Ladies and gentlemen, thank you for standing by, and welcome to the Commerce Third Quarter 2025 Earnings Conference Call. [Operator Instructions] 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.

Good morning, and welcome to Commerce's, formerly BigCommerce's Third 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 fourth 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.commerce.com. With that, let me turn the call over to Travis.

Thanks, Tyler, and good morning, everyone. Q3 marked another solid step forward for Commerce. We delivered revenue of $86 million, in line with our guidance range. Non-GAAP operating income reached $8 million, which significantly exceeded the high end of our profitability guidance while operating cash flow came in just under $11 million. For the 12 months ending September 30, 2025, we had total revenue of $340 million and non-GAAP operating income just above $30 million. For the 3 months ended September 30, 2025, we had approximately 80.8 million common shares outstanding and 81.3 million fully diluted shares outstanding. We are now in full execution mode, and our focus is on scaling profitable, sustainable growth across each of our core offerings. AI is reshaping how customers discover, evaluate and purchase products. The future of commerce is intelligent, composable and agentic. Traditional e-commerce flows are shifting to conversational discovery, personalized curation and increasingly autonomous purchase journeys. AI agents like ChatGPT, Gemini, CoPilot and Perplexity are fast becoming the entry point for commerce. This requires a fundamental shift in how merchants think about visibility, relevance and conversion. When product discovery begins with a prompt, not a home page, it is the quality of data that determines whether you get seen, chosen and purchased. We've architected Commerce to meet this shift head on. Feedonomics syndicates enriched structured product data into all major AI services. Merchants can surface their catalogs in the exact context where intent is detected and decisions are made. We are building and launching new products anchored by Feedonomics to meet this need, and we see strong pipeline signals emerging as we head into the holiday period. Similarly, Makeswift empowers marketers to build and update AI optimized site experiences in real time without writing code. Through our open modular platform, merchants can…

Thanks, Travis. For those of you who are newer to our story, Commerce serves tens of thousands of accounts globally, including just under 6,000 accounts using our enterprise plans. Our platform powers both B2C and B2B ecommerce for leading brands and manufacturers, with capabilities that span storefront infrastructure, data syndication, and visual design. Our Feedonomics product sits at the center of our data strategy. It ingests, enriches, and syndicates product catalog data across channels like Google, Meta, Amazon, and, increasingly, AI-driven surfaces like OpenAI, Perplexity, Gemini, and Copilot. This enables merchants to increase discoverability, drive marketing spend performance, and optimize channel-level return on ad spend. As of the end of Q3, our annual revenue run-rate was approximately $356 million, with 76% of ARR coming from customers using enterprise plans and corresponding average revenue per account exceeding $46,800. Our multi-product model combines recurring subscription revenue from our core platform and Feedonomics with revenue share from a curated ecosystem of technology and service partners, all underpinned by a disciplined operating model and strong balance sheet. We remain focused on delivering profitable, high-quality growth by expanding share of wallet within our installed base, acquiring new merchants, and scaling emerging self-service product lines across small and mid-market businesses. In Q3, we delivered revenue of $86 million, a 3% increase year-over-year and consistent with our guidance range. Non-GAAP operating income landed at $8 million, or 9% of revenue, which exceeded the high end of our profitability guidance by nearly $5 million. This represents a 413 basis point improvement year-over-year. Operating cash flow was approximately $11 million, marking our second consecutive quarter of double-digit operating cash flow margin and further demonstrating the operating leverage in our model. ARR ended the quarter at $356 million, up 2% year-over-year. Enterprise ARR represented 76% of total ARR compared to…

[Operator Instructions] The first question today comes from Ken Wong with Oppenheimer.

Fantastic. I want to start with you, Daniel, hoping you could maybe address the sequential decline in enterprise ARR and the downtick in enterprise customers would just love a sense of kind of what's happening there and maybe what you're seeing in terms of how that might trend going forward?

