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TheStreet Open House

ChannelAdvisor Announces Fourth Quarter And Full Year 2013 Financial Results

Stocks in this article: ECOM

About ChannelAdvisor

ChannelAdvisor (NYSE: ECOM) is a leading provider of cloud-based e-commerce solutions that enable online retailers and manufacturers to integrate, manage and optimize their merchandise sales across hundreds of online channels including Amazon, Google, eBay, Facebook and more. Through automation, analytics and optimization, ChannelAdvisor customers can leverage a single inventory feed to more efficiently list and advertise products online, and connect with shoppers to increase sales. Billions of dollars in merchandise value are driven through ChannelAdvisor’s platform every year, and thousands of customers use ChannelAdvisor’s solutions to help grow their businesses. 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 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, 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: 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 two non-redundant data centers 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; and challenges and risks associated with our increasing international operations. 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.

The following schedules are preliminary and subject to change pending the company's filing of its Form 10-K.

 

ChannelAdvisor Corporation and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share and per share data)

 
December 31,
2013   2012
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 104,406 $ 10,865
Accounts receivable, net of allowance of $561 and $191 as of December 31, 2013 and December 31, 2012, respectively 13,951 9,571
Prepaid expenses and other current assets 3,571   2,589  
Total current assets 121,928 23,025
Property and equipment, net 9,088 4,315
Goodwill 16,106 16,106
Intangible assets, net 670 1,245
Restricted cash 685 687
Other assets 309   2,644  
Total assets $ 148,786   $ 48,022  
Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)
Current liabilities:
Accounts payable $ 4,237 $ 1,269
Accrued expenses 7,492 4,650
Deferred revenue 14,093 9,750
Current portion of long-term debt 3,370
Other current liabilities 1,723   980  
Total current liabilities 27,545 20,019
Long-term debt, net of current portion 7,602
Series A and Series C warrants liability 3,235
Long-term capital leases, net of current portion 1,558 1,136
Other long-term liabilities 1,903   1,714  
Total liabilities 31,006 33,706
Commitments and contingencies
Redeemable convertible preferred stock:
Convertible Series A preferred stock, $0.001 par value, 0 and 94,069,763 shares authorized, 0 and 93,821,393 shares issued and outstanding as of December 31, 2013 and December 31, 2012, respectively 18,887
Convertible Series B preferred stock, $0.001 par value, 0 and 40,641,227 shares authorized, issued and outstanding as of December 31, 2013 and December 31, 2012, respectively 18,000
Convertible Series B-1 preferred stock, $0.001 par value, 0 and 5,660,378 shares authorized, issued and outstanding as of December 31, 2013 and December 31, 2012, respectively 3,000
Convertible Series C preferred stock, $0.001 par value, 0 and 80,000,000 shares authorized, 0 and 73,880,351 shares issued and outstanding as of December 31, 2013 and December 31, 2012, respectively   50,608  
Total redeemable convertible preferred stock 90,495
Stockholders’ equity (deficit):
Common stock, $0.001 par value, 100,000,000 and 303,500,000 shares authorized, 23,643,872 and 1,240,193 shares issued and outstanding as of December 31, 2013 and December 31, 2012, respectively 24 1
Additional paid-in capital 218,330 3,584
Accumulated other comprehensive loss (471 ) (289 )
Accumulated deficit (100,103 ) (79,475 )
Total stockholders’ equity (deficit) 117,780   (76,179 )
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) $ 148,786   $ 48,022  
 
 

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,
2013     2012 2013     2012
(unaudited) (unaudited) (unaudited)
Revenue $ 20,486 $ 15,993 $ 68,004 $ 53,587
Cost of revenue (1) 5,117   4,042   18,088   14,749  
Gross profit 15,369 11,951 49,916 38,838
Operating expenses (1):
Sales and marketing 11,060 6,161 37,458 24,326
Research and development 3,787 2,576 12,669 10,109
General and administrative 5,513   2,390   14,154   8,252  
Total operating expenses 20,360   11,127   64,281   42,687  
(Loss) income from operations (4,991 ) 824 (14,365 ) (3,849 )
Other (expense) income:
Loss on extinguishment of debt (3,112 ) (3,112 )
Interest expense, net (354 ) (357 ) (2,960 ) (1,185 )
Other income, net (5 ) 6   12   31  
Total other (expense) income (3,471 ) (351 ) (6,060 ) (1,154 )
(Loss) income before income taxes (8,462 ) 473 (20,425 ) (5,003 )
Income tax expense (benefit) 147   (153 ) 203   (70 )
Net (loss) income $ (8,609 ) $ 626   $ (20,628 ) $ (4,933 )
Net (loss) income per share:
Basic and diluted $ (0.38 ) $ 0.04 $ (1.51 ) $ (4.23 )
Weighted average common shares outstanding:
Basic 22,724,943 1,200,109 13,695,804 1,164,942
Diluted 22,724,943 15,960,013 13,695,804 1,164,942
 
(1) Includes stock-based compensation as follows:
Cost of revenue $ 45 $ 26 $ 204 $ 64
Sales and marketing 168 103 607 224
Research and development 84 31 348 105
General and administrative 369   85   940   245  
$ 666   $ 245   $ 2,099   $ 638  
 
 

