In an unexpected announcement, BigCommerce has today announced a plan to “accelerate the path to profitability” by cutting 13% of its workforce.
While this isn’t the first time we have seen drastic action taken by an ecommerce company, such as Shopify doing something similar earlier this year. The timing of this announcement is awful as it is so close to Christmas and with such short notice, amidst tough economic conditions for many.
The BigCommerce Announcement Breakdown
What you need to know: BigCommerce has announced its plan to reduce its cost structure and accelerate its path to profitability. The planned restructuring aims to move forward its adjusted EBITDA breakeven timeline from mid to late 2024 to the fourth quarter of 2023.
How will it do this?: BigCommerce will prioritize its strategic focus, investments, and resources to build upon its expanding leadership position in enterprise ecommerce. Already recognized as a leader in composable commerce and omnichannel selling with a full-featured enterprise B2C and B2B offering, BigCommerce will focus its go-to-market efforts on the enterprise business, where it sees the strongest unit economics and the opportunity for long-term, profitable growth.
As part of this restructuring plan, BigCommerce will reduce its sales and marketing expenditures in non-enterprise initiatives and its total workforce by approximately 13% across employees and contractors.
BigCommerce expects the workforce changes to be largely complete by December 31, 2022. The company estimates the aggregate costs associated with the reduction in force to be approximately $4.2 million to $4.6 million, primarily consisting of severance payments, employee benefits, and related costs, and expects to incur these charges in the fourth quarter of 2022.
In conjunction with the reduction in force, BigCommerce is also evaluating its facilities footprint and its continued need for existing space for potential impairment of the right-of-use assets associated with its headquarters facilities. The company estimates the aggregate cost of an impairment will range between $2.0 million and $3.2 million.
What they said: “This focusing of our spending and resources, which impacts all of our teammates, was an incredibly difficult decision to make. We are implementing changes that will enhance the strength of our financial profile against the backdrop of a challenging economic environment. It will also drive focus on the areas we view as having the strongest product market advantage and best long-term financial performance,” said Brent Bellm, CEO of BigCommerce.
“We are sadly parting ways with some incredibly talented people whom we have grown to cherish as friends and colleagues over the years. We will do our best to support them through the transition to find their next opportunities.”
Our take: This news came out of the blue as for months it has looked like BigCommerce has been growing and announcing new integrations at a steady rate. While their latest quarterly results did show a loss, it wasn’t against industry norms given the current climate.
While companies have to do what is best for business and that undoubtedly looks like stuffing Q4 2022 with the costs of the actions they are taking. The human factor is what leaves a bad taste. Less than two weeks before Christmas many employees and contractors will be finding out that they no longer have jobs. Obviously severance pay is one thing but that’s not going to alleviate the worry and stress for many families over the next few weeks.
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