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ECOM - ChannelAdvisor News Story

$25.35 -0.3  -1.1%

Last Trade - 09/04/21

Sector
Technology
Size
Mid Cap
Market Cap £549.5m
Enterprise Value £497.4m
Revenue £105.8m
Position in Universe 3117th / 6827

ChannelAdvisor Reports Record Fourth Quarter and Full Year 2020 Results; Revenue and Adjusted EBITDA Significantly Exceed Guidance

Thu 11th February, 2021 11:45am
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RESEARCH TRIANGLE PARK, N.C., Feb. 11, 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 fourth quarter and full year ended
December 31, 2020.

Fourth Quarter 2020 Highlights

GAAP
* Total revenue increased 16% year-over-year to a record $40.3 million
* Brands revenue increased 27% year-over-year and reached 35% of total
revenue, a new high
* Subscription revenue growth accelerated to 8% year-over-year
* GAAP net income was $6.1 million, or $0.20 per diluted share based on 30.6
million diluted weighted average shares outstanding 
Non-GAAP
* Adjusted EBITDA increased 15% year-over-year to $10.8 million
* Adjusted EBITDA margin was 27%, similar to the prior year period
Full Year 2020 Highlights

GAAP
* Total revenue increased 12% to a record $145.1 million
* Brands revenue increased 25% year-over-year and reached 33% of total
revenue, a new fiscal year high
* GAAP net income was $18.8 million, or $0.63 per diluted share based on 30.0
million diluted weighted average shares outstanding, up from $3.5 million and
$0.12 per diluted share in 2019
* Cash and cash equivalents were $71.5 million at year end, an increase of
$19.8 million for the year, including the use of cash for the acquisition of
BlueBoard in July 2020
* Operating cash flow of $34.3 million, compared to $13.0 million for the
prior year
Non-GAAP
* Adjusted EBITDA increased 80% to $36.3 million
* Adjusted EBITDA margin of 25% was up 9 points year-over-year
* Free cash flow was $29.6 million, or $0.98 per diluted share based on 30.0
million diluted weighted average shares outstanding, more than triple the
prior year free cash flow of $9.3 million
“Q4 marked a tremendous finish to a stellar year for ChannelAdvisor, with
record revenue and strong adjusted EBITDA, both of which significantly
exceeded our guidance for the quarter,” said David Spitz, ChannelAdvisor’s
chief executive officer. “Continued solid execution and record e-commerce
volumes drove success for our customers and rapid growth from brands during
the quarter, with brands revenue for the quarter up 27% year over year.
Another quarter of robust performance in sales, especially with brands,
combined with outstanding revenue retention, drove the second consecutive
quarter of acceleration in subscription revenue growth. Our strategy of
empowering brands' digital transformation is paying off in a big way and
we’re optimistic 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:
* Expanded product offering: To help brands amplify their brand presence and
drive effective advertising with Amazon, ChannelAdvisor recently launched
Managed Services for Amazon’s demand-side platform. ChannelAdvisor also
launched new enhancements to the Channel Health Console to provide brands with
a simplified dashboard to monitor the health and performance of their
fulfillment channels closely. 
 
* Additional market access: ChannelAdvisor is helping brands reach more
consumers by continuing to expand its industry-leading Marketplaces platform
with the addition of Amazon Sweden, Back Market (AT, BE, NL, FI and PL), Darty
(FR), Paysfer (US), and Spartoo (FR). The company also added first-party
dropship integrations with Fantastic Furniture and expanded its existing
support for Macy’s and Walgreens.
 
* Industry leadership: Named the #1 channel management vendor for the ninth
consecutive year, the #3 search engine marketing vendor, and a leading
provider of online advertising services in Digital Commerce 360’s 2021
Leading Vendors to the Top 1000 retailers.
 
* New customers: ChannelAdvisor recently added notable new Brands Analytics
customers including Chanel and Gibson Guitars. Existing customers including
Xerox and Tetra, a division of Spectrum Brands, expanded their relationships
with the addition of the Brands Analytics functionality. Additional notable
new customers include TCL Electronics, Mabe CA, and Fisher & Paykel
Appliances, a division of Haier. ChannelAdvisor also expanded its relationship
with customers such as Calzedonia and Defacto, and strategic partner XPO
Logistics.
Financial Outlook

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

 (in millions, except percentages)                     Q1 2021        
 Revenue                                               $37.3 - $37.7  
 Adjusted EBITDA                                       $6.9 - $7.3    
 As a Percentage of Revenue (at the midpoints for Q1)  19%            
 Stock-based Compensation Expense                      $2.9 - $3.3    
 Weighted Average Shares Outstanding                   29.2           

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 Fourth Quarter and Full Year 2020 Financial Results Conference Call  
 When:       Thursday, February 11, 2021                                                         
 Time:       8:00 a.m. ET                                                                        
 Live Call:  (855) 638-4821, Passcode 6076252, Toll free                                         
             (704) 288-0612, Passcode 6076252, 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 and free cash flow
per diluted share, 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, for 2019
only, non-recurring severance and related costs, and for 2020 only,
transaction costs associated with our July 2020 acquisition of BlueBoard. 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 and non-GAAP gross margin exclude stock-based compensation
expense and for 2019 only, non-recurring severance and related costs.

