Attached files
| file | filename |
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| 8-K - 8-K - CHANNELADVISOR CORP | ecom11520158-k.htm |
| EX-99.2 - EXHIBIT 99.2 - CHANNELADVISOR CORP | ecom1152015ex992.htm |
Exhibit 99.1
ChannelAdvisor Announces Third Quarter 2015 Financial Results
Revenue of $24.4 million increases 16 percent year-over-year
Adjusted EBITDA of $0.7 million exceeds expectations
Research Triangle Park, NC - November 5, 2015 - ChannelAdvisor Corporation (NYSE: ECOM), a leading provider of cloud-based e-commerce solutions that enable retailers and manufacturers to increase global sales, today announced its financial results for the quarter ended September 30, 2015.
“Revenue in the third quarter was above the high end of our expectations at $24.4 million, an increase of 16% from the year-ago period, or 19% on a constant currency basis,” said David Spitz, CEO of ChannelAdvisor. “Our revenue upside combined with improved operational efficiency to produce positive adjusted EBITDA and operating cash flow for the quarter, enabling us to reach those milestones earlier than anticipated. These strong results validate our strategy to focus on generating top-line growth while maintaining a roughly break-even adjusted EBITDA. We are seeing success from emphasizing larger retailer and brand customers and believe our strategy positions us to continue to scale as we progress toward our goals of enhancing market leadership and delivering consistent profitable growth.”
Third Quarter 2015 Financial Results
• | Total revenue of $24.4 million for the third quarter of 2015 increased 16 percent compared with total revenue of $21.0 million for the third quarter of 2014. |
• | GAAP net loss was $(4.8) million compared with a net loss of $(9.0) million in the third quarter of 2014. GAAP net loss per share was $(0.19), based on 25.1 million weighted average shares outstanding, compared with a net loss per share of $(0.36), based on 24.8 million weighted average shares outstanding in the year-ago period. |
• | Non-GAAP net loss, which excludes the impact of non-cash stock-based compensation, was $(1.7) million for the third quarter of 2015 compared with non-GAAP net loss of $(6.5) million for the third quarter of 2014. Non-GAAP net loss per share was $(0.07) for the third quarter of 2015 compared with a non-GAAP net loss per share of $(0.26) for the third quarter of 2014. |
• | Adjusted EBITDA, a non-GAAP measure, was $0.7 million for the third quarter of 2015 compared with $(4.7) million for the third quarter of 2014. Adjusted EBITDA excludes depreciation, amortization, income tax expense, interest and stock-based compensation expense. |
• | Cash at quarter end totaled $59.0 million, compared with $57.7 million at the end of the second quarter. |
Recent Business Highlights
• | Total customer count was 2,910 at the end of the third quarter, an increase of 5 percent from 2,781 customers at the end of the third quarter of 2014. |
• | Average revenue per customer, calculated on a trailing twelve-month basis, increased 4 percent to $32,748 for the twelve months ended September 30, 2015, compared with $31,375 for the twelve months ended September 30, 2014. |
• | Fixed subscription fees were 80 percent of total revenue and variable subscription fees were 20 percent of total revenue for the third quarter of 2015. This compares to 79 percent and 21 percent, respectively, for the third quarter of 2014. |
• | Subscription dollar retention rate, the primary metric that we use to measure customer retention, exceeded 100 percent for the quarter, consistent with recent performance. |
• | Added new top-tier customers including BeyondTheRack.com, BrightStar, Chico's FAS, Inc., Dell, Delta Apparel, El Corte Ingles, Folica, Inc., Fujitsu America Inc., OnlineShoes.com, Shoes.com, SkinCareRx.com, Vax Limited and Vogue International, Inc. |
• | Announced Mark Cook as new CFO. |
• | Supported customers selling on Jet.com when the marketplace publicly launched in July. |
• | Added support for Newegg Canada. |
• | Announced 2015 Autumn Release to help retailers prepare for the next era of e-commerce. |
Exhibit 99.1
Financial Outlook
Based on information available as of today, ChannelAdvisor is issuing the following guidance for the fourth quarter and full year of 2015:
Fourth Quarter 2015
• | Total revenue between $26.2 million and $26.6 million. |
• | Adjusted EBITDA between $0.6 million and $1.0 million. |
• | Stock-based compensation expense between $3.2 million and $3.5 million. |
• | 25.2 million weighted average shares outstanding. |
Full Year 2015
• | Total revenue between $97.4 million and $97.8 million. |
• | Adjusted EBITDA between $(3.0) million and $(3.4) million. |
• | Stock-based compensation expense between $12.5 million and $12.8 million. |
• | 25.1 million weighted average shares outstanding. |
Conference Call Information
What: | ChannelAdvisor Third Quarter 2015 Financial Results Conference Call |
When: | Thursday, November 5, 2015 |
Time: | 4:30 p.m. ET |
Live Call: | (855) 638-4821, Passcode 60136359, Domestic |
(704) 288-0612, Passcode 60136359, International | |
Webcast: | http://ir.channeladvisor.com (live and replay) |
Key Operating Metrics
Number of customers includes all customers who subscribe to at least one of our solutions, but excludes customers who subscribe only to one of our legacy product offerings from prior to 2008 that are focused on solutions for lower-volume eBay sellers.
