ChannelAdvisor Corporation revenue increased on 7.1% and EBITDA Margin increased on 7.1 pp from -8.2% to -1.1%
02/13/2019 • About ChannelAdvisor Corporation (
$ECOM) • By InTwits
ChannelAdvisor Corporation reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- ChannelAdvisor Corporation is a growth stock: 2018 revenue growth was 7.1%, 5 year revenue CAGR was 14.0% at 2018 ROIC -8.6%
- The company operates at negative EBITDA Margin: -1.1%
- ChannelAdvisor Corporation spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 0.0%. Average EBITDA Margin for the same period was -10.4%
- ChannelAdvisor Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.3%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $2m in 2018, $3m in 2017, $2m in 2016, $4m in 2015, $6m in 2014
- The company has unprofitable business model: ROIC is -8.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
ChannelAdvisor Corporation's Revenue increased on 7.1%. Revenue growth showed slowdown in 18Q4 - it was 2.0% YoY. Revenue decline was accelerating on average at -4.6 pp per annum in 2014-2018. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 7.0 pp from 11.8% to 4.8% in FY2018.
Gross Margin decreased slightly on 1.3 pp from 78.8% to 77.5% in 2018. Gross Margin grew at 1.7 pp per annum in 2014-2018. SG&A as a % of Revenue decreased on 8.1 pp from 72.7% to 64.6% in 2018. SG&A as a % of Revenue stuck to a declining trend at -5.8 pp per annum in the last 5 years.
Net Income margin increased on 7.7 pp from -13.5% to -5.8% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.6% in 2018. CAPEX/Revenue decreased on 2.5 pp from 4.0% in 2015 to 1.6% in 2018. For the last three years the average CAPEX/Revenue was 1.8%.
Return on investment
The company operates at negative ROIC (-8.6%) and ROE (-8.9%). ROIC jumped on 10.7 pp from -19.3% to -8.6% in 2018. ROE jumped on 10.7 pp from -19.6% to -8.9% in 2018. ROIC followed a growing trend at 5.0 pp per annum in 2014-2018.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.3x and Debt / EBITDA is . Debt surged on 119% while cash dropped on 11.7%.
The company has no short term refinancing risk: short term debt is zero.
Management team
David J Spitz is a the company's CEO. David J Spitz is a founder and has spent 4 years with the company.
Financial and operational results
FY ended 12/31/2018
ChannelAdvisor Corporation ($ECOM) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 84.9 | 100.6 | 113.2 | 122.5 | 131.2 | 7.1% |
| Gross Profit | 60.7 | 74.8 | 85.6 | 96.6 | 101.7 | 5.3% |
| SG&A | 78.1 | 76.1 | 81.7 | 89.1 | 84.8 | -4.9% |
| EBITDA | -27.7 | -12.4 | -6.0 | -10.0 | -1.4 | |
| Net Income | -34.5 | -21.0 | -8.0 | -16.6 | -7.6 | |
Balance Sheet
|
|---|
| Cash | 68.4 | 60.5 | 65.4 | 53.4 | 47.2 | -11.7% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 2.0 | 2.0 | 1.3 | 0.6 | 1.4 | 119.0% |
Cash flow
|
|---|
| Capex | 6.0 | 4.1 | 1.8 | 2.8 | 2.0 | -26.7% |
Ratios
|
|---|
| Revenue growth | 24.8% | 18.5% | 12.5% | 8.2% | 7.1% | |
| EBITDA growth | 160.7% | -55.3% | -51.6% | 66.7% | -85.9% | |
|
|---|
| Gross Margin | 71.5% | 74.3% | 75.6% | 78.8% | 77.5% | -1.3% |
| EBITDA Margin | -32.7% | -12.3% | -5.3% | -8.2% | -1.1% | 7.1% |
| SG&A, % of revenue | 92.0% | 75.6% | 72.2% | 72.7% | 64.6% | -8.1% |
| Net Income Margin | -40.7% | -20.8% | -7.1% | -13.5% | -5.8% | 7.7% |
| CAPEX, % of revenue | 7.0% | 4.0% | 1.6% | 2.3% | 1.6% | -0.7% |
|
|---|
| ROIC | -31.4% | -23.2% | -15.8% | -19.3% | -8.6% | 10.7% |
| ROE | -32.6% | -23.6% | -9.4% | -19.6% | -8.9% | 10.7% |
ChannelAdvisor Corporation ($ECOM) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 31 | 33 | 32 | 35 | | 11.0% | 8.9% | 7.4% | 2.0% |
| EBITDA | -2 | -1 | -1 | 2 | | | | | 100.3% |
| Net Income | -3 | -3 | -2 | 1 | | | | | |
Balance Sheet
|
|---|
| Cash | 55 | 51 | 49 | 47 | | -13.6% | -12.0% | -9.8% | -11.7% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 2 | 1 | 1 | | -76.8% | 48.5% | 56.3% | 119.0% |
Ratios
|
|---|
| Gross Margin | 76.6% | 78.6% | 76.5% | 78.2% | | 3.8% | 2.5% | -1.8% | -4.0% |
| EBITDA Margin | -5.3% | -3.8% | -2.1% | 6.3% | | 17.0% | 3.7% | 6.2% | 3.1% |
| Net Income Margin | -10.0% | -8.5% | -7.1% | 1.7% | | 18.4% | 4.8% | 6.4% | 3.1% |
Peers in Application Software
Below you can find ChannelAdvisor Corporation benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 14.3% | 15.7% | 15.2% |
|---|
| ChannelAdvisor Corporation ($ECOM) | | 18.5% | 12.5% | 8.2% | 7.1% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.7% |
|---|
| ChannelAdvisor Corporation ($ECOM) | 71.5% | 74.3% | 75.6% | 78.8% | 77.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.1% | -9.4% | -4.7% | -3.3% | -3.3% |
|---|
| ChannelAdvisor Corporation ($ECOM) | -32.7% | -12.3% | -5.3% | -8.2% | -1.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 3.0% | 2.3% | 2.4% |
|---|
| ChannelAdvisor Corporation ($ECOM) | 7.0% | 4.0% | 1.6% | 2.3% | 1.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -10.4% |
|---|
| ChannelAdvisor Corporation ($ECOM) | -31.4% | -23.2% | -15.8% | -19.3% | -8.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (70 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.7x |
|---|
