Financial Release
ChannelAdvisor Reports Record Fourth Quarter and Full Year 2020 Results; Revenue and Adjusted EBITDA Significantly Exceed Guidance
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 inJuly 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
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 withFantastic 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 includingChanel andGibson 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,
(in millions, except percentages) | Q1 2021 |
Revenue | |
Adjusted EBITDA | |
As a Percentage of Revenue (at the midpoints for Q1) | 19% |
Stock-based Compensation Expense | |
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: | |
Time: | |
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
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.
About
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
Consolidated Balance Sheets
(in thousands, except share and per share data)
2020 | 2019 | ||||||||
Assets | (unaudited) | ||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 71,545 | $ | 51,785 | |||||
Accounts receivable, net of allowance of |
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 | |||||||
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, |
— | — | |||||||
Common stock, |
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 |
Consolidated Statements of Operations
(in thousands, except share and per share data)
Three Months Ended |
Year Ended December 31, | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
(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 |
Consolidated Statements of Cash Flows
(in thousands)
Year Ended |
||||||||
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 |
Year Ended |
||||||||||||||
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 |
Year Ended |
||||||||||||||
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 |
Year Ended |
||||||||||||||
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 |
Year Ended |
|||||||||||||||||
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 |
Year Ended |
||||||||||||||||||
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
Source: ChannelAdvisor Corporation