Ladies and gentlemen, thank you for standing by and welcome to BigCommerce’s Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to turn the conference over to your first speaker today, Rohit Giri, Head of Investor Relations. Thank you Please go ahead.

Good afternoon and welcome to BigCommerce’s third quarter 2020 earnings call, discussing the results announced in our press release issued after the market close today. With me are BigCommerce’s President, CEO and Chairman, Brent Bellm and CFO, Robert Alvarez. Today’s call will contain 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, our expected future business and financial performance and financial condition, and our guidance for the third quarter of 2020 and the full year 2020. These statements can be identified by words such as expect, anticipate, intend, plan, believe, seek, 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 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 Brent.

Thank you, Rohit. Welcome everyone and thanks for joining us today. I hope everyone is in good health and keeping safe. Let's jump right into our third quarter performance. Our results reflect strong execution, continued product innovation, and the impact of our best-of-breed partner ecosystem. We had an exceptional third quarter, with Q3 revenue coming in at $39.7 billion, up 41% year-over-year. Total annual revenue run rate or ARR was $167 million, which was up 38% year-over-year. Q3 revenue and ARR achieved our highest growth rates in years and we've accelerated our year-over-year revenue growth rate for four consecutive quarters. We remain strategically focused on serving the needs of merchants of all sizes, and this past quarter further illustrates our ability to continue to disrupt the mid-market and large enterprise segments of the market. Our continued progress in moving up market was reflected in our enterprise account ARR growth rate, which was up 48% year-over-year in Q3. We delivered these results through a disciplined investment framework that is both intentional and purposeful. I'm proud of the improving efficiency and our financial model that we delivered in Q3 which represents a 15 point year-over-year improvement in our adjusted EBITDA margin. Our open SaaS platform continues to succeed in the market because of three primary factors. First, are platforms enterprise functionality; second, our platforms openness and flexibility; and third, our lower total cost of ownership. We have benefited from overall ecommerce trends, and equally important to our progress has been the strategic decisions and investments we made as a company before the COVID-19 crisis started. Our continued momentum is reflected in both our financial results and third-party industry recognition. For example, IDC MarketScape, recently named BigCommerce, a leader in B2C Digital commerce, and a major player in b2b Digital commerce. I can…

Thanks Brent. And thanks again to everyone for joining us today. Before discussing detailed financial results, I'd like to point out that in addition to our GAAP results, I'll also be discussing certain non-GAAP results. Our GAAP financial results along with the reconciliation between GAAP and non-GAAP results can be found in our earnings release As Brent mentioned, we generated total revenue in Q3 of $39.7, up 41% year-over-year, subscription revenue was $26.5 million in Q3, up 26% year-over-year. Debt growth rate accelerated versus Q2 due to strong bookings growth and retention, as well as the sun-setting of the 90-day essentials plans promotion, which we discussed in our qQ2 call. Subscription revenue accounted for 67% of our Q3 revenue, led by new merchant subscriptions and planned upgrades from existing merchants. Partner and services revenue was $13.2 million in Q3, up 82% year-over-year, which accounted for 33% of our Q3 revenue. The increase in partner and services revenue is primarily a result of increased ecommerce activity across our platform, driven in part by the COVID-19 pandemic-related changes in consumer behavior and improve monetization of partner revenue share. Since the onset of the pandemic, we have generally experienced a shortening of sales cycle-time, and an improvement in lead conversion and competitive win rates. Our teams are also working hard to maintain strong platform performance, and the uptime necessary to help our merchants in these challenging times. While we expect the macroeconomic shift towards ecommerce to continue after the COVID-19 pandemic abates, elevated levels of platform transaction volume, subscription revenue, and PSR may receive as pandemic-related restrictions eventually ease. Therefore, we will continue to take a prudent approach in forecasting the COVID impact given this uncertainty, while continue to make the structural investments necessary to fuel our long-term growth strategy. Moving on to…

[Operator Instructions] Our first question or comment comes from a line of Stan Zlotsky from Morgan Stanley. Your line is open.

