ChannelAdvisor Reports Record Fourth Quarter and Full Year 2021 Results


Q4 brands subscription revenue increased 42% year-over-year, a new record, representing 48% of total quarterly subscription revenue

Q4 total revenue of $45.4 million, a new record, up 13% year-over-year

Q4 subscription revenue increased 22% year-over-year

2021 operating cash flow of $34.3 million

RESEARCH TRIANGLE PARK, N.C., Feb. 10, 2022 (GLOBE NEWSWIRE) -- ChannelAdvisor Corporation (NYSE: ECOM), a leading provider of cloud-based e-commerce solutions that enable brands and retailers to increase global sales, today reported financial results for the fourth quarter and full year ended December 31, 2021.

Fourth Quarter 2021 Highlights
GAAP

  • Record total revenue of $45.4 million, up 13% year-over-year
  • Subscription revenue increased 22% year-over-year
  • Brands revenue increased 34% year-over-year
  • Brands subscription revenue grew 42% year-over-year and represented 48% of total quarterly subscription revenue
  • Net income of $33.7 million includes a tax benefit of $28.7 million driven primarily by a $29.4 million release of the valuation allowance recorded against deferred tax assets

Non-GAAP

  • Adjusted EBITDA of $11.2 million
  • Adjusted EBITDA margin of 25%

Full Year 2021 Highlights
GAAP

  • Record total revenue of $167.7 million, up 16% year-over-year
  • Subscription revenue increased 23% year-over-year
  • Brands revenue increased 39% year-over-year and reached 40% of total revenue, a new fiscal year high
  • Brands subscription revenue growth of 47% year-over-year and represented 45% of total subscription revenue for the year
  • Cash and cash equivalents of $100.6 million at year end, an increase of $29.0 million for the year
  • Operating cash flow of $34.3 million

Non-GAAP

  • Adjusted EBITDA of $37.9 million
  • Adjusted EBITDA margin of 23%
  • Free cash flow of $29.2 million, or $0.93 per diluted share based on 31.5 million diluted weighted average shares outstanding

“Q4 marked an outstanding finish to an amazing year for ChannelAdvisor,” said David Spitz, ChannelAdvisor’s chief executive officer. “Our strategic focus on brands continued to drive solid results, with record revenue, adjusted EBITDA that significantly exceeded the high end of our guidance, and strong free cash flow that pushed our cash balance above $100 million. Our land and expand strategy with brands fueled these results, as we saw a strong increase in brands customer count and continued growth in average revenue per customer and annual recurring revenue during the year. We have a large, unpenetrated market opportunity, and believe with our continued focus on product innovation, channel expansion, strong sales and revenue retention, as well as a debt free balance sheet, that we’re well positioned to drive sustainable revenue growth and strong margins in 2022 and beyond.”

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: ChannelAdvisor introduced new interactive analytics in its Advertising Console to help brands quickly discover trending information on all retail media campaigns. ChannelAdvisor also launched new options for advertisers with native integration for TikTok feeds and additional support for Walmart Sponsored Products Campaigns through Item BuyBox and Carousel Placements. For its recently launched Commerce Network, an in-platform experience that enables online channels to easily scout, engage and grow with brands and retailers, ChannelAdvisor launched enhancements including Multiple Seller Profiles which enables sellers to differentiate how their brands, verticals, and business units are discovered by and promoted to different channels.

  • Continued Channel Expansion: ChannelAdvisor remains laser-focused on global channel expansions to help address the evolving business needs of brands and retailers worldwide. With the recent addition of many new integrations, ChannelAdvisor now supports over 300 channels. New global integrations include AliExpress in China, Brazil, France, Italy, Spain and Turkey; Back Market in Germany, Spain, Greece, Ireland, Italy, Portugal, Sweden and Slovakia; Hudson Bay in Canada and the U.S.; and Idealo and Limango in Germany. The company also added support for first-party integrations with Amazon across 17 countries, and in the U.S. with DSW, Journey’s, Martha Stewart and Urban Outfitters.

