers’ branded ecommerce stores and their cross-channel connections to popular online marketplaces, social networks, and offline point-of-sale (“POS”) systems.
BigCommerce’s omnichannel offering helps customers advertise and sell successfully through more channels than they could on competitive platforms. We made remarkable progress following our 2021 acquisition of Feedonomics, the industry’s best solution for managing product catalog integrations at scale through more than 100 of the world’s foremost search, advertising, social network and marketplace channels.
Our omnichannel offering helps customers advertise and sell successfully through more channels than they could on competitive platforms. We made remarkable progress following our 2021 acquisition of Feedonomics, the industry’s best solution for managing product catalog integrations at scale through more than 100 of the world’s foremost search, advertising, social network and marketplace channels.
For SMBs, BigCommerce Essentials offers three retail plans: Standard, Plus, and Pro, amortized at $29, $79, and $299 per month when paid in full annually, respectively or $39, $105 and $399 if paid monthly, respectively. Our Essentials plans include GMV thresholds with programmatic upgrades built in as merchants exceed each plan’s threshold.
For SMBs, BigCommerce Essentials offers three retail plans: Standard, Plus, and Pro, amortized at $29, $79, and $299 per month when pre-paid in full annually, respectively, or $39, $105 and $399 if paid monthly, respectively. Our Essentials plans include GMV thresholds with programmatic upgrades built in as merchants exceed each plan’s threshold.
For the enterprise and mid-market segments, we believe our platform combines three elements not typically offered together: • Multi-tenant SaaS. The speed, ease-of-use, high-performance, and continuously-updated benefits associated with multi-tenant SaaS. • Enterprise functionality. Enterprise-grade functionality capable of supporting sophisticated use cases and significant sales volumes. • Open SaaS.
For enterprise and mid-market, we believe our platform combines three elements not typically offered together: • Multi-tenant SaaS. The speed, ease-of-use, high-performance, and continuously-updated benefits associated with multi-tenant SaaS. • Enterprise functionality. Enterprise-grade functionality capable of supporting sophisticated use cases and significant sales volumes. • Open SaaS.
A dynamic and growing cross-channel category is “headless commerce,” which refers to the integration of a back-end commerce platform like ours with a front-end user experience separately created in a content management system (“CMS”) or design framework. The most dynamic and interactive online user experiences are often created using these tools.
A dynamic and growing cross-channel category is “headless commerce” which refers to the integration of a back-end commerce platform like ours with a front-end user experience separately created in a content management system (“CMS”) or design framework. The most dynamic and interactive online user experiences are often created using these tools.
Our commitment to composable commerce, which lets customers adapt our platform and integrated applications to their specific needs, appeals to businesses seeking the most modern approach to technology. We lower the financial and operating cost of ecommerce by providing world-class technology as a service, including product, hosting, security, bug fixing and continuous innovation.
Our commitment to composable commerce, which lets customers adapt our platform and integrated applications to their specific needs, appeals to businesses seeking the most modern approach to technology. We lower the financial and operating cost of ecommerce by providing world-class 2 Table of Contents technology as a service, including product, hosting, security, bug fixing and continuous innovation.
Cross-channel commerce involves the integration of a customer’s commerce capabilities with other sites—online and offline—where consumers and businesses make their purchases. We offer free, direct integrations with leading social networks such as Facebook and Instagram, search engines such as Google, online marketplaces such as Amazon and eBay, and POS platforms such as Square, and Clover (a Fiserv company).
Cross-channel commerce involves the integration of a customer’s commerce capabilities with other sites—online and offline—where consumers and businesses make their purchases. We offer free, direct integrations with leading social networks such as Facebook and Instagram, search engines such as Google, online marketplaces such as Amazon and eBay, and POS platforms such as Square.
We intend to use our investor relations website as a means of disclosing information about our business, our financial condition and results of operations and other matters and for complying with our disclosure obligations under Regulation FD. The information we post on our investor relations website, including information contained in investor presentations, may be deemed material.
We intend to use our investor relations website as a means of disclosing information about our business, our financial condition and results of operations and other matters and for complying with our disclosure obligations under Regulation FD. The information we post on our investor relations 5 Table of Contents website, including information contained in investor presentations, may be deemed material.
We serve these segments with a platform offering enterprise-grade functionality, openness and performance capabilities with friendly simplicity and ease-of-use. Our platform is the result of a multi-year investment in platform transformation. In every important component of our platform, we have added advanced functionality and openness using application programming interface (“API”) endpoints.
We serve these lines of business with a platform offering enterprise-grade functionality, openness and performance capabilities with friendly simplicity and ease-of-use. Our platform is the result of a multi-year investment in platform transformation. In every important component of our platform, we have added advanced functionality and openness using application programming interface (“API”) endpoints.
In the mid-market and enterprise segments, our primary competitors are Magento (an Adobe company), Salesforce Commerce Cloud, commercetools, and Shopify Plus. In the SMB segment, our primary competitors are Shopify and WooCommerce. Intellectual property We rely on a combination of trade secret, trademark, copyright, patent, and other intellectual property laws to protect our intellectual property.
In mid-market and enterprise, our primary competitors are Magento (an Adobe company), Salesforce Commerce Cloud, Commercetools, and Shopify Plus. In SMB, our primary competitors are Shopify and WooCommerce. Intellectual property We rely on a combination of trade secret, trademark, copyright, patent, and other intellectual property laws to protect our intellectual property.
We focus our 2 Table of Contents research and development investments in our core product to create a best-of-breed ecommerce platform. We believe this strategy has four advantages: • Core product focus. We can create the industry’s best ecommerce platform and innovate faster than our competition by focusing development on a single core product. • Best-of-breed choice.
We focus our research and development investments in our core product to create a best-of-breed ecommerce platform. We believe this strategy has four advantages: • Core product focus. We can create the industry’s best ecommerce platform and innovate faster than our competition by focusing development on a single core product. • Best-of-breed choice.
We had total revenue of $279.1 million, $219.9 million and $152.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. We plan to continue to invest in our “Open SaaS” strategy, building new partnerships and continuing to develop a platform that offers best-of-breed functionality with the cost-effectiveness of multi-tenant SaaS.
We had total revenue of $309.4 million, $279.1 million and $219.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. We plan to continue to invest in our “Open SaaS” strategy, building new partnerships and continuing to develop a platform that offers best-of-breed functionality with the cost-effectiveness of multi-tenant SaaS.
Feedonomics features both superior integrations and industry-leading tools for optimizing product feeds to achieve maximum organic performance and return-on-ad-spend. Major channels enabled include Amazon, Facebook/Instagram, Google, Mercado Libre, Microsoft, Target+, TikTok, Walmart and, most recently, Snap. Commerce-as-a-Service, "CaaS" describes our ability to enable partners to create and sell customized commerce solutions powered by our platform technology.
Feedonomics features both superior integrations and industry-leading tools for optimizing product feeds to achieve maximum organic performance and return-on-ad-spend. Major channels enabled include Amazon, Facebook/Instagram, Google, Mercado Libre, Microsoft, Target+, TikTok, and Walmart. Commerce-as-a-Service, “CaaS” describes our ability to enable partners to create and sell customized commerce solutions powered by our platform technology.
Culture and values Our culture is built on our corporate values: Customers First, Team on a Mission, Think Big, Act with Integrity, and Make a Difference Every Day. Together our values and caring culture create an atmosphere that enables us to successfully recruit and retain talented and passionate team members.
Culture and values Our culture is built on our corporate values: Customers First, Team on a Mission, Think Big, Act with Integrity, and Make a Difference Every Day. Together our values and caring culture create an atmosphere that enables us to successfully recruit and retain 4 Table of Contents talented and passionate team members.
We serve customers with subscription plans tailored to their size and feature needs. For our larger customers, our Enterprise plan offers our full feature set at a monthly or annual subscription price tailored to each business.
We serve customers with subscription plans tailored to their size and feature needs. For our larger customers, our Enterprise plan offers our full feature set at a price tailored to each business.
We distinguish market segments based on annual gross merchandise volume (“GMV”) per site, specifically: SMB ($0 to $1 million), mid-market ($1 million to $50 million), and large enterprise (greater than $50 million). One individual customer represented more than 5% of our total revenue for the year ended December 31, 2022. International presence We serve customers in more than 150 countries.
We distinguish markets based on annual gross merchandise volume (“GMV”) per site, specifically: SMB ($0 to $1 million), mid-market ($1 million to $50 million), and enterprise (greater than $50 million). One individual customer represented more than 5 percent of our total revenue for the year ended December 31, 2023. International presence We serve customers in more than 150 countries.
Of these employees, 1,131 are in the United States and 369 are in our international locations. We consider our culture and employees to be vital to our success. We have invested substantial time and resources in building our team and culture across all our offices.
Of these employees, 934 are in the United States and 387 are in our international locations. We consider our culture and employees to be vital to our success. We have invested substantial time and resources in building our team and culture across all our offices.
Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings and public conference calls and webcasts. 5 Table of Contents
Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings and public conference calls and webcasts.
We target the following business segments: • large enterprises, which we define as sites with annual online sales over $50 million, • the mid-market, which we define as sites with annual online sales between $1 million and $50 million, and • small businesses (“SMBs”), which we define as sites with annual online sales less than $1 million.
We target the following lines of business: • enterprise, which we define as sites with annual online sales over $50 million, • the mid-market, which we define as sites with annual online sales between $1 million and $50 million, and • small businesses (“SMBs”), which we define as sites with annual online sales less than $1 million.
As we work to develop and deliver this platform for our customers, we will also invest in and grow our business by acquiring additional customers to our platform, growing our revenue with existing customers, and expanding our presence in new segments and geographies.
As we work to develop and deliver this platform for our customers, we will also invest in and grow our business by acquiring additional customers to our platform, growing our revenue with existing customers, and expanding our presence in new markets and geographies while maintaining a focus on profitability.
Our APAC presence has driven a 10% and 52% APAC revenue growth for the years ended December 31, 2022 and 2021, respectively. Our London office has contributed to EMEA revenue growth of 34% and 68% for the years ended December 31, 2022 and 2021, respectively.
Our APAC presence has driven a 7 percent and 9 percent APAC revenue growth for the years ended December 31, 2023 and 2022, respectively. Our London office has contributed to EMEA revenue growth of 25 percent and 34 percent for the years ended December 31, 2023 and 2022, respectively.
Facilities Our worldwide corporate headquarters is located in Austin, Texas. It covers 70,682 square feet pursuant to an operating lease that expires in 2028. We also have office locations key global locations including London, San Francisco, Kyiv, Ukraine and Sydney, Australia. We believe our current facilities are suitable and adequate to meet our current needs.
Facilities Our worldwide corporate headquarters is located in Austin, Texas. It covers 70,682 square feet pursuant to an operating lease that expires in 2028. We also have office locations across the United States and globally, including San Francisco, Los Angeles, Atlanta, London, UK, Kyiv, Ukraine and Sydney, Australia.
Our platform is subject to a rigorous set of security standards designed to ensure the security of customer data. Our customers We serve customers across a range of sizes, geographies, and segments including B2C, B2B, and DNBs.
Our platform is built using best-of-breed open source technologies, deployed across geographically-distributed data centers. Our platform is subject to a rigorous set of security standards designed to ensure the security of customer data. Our customers We serve customers across a range of sizes, geographies, and lines of business including B2C, B2B, and DNBs.
We hold domestic and international domain names that include “BigCommerce” and similar variations. Employees and Human Capital Resources As of December 31, 2022, we had 1,500 full-time employees, including 388 in research and development, 409 in sales and marketing and 703 in general and administrative, professional services, and customer support.
We hold domestic and international domain names that include “BigCommerce” and similar variations. Employees and human capital resources As of December 31, 2023, we had 1,321 full-time employees, including 393 in cost of sales, 359 in research and development, 369 in sales and marketing and 200 in general and administrative.
We believe no other SaaS platform offers comparable enterprise functionality and flexibility at our price point — an advantage increasingly recognized by the world’s most respected technology analysts. Partners are essential to our open strategy. We believe we possess one of the deepest and broadest ecosystems of integrated technology solutions in the ecommerce industry.
We believe no other SaaS platform offers comparable enterprise functionality and flexibility at our price point — an advantage increasingly recognized by the world’s most respected technology analysts. We have also introduced Catalyst, our next generation storefront technology, for developers and agency partners.
Historically, B2B ecommerce adoption has lagged that of B2C, but that is changing. B2B sellers are embracing digital transformation in pursuit of both efficiency and sales effectiveness, in response to business buyers whose user experience expectations have been reshaped by B2C shopping.
B2B sellers are embracing digital transformation in pursuit of both efficiency and sales effectiveness, in response to business buyers whose user experience expectations have been reshaped by B2C shopping. 3 Table of Contents Technology, infrastructure and operations We have designed our platform with enterprise-grade security, reliability, and scalability as top priorities.
We plan to add additional languages throughout 2023. 3 Table of Contents We maintain our headquarters in Austin, Texas. Approximately 75% of our employees are located in the United States, as of December 31, 2022. We were originally founded in Sydney, Australia.
A component of our growth strategy involves the further expansion of our operations and customer base internationally. We maintain our headquarters in Austin, Texas. Approximately 70 percent of our employees are located in the United States, as of December 31, 2023. We were originally founded in Sydney, Australia.
For example, we occasionally cannot be certain which laws will be deemed applicable to us given the global nature of our business. This ambiguity includes topics such as data privacy and security, pricing, advertising, taxation, content regulation, and intellectual property ownership and infringement.
This ambiguity includes topics such as data privacy and security, pricing, advertising, taxation, content regulation, and intellectual property ownership and infringement.
However, neither historical seasonal patterns nor historical patterns of product introductions should be considered reliable indicators of our future pattern of product introductions, future revenue or financial performance. Regulatory considerations 4 Table of Contents The legal environment of internet-based businesses, both in the United States and internationally, is evolving rapidly and is often unclear.
Additionally, new product introductions can significantly impact revenue, product costs and operating expenses. However, neither historical seasonal patterns nor historical patterns of product introductions should be considered reliable indicators of our future pattern of product introductions, future revenue or financial performance.
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While the COVID-19 pandemic accelerated some of these trends, the pandemic's impact on these trends has moderated over the past year as pandemic-related restrictions have been lifted. Technology, infrastructure and operations We have designed our platform with enterprise-grade security, reliability, and scalability as top priorities. Our platform is built using best-of-breed open source technologies, deployed across geographically-distributed data centers.
