6 May, 2021 ChannelAdvisor Reports First Quarter 2021 Results; Revenue and Adjusted EBITDA Significantly Exceed Guidance
Total revenue growth accelerated to 22% year-over-year
Subscription revenue growth accelerated to 17% year-over-year
Revenue from brands increased 39% year-over-year
Research Triangle Park, NC – May 6, 2021 – ChannelAdvisor Corporation (NYSE: ECOM), a leading provider of cloud-based e-commerce solutions that enable brands and retailers to increase global sales, today reported financial results for the quarter ended March 31, 2021.
First Quarter 2021 Highlights
- Total revenue increased 22% year-over-year to $39.2 million
- Subscription revenue growth accelerated to 17% year-over-year
- Brands revenue increased 39% year-over-year
- GAAP net income was $5.5 million, or $0.18 per diluted share based on 31.1 million diluted
weighted average shares outstanding
- Operating cash flow increased 46% year-over-year to $8.4 million
- Cash and cash equivalents were $82.4 million, an increase of $26.0 million since March 31, 2020 and an increase of $10.8 million since December 31, 2020
- Deferred revenue increased by a record amount to $25.4 million, up $6.1 million since March 31, 2020 and up $2.6 million since December 31, 2020
- Adjusted EBITDA increased 41% year-over-year to $9.2 million
- Adjusted EBITDA margin was 23%, up three points year-over-year
- Free cash flow was $7.4 million, or $0.24 per diluted share based on 31.1 million diluted weighted average shares outstanding
“Q1 marked another quarter of exceptional financial results and meaningful progress on our brands strategy, underpinned by accelerating momentum across our business,” said David Spitz, ChannelAdvisor’s chief executive officer. “Revenue and adjusted EBITDA both significantly exceeded our guidance for the quarter, driven by continued strong execution, product innovation, and robust e-commerce volumes. Our strategy drove success for our customers and rapid revenue growth from brands, with revenue from brands up 39% year over year during the quarter. Continued strength in sales, especially with brands, combined with excellent customer expansion and retention, drove record net bookings and the third consecutive quarter of acceleration in subscription revenue growth. Our strategy of helping accelerate brands’ digital transformation has continued to pay off and we remain excited about our growth prospects going forward.”
Recent Business Highlights
We believe the following highlights are additional indicators of our position as a leading digital distribution platform for brands:
- Continued product innovation: To help Walmart sellers save valuable time and resources by managing their advertising campaigns in the same platform as their listings, ChannelAdvisor now offers powerful automation tools for Walmart Connect. ChannelAdvisor also launched Third Party Seller Analysis, a new Brand Analytics premium feature that can help brands increase visibility of third-party sellers on retail sites and marketplaces such as Amazon and Walmart.
- Continued channel expansion: ChannelAdvisor remains laser-focused on global marketplace expansions to help address the evolving business needs of brands and retailers worldwide. This ongoing commitment to marketplace expansion is evident through the broadening of support of Elkjøp (FI, SE, and DK) and Lazada (PH, VN, SG, TH, ID, MY) in addition to new marketplace integrations with Åhléns (SE), Amazon Poland (PL), Back Market (UK), Beyond (US), Exelon (US), Joom (FR), NBCUniversal Checkout (US), PopIn Border (KR), and Zalando (CZ and IE). The company also added support for first-party integrations with AAFES (US), Aldi (DE), Best Buy Canada (Consignment), Hofer (AT), Tractor Supply (US), Wayfair (CA), and Zappos (US).
- Industry leadership: Selected by Google to join its exclusive Google Partners International Growth program, a network of best-in-class providers with a track record in helping brands and retailers expand their reach and capture new audiences globally. With comprehensive insight into expanding abroad, ChannelAdvisor’s long-standing alliance with Google can help serve as a key differentiator for brands and retailers seeking a competitive edge.
- New customers: ChannelAdvisor recently added notable new customers including Fitbit, Yamaha Music, Viewsonic, John West Food, Fissler and strategic partner Authentic Brands Group. ChannelAdvisor also expanded its relationship with customers such as Tervis Tumbler, Shiseido, and Gant AB.
Based on the information available as of today, ChannelAdvisor is issuing guidance for its second quarter 2021.
|(in millions, except percentages)||Q2 2021|
|Revenue||$39.8 – $40.2|
|Y/Y Growth||6% – 7%|
|Adjusted EBITDA||$7.7 – $8.1|
|As a Percentage of Revenue (at the midpoint)||20%|
|Stock-based Compensation Expense||$3.1 – $3.5|
|Weighted Average Shares Outstanding||30.0|
Refer to the “Adjusted EBITDA Guidance Reconciliation” table included with the financial tables at the end of this release for the reconciliation to the most comparable GAAP financial measure.
