February 6, 2014 ChannelAdvisor Announces Fourth Quarter and Full Year 2013 Financial Results
Fourth quarter total revenue of $20.5 million increases 28 percent year-over-year
Fourth quarter core revenue of $20.1 million increases 30 percent year-over-year
RESEARCH TRIANGLE PARK, N.C.–(BUSINESS WIRE)–Feb. 6, 2014– ChannelAdvisor Corporation (NYSE: ECOM), a leading provider of cloud-based e-commerce solutions that enable retailers and manufacturers to increase global sales, today announced its financial results for the fourth quarter and full year ended December 31, 2013.
“We are pleased to report a record fourth quarter with total revenue of $20.5 million and a 30% year-over-year increase in core revenue. Full-year 2013 total revenue was $68.0 million with a 29% year-over-year increase in core revenue,” said Scot Wingo, Chief Executive Officer ofChannelAdvisor. “Our revenue growth accelerated due to the secular e-commerce trends, as well as increased fragmentation and complexity. In 2013, we grew our customer base 26%, adding 501 customers and ending the year with 2,429 customers. This illustrates that retailers are partnering with ChannelAdvisor as their strategic cloud-based platform for managing and optimizing their e-commerce channels. With the solid success we have seen from our increased investments in sales and marketing, we plan to continue this strategy in 2014 in order to further capitalize on the significant opportunity ahead of us.”
Fourth Quarter 2013 Financial Results
- Total revenue of $20.5 million for the fourth quarter of 2013 increased 28 percent compared with total revenue of $16.0 million in the fourth quarter of 2012.
- Core revenue increased by 30 percent to $20.1 million from $15.4 million in the fourth quarter of 2012. The company’s method for calculating this and other key operating metrics that it reports is included later in this press release.
- GAAP net loss was $(8.6) million compared with net income of $0.6 million in the fourth quarter of 2012. GAAP net loss per share was$(0.38), based on 22.7 million weighted average diluted shares outstanding, compared with net income per share of $0.04, based on 16.0 million weighted average diluted shares outstanding in the year-ago period.
- Non-GAAP net loss, which excludes the impact of non-cash stock-based compensation expense and loss on extinguishment of debt, was$(4.8) million compared with non-GAAP net income of $0.9 million for the fourth quarter of 2012. Non-GAAP net loss per share was $(0.21) for the fourth quarter of 2013, based on 22.7 million weighted average diluted shares outstanding, compared with non-GAAP net income per share of $0.05 for the fourth quarter of 2012, based on 16.0 million weighted average diluted shares outstanding. Per share figures for the fourth quarter of 2012 assume that the company’s pre-IPO preferred stock was converted to common stock at the beginning of the quarter.
- Adjusted EBITDA, a non-GAAP measure, was $(3.2) million for the fourth quarter of 2013 compared with $1.9 million for the fourth quarter of 2012. Adjusted EBITDA excludes depreciation, amortization, income tax, interest and stock-based compensation expenses, as well as loss on extinguishment of debt.
- Cash at quarter end totaled $104.4 million, compared with $90.3 million at the end of the third quarter of 2013. The increase was primarily due to proceeds from our registered public follow-on offering in November, partially offset by the repayment of our debt and investments in our long-term growth.
Full Year 2013 Financial Results
- Total revenue of $68.0 million for the year increased 27 percent compared with total revenue of $53.6 million in 2012.
- Core revenue increased by 29 percent to $66.2 million from $51.2 million in 2012.
- GAAP net loss was $(20.6) million compared with a net loss of $(4.9) million in the year ended 2012. GAAP net loss per share was $(1.51), based on 13.7 million weighted average shares outstanding, compared with a net loss per share of $(4.23), based on 1.2 million weighted average shares outstanding in the year-ago period.
- Non-GAAP net loss was $(15.4) million compared with a non-GAAP net loss of $(4.3) million for the year ended 2012. Non-GAAP net loss per share was $(0.80) for 2013, based on 19.2 million weighted average shares outstanding, compared with a non-GAAP net loss per share of$(0.30) for 2012, based on 14.6 million weighted average shares outstanding. Per share figures for 2012 assume that the company’s pre-IPO preferred stock was converted to common stock at the beginning of the year.
- Adjusted EBITDA was $(8.5) million in 2013 compared with $(0.3) million in 2012.
Recent Business Highlights
- Added 142 net core customers in the fourth quarter. Total core customer count was 2,429 at the end of the fourth quarter, an increase of 26 percent from 1,928 core customers at the end of the fourth quarter of 2012.