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Purpose-built for the needs of mid-market and enterprise B2C and B2B brands and retailers, Catalyst is designed to provide a simplified starting point for BigCommerce customers, ecommerce developers and agency partners to easily and quickly build online stores using a composable architecture.
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In December 2022, we exited and made the decision to put 40,540 square feet of our Austin headquarters up for sublease. We believe our current facilities are suitable for the composition of our staff and additional or substitute space will be available as needed to accommodate any such expansion of our operations.
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Catalyst helps increase the pace of development without sacrificing quality, with fully customizable storefront components and a streamlined GraphQL API client optimized for the latest version of Next.js and React Server Components. Partners are essential to our open strategy. We believe we possess one of the deepest and broadest ecosystems of integrated technology solutions in the ecommerce industry.
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Historically, B2B ecommerce adoption has lagged that of B2C, but that is changing.
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In October 2023, we entered into an agreement to sublease 32,957 rentable square feet in our Austin location which commenced in January 2024. We currently have approximately 7,583 square feet of our Austin headquarters available for sublease.
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Regulatory considerations The legal environment of internet-based businesses, both in the United States and internationally, is evolving rapidly and is often unclear. For example, we occasionally cannot be certain which laws will be deemed applicable to us given the global nature of our business.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThis may result in customers curtailing or ceasing their use of our platform, our reputation being harmed, our incurring significant liabilities, and adverse effects on our results of operations and growth prospects; • Increases in cost, interruptions in service, latency, or poor service from our third-party data center providers could impair the delivery of our platform; • If the security of information we possess is compromised or is otherwise accessed without authorization, our reputation may be harmed and we may be exposed to liability and loss of business; • If there are interruptions or performance problems associated with our technology or infrastructure, our customers, partners and prospects may experience service outages, and delays in using our platform; • If we fail to maintain or grow our brand recognition, our ability to expand our customer base will be impaired and our financial condition may suffer; • If we fail to offer high quality support, our business and reputation could suffer; • Evolving global laws, regulations and standards on privacy and data security, restrictions on cross-border data transfers, and data localization requirements may limit the use and adoption of our services, expose us to liability, or otherwise adversely affect our business; • Activities of customers, their shoppers, and our partners could damage our brand, subject us to liability and harm our business and financial results; • We could incur substantial costs in protecting or defending our proprietary rights.
Biggest changeIf we or our third-party providers fail to protect the security of this information and/or experience a data security incident, our reputation may be harmed and we may be exposed to material financial penalties and legal liability, which could materially adversely affect our business, results of operations, and financial condition; • Increases in cost, interruptions in service, latency, or poor service from our third-party data center providers could impair the delivery of our platform; • If the security of information we possess is compromised or is otherwise accessed without authorization, our reputation may be harmed and we may be exposed to liability and loss of business; • If there are interruptions or performance problems associated with our technology or infrastructure, our customers, partners and prospects may experience service outages, and delays in using our platform; • We have identified a material weakness in our internal controls over financial reporting related to information technology general controls.
These provisions, which may delay, prevent or deter a merger, acquisition, tender offer, proxy contest, or other transaction that stockholders may consider favorable, include the following: • the division of our board of directors into three classes and the election of each class for three-year terms; • advance notice requirements for stockholder proposals and director nominations; • provisions limiting stockholders’ ability to call special meetings of stockholders, to require special meetings of stockholders to be called, and to take action by written consent; • restrictions on business combinations with interested stockholders; • in certain cases, the approval of holders representing at least 66 2⁄3 % of the total voting power of the shares entitled to vote generally in the election of directors will be required for stockholders to adopt, amend or repeal our bylaws, or amend or repeal certain provisions of our certificate of incorporation; • no cumulative voting; • the required approval of holders representing at least 66 2⁄3 % of the total voting power of the shares entitled to vote at an election of the directors to remove directors; and • the ability of our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our governing body.
These provisions, which may delay, prevent or deter a merger, acquisition, tender offer, proxy contest, or other transaction that stockholders may consider favorable, include the following: • the division of our board of directors into three classes and the election of each class for three-year terms; • advance notice requirements for stockholder proposals and director nominations; • provisions limiting stockholders’ ability to call special meetings of stockholders, to require special meetings of stockholders to be called, and to take action by written consent; • restrictions on business combinations with interested stockholders; • in certain cases, the approval of holders representing at least 66 2⁄3 percent of the total voting power of the shares entitled to vote generally in the election of directors will be required for stockholders to adopt, amend or repeal our bylaws, or amend or repeal certain provisions of our certificate of incorporation; • no cumulative voting; • the required approval of holders representing at least 66 2⁄3 percent of the total voting power of the shares entitled to vote at an election of the directors to remove directors; and • the ability of our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our governing body.
Failure to overcome any of these difficulties could negatively affect our results of operations. 17 Table of Contents Our current international operations and future initiatives involve a variety of risks, including: • geopolitical crises, such as the Russian invasion of Ukraine and other escalating global tensions that could lead to disruption, instability and volatility in global markets and industries; • changes in a country’s or region’s political or economic conditions; • the need to adapt and localize our platform for specific countries; • greater difficulty collecting accounts receivable and longer payment cycles; • potential changes in trade relations arising from policy initiatives critical of existing and proposed trade agreements; • unexpected changes in laws, regulatory requirements, taxes, or trade laws; • more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information, increasingly common around the globe; • differing labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • challenges inherent in efficiently managing an increased number of employees over large geographic distances (including in a work-from-home environment), with the need to implement appropriate systems, policies, benefits, and compliance programs; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we chose to do so in the future; • limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • laws and business practices favoring local competitors or general preferences for local vendors; • limited or insufficient intellectual property protection or difficulties enforcing our intellectual property; • political instability or terrorist activities; • risks related to global health epidemics, such as the COVID-19 pandemic, including restrictions on our ability and our customers’ ability to travel, disruptions in our customers’ ability to distribute products, and temporary closures of our customers’ facilities; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Failure to overcome any of these difficulties could negatively affect our results of operations. 20 Table of Contents Our current international operations and future initiatives involve a variety of risks, including: • geopolitical crises, such as the Russian invasion of Ukraine and other escalating global tensions that could lead to disruption, instability and volatility in global markets and industries; • changes in a country’s or region’s political or economic conditions; • the need to adapt and localize our platform for specific countries; • greater difficulty collecting accounts receivable and longer payment cycles; • potential changes in trade relations arising from policy initiatives critical of existing and proposed trade agreements; • unexpected changes in laws, regulatory requirements, taxes, or trade laws; • more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information, increasingly common around the globe; • differing labor regulations, especially in Europe, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; • challenges inherent in efficiently managing an increased number of employees over large geographic distances (including in a work-from-home environment), with the need to implement appropriate systems, policies, benefits, and compliance programs; • difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems; • increased travel, real estate, infrastructure, and legal compliance costs associated with international operations; • currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions if we chose to do so in the future; • limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations in other countries; • laws and business practices favoring local competitors or general preferences for local vendors; • limited or insufficient intellectual property protection or difficulties enforcing our intellectual property; • political instability or terrorist activities; • risks related to global health epidemics, including restrictions on our ability and our customers’ ability to travel, disruptions in our customers’ ability to distribute products, and temporary closures of our customers’ facilities; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
We are often required to spend significant time and resources to better educate our potential mid-market and large enterprise customers and familiarize them with the platform. The length of our sales cycle for these customers, from initial evaluation to contract execution, is generally three to six months but can vary substantially.
We are often required to spend significant time and resources to better educate our potential mid-market and enterprise customers and familiarize them with the platform. The length of our sales cycle for these customers, from initial evaluation to contract execution, is generally three to six months but can vary substantially.
Mid-market and large enterprise customers, particularly those in highly regulated industries and those requiring customized applications, may have a lengthy sales cycle for the evaluation and implementation of our platform. This may cause a delay between increasing operating expenses for such sales efforts and, upon successful sales, the generation of corresponding revenue.
Mid-market and enterprise customers, particularly those in highly regulated industries and those requiring customized applications, may have a lengthy sales cycle for the evaluation and implementation of our platform. This may cause a delay between increasing operating expenses for such sales efforts and, upon successful sales, the generation of corresponding revenue.
Our customers rely on our personnel for support related to our subscription and customer solutions. High-quality support is important for the renewal and expansion of our agreements with existing customers. The importance of high-quality support will increase as we expand our business and pursue new customers, particularly mid-market and large enterprise customers.
Our customers rely on our personnel for support related to our subscription and customer solutions. High-quality support is important for the renewal and expansion of our agreements with existing customers. The importance of high-quality support will increase as we expand our business and pursue new customers, particularly mid-market and enterprise customers.
We cannot be certain when or if our operations will generate sufficient cash to fund our ongoing operations or the growth of our business. On September 14, 2021, we issued $345.0 million in aggregate principal amount of our 0.25% Convertible Notes (the “Convertible Notes”).
We cannot be certain when or if our operations will generate sufficient cash to fund our ongoing operations or the growth of our business. On September 14, 2021, we issued $345.0 million in aggregate principal amount of our 0.25 percent Convertible Notes (the “Convertible Notes”).
Any of the above circumstances or events may harm our reputation, cause customers to terminate their agreements with us, impair our ability to grow our customer base, subject us to financial liabilities under our service level agreements (“SLAs”), and otherwise harm our business, results of operations, and financial condition.
Any of the above circumstances or events may harm our reputation, cause customers to terminate their agreements with us, impair our ability to grow our customer base, subject us to financial liabilities under our service level agreements, and otherwise harm our business, results of operations, and financial condition.
Our sales cycle with mid-market and large enterprise customers can be long and unpredictable, and our sales efforts require considerable time and expense. The timing of our sales with our mid-market and large enterprise customers and related revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for these customers.
Our sales cycle with mid-market and enterprise customers can be long and unpredictable, and our sales efforts require considerable time and expense. The timing of our sales with our mid-market and enterprise customers and related revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for these customers.
Even if such a data breach did not arise out of our action or inaction, or if it were to affect one or more of our competitors or our customers’ competitors, rather than us, the resulting concern could negatively affect our customers and our business.
Even if a data breach did not arise out of our action or inaction, or if it were to affect one or more of our competitors or our customers’ competitors, rather than us, the resulting concern could negatively affect our customers and our business.
The war between Russia and Ukraine has resulted in the imposition of sanctions by the United States, other North Atlantic Treaty Organization (“NATO”) member states, as well as non-member states against Russia, certain Russian citizens, and enterprises.
The war between Russia and Ukraine has resulted in the imposition of sanctions by the United States, other North Atlantic Treaty Organization member states, as well as non-member states against Russia, certain Russian citizens, and enterprises.
The application of the if-converted method may reduce our reported diluted earnings per share, and accounting standards may change in the future in a manner that may adversely affect our diluted earnings per share. 27 Table of Contents Furthermore, if any of the conditions to the convertibility of the Convertible Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the Convertible Notes as a current, rather than a long-term, liability.
The application of the if-converted method may reduce our reported diluted earnings per share, and accounting standards may change in the future in a manner that may adversely affect our diluted earnings per share. 31 Table of Contents Furthermore, if any of the conditions to the convertibility of the Convertible Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the Convertible Notes as a current, rather than a long-term, liability.
If our platform does not operate as effectively when accessed through these devices, our customers and their shoppers may not be satisfied with our services, which could harm our business; 6 Table of Contents • Changes in tax laws or regulations that are applied adversely to us or our customers could increase the cost of our ecommerce platform and adversely impact our business; • The market price of shares of our common stock has been volatile, which could cause the value of your investment to decline; • Our failure to raise capital when needed could harm our business, operating results and financial condition.
If our platform does not operate as effectively when accessed through these devices, our customers and their shoppers may not be satisfied with our services, which could harm our business; • Changes in tax laws or regulations that are applied adversely to us or our customers could increase the cost of our ecommerce platform and adversely impact our business; • The market price of shares of our common stock has been volatile, which could cause the value of your investment to decline; • Our failure to raise capital when needed could harm our business, operating results and financial condition.
As our efforts increasingly focus on enterprise accounts, we may face greater sales, marketing, development and support costs, longer sales cycles and more unpredictability in attracting or retaining enterprise accounts. Our success in this enterprise focus will depend on our ability to effectively transition some existing SMB sales and marketing personnel and resources to the enterprise segment.
As our efforts increasingly focus on enterprise accounts, we may face greater sales, marketing, development and support costs, longer sales cycles and more unpredictability in attracting or retaining enterprise accounts. Our success in this enterprise focus will depend on our ability to effectively transition some existing SMB sales and marketing personnel and resources to enterprise.
We generally cannot and do not proactively monitor the content that our customers upload or the information provided to us through the applications integrated with our ecommerce platform; therefore, we do not control the substance of the content on our servers, which may include personal information.
We generally cannot and do not proactively monitor the content that our customers upload or the information provided to us through the applications integrated with our ecommerce platform; therefore, we do not control the substance of the content on our servers, which may include Confidential Information.
We believe our revenue growth depends on a number of factors, including: • our ability to attract new customers and retain and increase sales to existing customers; • our ability to maintain and expand our relationships with our partners; • our ability to, and the ability of our partners to, successfully implement our platform, increase our existing customers’ use of our platform, and provide our customers with excellent customer support; • our ability to increase the number of our partners; • our ability to develop our existing platform and introduce new functionality to our platform; • our ability to expand into new market segments and internationally; and • our ability to earn revenue share and customer referrals from our partner ecosystem.
We believe our revenue growth depends on a number of factors, including: • our ability to attract new customers and retain and increase sales to existing customers; • our ability to maintain and expand our relationships with our partners; • our ability to, and the ability of our partners to, successfully implement our platform, increase our existing customers’ use of our platform, and provide our customers with excellent customer support; • our ability to increase the number of our partners; • our ability to develop our existing platform and introduce new functionality to our platform; • our ability to expand into new markets and internationally; and • our ability to earn revenue share and customer referrals from our partner ecosystem.
If we are unable to respond to these changes in a cost-effective manner, our platform may become less marketable and less competitive or obsolete, and our operating results may be negatively affected. 22 Table of Contents The estimates of market opportunity and forecasts of market growth included in this Annual Report on Form 10-K may prove to be inaccurate.
