press release

Aug. 6, 2020, 6:55 a.m. EDT

ChannelAdvisor Reports Second Quarter 2020 Results; Record Revenue and Adjusted EBITDA Significantly Exceed Guidance

RESEARCH TRIANGLE PARK, N.C., Aug 06, 2020 (GLOBE NEWSWIRE via COMTEX) -- Revenue Growth of 17% on a Y/Y Basis Best Since Fourth Quarter 2015Variable Revenue Increased 89% on a Y/Y BasisAdjusted EBITDA Margin More than Tripled on a Y/Y Basis to 31%Cash Increased $8 Million Sequentially to $64 Million

RESEARCH TRIANGLE PARK, N.C., Aug. 06, 2020 (GLOBE NEWSWIRE) -- ChannelAdvisor Corporation /zigman2/quotes/208422285/composite ECOM -1.43% , a leading provider of cloud-based e-commerce solutions that enable brands and retailers to increase global sales, today reported financial results for the quarter ended June 30, 2020.

"Our second quarter results were exceptional, with record revenues and record adjusted EBITDA both substantially exceeding our original guidance for the quarter," said David Spitz, ChannelAdvisor's chief executive officer. "Strong revenues were driven by sustained and broad-based growth in GMV as e-commerce spending remained elevated throughout the quarter, consistent with broader e-commerce trends as the COVID-19 pandemic caused a shift in consumer buying behavior. Continued expense discipline and the scalability of our business model contributed to a significant improvement in profitability and cash flow as well. Although it remains difficult to forecast near-term GMV and variable revenues, we believe e-commerce trends are likely to remain strong and that we are well positioned to benefit from these trends."

Second Quarter 2020 Financial Results

  • Revenue: Total revenue was $37.4 million for the second quarter 2020, an increase of 17.3% from the year-ago period. On a trailing twelve month basis, brands revenue continued to expand for the second quarter 2020 to a new high of 31.1% of total revenue. Variable revenues were $11.7 million, or 31.4% of total revenue for the second quarter 2020, compared with $6.2 million, or 19.5% of total revenue for the year-ago period. Fixed subscription revenues were $25.7 million, or 68.6% of total revenue for the second quarter 2020, compared with $25.7 million, or 80.5% of total revenue for the year-ago period.

  • Gross Profit: GAAP gross profit was $30.4 million, representing a 81.2% gross margin for the second quarter 2020, compared with $24.8 million and 77.8%, respectively, for the year-ago period. Non-GAAP gross profit was $30.6 million, representing a 81.8% non-GAAP gross margin for the second quarter 2020, compared with $25.0 million and 78.4%, respectively, for the year-ago period. For a description of non-GAAP gross profit, non-GAAP gross margin and other non-GAAP measures included in this press release, including their potential limitations, see "Non-GAAP Financial Measures" below.

  • Net Income (Loss): GAAP net income was $7.0 million for the second quarter 2020, compared with GAAP net loss of $(1.3) million for the year-ago period. GAAP net income per diluted share was $0.24 based on 29.7 million diluted weighted average shares outstanding for the second quarter 2020, compared with GAAP net loss of $(0.05) per diluted share based on 27.9 million diluted weighted average shares outstanding for the year-ago period. Non-GAAP net income was $9.8 million for the second quarter 2020, compared with non-GAAP net income of $1.5 million for the year-ago period. Non-GAAP net income per diluted share was $0.33 based on 29.7 million diluted weighted average shares outstanding for the second quarter 2020, compared with non-GAAP net income per diluted share of $0.05 based on 27.9 million diluted weighted average shares outstanding for the year-ago period.

  • Adjusted EBITDA: Adjusted EBITDA, a non-GAAP measure, was $11.6 million for the second quarter 2020, compared with $3.0 million for the year-ago period. Adjusted EBITDA margin, which is adjusted EBITDA divided by revenue, was 30.9% for the second quarter 2020, compared with 9.4% for the year-ago period. Adjusted EBITDA for the twelve months ended June 30, 2020 totaled $32.6 million.

  • Cash: Cash and cash equivalents totaled $63.9 million as of June 30, 2020, compared with $51.8 million as of December 31, 2019. Cash generated from operations was $13.5 million for the six months ended June 30, 2020, compared with $4.5 million for the year-ago period. Free cash flow, a non-GAAP measure, was $11.5 million for the six months ended June 30, 2020, compared with $3.0 million for the year-ago period.

