ECOM
$23.16
Channeladvisor
$.06
.26%
Earnings Details
1st Quarter March 2021
Thursday, May 6, 2021 6:45:00 AM
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Summary

Channeladvisor Beats

Channeladvisor (ECOM) reported 1st Quarter March 2021 earnings of $0.24 per share on revenue of $39.2 million. The consensus earnings estimate was $0.17 per share on revenue of $37.4 million. The Earnings Whisper number was $0.21 per share. Revenue grew 22.3% on a year-over-year basis.

The company said it expects second quarter revenue of $39.8 million to $40.2 million. The current consensus revenue estimate is $37.70 million for the quarter ending June 30, 2021.

ChannelAdvisor Corp is engaged in providing software-as-a-service solutions that enables retailers and manufacturers to integrate, manage and optimize their merchandise sales across hundreds of online channels.

Results
Reported Earnings
$0.24
Earnings Whisper
$0.21
Consensus Estimate
$0.17
Reported Revenue
$39.2 Mil
Revenue Estimate
$37.4 Mil
Growth
Earnings Growth
Revenue Growth
Guidance
Power Rating
Grade
Earnings Release

ChannelAdvisor Reports First Quarter 2021 Results; Revenue and Adjusted EBITDA Significantly Exceed Guidance

Total revenue growth accelerated to 22% year-over-year

Subscription revenue growth accelerated to 17% year-over-year

Revenue from brands increased 39% year-over-year

RESEARCH TRIANGLE PARK, N.C., May 06, 2021 (GLOBE NEWSWIRE) -- ChannelAdvisor Corporation (NYSE: ECOM), 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 March 31, 2021.

First Quarter 2021 Highlights
GAAP

  • Total revenue increased 22% year-over-year to $39.2 million
  • Subscription revenue growth accelerated to 17% year-over-year
  • Brands revenue increased 39% year-over-year
  • GAAP net income was $5.5 million, or $0.18 per diluted share based on 31.1 million diluted weighted average shares outstanding
  • Operating cash flow increased 46% year-over-year to $8.4 million
  • Cash and cash equivalents were $82.4 million, an increase of $26.0 million since March 31, 2020 and an increase of $10.8 million since December 31, 2020
  • Deferred revenue increased by a record amount to $25.4 million, up $6.1 million since March 31, 2020 and up $2.6 million since December 31, 2020

Non-GAAP

  • Adjusted EBITDA increased 41% year-over-year to $9.2 million
  • Adjusted EBITDA margin was 23%, up three points year-over-year
  • Free cash flow was $7.4 million, or $0.24 per diluted share based on 31.1 million diluted weighted average shares outstanding

“Q1 marked another quarter of exceptional financial results and meaningful progress on our brands strategy, underpinned by accelerating momentum across our business,” said David Spitz, ChannelAdvisor’s chief executive officer. “Revenue and adjusted EBITDA both significantly exceeded our guidance for the quarter, driven by continued strong execution, product innovation, and robust e-commerce volumes. Our strategy drove success for our customers and rapid revenue growth from brands, with revenue from brands up 39% year over year during the quarter. Continued strength in sales, especially with brands, combined with excellent customer expansion and retention, drove record net bookings and the third consecutive quarter of acceleration in subscription revenue growth. Our strategy of helping accelerate brands' digital transformation has continued to pay off and we remain excited about our growth prospects going forward.”

Recent Business Highlights

We believe the following highlights are additional indicators of our position as a leading digital distribution platform for brands:

  • Continued product innovation: To help Walmart sellers save valuable time and resources by managing their advertising campaigns in the same platform as their listings, ChannelAdvisor now offers powerful automation tools for Walmart Connect. ChannelAdvisor also launched Third Party Seller Analysis, a new Brand Analytics premium feature that can help brands increase visibility of third-party sellers on retail sites and marketplaces such as Amazon and Walmart.
  • Continued channel expansion: ChannelAdvisor remains laser-focused on global marketplace expansions to help address the evolving business needs of brands and retailers worldwide. This ongoing commitment to marketplace expansion is evident through the broadening of support of Elkjøp (FI, SE, and DK) and Lazada (PH, VN, SG, TH, ID, MY) in addition to new marketplace integrations with Åhléns (SE), Amazon Poland (PL), Back Market (UK), Beyond (US), Exelon (US), Joom (FR), NBCUniversal Checkout (US), PopIn Border (KR), and Zalando (CZ and IE). The company also added support for first-party integrations with AAFES (US), Aldi (DE), Best Buy Canada (Consignment), Hofer (AT), Tractor Supply (US), Wayfair (CA), and Zappos (US).
  • Industry leadership: Selected by Google to join its exclusive Google Partners International Growth program, a network of best-in-class providers with a track record in helping brands and retailers expand their reach and capture new audiences globally. With comprehensive insight into expanding abroad, ChannelAdvisor's long-standing alliance with Google can help serve as a key differentiator for brands and retailers seeking a competitive edge.
  • New customers: ChannelAdvisor recently added notable new customers including Fitbit, Yamaha Music, Viewsonic, John West Food, Fissler and strategic partner Authentic Brands Group. ChannelAdvisor also expanded its relationship with customers such as Tervis Tumbler, Shiseido, and Gant AB.