If we are unable to respond to these changes in a cost-effective manner, our platform may become less marketable and less competitive or obsolete, and our operating results may be negatively affected. The estimates of market opportunity and forecasts of market growth included in this Annual Report on Form 10-K may prove to be inaccurate.
Additional factors that may influence the length and variability of our sales cycle include: • the effectiveness of our sales force as we hire and train our new salespeople to sell to mid-market and large enterprise customers; • the discretionary nature of purchasing and budget cycles and decisions; • the obstacles placed by customers’ procurement process; • economic conditions and other factors impacting customer budgets; 11 Table of Contents • customers’ integration complexity; • customers’ familiarity with SaaS ecommerce solutions; • customers’ evaluation of competing products during the purchasing process; and • evolving customer demands.
Additional factors that may influence the length and variability of our sales cycle include: • the effectiveness of our sales force as we hire and train our new salespeople to sell to mid-market and enterprise customers; • the discretionary nature of purchasing and budget cycles and decisions; • the obstacles placed by customers’ procurement process; • economic conditions and other factors impacting customer budgets; • customers’ integration complexity; • customers’ familiarity with SaaS ecommerce solutions; • customers’ evaluation of competing products during the purchasing process; and • evolving customer demands.
In December 2022, we implemented a reduction in force. Any reduction in force may yield unintended consequences and costs, such as attrition beyond the intended reduction in force, the distraction of employees and reduced employee morale, which could, in turn, adversely impact productivity, including through a loss of continuity, loss of accumulated knowledge and/or inefficiency during transitional periods.
In December 2022 and November 2023, we implemented reductions in force. Any reduction in force may yield unintended consequences and costs, such as attrition beyond the intended reduction in force, the distraction of employees and reduced employee morale, which could, in turn, adversely impact productivity, including through a loss of continuity, loss of accumulated knowledge and/or inefficiency during transitional periods.
Our revenue may be disproportionately affected by delays or reductions in general IT spending. Competitors, many of whom are larger and more established than we are, may respond to market conditions by lowering prices and attempting to lure away our customers. In addition, consolidation in certain industries may result in reduced overall spending on our platform.
Our revenue may be disproportionately affected by delays or reductions in general IT spending. Competitors, many of whom are larger and more 27 Table of Contents established than we are, may respond to market conditions by lowering prices and attempting to lure away our customers. In addition, consolidation in certain industries may result in reduced overall spending on our platform.
If we fail to meaningfully protect our intellectual property and proprietary rights, our business, operating results, and financial condition could be adversely affected. 13 Table of Contents We have been, and may in the future be, subject to legal proceedings and litigation, including intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business.
If we fail to meaningfully protect our intellectual property and proprietary rights, our business, operating results, and financial condition could be adversely affected. We have been, and may in the future be, subject to legal proceedings and litigation, including intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business.
Legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy our platform and use information that we regard as proprietary to create products and services that compete with ours.
Legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for 14 Table of Contents unauthorized third parties to copy our platform and use information that we regard as proprietary to create products and services that compete with ours.
We price our subscriptions based on a combination of transaction and order volume, and feature functionality. We recently adjusted our pricing levels and expect that we may need to change our pricing again in the future.
We price our subscriptions based on a combination of transaction and order volume, and feature functionality. In 2023 we adjusted our pricing levels and expect that we may need to change our pricing again in the future.
A component of our growth strategy involves the further expansion of our operations and customer base internationally. In the case of the two most recent fiscal years, approximately 22 percent of our revenue has been generated from customers outside the United States. We currently have locations in the United States, Australia, the United Kingdom (“UK”), Singapore, and Ukraine.
A component of our growth strategy involves the further expansion of our operations and customer base internationally. In the case of the two most recent fiscal years, approximately 24 percent of our revenue has been generated from customers outside the United States. We currently have locations in the United States, Australia, the United Kingdom (“UK”), and Ukraine.
You should not rely on our revenue for any prior periods as any indication of our future revenue or revenue growth. We are increasingly focusing our sales and marketing efforts on enterprise accounts. Our business would be harmed if we fail to implement this strategy successfully.
You should not rely on our revenue for any prior periods as any indication of our future revenue or revenue growth. 8 Table of Contents We are increasingly focusing our sales and marketing efforts on enterprise accounts. Our business would be harmed if we fail to implement this strategy successfully.
If our platform is unavailable or if our customers are unable to access our platform within a reasonable amount of time, our business would be harmed. Any outage on our platform would impair the ability of our customers to engage in ecommerce, which would negatively impact our brand, reputation and customer satisfaction.
If our platform is unavailable or if our customers are unable to access our platform within a reasonable amount of time, our business would 12 Table of Contents be harmed. Any outage on our platform would impair the ability of our customers to engage in ecommerce, which would negatively impact our brand, reputation and customer satisfaction.
Some of our larger competitors also have substantially broader product lines and market focus and will therefore not be as susceptible to downturns in a particular market. Conditions in our market could change rapidly and significantly as a result of technological advancements, partnering by our competitors, or continuing market consolidation.
Some of our larger competitors also have substantially broader product lines and market focus and will therefore not be as susceptible to downturns in a particular market. Conditions in our market could change rapidly and significantly as a result of 19 Table of Contents technological advancements, partnering by our competitors, or continuing market consolidation.
On occasion, some customers will negotiate their contracts to include a trial period, delayed payment or a number of months on a promotional basis. Much of our revenue is generated from the recognition of contract liabilities from contracts entered into during previous periods.
On occasion, some customers will negotiate their contracts to include a trial period, delayed payment or a number of months on a promotional basis. 13 Table of Contents Much of our revenue is generated from the recognition of contract liabilities from contracts entered into during previous periods.
It is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in such action.
It is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our amended and restated 32 Table of Contents certificate of incorporation to be inapplicable or unenforceable in such action.
Our business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others; • We may acquire or invest in companies, which may divert our management’s attention and result in additional dilution to our stockholders.
Our business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others; 6 Table of Contents • We may acquire or invest in companies, which may divert our management’s attention and result in additional dilution to our stockholders.
In addition, job candidates and existing employees often consider the value of the stock awards they receive in connection with their employment. If the perceived value of our stock 23 Table of Contents awards declines, it may adversely affect our ability to recruit and retain highly skilled employees.
In addition, job candidates and existing employees often consider the value of the stock awards they receive in connection with their employment. If the perceived value of our stock awards declines, it may adversely affect our ability to recruit and retain highly skilled employees.
Additionally, due to the heightened regulatory environment in which they operate, potential customers in these industries may encounter additional difficulties when trying to move away from legacy ecommerce platforms to an open SaaS platform like the one we provide. We may be subject to additional obligations to collect and remit sales tax and other taxes.
Additionally, due to the heightened regulatory environment in which they operate, potential customers in these industries may encounter additional difficulties when trying to move away from legacy ecommerce platforms to an open SaaS platform like the one we provide. 22 Table of Contents We may be subject to additional obligations to collect and remit sales tax and other taxes.
Additional risks and uncertainties that we are unaware of may also become important factors that adversely affect our business. The occurrence of any of the following risks, or additional risks that we are unaware of, could materially and adversely affect 7 Table of Contents our business, strategies, prospects, financial condition, results of operations and cash flows.
Additional risks and uncertainties that we are unaware of may also become important factors that adversely affect our business. The occurrence of any of the following risks, or additional risks that we are unaware of, could materially and adversely affect our business, strategies, prospects, financial condition, results of operations and cash flows.
Because our decision to issue securities in the future offering will depend on numerous 20 Table of Contents considerations, including factors beyond our control, we cannot predict or estimate the amount, timing or nature of any future issuances of debt or equity securities.
Because our decision to issue securities in the future offering will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing or nature of any future issuances of debt or equity securities.
We have historically operated a strategic development center in Ukraine where we employed 100 individuals as of December 31, 2022. We have also invested significant resources in Ukraine over the last several years. As a result, warfare, political turmoil or terrorist attacks in Ukraine could negatively affect our Ukrainian operations and our business.
We have historically operated a strategic development center in Ukraine where we employed 64 individuals as of December 31, 2023. We have also invested significant resources in Ukraine over the last several years. As a result, warfare, political turmoil or terrorist attacks in Ukraine could negatively affect our Ukrainian operations and our business.
In addition, we make public statements about our use and disclosure of personal data through our data privacy policies that are posted on our websites.
We make public statements about our use and disclosure of personal data through our data privacy policies that are posted on our websites.
Furthermore, the recently enacted Inflation Reduction Act introduced, among other 25 Table of Contents changes, a 15% corporate minimum tax on certain United States corporations and a 1% excise tax on certain stock redemptions by United States corporations. The impact of this tax legislation on holders of our common stock is uncertain and could be adverse.
Furthermore, the recently enacted Inflation Reduction Act introduced, among other changes, a 15 percent corporate minimum tax on certain United States corporations and a 1 percent excise tax on certain stock redemptions by United States corporations. The impact of this tax legislation on holders of our common stock is uncertain and could be adverse.
Obtaining the necessary export license or other authorization for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities even if the export license ultimately may be granted.
Obtaining the necessary export 29 Table of Contents license or other authorization for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities even if the export license ultimately may be granted.
We have a history of operating losses, and we may not be able to generate sufficient revenue to achieve profitability on our anticipated timeline or sustain it thereafter. We have not yet achieved profitability. We incurred net losses of $139.9 million, $76.7 million and $37.6 million for the years ended December 31, 2022, 2021, and 2020, respectively.
We have a history of operating losses, and we may not be able to generate sufficient revenue to achieve profitability on our anticipated timeline or sustain it thereafter. We have not yet achieved profitability. We incurred net losses of $64.7 million, $139.9 million and $76.7 million for the years ended December 31, 2023, 2022, and 2021 respectively.
These laws and regulations could impact taxation, internet neutrality, tariffs, content, copyrights, liability for content, distribution, electronic contracts and other communications, consumer protection, online advertising, and the characteristics and quality of services.
These requirements could impact taxation, internet neutrality, tariffs, content, copyrights, liability for content, distribution, electronic contracts and other communications, consumer protection, online advertising, and the characteristics and quality of services.
Debt or equity issued to raise additional capital may reduce the value of our common stock; • Insiders have substantial control over us, which may limit our stockholders’ ability to influence corporate matters and delay or prevent a third party from acquiring control over us; • If our operating and financial performance in any given period does not meet the guidance that we provide to the public or the expectations of investment analysts, the market price of our common stock may decline; • The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act, the requirements of the Sarbanes-Oxley Act and the requirements of Nasdaq, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner • Provisions in our organizational documents and certain rules imposed by regulatory authorities may delay or prevent our acquisition by a third party; • The provision of our amended and restated certificate of incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers; • Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate.
Debt or equity issued to raise additional capital may reduce the value of our common stock; • If our operating and financial performance in any given period does not meet the guidance that we provide to the public or the expectations of investment analysts, the market price of our common stock may decline; • The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act, the requirements of the Sarbanes-Oxley Act and the requirements of Nasdaq, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner; • Provisions in our organizational documents and certain rules imposed by regulatory authorities may delay or prevent our acquisition by a third party; • The provision of our amended and restated certificate of incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers; • Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate.
If we are unable to develop and sell new technology, features, and functionality for our platform that satisfy our customers and that keep pace with rapid technological and industry change, our revenue and operating results could be adversely affected.
If we are unable to develop and sell new technology, features, and functionality for our platform that satisfy our customers and that keep pace with rapid technological and industry change, our revenue and operating results could be adversely 25 Table of Contents affected.
Many of these laws and regulations, including the European Union’s General Data Protection Regulation (“GDPR”), the UK General Data Protection Regulation (“UK GDPR”) and the California Consumer Privacy Act (the “CCPA”), contain detailed requirements regarding collecting and processing personal information, restrict the use and storage of such information, and govern the need for consumer consent.
Many of these laws and regulations, including the European Union’s General Data Protection Regulation (“GDPR”), the UK General Data Protection Regulation (“UK GDPR”) and United States state privacy laws, including the California Consumer Privacy Act (the “CCPA”), contain detailed requirements regarding collecting and processing personal information, restrict the use and storage of such information, and govern the need for consumer consent for certain types of processing.
If we invest substantial time and resources to expand our international operations and are unable to do so 18 Table of Contents successfully, our business and operating results will suffer. We recently adjusted our pricing levels and may in the future need to reduce or change our pricing model to remain competitive.
If we invest substantial time and resources to expand our international operations and are 21 Table of Contents unable to do so successfully, our business and operating results will suffer. We have previously adjusted our pricing levels and may in the future need to reduce or change our pricing model to remain competitive.
For one or more of those transactions, we may: • issue additional equity securities that would dilute our stockholders; • use cash that we may need in the future to operate our business; • incur debt on terms unfavorable to us or that we are unable to repay; • incur large charges or substantial liabilities; • encounter difficulties retaining key employees of the acquired company or integrating diverse software codes or business cultures; and • become subject to adverse tax consequences, substantial depreciation, or deferred compensation charges. 14 Table of Contents We rely on third-party proprietary and open source software for our platform.
For one or more of those transactions, we may: • issue additional equity securities that would dilute our stockholders; • use cash that we may need in the future to operate our business; • incur debt on terms unfavorable to us or that we are unable to repay; • incur large charges or substantial liabilities; • encounter difficulties retaining key employees of the acquired company or integrating diverse software codes or business cultures; and • become subject to adverse tax consequences, substantial depreciation, or deferred compensation charges.
As of December 31, 2022, we had an accumulated deficit of $529.9 million. While we have experienced significant revenue growth over recent periods, we may not be able to sustain or increase our growth or achieve profitability in the future.
As of December 31, 2023, we had an accumulated deficit of $594.6 million. While we have experienced significant revenue growth over recent periods, we may not be able to sustain or increase our growth or achieve profitability in the future.
Our success is dependent, in part, upon protecting our proprietary technology. We rely on a combination of trade secret laws, contractual provisions, trademarks, service marks, copyrights, and patents in an effort to establish and protect our proprietary rights. However, the steps we take to protect our intellectual property may be inadequate.
We rely on a combination of trade secret laws, contractual provisions, trademarks, service marks, copyrights, and patents in an effort to establish and protect our proprietary rights. However, the steps we take to protect our intellectual property may be inadequate.
