Earnings Call
Commerce.com, Inc. (CMRC)
Earnings Call Transcript - CMRC Q2 2025
Operator, Operator
Ladies and gentlemen, thank you for standing by, and welcome to the Commerce Second Quarter 2025 Earnings Call. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Tyler Duncan, Vice President, Finance and Investor Relations. You may begin.
Tyler Duncan, Vice President, Finance and Investor Relations
Good morning, and welcome to Commerce's, formerly BigCommerce's Second Quarter 2025 Earnings Call. We will be discussing the results announced in our press release issued before today's market open. With me are Commerce's Chief Executive Officer, Travis Hess; and Chief Financial Officer, Daniel Lentz. Today's call will contain certain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning financial and business trends, as well as our expected future business and financial performance, financial condition, and our guidance for both the third quarter of 2025 and the full-year 2025. These statements can be identified by words such as expect, anticipate, intend, plan, believe, seek, committed, will or similar words. These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date, and we do not undertake any duty to update these statements. Forward-looking statements, by their nature, address matters that are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to the risks and other disclosures contained in our filings with the Securities and Exchange Commission. During the call, we will also discuss certain non-GAAP financial measures, which are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, as well as how we define these metrics and other metrics is included in our earnings press release, which has been furnished to the SEC and is also available on our website at investors.bigcommerce.com. With that, let me turn the call over to Travis.
Travis Hess, CEO
Thanks, Tyler, and good morning, everyone. I'll open my remarks today by providing a quick update on our second quarter results, and then I'll transition into some details behind the company branding and name change we announced this morning. Given the announced changes, we are going to have a number of partners and industry analysts on our call today as well, so there will be some unavoidable technical jargon we will cover related to changes in our industry. First, let's start with a quick overview on the quarter. Q2 represented solid progress for the business in a number of areas. We delivered non-GAAP operating income of nearly $4.8 million, a 335 basis point margin improvement year-over-year. Annual revenue run-rate or ARR reached nearly $355 million, a year-over-year improvement of 3%. Revenue reached $84.4 million in the quarter, growing 3% year-over-year, and operating cash flow came in at approximately $13.6 million, an improvement of nearly $2 million year-over-year. Both revenue and non-GAAP operating income exceeded the high side of our guidance range. While these results are encouraging in a number of areas, the business is capable of much more. I will spend the majority of my remarks today discussing where we're taking the business and why the changes we announced today will help us get there. eCommerce as we know it today is about to undergo a radical change. The advent and rise of answer engines and generative AI is driving an unprecedented evolution in consumer behavior, shifting search and browse to conversational queries that surface contextual shopping intent. Answer engines like Perplexity, ChatGPT, Gemini, and Copilot are profoundly reshaping how we search, get things done, and how we shop. This significant shift is redefining how consumers discover and engage with businesses of all kinds, but most especially the brands, retailers, and B2B companies out there competing for traffic, customers, and conversions every day. Merchants of all sizes and across all industries must rethink how they show up in the era of AI-driven, agentic commerce. To remain competitive in this new paradigm, merchants must leverage partners who can help them harness their data for enhanced visibility, relevance, and performance across AI-driven channels. We are uniquely suited to serve the market through this transformation. Q2 was a defining period, the strategy, product, and go-to-market engine we have built over the past year came together behind a singular focus: powering an AI-driven commerce ecosystem at scale. Our transformation phase is over. We have moved fully into execution and growth, and we are proud to reintroduce our company as Commerce. This rebrand as Commerce marks the culmination of a year spent rebuilding the company for where the commerce industry is going for the agentic future. Digital commerce is no longer organized around a single search box or a closed ecosystem. Shopping will be orchestrated by answer engines and other evolving AI-driven experiences that favor an open, composable approach to support these new buyer behaviors. In this new world, it is structured data such as title, description, size, and color, and unstructured data such as size guides, brand guidelines, spec sheets, video content, reviews, customer service transcripts, and articles synthesized, optimized, and orchestrated across owned and third-party channels that will help businesses adapt and succeed in this dynamic landscape. We have spent the last year deliberately rebuilding the company around this future. Our new brand also reflects our broader market position: a flexible, open, partner-led ecosystem with infrastructure that powers everything from full-stack commerce to data optimization and syndication, working alongside platforms with whom we sometimes compete to enable those customers to meet challenges we are uniquely positioned to solve. Our ability to operate across the stack and ecosystem, sometimes as the platform, other times agnostically as the data, orchestration, or experience layer is what makes our position in the market so unique and valuable. We help shape how commerce happens, wherever it takes place, and most importantly, however it best serves merchants and shoppers. I want to