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 first quarter and full
year 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, 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
Consolidated Balance Sheets
(in thousands, except share and per share data)

                                                                                                                                                                        December 31,                                          
                                                                                                                                                                        2020                          2019                    
 Assets                                                                                                                                                                 (unaudited)                                           
 Current assets:                                                                                                                                                                                                              
 Cash and cash equivalents                                                                                                                                              $      71,545                 $      51,785           
 Accounts receivable, net of allowance of $417 and $733 as of December 31, 2020 and 2019, respectively                                                                  24,705                        22,126                  
 Prepaid expenses and other current assets                                                                                                                              13,874                        10,452                  
 Total current assets                                                                                                                                                   110,124                       84,363                  
 Operating lease right of use assets                                                                                                                                    8,141                         11,128                  
 Property and equipment, net                                                                                                                                            8,707                         9,597                   
 Goodwill                                                                                                                                                               30,990                        23,486                  
 Intangible assets, net                                                                                                                                                 4,155                         1,285                   
 Deferred contract costs, net of current portion                                                                                                                        14,040                        12,810                  
 Long-term deferred tax assets, net                                                                                                                                     3,551                         3,584                   
 Other assets                                                                                                                                                           953                           614                     
 Total assets                                                                                                                                                           $      180,661                $      146,867          
 Liabilities and stockholders' equity                                                                                                                                                                                         
 Current liabilities:                                                                                                                                                                                                         
 Accounts payable                                                                                                                                                       $      158                    $      409              
 Accrued expenses                                                                                                                                                       14,008                        8,577                   
 Deferred revenue                                                                                                                                                       22,819                        21,000                  
 Other current liabilities                                                                                                                                              6,029                         6,431                   
 Total current liabilities                                                                                                                                              43,014                        36,417                  
 Long-term operating leases, net of current portion                                                                                                                     5,394                         9,767                   
 Long-term finance leases, net of current portion                                                                                                                       8                             27                      
 Other long-term liabilities                                                                                                                                            2,154                         1,007                   
 Total liabilities                                                                                                                                                      50,570                        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 December 31, 2020 and 2019, respectively                        —                             —                       
 Common stock, $0.001 par value, 100,000,000 shares authorized, 29,020,424 and 28,077,469 shares issued and outstanding as of December 31, 2020 and 2019, respectively  29                            28                      
 Additional paid-in capital                                                                                                                                             288,842                       278,111                 
 Accumulated other comprehensive loss                                                                                                                                   (1,095          )             (1,740          )       
 Accumulated deficit                                                                                                                                                    (157,685        )             (176,750        )       
 Total stockholders' equity                                                                                                                                             130,091                       99,649                  
 Total liabilities and stockholders' equity                                                                                                                             $      180,661                $      146,867          



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

                                                         Three Months Ended December 31,                                   Year Ended December 31,                             
                                                                               2020                              2019                             2020                         201 
                                                                                                                                                                               9  
                                                         (unaudited)                       (unaudited)                     (unaudited)                                         
 Revenue                                                 $       40,312                    $       34,775                  $       145,072              $       129,959        
 Cost of revenue (1) (2)                                 8,547                             7,132                           30,354                       29,008                 
 Gross profit                                            31,765                            27,643                          114,718                      100,951                
 Operating expenses (1) (2):                                                                                                                                                   
 Sales and marketing                                     14,469                            12,005                          52,905                       52,813                 
 Research and development                                4,837                             4,039                           18,990                       19,200                 
 General and administrative                              5,997                             5,864                           23,739                       25,136                 
 Total operating expenses                                25,303                            21,908                          95,634                       97,149                 
 Income from operations                                  6,462                             5,735                           19,084                       3,802                  
 Other income (expense):                                                                                                                                                       
 Interest income (expense), net                          (35             )                 155                             175                          754                    
 Other income (expense), net                             (35             )                 (353            )               9                            (385             )     
 Total other income (expense)                            (70             )                 (198            )               184                          369                    
 Income before income taxes                              6,392                             5,537                           19,268                       4,171                  
 Income tax expense                                      272                               117                             443                          689                    
 Net income                                              $       6,120                     $       5,420                   $       18,825               $       3,482          
 Net income per share:                                                                                                                                                         
 Basic                                                   $       0.21                      $       0.19                    $       0.66                 $       0.12           
 Diluted                                                 $       0.20                      $       0.19                    $       0.63                 $       0.12           
 Weighted average common shares outstanding:                                                                                                                                   
 Basic                                                   29,006,116                        28,069,017                      28,616,401                   27,886,278             
 Diluted                                                 30,597,322                        28,926,527                      30,035,261                   28,816,977             
                                                                                                                                                                               