Average revenue per customer is revenue divided by the average monthly number of customers during the period.
Subscription dollar retention rate is calculated for a particular period by establishing the cohort of customers that had active contracts as of the end of the prior period. We then calculate our subscription dollar retention rate by taking the amount of fixed subscription revenue we recognized for the cohort in the period for which we are reporting the rate and dividing it by the fixed subscription revenue we recognized for the same cohort in the prior period. For this purpose any variable subscription fees paid by our customers or any implementation fees.
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: non-GAAP net loss, non-GAAP net loss per share and adjusted EBITDA.
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
Exhibit 99.1
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. With respect to our expectations under "Financial Outlook" above, reconciliation of non-GAAP Adjusted EBITDA guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from this non-GAAP measure. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.
About ChannelAdvisor
ChannelAdvisor (NYSE: ECOM) is a leading provider of cloud-based e-commerce solutions that enable online retailers and manufacturers to integrate, manage and optimize their merchandise sales across hundreds of online channels including Amazon, Google, eBay, Facebook and more. Through automation, analytics and optimization, ChannelAdvisor customers can leverage a single inventory feed to more efficiently list and advertise products online, and connect with shoppers to increase sales. Billions of dollars in merchandise value are driven through ChannelAdvisor’s platform every year, and thousands of customers use ChannelAdvisor’s solutions to help grow their businesses. 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 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, 2014 and its Quarterly Report on Form 10-Q that will be filed for the quarter ended September 30, 2015, 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: 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 increasing international operations; and 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.
###
Exhibit 99.1
Media Contact:
Sarah O'Dea
ChannelAdvisor Corporation
sarah.odea@channeladvisor.com
919-228-4784
Investor Contact:
Garo Toomajanian
ICR, LLC
ir@channeladvisor.com
919-228-2003
ChannelAdvisor Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
September 30, 2015 | December 31, 2014 | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 58,984 | $ | 68,366 | |||
Accounts receivable, net of allowance of $1,050 and $673 as of September 30, 2015 and December 31, 2014, respectively | 16,141 | 14,619 | |||||
Prepaid expenses and other current assets | 7,181 | 4,940 | |||||
Total current assets | 82,306 | 87,925 | |||||
Property and equipment, net | 12,565 | 12,603 | |||||
Goodwill | 21,473 | 21,518 | |||||
Intangible assets, net | 3,393 | 4,083 | |||||
Restricted cash | 567 | 633 | |||||
Other assets | 637 | 285 | |||||
Total assets | $ | 120,941 | $ | 127,047 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,851 | $ | 564 | |||
Accrued expenses | 7,799 | 7,292 | |||||
Deferred revenue | 19,866 | 16,840 | |||||
Other current liabilities | 3,535 | 2,563 | |||||
Total current liabilities | 33,051 | 27,259 | |||||