Recent Business Highlights

  • Acquisition of BlueBoard: Acquired BlueBoard, a leading e-commerce analytics company. Headquartered in Paris, France, BlueBoard helps leading global brands such as L'Oreal, Clarins, and Logitech gain a competitive advantage on their e-commerce channels with actionable insights into how their products are performing across thousands of retailer websites and marketplaces. By acquiring BlueBoard, ChannelAdvisor continues to enhance its capabilities for brands seeking to accelerate e-commerce growth.

  • Revolving Credit Facility: Established a $25.0 million revolving credit facility that is available until August 5, 2023 for general corporate purposes and strategic initiatives. Additionally, the company may request increases to the facility provided that the aggregate amount of such increases during the term does not exceed $10.0 million.

  • Diversity, Equity & Inclusion: In response to recent external events, ChannelAdvisor has formed a Diversity, Equity and Inclusion (DE&I) task force tasked with five key DE&I objectives for the company: driving awareness, accelerating opportunity, improving access, advocacy, and accountability. We are proud of our long history of inclusion and our merit-based culture, but also believe there is more work to do to promote DE&I internally and externally.

  • ChannelAdvisor Starter Edition General Availability: Made ChannelAdvisor Starter Edition generally available with our strategic launch partner, ShipStation. ChannelAdvisor Starter Edition is a solution designed to help small-to-medium-sized merchants streamline their marketplace operations and expand to new channels.

  • Support for New Selling Channels: Added to its leading network of marketplaces by expanding support for Afound (AT/DE) in addition to offering new integrations with Atlas for Men (UK), ComEd (US), Galaxus (CH), OfferUp (US), and Shop Premium Outlet (US).

  • New Dropship Integrations: For US-based sellers that need help streamlining their dropship operations, ChannelAdvisor now offers support for first-party integrations with Boscov (US), Dollar General (US), Nautica (US), Kohls (US) and Staples (US).

  • Enhanced Advertising Support: Brands and retailers that advertise on Amazon can now easily evaluate and eliminate low-performing sponsored campaigns with ChannelAdvisor's new Ad Performance Rules for Amazon Advertising. Advertisers can set custom parameters for each campaign, allowing them to pause underperforming ads automatically. This additional layer of automation helps drive ad spend efficiency and saves time for advertisers.

  • Customer Details: ChannelAdvisor recently added notable new customers including Tempur-Sealy, HUGO BOSS and Bushnell, and expanded its relationship with ASICS.

Financial Outlook

Based on the information available as of today, ChannelAdvisor is issuing guidance for its third quarter 2020 but is not issuing guidance for the full year 2020.

(in millions) Q3 2020
Revenue $34.0 (floor)
Adjusted EBITDA $6.5 (floor)
Stock-based Compensation Expense $2.5
Weighted Average Shares Outstanding 28.9

Refer to the "Adjusted EBITDA Guidance Reconciliation" table included with the financial tables at the end of this release for the reconciliation to the most comparable GAAP financial measure.

Conference Call Information

What: ChannelAdvisor Second Quarter 2020 Financial Results Conference Call
When: Thursday, August 6, 2020
Time: 8:00 a.m. ET
Live Call: (855) 638-4821, Passcode 2685276, Toll free
(704) 288-0612, Passcode 2685276, Toll
Webcast: http://ir.channeladvisor.com (live and replay)

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: adjusted EBITDA and adjusted EBITDA margin, free cash flow, non-GAAP gross profit and non-GAAP gross margin. Adjusted EBITDA and adjusted EBITDA margin exclude depreciation, amortization, income tax expense, net interest expense, stock-based compensation expense and for 2020 only, acquisition costs for the acquisition of BlueBoard. Free cash flow is cash flow from operations, reduced by purchases of property and equipment and payment of software development costs. Non-GAAP gross profit and non-GAAP gross margin exclude stock-based compensation expense.

ChannelAdvisor believes that these non-GAAP measures of financial results provide useful information to management and investors relating to ChannelAdvisor's financial condition and results of operations. The company's management uses these non-GAAP measures to compare the company's performance to that of prior periods for trend analyses, and for budgeting and planning purposes. The company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the company's financial measures with other software companies, many of which present similar non-GAAP financial measures to investors, and that it allows for greater transparency with respect to key metrics used by management in its financial and operational decision-making.