be clear about the intention behind this change. Commerce is more than a parent company rebrand, it's a deliberate signal that we intend to shape the future of commerce. It reflects our current identity and anticipates the market's direction, driven by a wave of AI-powered agentic transformation. We recently announced a series of high impact partnerships that reflect our market-leading position in this area, which will help B2B and B2C businesses thrive in the era of AI-powered shopping, or agentic commerce. We've launched our partnership with Perplexity, a leading AI answer engine, to deliver optimized product data directly impacting its AI-driven contextual responses. This, in turn, improves discoverability and visibility for major brands, because their data is providing the foundation for trusted answers. Our expanded relationship with Google Cloud is helping merchants stand out across sales channels with AI-enriched product data. This delivers richer and more seamless experiences for customers and greater discoverability for merchants. This includes innovations leveraging Google Cloud with Gemini within Commerce's data enrichment offerings. Today, we also announced a new partnership with PROS, a market leader in AI-driven pricing optimization and configure-price-quoting. We will enable merchants to dynamically optimize pricing, automate complex quotes, and deliver real-time pricing offers to customers. This partnership will enable us to support more complex use cases, particularly in B2B, and expand our addressable market. Many of the world's top brands have selected Commerce to deliver these capabilities today. Adventure brand Revelyst, the parent company of Bell, Bushnell, CamelBak, and Giro; global consumer brand URBN, the parent company of Urban Outfitters, Anthropologie, and many others; and Tapestry, the parent company of fashion brands such as Coach and Kate Spade New York; and Dell Technologies, are already leveraging Commerce's data integrations to improve visibility, protect brand consistency, and boost performance across AI-driven search experiences. These are all exciting customer wins, partnerships, and product developments. Operationally, we remain focused on the execution of our go-to-market transformation plan. We see clear traction from the changes we began in late 2024. Our pipeline conversion rates are improving as our sales teams are now selling bundled products aligned to specific use cases and verticals across the product portfolio. This is a go-to-market engine that looks very different from a year ago, and it is now structurally aligned to the market for which we have been building. We need to improve the efficiency of our sales and marketing spending, and the changes we have made are focused on that outcome. Let me finish with a few other quick highlights from Q2. We were proud to be awarded 24 out of 24 medals in the 2025 Paradigm B2B Combine for the third year in a row, and we also advanced our rankings in 5 key categories and earned more gold medals in the Midmarket Edition than any other platform. This quarter, we welcomed top B2B brands such as Global Experience Specialists, Spear Education, and Arrow Fastener. In B2C, we saw great wins with LifeWave and Belami. I am encouraged by the progress that I see, and I am confident we can build on our momentum. Q2 was a pivotal quarter for us, not just in terms of execution, but in how we define and present who we are to the world. Commerce is the culmination of the work we have done to transform our products, go-to-market, leadership, and architecture. It reflects our belief that the future of commerce is intelligent, composable, and AI-driven. And we are uniquely positioned to lead in that future. After a year of bold, foundational change, we are now in execution mode. With that, I'll turn it over to Daniel to walk through our financials and outlook.
Daniel Lentz, CFO
Thanks, Travis. Our Q2 results demonstrate continued momentum across our key business performance metrics. Commerce currently serves over 5,800 enterprise accounts and tens of thousands of small businesses. ARR reached nearly $355 million at quarter-end, a 3% increase year-over-year, while average revenue per enterprise account rose to $46,403, a 9% increase year-over-year. We delivered $84.4 million in revenue in the quarter, up over 3% year-over-year, and non-GAAP operating income of $4.8 million. Profitability metrics strengthened significantly. Non-GAAP gross margin strengthened to 80%, up 280 basis points year-over-year, while non-GAAP operating income margin finished Q2 at 6%, improving 335 basis points from Q2 2024 and 1,013 basis points from Q2 2023. We closed Q2 2025 with a solid balance sheet, including $136 million in cash, cash equivalents, and marketable securities. Our operating efficiency gains also continue to improve, with quarterly operating cash flow reaching approximately $14 million, up $2 million from Q2 2024. We have reduced our net debt position to $18 million, a 73% decrease year-over-year. Our debt maturity profile remains manageable with approximately $4 million due in 2026 and $150 million due in 2028. For the 3 months ended June 30, 2025, we had approximately 80 million common shares outstanding and 81 million fully diluted shares outstanding. Let me provide a brief update on the progress of our other core growth initiatives from our Investor Day. We are on track to release an integrated, self-serve version of Feedonomics within the BigCommerce control panel by this holiday season. Our self-serve version of Makeswift within the BigCommerce platform and our branded payments solution are also on track to be released in the front half of 2026. These releases will improve customers' core commerce platform capabilities while also creating new revenue growth opportunities for the business. Our partner bundling strategy is progressing well. This strategy enables additional revenue and profit opportunity through reselling core partner products, and it also creates an opportunity to increase distribution of our products through select partners without the burden of associated