Such events could prevent us from providing our platform to our customers. A catastrophic event that results in the destruction or disruption of our data centers, or our network infrastructure or IT systems, including any errors, defects, or failures in third-party hardware, could affect our ability to conduct normal business operations, and adversely affect our operating results.
A catastrophic event that results in the destruction or disruption of our data centers, or our network infrastructure or IT systems, including any errors, defects, or failures in third-party hardware, could affect our ability to conduct normal business operations, and adversely affect our operating results.
If our relationships with our strategic technology partners or the partners of companies we acquire are disrupted, we may receive less revenue and incur costs to form other revenue-generating strategic technology partnerships.
Any companies we may acquire may have strategic technology partners, which may be different or competitive with the relationships we have. If our relationships with our strategic technology partners or the partners of companies we acquire are disrupted, we may receive less revenue and incur costs to form other revenue-generating strategic technology partnerships.
We expect a relatively small number of new enterprise accounts to constitute a more material portion of our total bookings in any given period. As a result, even if our increased shift toward enterprise accounts is successful, we may experience less stable or less predictable bookings between periods.
We expect a relatively small number of new enterprise accounts to constitute a more material portion of our total bookings in any given period. As a result, even if our increased shift toward enterprise accounts is successful, we may experience less stable or less predictable bookings between periods. This may make it challenging for us to accurately forecast our results.
As of December 31, 2022, we had research and development tax credit carryforwards of approximately $8.8 million and $6.0 million for federal and state tax purposes, respectively. The federal and state tax credits will begin to expire in 2024.
As of December 31, 2023, we had research and development tax credit carryforwards of approximately $13.6 million and $7.1 million for federal and state tax purposes, respectively. The federal and state tax credits will begin to expire in 2024.
Additionally, we currently have significant numbers of securities outstanding that may be exercisable for our common stock, which may result in significant dilution and downward pressure on our stock price. As of December 31, 2022, we had 73,945,044 shares of Series 1 common stock and no shares of Series 2 common stock outstanding.
Additionally, we currently have significant numbers of securities outstanding that may be exercisable for our common stock, which may result in significant dilution and downward pressure on our stock price. As of December 31, 2023, we had approximately 76.4 million shares of Series 1 common stock and no shares of Series 2 common stock outstanding.
If so, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition or results of operations.
If so, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition or results of operations. Item 1B. Unresolve d Staff Comments. None.
As of December 31, 2022, we had net operating loss (“NOL”) carryforwards of approximately $294.9 million and $165.6 million for federal and state tax purposes, respectively, that are available to reduce future taxable income. If not utilized, the federal and state NOL carryforwards will begin to expire in 2036.
As of December 31, 2023, we had net operating loss (“NOL”) carryforwards of approximately $288.0 million and $157.7 million for federal and state tax purposes, respectively, that are available to reduce future taxable income. If not utilized, the federal and state NOL (net operating loss) carryforwards will begin to expire in 2036.
As of December 31, 2022, approximately $246.5 million of the federal NOL carryforwards do not expire and will carry forward indefinitely until utilized. As of December 31, 2022, we also had total foreign NOL carryforwards of $44.2 million, which do not expire under local law.
As of December 31, 2023, approximately $241.2 million of the federal NOL carryforwards do not expire and will carry forward indefinitely until utilized. As of December 31, 2023, we also had total foreign NOL carryforwards of $46.9 million, which do not expire under local law.
Our servers may be unable to achieve or maintain data transmission capacity sufficient for timely service of increased traffic or order processing. Our failure to achieve or maintain sufficient and performant data transmission capacity could significantly reduce demand for our platform.
As a result, our operating results may be significantly worse than forecasted. Our servers may be unable to achieve or maintain data transmission capacity sufficient for timely service of increased traffic or order processing. Our failure to achieve or maintain sufficient and performant data transmission capacity could significantly reduce demand for our platform.
These risks and uncertainties include, but are not limited to, the following: • We have a history of operating losses, and we may not be able to generate sufficient revenue to achieve profitability on our anticipated timeline or sustain it thereafter; • We have experienced significant growth in recent periods, and our recent growth rates may not be indicative of our future growth; • We face intense competition and may lack sufficient financial or other resources to maintain or improve our competitive position, which may harm our ability to add new customers, retain existing customers, and grow our business; • Our success depends in part on our partner-centric strategy; • Failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our platform; • To the extent our security measures, or those of our third-party partners or service providers, are actually or perceived to have been compromised, our platform may be perceived as not being secure.
These risks and uncertainties include, but are not limited to, the following: • We have a history of operating losses, and we may not be able to generate sufficient revenue to achieve profitability on our anticipated timeline or sustain it thereafter; • We have experienced significant growth in recent periods, and our recent growth rates may not be indicative of our future growth; • We face intense competition and may lack sufficient financial or other resources to maintain or improve our competitive position, which may harm our ability to add new customers, retain existing customers, and grow our business; • Our success depends in part on our partner-centric strategy; • Failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our platform; • We store and process confidential information, including personal information of our customers and their shoppers.
Changes in subjective assumptions, estimates and judgments by management related to complex accounting matters or changes in accounting principles generally accepted in the United States, could significantly affect our financial condition and results of operations.
Enforcement actions and sanctions could further harm our business, results of operations, and financial condition. 30 Table of Contents Changes in subjective assumptions, estimates and judgments by management related to complex accounting matters or changes in accounting principles generally accepted in the United States, could significantly affect our financial condition and results of operations.
We also will need to manage our sales processes as our sales personnel and partner network continue to grow and become more complex, and as we continue to expand into new geographies and market segments.
We also will need to manage our sales processes as our sales personnel and 26 Table of Contents partner network continue to grow and become more complex, and as we continue to expand into new geographies and markets.
As we increase our international sales and business or acquire other companies, our risks under these laws may increase. 26 Table of Contents Noncompliance with anti-corruption, anti-bribery, or anti-money laundering laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences.
Noncompliance with anti-corruption, anti-bribery, or anti-money laundering laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences.
If we are not able to generate traffic to our website through digital marketing our ability to attract new customers may be impaired. Our ability to increase our customer base and achieve broader market acceptance of our ecommerce platform will depend on our ability to expand our marketing and sales operations.
Failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our platform. If we are not able to generate traffic to our website through digital marketing our ability to attract new customers may be impaired.
They may restrict our ability to add, customize or integrate systems, functionality and shopper experiences. Such changes could limit or terminate our ability to use these third-party applications and platforms and provide our customers a highly extensible and customizable experience. This could negatively impact our offerings and harm our business.
Such changes could limit or terminate our ability to use these third-party applications and platforms and provide our customers a highly extensible and customizable experience. This could negatively impact our offerings and harm our business.
The successful assertion of one or more large claims against us, or changes in our insurance policies, including premium increases or the imposition of large deductible or coinsurance requirements, could have an adverse effect on our business, financial condition, and results of operations. We are also subject to federal, state, and foreign laws regarding cybersecurity and the protection of data.
The successful assertion of one or more large claims against us, or changes in our insurance policies, including premium increases or the imposition of large deductible or coinsurance requirements, could have an adverse effect on our business, financial condition, and results of operations.
Even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all; • We anticipate that our operations will continue to increase in complexity as we grow, which will create management challenges; • We depend on our senior management team and the loss of one or more key employees or an inability to attract and retain highly skilled employees could adversely affect our business; • If we are unable to maintain our corporate culture as we grow, we could lose the innovation, teamwork, passion, and focus on execution that we believe contribute to our success, and our business may be harmed; • Unfavorable conditions in our industry or the global economy, or reductions in IT spending, could limit our ability to grow our business and negatively affect our results of operations; • Operations at our strategic development center in Kyiv, Ukraine have been impacted as a result of ongoing military action by Russia in Ukraine and our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy resulting from the conflict in Ukraine or the unavailability of our personnel in Ukraine; • Natural catastrophic events and man-made problems such as power disruptions, computer viruses, global pandemics, data security breaches and terrorism may disrupt our business; • Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data protection, and other losses; • Our current operations are international in scope.
Even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all; • We anticipate that our operations will continue to increase in complexity as we grow, which will create management challenges; • We depend on our senior management team and the loss of one or more key employees or an inability to attract and retain highly skilled employees could adversely affect our business; • Unfavorable conditions in our industry or the global economy, or reductions in IT spending, could limit our ability to grow our business and negatively affect our results of operations; • Natural catastrophic events and man-made problems such as power disruptions, computer viruses, global pandemics, data security breaches and terrorism may disrupt our business; • Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data protection, and other losses; • Our current operations are international in scope.
It is possible that these attacks could have collateral effects on additional critical infrastructure and financial institutions globally, which could adversely affect our operations and could increase the frequency and severity of cyber-based attacks against our information technology systems.
For example, the war has been accompanied by cyberattacks against the Ukrainian government and other countries in the region. It is possible that these attacks could have collateral effects on additional critical infrastructure and financial institutions globally, which could adversely affect our operations and could increase the frequency and severity of cyber-based attacks against our information technology systems.
If we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock.
The terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. If we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock.
Jurisdictions in which we have not historically collected or accrued sales, use, value added, or other taxes could assert our liability for such taxes, which could result in substantial tax liabilities and related penalties for past sales, discourage customers from using our platform or otherwise harm our business and operating results. 19 Table of Contents Changes in tax laws or regulations that are applied adversely to us or our customers could increase the cost of our ecommerce platform and adversely impact our business.
Jurisdictions in which we have not historically collected or accrued sales, use, value added, or other taxes could assert our liability for such taxes, which could result in substantial tax liabilities and related penalties for past sales, discourage customers from using our platform or otherwise harm our business and operating results.
If we are unable to generate the necessary cash flow, we may be required to adopt one or more alternatives, such as selling assets or obtaining debt financing or equity capital on terms that may be onerous or highly dilutive. Furthermore, our existing indebtedness may limit our ability to incur additional indebtedness on favorable terms or at all.
If we are unable to generate the necessary cash flow, we may be required to adopt one or more alternatives, such as selling assets or obtaining debt financing or equity capital on terms that 23 Table of Contents may be onerous or highly dilutive.
While we have policies and procedures to address compliance with such laws, our employees and agents could violate our policies and applicable law, for which we may be ultimately held responsible.
While we have policies and procedures to address compliance with such laws, our employees and agents could violate our policies and applicable law, for which we may be ultimately held responsible. As we increase our international sales and business or acquire other companies, our risks under these laws may increase.
If we do not help our customers quickly resolve issues and provide effective ongoing support, our ability to sell new software to existing and new customers could suffer and our reputation with existing or potential customers could be harmed. We store personal information of our customers and their shoppers.
If we do not help our customers quickly resolve issues and provide effective ongoing support, our ability to sell new software to existing and new customers could suffer and our reputation with existing or potential customers could be harmed. Failure to adequately protect our proprietary rights could impair our competitive position.
While our contracts with strategic technology partners generally limit the ability of such partners to terminate the contract for convenience on short notice, certain of our strategic technology partners have termination for convenience clauses in their contracts with us. Any companies we may acquire, may have strategic technology partners which may be different or competitive with the relationships we have.
While our contracts with strategic technology partners generally limit the ability of such partners to terminate the contract for convenience on short notice, certain of our strategic technology partners have 9 Table of Contents termination for convenience clauses in their contracts with us.
Our inability to obtain third-party licenses for such software, or obtain them on favorable terms, or any errors or failures caused by such software could adversely affect our business, results of operations and financial condition. Some of our offerings include software or other intellectual property licensed from third parties.
We rely on third-party proprietary and open source software for our platform. Our inability to obtain third-party licenses for such software, or obtain them on favorable terms, or any errors or failures caused by such software could adversely affect our business, results of operations and financial condition.
To the extent that our platform depends upon the successful operation of third-party software, any undetected errors or defects in such third-party software could impair the functionality of our platform, delay new feature introductions, result in a failure of our platform, and injure our reputation.
To the extent that our platform depends upon the successful operation of third-party software, any undetected errors or defects in such third-party software could impair the functionality of our platform, delay new feature introductions, result in a failure of our platform, and injure our reputation. 16 Table of Contents Our use of open source software could subject us to possible litigation or cause us to subject our platform to unwanted open source license conditions that could negatively impact our sales.
If we raise our prices to offset the costs of these changes, existing and potential future customers may elect not to continue to subscribe or elect to subscribe to our ecommerce platform in the future.
They could require us or our customers to pay fines and/or penalties and interest for past amounts deemed to be due. If we raise our prices to offset the costs of these changes, existing and potential future customers may elect not to continue to subscribe or elect to subscribe to our ecommerce platform in the future.
Responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. Enforcement actions and sanctions could further harm our business, results of operations, and financial condition.
Responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.
We may not be able to maintain our insurance coverage. We cannot predict the outcome of lawsuits, and cannot assure you that the results of any of these actions will not have an adverse effect on our business, operating results or financial condition.
We cannot predict the outcome of lawsuits, and cannot assure you that the results of any of these actions will not have an adverse effect on our business, operating results or financial condition. We may acquire or invest in companies, which may divert our management’s attention and result in additional dilution to our stockholders.
In general, under Section 382 and 383 of the United States Internal Revenue Code of 1986 (as amended, the “Code”), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes such as research tax credits to offset future taxable income or income tax.
The amount of federal NOLs that do not expire and carryforward indefinitely that we are permitted to deduct in any future taxable year is limited to 80 percent of federal taxable income in the year utilized, where taxable income is determined without regard to the NOL deduction itself. 17 Table of Contents In general, under Section 382 and 383 of the United States Internal Revenue Code of 1986 (as amended, the “Code”), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes such as research tax credits to offset future taxable income or income tax.
Requiring us to change one or more aspects of the way we deliver our platform may harm our business. Although we carry general liability insurance and other insurance, our insurance may not cover potential claims of this type. Our insurance may not be adequate to cover us for all liability that may be imposed.
Although we carry general liability insurance and other insurance, our insurance may not cover potential claims of this type. Our insurance may not be adequate to cover us for all liability that may be imposed. We may not be able to maintain our insurance coverage.
If the costs for such services increase due to vendor consolidation, regulation, contract renegotiation or otherwise, we may not be able to increase the fees for our ecommerce platform or professional services to cover the changes. As a result, our operating results may be significantly worse than forecasted.
A significant portion of our operating cost is from our third-party data hosting and transmission services. If the costs for such services increase due to vendor consolidation, regulation, contract renegotiation or otherwise, we may not be able to increase the fees for our ecommerce platform or professional services to cover the changes.