- Average revenue per core customer, calculated on a trailing twelve-month basis, increased 9 percent to $30,670 at the end of the fourth quarter, compared with $28,050 at the end of the fourth quarter of 2012.
- Fixed subscription fees were 67 percent of total revenue and variable subscription fees were 33 percent of total revenue for 2013. This compares to 61 percent and 39 percent, respectively, for 2012.
- Subscription dollar retention rate, the primary metric that we use to measure customer retention, exceeded 100 percent for the quarter, consistent with recent performance.
- Processed $4.4 billion in total gross merchandise value in 2013, an increase of 26 percent from 2012.
- Added new top-tier customers including Alex & Ani, BlueStem Brands, Quiksilver, TireBuyer.com and WMF Americas Group, Inc.
- Expanded Webstores Amplifier solution with the addition of support for Shopify, allowing customers to maintain a single system of record within the ChannelAdvisor platform while automatically pushing inventory to a Shopify store.
- Participated at the 2013 SEMA Auto Show at the Las Vegas Convention Center.
- Recognized by the North Carolina Technology Association (NCTA) as the winner of this year’s NCTA 21 Software Company of the Year award.
- Appointed industry veteran James Huang as managing director for Greater China.
Based on information available as of today, ChannelAdvisor is issuing the following guidance for the first quarter and full year of 2014:
First Quarter 2014
- Total revenue between $18.7 million and $19.0 million.
- Adjusted EBITDA between $(8.5) million and $(7.0) million.
- Stock-based compensation expense between $1.5 million and $2.0 million.
- 24.1 million weighted average shares outstanding.
Full Year 2014
- Total revenue between $84.6 million and $85.4 million.
- Adjusted EBITDA between $(19.0) million and $(15.0) million.
- Stock-based compensation expense between $7.0 million and $9.0 million.
- 24.4 million weighted average shares outstanding.
Conference Call Information
|What:||ChannelAdvisor fourth quarter and full year 2013 financial results conference call|
|When:||Thursday, February 6, 2014|
|Time:||5:00 p.m. ET|
|Live Call:||(866) 700-6293, Passcode 79225744, Domestic|
|(617) 213-8835, Passcode 79225744, International|
|Replay:||(888) 286-8010, Passcode 17499170, Domestic|
|(617) 801-6888, Passcode 17499170, International|
|Webcast:||http://ir.channeladvisor.com (live and replay)|
The replay will be available until February 20, 2014.
Key Operating Metrics
Core revenue excludes revenue attributable to the products from two small legacy acquisitions, both of which occurred prior to 2008, which we do not consider to be a core part of our strategic focus going forward.
Number of core customers includes all customers who subscribe to at least one of our solutions other than the non-core, legacy products.
Average revenue per core customer is total core revenue divided by the average monthly number of core customers during the period.
Subscription dollar retention rate is calculated for a particular period by establishing the cohort of core customers that had active contracts as of the end of the prior period. We then calculate our subscription dollar retention rate by taking the amount of fixed subscription revenue we recognized for the cohort in the period for which we are reporting the rate and dividing it by the fixed subscription revenue we recognized for the same cohort in the prior period. For this purpose, we do not include any non-core revenue, any variable subscription fees paid by our customers or any implementation fees.
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: core revenue, non-GAAP net (loss) income, non-GAAP net (loss) income per share and adjusted EBITDA.
ChannelAdvisor believes that these non-GAAP measures of financial results provide useful information to management and investors relating to ChannelAdvisor’s financial condition and results of operations. The company’s management uses these non-GAAP measures to compare the company’s performance to that of prior periods for trend analyses, and for budgeting and planning purposes. The company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors, and that it allows for greater transparency with respect to key metrics used by management in its financial and operational decision-making.
Management of the company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses that are required by GAAP to be recorded in the company’s financial statements. In order to compensate for these limitations, management presents non-GAAP financial measures together with GAAP results. Non-GAAP measures should be considered in addition to results and guidance prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release. ChannelAdvisor urges investors to review the reconciliation and not to rely on any single financial measure to evaluate the company’s business. In addition, other companies, including companies in our industry, may calculate similarly named non-GAAP measures differently than we do, which limits their usefulness in comparing our financial results with theirs. With respect to our expectations under “Business Outlook” above, reconciliation of non-GAAP Adjusted EBITDA guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from this non-GAAP measure. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.