February 13, 2017

Internet Retailer

ChannelAdvisor’s revenue grows 12.5 percent in 2016

Sellers are seeing big growth on Wal-Mart’s marketplace, while growth on Amazon decelerated during Q4 and the holidays.

Revenue for ChannelAdvisor Corp. increased 12.5% to $113.2 million in 2016 up from $100.6 million a year ago, the e-commerce vendor reported in its fourth quarter and year-end earnings release.

ChannelAdvisor helps retailers sell on online marketplaces like those operated by Amazon.com Inc. and eBay Inc., and it facilitates sales through comparison shopping sites and search marketing. 140 retailers in the Internet Retailer 2016 Top 1000 use ChannelAdvisor to manage their marketplace sales, and 129 retailers use the vendor to handle comparison shopping engine feeds, according to Top500Guide.com.

Key to ChannelAdvisor’s growth is its ongoing shift to acquire larger retailers and brands as customers—a change from providing services primarily to small and midsized online retailers. As a result, the company has fewer customers than a year ago as it terminates relationships with smaller retailers and brands and adds larger customers. ChannelAdvisor has 2,875 customers as of the end of 2016 compared with 2,898 at the end of 2015. However, average revenue per customer increased 14.0% to $39,339 for the 12 months ended Dec. 31 compared with $34,513 a year earlier.

“Management reiterated expectations for growth to accelerate at some point in 2017, driven by the mix shift to larger customers, increased deal size from existing customers, and scaling up of new growth initiatives and marketplaces,” Colin Sebastian, e-commerce investment analyst at Robert W. Baird, wrote in a note to investors.

For the fourth quarter ended Dec. 31, ChannelAdvisor reported revenue of $31.8 million, up 8.2% from $29.4 million in the same quarter a year ago.

Marketplace sellers that use ChannelAdvisor’s technology to sell continue to perform well on Amazon with a double-digit growth in sales during Q4, but sales growth decelerated on the marketplace in Q4 and during the holiday period year over year, CEO David Spitz said on a call with investors.

“We believe Amazon’s extended promotional period during the holidays, including their Black Friday deals store, which opened Nov. 1, shifted a portion of demand from third-party marketplace products to heavily promoted products that Amazon sells first party—where Amazon directly controlled pricing,” Spitz said, according to a SeekingAlpha transcript. Amazon is No. 1 in the Internet Retailer 2016 Top 500 Guide.

Read more: www.internetretailer.com/2017/02/13/channeladvisors-revenue-grows-125-2016