We intend to continue to make investments to support our business and may require additional funds. Additional financing may not be available on favorable terms, if at all. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, operating results and financial condition.
If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, operating results and financial condition. If we incur additional debt, the debt holders could have rights senior to holders of our common stock to make claims on our assets.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn December 2022, we exited and made the decision to put 40,540 square feet of our Austin headquarters up for lease. We believe our current facilities are suitable for the composition of our staff and additional or substitute space will be available as needed to accommodate any such expansion of our operations.
Biggest changeWe also lease office space in San Francisco, California; Los Angeles, California; Atlanta, Georgia; Kyiv, Ukraine Sydney, Australia; and London, United Kingdom. We believe our current facilities are suitable for the composition of our staff and additional or substitute space will be available as needed to accommodate any such expansion of our operations.
Pursuant to the Four Points lease, we lease approximately 70,682 square feet of office space under a lease agreement with an initial term that expires on April 30, 2028, with the option to extend the lease for an additional two, five-year terms.
Item 2. Pr operties. Our principal executive offices are located in Austin, Texas. We lease approximately 70,682 square feet of office space under a lease agreement with an initial term that expires on April 30, 2028, with the option to extend the lease for an additional two, five-year terms.
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Item 2. Pr operties. Our principal executive offices are located in Austin, Texas in two buildings located in the Four Points and Downtown regions under separate lease agreements.
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We have made the decision to put approximately 40,540 square feet, up for sub-lease. In October 2023, we entered into an agreement to sublease 32,957 square feet in our Austin location which commenced in January 2024 with an initial term of 12 months.
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Pursuant to the Downtown lease, we lease approximately 10,750 square feet of office space with an initial term that expires on March 31, 2023, with the option to extend the lease for an additional three-year term. We also lease office space in San Francisco, California; Sydney, Australia; and London, United Kingdom.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeNot applicable. 29 Table of Contents PART II
Biggest changeNot applicable. 34 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 29 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 30 Item 6. Reserved 31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 44 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 34 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 35 Item 6. Reserved 36 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 37 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 51 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeNote that historic stock price performance is not necessarily indicative of future stock price performance. 30 Table of Contents The information contained in the Stock Performance Graph shall not be deemed to be soliciting material or to be filed with the SEC nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Exchange Act, except to the extent we specifically incorporate it by reference into such filing.
Biggest changeThe information contained in the Stock Performance Graph shall not be deemed to be soliciting material or to be filed with the SEC nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Exchange Act, except to the extent we specifically incorporate it by reference into such filing. 35 Table of Contents Issuer Purchases of Equity Securities There were no share repurchases of our common stock for the three months ended December 31, 2023 .
Equity Compensation Plan Information Information regarding the securities authorized for issuance under our equity compensation plans will be included in our Proxy Statement relating to our 2023 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2022 and is incorporated herein by reference.
Equity Compensation Plan Information Information regarding the securities authorized for issuance under our equity compensation plans will be included in our Proxy Statement relating to our 2023 annual meeting of stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended December 31, 2023 and is incorporated herein by reference.
This graph assumes the investment of $100 on August 5, 2020, our first day of trading, in our common stock at the closing price of $72.27 per share, the S&P 500 Index and the NASDAQ Computer Index, and assumes the reinvestment of dividends, if any.
This graph assumes the investment of $100 on August 5, 2020, our first day of trading, in our common stock at the closing price of $72.27 per share, the S&P 500 Index, the NASDAQ Computer Index, and the Russell 2000 Index, and assumes the reinvestment of dividends, if any.
As of December 31, 2022, we had 190 holders of record of our common stock. The actual number of shareholders is greater than this number of record holders, and includes shareholders who are beneficial owners, but whose shares are held in street names by brokers and other nominees.
As of December 31, 2023, we had 178 holders of record of our common stock. The actual number of shareholders is greater than this number of record holders, and includes shareholders who are beneficial owners, but whose shares are held in street names by brokers and other nominees.
Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between August 5, 2020 (our first day of trading) and December 31, 2022, with the cumulative total return of (i) the S&P 500 Index and (ii) the NASDAQ Computer Index.
Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between August 5, 2020 (our first day of trading) and December 31, 2023, with the cumulative total return of (i) the S&P 500 Index, (ii) the NASDAQ Computer Index and (iii) the Russell 2000 Index.
We do not anticipate paying cash dividends on our common stock for the foreseeable future. Sales of Unregistered Securities Unregistered Sales of Equity Securities On April 25, 2022, we issued 314,192 shares of our common stock in connection with the acquisition of Bundle B2B Inc. and registered those shares on November 10, 2022.
We do not anticipate paying cash dividends on our common stock for the foreseeable future. Sales of Unregistered Securities Unregistered Sales of Equity Securities There were no unregistered sales of equity securities for the year ended December 31, 2023.
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Issuer Purchases of Equity Securities (in thousands) Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may be purchased under the plans or program October 1-31, 2022 — $ - — — November 1-30, 2022 — $ - — — December 1-31, 2022 — $ - — — Total — $ — $ — $ —
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In fiscal year 2023, we included the Russell 2000 Index in our performance graph as this metric will be included in the calculation of performance based equity awards starting in fiscal 2024.
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Note that historic stock price performance is not necessarily indicative of future stock price performance.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear ended December 31, 2022 2021 2020 (in thousands) Revenue $ 279,075 $ 219,855 $ 152,368 Cost of revenue (1) 69,980 48,479 34,126 Gross profit 209,095 171,376 118,242 Operating expenses: Sales and marketing (1) 134,794 99,350 72,470 Research and development (1) 88,253 64,547 48,332 General and administrative (1) 75,989 56,839 36,137 Acquisition related expenses 35,216 23,299 - Restructuring charges 7,332 - - Amortization of intangible assets 8,078 3,284 - Total operating expenses 349,662 247,319 156,939 Loss from operations (140,567 ) (75,943 ) (38,697 ) Interest income 4,198 130 31 Interest expense (2,828 ) (828 ) (3,103 ) Change in fair value of financial instrument - - 4,413 Other expense (227 ) (70 ) (179 ) Loss before provision for income taxes (139,424 ) (76,711 ) (37,535 ) Provision for income taxes 495 (34 ) 25 Net loss $ (139,919 ) $ (76,677 ) $ (37,560 ) (1) Includes stock-based compensation expense as follows: Year ended December 31, 2022 2021 2020 (in thousands) Cost of revenue 4,181 2,055 769 Sales and marketing 11,905 7,761 3,310 Research and development 12,292 5,901 2,500 General and administrative 13,954 9,707 4,479 Total stock-based compensation expense $ 42,332 $ 25,424 $ 11,058 (1) Includes depreciation and amortization as follows: Year ended December 31, 2022 2021 2020 (in thousands) Cost of revenue $ 722 $ 847 $ 958 Sales and marketing 756 876 902 Research and development 404 506 609 General and administrative 1,462 638 615 Total depreciation and amortization expense $ 3,344 $ 2,867 $ 3,084 Revenue by geographic region The composition of our revenue by geographic region during the years ended December 31, 2022 and 2021, and years ended December 31, 2021 and 2020 were as follows: Year ended December 31, Change Year ended December 31, Change 2022 2021 Amount % 2021 2020 Amount % (dollars in thousands) (dollars in thousands) Revenue Americas—U.S. $ 216,639 $ 169,737 $ 46,902 27.6 $ 169,737 $ 120,934 $ 48,803 40.4 Americas—other 12,124 8,559 3,565 41.7 8,559 5,371 3,188 59.4 EMEA 27,743 20,783 6,960 33.5 20,783 12,396 8,387 67.7 APAC 22,569 20,776 1,793 8.6 20,776 13,667 7,109 52.0 Total Revenue $ 279,075 $ 219,855 $ 59,220 26.9 $ 219,855 $ 152,368 $ 67,487 44.3 37 Table of Contents Comparison of years ended December 31, 2022 and 2021, and the years ended December 31, 2021 and 2020 Revenue The following table presents the components of our revenue for each of the periods indicated: Year ended December 31, Change Year ended December 31, Change 2022 2021 Amount % 2021 2020 Amount % (dollars in thousands) (dollars in thousands) Revenue Subscription solutions $ 205,800 $ 154,933 $ 50,867 32.8 $ 154,933 $ 103,706 $ 51,227 49.4 Partner and services 73,275 64,922 8,353 12.9 64,922 48,662 16,260 33.4 Total revenue $ 279,075 $ 219,855 $ 59,220 26.9 $ 219,855 $ 152,368 $ 67,487 44.3 Revenue increased $59.2 million, or 26.9%, to $279.1 million for the year ended December 31, 2022 from $219.9 million for the year ended December 31, 2021, as a result of increases in both subscription solutions and partner and services revenue as well as revenue pertaining to the acquisition of Feedonomics.
Biggest changeYear ended December 31, 2023 2022 2021 (in thousands) Revenue $ 309,394 $ 279,075 $ 219,855 Cost of revenue (1)(2) 74,202 69,980 48,479 Gross profit 235,192 209,095 171,376 Operating expenses: (1)(2) Sales and marketing 140,230 141,342 104,872 Research and development 83,460 88,253 64,547 General and administrative 58,838 69,441 51,317 Acquisition related expenses 10,252 35,216 23,299 Restructuring charges 6,434 7,332 — Amortization of intangible assets 8,422 8,078 3,284 Total operating expenses 307,636 349,662 247,319 Loss from operations (72,444 ) (140,567 ) (75,943 ) Interest income 11,493 4,198 130 Interest expense (2,884 ) (2,828 ) (828 ) Other expenses (836 ) (227 ) (70 ) Loss before provision for income taxes (64,671 ) (139,424 ) (76,711 ) Benefit (provision) for income taxes 0 (495 ) 34 Net loss $ (64,671 ) $ (139,919 ) $ (76,677 ) Basic net loss per share $ (0.86 ) $ (1.91 ) $ (1.08 ) Shares used to compute basic net loss per share 75,143 73,226 70,933 (1) Amounts include stock-based compensation expense and associated payroll tax costs, as follows: Year ended December 31, 2023 2022 2021 (in thousands) Cost of revenue $ 4,949 $ 4,226 $ 2,122 Sales and marketing 13,474 13,551 9,392 Research and development 13,478 12,388 6,169 General and administrative 9,785 12,821 8,851 Total stock-based compensation expense and associated payroll tax costs $ 41,686 $ 42,986 $ 26,534 (2) Amounts include depreciation as follows: Year ended December 31, 2023 2022 2021 (in thousands) Cost of revenue $ 550 $ 722 $ 847 Sales and marketing 612 888 1,030 Research and development 897 404 506 General and administrative 2,000 1,330 484 Total depreciation expense $ 4,059 $ 3,344 $ 2,867 43 Table of Contents Revenue by geographic region The composition of our revenue by geographic region during the years ended December 31, 2023 and 2022, and years ended December 31, 2022 and 2021 were as follows: Year ended December 31, Change Year ended December 31, Change 2023 2022 Amount Percent 2022 2021 Amount Percent (in thousands) (in thousands) Revenue Americas – U.S. $ 236,502 $ 216,639 $ 19,863 9.2 % $ 216,639 $ 169,737 $ 46,902 27.6 % Americas – other 14,103 12,124 1,979 16.3 12,124 8,559 3,565 41.7 EMEA 34,661 27,743 6,918 24.9 27,743 20,783 6,960 33.5 APAC 24,128 22,569 1,559 6.9 22,569 20,776 1,793 8.6 Total Revenue $ 309,394 $ 279,075 $ 30,319 10.9 % $ 279,075 $ 219,855 $ 59,220 26.9 % (1) Americas-other revenue includes revenue from North and South America, other than the U.S.
Financing activities Net cash provided by financing activities during the year ended December 31, 2022 was $0.2 million primarily consisting of issuance of shares of common stock pursuant to the exercise of stock options. Net cash provided by financing activities during the year ended December 31, 2021 was $305.3 million.
Net cash provided by financing activities during the year ended December 31, 2022 was $0.2 million. primarily consisting of issuance of shares of common stock pursuant to the exercise of stock options. Net cash provided by financing activities during the year ended December 31, 2021 was $305.3 million.
However, notwithstanding the foregoing, we may elect, at our option, that the sole remedy for an Event of Default relating to certain failures by us to comply with certain reporting covenants in the Convertible Notes Indenture consists exclusively of the right of the noteholders to receive special interest on the Convertible Notes for up to 180 days at a specified rate per annum not exceeding 0.50% on the principal amount of the Convertible Notes.
However, notwithstanding the foregoing, we may elect, at our option, that the sole remedy for an Event of Default relating to certain failures by us to comply with certain reporting covenants in the Convertible Notes Indenture consists exclusively of the right of the noteholders to receive special interest on the Convertible Notes for up to 180 days at a specified rate per annum not exceeding 0.50 percent on the principal amount of the Convertible Notes.
We provide a comprehensive platform for launching and scaling an ecommerce operation, including store design, catalog management, hosting, checkout, order management, reporting, and pre-integration into third-party services like payments, shipping, and accounting. All our stores run on a single code base and share a global, multi-tenant architecture purpose built for security, high performance, and innovation.
We provide a comprehensive platform for launching and scaling an ecommerce operation, including store design, catalog management, hosting, checkout, order management, reporting, and pre-integration into third-party services like payments, shipping, and accounting. All of our stores run on a single code base and share a global, multi-tenant architecture purpose built for security, high performance, and innovation.
Indebtedness 2021 Convertible senior notes In September 2021, we issued $345.0 million principal amount of 0.25% Convertible Senior Notes due 2026 (the “Convertible Notes”). The Convertible Notes were issued pursuant to, and are governed by, an indenture (the “Convertible Notes Indenture”), dated as of September 14, 2021, between us and U.S. Bank National Association, as trustee.
Indebtedness 2021 Convertible senior notes In September 2021, we issued $345.0 million principal amount of 0.25 percent Convertible Senior Notes due 2026 (the “Convertible Notes”). The Convertible Notes were issued pursuant to, and are governed by, an indenture (the “Convertible Notes Indenture”), dated as of September 14, 2021, between us and U.S. Bank National Association, as trustee.
If any other Event of Default occurs and is continuing, then, the trustee, by notice to us, or noteholders of at least 25% of the aggregate principal amount of Convertible Notes then outstanding, by notice to us and the trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding to become due and payable immediately.
