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ECOM - ChannelAdvisor News Story

$20.04 0.5  2.7%

Last Trade - 22/01/21

Sector
Technology
Size
Mid Cap
Market Cap £424.7m
Enterprise Value £376.2m
Revenue £102.0m
Position in Universe 3234th / 6630

ChannelAdvisor Reports Third Quarter 2020 Results; Revenue and Adjusted EBITDA Exceed Guidance

Thu 5th November, 2020 11:45am
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Revenue Growth of 11% on a Y/Y Basis with Record Fixed Revenue
Brands Revenue Growth of 29% on a Y/Y Basis to a Record 34% of Revenue
Net Bookings Best In More Than Five Years
Adjusted EBITDA Increased 44% on a Y/Y Basis
Cash at $66 Million with Operating Cash Flow of $26 Million Year-To-Date

RESEARCH TRIANGLE PARK, N.C., Nov. 05, 2020 (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 September 30, 2020.

“We delivered strong financial results again in the third quarter, with
revenue and adjusted EBITDA that both exceeded our guidance for the
quarter,” said David Spitz, ChannelAdvisor’s chief executive officer.
“What excites me even more is the strong performance we had in sales,
especially with brands, and overall outstanding revenue retention for the
quarter, both of which combined to drive an acceleration in fixed revenue
growth. Our strategic shift towards brands has continued to pay off, with
revenue growth from brands accelerating to 29% year over year for the quarter,
and our solid overall execution in the quarter positions us for continued
strong performance as we close out the year.”

Third Quarter 2020 Financial Results
* Revenue:  Total revenue was $35.3 million for the third quarter 2020, an
increase of 11.4% from the year-ago period. Brands revenue increased 29.3%
from the year-ago period and reached a new high of 34.2% of total revenue.
Variable revenue was $8.2 million, or 23.2% of total revenue for the third
quarter 2020, compared with $5.8 million, or 18.5% of total revenue for the
year-ago period. Fixed subscription revenue was $27.1 million, or 76.8% of
total revenue for the third quarter 2020, compared with $25.8 million, or
81.5% of total revenue for the year-ago period.


* Gross Profit:  GAAP gross profit was $27.6 million, representing a 78.2%
gross margin for the third quarter 2020, compared with $24.4 million and
77.1%, respectively, for the year-ago period. Non-GAAP gross profit was $27.8
million, representing a 78.8% non-GAAP gross margin for the third quarter
2020, compared with $24.8 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:  GAAP net income was $3.7 million for the third quarter 2020,
compared with $1.7 million for the year-ago period. GAAP net income per
diluted share was $0.12 based on 30.4 million diluted weighted average shares
outstanding for the third quarter 2020, compared with $0.06 per diluted share
based on 28.8 million diluted weighted average shares outstanding for the
year-ago period. Non-GAAP net income was $6.2 million for the third quarter
2020, compared with $3.5 million for the year-ago period. Non-GAAP net income
per diluted share was $0.20 based on 30.4 million diluted weighted average
shares outstanding for the third quarter 2020, compared with $0.12 based on
28.8 million diluted weighted average shares outstanding for the year-ago
period.


* Adjusted EBITDA:  Adjusted EBITDA, a non-GAAP measure, was $7.4 million for
the third quarter 2020, compared with $5.2 million for the year-ago period.
Adjusted EBITDA margin, which is adjusted EBITDA divided by revenue, was 21.1%
for the third quarter 2020, compared with 16.3% for the year-ago period.
Adjusted EBITDA for the twelve months ended September 30, 2020 totaled $34.8
million.


* Cash:  Cash and cash equivalents totaled $66.4 million as of September 30,
2020, compared with $51.8 million as of December 31, 2019. Cash generated
from operations was $26.0 million for the nine months ended September 30,
2020, compared with $7.5 million for the year-ago period. Free cash flow, a
non-GAAP measure, was $22.7 million for the nine months ended September 30,
2020, compared with $4.8 million for the year-ago period.
Recent Business Highlights
* Launch of ‘Shoppable Media’, a Comprehensive Suite of Multi-Channel
Solutions for Brands: From inspiration to conversion, brands can ease the path
to purchase directly from their websites and across various marketing and
advertising channels with ChannelAdvisor’s Shoppable Media, a product
offering that comprises Where to Buy Online, Where to Buy Local, Dynamic
Shopping Links, and Buy Now Interstitial, a new dynamic linking feature.