Financial Outlook

Based on the information available as of today, ChannelAdvisor is issuing guidance for its second quarter 2021.

 (in millions, except percentages)Q2 2021 
 Revenue$39.8 - $40.2 
 Y/Y Growth6% - 7% 
 Adjusted EBITDA$7.7 - $8.1 
 As a Percentage of Revenue (at the midpoint)20% 
 Stock-based Compensation Expense$3.1 - $3.5 
 Weighted Average Shares Outstanding30.0 

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 First Quarter 2021 Financial Results Conference Call
When:Thursday, May 6, 2021
Time:8:00 a.m. ET
Live Call:(855) 638-4821, Passcode 1697769, Toll Free
 (704) 288-0612, Passcode 1697769, 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, and free cash flow and free cash flow per diluted share. We also may provide information regarding non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations and non-GAAP operating margin. Adjusted EBITDA and adjusted EBITDA margin exclude depreciation, amortization, income tax expense, net interest expense, stock-based compensation expense, and for 2021 only, acquisition-related contingent consideration fair value adjustment. Adjusted EBITDA margin is equal to adjusted EBITDA divided by GAAP revenue. Free cash flow is cash flow from operations, reduced by purchases of property and equipment and payment of capitalized software development costs. Non-GAAP gross profit, non-GAAP gross margin and non-GAAP operating expenses exclude stock-based compensation expense and, as applicable, acquisition-related contingent consideration fair value adjustment. Non-GAAP gross margin is equal to non-GAAP gross profit divided by GAAP revenue. Non-GAAP operating margin is equal to non-GAAP income from operations divided by GAAP revenue.

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 (NYSE: ECOM) 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 second quarter 2021 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, 2020 and its Quarterly Report on Form 10-Q that will be filed for the quarter ended March 31, 2021, 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.

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


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

 March 31, 2021 December 31, 2020
 (unaudited)  
Assets   
Current assets:   
Cash and cash equivalents$82,384  $71,545 
Accounts receivable, net of allowance of $393 and $417 as of March 31, 2021 and December 31, 2020, respectively25,815  24,705 
Prepaid expenses and other current assets13,008  13,874 
Total current assets121,207  110,124 
Operating lease right of use assets7,200  8,141 
Property and equipment, net8,103  8,707 
Goodwill30,990  30,990 
Intangible assets, net3,870  4,155 
Deferred contract costs, net of current portion14,700  14,040 
Long-term deferred tax assets, net3,430  3,551 
Other assets888  953 
Total assets$190,388  $180,661 
Liabilities and stockholders' equity   
Current liabilities:   
Accounts payable$375  $158 
Accrued expenses13,621  14,008 
Deferred revenue25,417  22,819 
Other current liabilities5,413  6,029 
Total current liabilities44,826  43,014 
Long-term operating leases, net of current portion4,159  5,394 
Other long-term liabilities1,431  2,162 
Total liabilities50,416  50,570 
Commitments and contingencies   
Stockholders' equity:   
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding as of March 31, 2021 and December 31, 2020   
Common stock, $0.001 par value, 100,000,000 shares authorized, 29,732,852 and 29,020,424 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively30  29 
Additional paid-in capital293,415  288,842 
Accumulated other comprehensive loss(1,245) (1,095)
Accumulated deficit(152,228) (157,685)
Total stockholders' equity139,972  130,091 
Total liabilities and stockholders' equity$190,388  $180,661 


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

 Three Months Ended March 31,
 2021 2020
Revenue$39,166  $32,032 
Cost of revenue (1) (2)8,408  7,063 
Gross profit30,758  24,969 
Operating expenses (1) (2):   
Sales and marketing14,632  12,340 
Research and development5,527  4,801 
General and administrative4,882  5,735 
Total operating expenses25,041  22,876 
Income from operations5,717  2,093 
Other (expense) income:   
Interest (expense) income, net(33) 126 
Other (expense) income, net(130) 8 
Total other (expense) income(163) 134 
Income before income taxes5,554  2,227 
Income tax expense97  220 
Net income$5,457  $2,007 
Net income per share:   
Basic$0.19  $0.07 
Diluted$0.18  $0.07 
Weighted average common shares outstanding:   
Basic29,294,130  28,161,765 
Diluted31,138,533  29,047,028 
    
(1) Includes stock-based compensation as follows:   
Cost of revenue$232  $319 
Sales and marketing820  740 
Research and development612  680 
General and administrative1,384  1,175 
 $3,048  $2,914 
    