  • Industry leadership: Named the #1 channel management vendor for the 10th consecutive year in Digital Commerce 360’s ‘Leading Vendors to the Top 1000 Retailers’ report. ChannelAdvisor is also ranked as the fourth-leading search engine marketing vendor, and a leading provider of online advertising services.

  • New customers: ChannelAdvisor recently added notable new customers including Reynolds Consumer Products, Crown Pet Foods, Arnott’s Biscuits and De Longhi. ChannelAdvisor also expanded its relationship with customers such as Viewsonic, Sennheiser and Clorox.

Financial Outlook

Based on the information available as of today, ChannelAdvisor is issuing guidance for its first quarter 2022.

(in millions, except percentages)Q1 2022
Revenue$41.9 - $42.3
Adjusted EBITDA$6.8 - $7.2
As a Percentage of Revenue (at the midpoint for Q1)17%
Stock-based Compensation Expense$3.0 - $3.4
Diluted Weighted Average Shares Outstanding32.2 

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 2021 Financial Results Conference Call
When:Thursday, February 10, 2022
Time:8:00 a.m. ET
Live Call:(855) 638-4821, Passcode 9283479, Toll free
 (704) 288-0612, Passcode 9283479, 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 (benefit) expense, net interest expense, and stock-based compensation expense. For 2021 only, adjusted EBITDA excludes the change in fair value of acquisition-related contingent consideration (which increased GAAP operating income), and also excludes lease abandonment and related costs and subsidiary liquidation costs. For 2020 only, adjusted EBITDA excludes transaction costs associated with our July 2020 acquisition of BlueBoard. 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 the other items excluded from adjusted EBITDA described above, as applicable. 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 financial measures 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 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 multichannel commerce platform whose mission is to connect and optimize the world’s commerce. For over two decades, ChannelAdvisor has helped brands and retailers worldwide improve their online performance by expanding sales channels, connecting with consumers across the entire buying cycle, optimizing their operations for peak performance, and providing actionable analytics to improve competitiveness. Thousands of customers depend on ChannelAdvisor to securely power their e-commerce operations on channels such as Amazon, eBay, Facebook, Google, Walmart, and hundreds more. For more information, visit www.channeladvisor.com.

Cautionary Language Concerning Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook and guidance for the first quarter 2022 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, 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.


ChannelAdvisor Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)

 December 31,
  2021   2020 
Assets(unaudited)  
Current assets:   
Cash and cash equivalents$100,567  $71,545 
Accounts receivable, net of allowance of $279 and $417 as of December 31, 2021 and 2020, respectively 28,886   24,705 
Prepaid expenses and other current assets 15,497   13,874 
Total current assets 144,950   110,124 
Operating lease right of use assets 2,856   8,141 
Property and equipment, net 7,682   8,707 
Goodwill 30,042   30,990 
Intangible assets, net 3,079   4,155 
Deferred contract costs, net of current portion 17,951   14,040 
Long-term deferred tax assets, net 32,616   3,551 
Other assets 796   953 
Total assets$239,972  $180,661 
Liabilities and stockholders' equity   
Current liabilities:   
Accounts payable$1,457  $158 
Accrued expenses 12,644   14,008 
Deferred revenue 29,942   22,819 
Other current liabilities 4,831   6,029 
Total current liabilities 48,874   43,014 
Operating lease liabilities, net of current portion 1,182   5,394 
Other long-term liabilities 1,718   2,162 
Total liabilities 51,774   50,570 
Commitments and contingencies   
Stockholders' equity:   
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding as of December 31, 2021 and 2020, respectively     
Common stock, $0.001 par value, 100,000,000 shares authorized, 30,188,595 and 29,020,424 shares issued and outstanding as of December 31, 2021 and 2020, respectively 30   29 
Additional paid-in capital 300,875   288,842 
Accumulated other comprehensive loss (2,237)  (1,095)
Accumulated deficit (110,470)  (157,685)
Total stockholders' equity 188,198   130,091 
Total liabilities and stockholders' equity$239,972  $180,661 