* Search Terms Generator for Amazon: Seller Central merchants advertising and
selling on Amazon through ChannelAdvisor can save time and resources with the
Search Terms Generator.  This new feature automatically generates Search
Terms and provides updates based on advertising performance to help improve
organic listings.


* New Marketplace Integrations: ChannelAdvisor is committed to helping brands
and retailers reach new global audiences through the support of Bunnings
Marketlink (AU), Grupo Exito (US CBT to CO), Kroger (US), Love the Sales (UK),
Onceit (NZ), and Stockd (US), adding to the global total of more than 100
marketplace integrations.


* New First-Party Retail Dropship Connections: ChannelAdvisor added support
for first-party integrations with Bluestem (US), JClub (US), OTTO VAL (DE),
and Walgreens (US).


* Enhanced Client Experience to Improve Operational Agility:

 * New Knowledge Center:  New services IT infrastructure improves the ability
of clients to answer questions, solve problems and learn new features. With
improved self-help content that is easier to find, forums to encourage and
facilitate client engagement, and a new set of tools to enable team members to
better address client questions, ChannelAdvisor continues to invest in making
our clients successful.


* New Order Pipeline Dashboard:  With this new analytics tool, ChannelAdvisor
continues to help brands and retailers minimize costly order processing
delays, especially during peak volume periods with powerful visualization and
monitoring of where those delays may be occurring in the processing pipeline.


* New Channel Health Console: Allows ChannelAdvisor Marketplace users to
understand and gauge operational health across all channel integrations,
enabling prioritization and focus on the most important areas of the business.


* Deal Planner: Introduces a new way to manage short-term promotions in dozens
of marketplaces. Brands and retailers can create deals for a specified time
period and then adjust the price for the deal’s duration. When the time
window expires, the listing returns to the original price.


 
* ChannelAdvisor Consumer Survey Indicates Significant Shift In Online
Shopping Behavior: Results from our recent consumer survey of more than one
thousand active shoppers in the US and the UK indicated significant shifts in
online shopping behavior among purchase-ready consumers across all age groups
and genders during the pandemic. ChannelAdvisor presented the survey findings
in a webinar that can be found on our corporate website
(https://go.channeladvisor.com/NA-Holiday-2020-Consumer-Habits-Webinar-WBN-Q320.html).


* Customer Details:  ChannelAdvisor recently added notable new customers
including Epson U.S., Gant, Geox, Omron Healthcare Europe and Universal Music
Group Germany, and expanded its relationship with customers such as Brady
Corporation and Simone Perele SAS.
Financial Outlook

Based on the information available as of today, ChannelAdvisor is issuing
guidance for its fourth quarter 2020.

 (in millions)                                 Q4 2020           
 Revenue                                       $37.3 - $38.3     
 Y/Y Growth                                    7% - 10%          
 Adjusted EBITDA                               $8.0 - $9.0       
 As a Percentage of Revenue (at the midpoint)  22%               
 Stock-based Compensation Expense              $2.1 - $2.5       
 Weighted Average Shares Outstanding           29.0              

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 Third Quarter 2020 Financial Results Conference Call  
 When:       Thursday, November 5, 2020                                           
 Time:       8:00 a.m. ET                                                         
 Live Call:  (855) 638-4821, Passcode 5252688, Toll Free                          
             (704) 288-0612, Passcode 5252688, 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 (benefit) 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
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 (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 fourth 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 September 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)