go-to-market costs on our side. We anticipate the inclusion of Noibu's leading error monitoring platform in our go-to-market teams' sellable product portfolio later this year. Our partnership with PROS will enable them to offer a combined solution to the verticals in which they have deep expertise, while also enabling Commerce to offer PROS to our core customers as well. We are also excited to partner with Accenture to create and scale joint Commerce and Accenture solutions for customers, particularly focused on AI and agentic commerce. Before moving to guidance, I'd like to explain how the shift to AI-driven commerce will help accelerate our revenue model. Commerce generates revenue in 3 ways: First, BigCommerce platform subscription revenue, tied to merchant order volume. Second, Feedonomics subscription revenue, based on product SKU volume going through our data feed optimization models. And third, partner and services revenue, including certain implementation services and technology partner revenue share. What's important to understand is that all 3 of these revenue streams benefit from AI's acceleration of change in the commerce industry. For us at Commerce, the growth of answer engines and agentic shopping is the equivalent of a new channel or a new buyer, driving order growth and technology partner revenue share. It also makes data optimization more important to customers than before, as answer engines and AI-powered shopping require even more sophisticated product data than existing search engines. This, in turn, leads to more account opportunities and SKU volume growth to our data feed optimization models and the associated pricing and revenue growth. Agentic search is also a monetizable channel offering and represents a direct revenue opportunity in its own right. As demand increases for product data conditioned specifically for agentic surfaces, we intend to offer paid AI features as well. As AI reshapes how consumers discover and buy, we intend to meet that change head-on with value for our merchants and monetization for Commerce. In AI-powered shopping, data is the new storefront. Our ability to structure and syndicate product catalog data into answer engines is increasingly mission critical for merchant success. As AI agents become the front door to product discovery, merchants who deliver clean, enriched product data will appear more frequently, earlier in the buyer journey, and with greater contextual relevance. This drives higher quality traffic, better conversion rates, and increased GMV. And as that GMV scales, ultimately so does our revenue. Now, let me close with guidance. For Q3, we expect revenue between $85 million and $87 million and non-GAAP operating income between $2.3 million and $3.3 million. For the full year 2025, we expect revenue between $339.6 million and $346.6 million and non-GAAP operating income between $19 million and $25 million. Travis and I will now take your questions.
Operator, Operator
The first question comes from Raimo Lenschow with Barclays.
Raimo Lenschow, Analyst
Great to see the progress here. Travis, can you talk a little bit about like what you're seeing in the field? Obviously, when we talked 90 days ago after Q1, the world was very, very uncertain, consumers were really uncertain and then commerce businesses kind of suffered from that one. How has the world evolved since? And what are you seeing from your customers in terms of living in this new tariff world?
Travis Hess, CEO
Raimo, thanks for the question. Yes, we're not seeing a lot of impact thus far from tariffs, to be honest with you, at least nothing that's obvious. I think Daniel can provide some color there as well. I think we're continuing to see success, obviously, in demand, particularly on the B2B side, I think we've been pretty transparent about that trend over the last year. And then obviously, with the answer engine proliferation and angst with merchants in space knowing they need to do something. They're seeing search traffic drop off and obviously, want to optimize for that. There's a tremendous amount of demand and sense of urgency around particularly discoverability right now. And obviously, a lot of discussion and conjecture around where this is going to evolve to as it relates to actual shopping. But right now, it's primarily around discoverability and transformation to align to being discovered going forward.
Raimo Lenschow, Analyst
Daniel, regarding the rebranding, since we lack extensive experience, we rely on being discovered by new customers. Can you share some insights on the positives and negatives? Clearly, there has been investment in this, and there will be a transitional phase. Should we expect any disruption in acquiring new customers? How do you foresee this developing? Congratulations once again.
Daniel Lentz, CFO
No problem. That's a great question. What I would say is it's really important to understand that we are not rebranding the individual products themselves. This is a corporate parent brand change, and it really better represents where we already are playing in the market. In a lot of ways, for example, a lot of customers are not familiar with the fact that we have Feedonomics as a core product, which is specifically built to help merchants optimize for where things are going with AI no matter what platform you're on. And the fact that the corporate name was associated with one of the products and a platform product in particular, I think it led to some confusion and sometimes it can limit opportunities that we saw on the sales side. And so I don't think that it's really going to affect deal volume or pipeline build because, again, this is not impacting the branding of the individual products themselves. What I think it does is it gives us an opportunity to have a much more cohesive message. And one that's much more true — truly represents what the business is and what exactly it is that we do, in a way that I think broadens our TAM specifically with respect to Feedonomics, and that's really key to why we did this.
Operator, Operator
The next question comes from Ken Wong with Oppenheimer.
