What happened

Shares of e-commerce technology company BigCommerce Holdings (BIGC -0.88%) ended the week on a bad note after the company reported financial results for the fourth quarter of 2022. As of 12:15 p.m. ET on Friday, BigCommerce stock was down 19%.

So what

In the fourth quarter, BigCommerce generated revenue of $72.4 million, up 12% year over year and barely hitting the low end of management's guidance. Wall Street, however, had expected better. Management said that growth during the quarter was hurt by a shift in its sales strategy: It's focusing on landing larger enterprise e-commerce customers, which can have bigger upside, but it tends to be a slow process.

If there's a silver lining, BigCommerce is having success with enterprise customers. The company's annual revenue run-rate (ARR) ended 2022 at $312 million, up 16% year over year. Moreover, ARR from enterprise clients now accounts for 72% of the total and grew 30% year over year.

Now what

On one hand, the market is reacting to slower revenue growth for BigCommerce. On the other hand, it's also looking at ongoing losses and revenue guidance for 2023.

For 2023, BigCommerce's management expects to generate revenue of $313 million at the high end of guidance, which would be a 12% annual growth rate -- far slower than the 27% growth it posted in 2022.

Part of this slower growth is due to a shift in BigCommerce's sales strategy. But the shift is being motivated by efforts to reach positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the fourth quarter of 2023. For perspective, its adjusted EBITDA loss more than doubled in 2022 to $43.6 million.

To close, I think the market is somewhat disappointed because it feels like the company is sacrificing growth but profits still appear a long way off.

That said, I don't believe BigCommerce is in a dire situation considering its recurring revenue is still increasing and its business is well funded with more than $300 million in cash, cash equivalents, and marketable securities, which should be encouraging for those who are still holding.