                                                                                                                                                                                      September 30, 2020           December 31, 2019             
                                                                                                                                                                                      (unaudited)                                                
 Assets                                                                                                                                                                                                                                          
 Current assets:                                                                                                                                                                                                                                 
 Cash and cash equivalents                                                                                                                                                            $        66,357              $      51,785                 
 Accounts receivable, net of allowance of $410 and $733 as of September 30, 2020 and December 31, 2019, respectively                                                                  21,817                       22,126                        
 Prepaid expenses and other current assets                                                                                                                                            12,840                       10,452                        
 Total current assets                                                                                                                                                                 101,014                      84,363                        
 Operating lease right of use assets                                                                                                                                                  8,802                        11,128                        
 Property and equipment, net                                                                                                                                                          9,184                        9,597                         
 Goodwill                                                                                                                                                                             30,990                       23,486                        
 Intangible assets, net                                                                                                                                                               4,439                        1,285                         
 Deferred contract costs, net of current portion                                                                                                                                      13,370                       12,810                        
 Long-term deferred tax assets, net                                                                                                                                                   3,649                        3,584                         
 Other assets                                                                                                                                                                         979                          614                           
 Total assets                                                                                                                                                                         $        172,427             $      146,867                
 Liabilities and stockholders' equity                                                                                                                                                                                                            
 Current liabilities:                                                                                                                                                                                                                            
 Accounts payable                                                                                                                                                                     $        545                 $      409                    
 Accrued expenses                                                                                                                                                                     14,892                       8,577                         
 Deferred revenue                                                                                                                                                                     21,368                       21,000                        
 Other current liabilities                                                                                                                                                            6,375                        6,431                         
 Total current liabilities                                                                                                                                                            43,180                       36,417                        
 Long-term operating leases, net of current portion                                                                                                                                   6,436                        9,767                         
 Long-term finance leases, net of current portion                                                                                                                                     12                           27                            
 Other long-term liabilities                                                                                                                                                          2,170                        1,007                         
 Total liabilities                                                                                                                                                                    51,798                       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 September 30, 2020 and December 31, 2019                                      —                            —                             
 Common stock, $0.001 par value, 100,000,000 shares authorized, 28,981,204 and 28,077,469 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively  29                           28                            
 Additional paid-in capital                                                                                                                                                           286,208                      278,111                       
 Accumulated other comprehensive loss                                                                                                                                                 (1,803            )          (1,740          )             
 Accumulated deficit                                                                                                                                                                  (163,805          )          (176,750        )             
 Total stockholders' equity                                                                                                                                                           120,629                      99,649                        
 Total liabilities and stockholders' equity                                                                                                                                           $        172,427             $      146,867                

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,                          
                                                         2020                          2019                     2020                         2019                        
 Revenue                                                 $       35,285                $       31,678           $       104,760              $       95,184              
 Cost of revenue (1) (2)                                 7,691                         7,251                    21,807                       21,876                      
 Gross profit                                            27,594                        24,427                   82,953                       73,308                      
 Operating expenses (1) (2):                                                                                                                                             
 Sales and marketing                                     13,477                        12,403                   38,436                       40,808                      
 Research and development                                4,809                         4,803                    14,153                       15,161                      
 General and administrative                              5,974                         5,440                    17,742                       19,272                      
 Total operating expenses                                24,260                        22,646                   70,331                       75,241                      
 Income (loss) from operations                           3,334                         1,781                    12,622                       (1,933          )           
 Other income:                                                                                                                                                           
 Interest (expense) income, net                          (1              )             205                      210                          599                         
 Other income (expense), net                             5                             (44             )        44                           (32             )           
 Total other income                                      4                             161                      254                          567                         
 Income (loss) before income taxes                       3,338                         1,942                    12,876                       (1,366          )           
 Income tax (benefit) expense                            (374            )             213                      171                          572                         
 Net income (loss)                                       $       3,712                 $       1,729            $       12,705               $       (1,938  )           
 Net income (loss) per share:                                                                                                                                            
 Basic                                                   $       0.13                  $       0.06             $       0.45                 $       (0.07   )           
 Diluted                                                 $       0.12                  $       0.06             $       0.43                 $       (0.07   )           
 Weighted average common shares outstanding:                                                                                                                             
 Basic                                                   28,802,310                    28,049,199               28,485,547                   27,824,696                  
 Diluted                                                 30,436,601                    28,754,679               29,815,829                   27,824,696                  
                                                                                                                                                                         
 (1) Includes stock-based compensation as follows:                                                                                                                       
 Cost of revenue                                         $       203                   $       169              $       760                  $       745                 
 Sales and marketing                                     544                           —                        2,061                        1,773                       
 Research and development                                485                           454                      1,708                        1,696                       
 General and administrative                              1,030                         178                      3,203                        2,786                       
                                                         $       2,262                 $       801              $       7,732                $       7,000               
                                                                                                                                                                         
 (2) Includes depreciation and amortization as follows:                                                                                                                  
 Cost of revenue                                         $       1,062                 $       1,046            $       3,067                $       2,947               
 Sales and marketing                                     154                           205                      465                          607                         
 Research and development                                61                            94                       195                          277                         
 General and administrative                              378                           319                      928                          975                         
                                                         $       1,655                 $       1,664            $       4,655                $       4,806               