If any other Event of Default occurs and is continuing, then, the trustee, by notice to us, or noteholders of at least 25 percent of the aggregate principal amount of Convertible Notes then outstanding, by notice to us and the trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding to become due and payable immediately.
The Convertible Notes accrue interest at a rate of 0.25% per annum, payable semi-annually in arrears on April 1 and October 1 of each year, beginning on April 1, 2022. The Convertible Notes will mature on October 1, 2026, unless earlier repurchased, redeemed or converted.
The Convertible Notes accrue interest at a rate of 0.25 percent per annum, payable semi-annually in arrears on April 1 and October 1 of each year, beginning on April 1, 2022. The Convertible Notes will mature on October 1, 2026, unless earlier repurchased, redeemed or converted.
The Convertible Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the Convertible Notes Indenture), which include the following: (i) certain payment defaults on the Convertible Notes (which, in the case of a default in the payment of interest on the Convertible Notes, will be subject to a 30-day cure period); (ii) our failure to send certain notices under the Convertible Notes Indenture within specified periods of time; (iii) our failure to comply with certain covenants in the Convertible Notes Indenture relating to our ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of us and our subsidiaries, taken as a whole, to another person; (iv) a default by us in our other obligations or agreements under the Convertible Notes Indenture or the Convertible Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Convertible Notes Indenture; (v) certain defaults by us or any of our significant subsidiaries with respect to indebtedness for borrowed money of at least $65,000,000; and (vi) certain events of bankruptcy, insolvency and reorganization involving us or any of our significant subsidiaries.
The Convertible Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the Convertible Notes Indenture), which include the following: (i) certain payment defaults on the Convertible Notes (which, in the case of a default in the payment of interest on the Convertible Notes, will be subject to a 30-day cure period); (ii) our failure to send certain notices under the Convertible Notes Indenture within specified periods of time; (iii) our failure to comply with certain covenants in the Convertible Notes Indenture relating to our ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of us and our subsidiaries, taken as a whole, to another person; (iv) a default by us in our other obligations or agreements under the Convertible Notes Indenture or the Convertible Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Convertible Notes Indenture; (v) certain defaults by us or any of our significant subsidiaries with respect to indebtedness for borrowed money of at least $65.0 million; and (vi) certain events of bankruptcy, insolvency and reorganization involving us or any of our significant subsidiaries.
Key business metrics We review the following key business metrics to measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. Increases or decreases in our key business metrics may not correspond with increases or decreases in our revenue.
Business metrics We review the following business metrics to measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. Increases or decreases in our business metrics may not correspond with increases or decreases in our revenue.
We believe we are positioned to grow significantly through a combination of our own marketing and sales initiatives, customer referrals from our agency and technology partners, and word-of-mouth referrals from existing customers.
We believe we are positioned to grow through a combination of our own marketing and sales initiatives, customer referrals from our agency and technology partners, and word-of-mouth referrals from existing customers.
Composable gives merchants the freedom to mix, match and combine best-in-breed tech vendors to create a customized and robust technology stack. With BigCommerce’s open commerce approach and commitment to MACH Alliance principles. B2C and B2B merchants can make smart technology investments that are agile, functional, and flexible. In an unpredictable economy, flexibility and composability are especially important.
Composable gives merchants the freedom to mix, match and combine best-in-breed tech vendors to create a customized and robust technology stack. With our open commerce approach and commitment to MACH Alliance principles. B2C and B2B merchants can make smart technology investments that are agile, functional, and flexible. In an unpredictable economy, flexibility and composability are especially important.
We measure the efficiency of new customer acquisition by comparing the lifetime value (“LTV”) of newly-acquired customers to the customer acquisition costs (“CAC”) of the associated time period to get an “LTV:CAC ratio.” We calculate LTV as gross profit from new sales during the four quarters of any given year divided by the estimated future subscription churn rate.
Lifetime value to customer acquisition costs We measure the efficiency of new customer acquisition by comparing the lifetime value of newly-acquired customers to the customer acquisition costs of the associated time period to get an “LTV:CAC ratio.” We calculate LTV as gross profit from new sales during the four quarters of any given year divided by the estimated future subscription churn rate.
For our larger customers, our Enterprise plan offers our full feature set at a monthly subscription price tailored to each business. For SMBs, BigCommerce Essentials offers three retail plans: Standard, Plus, and Pro, priced at $29.95, $79.95, and $299.95 per month when paid annually, or $39, $105, and $399 per month, when paid monthly, respectively.
For our larger customers, our Enterprise plan offers our full feature set at a subscription price tailored to each business. For SMBs, BigCommerce Essentials offers three retail plans: Standard, Plus, and Pro, priced at $29, $79, and $299 per month when pre-paid annually, or $39, $105, and $399 per month, when paid monthly, respectively.
Enterprise Account metrics To measure the effectiveness of our ability to execute against our growth strategy, particularly within the mid-market and enterprise business segments, we calculate ARR attributable to Enterprise Accounts. We define Enterprise Accounts as accounts with at least one unique Enterprise plan subscription or an enterprise level feed management subscription (collectively “Enterprise Accounts”).
Enterprise Account metrics To measure the effectiveness of our ability to execute against our growth strategy, particularly within the mid-market and enterprise lines of business, we calculate ARR attributable to Enterprise Accounts. We define Enterprise Accounts as accounts with at least one unique Enterprise plan subscription or an enterprise level feed management subscription (collectively “Enterprise Accounts”).
Cash and cash equivalents consist of highly-liquid investments with original maturities of less than three months. Our restricted cash balance of $1.5 million and $1.1 million at December 31, 2022 and December 31, 2021, respectively, consists of security deposits for future chargebacks and amounts on deposit with certain financial institutions.
Cash and cash equivalents consist of highly-liquid investments with original maturities of less than three months. Our restricted cash balance of $1.1 million and $1.5 million at December 31, 2023 and December 31, 2022, respectively, consists of security deposits for future chargebacks and amounts on deposit with certain financial institutions.
The Convertible Notes will be redeemable, in whole or in part (subject to the “Partial Redemption Limitation” (as defined in the Convertible Notes Indenture)), at our option at any time, and from time to time, on or after October 7, 2024 and on or before the 25th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not 41 Table of Contents consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice.
The Convertible Notes will be redeemable, in whole or in part (subject to the “Partial Redemption Limitation” (as defined in the Convertible Notes Indenture)), at our option at any time, and from time to time, on or after October 7, 2024 and on or before the 25th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of our common stock exceeds 130 percent of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice.
Our partners currently offer more than 1290 pre-built applications and integrations spanning major categories relevant to ecommerce, including shipping, tax, accounting and ERP, marketing, fulfillment, cross-channel commerce, and POS systems, with additional applications and integrations for merchandising, locations, and payments.
Our partners currently offer more than 1300 pre-built applications and integrations spanning major categories relevant to ecommerce, including shipping, tax, accounting and ERP, marketing, fulfillment, cross-channel commerce, and POS systems, with additional applications and integrations for merchandising, locations, and payments.
Subscription solutions revenue increased $50.9 million, or 32.8%, to $205.8 million for the year ended December 31, 2022 from $154.9 million for the year ended December 31, 2021, primarily due to the increase in mid-market and large enterprise customers and our international expansion efforts.
Subscription solutions revenue increased $50.9 million, or 32.8 percent, to $205.8 million for the year ended December 31, 2022 from $154.9 million for the year ended December 31, 2021, primarily due to the increase in mid-market and enterprise customers and our international expansion efforts.
If certain corporate events that constitute a “Fundamental Change” (as defined in the Convertible Notes Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require us to repurchase their Convertible Notes at a cash repurchase price equal to the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.
If certain corporate events that constitute a “Fundamental Change” (as defined in the Convertible Notes Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require us to repurchase their Convertible Notes at a cash 48 Table of Contents repurchase price equal to the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.
As we continue to grow as a platform, we believe our ability to realize more favorable and expansive revenue share agreements will grow as well. 33 Table of Contents We also grow by selling additional stores to existing customers.
As we continue to grow as a platform, we believe our ability to realize more favorable and expansive revenue share agreements will grow as well. 38 Table of Contents We also grow by selling additional stores to existing customers.
Annual revenue run-rate We calculate annual revenue run-rate (“ARR”) at the end of each month as the sum of: (1) contractual monthly recurring revenue at the end of the period, which includes platform subscription fees, invoiced growth adjustments, product feed management subscription fees, recurring professional services revenue, and other recurring revenue, multiplied by twelve to prospectively annualize recurring revenue, and (2) the sum of the trailing twelve-month non-recurring and variable revenue, which includes one-time partner integrations, one-time fees, payments revenue share, and any other revenue that is non-recurring and variable. 34 Table of Contents Subscription ARR We calculate subscription ARR at the end of each month as the sum of contractual monthly recurring revenue at the end of the period, which includes platform subscription fees, invoiced growth adjustments, product feed management subscription fees, recurring professional services revenue, and other recurring revenue, multiplied by twelve to prospectively annualize recurring revenue.
Annual revenue run-rate We calculate annual revenue run-rate (“ARR”) at the end of each month as the sum of: (1) contractual monthly recurring revenue at the end of the period, which includes platform subscription fees, invoiced growth adjustments, product feed management subscription fees, recurring professional services revenue, and other recurring revenue, multiplied by twelve to prospectively annualize recurring revenue, and (2) the sum of the trailing twelve-month non-recurring and variable revenue, which includes one-time partner integrations, one-time fees, payments revenue share, and any other revenue that is non-recurring and variable.
Amortization of intangible assets Amortization of intangible assets consist of non-cash amortization of acquired intangible assets which were recognized as a result of business combinations and are being amortized over their expected useful life.
Amortization of intangible assets Amortization of intangible assets consist of amortization of acquired intangible assets which were recognized as a result of business combinations and are being amortized over their expected useful life.
We enter into contracts with our strategic technology partners that are generally for one year or longer. We generate revenue from these contracts in three ways: (1) revenue-sharing arrangements, (2) technology 35 Table of Contents integrations, and (3) partner marketing and promotion. We recognize revenue on a net basis from revenue-sharing arrangements when the underlying transaction occurs.
We enter into contracts with our strategic technology partners that are generally for one year or longer. We generate revenue from these contracts in three ways: (1) revenue-sharing arrangements, (2) technology integrations, and (3) partner marketing and promotion. We recognize revenue on a net basis from revenue-sharing arrangements when the underlying transaction occurs.
Gross margin decreased to 74.9% during 2022 from 77.9% during 2021.
Gross margin decreased to 74.9 percent during 2022 from 77.9 percent during 2021.
The increase was also attributable to $13.2 38 Table of Contents million in additional marketing spend to support revenue growth coupled with $7.6 million in sales and marketing spending attributable to the acquisition of Feedonomics.
The increase was also attributable to $13.2 million in additional marketing spend to support revenue growth coupled with $7.6 million in sales and marketing spending attributable to the acquisition of Feedonomics.
Subscription solutions revenue consists of: (1) platform subscription fees, (2) recurring professional services, and (3) sales of SSL certificates. We generally recognize platform subscription fees and recurring professional services revenue in the month they are earned. We begin revenue recognition on the date that our service is made available to our customers.
Subscription solutions revenue consists of: (1) platform subscription fees and (2) recurring professional services. We generally recognize platform subscription fees and recurring professional services revenue in the month they are earned. We begin revenue recognition on the date that our service is made available to our customers.
We calculate CAC as total sales and marketing expense incurred during the associated preceding four quarters. New SMB, Mid-Market and Enterprise customers were added at an estimated LTV:CAC ratio of 3.8:1 and 4.9:1 for the years ended December 31, 2022 and 2021, respectively.
We calculate CAC as total sales and marketing expense incurred during the associated preceding four quarters. New SMB, Mid-Market and Enterprise customers were added at an estimated LTV:CAC ratio of 3.5:1 and 3.8:1 for the years ended December 31, 2023 and 2022, respectively.
Investing activities Net cash used in investing activities during the year ended December 31, 2022 was $116.5 million. It consisted primarily of the cash paid for an acquisition of $0.7 million, the purchases of marketable securities of $214.2 million and the purchases of property and equipment of $5.2 million, offset by the maturity of marketable securities of $103.6 million.
It consisted primarily of the cash paid for an acquisition of $0.7 million the purchases of marketable securities of $214.2 million and the purchases of property and equipment of $5.2 million, offset by the maturity of marketable securities of $103.6 million. Net cash used in investing activities during the year ended December 31, 2021 was $186.9 million.
Our business has achieved significant growth since our inception. We had total revenue of $279.1 million, $219.9 million and $152.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Our business has achieved significant growth since our inception. We had total revenue of $309.4 million, $279.1 million and $219.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
We expect to continue to make substantial investments in research and development. We expect our research and development expenses to increase in absolute dollars, but decrease as a percentage of total revenue over time, as we continue to leverage engineers in other low-cost international locations. We expense research and development expenses as incurred.
We expect our research and development expenses to increase in absolute dollars, but decrease as a percentage of total revenue over time, as we continue to leverage engineers in other low-cost international locations.
BigCommerce and Feedonomics enable merchants to improve and optimize omnichannel shopping and advertising, helping bolster their sales growth. • B2B . As of December 31, 2022, approximately 19% of our customers use BigCommerce primarily for B2B sales. In many cases, these customers’ needs are met using our native functionality, including B2B features like customer groups and price lists.
BigCommerce and Feedonomics enable merchants to improve and optimize omnichannel shopping and advertising, helping bolster their sales growth. • B2B . A portion of our customers use BigCommerce primarily for B2B sales. In many cases, these customers’ needs are met using our native functionality, including B2B features like customer groups and price lists.
The increase was primarily due to an increase of $9.8 million in personnel-related expense, including stock-based compensation expense, variable spend associated international expansion growth of $5.7 million and expenses related to the acquisition of Feedonomics of $3.7 million.
The increase was primarily due to an increase of $12.2 million in personnel-related expense, including stock-based compensation expense, variable spend associated international expansion growth of $2.6 million and expenses related to the acquisition of Feedonomics of $3.7 million.
General and administrative General and administrative expenses consist primarily of: (1) personnel-related expenses (including stock-based compensation expense) for finance, legal and compliance, human resources, and IT, (2) external professional services, and (3) allocated overhead costs.