Yes, Ken, thanks for the question. I think what we're seeing there is kind of just a reflection of where we're at in progress through the year. We wanted to be a little bit further along in bookings by this point in the year than where we are. Really, it's a function primarily of net revenue retention last year and the year before, we were around 98% or 99% in net revenue retention. So far this year, we're in a very similar place. And we are absolutely focused on what we're doing in that area of the business and focusing on our existing customers and existing customer expansion to help drive that. I think broadly speaking, what we're seeing in the market, a lot of the energy and focus is in what's going on in AI and agentic which is good for us because we've got a ton of stuff coming through there, which Travis will speak to here in a minute that we think is going to build a lot of momentum there. It's been just a little bit tougher on the platform side, which I think is what's really reflected in those numbers.

Perfect. And then, Travis, in your prepared remarks, you alluded to seeing some strong signals into the holiday season. I would love if you could perhaps expand on that and just help us think through how things might play out this Black Friday, Cyber Monday, Christmas season and kind of how that's kind of baked into your expectations?

Yes. Thanks, Ken. Yes, I think a lot of the momentum, as Daniel just alluded to, is certainly around the AI piece. We've had several very large branded manufacturers, retailers in closed beta for the last couple of months around AI readiness. We're kind of adding to that on a weekly basis. We'll share more about that, obviously, in next quarter's call. But that's where a lot of the peak demand is in. It's a lot of what we're doing in some of the larger GSI motion around distribution, particularly with Accenture, having had a tremendous amount of shared clients between themselves and us, particularly on the Feedonomics side where that's on the B2C side is where almost all of the momentum is right now just given the time of year. So right now in discovery, it's starting to trickle into shopping, but certainly, that's where most of the efforts, most of the energies are and to Daniel's point, we're sitting in a, I think, a really nice spot with obviously the existing installed base on the Feedonomics side, and that will trickle into more Makeswift stuff as we get into more brand agents, merchant agents, things like that, that are expanding pretty quickly in here into Q4 that we'll have more to share obviously in next quarter's call. But that on the B2C side is there. On the B2B side, we've had strong momentum on platform for most of the year. We kind of talked about that in the prepared remarks. We're continuing to see that into Q4 as well. But on the B2C side, it's been mostly on the data front on the AI front. That's helpful.

Next question comes from DJ Hynes with Canaccord.

So Travis, we've obviously seen a number of e-commerce platforms start to partner with these answer engines, right? It feels like a little bit of a land grab, which makes sense given where we are in the cycle. Can you guys maybe talk about competitive dynamics of discoverability as it relates to these answer engines. Is it going to come down to who has the most store front, who has the most traffic stores, who has the best product data? I guess I'm curious if it's a function of who has the better product or who gets there first? Any color there would be helpful.

Yes, it's a great question. We very much believe it's the quality of the data. It's not just the structured data. It's going to be unstructured data. That's combined. And what I mean by unstructured data is anything from product spec sheets to brand guidelines to call center transcripts to articles, to blogs, to ratings and reviews, user-generated content, you name it. All of those assets can be combined with typical structured data that were already enriching and syndicating and that quality of that data and how it's being syndicated into these answer engines per their spec and ultimately, the hypothesis of how we're optimizing to potential prompts and the feedback and analytics associated with that is ultimately going to drive the most amount of efficacy in our opinion. Obviously, we're sitting on many, many of some of the largest branded manufacturers and retailers on the Feedonomics side today. I mean that is our moat, the fact that we have the most enriched basis of their catalog and their product data today to syndicate that in we feel very strongly. As it relates to shopping and monetization, we very much view being open and agnostic is a massive advantage. We don't have a walled garden. We don't need to commercialize it by pushing it through our checkout. We're seeing several different models where that would go through other people's rails, some models now that would disrupt traditional channels where we go through our rails. You saw our announcement around PayPal last week. You're starting to see some of the payment providers that have broad reach that have security and identification capabilities that are starting to play in this as well. I think the reality of it is embracing a standard, embracing to be in enrichment of both structured and unstructured data, the enrichment of such and being able to syndicate that at scale agnostically regardless of the commercial model or regardless of where the market takes us, we think, is the ultimate advantage. And it's hard to read the tea leaves for those not in the space because it seems like every week, it's changing and seems to be, one, trying to disintermediate somebody else, but the reality of it is that openness coupled with the existing client relationships and what we're doing on a day in and day out basis, we feel is a massive advantage for where we are. That's helpful.