(2) Includes depreciation and amortization as follows:   
Cost of revenue$1,202  $976 
Sales and marketing159  155 
Research and development63  70 
General and administrative408  277 
 $1,832  $1,478 


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

 Three Months Ended March 31,
 2021 2020
Cash flows from operating activities   
Net income$5,457  $2,007 
Adjustments to reconcile net income to cash and cash equivalents provided by operating activities:   
Depreciation and amortization1,832  1,478 
Bad debt (recovery) expense(4) 297 
Stock-based compensation expense3,048  2,914 
Deferred income taxes97  220 
Other items, net(1,536) (213)
Changes in assets and liabilities:   
Accounts receivable(1,060) 291 
Prepaid expenses and other assets1,290  993 
Deferred contract costs(1,131) (60)
Accounts payable and accrued expenses(2,203) (981)
Deferred revenue2,589  (1,204)
Cash and cash equivalents provided by operating activities8,379  5,742 
Cash flows from investing activities   
Purchases of property and equipment(225) (344)
Payment of software development costs(749) (672)
Cash and cash equivalents used in investing activities(974) (1,016)
Cash flows from financing activities   
Repayment of finance leases(4) (7)
Proceeds from exercise of stock options3,587  87 
Payment of statutory tax withholding related to net-share settlement of restricted stock units(66)  
Cash and cash equivalents provided by financing activities3,517  80 
Effect of currency exchange rate changes on cash and cash equivalents(83) (242)
Net increase in cash and cash equivalents10,839  4,564 
Cash and cash equivalents, beginning of period71,545  51,785 
Cash and cash equivalents, end of period$82,384  $56,349 


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 March 31,
 2021 2020
Revenue$39,166  $32,032 
    
Gross profit (GAAP)$30,758  $24,969 
Plus: Stock-based compensation expense included within cost of revenue232  319 
Gross profit (Non-GAAP)$30,990  $25,288 
Gross margin (GAAP)78.5% 78.0%
Gross margin (Non-GAAP)79.1% 78.9%


Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses
(unaudited; in thousands)
 Three Months Ended March 31,
 2021 2020
Operating expenses (GAAP)$25,041  $22,876 
Less: Stock-based compensation expense included within operating expenses2,816  2,595 
Less: Contingent consideration fair value adjustment(1,313)  
Operating expenses (Non-GAAP)$23,538  $20,281 


Reconciliation of GAAP Income from Operations and GAAP Operating Margin to
Non-GAAP Income from Operations and Non-GAAP Operating Margin
(unaudited; dollars in thousands)
 Three Months Ended March 31,
 2021 2020
Revenue$39,166  $32,032 
    
Income from operations (GAAP)$5,717  $2,093 
Plus: Stock-based compensation expense3,048  2,914 
Less: Contingent consideration fair value adjustment(1,313)  
Income from operations (Non-GAAP)$7,452  $5,007 
Operating margin (GAAP)14.6% 6.5%
Operating margin (Non-GAAP)19.0% 15.6%


Reconciliation of GAAP Net Income to Non-GAAP Net Income
(unaudited; in thousands)
 Three Months Ended March 31,
 2021 2020
Net income (GAAP)$5,457  $2,007 
Plus: Stock-based compensation expense3,048  2,914 
Less: Contingent consideration fair value adjustment(1,313)  
Net income (Non-GAAP)$7,192  $4,921 


Reconciliation of GAAP Net Income to Adjusted EBITDA
(unaudited; in thousands)
 Three Months Ended March 31,
 2021 2020
Net income (GAAP)$5,457  $2,007 
Adjustments:   
Interest expense (income), net33  (126)
Income tax expense97  220 
Depreciation and amortization expense1,832  1,478 
Total adjustments1,962  1,572 
EBITDA7,419  3,579 
Stock-based compensation expense3,048  2,914 
Contingent consideration fair value adjustment(1,313)  
Adjusted EBITDA$9,154  $6,493 


Free Cash Flow Reconciliation
(unaudited; in thousands except share and per share data)
 Three Months Ended March 31,
 2021 2020
Cash and cash equivalents provided by operating activities$8,379  $5,742 
Less: Purchases of property and equipment(225) (344)
Less: Payment of capitalized software development costs(749) (672)
Free cash flow$7,405  $4,726 
    
Diluted weighted average shares outstanding31,138,533  29,047,028 
Free cash flow per diluted share$0.24  $0.16 


Adjusted EBITDA Guidance Reconciliation
(unaudited; in millions)
 Second Quarter 2021
 Low High
Net income (estimate)$2.1  $3.2 
Adjustments (estimates):   
Interest (income) expense, net0.1  0.0 
Income tax expense0.2  0.1 
Depreciation and amortization expense1.8  1.7 
Total adjustments2.1  1.8 
EBITDA4.2  5.0 
Stock-based compensation expense (estimate)3.5  3.1 
Adjusted EBITDA guidance (floor)$7.7  $8.1 

 


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Source: ChannelAdvisor Corporation