General and administrative General and administrative expenses consist primarily of: (1) personnel-related expenses (including stock-based compensation expense and associated payroll costs) for finance, legal and compliance, and human resources, (2) external professional services, and (3) allocated overhead costs, such as technology and facility costs.
Partner and services revenue increased $8.4 million, or 12.9%, to $73.3 million for the year ended December 31, 2022 from $64.9 million for the year ended December 31, 2021, primarily as a result of increases in revenue-sharing activity with our technology partners and improved monetization of partner revenue share.
Partner and services revenue increased $6.9 million, or 9.4 percent, to $80.1 million for the year ended December 31, 2023 from $73.3 million for the year ended December 31, 2022, primarily as a result of increases in revenue-sharing activity with our technology partners and improved monetization of partner revenue share.
We focus on collaborating with, not competing against, partners in our ecosystems. This strategy contrasts with our largest competitors, who operate software stacks with multiple vertically integrated adjacent services that potentially compete with offerings from technology partners in their ecosystems.
This strategy contrasts with our largest competitors, who operate software stacks with multiple vertically integrated adjacent services that potentially compete with offerings from technology partners in their ecosystems.
We believe we possess one of the deepest and broadest ecosystems of integrated technology solutions in the ecommerce industry. We strategically partner with, rather than compete against, the leading providers in adjacent categories, including payments, shipping, POS, CMS, CRM, and ERP.
We believe we possess one of the deepest and broadest ecosystems of integrated technology solutions in the ecommerce industry. We strategically partner with, rather than compete against, the leading providers in adjacent categories, including payments, shipping, point of sale (POS), content management system (CMS), customer relationship management (CRM), and enterprise resource planning (ERP).
Partner revenue that is not directly linked to customer usage of a partner’s solution is allocated based on each customer’s share of total platform GMV.
We allocate partner revenue, where applicable, primarily based on each customer’s share of GMV processed through that partner’s solution. Partner revenue that is not directly linked to customer usage of a partner’s solution is allocated based on each customer’s share of total platform GMV.
Our platform serves stores in a wide variety of sizes, product categories, and purchase types, including B2C and B2B. Our customers include Ben & Jerry’s, Molton Brown, Burrow, SC Johnson, SkullCandy, SoloStove and Vodafone. We offer access to our platform on a subscription basis. We serve customers with subscription plans tailored to their size and feature needs.
Our platform serves stores in a wide variety of sizes, product categories, and purchase types, including B2C and B2B. We offer access to our platform on a subscription basis. We serve customers with subscription plans tailored to their size and feature needs.
Accordingly, our effective tax rate will vary depending on the relative proportion of foreign to domestic income, use of foreign tax credits, changes in the valuation of our deferred tax assets and liabilities, applicability of any valuation allowances, and changes in tax laws in jurisdictions in which we operate.
Accordingly, our effective tax rate will vary depending on the relative proportion of foreign to domestic income, use of foreign tax credits, changes in the valuation of our deferred tax assets and liabilities, applicability of any valuation allowances, and changes in tax laws in jurisdictions in which we operate. 42 Table of Contents Results of operations The following table summarizes our historical consolidated statement of operations data.
We recognize SSL certificates revenue ratably over the term of the certificates. Fixed monthly fees and any overage charges related to subscription solutions are recognized as revenue in the month they are earned. Partner and services revenue is derived from: (1) revenue-sharing arrangements, (2) technology integrations, (3) partner marketing and promotion, and (4) non-recurring professional services.
Fixed monthly fees and any overage charges related to subscription solutions are recognized as revenue in the month they are earned. Partner and services revenue is derived from: (1) revenue-sharing arrangements, (2) technology integrations, (3) partner marketing and promotion, and (4) non-recurring professional services. We recognize revenue on a net basis from revenue-sharing arrangements when the underlying transaction occurs.
Cost of revenue increased $14.4 million, or 42.1%, to $48.5 million for the year ended December 31, 2021 from $34.1 million for the year ended December 31, 2020, primarily as a result of higher hosting costs of $1.6 million as a result of increased transactions processed and increases in personnel-related costs of $7.2 million, including stock-based compensation expense, for personnel involved in providing customer support and professional services and Feedonomics related expenses of $5.5 million.
Cost of revenue increased $21.5 million, or 44.4 percent, to $70.0 million for the year ended December 31, 2022 from $48.5 million for the year ended December 31, 2021, primarily as a result of higher hosting costs of $4.7 million and increases in personnel-related costs of $6.8 million, including stock-based compensation expense, for personnel involved in providing customer support and professional services and Feedonomics related expenses of $10.0 million.
Restructuring charges Restructuring charges are comprised of costs incurred as a result of our December 15, 2022 reduction in force as well as an impairment of the right of use asset triggered by our decision to cease using a significant portion of certain leased facilities.
Restructuring charges Restructuring charges are comprised of costs incurred as a result of our 2023 and 2022 Restructures as well as an impairment of the right-of-use assets triggered by our decision to cease using a significant portion of certain leased facilities as a result of the 2022 Restructure.
The foreign jurisdictions in which we operate have different statutory tax rates than those of the United States. Additionally, certain of our foreign earnings may also be currently taxable in the United States.
For U.S. federal income tax purposes and in certain foreign and state jurisdictions, we have NOL carryforwards. The foreign jurisdictions in which we operate have different statutory tax rates than those of the United States. Additionally, certain of our foreign earnings may also be currently taxable in the United States.
We continually evaluate prospective and existing partners’ abilities to enhance the capabilities of our customers’ ecommerce businesses. We add new partners and expand existing partner relationships to enhance the utility of our platform, while creating new opportunities to expand our revenue share in partner and services revenue.
We add new partners and expand existing partner relationships to enhance the utility of our platform, while creating new opportunities to expand our revenue share in partner and services revenue.
Interest income Interest income was $4.2 million for the year ended December 31, 2022 primarily as a result of interest rate increased and was insignificant for the years ended December 31, 2021 and 2020. 39 Table of Contents Interest expense Interest expense increased to $2.8 million, or 250% for the year ended December 31, 2022 from $0.8 million for the year ended December 31, 2021 primarily as a result of a full year impact of interest expense on convertible debt in 2022.
Interest expense increased to $2.8 million, or 250.0 percent for the year ended December 31, 2022 from $0.8 million for year ended December 31, 2021, primarily as a result of a full year impact of interest expense on convertible debt in 2022.
As a result, we expect that general and administrative expenses will increase in absolute dollars but may fluctuate as a percentage of total revenue from period to period. Acquisition related expenses Acquisition related expenses consists primarily of cash payments for third-party acquisition costs and other acquisition related expenses, including contingent compensation arrangements entered into in connection with acquisitions.
We expect our general and administrative expenses to increase in absolute dollars but will decrease as a percent of revenue. 41 Table of Contents Acquisition related expenses Acquisition related expenses consists of cash payments for third-party acquisition costs and other acquisition related expenses, including contingent compensation arrangements entered into in connection with acquisitions.
We serve headless use cases well due to years of investment in our platform APIs and integration capabilities. Pre-built integrations connect our platform with leading CMSs such as Acquia, Adobe, Bloomreach, Drupal, Sitecore, and WordPress. Efficient acquisition of new customers The growth of our customer base is important to our continued revenue growth.
We serve headless use cases well due to years of investment in our platform APIs and integration capabilities. Pre-built integrations connect our platform with leading CMSs such as Acquia, Adobe, Bloomreach, Drupal, Sitecore, and WordPress. Retention and growth of our existing customers We believe our long-term revenue growth is correlated with the growth of our existing customers’ ecommerce businesses.
Fixed monthly fees and any transaction charges related to subscription solutions are recognized as revenue in the month they are earned. Subsequent to our acquisition of Feedonomics on July 23, 2021, subscription revenue also includes revenue from Feedonomics. Through Feedonomics, BigCommerce provides feed management solutions under service contracts which are generally one year or less and, in many cases, month-to-month.
Fixed monthly fees and any transaction charges related to subscription solutions are recognized as revenue in the month they are earned. Through Feedonomics, we provide feed management solutions under service contracts which are generally one year or less and, in many cases, month-to-month.
The results of these estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Research and development Year ended December 31, Change Year ended December 31, Change 2022 2021 Amount % 2021 2020 Amount % (dollars in thousands) (dollars in thousands) Research and development $ 88,253 $ 64,547 $ 23,706 36.7 % $ 64,547 $ 48,332 $ 16,215 33.5 % Percentage of revenue 31.6 % 29.4 % 2.4 % 29.4 % 31.7 % (2.5 )% Research and development expenses increased $23.7 million, or 36.7%, to $88.2 million for the year ended December 31, 2022 from $64.5 million for the year ended December 31, 2021, primarily due to higher staffing costs of $15.0 million, including stock-based compensation and bonuses, decreased variable spend of $0.3 million, and expenses related to the acquisition of Feedonomics of $9.0 million; these expenses increased as a percentage of revenue.
Research and development Year ended December 31, Change Year ended December 31, Change 2023 2022 Amount Percent 2022 2021 Amount Percent (dollars in thousands) Research and development $ 83,460 $ 88,253 $ (4,793 ) (5.4 ) % $ 88,253 $ 64,547 $ 23,706 36.7 % Percentage of revenue 27.0 % 31.6 % 31.6 % 29.4 % Research and development expenses decreased $4.8 million, or (5.4) percent, to $83.5 million for the year ended December 31, 2023 from $88.3 million for the year ended December 31, 2022, primarily due to a decrease in staffing costs of $5.1 million, including stock-based compensation and bonuses, partially offset by an increase in variable spend of $0.3 million. 45 Table of Contents Research and development expenses increased $23.7 million, or 36.7 percent, to $88.3 million for the year ended December 31, 2022 from $64.5 million for the year ended December 31, 2021, primarily due to higher staffing costs of $15.0 million, including stock-based compensation and bonuses, expenses related to the acquisition of Feedonomics of $9.0 million, offset by a decrease in variable spend of $0.3 million.
Revenue increased $67.5 million, or 44.3%, to $219.9 million for the year ended December 31, 2021 from $152.4 million for the year ended December 31, 2020, as a result of increases in both subscription solutions and partner and services revenue as well as revenue pertaining to the acquisition of Feedonomics.
Revenue increased $59.2 million, or 26.9 percent, to $279.1 million for the year ended December 31, 2022 from $219.9 million for the year ended December 31, 2021, as a result of increases in both subscription solutions and partner and services revenue as well as revenue pertaining to the acquisition of Feedonomics.
Cost of revenue Cost of revenue consists primarily of: (1) personnel-related costs (including stock-based compensation expense) for our customer success teams, (2) costs that are directly related to hosting and maintaining our platform, (3) fees for processing customer payments, and (4) the allocation of overhead costs.
Cost of revenue Cost of revenue consists primarily of: (1) personnel-related costs (including stock-based compensation expense and associated payroll costs) for our customer success teams, (2) costs that are directly related to hosting and maintaining our platform, (3) fees for processing customer payments, (4) personnel and other costs related to feed management, and (5) allocated costs, such as, depreciation, technology and facility costs.
Net cash used in investing activities during the year ended December 31, 2021 was $186.9 million. It consisted primarily of the cash paid for an acquisition of $81.1 million, the purchases of marketable securities of $107.0 million and the purchases of property and equipment of $3.3 million, partially offset by the maturity of marketable securities of $4.5 million.
It consisted primarily of the cash paid for an acquisition of $7.9 million, the purchases of marketable securities of $228.3 million and the purchases of property and equipment of $4.2 million, offset by the maturity of marketable securities of $243.2 million. 47 Table of Contents Net cash used in investing activities during the year ended December 31, 2022 was $116.5 million.
Sales and marketing expenses increased $26.9 million, or 37.1%, to $99.4 million for the year ended December 31, 2021 from $72.5 million for the year ended December 31, 2020, primarily due to an increase of $12.9 million in personnel-related costs, including stock-based compensation expense, for personnel engaged in acquiring new customers and marketing our products and services.
Sales and marketing expenses increased $36.5 million, or 34.8 percent, to $141.3 million for the year ended December 31, 2022 from $104.9 million for the year ended December 31, 2021, primarily due to an increase of $14.6 million in personnel-related costs, including stock-based compensation expense, for personnel engaged in acquiring new customers and marketing our products and services.
The total billings and allocated partner revenue, where applicable, for the measured period are divided by the total billings and allocated partner revenue for such accounts, corresponding to the period one year prior. An NRR greater than 100% implies positive net revenue retention. This methodology includes stores added to or subtracted from an account’s subscription during the previous twelve months.
The total billings and allocated partner revenue, where applicable, for the measured period are divided by the total billings and allocated partner revenue for such accounts, corresponding to the period one year prior. An NRR greater than 100 percent implies positive net revenue retention.
Except for changes resulting from the acquisition of Feedonomics in July 2021, including purchase price allocation and valuation of acquired intangibles, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in “Management's Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K for the year ended December 31, 2020.
There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in our Annual Report on Form 10-K for the year ended December 31, 2023.
Year ended December 31, 2022 2021 2020 (in thousands) Net cash used in operating activities $ (89,357 ) $ (40,300 ) $ (26,529 ) Net cash used in investing activities $ (116,526 ) $ (186,877 ) $ (1,964 ) Net cash provided by financing activities $ 209 $ 305,274 $ 239,950 As of December 31, 2022, we had $305.0 million in cash, cash equivalents, restricted cash, and marketable securities, a decrease of $96.0 million compared to $401.0 million for the year ended December 31, 2021.
Year ended December 31, 2023 2022 2021 (in thousands) Net cash used in operating activities $ (24,243 ) $ (89,357 ) $ (40,300 ) Net cash provided by (used in) investing activities 2,816 (116,526 ) (186,877 ) Net cash provided by financing activities 1,242 209 305,274 Net increase (decrease) in cash, cash equivalents and restricted cash $ (20,185 ) $ (205,674 ) $ 78,097 As of December 31, 2023, we had $271.3 million in cash, cash equivalents, restricted cash, and marketable securities, a decrease of $33.7 million compared to $305.0 million for the year ended December 31, 2022.
We believe that our existing cash and cash equivalents and our cash flows from operating activities will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months. In the future, we may attempt to raise additional capital through the sale of additional equity or debt financing.
We believe that our existing cash and cash equivalents and our cash flows from operating activities will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.
