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E-commerce software provider Demandware grows Q1 revenue 54% amid global growth

May 8, 2015 12:58 PM
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Demandware Inc., the provider of e-commerce software to 44 of the retailers in the Internet Retailer 2015 Top 500, reported today 54.3% year-over-year growth in revenue, as the company won more business abroad and from larger brands.

The number of clients using Demandware’s on-demand software to sell online increased 30% to 279 as of March 31, with those companies operating 1,241 e-commerce sites, an increase of 42% Demandware sites from a year earlier.

Among the larger companies going live with Demandware software in the first quarter was Coach Inc., the handbag brand that is No. 82 in the Top 500. Demandware also signed up as clients in the quarter Scholastic Inc., No. 96, and Christopher & Banks, No. 370.

“Our pipeline is much stronger than it has ever been, and the number of large enterprise deals in the pipeline exceeds anything we have seen in prior years,” CEO Thomas D. Ebling told investment analysts today, according to a transcript from SeekingAlpha.

Analyst Shawn Milne of Janney Capital Markets wrote in a note to investors that Demandware “continues to successfully move upstream, including names like Coach.”

The Boston-based e-commerce software provider also is winning deals overseas. Ebling noted that Danish apparel brand IC Group A/S launched 33 sites across Europe for three of its brands on Demandware software. “We continued our Asia Pacific expansion with customers like Cotton On, Bossini, and Vertu launching sites in China, Hong Kong, Malaysia and Singapore during Q1,” Ebling added.

Ebling said Demandware’s “most important accomplishment” of the quarter was its acquisition in January of Tomax, a provider of retail point-of-sale technology. Demandware has said the acquisition will extend Demandware’s reach to the checkout counter, giving retailers a unified view of their customers and sales, and enabling them to make more personalized offers across channels.

Tomax, whose team remains based in Salt Lake City, brought about 170 employees to Demandware, including some 100 software engineers. That contributed to Demandware’s employee headcount growing to 817 as of March 31, up 87% from 438 a year earlier. Including the Tomax engineers, Demandware’s research and development staff more than doubled to 271 from 107 a year earlier, and the sales and marketing team increased 45% to 238 staffers.

For the first quarter ended March 31, Demandware reported:

  • Revenue increased 54.3% to $50.276 million from $32.574 million in the year-ago quarter.
  • Subscription revenue for Demandware software increased 44.6% to $43.248 million from $29.905 million. Had it not been for revenue declines caused by the strengthening dollar subscription revenue would have increased 51%.
  • Services and other revenue increased 163.3% to $7.028 million from $2.669 million. That includes about $4 million in Tomax revenue.
  • Net loss decreased 36.9% to $5.280 million from $8.363 million.
  • Annual revenue per client was $591,000 on a rolling four-quarter basis, up 11.1% from $532,000 a year earlier.

Demandware clients in the Top 500 include Victoria’s Secret parent L Brands Inc., No. 28; L.L Bean Inc., No. 34; 1-800-Contacts Inc., No. 91 and VF Corp., No. 104, whose brands include Timberland, Lee, Wrangler and North Face.

 

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