ChannelAdvisor Corporation, a leading provider of cloud-based e-commerce solutions that enable brands and retailers to increase global sales, reported financial results for the quarter ended September 30, 2020.
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“We delivered strong financial results again in the third quarter, with revenue and adjusted EBITDA that both exceeded our guidance for the quarter,” said David Spitz, ChannelAdvisor’s chief executive officer. “What excites me even more is the strong performance we had in sales, especially with brands, and overall outstanding revenue retention for the quarter, both of which combined to drive an acceleration in fixed revenue growth. Our strategic shift towards brands has continued to pay off, with revenue growth from brands accelerating to 29% year over year for the quarter, and our solid overall execution in the quarter positions us for continued strong performance as we close out the year.”
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Third Quarter 2020 Financial Results
- Revenue: Total revenue was $35.3 million for the third quarter 2020, an increase of 11.4% from the year-ago period. Brands revenue increased 29.3% from the year-ago period and reached a new high of 34.2% of total revenue. Variable revenue was $8.2 million, or 23.2% of total revenue for the third quarter 2020, compared with $5.8 million, or 18.5% of total revenue for the year-ago period. Fixed subscription revenue was $27.1 million, or 76.8% of total revenue for the third quarter 2020, compared with $25.8 million, or 81.5% of total revenue for the year-ago period.
- Gross Profit: GAAP gross profit was $27.6 million, representing a 78.2% gross margin for the third quarter 2020, compared with $24.4 million and 77.1%, respectively, for the year-ago period. Non-GAAP gross profit was $27.8 million, representing a 78.8% non-GAAP gross margin for the third quarter 2020, compared with $24.8 million and 78.4%, respectively, for the year-ago period. For a description of non-GAAP gross profit, non-GAAP gross margin and other non-GAAP measures included in this press release, including their potential limitations, see “Non-GAAP Financial Measures” below.
- Net Income: GAAP net income was $3.7 million for the third quarter 2020, compared with $1.7 million for the year-ago period. GAAP net income per diluted share was $0.12 based on 30.4 million diluted weighted average shares outstanding for the third quarter 2020, compared with $0.06 per diluted share based on 28.8 million diluted weighted average shares outstanding for the year-ago period. Non-GAAP net income was $6.2 million for the third quarter 2020, compared with $3.5 million for the year-ago period. Non-GAAP net income per diluted share was $0.20 based on 30.4 million diluted weighted average shares outstanding for the third quarter 2020, compared with $0.12 based on 28.8 million diluted weighted average shares outstanding for the year-ago period.
- Adjusted EBITDA: Adjusted EBITDA, a non-GAAP measure, was $7.4 million for the third quarter 2020, compared with $5.2 million for the year-ago period. Adjusted EBITDA margin, which is adjusted EBITDA divided by revenue, was 21.1% for the third quarter 2020, compared with 16.3% for the year-ago period. Adjusted EBITDA for the twelve months ended September 30, 2020 totaled $34.8 million.
- Cash: Cash and cash equivalents totaled $66.4 million as of September 30, 2020, compared with $51.8 million as of December 31, 2019. Cash generated from operations was $26.0 million for the nine months ended September 30, 2020, compared with $7.5 million for the year-ago period. Free cash flow, a non-GAAP measure, was $22.7 million for the nine months ended September 30, 2020, compared with $4.8 million for the year-ago period.
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