Yes. Yes. No, it's super helpful. And then, Daniel, maybe a follow-up for you. I mean, obviously, margin progression has been a bright spot during this period of slower growth. You gave us a really wide range for Q4, wider than you normally do. Just talk about what you're contemplating in that? What kind of gets you to the high end of the guidance, what gets you to the low end of the guidance? Or how are you thinking about planned investments for Q4? Any color there would be helpful.

Yes. Let me first just address the guidance question really quickly, and then let me just talk about kind of progress in general. So from a guidance range perspective on the revenue side, we've got a range of about $5 million. A lot of that for me really lands based upon where things come out with the consumer and where is the holiday shopping season and where does that land? I think we're just giving ourselves a little bit of room there to see how that can shake out. Just based on the fact that there's a lot of things we see that are really resilient and good on the macroeconomic side of things, but there's also just some signals that just make us be a little bit cautious in that. But we were not intending to signal some sort of bigger risk level than what we've seen in previous holiday period, some of that's just conservatism. What I'd say like just to focus on what I liked so far and what we've seen in the year and what we've seen, particularly on the quarter. I mean we've posted stable revenue growth. We've got new products launching with more in pipeline that we think can drive stronger growth in 2026. That's really the focus. The pace of new launches, what we've already shown, whether it's Feedonomics Surface or a whole host of other things. I'm really encouraged by, we have more new products coming out in the AI space, particularly in Feedonomics. I can't even keep up with how many of them there are, actually, which is a big shout out to our product team, which I appreciate. We delivered revenue in line with expectations. Like you said, we had really meaningful improvement to profit and cash flow. Profit margins…

Next question comes from Maddie Schrage with KeyBanc.

My first one is just maybe could you talk about which of your new product rollouts you're most excited for in 2026. And then I'm also curious, are there any early learnings from Feedonomics Surface? And is the intention to always keep this only for big commerce customers or maybe open it up later?

Maddie, thanks for the question. Oh, gosh, to pick a favorite, I'm going to have folks on the product side, someone's going to be mad here. Honestly, Feedo Surface coming out probably, I will say, too, Feedo Surface, which we just released to GA, it's the most downloaded app in that App Store for us. There's only 2 channels today. We're obviously looking to expand that substantially. Really excited about that. We've not had a lot of product-led growth here. Quite frankly, it was one of the big things that I wanted to change when I first came in, kind of started with leadership, went into go-to-market, evolved into, obviously, the rebrand and the last is really product. We've had a high reliance on growth based on landing new accounts. When I got here, it's just not a sustainable model. We need to be able to sell more into the existing installed base and obviously, service is the first of many in doing that. So really, really excited about that. To the second part of that question, yes, the plan is that Feedo already runs agnostically today. You saw us in the prepared remarks, talked about partnership with Shopify, we've been supporting that for a long time. We have many, many Feedonomics clients that use Shopify as a commerce platform, which is great for them. They use Feedonomics for all of the enrichment and syndication across ads and marketplaces and presumably at some point into LLMs depending on the brand and the merchant. So really excited about that as well. And then on the Makeswift side, we talked about this in the prepared remarks as well. When we bought Makeswift, it was put into play by way of catalysts. So very high-end headless architecture. It was really targeted to some of our most sophisticated merchants that were net new, it was limited to net new. Obviously, putting that out on Stencil next year is going to be a massive move and upgrade similar to Feedo Surface. So really excited to do that. We're also exploring Makeswift on other surfaces as well as a Visual Editor. So very much taking an agnostic approach there as well, which we feel from a distribution perspective, could be very enriching to shareholders.