Hey guys, this is Chris on first Stan. Congrats in the quarter. I wanted to kind of ask about PSR and I saw that dollar amount and percentage growth basis both accelerated sequentially, which is really awesome to see. Within PSR, did you see a stronger attach of solutions outside of just the payments rev share? And I guess like the follow on question to that is what is your upsell motion? How do you make sure that your merchants have taken more than just payments? Because I'm assuming when they take more than just payments, there's a level of durability that you can kind of guide to and see within the merchants as they grow more within the platform? Thank you.

Yes. Hey, Chris. Brent, let me take the first one, you can take the second one. So when we look at our PSR, as we've talked about, over the past couple years, we've definitely entered into partnerships beyond payments. If you think about our ecosystem, our best-of-breed partners now span well beyond just payments. Payments is obviously the most mature. One of the partners that has really started to produce a good amount of revenue for us is our largest ad partner. We talked about this during our last call that we were expecting the renegotiation in Q4. That guidance remains the same, but we saw was an increase in rev share from that ad partner in Q3 well beyond our expectations. But as we think about Q4 and beyond, we feel great about the partnership. We feel about -- great about that revenue stream. And we feel great about our ability to monetize partners beyond payments over time. It's just a little bit noisy for Q4, as the new agreement kicks in and goes into effect.

This is Brent, I'd add that the way we approach partnerships is with a real sense of commitment to our technology partners to help them present their best version of themselves to our customers and in our marketplace of apps. We organized by verticals. So we've got a team around payments and point-of-sale and ERP/back office, B2B, email marketing and other marketing apps, et cetera, lots of different pods. They then are supported by our partner marketing team, and our customer marketing teams, as well as team within the company whose full time jobs are basically to assist our merchants in selecting and adopting the best partner solutions for them. So we are really simultaneously across all of the various verticals, trying to assist our best partners in promoting their capabilities and driving adoption.

Got it. Thanks, guys.

Thank you. Our next question or comment comes from the line of Raimo Lenschow from Barclays. Your line is open.

Hey, thank you. The -- two questions. First, Brent, if I look at the partner revenue and the growth we saw this quarter, I mean, I'm aware that obviously things are normalizing eventually, et cetera. But what are you seeing like that 82% growth is better than we saw last quarter. So what does it tell us about like e-commerce adoption, and a lot of how e-commerce is playing like a new role in this kind of new economy that we're living on now? And then the follow-up is more for Robert then it’s like, so if I think about the growth rates there, maybe reminders of the puts and takes around subscription, because we had a couple of programs at the beginning of the year, it's now starting to inflect higher, but tell us a little bit about the drivers there again, and kind of I’m trying to relate it to the partner revenue? Thank you.

Hey, Raimo. In partner revenue, the single biggest component is rev share from our payments partners. And of course, the largest driver of that is actual sales volume or GMV for our customers, and we continue to see year-on-year growth rates in customer sales. And therefore, rev share hold up very strong. We keep planning for internally and in our external guidance, some kind of a return to a new normal trend line, but that return keeps being delayed with each passing week. And really that's the biggest reason why PSR has stood up so strong and was at 82% year-on-year in the last quarter.

Okay.

Yes, Raimo. Hey, Raimo. Yes on your second question just to remind everybody, we had a 90-day promo that we talked a lot about last time, which we wound down in July. And we were setting expectations that subscription revenue would bounce back in Q3 as those stores would convert to paid stores. So we were very pleased when to deliver 26% year-over-year on the subscription line. We expect similar consistent growth in subscriptions into Q4. The one thing to call out for PSR, I think probably the big biggest driver is the impact of the ad revenue that I had spoken about. Again, I want to emphasize the partnership has done really, really well. It's teed this up to enter into a new agreement with our ad partner. If you were to back that out for Q4 PSR would kind of be growing in that 40% range versus what we're guiding to in the 20s. So that's a little bit noisy on that front. But overall, the secondary factor PSR for Q4 we are, again, ramping down GMV expectations due to COVID. And our inability to really predict the continued impact to COVID, so those are the two main factors going into Q4 and PSR.