Long-term capital leases, net of current portion | 2,151 | 2,014 | |||||
Other long-term liabilities | 3,913 | 4,126 | |||||
Total liabilities | 39,115 | 33,399 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding as of September 30, 2015 and December 31, 2014 | — | — | |||||
Common stock, $0.001 par value, 100,000,000 shares authorized, 25,147,137 and 24,915,510 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively | 25 | 25 | |||||
Additional paid-in capital | 237,545 | 228,370 | |||||
Accumulated other comprehensive loss | (856 | ) | (130 | ) | |||
Accumulated deficit | (154,888 | ) | (134,617 | ) | |||
Total stockholders’ equity | 81,826 | 93,648 | |||||
Total liabilities and stockholders’ equity | $ | 120,941 | $ | 127,047 | |||
ChannelAdvisor Corporation and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenue | $ | 24,379 | $ | 20,966 | $ | 71,151 | $ | 61,074 | |||||||
Cost of revenue (excluding depreciation) (1) | 4,954 | 5,020 | 15,571 | 15,686 | |||||||||||
Depreciation - cost of revenue | 1,336 | 998 | 3,536 | 2,483 | |||||||||||
Gross profit | 18,089 | 14,948 | 52,044 | 42,905 | |||||||||||
Operating expenses (1): | |||||||||||||||
Sales and marketing | 11,879 | 13,595 | 40,790 | 41,475 | |||||||||||
Research and development | 3,874 | 4,157 | 11,955 | 12,308 | |||||||||||
General and administrative | 6,075 | 5,310 | 16,867 | 14,860 | |||||||||||
Depreciation and amortization | 1,005 | 743 | 2,827 | 1,910 | |||||||||||
Total operating expenses | 22,833 | 23,805 | 72,439 | 70,553 | |||||||||||
Loss from operations | (4,744 | ) | (8,857 | ) | (20,395 | ) | (27,648 | ) | |||||||
Other income (expense): | |||||||||||||||
Interest expense, net | (60 | ) | (55 | ) | (142 | ) | (157 | ) | |||||||
Other income (expense), net | 14 | (86 | ) | 140 | (86 | ) | |||||||||
Total other income (expense) | (46 | ) | (141 | ) | (2 | ) | (243 | ) | |||||||
Loss before income taxes | (4,790 | ) | (8,998 | ) | (20,397 | ) | (27,891 | ) | |||||||
Income tax (benefit) expense | 1 | 6 | (126 | ) | 87 | ||||||||||
Net loss | $ | (4,791 | ) | $ | (9,004 | ) | $ | (20,271 | ) | $ | (27,978 | ) | |||
Net loss per share: | |||||||||||||||
Basic and diluted | $ | (0.19 | ) | $ | (0.36 | ) | $ | (0.81 | ) | $ | (1.14 | ) | |||
Weighted average common shares outstanding: | |||||||||||||||
Basic and diluted | 25,110,212 | 24,793,869 | 25,020,154 | 24,528,263 | |||||||||||
(1) Includes stock-based compensation as follows: | |||||||||||||||
Cost of revenue (excluding depreciation) | $ | 238 | $ | 183 | $ | 777 | $ | 373 | |||||||
Sales and marketing | 1,190 | 922 | 3,766 | 1,833 | |||||||||||
Research and development | 397 | 286 | 1,295 | 584 | |||||||||||
General and administrative | 1,272 | 1,143 | 3,435 | 2,511 | |||||||||||
$ | 3,097 | $ | 2,534 | $ | 9,273 | $ | 5,301 | ||||||||
ChannelAdvisor Corporation and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Cash flows from operating activities | |||||||
Net loss | $ | (20,271 | ) | $ | (27,978 | ) | |
Adjustments to reconcile net loss to cash and cash equivalents used in operating activities: | |||||||
Depreciation and amortization | 6,363 | 4,393 | |||||
Bad debt expense | 1,253 | 993 | |||||
Stock-based compensation expense | 9,273 | 5,301 | |||||
Other items, net | (150 | ) | 107 | ||||
Changes in assets and liabilities: | |||||||
Accounts receivable | (4,170 | ) | 603 | ||||
Prepaid expenses and other assets | (2,071 | ) | (818 | ) | |||