And one thing -- this is Daniel. Let me just add on that. Just to be really clear, we have already through Feedonomics given customers access to hundreds of channels. And it's not rocket science for us to extend those channels into Surface but do it at a price point that makes it much more sellable for -- not only our installed base, but to your point, we definitely think there's an opportunity in the future to extend Feedo Surface on to other platforms. I think we've been very deliberate, and I think Travis is being very deliberate in his language to reflect the fact that Commerce is a platform-agnostic company. We have a platform product that works for the part of the market that we're targeting. But we also partner with a lot of the other platforms that we compete with, with BigCommerce, and we think Feedonomics Surface in the future could potentially be something that could be great for other platforms to use with their customers as well.

[Operator Instructions] The next question comes from Scott Berg with Needham.

Daniel, I just wanted to follow up on a comment you made a moment ago around your expectation that I think you said RPO is going to be up in 4Q with regard to the PayPal partnership. Can you maybe give a little bit more color upon that, at least I view the opportunities you have there are going to be more transactional than something that would be maybe hitting RPO.

That's a good question, Scott. What I mean by that is there's a lot of elements within our agreements with different technology partners, some of which are purely volume-based, where you get a certain amount of take rate based on volume. Those elements to your point, don't typically hit RPO, but there's a whole lot of other economic arrangements within those agreements, whether it's the equivalent of slotting fees or development fees and otherwise. That does end up hitting RPO and part of why we've seen a flattish more looking RPO over the course of the last few quarters is because we've been approaching the end of the agreement with PayPal and needed to get to renewal. And that's where we will see that effect reflecting in the Q4 numbers.

Understood. Helpful. And then following on kind of the PayPal theme here is the Commerce for payments that you know are going to release early next year is as you're farther down that road right now and starting to think about '26, I know you're certainly not guiding for anything financially in '26. But how should we think about that impacting the P&L? Is it really just upside opportunity within the PSR revenue line item? Or is there maybe another impact there that I haven't considered yet?

Yes. Let me -- I'll address the question on the P&L side really quickly and then turn it over to Travis to talk about kind of what the long-term vision is for what this looks like. We talked at our Investor Day about the fact that we are at this time, not kind of going kind of as a full in payments process. So we're going to be taking on pricing, getting incremental spread from that, but we're still going to be recognizing this net on P&L. So I don't anticipate anytime soon, we're going to end up with a P&L that looks like fintech. We think this is going to be high margin revenue because of the fact that we're not going to be recognizing full interchange in cost of revenue.

Yes, Scott, I'll just dovetail on that for a second. I think directly and indirectly signaling, I feel very differently than previous leadership about this. This is kind of the first step in monetizing this capability. And I would expect us to go deeper here into 2026, we'll probably have a little bit more to share about that in the next quarter's call as we set kind of guidance for 2026. But yes, hopefully, this is a shot over the bow that we're open to this. We think it's an interesting opportunity to bring value not only to shareholders, but to our merchants. And to the extent we continue to do that and accelerate it, we'll lean in pretty aggressively.

The next question comes from Josh Baer with Morgan Stanley.

Katie Keyser on for Josh Baer. I appreciate the question. Interesting to hear about kind of the unbundling of the Feedonomics order orchestration, you being kind of available a la carte for merchants. So maybe just a pricing and packaging question. I mean, first, how do you expect kind of the unbundling dynamic to drive this better adoption of the product? And then just related, any broader updates on pricing and packaging strategies, where are you leaning into kind of simplification and bundling relative to other areas of the platform that could be run kind of more a la carte like this?

You bet. That's a great question. On the order orchestration piece, I've kind of alluded to this a few times in previous calls that with agentic in particular, obviously, it's front and center in discovery right now that, that's going to evolve into, obviously, shopping and will introduce a fair amount of complexity around order orchestration in particular, which Feedo was already doing behind the scenes. We've not touted it as a stand-alone SKU as a product that just kind of organically travels with a lot of these larger merchants as it relates to sinking inventory and pricing and availability across all these different channels as they're selling across different surfaces and channels. That's obviously extending into what we've talked about and offering it a la carte. I think there's a lot of investment going into that product, and we'll evolve it appropriately in market for availability just as things get more complicated as merchants are selling across different services. We view this as very much a cost savings element as well, maintaining obviously positive customer experiences by sinking all of this data is obviously pertinent in that experience as folks are selling across different channels, making sure they're not overselling in certain capacities. And so we'll continue to roll out elements of this to the point we made earlier. Sometimes it will be a la carte, sometimes it will be properly bundled. I'll let Daniel allude to some of the bundling and packaging strategy we've got coming up. But any time we see an opportunity as the market evolves to bring value and monetize or make it easier for a merchant, certainly, we're going to take an opportunity to go do that. This is kind of the first of many in the evolution of that product as it maps to what the demand and changes in markets.