Perfect. Well done. Congratulations.

Thanks Raimo.

Thank you. Our next question or comment comes from the line of Samad Samana from Jefferies. Your line is open.

Hi, good evening. Strong quarter guys. Great to see. Just maybe a question on Magento. One, is more announced that support was going to end on June the 30th. I'm curious if you're seeing an increase or saw an increase in third quarter on legacy Magento customers as part of your new -- your new customer share? And then maybe Brent, do you have a realistic view on how many realistic units there are that you could gain from that?

Yes. We -- last time I checked them, you can get one of the built with.com and do a look up of how many stores are still out there, when they scan all sites that are publicly available on the internet and running various versions of Magento 1. The last time I looked if I remember, right, there was something like 90,000 of them out there. And that was after June 30. So clearly, because it's downloaded, or on-premise software, there's nobody can -- that can easily stop a merchant from still running their installed version of Magento 1. And I am certain that there are still many, many, many 10s of thousands of sites out there that are on it. We continue to generate very good sales for Magento 1 customers converting off of it onto us. So I think that that's one that until it trickles down the much closer to zero. There's lots of continued sales opportunity for us.

Great. And then Robert, maybe a follow-up for you. The accounts with ACV, greater than $2,000, the growth right there continue to accelerate even as the comp got tougher. I'm curious if you can maybe peel that back a little bit, how much of that was from existing customers, typically into a bigger category versus the strength in new customer adds?

Yes, I mean, we had another great quarter bookings, Samad. So if you look at our change in ARR, you can see a really strong bookings quarter for us. So I think the major driver of this is just the continued demand that we're seeing and new bookings that we've been able to deliver.

Great. Thanks very much. It was really great -- to see an impressive performance guys. Take care.

Thanks so much.

Thank you. Our next question or comment comes from the line of Josh Beck from KBCM. Your line is open.

Thank you for taking the question. I wanted to ask about really the any context you can share on these new bookings. I mean, it's pretty unusual for a company to see shrinking sales cycles. So in your conversations, is there any increased urgency? Is it anything to do with maybe the awareness of the company now that you're public, just any other context that you can share on really what's driving these strong new bookies that you are seeing?

Hey, Josh, certainly the pandemic really lights the urgency for a lot of companies who either got caught flat footed and needed to in the fastest timeframe possible replace offline sales channels either owned or third-party that were shrinking. And one of the great benefits of our platform is it's about as fast and easy to get up and selling as possible, and provides the flexibility and enterprise functionality to keep enhancing your operations over time. In addition, there are a lot of companies who might not be new to e-commerce, but then found themselves mean to add new brands, new geographies, new segments that they sold to. And that certainly drove a lot of urgency. Your third one, which is does being public assist with sales cycles, because it gives greater confidence to companies that they are making the right choice, a safe choice. And we really believe that to be true. Companies are betting their digital future on their e-commerce platform. They want to make sure they get that decision, right, not just at the time of making it, but they want to be on a platform that basically continues to innovate at the forefront of e-commerce, which keeps them ahead of the curve, doesn't force them to replatform a year or two down the road. And by being public this sort of visibility that our prospective customers and our ecosystem partners have into our size, momentum balance sheet strength, strategy is really nice day relative to what it was before August. And so how much does that help? We can't quantify it. But we have a belief that that's really beneficial to our customer and our ecosystem.

Thanks, Brent. And then maybe a follow-up on GMV. Robert, it certainly sounds like you want to air on the conservative side of things as you contemplate guidance. I'm just curious, when you look at the data, are you seeing maybe some kind of deceleration as some of these lockdowns ease? Or is it just more simply that it's very difficult to predict metric like this and you'd rather just be a bit conservative?