It also includes changes to subscription and partner and services revenue billings, and revenue reductions from stores or accounts that leave the platform during the previous one-year period. Net new accounts added after the previous one-year period are excluded from our NRR calculations. NRR for enterprise accounts was 111% and 118% for years ended December 31, 2022 and 2021, respectively.
This methodology includes stores added to or subtracted from an account’s subscription during the previous twelve months. It also includes changes to subscription and partner and services revenue billings, and revenue reductions from stores or accounts that leave the platform during the previous one-year period. Net new accounts added after the previous one-year period are excluded from our NRR calculations.
Acquisition related expenses Acquisition related expense was $35.2 million and $23.3 million for the years ended December 31, 2022 and December 31, 2021, respectively, primarily as a result of acquisition related compensation in conjunction with our business combinations. Acquisition related expenses were insignificant for the year ended December 31, 2020.
Acquisition related expense increased by $11.9 million or 51.1 percent to $35.2 million for the year ended December 31, 2022 from $23.3 million for the year ended December 31, 2021, respectively, primarily as a result of acquisition related compensation in conjunction with our business combinations.
The chart below illustrates certain of our key business metrics as of the period ended. 2022 2021 2020 Total ARR (in thousands) $ 311,670 $ 268,665 $ 181,166 Subscription ARR (in thousands) $ 238,395 $ 203,743 $ 132,504 Enterprise Account Metrics: # of Accounts 5,786 5,036 3,365 ARR $ $ 223,964 $ 172,858 $ 100,771 ARR % of Total ARR 72 % 64 % 56 % ARPA $ 38,708 $ 34,324 $ 29,947 Net revenue retention We use net revenue retention (“NRR”) to evaluate our ability to maintain and expand our revenue with our account base of customers exceeding the ACV threshold over time.
Year ended December 31, 2023 2022 2021 Total ARR (in thousands) $ 336,541 $ 311,670 $ 268,665 Subscription ARR (in thousands) $ 256,412 $ 238,395 $ 203,743 Enterprise account metrics: Number of enterprise accounts 5,994 5,786 5,036 ARR attributable to enterprise accounts (in thousands) $ 245,100 $ 223,964 $ 172,858 ARR attributable to enterprise accounts as a percentage of Total ARR 73 72 64 ARPA $ 40,981 $ 38,708 $ 34,324 Net revenue retention We use net revenue retention (“NRR”) to evaluate our ability to maintain and expand our revenue with our account base of enterprise customers exceeding the ACV threshold over time.
During the measurement period, which may be up to one year from the acquisition date, adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. 43 Table of Contents Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our condensed consolidated statements of operations.
During the measurement period, which may be up to one year from the acquisition date, adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill.
Net cash provided by financing activities during the year ended December 31, 2020 was $240.0 million.
Investing activities Net cash provided by investing activities during the year ended December 31, 2023 was $2.8 million.
Liquidity and capital resources We have incurred losses since our inception and may continue to generate negative operating cash flow, however we believe we have sufficient cash and cash equivalents and marketable securities to continue to fund operations.
Liquidity and capital resources We have incurred losses since our inception, however we continue to show improvements in losses from operations and operating cash flow, further we believe we have sufficient cash and cash equivalents and marketable securities to continue to fund operations for at least the next 12 months.
Results of operations The following table summarizes our historical consolidated statement of operations data. The period-to-period comparison of operating results is not necessarily indicative of results for future periods.
The period-to-period comparison of operating results is not necessarily indicative of results for future periods.
The following segments are significant areas of potential growth and strategic focus for us: • Enterprise . Increasingly, we are successfully competing for enterprise sites selling more than $50 million annually online, with our Enterprise plan product feature set, along with our sales, marketing, solutioning, and service capabilities. • Omnichannel .
Increasingly, we are successfully competing for enterprise sites selling more than $50 million annually online, with our Enterprise plan product feature set, along with our sales, marketing, solutioning, and service capabilities. • Omnichannel . This is the ability for merchants to conduct commerce anywhere shoppers are - online and offline.
Cost of revenue, gross profit, and gross margin The following table presents our cost of revenue, gross profit, and gross margin for each of the periods indicated: Year ended December 31, Change Year ended December 31, Change 2022 2021 Amount % 2021 2020 Amount % (dollars in thousands) (dollars in thousands) Cost of revenue $ 69,980 $ 48,479 $ 21,501 44.4 $ 48,479 $ 34,126 $ 14,353 42.1 Gross profit $ 209,095 $ 171,376 $ 37,719 22.0 $ 171,376 $ 118,242 $ 53,134 44.9 Gross margin 74.9 % 77.9 % (3.0 )% 77.9 % 77.6 % 0.3 % Cost of revenue increased $21.5 million, or 44.4%, to $70.0 million for the year ended December 31, 2022 from $48.5 million for the year ended December 31, 2021, primarily as a result of higher hosting costs of $4.7 million as a result of increased transactions processed and increases in personnel-related costs of $6.8 million, including stock-based compensation expense, for personnel involved in providing customer support and professional services and Feedonomics related expenses of $10.0 million.
Partner and services revenue increased $8.4 million, or 12.9 percent, to $73.3 million for the year ended December 31, 2022 from $64.9 million for the year ended December 31, 2021, primarily as a result of increases in revenue-sharing activity with our technology partners and improved monetization of partner revenue share. 44 Table of Contents Cost of revenue, gross profit, and gross margin The following table presents our cost of revenue, gross profit, and gross margin for each of the periods indicated: Year ended December 31, Change Year ended December 31, Change 2023 2022 Amount Percent 2022 2021 Amount Percent (dollars in thousands) Cost of revenue $ 74,202 $ 69,980 $ 4,222 6.0 % $ 69,980 $ 48,479 $ 21,501 44.4 % Gross profit 235,192 209,095 26,097 12.5 209,095 171,376 37,719 22.0 Gross margin percentage 76.0 % 74.9 % 74.9 % 77.9 % Cost of revenue increased $4.2 million, or 6.0 percent, to $74.2 million for the year ended December 31, 2023 from $70.0 million for the year ended December 31, 2022, primarily as a result of higher hosting costs of $2.9 million, and $0.9 million of personnel-related costs including stock-based compensation expense and associated payroll costs, and $0.4 million of variable costs.
We power both our customers’ branded ecommerce stores and their cross-channel connections to popular online marketplaces, social networks, and offline POS systems. Our strategy is to provide the world’s best combination of freedom of choice and flexibility in a multi-tenant SaaS platform. We describe this strategy as “Open SaaS.” As of December 31, 2022, we served 5,786 enterprise accounts.
Our strategy is to provide the world’s best combination of freedom of choice and flexibility in a multi-tenant SaaS platform. We describe this strategy as “Open SaaS.” As of December 31, 2023, we served 5,994 enterprise accounts.
Other expense Other expense was insignificant in the years ended December 31, 2022, 2021 and 2020. Provision for income taxes Our provision for income taxes was not material for the years ended December 31, 2022, 2021 and 2020.
Benefit (provision) for income taxes 46 Table of Contents Our provision for income taxes was not material for the years ended December 31, 2023, 2022 and 2021.
Successful rollout of new geographies We believe our platform can compete successfully around the world. We enhance usability in new geographies by translating our control panel into local languages and enabling the integration of local payment processors. We support the growth of mid-market and large enterprise customers around the world by expanding our regional sales and marketing capabilities.
Successful rollout of new geographies Our current operations are international in scope, and we plan further geographic expansion. We believe our platform can compete successfully around the world. We enhance usability in new geographies by translating our control panel into local languages and enabling the integration of local payment processors.
These service types may be sold stand-alone or as part of a multi-service bundle (e.g. both marketplaces and advertising) and constitute a single combined performance obligation. Services are performed and fees are determined based on monthly usage and are billed in arrears.
We recognize revenue from Feedonomics’ technology platform and related services under service contracts which are generally one year or less, and in many cases month-to-month. These service types may be sold stand-alone or as part of a multi-service bundle (e.g. both marketplaces and advertising). Services are performed and fees are determined based on monthly usage and are billed in arrears.
As we work to develop and deliver this platform for our customers, we will also invest and grow our business by acquiring additional customers to our platform, growing our revenue with existing customers, cross-selling owned and partner solutions to existing customers, expanding our presence in new segments and geographies, and considering targeted acquisitions that can enhance our service to customers.
As we work to develop and deliver this platform for our customers, we will also invest and grow our business by acquiring additional customers to our platform, growing our revenue with existing customers, cross-selling owned and partner solutions to existing customers, expanding our presence in new markets and geographies, and considering targeted acquisitions that can enhance our service to customers. 37 Table of Contents Key factors affecting our performance We believe our future performance will depend on many factors, including the following: Continued growth of ecommerce domestically and globally Ecommerce is rapidly transforming global B2C and B2B commerce.
These accounts may have more than one Enterprise plan or a combination of Enterprise plans and Essentials plans.
These accounts may have more than one Enterprise plan or a combination of Enterprise plans and Essentials plans. The chart below illustrates certain of our key business metrics as of the periods ended.
Our marketable 40 Table of Contents securities balance of $211.9 million at December 31, 2022, consists of investments in debt securities and $102.3 million at December 31, 2021. We maintain cash account balances in excess of FDIC-insured limits.
Our marketable securities balance of $198.4 million and $211.9 million at December 31, 2023 and December 31, 2022, respectively, consists of investments in corporate and U.S. treasury securities. We maintain cash account balances in excess of Federal Deposit Insurance Corporation (FDIC) insured limits.
As our customers’ online sales increase, our partner and services revenue generated by revenue-sharing agreements with our strategic technology partners increases as well. Our ability to retain and grow our customers’ ecommerce businesses often depends on the continued expansion of our platform and the capabilities of our strategic technology partners to provide revenue generating services to our customers.
Our ability to retain and grow our customers’ ecommerce businesses often depends on the continued expansion of our platform and the capabilities of our strategic technology partners to provide revenue generating services to our customers. We continually evaluate prospective and existing partners’ abilities to enhance the capabilities of our customers’ ecommerce businesses.
This is the ability for merchants to conduct commerce anywhere shoppers are - online and offline. This includes shopping through a merchant’s branded ecommerce store or through online marketplaces and social commerce channels such as Google, Meta (Facebook and Instagram), TikTok, Amazon, Walmart, eBay, Wish and Mercado Libre.
This includes shopping through a merchant’s branded ecommerce store or through online marketplaces and social commerce channels such as Google, Meta (Facebook and Instagram), TikTok, Amazon, Walmart, eBay, Wish and Mercado Libre. Merchants’ product data is made available and may be optimized for these commerce and related advertising channels through BigCommerce and Feedonomics’ product and service offerings.
Provision for income taxes Provision for income taxes consists primarily of deferred income taxes associated with amortization of tax deductible goodwill and current income taxes related to certain foreign and state jurisdictions in which we conduct business. For U.S. federal income tax purposes and in certain foreign and state jurisdictions, we have NOL carryforwards.
Benefit (provision) for income taxes Our benefit for income taxes consists primarily of deferred income taxes associated with amortization of tax deductible goodwill and a tax benefit related to the reduction of the valuation allowance due to the purchase of Makeswift during the year as well as current income taxes related to certain foreign and state jurisdictions in which we conduct business.
General and administrative expenses increased $20.7 million, or 57.3%, to $56.8 million for the year ended December 31, 2021 from $36.1 million for the year ended December 31, 2020.
General and administrative expenses increased $18.1 million, or 35.3 percent, to $69.4 million for the year ended December 31, 2022 from $51.3 million for the year ended December 31, 2021.
Our Enterprise plan contracts are generally for a fixed term of one to three years and are non-cancelable for convenience. Our retail plans are generally month-to-month contracts. Monthly subscription fees for Pro and Enterprise plans are adjusted if a customer’s GMV or orders processed are outside of specified plan thresholds on a trailing twelve-month basis.
Under both models, merchants have full access to the functionality of our platform upon contract execution, and revenue is recognized ratably over the contract life. Our retail plans are generally month-to-month contracts. Monthly subscription fees for Pro and Enterprise plans are adjusted if a customer’s GMV or orders processed are outside of specified plan thresholds on a trailing twelve-month basis.
We focus our sales and marketing efforts on creating sales leads and establishing and promoting our brand. We plan to increase our investment in sales and marketing by hiring additional sales and marketing personnel, executing our go-to-market strategy globally, and building our brand awareness.
We focus our sales and marketing efforts on creating sales leads and establishing and promoting our brand. We plan to increase our investment in sales and marketing by executing our go-to-market strategy globally and building our brand awareness. Incremental sales commissions for new customer contracts are deferred and amortized ratably over the estimated period of our relationship with such customers.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBecause of the short-term maturities of our cash, cash equivalents, restricted cash, and marketable securities, we do not believe that an increase in market rates would have any significant negative impact on the realized value of our investments. A one-eighth percent change in interest expense would have an annual impact of approximately $0.4 million on cash interest expense.
Biggest changeBecause of the short-term maturities of our cash, cash equivalents, restricted cash, and marketable securities, we do not believe that an increase in market rates would have any significant negative impact on the realized value of our investments.
Foreign currency exchange risk All of our revenue and a majority of our expense and capital purchasing activities for the year ended December 31, 2022 were transacted in U.S. dollars. As we expand our sales and operations internationally, we will be more exposed to changes in foreign exchange rates. Our international revenue is currently collected in U.S. dollars.
Foreign currency exchange risk All of our revenue and a majority of our expense and capital purchasing activities for the year ended December 31, 2023 were transacted in U.S. dollars. As we expand our sales and operations internationally, we will be more exposed to changes in foreign exchange rates. Our international revenue is currently collected in U.S. dollars.
A portion of our operating expenses are incurred outside the United States and are denominated in foreign currencies, which are subject to fluctuations due to changes in foreign currency exchange rates. In particular, in our Australia and UK-based operations, we pay payroll and other expenses in Australian dollars and British pounds sterling, respectively.
A portion of our operating expenses are incurred outside the United States and are denominated in foreign currencies, which are subject to fluctuations due to changes in foreign currency exchange rates. In particular, in our Mexico, Australia and UK-based operations, we pay payroll and other expenses in Mexican pesos, Australian dollars and British pounds sterling, respectively.
Added
An immediate increase or decrease in interest rates of 100 basis points at December 31, 2023 could result in a $2 million market value reduction or increase of the same amount.

Other CMRC 10-K year-over-year comparisons