Management of the company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses that are required by GAAP to be recorded in the company's financial statements. In order to compensate for these limitations, management presents non-GAAP financial measures together with GAAP results. Non-GAAP measures should be considered in addition to results and guidance prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release. ChannelAdvisor urges investors to review the reconciliation and not to rely on any single financial measure to evaluate the company's business. In addition, other companies, including companies in our industry, may calculate similarly named non-GAAP measures differently than we do, which limits their usefulness in comparing our financial results with theirs.

About ChannelAdvisor

ChannelAdvisor /zigman2/quotes/208422285/composite ECOM -1.43% is a leading e-commerce cloud platform whose mission is to connect and optimize the world's commerce. For nearly two decades, ChannelAdvisor has helped brands and retailers worldwide improve their online performance by expanding sales channels, connecting with consumers around the world, optimizing their operations for peak performance and providing actionable analytics to improve competitiveness. Thousands of customers depend on ChannelAdvisor to securely power their sales and optimize fulfillment on channels such as Amazon, eBay, Facebook, Google, Walmart, and hundreds more. For more information, visit www.channeladvisor.com .

Cautionary Language Concerning Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook and guidance for the third quarter 2020 and expectations regarding our growth and that of the e-commerce industry. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections, as well as the current beliefs and assumptions of management. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond ChannelAdvisor's control. ChannelAdvisor's actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in ChannelAdvisor's Annual Report on Form 10-K for the year ended December 31, 2019 and its Quarterly Report on Form 10-Q that will be filed for the quarter ended June 30, 2020, as well as other documents that may be filed by the company from time to time with the Securities and Exchange Commission. These documents are available on the 'SEC Filings' section of the Investor Relations page of our website at http://ir.channeladvisor.com . In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the impact of the COVID-19 pandemic on global economic conditions and on our revenues and financial performance; our reliance for a significant portion of our revenue on sales by our customers on the Amazon and eBay marketplaces and through advertisements on Google; our ability to respond to rapid changes in channel technologies or requirements; our ability to compete successfully against current and future competitors, which could include the channels themselves; our reliance in part on a pricing model under which a portion of the subscription fees we receive from customers is variable, based upon the amount of transaction volume that those customers process through our platform; our reliance on non-redundant data centers and cloud computing providers to deliver our SaaS solutions; the potential that the e-commerce market does not grow, or grows more slowly than we expect, particularly on the channels that our solutions support; challenges and risks associated with our international operations; our ability to align our expenses with revenue; and risks related to security or privacy breaches. The forward-looking statements included in this press release represent ChannelAdvisor's views as of the date of this press release. ChannelAdvisor undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, these forward-looking statements should not be relied upon as representing ChannelAdvisor's views as of any date subsequent to the date of this press release.


ChannelAdvisor Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)

June 30, 2020 December 31, 2019
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 63,875 $ 51,785
Accounts receivable, net of allowance of $468 and $733 as of June 30, 2020 and December 31, 2019, respectively 23,864 22,126
Prepaid expenses and other current assets 11,772 10,452
Total current assets 99,511 84,363
Operating lease right of use assets 9,474 11,128
Property and equipment, net 9,066 9,597
Goodwill 23,486 23,486
Intangible assets, net 981 1,285
Deferred contract costs, net of current portion 12,797 12,810
Long-term deferred tax assets, net 2,908 3,584
Other assets 764 614
Total assets $ 158,987 $ 146,867
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 401 $ 409
Accrued expenses 11,608 8,577
Deferred revenue 19,264 21,000
Other current liabilities 5,088 6,431
Total current liabilities 36,361 36,417
Long-term operating leases, net of current portion 7,450 9,767
Long-term finance leases, net of current portion 15 27
Other long-term liabilities 815 1,007
Total liabilities 44,641 47,218
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares
issued and outstanding as of June 30, 2020 and December 31, 2019
-- --
Common stock, $0.001 par value, 100,000,000 shares authorized, 28,647,086
and 28,077,469 shares issued and outstanding as of June 30, 2020 and
December 31, 2019, respectively
29 28
Additional paid-in capital 284,075 278,111
Accumulated other comprehensive loss (2,241) (1,740)
Accumulated deficit (167,517) (176,750)
Total stockholders' equity 114,346 99,649
Total liabilities and stockholders' equity $ 158,987 $ 146,867