Hoi-Fung Wong, Analyst
Somewhat piggybacking off of Raimo's question. Travis, this past year saw BigCommerce prioritize the reshaping of your exec team, go-to-market alignment. With this rebrand as Commerce, do you think the product portfolio is in a place for us on the outside to properly measure success? Or is that going to have to wait until '26?
Travis Hess, CEO
I think it's a great question, Ken. I think you're going to see leading indicators certainly as we build pipe and we announce new, obviously, efficacy with some of the existing clients that we have. Part of the challenge on the agentic stuff, A, you're buttoned up against holiday. And obviously, we're dealing with a lot of large branded manufacturers and retailers coming in, so there'll be some sensitivity there. But we're also playing with the pace of these answer engines as well and where they are in their journey of how they're optimizing, how they're ingesting data and things like that. So all 3 are kind of coming together, where the brand itself is, where the answer engines are in particular and then how we're helping them. But I would expect to see material signs of optimism and signs of growth that would most notably turn into revenue probably more so in the early part of next year materially versus the second half of this year. But we'll see other indicators that would be organic and natural that you'd probably see from the outside in as well.
Hoi-Fung Wong, Analyst
Perfect. Super helpful. And then lots of mentions of new partnerships, and it sounds like that is potentially going to be a more important revenue path going forward. I mean, should we anticipate that the pace of new software service partnerships are going to pick up relative to what we've seen from BigCommerce historically?
Travis Hess, CEO
I think you're going to see more transformative type partnerships, right? I think the models are shifting. I think we were fairly verbose about that in my opening remarks. I think it's changing the entire dynamic of where folks are placing their bets and how organizations, regardless of size or market, need to adapt to do that. And that, by definition, will require transformation. So the services side of this, I would expect to shift more broadly into helping these organizations transform and take advantage of that. And for us, that partnership is a combination of obviously software and services and the services handling the transformation piece. We feel like we've got capabilities that would act as more of a catalyst to help spark that transformation and service and help brands get into a better spot to take advantage of, obviously, the sense of urgency around discoverability right now. And certainly, shortly thereafter, this is going to get deeper and more agentic where this is going to turn into shopping. And then that's going to launch monetization models that, again, depending on the answer engine might be slightly nuanced and different that organizations and service providers are also going to need to adjust to. So this is kind of the tip of the spear of what we see as a massive paradigm shift in the space.
Operator, Operator
The next question comes from Natalie Howe with Bank of America.
Natalie Howe, Analyst
You talked a little bit about your B2B offering. So I wanted to dig in a little more on that, especially as the pillar of ARR reacceleration. So what has been the biggest improvement in the adoption of B2B? And how has it been integrating with the rest of the platform? And what's the ideal customer for that, whether it's new logos or customers already in the base?
Travis Hess, CEO
Yes. It's a great question, Natalie. We've seen a lot of momentum there for some obvious reasons and maybe some less obvious reasons, just the pure capabilities of the platform and just the nature of what we define as B2B, which is more so traditional manufacturing and distribution, which tends to have some complexity innately to that business, large complex catalogs, pricing schemas, contractual pricing, punch outs, a lot of back-office technology challenges. Oftentimes, these large organizations grow inorganically and buy their way to growth and with that inherit a bunch of a tangled mess on the back end. So a lot of the capabilities in the core platform have lended itself to transformation in that capacity, and I think drawn a lot of folks to us. Where we've seen the really biggest opportunity short-term to expand that TAM is really through CPQ or configure price quote. As you get more complex in these products, obviously, you're needing to configure them sometimes with tens of thousands of SKUs. And it's why we partnered with PROS. Obviously, they live and breathe in this space. They dominate some very innately complicated industries, and it was just a natural extension. They've got far more advanced capabilities than we could ever possibly build ourselves. And it's just a great use case and example of where partnering and being open makes a lot more sense to accelerate value to our customer base and widen our TAM as opposed to waiting to go build it over time. The challenge is historically, we've got to make that easy. And so we've been very deliberate about who we're partnering with, why we're partnering with. We got to make that easy commercially, operationally and technically. That's the spirit behind all of these things.
Natalie Howe, Analyst
Got it. And then a quick question on the payment solution. I know it's not until 2026. You guys want to provide more optionality for your customers. But what gives you the confidence that some customers will end up using your guys as payment solution? And what's like the reasoning behind providing it yourselves?
Daniel Lentz, CFO
This is Daniel. I'll address that. It's important to note that we will be offering an optional solution aimed specifically at small businesses and mid-market customers. Many in our customer base are seeking straightforward solutions that integrate easily and are competitively priced. By providing a native payment solution that is fully integrated into our platform, we can simplify things for customers who don’t face multi-region complexities and don't require different payment solutions based on location. However, we also serve large, complex businesses that do not want to be restricted to a single payment solution, which might benefit us but not them. Therefore, we want to ensure that customers have the flexibility to choose partners that fit their needs, such as working with one partner in Europe and another in South America. Simultaneously, there is a significant portion of our customers that would gain from a straightforward, integrated solution, allowing us to capture some additional margin on the pricing we offer and provide value back to our shareholders without assuming the risks and complexities associated with underwriting and capital commitments.