Yes. Hey, JB. As we talked about a lot before March, April, we saw a really big spike in GMV and transactions. The strength really carried through Q2. We still saw strong performance, maybe not at the peak as of what it was back in March, April. But again going into Q4, which is our holiday season in a typical year, our holiday season would be the best quarter for us. But in this year, we're just, again having to take a really prudent approach on what the GMV levels are going to be through the end of this year and kind of going into next year. So what we're doing is we're just taking a ramp down approach over the next three to six months ending Q1 next year, closer to where pre-COVID GMV levels were and -- but I guess we'll just have to see how Q4 plays out.

Makes sense. Thanks, guys.

Thanks, JB.

Thank you. Our next question or comment comes from the line of David Hynes from Canaccord. Your line is open.

Hey, guys. Congrats on the results, and thanks for taking the questions. Brent, I wanted to ask about the new customer ads in that $2,000 plus cohort gig. Curious if you're seeing any shift in the mix of first time e-commerce participants versus replatforming wins, I guess compared to kind of pre-COVID, and maybe any implications about what that tells us about the current environment?

Hey, David, we don't closely track this for every customer. Under normal times, we estimate the mix to be about 50-50 replatforms versus new from scratch sites. It was our belief and understanding that for the first several months of the pandemic, things shifted in the direction of new sites, and companies that need to really adopt as quickly as possible. And those who are on existing sites were sort of clinging by their fingernails, trying to keep them up, handling the volumes. But now that folks have readjusted to working in remote environments, or if they're lucky able to kind of go back with colleagues, it's a lot easier to start thinking about your future and the importance of being on the right platform. And so migrations are certainly, back and probably a pretty big part of the total mix. But I don't have a number specifically to be able to share on that. Thanks for question.

Yes. That makes sense. And then maybe just a follow-up. So I think look obviously we know you guys are well positioned in that mid-market enterprise market. I think, one of the benefits, if you will of COVID, as you've kind of seen a resurgence of growth in the SMB segment as well. So I'm curious if that's driven any change in terms of how you're thinking about kind of investment allocation going forward? And I don't know if that's a better question for you, Brent, are you right, but they're just?

Hey, DJ. I'll start Brent and you can finish. But yes, clearly, we're seeing strong bookings for our enterprise accounts, but since March, we've seen really strong bookings across our SMB segment. And I think that in terms of investments, I think the way we're deploying funds and how we're going to market, there's a lot of things that benefit both segments, and we feel like the balance that we have today is driving growth in both. And so no major changes, but definitely pleased with the performance of our SMB teams.

Yes, yes. Make sense. Okay. Great. Thanks, guys.

Thank you. Our next question or comment comes from the line of Scott Berg from Needham & Company. Your line is open.

Hi, Brent, and congrats on a good quarter and thanks for taking my questions. I guess two for me. First of all, let's start off with your up market transaction whether they're B2B or on enterprise side. Brent, are you seeing any like commonality in what's driving customers to move besides just the general modernization kind of type of comments. I didn't know if it was maybe a particular vendor that had some aging technology that you're seeing more of those customers try to rush in mass with the current e-commerce trends, or if there's a particular type of functionality that maybe those customers are missing that really attract to them during this pandemic to what the e-commerce platform has?

Yes. I think the dynamics -- and thanks for the question, Scott. It's different depending on whether a company is on legacy on-premise software, or on an old and outdated SaaS platform. If you're on on-premise software, you typically buy a license, start customizing it, find it increasingly hard over time to do upgrades and patches, you find out that the version you're on, can't be modernized to take advantage of the latest functionality and trends. And as a result of that, it seems like every year that internet retailer queries companies on whether they are planning to replatform in the next 12 months, there's this ironclad rule that the numbers always 20% to 25%, say yes. In other words, the lifespan of on-premise software seems to be about four to five years before it's so outdated, buggy poor performing that companies grab that and start over. And that hasn't changed. In addition to that, the sort of the older, fast platform, some of which date from the 90s or early 2,000s, simply haven't invested haven't kept up, they are nowhere close to where we are in capabilities and performance, they don't have the partnerships like the ones we keep announcing. And if you're on one of those, you may be on SaaS, but you're still losing ground every month, and those companies eventually will move off as well. If you want to stay at the forefront of e-commerce, they're really only a few multi-tenant SaaS platforms that are investing to do that. And of course, we're one of those, but we are distinguished because we're the only one that is focused only on our e-commerce platform, we're not a software conglomerate, our platform is not a minority or a small minority of our revenue, it drives everything for us. And so we think that we're the most focused company in the world at delivering the best e-com platform, and one that's always innovating faster than our competition.