 (1) Includes stock-based compensation as follows:                                                                                                                             
 Cost of revenue                                         $       212                       $       250                     $       972                  $       995            
 Sales and marketing                                     731                               612                             2,792                        2,385                  
 Research and development                                460                               202                             2,168                        1,898                  
 General and administrative                              1,065                             912                             4,268                        3,698                  
                                                         $       2,468                     $       1,976                   $       10,200               $       8,976          
                                                                                                                                                                               
 (2) Includes depreciation and amortization as follows:                                                                                                                        
 Cost of revenue                                         $       1,144                     $       995                     $       4,211                $       3,942          
 Sales and marketing                                     159                               168                             624                          775                    
 Research and development                                62                                76                              257                          353                    
 General and administrative                              493                               291                             1,421                        1,266                  
                                                         $       1,858                     $       1,530                   $       6,513                $       6,336          



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

                                                                                                     Year Ended December 31,                         
                                                                                                     2020                         2019               
                                                                                                     (unaudited)                                     
 Cash flows from operating activities                                                                                                                
 Net income                                                                                          $     18,825                 $     3,482        
 Adjustments to reconcile net income to cash and cash equivalents provided by operating activities:                                                  
 Depreciation and amortization                                                                       6,513                        6,336              
 Bad debt expense                                                                                    525                          1,147              
 Stock-based compensation expense                                                                    10,200                       8,976              
 Deferred income taxes                                                                               (39           )              531                
 Other items, net                                                                                    (829          )              118                
 Changes in assets and liabilities, net of effects from acquisition:                                                                                 
 Accounts receivable                                                                                 (2,143        )              361                
 Prepaid expenses and other assets                                                                   (1,728        )              892                
 Deferred contract costs                                                                             (2,572        )              (3,146        )    
 Accounts payable and accrued expenses                                                               4,270                        (2,306        )    
 Deferred revenue                                                                                    1,284                        (3,383        )    
 Cash and cash equivalents provided by operating activities                                          34,306                       13,008             
 Cash flows from investing activities                                                                                                                
 Acquisition, net of cash acquired                                                                   (8,467        )              —                  
 Purchases of property and equipment                                                                 (1,704        )              (986          )    
 Payment of software development costs                                                               (3,034        )              (2,721        )    
 Cash and cash equivalents used in investing activities                                              (13,205       )              (3,707        )    
 Cash flows from financing activities                                                                                                                
 Repayment of finance leases and debt                                                                (1,808        )              (2,209        )    
 Proceeds from exercise of stock options                                                             3,825                        974                
 Payment of statutory tax withholding related to net-share settlement of restricted stock units      (3,294        )              (3,389        )    
 Payment of line of credit financing costs                                                           (187          )              —                  
 Cash and cash equivalents used in financing activities                                              (1,464        )              (4,624        )    
 Effect of currency exchange rate changes on cash and cash equivalents                               123                          (77           )    
 Net increase in cash and cash equivalents                                                           19,760                       4,600              
 Cash and cash equivalents, beginning of year                                                        51,785                       47,185             
 Cash and cash equivalents, end of year                                                              $     71,545                 $     51,785       



 Reconciliation of GAAP Gross Profit and GAAP Gross Margin to Non-GAAP Gross Profit and Non-GAAP Gross Margin                                                                 
 (unaudited; in thousands)                                                                                                                                                    
                                                                         Three Months Ended December 31,                      Year Ended December 31,                         
                                                                         2020                         2019                    2020                       2019                 
 Revenue                                                                 $      40,312                $      34,775           $     145,072              $     129,959        
                                                                                                                                                                              
 Gross profit (GAAP)                                                     $      31,765                $      27,643           $     114,718              $     100,951        
 Plus: Stock-based compensation expense included within cost of revenue  212                          250                     972                        995                  
 Plus: Non-recurring severance and related costs within cost of revenue  —                            —                       —                          238                  
 Gross profit (Non-GAAP)                                                 $      31,977                $      27,893           $     115,690              $     102,184        
 Gross margin (GAAP)                                                     79             %             79             %        79             %           78             %     
 Gross margin (Non-GAAP)                                                 79             %             80             %        80             %           79             %     



 Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses                                                                                                                      
 (unaudited; in thousands)                                                                                                                                                                     
                                                                                            Three Months Ended December 31,                      Year Ended December 31,                       
                                                                                            2020                         2019                    2020                      2019                
 Operating expenses (GAAP)                                                                  $      25,303                $      21,908           $     95,634              $     97,149        
 Less: Stock-based compensation expense included within operating expenses                  2,256                        1,726                   9,228                     7,981               
 Less: Transaction costs in connection with acquisition included within operating expenses  45                           —                       488                       —                   
 Less: Non-recurring severance and related costs within operating expenses                  —                            344                     —                         1,071               
 Operating expenses (Non-GAAP)                                                              $      23,002                $      19,838           $     85,918              $     88,097        



 Reconciliation of GAAP Income from Operations and GAAP Operating Margin to Non-GAAP Income from Operations and Non-GAAP Operating Margin                     
 (unaudited; in thousands)                                                                                                                                    
                                                         Three Months Ended December 31,                      Year Ended December 31,                         
                                                         2020                         2019                    2020                       2019                 
 Revenue                                                 $      40,312                $      34,775           $     145,072              $     129,959        
                                                                                                                                                              
 Income from operations (GAAP)                           $      6,462                 $      5,735            $     19,084               $     3,802          
 Plus: Stock-based compensation expense                  2,468                        1,976                   10,200                     8,976                
 Plus: Transaction costs in connection with acquisition  45                           —                       488                        —                    
 Plus: Non-recurring severance and related costs         —                            344                     —                          1,309                
 Income from operations (Non-GAAP)                       $      8,975                 $      8,055            $     29,772               $     14,087         
 Operating margin (GAAP)                                 16             %             16             %        13             %           3              %     
 Operating margin (Non-GAAP)                             22             %             23             %        21             %           11             %     



 Reconciliation of Net Income to Adjusted EBITDA                                                                                                            
 (unaudited; in thousands)                                                                                                                                  
                                                   Three Months Ended December 31,                      Year Ended December 31,                             
                                                   2020                      2019                       2020                         2019                   
 Net income                                        $     6,120               $     5,420                $     18,825                 $    3,482             
 Adjustments:                                                                                                                                               
 Interest (income) expense, net                    35                        (155         )             (175          )              (754         )         
 Income tax expense                                272                       117                        443                          689                    
 Depreciation and amortization expense             1,858                     1,530                      6,513                        6,336                  
 Total adjustments                                 2,165                     1,492                      6,781                        6,271                  
 EBITDA                                            8,285                     6,912                      25,606                       9,753                  
 Stock-based compensation expense                  2,468                     1,976                      10,200                       8,976                  
 Transaction costs in connection with acquisition  45                        —                          488                          —                      
 Non-recurring severance and related costs         —                         464                        —                            1,429                  
 Adjusted EBITDA                                   $     10,798              $     9,352                $     36,294                 $    20,158            



 Free Cash Flow Reconciliation                                                                                                                                                        
 (unaudited; in thousands)                                                                                                                                                            
                                                             Three Months Ended December 31,                                 Year Ended December 31,                                  
                                                             2020                              2019                          2020                           2019                      
 Cash and cash equivalents provided by operating activities  $       8,321                     $       5,494                 $       34,306                 $       13,008            
 Less: Purchases of property and equipment                   (683            )                 (230            )             (1,704          )              (986            )         
 Less: Payment of capitalized software development costs     $       (751    )                 $       (749    )             (3,034          )              (2,721          )         
 Free cash flow                                              $       6,887                     $       4,515                 $       29,568                 $       9,301             
                                                                                                                                                                                      
 Diluted weighted average shares outstanding                 30,597,322                        28,926,527                    30,035,261                     28,816,977                
 Free cash flow per diluted share                            $       0.23                      $       0.16                  $       0.98                   $       0.32              



 Adjusted EBITDA Guidance Reconciliation                                         
 (unaudited; in millions)                                                        
                                              First Quarter 2021                 
                                              Low                 High           
 Net income (estimate)                        $    1.5            $    2.6       
 Adjustments (estimates):                                                        
 Interest (income) expense, net               0.1                 0.0            
 Income tax expense                           0.2                 0.1            
 Depreciation and amortization expense        1.8                 1.7            
 Total adjustments                            2.1                 1.8            
 EBITDA                                       3.6                 4.4            
 Stock-based compensation expense (estimate)  3.3                 2.9            
 Adjusted EBITDA guidance                     $    6.9            $    7.3       

 

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

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