And what I would add on top of that, look, we're always pretty transparent. We try to be really transparent about what we think has gone well and what we think needs to improve. If you look at where we are as a business, I think it reflects the fact that we've -- we are and will always be an open company and the way that we think about things. We want to give customers freedom of choice. We want them to be able to pick the solutions that are right for them. But we also want to create products that make it easy and seamless for customers to use the products. It's just easy to use. What that creates is an opportunity for us to actually improve the business model by creating more opportunities for cross-sell bundling or unbundling to your point, depending upon how we think about the product. The business historically has not focused enough on having a typical SaaS product-led growth self-serve upgrade motion, and it's reflected in the net revenue retention results that I spoke about earlier, and this is why it's a huge area of focus for our entire leadership team to do this. So if you look at Feedonomics surface or BC Payments as 2 examples of that. We've had Feedonomics as an upmarket product for a very long time, but it's at a price point that made it difficult to cross-sell into our mid-market customers. And we have tens of thousands of them on the platform, right? So by launching Feedonomics Surface, it's a free product to start with, but we're going to be introducing additional channels that will have either paid channels or paid features. So as customers adopt and grow and use the product, they are going to grow and…

The next question comes from Brian Peterson with Raymond James.

Just one for me. Just as we're thinking about the overall demand environment and the pipeline of opportunities, would you say that's changed overall in 2025? And as some of the larger merchants are potentially thinking about AI initiatives, has that accelerated their investment in innovation or maybe that's taken a step back in terms of them evaluating alternatives? Would love to get some color there.

Yes. I think we both alluded to it earlier, the demand for B2B has been consistent and solid. I think that was expected kind of coming into the year, and it's something that we've seen since I've been here to be the norm. On the B2C side, I think the behavioral change really over the last 6-or-so months as agentic has become front and center, obviously, that sucked a lot of the air out of the room, just given organic traffic dropping for a lot of these brand manufacturers and retailers, which has probably softened their demand for wanting to replatform. I'm not saying we're not winning deals out there. There's certainly deals out there to be won. But I would say, especially the larger ones, agentic has shifted their focus. I think you're seeing a blending of marketing and commerce organizationally. It's starting to catalyze a lot of transformation. We've been very deliberate in our partnerships, particularly around Accenture and how astute they are around digital transformation. They're obviously front and center of this as well with a lot of shared clients. And what you're seeing is a lot of energy and effort going towards optimizing one's data strategy within the organizations and how the organization needs to ultimately support that, where again, getting ready particularly around, obviously, Discovery right now is front and center. And then as this evolves into shopping, what does that look like from a branded manufacturer or retailer perspective, how do I protect that experience? How do I make sure that I'm serving up relevant contextual content and experience and product availability through those conversations? How do I protect the monetization of the brand experience? How do I protect my AOV? How do I ingest loyalty and think about security and everything else. And obviously, we're front and center in a lot of those conversations across all the different services and people are still figuring out some of those commercial models as well on the answer engine side. So that's where you're seeing a lot of the energy and the effort. I can't speak tangibly to what the monetary investment is at the merchant level. I can just tell you from an effort and an importance and an angst perspective, this is absolutely front and center and taking most of the air out of the room versus a replatform. I think folks know that replatforming is not going to solve this challenge. If you solve this challenge, it may do other things, but I think that's what's front and center right now if that's helpful.

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

Thanks, everyone, for joining today. Looking forward to our Q4 call, where we'll share much more about 2026 and kind of the evolution of what we alluded to today around partnerships, advancement, momentum and lots of things we're excited for going into next year. So thank you all.

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