Got it helpful. And then from a follow-up perspective, maybe this is for RA, as you're looking at your PSR revenues, and maybe what the shift in those revenues looks like or interest from your customers during this pandemic. If we were to look out two or three years, obviously payments is make a chunk of that and continues to do well and is driven by GMV. And you talk about add revenues. But is there another type of partner functionality there that you would kind of look back and say, hey, this is starting to see some traction and can help grow those revenues, maybe more than what we thought pre-pandemic?

Yes, Scott. I mean, long-term. I'll start with just talking about our ecosystem. I mean, if you think about our best of breed partners that we go to market with, there is a solid list of categories that we are now getting rev share on today. And that's a byproduct of partnerships we've entered into in the past 12 to 24 months. But long-term we think about it as share of wallet in payments as a line item that again is the most mature. But if you think about shipping, if you think about tax, if you think about omni-channel marketplaces, advertising, all of those opportunities are in front of big commerce. And when the revenue will materialize in a big way, it's hard to predict, but the opportunity is definitely there.

Great. That’s all I have. Thanks for taking my questions.

Thanks, Scott.

Thank you. Our next question or comment comes from the line Mr. Brian Peterson from Raymond James. Please go ahead, sir.

Hi, gentlemen. Thanks for taking the question and congrats on the really strong results. So I wanted to hit on international. So the 67% growth in EMEA that's pretty impressive. You talk about what's driving that success, and how you think the platform is positioned to solve some of the challenges for merchants in that region?

Yes. The success and growth in EMEA is overwhelmingly driven by the UK, and Northern Europe, a little bit of Netherlands in Scandinavia, Ireland, but it's Northern Europe that is driving it. And what we have found is that we hired the right team, the right people out of the gates to solution and work with companies effectively. One thing I would say, that is different about e-commerce in Europe relative to the U.S. is that traditional brands, traditional retailers, are a bigger part relatively of e-commerce in Europe than they are in the United States, where new startups, new brands, new online retailers, have a higher share. And that greater complexity of pre-existing businesses favors our platforms, flexibility, its openness, its adaptability, we see more headless implementations in Europe than we do in other regions. So really, really bullish on where we can go from there, because with that strength, we're now starting to target continental Europe as well. We announced the launch of our marketing websites in France, Italy, and the Netherlands. And it's just the very early days of what will hopefully be very strong competitiveness from us. In Continental Europe, Eastern Europe, Middle East and Africa ultimately, we'd really like to serve great companies in every part of the world, and hope that that Northern Europe success is indicative of what we can do elsewhere. Thanks for the question.

Great. Thanks Brent. Maybe If I can get one follow up in obviously, that a lot of upside this quarter. I'm curious what are you guys seeing from an LTV to CAC perspective? And it will be areas where you're really looking to kind of pick up the investments with respect to the click ahead to 2021? Thank you.

Hey, BP, I mean, as you know, as that mix, our mix continues to shift to enterprise accounts are our LTV to CAC unit economics get even better. And so we're seeing we're definitely seeing that, you know, we're still very focused on how we drive leads and demand for our enterprise accounts. And, you know, that efficiency held true in Q3 and continues to hold true. And, we drive a lot of leads through tech partner, agency partner initiatives, inbound marketing, and direct sales. And I think those motions are working well. And in -- they're showing up in our improving metrics very much in line with the continued growth in enterprise accounts. One thing I'll also share BP is, as we go to market with more of our tech partners and the ecosystem, they drive merchants and leads over to BigCommerce. And that benefits not just mid-market and enterprise, but it also benefits our small business segment.