ChannelAdvisor Corporation and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Revenue $ 37,443 $ 31,932 $ 69,475 $ 63,506
Cost of revenue (1) (2) 7,053 7,096 14,116 14,625
Gross profit 30,390 24,836 55,359 48,881
Operating expenses (1) (2):
Sales and marketing 12,619 14,092 24,959 28,405
Research and development 4,543 5,025 9,344 10,358
General and administrative 6,033 7,133 11,768 13,832
Total operating expenses 23,195 26,250 46,071 52,595
Income (loss) from operations 7,195 (1,414) 9,288 (3,714)
Other income:
Interest income, net 85 211 211 394
Other income, net 31 32 39 12
Total other income 116 243 250 406
Income (loss) before income taxes 7,311 (1,171) 9,538 (3,308)
Income tax expense 325 167 545 359
Net income (loss) $ 6,986 $ (1,338) $ 8,993 $ (3,667)
Net income (loss) per share:
Basic $ 0.25 $ (0.05) $ 0.32 $ (0.13)
Diluted $ 0.24 $ (0.05) $ 0.31 $ (0.13)
Weighted average common shares outstanding:
Basic 28,489,086 27,925,728 28,325,426 27,710,584
Diluted 29,700,524 27,925,728 29,362,886 27,710,584
(1) Includes stock-based compensation as follows:
Cost of revenue $ 238 $ 191 $ 557 $ 576
Sales and marketing 777 737 1,517 1,773
Research and development 543 512 1,223 1,242
General and administrative 998 1,361 2,173 2,608
$ 2,556 $ 2,801 $ 5,470 $ 6,199
(2) Includes depreciation and amortization as follows:
Cost of revenue $ 1,029 $ 978 $ 2,005 $ 1,901
Sales and marketing 156 196 311 402
Research and development 64 93 134 183
General and administrative 273 329 550 656
$ 1,522 $ 1,596 $ 3,000 $ 3,142



ChannelAdvisor Corporation and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)

Six Months Ended June 30,
2020 2019
Cash flows from operating activities
Net income (loss) $ 8,993 $ (3,667)
Adjustments to reconcile net income (loss) to cash and cash equivalents provided by operating activities:
Depreciation and amortization 3,000 3,142
Bad debt expense 504 434
Stock-based compensation expense 5,470 6,199
Deferred income taxes 532 352
Other items, net (420) 192
Changes in assets and liabilities:
Accounts receivable (2,426) 344
Prepaid expenses and other assets (850) 1,609
Deferred contract costs (901) (1,836)
Accounts payable and accrued expenses 1,177 (1,157)
Deferred revenue (1,623) (1,082)
Cash and cash equivalents provided by operating activities 13,456 4,530
Cash flows from investing activities
Purchases of property and equipment (580) (249)
Payment of software development costs (1,407) (1,293)
Cash and cash equivalents used in investing activities (1,987) (1,542)
Cash flows from financing activities
Repayment of finance leases (1,415) (1,902)
Proceeds from exercise of stock options 2,134 951
Payment of statutory tax withholding related to net-share settlement of restricted stock units -- (169)
Cash and cash equivalents provided by (used in) financing activities 719 (1,120)
Effect of currency exchange rate changes on cash and cash equivalents (98) (28)
Net increase in cash and cash equivalents 12,090 1,840
Cash and cash equivalents, beginning of period 51,785 47,185
Cash and cash equivalents, end of period $ 63,875 $ 49,025



Reconciliation of GAAP Gross Profit and GAAP Gross Margin to
Non-GAAP Gross Profit and Non-GAAP Gross Margin
(unaudited; dollars in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Revenue $ 37,443 $ 31,932 $ 69,475 $ 63,506
Gross profit (GAAP) $ 30,390 $ 24,836 $ 55,359 $ 48,881
Plus: Stock-based compensation expense included within cost of revenue 238 191 557 576
Gross profit (Non-GAAP) $ 30,628 $ 25,027 $ 55,916 $ 49,457
Gross margin (GAAP) 81.2 % 77.8 % 79.7 % 77.0 %
Gross margin (Non-GAAP) 81.8 % 78.4 % 80.5 % 77.9 %




Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses
(unaudited; in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Operating expenses (GAAP) $ 23,195 $ 26,250 $ 46,071 $ 52,595
Less: Stock-based compensation expense included within operating expenses 2,318 2,610 4,913 5,623
Less: Acquisition costs included within operating expenses 265 -- 265 --
Operating expenses (Non-GAAP) $ 20,612 $ 23,640 $ 40,893 $ 46,972




Reconciliation of GAAP Income (Loss) from Operations and GAAP Operating Margin to
Non-GAAP Income from Operations and Non-GAAP Operating Margin
(unaudited; dollars in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Revenue $ 37,443 $ 31,932 $ 69,475 $ 63,506
Income (loss) from operations (GAAP) $ 7,195 $ (1,414) $ 9,288 $ (3,714)
Plus: Stock-based compensation expense 2,556 2,801 5,470 6,199
Plus: Acquisition costs 265 -- 265 --
Income from operations (Non-GAAP) $ 10,016 $ 1,387 $ 15,023 $ 2,485
Operating margin (GAAP) 19.2 % (4.4) % 13.4 % (5.8) %
Operating margin (Non-GAAP) 26.7 % 4.3 % 21.6 % 3.9 %




Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income
(unaudited; in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Net income (loss) (GAAP) $ 6,986 $ (1,338) $ 8,993 $ (3,667)
Plus: Stock-based compensation expense 2,556 2,801 5,470 6,199
Plus: Acquisition costs 265 -- 265 --
Net income (Non-GAAP) $ 9,807 $ 1,463 $ 14,728 $ 2,532
Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA
(unaudited; in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Net income (loss) (GAAP) $ 6,986 $ (1,338 ) $ 8,993 $ (3,667)
Adjustments:
Interest (income) expense, net (85) (211) (211) (394)
Income tax expense 325 167 545 359
Depreciation and amortization expense 1,522 1,596 3,000 3,142
Total adjustments 1,762 1,552 3,334 3,107
EBITDA 8,748 214 12,327 (560)
Stock-based compensation expense 2,556 2,801 5,470 6,199
Acquisition costs 265 -- 265 --
Adjusted EBITDA $ 11,569 $ 3,015 $ 18,062 $ 5,639




Free Cash Flow Reconciliation
(unaudited; in thousands)
Six Months Ended June 30,
2020 2019
Cash and cash equivalents provided by operating activities $ 13,456 $ 4,530
Less: Purchases of property and equipment (580) (249)
Less: Payment of software development costs (1,407) (1,293)
Free cash flow $ 11,469 $ 2,988




Adjusted EBITDA Guidance Reconciliation
(unaudited; in millions)
Third Quarter 2020
Floor
Net income (estimate) $ 2.0
Adjustments (estimates):
Interest (income) expense, net (0.1)
Income tax expense 0.1
Depreciation and amortization expense 1.6
Total adjustments 1.6
EBITDA 3.6
Stock-based compensation expense (estimate) 2.5
Acquisition costs (estimate) 0.4
Adjusted EBITDA guidance (floor) $ 6.5








        Investor Contact:
        Raiford Garrabrant
        ChannelAdvisor Corporation
        raiford.garrabrant@channeladvisor.com
        919-228-4817
        
        Media Contact:
        Tamara Gibbs
        ChannelAdvisor Corporation
        tamara.gibbs@channeladvisor.com
        919-249-9798
        


COMTEX_368968770/2471/2020-08-06T06:55:04

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/zigman2/quotes/208422285/composite
US : U.S.: NYSE
$ 13.77
-0.20 -1.43%
Volume: 74,468
Sept. 21, 2020 11:37a
P/E Ratio
24.65
Dividend Yield
N/A
Market Cap
$400.72 million
Rev. per Employee
$179,751
loading...
/zigman2/quotes/208422285/composite
US : U.S.: NYSE
$ 13.77
-0.20 -1.43%
Volume: 74,468
Sept. 21, 2020 11:37a
P/E Ratio
24.65
Dividend Yield
N/A
Market Cap
$400.72 million
Rev. per Employee
$179,751
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