Operator, Operator
The next question comes from David Hynes with Canaccord.
David E. Hynes, Analyst
So Travis, look, as the commerce space continues to evolve towards agentic or answer engines, do you still think BigCommerce's best opportunity is as platform? Or do you now see a better path to market as that data orchestrations experience layer? And I guess if it's the latter, like how does that change how you think about the economics of the business?
Travis Hess, CEO
Yes, that's a great question. The truth is that both options will coexist. The platform isn't going away; people will continue to visit branded sites to shop. There's definitely that thrill of making a purchase. While I'm not as enthusiastic about it as some people, many enjoy the rush of buying. That being said, there's a compelling narrative about collaboration here. There are moments where the platform plays a crucial role. I believe in having an open composable approach, which was a key reason I accepted this position. The pace of AI adoption within these answer engines has likely outstripped our expectations, but it was bound to get complex. A solid data foundation will be essential for driving much of this. Data will lead to greater innovation related to the platform and enhance experiences both on and off owned channels. The balance may shift over time. I see a benefit in having more than just a data layer to optimize. There’s more involved than simply having a platform with component capabilities, and we need to deliberately tailor these to specific industries. Clients want flexibility and agility; they prefer to choose us willingly rather than being locked in by necessity. Our challenge is to provide top-notch capabilities that enable this. If it focuses solely on data, that's fine too. It allows us to expand our total addressable market without requiring everyone to switch to our platform, which isn’t suitable for all businesses. I would be naïve to assume that it is, and the opposite is also true. That's the core idea behind it. The mix might look different in six months or a year, and we will adapt as needed. However, it’s difficult to predict right now due to so many factors still in play. Even how the commercialization of agentic technology will unfold is still being determined by the answer engines. This will continue to develop as we advance.
Daniel Lentz, CFO
One point I would add is that we need to ensure our shareholders understand the significance of the changes we are making. The trends we are observing regarding AI and commerce positively impact all aspects of our revenue model. I expect that the Feedonomics product will grow at a faster rate compared to the platform product, a trend that has been ongoing and is likely to continue in the future. This creates a valuable opportunity to enhance services for merchants across various platforms, which is crucial. As AI becomes more prominent and influences commerce, we will see an increase in SKUs processed by our data transformation engines, leading to greater volume. For customers where it is sensible to cross-sell the platform, we will take that opportunity. This results in a shift in the product mix, driving more volume, and consequently capturing revenue through order growth and associated revenue share across various domains. From my viewpoint, while our revenue model may alter the growth dynamics of different products, it ultimately benefits our entire portfolio.
David E. Hynes, Analyst
Yes. Okay. I think that makes sense. And then, Daniel, just based on how you're modeling the business, like when do you think we might see a return to positive enterprise customer count?
Daniel Lentz, CFO
That's a great question. I'd like to see that happening towards the back half of this year, but we don't know for sure that's going to happen. I mean there's a lot of things that I see in the business right now that I think are really, really positive. We beat the high side of the guidance range on revenue and profit. The revenue growth rate has stabilized. We have line of sight to acceleration. I'm excited about that. Importantly, enterprise ARPA, or average revenue per account, it was up to 9%, which I think is like our seventh consecutive quarter of accelerating growth in ARPA. And we also had the strongest sequential growth in ARR and bookings that we've seen in over a year. I mean our deferred revenue was up 31% on the quarter. So there's a lot of signs I'm seeing that are really good. As I've said when this comes up on each of our calls over the last few quarters, I'm a CFO. I'm never going to be happy until count and dollar per account are growing together. We're seeing new account growth that's really good, really large accounts that we're really excited about. We're also just continuing to invest and need to make progress on gross retention with some of our smaller accounts, which is why you're seeing that in the unit count number. So it's not the core of our revenue model. I'm much more concerned about dollarized retention, as I've said before, than I am unit count, but it's obviously something that we're focusing on as well.
Operator, Operator
The next question comes from Parker Lane with Stifel.
Jeffrey Parker Lane, Analyst
In the prepared remarks, you specifically called out improving pipeline conversion rates. And just wondering, if you look now that we've made those changes to the sales org in late '24, how the pipeline build is developing? And how much of that is being driven by this proliferation of agentic commerce versus just blocking and tackling normal course of business?