Got it. Thank you. Thank you.

Thanks, BP.

Thank you. Our next question or comment comes from the line of Terry Tillman from Truist. Please go ahead, sir.

Yes. I’ll echo the congratulations Brent Bellm, and thanks for taking my question. And then add a follow-up. I guess maybe just looking at the product front. You guys provide nice color each quarter on new innovations. Maybe just going back to last quarter, Brent, in terms of Page Builder, there's an important new innovation, what have you seen from your customers and how they're consuming that? And how that's helping their web storefronts? And then I had a follow-up.

Yes. All the feedback we've received has been incredibly positive. And thanks for the question, Terry. It first went out in beta in April, and for a few months was available only on new stores that's now available to existing stores, full general availability was one of these somewhat magical product releases for us because despite being big and complex that went out on time, and bug free, the user experience has been great. And we're just going to keep adding to it because as we enhance the capabilities, making it globally available across pages, adding more GraphQL API's to individual sort of widget components. It's only going to get better with time. And so we're, we're really thrilled with Page Builder as a foundation for creating beautiful web pages that convert without having to go into the source code to modify things and feedbacks been great. Thanks for the question.

That's great to hear.

Yes. And then the follow up is just related to maybe RA for you in terms of enterprise ARR growth accelerated to 48% up from 44%, you guys still have a lot of go to market investments that are still baking from last year and even into this year, you're not public product enhancements market tailwinds. Is there a certain kind of threshold that you're looking for kind of a minimal growth rate and enterprise ARR? Or is there even still the potential for it to continue accelerating? Thank you again. Nice job.

Hey, thanks, Terry. I mean, if you just look at our past quarterly trend, our enterprise account AAR has been growing north of 40%, pretty consistently. That mix shift, you know, continues to accelerate. So yes, I was very, very happy with the continued performance of our enterprise go to market teams. And a lot of the investments that we're making in the product are obviously driving this investments that we've made in the partner ecosystem are helping to drive this. So yes, pretty consistently above 40%. And it was really good to deliver almost 50% year-over-year growth and enterprise this past quarter.

All right. Thank you.

Thanks, Terry.

Thank you. Our next question or comment comes from the line of Ygal Arounian from Wedbush Securities. Your line is open.

Hey, guys, thanks for taking the questions. We will start with just diving into 4Q bottleneck volumes and partner revenue and how you're thinking about, how volumes kind of trend as we continue through to the pandemic? Particularly, around the comments are on holiday. So I think generally speaking expectations are for really strong holiday sales for ecommerce talking about a lot of carrier constraints, an earlier start to the holiday season, anything you're seeing from your merchants that would give you the confidence that holiday, it's going to be a strong part for the holiday sale season for them as well?

RA, you want to take that, so it's kind of relates the guidance?

Yes, yes, sure. I mean, I, you know, for I mean, what we're seeing across both SMB, mid-market, and enterprise is obviously a sense of urgency to get ready for the holiday season. We're seeing our sales cycles come down as merchants try to get online to get ahead of the holiday season. Clearly, e-commerce is no longer a nice to have, it's a must have. When we think about GMV levels for Q4, we're ramping it down more. So just to get things kind of back to closer to pre-COVID levels by Q1 of next year. But yes, we're definitely seeing the signups for merchants to get ahead of Q4. And we'll see how the GMV and transaction volumes pulled up in Q4 versus Q4 last year where we saw a pretty big quarter in volumes in the holiday season back in 2019.