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

                                                                                                            Nine Months Ended September 30,                     
                                                                                                            2020                      2019                      
 Cash flows from operating activities                                                                                                                           
 Net income (loss)                                                                                          $     12,705              $     (1,938  )           
 Adjustments to reconcile net income (loss) to cash and cash equivalents provided by operating activities:                                                      
 Depreciation and amortization                                                                              4,655                     4,806                     
 Bad debt expense                                                                                           479                       911                       
 Stock-based compensation expense                                                                           7,732                     7,000                     
 Deferred income taxes                                                                                      (61           )           513                       
 Other items, net                                                                                           (617          )           43                        
 Changes in assets and liabilities, net of effects from acquisition:                                                                                            
 Accounts receivable                                                                                        343                       1,007                     
 Prepaid expenses and other assets                                                                          (917          )           2,282                     
 Deferred contract costs                                                                                    (1,800        )           (2,661        )           
 Accounts payable and accrued expenses                                                                      3,404                     (2,112        )           
 Deferred revenue                                                                                           62                        (2,337        )           
 Cash and cash equivalents provided by operating activities                                                 25,985                    7,514                     
 Cash flows from investing activities                                                                                                                           
 Acquisition, net of cash acquired                                                                          (8,787        )           —                         
 Purchases of property and equipment                                                                        (1,021        )           (755          )           
 Payment of software development costs                                                                      (2,283        )           (1,972        )           
 Cash and cash equivalents used in investing activities                                                     (12,091       )           (2,727        )           
 Cash flows from financing activities                                                                                                                           
 Repayment of finance leases                                                                                (1,418        )           (2,357        )           
 Proceeds from exercise of stock options                                                                    3,553                     968                       
 Payment of statutory tax withholding related to net-share settlement of restricted stock units             (1,299        )           (2,101        )           
 Payment of line of credit financing costs                                                                  (179          )           —                         
 Cash and cash equivalents provided by (used in) financing activities                                       657                       (3,490        )           
 Effect of currency exchange rate changes on cash and cash equivalents                                      21                        (256          )           
 Net increase in cash and cash equivalents                                                                  14,572                    1,041                     
 Cash and cash equivalents, beginning of period                                                             51,785                    47,185                    
 Cash and cash equivalents, end of period                                                                   $     66,357              $     48,226              



 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 September 30,                     Nine Months Ended September 30,                     
                                                                                  2020                         2019                    2020                          2019                  
 Revenue                                                                          $      35,285                $      31,678           $      104,760                $      95,184         
                                                                                                                                                                                           
 Gross profit (GAAP)                                                              $      27,594                $      24,427           $      82,953                 $      73,308         
 Plus: Stock-based compensation expense included within cost of revenue           203                          169                     760                           745                   
 Plus: Non-recurring severance and related costs included within cost of revenue  —                            238                     —                             238                   
 Gross profit (Non-GAAP)                                                          $      27,797                $      24,834           $      83,713                 $      74,291         
 Gross margin (GAAP)                                                              78.2           %             77.1           %        79.2            %             77.0           %      
 Gross margin (Non-GAAP)                                                          78.8           %             78.4           %        79.9            %             78.0           %      



 Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses                                                                                                                           
 (unaudited; in thousands)                                                                                                                                                                          
                                                                                            Three Months Ended September 30,                     Nine Months Ended September 30,                    
                                                                                            2020                         2019                    2020                         2019                  
 Operating expenses (GAAP)                                                                  $      24,260                $      22,646           $      70,331                $      75,241         
 Less: Stock-based compensation expense included within operating expenses                  2,059                        632                     6,972                        6,255                 
 Less: Transaction costs in connection with acquisition included within operating expenses  178                          —                       443                          —                     
 Less: Non-recurring severance and related costs included within operating expenses         —                            727                     —                            727                   
 Operating expenses (Non-GAAP)                                                              $      22,023                $      21,287           $      62,916                $      68,259         



 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 September 30,                     Nine Months Ended September 30,                      
                                                         2020                         2019                    2020                       2019                      
 Revenue                                                 $      35,285                $      31,678           $     104,760              $     95,184              
                                                                                                                                                                   
 Income (loss) from operations (GAAP)                    $      3,334                 $      1,781            $     12,622               $     (1,933  )           
 Plus: Stock-based compensation expense                  2,262                        801                     7,732                      7,000                     
 Plus: Transaction costs in connection with acquisition  178                          —                       443                        —                         
 Plus: Non-recurring severance and related costs         —                            965                     —                          965                       
 Income from operations (Non-GAAP)                       $      5,774                 $      3,547            $     20,797               $     6,032               
 Operating margin (GAAP)                                 9.4            %             5.6            %        12.0           %           (2.0          )%          
 Operating margin (Non-GAAP)                             16.4           %             11.2           %        19.9           %           6.3           %           



 Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income                                                                                                
 (unaudited; in thousands)                                                                                                                                      
                                                         Three Months Ended September 30,                   Nine Months Ended September 30,                     
                                                         2020                        2019                   2020                      2019                      
 Net income (loss) (GAAP)                                $      3,712                $      1,729           $     12,705              $     (1,938  )           
 Plus: Stock-based compensation expense                  2,262                       801                    7,732                     7,000                     
 Plus: Transaction costs in connection with acquisition  178                         —                      443                       —                         
 Plus: Non-recurring severance and related costs         —                           965                    —                         965                       
 Net income (Non-GAAP)                                   $      6,152                $      3,495           $     20,880              $     6,027               



 Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA                                                                                              
 (unaudited; in thousands)                                                                                                                                
                                                   Three Months Ended September 30,                   Nine Months Ended September 30,                     
                                                   2020                        2019                   2020                      2019                      
 Net income (loss) (GAAP)                          $      3,712                $      1,729           $     12,705              $     (1,938  )           
 Adjustments:                                                                                                                                             
 Interest expense (income), net                    1                           (205          )        (210          )           (599          )           
 Income tax (benefit) expense                      (374          )             213                    171                       572                       
 Depreciation and amortization expense             1,655                       1,664                  4,655                     4,806                     
 Total adjustments                                 1,282                       1,672                  4,616                     4,779                     
 EBITDA                                            4,994                       3,401                  17,321                    2,841                     
 Stock-based compensation expense                  2,262                       801                    7,732                     7,000                     
 Transaction costs in connection with acquisition  178                         —                      443                       —                         
 Non-recurring severance and related costs         —                           965                    —                         965                       
 Adjusted EBITDA                                   $      7,434                $      5,167           $     25,496              $     10,806              



 Reconciliation of Trailing Twelve Month (TTM) GAAP Net Income to Adjusted EBITDA                                                                                                     
 (unaudited; in thousands)                                                                                                                                                            
                                                   QTD                          QTD                     QTD                    QTD                       TTM                          
                                                   September 30, 2020           June 30, 2020           March 31, 2020         December 31, 2019         September 30, 2020           
 Net income (GAAP)                                 $        3,712               $      6,986            $      2,007           $       5,420             $      18,125                
 Adjustments:                                                                                                                                                                         
 Interest expense (income), net                    1                            (85            )        (126          )        (155            )         (365           )             
 Income tax (benefit) expense                      (374              )          325                     220                    117                       288                          
 Depreciation and amortization expense             1,655                        1,522                   1,478                  1,530                     6,185                        
 Total adjustments                                 1,282                        1,762                   1,572                  1,492                     6,108                        
 EBITDA                                            4,994                        8,748                   3,579                  6,912                     24,233                       
 Stock-based compensation expense                  2,262                        2,556                   2,914                  1,976                     9,708                        
 Transaction costs in connection with acquisition  178                          265                     —                      —                         443                          
 Non-recurring severance and related costs         —                            —                       —                      464                       464                          
 Adjusted EBITDA                                   $        7,434               $      11,569           $      6,493           $       9,352             $      34,848                



 Free Cash Flow Reconciliation                                                                                  
 (unaudited; in thousands)                                                                                      
                                                             Nine Months Ended September 30,                    
                                                             2020                      2019                     
 Cash and cash equivalents provided by operating activities  $     25,985              $     7,514              
 Less: Purchases of property and equipment                   (1,021        )           (755         )           
 Less: Payment of software development costs                 (2,283        )           (1,972       )           
 Free cash flow                                              $     22,681              $     4,787              



 Adjusted EBITDA Guidance Reconciliation                                              
 (unaudited; in millions)                                                             
                                              Fourth Quarter 2020                     
                                              Low                 High                
 Net income (estimate)                        $    3.5            $    5.2            
 Adjustments (estimates):                                                             
 Interest (income) expense, net               0.0                 (0.1      )         
 Income tax (benefit) expense                 0.2                 0.1                 
 Depreciation and amortization expense        1.8                 1.7                 
 Total adjustments                            2.0                 1.7                 
 EBITDA                                       5.5                 6.9                 
 Stock-based compensation expense (estimate)  2.5                 2.1                 
 Adjusted EBITDA guidance (floor)             $    8.0            $    9.0            

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

(https://www.globenewswire.com/NewsRoom/AttachmentNg/561ac7e1-3396-4612-82d7-e4117aeddad1)



GlobeNewswire, Inc. 2020
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