Daniel Lentz, CFO
Parker, the pipeline build has been healthy, although not exactly where we would like it to be. We are never completely satisfied with what we're seeing, but the indications have been quite positive. The improving win rates are certainly encouraging, and I believe this is due to our enhanced efforts in positioning the brand and our products. This is despite the challenges we face in the market due to changes at the parent company level, which we anticipated would make the first half of the year somewhat difficult. Overall, things have unfolded as we expected, and we are really optimistic about what we see. Our representatives are better at pitching bundled offerings and effectively accessing accounts, regardless of the platform used with the Feedonomics product. We believe the changes we've implemented will strengthen this performance.
Jeffrey Parker Lane, Analyst
Understood. And then I know you gave a model framework back at the Analyst Day in the spring, not explicitly guiding to '26. But with some of the sales changes and build behind us now and the rebrand behind us, how should we think about the cadence of margin expansion over sort of the midterm? Is there an opportunity to drive a little bit more margin than would be implied in this year?
Daniel Lentz, CFO
There is. What I would say, though, is we are prioritizing growth acceleration. I think we said going into the year that we're aiming for margin expansion in the low to mid-single digits. I think that's certainly still possible. But Travis and I are also prioritizing investments in the product, not just in features related to AI. We want to be really clear about this. This isn't chasing shiny objects, like we're really investing in our core products, core features and functionality while also building in advancements in AI offerings that we think are important. And so we want to continue to see healthy margins and expansion. I think you see that also even just in the cash flow results. I mean we had almost $14 million in operating cash flow in the quarter, which I think is outstanding. But where we see opportunities to invest back in the product, we are going to definitely do that. We're also investing a little bit more right now in sales and marketing expense, which you'll see in the numbers, which makes sense given the rebrand. But that said, we also are kind of laser-focused on where we are from an efficiency perspective because clearly, that's not where we want it to be from a growth relative to spend, and that's going to be something we're going to be focusing on as we go into next year. I'll have a lot more to say on this as we get into our next call once we get through kind of early rounds of planning for next year. It's a little bit early at this point, Parker, for us.
Operator, Operator
The next question comes from Maddie Schrage with KeyBanc Capital Markets.
Madison Taylor Schrage, Analyst
I just wanted to hit on B2B a little bit. Could you maybe talk about maybe the amount of new net adds that are joining the platform, that are joining for B2B functions and kind of where you see that going this next year? And then my second question for you is just on ARPA. Obviously, we've seen a good step up, kind of sequentially or I was going to say year-over-year for a while now. Can you talk to the upside that you're seeing there kind of what folks are taking more of or maybe any changes in pricing that are kind of leading to ARPA increasing continually?
Travis Hess, CEO
Dan and I will share insights on this topic. Maddie, that's a great question. Regarding B2B, a significant portion of our new bookings has been focused on this area for various reasons. I mentioned this in previous calls. At the start of the year, we reorganized our entire go-to-market team to focus on B2B. Previously, I was critical of how we treated B2B as just additional features rather than a distinct business model, which we've been intentional about since the year began. The effectiveness we've seen isn't solely due to increased headcount; it comes from our concentrated effort and ongoing investments in the product. The partnership with PROS is a quick way to enhance value and expand our total addressable market. Moving upmarket in B2B can be quite complex, especially around CPQ, but PROS has that expertise and naturally extends our capabilities. Their distribution model works well for both of us, allowing mutual promotion of our products. We've also gained considerable credibility in the B2B space, which provides us with momentum. There's a growing urgency for manufacturers and distributors to digitize and utilize AI, and we see significant potential for AI to disrupt this market, even more quickly than in B2C, in less obvious ways that we are eager to explore. Therefore, we expect this B2B momentum to continue in the near future. The platform's maturity level is different from B2C, and we're currently experiencing much greater momentum. Now, I'll hand it over to Daniel for the next question.
Daniel Lentz, CFO
Yes. Regarding growth in average revenue per account, I'm pleased to share that we are seeing improvements in average pricing per customer, even before launching many initiatives designed to enhance this further. Our sales teams have improved their pricing discipline, and we are successfully winning larger and more complex customers. Additionally, we are better at cross-selling Feedonomics and platform customer accounts. We have several upcoming initiatives that we believe will provide a boost to our growth. For instance, we plan to introduce a self-serve version of Feedonomics called Feedonomics Surface by the holiday season. This will enable us to enhance monetization for existing customers by helping them optimize their data for ads, marketplaces, and AI channels. We're in a good position to implement these enhancements using our existing products without having to completely reinvent our approach. We also plan to add new offerings within Feedonomics to optimize for LLMs and similar models. Furthermore, we're working on a self-serve version of Makeswift that will include paid features, along with a branded payment solution. On the partnership front, we're nearing the ability to sell Noibu as part of our current offerings and aim to achieve the same with PROS. Our collaboration with Accenture also holds significant promise for distribution. There are numerous exciting developments in the pipeline that give us confidence about our future. While we may not see immediate results in the next quarter, we have a lot of work ahead to complete these rollouts, and we believe they will positively impact our average deal size with both new and existing merchants.