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

 Three Months Ended December 31, Year Ended December 31,
 2021   2020   2021   2020
 (unaudited) (unaudited) (unaudited)  
Revenue$45,445  $40,312  $167,729  $145,072
Cost of revenue (1) (2) 10,191   8,547   38,232   30,354
Gross profit 35,254   31,765   129,497   114,718
Operating expenses (1) (2):       
Sales and marketing 15,482   14,469   60,755   52,905
Research and development 5,583   4,837   22,382   18,990
General and administrative 8,640   5,997   27,432   23,739
Total operating expenses 29,705   25,303   110,569   95,634
Income from operations 5,549   6,462   18,928   19,084
Other (expense) income:       
Interest (expense) income, net (31)  (35)  (127)  175
Other (expense) income, net (572)  (35)  (736)  9
Total other (expense) income (603)  (70)  (863)  184
Income before income taxes 4,946   6,392   18,065   19,268
Income tax (benefit) expense (28,723)  272   (29,150)  443
Net income$33,669  $6,120  $47,215  $18,825
Net income per share:       
Basic$1.12  $0.21  $1.59  $0.66
Diluted$1.06  $0.20  $1.50  $0.63
Weighted average common shares outstanding:       
Basic 30,096,827   29,006,116   29,774,172   28,616,401
Diluted 31,748,091   30,597,322   31,506,080   30,035,261
        
(1) Includes stock-based compensation as follows:       
Cost of revenue$71  $212  $736  $972
Sales and marketing 679   731   3,423   2,792
Research and development 376   460   2,245   2,168
General and administrative 1,169   1,065   5,630   4,268
 $2,295  $2,468  $12,034  $10,200
        
(2) Includes depreciation and amortization as follows:       
Cost of revenue$1,125  $1,144  $4,534  $4,211
Sales and marketing 76   159   432   624
Research and development 29   62   168   257
General and administrative 273   493   1,433   1,421
 $1,503  $1,858  $6,567  $6,513


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

 Year Ended December 31,
  2021   2020 
 (unaudited)  
Cash flows from operating activities   
Net income$47,215  $18,825 
Adjustments to reconcile net income to cash and cash equivalents provided by operating activities:   
Depreciation and amortization 6,567   6,513 
Bad debt expense 59   525 
Stock-based compensation expense 12,034   10,200 
Deferred income taxes (29,477)  (39)
Other items, net 200   (829)
Changes in assets and liabilities, net of effects from acquisition:   
Accounts receivable (4,358)  (2,143)
Prepaid expenses and other assets 110   (1,728)
Deferred contract costs (5,875)  (2,572)
Accounts payable and accrued expenses 76   4,270 
Deferred revenue 7,701   1,284 
Cash and cash equivalents provided by operating activities 34,252   34,306 
Cash flows from investing activities   
Acquisition, net of cash acquired    (8,467)
Purchases of property and equipment (1,609)  (1,704)
Payment of software development costs (3,395)  (3,034)
Cash and cash equivalents used in investing activities (5,004)  (13,205)
Cash flows from financing activities   
Repayment of finance leases and debt (15)  (1,808)
Proceeds from exercise of stock options 5,742   3,825 
Payment of statutory tax withholding related to net-share settlement of restricted stock units (5,743)  (3,294)
Payment of line of credit financing costs    (187)
Cash and cash equivalents used in financing activities (16)  (1,464)
Effect of currency exchange rate changes on cash and cash equivalents (210)  123 
Net increase in cash and cash equivalents 29,022   19,760 
Cash and cash equivalents, beginning of year 71,545   51,785 
Cash and cash equivalents, end of year$100,567  $71,545 


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 December 31, Year Ended December 31,
  2021   2020   2021   2020 
Revenue$45,445  $40,312  $167,729  $145,072 
        
Gross profit (GAAP)$35,254  $31,765  $129,497  $114,718 
Plus: Stock-based compensation expense included within cost of revenue 71   212   736   972 
Gross profit (Non-GAAP)$35,325  $31,977  $130,233  $115,690 
Gross margin (GAAP) 78%  79%  77%  79%
Gross margin (Non-GAAP) 78%  79%  78%  80%


Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses
(unaudited; in thousands)
 Three Months Ended December 31, Year Ended December 31,
  2021  2020  2021   2020
Operating expenses (GAAP)$29,705 $25,303 $110,569  $95,634
Less: Stock-based compensation expense included within operating expenses 2,224  2,256  11,298   9,228
Plus: Contingent consideration fair value adjustment included within operating expenses     (1,313)  
Less: Lease abandonment costs included within operating expenses 1,457    1,457   
Less: Subsidiary liquidation costs included within operating expenses 455    455   
Less: Transaction costs in connection with acquisition included within operating expenses   45     488
Operating expenses (Non-GAAP)$25,569 $23,002 $98,672  $85,918


Reconciliation of GAAP Income from Operations and GAAP Operating Margin to
Non-GAAP Income from Operations and Non-GAAP Operating Margin
(unaudited; dollars in thousands)
 Three Months Ended December 31, Year Ended December 31,
  2021   2020   2021   2020 
Revenue$45,445  $40,312  $167,729  $145,072 
        
Income from operations (GAAP)$5,549  $6,462  $18,928  $19,084 
Plus: Stock-based compensation expense 2,295   2,468   12,034   10,200 
Less: Contingent consideration fair value adjustment       (1,313)   
Plus: Lease abandonment costs 1,457      1,457    
Plus: Subsidiary liquidation costs 455      455    
Plus: Transaction costs in connection with acquisition    45      488 
Income from operations (Non-GAAP)$9,756  $8,975  $31,561  $29,772 
Operating margin (GAAP) 12%  16%  11%  13%
Operating margin (Non-GAAP) 21%  22%  19%  21%
        


Reconciliation of Net Income to Adjusted EBITDA
(unaudited; in thousands)
 Three Months Ended December 31, Year Ended December 31,
  2021   2020  2021   2020 
Net income$33,669  $6,120 $47,215  $18,825 
Adjustments:       
Interest (income) expense, net 31   35  127   (175)
Income tax (benefit) expense (28,723)  272  (29,150)  443 
Depreciation and amortization expense 1,503   1,858  6,567   6,513 
Total adjustments (27,189)  2,165  (22,456)  6,781 
EBITDA 6,480   8,285  24,759   25,606 
Stock-based compensation expense 2,295   2,468  12,034   10,200 
Contingent consideration fair value adjustment      (1,313)   
Lease abandonment and related costs 1,941     1,941    
Subsidiary liquidation costs 455     455    
Transaction costs in connection with acquisition    45     488 
Adjusted EBITDA$11,171  $10,798 $37,876  $36,294 


Free Cash Flow Reconciliation
(unaudited; in thousands, except share and per share data)
 Three Months Ended December 31, Year Ended December 31,
  2021   2020   2021   2020 
Cash and cash equivalents provided by operating activities$7,773  $8,321  $34,252  $34,306 
Less: Purchases of property and equipment (484)  (683)  (1,609)  (1,704)
Less: Payment of capitalized software development costs$(818) $(751)  (3,395)  (3,034)
Free cash flow$6,471  $6,887  $29,248  $29,568 
        
Diluted weighted average shares outstanding 31,748,091   30,597,322   31,506,080   30,035,261 
Free cash flow per diluted share$0.20  $0.23  $0.93  $0.98 


Adjusted EBITDA Guidance Reconciliation
(unaudited; in millions)
 First Quarter 2022
 Low High
Net income (estimate)$0.9 $2.0
Adjustments (estimates):   
Interest expense (income), net 0.1  0.0
Income tax expense 0.9  0.8
Depreciation and amortization expense 1.5  1.4
Total adjustments 2.5  2.2
EBITDA 3.4  4.2
Stock-based compensation expense (estimate) 3.4  3.0
Adjusted EBITDA guidance$6.8 $7.2
 

Coordonnées