Conference Call Information
|What:||ChannelAdvisor First Quarter 2021 Financial Results Conference Call|
|When:||Thursday, May 6, 2021|
|Time:||8:00 a.m. ET|
|Live Call:||(855) 638-4821, Passcode 1697769, Toll Free|
|(704) 288-0612, Passcode 1697769, Toll|
|Webcast:||http://ir.channeladvisor.com (live and replay)|
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: adjusted EBITDA and adjusted EBITDA margin, and free cash flow and free cash flow per diluted share. We also may provide information regarding non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations and non-GAAP operating margin. Adjusted EBITDA and adjusted EBITDA margin exclude depreciation, amortization, income tax expense, net interest expense, stock-based compensation expense, and for 2021 only, acquisition-related contingent consideration fair value adjustment. Adjusted EBITDA margin is equal to adjusted EBITDA divided by GAAP revenue. Free cash flow is cash flow from operations, reduced by purchases of property and equipment and payment of capitalized software development costs. Non-GAAP gross profit, non-GAAP gross margin and non-GAAP operating expenses exclude stock-based compensation expense and, as applicable, acquisition-related contingent consideration fair value adjustment. Non-GAAP gross margin is equal to non-GAAP gross profit divided by GAAP revenue. Non-GAAP operating margin is equal to non-GAAP income from operations divided by GAAP revenue.
ChannelAdvisor believes that these non-GAAP measures of financial results provide useful information to management and investors relating to ChannelAdvisor’s financial condition and results of operations. The company’s management uses these non-GAAP measures to compare the company’s performance to that of prior periods for trend analyses, and for budgeting and planning purposes. The company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors, and that it allows for greater transparency with respect to key metrics used by management in its financial and operational decision-making.
Management of the company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses that are required by GAAP to be recorded in the company’s financial statements. In order to compensate for these limitations, management presents non-GAAP financial measures together with GAAP results. Non-GAAP measures should be considered in addition to results and guidance prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release. ChannelAdvisor urges investors to review the reconciliation and not to rely on any single financial measure to evaluate the company’s business. In addition, other companies, including companies in our industry, may calculate similarly named non-GAAP measures differently than we do, which limits their usefulness in comparing our financial results with theirs.
ChannelAdvisor (NYSE: ECOM) is a leading e-commerce cloud platform whose mission is to connect and optimize the world’s commerce. For nearly two decades, ChannelAdvisor has helped brands and retailers worldwide improve their online performance by expanding sales channels, connecting with consumers around the world, optimizing their operations for peak performance and providing actionable analytics to improve competitiveness. Thousands of customers depend on ChannelAdvisor to securely power their sales and optimize fulfillment on channels such as Amazon, eBay, Facebook, Google, Walmart, and hundreds more. For more information, visit www.channeladvisor.com.
Cautionary Language Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook and guidance for the second quarter 2021 and expectations regarding our growth and that of the e-commerce industry. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections, as well as the current beliefs and assumptions of management. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond ChannelAdvisor’s control. ChannelAdvisor’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in ChannelAdvisor’s Annual Report on Form 10-K for the year ended December 31, 2020 and its Quarterly Report on Form 10-Q that will be filed for the quarter ended March 31, 2021, as well as other documents that may be filed by the company from time to time with the Securities and Exchange Commission. These documents are available on the ‘SEC Filings’ section of the Investor Relations page of our website at http://ir.channeladvisor.com. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the impact of the COVID-19 pandemic on global economic conditions and on our revenues and financial performance; our reliance for a significant portion of our revenue on sales by our customers on the Amazon and eBay marketplaces and through advertisements on Google; our ability to respond to rapid changes in channel technologies or requirements; our ability to compete successfully against current and future competitors, which could include the channels themselves; our reliance in part on a pricing model under which a portion of the subscription fees we receive from customers is variable, based upon the amount of transaction volume that those customers process through our platform; our reliance on non-redundant data centers and cloud computing providers to deliver our SaaS solutions; the potential that the e-commerce market does not grow, or grows more slowly than we expect, particularly on the channels that our solutions support; challenges and risks associated with our international operations; our ability to align our expenses with revenue; and risks related to security or privacy breaches. The forward-looking statements included in this press release represent ChannelAdvisor’s views as of the date of this press release. ChannelAdvisor undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, these forward-looking statements should not be relied upon as representing ChannelAdvisor’s views as of any date subsequent to the date of this press release.