Okay. Thanks. And then maybe related to that somewhere just as we think about your new customer growth, since the beginning of the pandemic, you guys talk a lot about those are kind of caught flat footed and coming on board and selling to different regions and that kind of thing, and that's driving a lot of the growth early on. Anything that you've seen over the past couple of months or as we going to 4Q in terms of cadence or maybe a peak in demand in terms of signups? Maybe seeing some of that pull forward kind of playing out or continuing to see strength of businesses as – new businesses come online and old businesses fold and in all the mixed up we're seeing in the economy today? Is that continued to kind of be strength going forward where we maybe haven't seen the peak and demand of new starts yet.

I'd characterize, it as our seeing strength, relative to pre-pandemic still in all segments, SMB, mid-market and large enterprise. Fastest responding segment, when the pandemic started with small business. The new sales skyrocketed, and it's come down from its peak, but it's still trending in a way that is materially stronger than where it had been pre-pandemic. What was slower to respond was call it upper mid-market and large enterprise and that's the part we see, now picking up, it's kind of hard for us to determine how much of that is an evolved pandemic response from larger, more complex companies, and how much of it is instead for us the added tailwind or credibility we get by being public now, which that segment really cares about. Or the third factor is, if you go back before May, that was before we had all of these incredibly favorable ratings from Gartner, Forrester, IDC and Paradigm B2B, we've now racked up all, you know, a whole bunch of very, very strong reviews. And larger enterprises factor that into their decision making. And that may also be helping to drive the further acceleration at the upper end of the market we serve.

That -- the last point is pretty interesting, the way those reviews can help drive demand. Thanks. Appreciate the answers.

Thanks.

Thank you. Our next question or comment comes from the line of Ken Wong from Guggenheim. Your line is open.

Great. Thanks for taking my question, guys. I wanted to again, also focus on that enterprise account level. Obviously, you guys have seen a good amount of new activity there some graduations from the install base. Just wondering on that graduation side, how does the kind of the lag impact from PSR factor in going forward? Just wondering like, just how should we think about when the subscription line will see a more a more meaningful uptake? Or is that starting already rolling?

Starting. Yes, well, - I'll let you follow-up on this. There was just a pause there. All right. So I'll tackle it. It's already rolling in. But it's gradual. Because remember the way our adjustments work, whether it's on an SMB plan, or it's on an enterprise plan, its trailing 12 months that we've looked at. So if suddenly a business's sales spike relative to the past. Well, in the first month, you only have one month of a spike, but we're looking trailing 12 months. And will that one month spike push a business over a threshold as an SMB to upgrade them to a higher plan? Or does it take two or three months? It all really depends where they were before relative to the breakpoint and how big their spike was. So it's a gradual thing that will keep flowing through over time. RA, anything you would add?

No, that was perfect BB.

Great, super, super helpful. And then second point, you know, kind of with this, this really strong sales momentum that we are seeing, Guess, how should we think about the pace of sales and marketing going forward? Is that something that you expect to, any kind of rough framework for how it should look relative to ARR growth or top line growth? What's the -- what's a good way for us to think about that number?

Are you talking about sales and marketing investments or just that displaces of the revenue?

Yes. The sales and marketing investments? I guess, that's something that should, you guys are looking for leverage, but it's not something that will be maybe like half of ARR growth, and any just rough framework or just in -- we should just expect it to increase. So any color there would be great?

Yes. I mean, we're happy with the leverage that we're delivering across sales and marketing. We did have periods where we invested in international expansion and go to market teams outside of the U.S. Clearly, with the results that we're seeing in EMEA, in APAC, we're really excited about international we think it's going to be a growth lever for our business for many, many years to come. And they'll definitely be periods where we're going to invest where the demand is. And we'll update you and the our investors as we do that on a quarterly basis.

Great. Thank you, guys.

Thank you. I'm showing no additional questions in the queue. At this time, I'd like to turn the conference back over to Mr. Brent Bellm, President, Chairman and CEO for any closing remarks.

Yes. Thanks, everyone, for joining us. We look forward to talking to you on our next call. Have a good one. Until then, have a wonderful holiday season.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.