ChannelAdvisor Corporation Net Income surged on 441% and Revenue surged on 11.6%
02/11/2021 • About ChannelAdvisor Corporation (
$ECOM) • By InTwits
ChannelAdvisor Corporation reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 20.4% in 2020 vs. 11.4% in 2019 vs. -5.3% in 2016
- EBITDA Margin is quite volatile: 20.4% in 2020, 11.4% in 2019, -1.1% in 2018, -8.2% in 2017, -5.3% in 2016
- ChannelAdvisor Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's a lot of higher than industry average of 3.7%.
- CAPEX is quite volatile: $2m in 2020, $1m in 2019, $2m in 2018, $3m in 2017, $2m in 2016
- The company has highly profitable business model: ROIC is 15.3%
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 jumped on 11.6%. Revenue growth showed acceleration in 20Q4 - it increased 15.9% YoY. During 2016-2020 Revenue growth bottomed in 2019 at -0.96%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 6.9 pp from 12.1% to 5.2% in 2020. EBITDA Margin grew at 7.1 pp per annum in 2016-2020.
Gross Margin increased slightly on 1.4 pp from 77.7% to 79.1% in 2020. SG&A as a % of Revenue decreased on 7.0 pp from 58.4% to 51.4% in 2020. SG&A as a % of Revenue declined at -5.6 pp per annum in the last 5 years.
Net Income margin jumped on 10.3 pp from 2.7% to 13.0% in 2020. Net Income margin stuck to a growing trend at 5.6 pp per annum in 2016-2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.2% in 2020. The company showed small CAPEX/Revenue decline of 1.1 pp from 2.3% in 2017 to 1.2% in 2020. It's average CAPEX/Revenue for the last three years was 1.2%.
Return on investment
The company operates at good ROIC (15.3%) and ROE (16.4%). ROIC jumped on 10.9 pp from 4.4% to 15.3% in 2020. ROE jumped on 12.7 pp from 3.7% to 16.4% in 2020. ROIC stuck to a growing trend at 8.6 pp per annum in the last 5 years. During the last 5 years ROE bottomed in 2017 at -19.6% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -2.1x and Debt / EBITDA is 0.3x. Debt dropped on 34.3% while cash jumped on 38.2%.
ChannelAdvisor Corporation has no short term refinancing risk: cash is higher than short term debt (1,517.1%).
Valuation and dividends
ChannelAdvisor Corporation's trades at EV/EBITDA 22.8x and P/E 39.1x.
Management team
David J Spitz is a ChannelAdvisor Corporation's CEO. David J Spitz has spent 5 years with the company. Richard Cornetta is a the company's CFO. Richard Cornetta has spent 1 year at the company.
Financial and operational results
FY ended 12/31/2020
ChannelAdvisor Corporation ($ECOM) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 113.2 | 122.5 | 131.2 | 130.0 | 145.1 | 11.6% |
| Gross Profit | 85.6 | 96.6 | 101.7 | 101.0 | 114.7 | 13.6% |
| SG&A | 81.7 | 89.1 | 84.8 | 75.9 | 74.6 | -1.7% |
| EBITDA | -6.0 | -10.0 | -1.4 | 14.8 | 29.5 | 99.8% |
| Net Income | -8.0 | -16.6 | -7.6 | 3.5 | 18.8 | 440.6% |
Balance Sheet
|
|---|
| Cash | 65.4 | 53.4 | 47.2 | 51.8 | 71.5 | 38.2% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 5.6 | 4.7 | -15.7% |
| Long Term Debt | 1.3 | 0.6 | 1.4 | 9.8 | 5.4 | -44.8% |
Cash flow
|
|---|
| Capex | 1.8 | 2.8 | 2.0 | 1.0 | 1.7 | 72.8% |
Ratios
|
|---|
| Revenue growth | 12.5% | 8.2% | 7.1% | -1.0% | 11.6% | |
| EBITDA growth | -51.6% | 66.7% | -85.9% | -1,146.6% | 99.8% | |
|
|---|
| Gross Margin | 75.6% | 78.8% | 77.5% | 77.7% | 79.1% | 1.4% |
| EBITDA Margin | -5.3% | -8.2% | -1.1% | 11.4% | 20.4% | 9.0% |
| SG&A, % of revenue | 72.2% | 72.7% | 64.6% | 58.4% | 51.4% | -7.0% |
| Net Income Margin | -7.1% | -13.5% | -5.8% | 2.7% | 13.0% | 10.3% |
| CAPEX, % of revenue | 1.6% | 2.3% | 1.6% | 0.8% | 1.2% | 0.4% |
|
|---|
| ROIC | -15.8% | -19.3% | -8.6% | 4.4% | 15.3% | 10.9% |
| ROE | -9.4% | -19.6% | -8.9% | 3.7% | 16.4% | 12.7% |
| Net Debt/EBITDA | | | | -2.5x | -2.1x | 0.4x |
ChannelAdvisor Corporation ($ECOM) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 32 | 37 | 35 | 40 | | 1.5% | 17.3% | 11.4% | 15.9% |
| EBITDA | 4 | 9 | 5 | 8 | | 875.7% | 577.3% | 10.6% | -3.4% |
| Net Income | 2 | 7 | 4 | 6 | | - | - | 114.7% | 12.9% |
Balance Sheet
|
|---|
| Cash | 56 | 64 | 66 | 72 | | 16.4% | 30.3% | 37.6% | 38.2% |
| Short Term Debt | 0 | 0 | 0 | 5 | | -100.0% | -100.0% | -100.0% | -15.7% |
| Long Term Debt | 9 | 7 | 6 | 5 | | -41.1% | -37.2% | -39.2% | -44.8% |
Ratios
|
|---|
| Gross Margin | 78.0% | 81.2% | 78.2% | 78.8% | | 1.8% | 3.4% | 1.1% | -0.7% |
| EBITDA Margin | 11.1% | 23.3% | 14.1% | 20.6% | | 10.0% | 19.3% | -0.1% | -4.1% |
| Net Income Margin | 6.3% | 18.7% | 10.5% | 15.2% | | 13.6% | 22.8% | 5.1% | -0.4% |
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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 15.7% | 15.2% | 19.5% | 14.7% |
|---|
| ChannelAdvisor Corporation ($ECOM) | - | 8.2% | 7.1% | -1.0% | 11.6% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 63.8% | 64.4% | 65.3% | 67.9% | 69.4% |
|---|
| ChannelAdvisor Corporation ($ECOM) | 75.6% | 78.8% | 77.5% | 77.7% | 79.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -4.7% | -3.3% | -3.3% | 2.7% | 6.8% |
|---|
| ChannelAdvisor Corporation ($ECOM) | -5.3% | -8.2% | -1.1% | 11.4% | 20.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 3.0% | 2.3% | 2.4% | 3.0% | 2.6% |
|---|
| ChannelAdvisor Corporation ($ECOM) | 1.6% | 2.3% | 1.6% | 0.8% | 1.2% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.2% | -10.2% | -10.6% | -4.5% | -2.2% |
|---|
| ChannelAdvisor Corporation ($ECOM) | -15.8% | -19.3% | -8.6% | 4.4% | 15.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (53 companies) | -0.9x | -0.8x | -0.7x | 0.4x | 0.3x |
|---|
| ChannelAdvisor Corporation ($ECOM) | - | - | - | -2.5x | -2.1x |