Operator, Operator
The next question comes from Brian Peterson with Raymond James.
Brian Christopher Peterson, Analyst
Congrats on the quarter. Just one for me. So Travis, if we think about the AI impacts, I'm curious actually what you're hearing from customers in terms of how big of an impact that's actually making on decisions? And is that impacting sales cycles at all? And I'd also love to understand, what are you hearing from your competitors? Because there's a lot of legacy solutions out there, and I'm curious if they're innovating at the pace of BigCommerce right now.
Travis Hess, CEO
Great question. I can't comment on how innovative our competitors are. However, it's clear that everyone is getting involved in AI now. There is a lot of talk without substance. Fortunately for us, Feedonomics was already engaged in this work five months ago. We approached it seriously and aimed to deliver a comprehensive solution rather than rolling it out gradually. Currently, the market demand, especially from B2C merchants of various sizes, revolves around discoverability. It feels similar to the urgency we experienced before Y2K; people are aware they need to take action, but they may not fully understand what that entails, prompting significant transformations and service changes. This technology represents one of the quickest adaptations in history, and businesses are eager to keep up. The pressing concern is how to be visible in this evolving landscape of consumer behavior. Each answer engine—like Gemini, Perplexity, and ChatGPT—approaches the challenge differently. We have been optimizing and managing both structured and unstructured data efficiently across various channels, which sets us up well for this demand. We're already engaged with 30% of the Internet Retailer 1000, including major manufacturers and retailers, so this expansion builds on what we had in place. Everyone is trying to integrate AI; while it may seem trendy, its real-world applications align well with our business. In the coming quarters, you'll see this effectiveness emerge, starting with discoverability and moving into orchestration, which will introduce complex challenges as people shop across different channels, leading to inventory and personalization tasks that we need to handle to meet or exceed customer expectations. This will be an exciting development for us. As Daniel mentioned, we believe this perfectly aligns with our three product assets. We're looking forward to seeing this evolve; whether we have this conversation in six months or had it six months ago, the clarity around it will grow as we witness the progress in real time.
Operator, Operator
The next question comes from Gabriela Borges with Goldman Sachs.
Gabriela Borges, Analyst
I find this dynamic around agentic search particularly interesting. Travis, maybe tell us a little bit more about, A, are you already seeing customers see a negative impact from agentic search such that it's catalyzing them to engage with your product suite? B, you mentioned AI-powered shopping requires even more sophisticated product data. Maybe just give us some examples there. In what ways does the product data need to be more sophisticated.
Travis Hess, CEO
Absolutely, Gabriela. To address your first question, yes, there is a significant need for this. It’s not just us; I’ve spoken to many colleagues in the service industry who share similar concerns. Major branded manufacturers and retailers are feeling a pressing need to stay ahead, and many are not equipped to handle this at scale, which creates concerns and increasing demand in the market. As I mentioned earlier, both on the Feedonomics side and our services side, we are seeing substantial transformations that benefit the industry. Historically, we have focused on synthesizing, optimizing, and syndicating structured data, including data enrichment across many channels. Now, some advanced language models have started to synthesize both structured and unstructured data. While we still have a lot of work to do with AI to extend structured data optimization, the intriguing part comes from the combination with unstructured data, alongside the valuable data we already manage for our customers. We are well-positioned with access to some of the most valuable data globally to enhance queries and experiences in collaboration with these language models, which makes it a fitting opportunity for us. Additionally, we are not restricted to specific checkout processes. As we transition into shopping, we support various mechanisms that best serve our merchants, giving us an advantage for commercialization at scale. This is central to many of our discussions. It is still early in this process; the shopping aspect is underdeveloped, with results being inconsistent. However, I believe it will improve significantly and lead to more refined conversations. Right now, discoverability is crucial, and as we progress, the focus will shift to enhancing experiences, inventory orchestration, and back-office operations, making things increasingly intriguing. I see this as one of the most significant shifts in this industry since responsive design, which, while not as glamorous, drove substantial transformation and change.
Gabriela Borges, Analyst
Do you have examples of customers that you can use to train your salespeople, where these customers have experienced an increase in traffic, conversion, or top-of-funnel metrics? They then purchase Feedonomics and you can present interesting pricing options you've discussed, and look at the statistics before and after.