Accounts payable and accrued expenses | 1,924 | (1,668 | ) | ||||
Deferred revenue | 3,045 | 2,238 | |||||
Cash and cash equivalents used in operating activities | (4,804 | ) | (16,829 | ) | |||
Cash flows from investing activities | |||||||
Purchases of property and equipment | (3,472 | ) | (5,400 | ) | |||
Payment of internal-use software development costs | (129 | ) | (820 | ) | |||
Cash and cash equivalents used in investing activities | (3,601 | ) | (6,220 | ) | |||
Cash flows from financing activities | |||||||
Repayment of capital leases | (1,592 | ) | (1,049 | ) | |||
Proceeds from exercise of stock options | 490 | 1,827 | |||||
Payment of statutory tax withholding related to net-share settlement of restricted stock units | (588 | ) | — | ||||
Cash and cash equivalents (used in) provided by financing activities | (1,690 | ) | 778 | ||||
Effect of currency exchange rate changes on cash and cash equivalents | 713 | 145 | |||||
Net decrease in cash and cash equivalents | (9,382 | ) | (22,126 | ) | |||
Cash and cash equivalents, beginning of period | 68,366 | 104,406 | |||||
Cash and cash equivalents, end of period | $ | 58,984 | $ | 82,280 | |||
Reconciliation of GAAP Net Loss to Non-GAAP Net Loss and Non-GAAP Net Loss Per Share | |||||||||||||||
(unaudited; in thousands, except share and per share data) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net loss (GAAP) | $ | (4,791 | ) | $ | (9,004 | ) | $ | (20,271 | ) | $ | (27,978 | ) | |||
Plus: stock-based compensation | 3,097 | 2,534 | 9,273 | 5,301 | |||||||||||
Plus: one-time severance and related costs | — | — | 656 | — | |||||||||||
Net loss (Non-GAAP) | $ | (1,694 | ) | $ | (6,470 | ) | $ | (10,342 | ) | $ | (22,677 | ) | |||
Weighted average common shares outstanding, basic and diluted | 25,110,212 | 24,793,869 | 25,020,154 | 24,528,263 | |||||||||||
Net loss per share, basic and diluted (Non-GAAP) | $ | (0.07 | ) | $ | (0.26 | ) | $ | (0.41 | ) | $ | (0.92 | ) | |||
Reconciliation of Net Loss to Adjusted EBITDA | |||||||||||||||
(unaudited; in thousands) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net loss | $ | (4,791 | ) | $ | (9,004 | ) | $ | (20,271 | ) | $ | (27,978 | ) | |||
Adjustments: | |||||||||||||||
Interest expense, net | 60 | 55 | 142 | 157 | |||||||||||
Income tax (benefit) expense | 1 | 6 | (126 | ) | 87 | ||||||||||
Depreciation and amortization expense | 2,341 | 1,741 | 6,363 | 4,393 | |||||||||||
Total adjustments | 2,402 | 1,802 | 6,379 | 4,637 | |||||||||||
EBITDA | (2,389 | ) | (7,202 | ) | (13,892 | ) | (23,341 | ) | |||||||
Stock-based compensation expense | 3,097 | 2,534 | 9,273 | 5,301 | |||||||||||
One-time severance and related costs | — | — | 656 | — | |||||||||||
Adjusted EBITDA | $ | 708 | $ | (4,668 | ) | $ | (3,963 | ) | $ | (18,040 | ) | ||||
Depreciation and Amortization by Financial Statement Line Item (1) | |||||||||||||||
(unaudited; in thousands) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Sales and marketing | $ | 334 | $ | 270 | $ | 913 | $ | 656 | |||||||
Research and development | 136 | 106 | 358 | 264 | |||||||||||
General and administrative | 535 | 367 | 1,556 | 990 | |||||||||||
Total depreciation and amortization expense attributable to operating expenses | $ | 1,005 | $ | 743 | $ | 2,827 | $ | 1,910 | |||||||
(1) Amounts are excluded from each operating expense line item and presented separately in Depreciation and amortization on the Consolidated Statements of Operations | |||||||||||||||