ChannelAdvisor Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

 
Year Ended December 31,
2013   2012
(unaudited)
Cash flows from operating activities
Net loss $ (20,628 ) $ (4,933 )
Adjustments to reconcile net loss to net cash and cash equivalents (used in) provided by operating activities:
Depreciation and amortization 3,722 2,903
Loss on extinguishment of debt 3,112
Bad debt expense 527 162
Deferred income taxes (12 ) 30
Change in fair value of preferred stock warrants 1,052 5
Accretion of debt discount 547 372
Non-cash stock-based compensation expense 2,099 638
Change in lease incentive obligation (21 ) (21 )
Amortization of debt issuance costs 38 57
Change in deferred rent 51 544
Changes in assets and liabilities:
Accounts receivable (4,917 ) (1,966 )
Prepaid expenses and other assets (1,026 ) (1,102 )
Restricted cash (1 ) 199
Accounts payable and accrued expenses 5,672 381
Deferred revenue 4,471   3,922  
Net cash and cash equivalents (used in) provided by operating activities (5,314 ) 1,191
 
Cash flows from investing activities
Purchases of property and equipment (3,711 ) (1,930 )
Payment of internal-use software development costs (1,507 ) (164 )
Net cash and cash equivalents used in investing activities (5,218 ) (2,094 )
 
Cash flows from financing activities
Proceeds from issuance of common stock, net of underwriting discounts and commissions 118,463
Proceeds from issuance of debt, net of debt issuance costs 9,873
Repayment of debt and capital leases (14,230 ) (1,548 )
Payment of debt extinguishment costs (1,200 )
Payment of deferred offering costs (2,909 ) (1,548 )
Proceeds from exercise of common stock warrants 1,592
Proceeds from exercise of stock options 2,448 222
Repurchase and retirement of common stock   (193 )
Net cash and cash equivalents provided by financing activities 104,164 6,806
 
Effect of currency exchange rate changes on cash (91 ) (36 )
Net increase in cash and cash equivalents 93,541 5,867
 
Cash and cash equivalents, beginning of year 10,865   4,998  
Cash and cash equivalents, end of year $ 104,406   $ 10,865  
 
 
Reconciliation of Core Revenue (Non-GAAP) to Revenue (GAAP)
(unaudited; in thousands)
     
Three Months Ended December 31, Year Ended December 31,
2013   2012 2013   2012
Core revenue $ 20,073 $ 15,438 $ 66,215 $ 51,224
Non-core revenue 413   555   1,789   2,363
Total revenue $ 20,486   $ 15,993   $ 68,004   $ 53,587
 
 
Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net (Loss) Income and Non-GAAP Net (Loss) Income Per Share
(unaudited; in thousands, except share and per share data)
       

Three Months Ended December 31,

Year Ended December 31,
2013   2012 2013   2012
Net (loss) income (GAAP) $ (8,609 ) $ 626 $ (20,628 ) $ (4,933 )
Plus: stock-based compensation 666 245 2,099 638
Plus: loss on extinguishment of debt 3,112     3,112    
Net (loss) income (Non-GAAP) $ (4,831 ) $ 871 $ (15,417 ) $ (4,295 )
 
Net (loss) income per share, basic (Non-GAAP):
Weighted average common shares outstanding, basic 22,724,943 1,200,109 13,695,804 1,164,942
Additional weighted average shares giving effect to conversion of preferred stock at the beginning of the period   13,388,066   5,465,265   13,385,257  
Shares used in computing non-GAAP net loss per share, basic 22,724,943   14,588,175   19,161,069   14,550,199  
Net (loss) income per share, basic (Non-GAAP) $ (0.21 ) $ 0.06   $ (0.80 ) $ (0.30 )
 
Net (loss) income per share, diluted (Non-GAAP):
Weighted average common shares outstanding, diluted 22,724,943 15,960,013 13,695,804 1,164,942
Additional weighted average shares giving effect to conversion of preferred stock at the beginning of the period     5,465,265   13,385,257  
Shares used in computing non-GAAP net loss per share, diluted 22,724,943   15,960,013   19,161,069   14,550,199  
Net (loss) income per share, diluted (Non-GAAP) $ (0.21 ) $ 0.05   $ (0.80 ) $ (0.30 )
 
 
Reconciliation of Net (Loss) Income to Adjusted EBITDA
(unaudited; in thousands)
       
Three Months Ended December 31, Year Ended December 31,
2013   2012 2013     2012
Net (loss) income $ (8,609 ) $ 626 $ (20,628 ) $ (4,933 )
Adjustments:
Interest expense, net 354 357 2,960 1,185
Income tax expense (benefit) 147 (153 ) 203 (70 )
Depreciation and amortization expense 1,103   802   3,722   2,903  
Total adjustments 1,604   1,006   6,885   4,018  
EBITDA (7,005 ) 1,632 (13,743 ) (915 )
Stock-based compensation expense 666 245 2,099 638
Loss on extinguishment of debt 3,112     3,112    
Adjusted EBITDA $ (3,227 ) $ 1,877   $ (8,532 ) $ (277 )
 
 
Reconciliation of Core Revenue Growth (USD) to Adjusted Core Revenue Growth (Local Currency)
(unaudited)
 
    Three Months Ended     Year Ended
March 31, 2013     June 30, 3013     September 30, 2013     December 31, 2013 December 31, 2013
Core revenue growth (USD) 25.6 % 31.4 % 29.7 % 30.0 % 29.3 %
Less: foreign currency translation loss (0.3 ) (0.8 ) (1.1 ) (1.0 ) (0.8 )
Adjusted core revenue growth (local currency) 25.9 % 32.2 % 30.8 % 31.0 % 30.1 %
 




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