Travis Hess, CEO
Yes, we mentioned this in the press release and my opening remarks, highlighting four or five well-known brands that are already our clients. Currently, we are in closed beta with some complex projects involving a select group of clients. This will eventually lead to a more public offering. Our focus will be on demonstrating the effectiveness of our solutions, which, while measurable, is also dynamic. As answer engines become more refined and add new features, each operates differently with varying advantages. For instance, Google has consumer-facing applications that integrate AI, and they're tracking user behavior through their widely used browser. Other answer engines are beginning to launch their own browsers as well. We anticipate ongoing evolution and disruption in how these platforms operate, which reinforces our existing relationships and our capability to synthesize, optimize, and distribute data. We're well-positioned to leverage this, as we are already working with some of the largest brands globally. Importantly, we are also excited about providing these capabilities in a self-service format to our existing clients and smaller merchants, who need as much assistance as larger companies, even if their spending and product catalogs are smaller. Discovery is crucial for all brands, regardless of size, as users do not differentiate based on this. The potential market is enormous, independent of the Commerce platform, and we see this as a great opportunity to initiate conversations.
Operator, Operator
The next question comes from Chris Kuntarich with UBS.
Christopher Louis Kuntarich, Analyst
Can you hear me?
Operator, Operator
Please go ahead. We can hear you now.
Christopher Louis Kuntarich, Analyst
Yes, I just wanted to stick with the agentic theme. Just, I wanted to focus on the B2C side here. I think I kind of understand that we're seeing this acceleration in this trend. But anything you could do to further dimensionalize the amount of discovery today coming from the agentic engines versus either like the start of the year or this time last year? And just how is that differing versus either brands that have leaned into this theme and ones that haven't or across certain verticals? Just anything you could share there to help further dimensionalize this?
Travis Hess, CEO
Yes, that's a great question. I've heard that there is typically a 20% decline in organic search for many brands. However, this figure can vary based on the brand and their actions. We don't have enough data yet to compare where things were six months ago to now, or predict where they will be in three months. A significant number of brands have experienced a decline. This perspective can vary depending on whom you ask. Currently, there are over a billion users weekly using answer engines, and this number is growing rapidly. I expect that as more capabilities become available, this issue will gain more attention. We should have more concrete data in the next quarter regarding the impacts we're observing. At the moment, we acknowledge the drop-off and recognize the need to optimize our data for discovery. Simultaneously, we must prepare for the complexities involved in shopping through these channels. In the future, there could be situations where agents negotiate and make purchases on behalf of others. I don't want to oversimplify this, as there are relevant use cases to consider. However, many organizations are focused on these challenges without necessarily solving all of them immediately. What's crucial is that they begin to address the decline in discovery while also preparing to capitalize on future opportunities. That’s a key topic of discussion right now, rather than solely analyzing past efforts.
Christopher Louis Kuntarich, Analyst
Got it. Maybe just one quick follow-up. Just thinking about it versus other sources of traffic, is it now larger than maybe e-mail or SMS? Just curious kind of where it's falling within the stack rank for BigCommerce customers.
Travis Hess, CEO
Yes, I don't have a specific number, but it's certainly growing faster than others. A lot of this growth can be attributed to trust. The core idea behind many of these answer engines and companions revolves around how much users trust the answers they receive, and trust is built over time. As these systems improve, adoption is likely to deepen, leading to greater effectiveness. However, we still have some distance to cover. I see this as a phased approach. Currently, the focus is on discoverability. As users engage in conversations with these answer engines and ask contextually relevant questions, we need to ensure that brands stay relevant and prominent in those discussions. The next phase will involve the user experience—after being discovered, we must consider where shopping occurs. Are we directing users back to our own channel, sending them to a marketplace, or allowing them to check out directly within that experience? Additionally, we need to manage the details behind the scenes—like how we serve SKUs and availability based on customer expectations. For instance, are customers willing to wait two weeks for a discount or prefer to pay more for immediate delivery? What channels do they expect to use when interacting with products? All these factors are being worked out behind the scenes, but it all begins and ends with data, which will be the most valuable component, alongside other resources.
Operator, Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Travis Hess for any closing remarks.
Travis Hess, CEO
Listen, I want to thank everybody, obviously, for showing up. We're clearly excited. This has been a long time coming. We've obviously orchestrated and metabolized a tremendous amount of change over the last year. I certainly appreciate the patience for those that follow us. We'll continue to lead and communicate in a transparent way. I appreciate the questions. We're excited to move into the execution phase and get out of transformation. I think we're all a little fatigued from all of the change, obviously. And listen, long story short, I said this early on taking this job, there was an obvious better together story here. We needed to build that comprehensively to scale and authentically, we feel like there's a really inexpensive AI play here with the product suite that we already have. That's the thing that we're most excited about here in the near term. I've talked about getting into more rooms and communicating in a more articulate way and focus. We feel like combining these elements into this brand and articulating that in a clear and concise way and now measuring sort of those success factors going forward, we're excited to share more with you guys going forward. So thank you all. Look forward to talking to you next quarter.
Operator, Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.