ChannelAdvisor’s revenue increases 16.3% in Q2
August 6, 2015 03:21 PM
E-commerce services provider has cut its sales staff as it focuses on larger brands and customers. 70% of ChannelAdvisor’s revenue comes from the top third of its customer base, the company said.
The company reported revenue of $24.2 million for the second quarter, up 16.3% from $20.8 million a year ago. ChannelAdvisor reported a $6.5 million net loss for the period compared with a $9.6 million loss in Q2 2014.
CEO David Spitz, who was promoted to the top post in May after serving as president and chief operating officer and working at the company for a decade, told investors Tuesday the company’s strategy of focusing on large retailers with longer sales cycles would ultimately boost profits but could hurt growth rates for a few more quarters. The company sees smaller customers as less stable and aims to garner longer-term revenue from larger ones, he said. Toward that goal, new clients include Asics, Phillips and Hewlett-Packard, he said.
“It's worth remembering that approximately 70% of our revenue comes from the top third of our customer base,” Spitz said on a conference call reporting the earnings results.
Spitz is overseeing the new pricing strategy after succeeding ChannelAdvisor co-founder Scot Wingo, who in May stepped away as CEO to become chairman.
Spitz said he is encouraged by a 4% increase in variable revenue in the quarter, to $5.3 million, due to higher charges, reflecting added ways retailer clients can sell online through ChannelAdvisor. ChannelAdvisor during the quarter added Jet.com, the new online warehouse club that launched last month and AliExpress, the global retail site of Chinese e-commerce giant Alibaba Group, to its platform.
ChannelAdvisor, which specializes in helping retailers sell on web marketplaces like Amazon, eBay, Rakuten Shopping, Walmart.com and others, as well as facilitating sales through comparison shopping sites and search marketing, reported that Amazon topped eBay as ChannelAdvisor’s largest channel partner during the quarter, as measured by gross merchandise volume.
Spitz did not say how many employees were cut, but said ChannelAdvisor has a modestly smaller but more tenured sales team.
In other results for Q2 ended June 30:
- Total customer count was 2,937, up 9.9% from 2,673 customers at the end of Q2 2014.
- Average revenue per customer, calculated on a trailing twelve-month basis, was $32,022 for the second quarter, up 2.8% compared with $31,160 for the second quarter of 2014.
Fixed subscription fees were 78% of total revenue and variable subscription fees were 22% of total revenuecompared with 76% and 24%, respectively, for the year-ago periods. Essentially all customers have both a fixed and variable fee structure. Customers can choose how much GMV (Gross Merchandise Value) they want to pre-purchase, which determines the fixed subscription rate. When customers generate more GMV than expected, a pre-determined variable rate is applied to the additional GMV.
ChannelAdvisor also said its chief financial officer, John Baule, will retire Aug. 31 and remain with the company through Sept. 30 as an adviser. The new CFO is Mark Cook, controller and vice president of finance at open-source technology provider Red Hat. Cook’s previous experience includes stints at RJR Nabisco, Blount, Worthington Industries, Guilford Mills and Cluett American Corp.