Revenue for e-commerce services provider ChannelAdvisor Corp. increased to $29.4 million in the fourth quarter ended Dec. 31, up 23.5% from $23.8 million in the same period a year ago, the company reported Thursday. For full-year 2015, revenue increased 18.5% to $100.6 million compared with $84.9 million in 2014.
ChannelAdvisor helps retailers sell on web marketplaces like Amazon, eBay, Walmart.com and others, and it facilitates sales through comparison shopping sites and search marketing. In 2015, the company shifted its focus from attracting small retailers as clients to acquiring larger retailers and brands, which is driving growth at ChannelAdvisor, CEO David Spitz said on a call with investors. The smallest 1,000 customers by revenue accounted for 6% of revenue in the fourth quarter, down from 7% in Q3, Spitz said. This compares with the top 100 retailers that accounted for 29% of revenue in the fourth quarter, up from 26% in Q3.
“Our gradual shift toward larger retailers and branded manufacturers positions us to better capture gross merchandise value from customer segments that we believe will continue to experience share gains in e-commerce,” Spitz said. Larger retailers and e-commerce service providers ChannelAdvisor added in Q4 include Birchbox Inc., No. 255 in the Internet Retailer 2015 Top 500 Guide, Johnson & Johnson Services Inc., Indochino Apparel Inc., Maclaren Services, Milestone AV Technologies and PFS Web Inc. ChannelAdvisor also added support for Amazon.com Inc.’s Sponsored Products advertising option, which allows advertisers to promote products on Amazon.com, paying Amazon when consumers click on their ads.
About 140 retailers in Internet Retailer’s 2015 Top 1000 Guide use services from ChannelAdvisor.
In the fourth quarter, ChannelAdvisor expanded its enterprise salesforce, which focuses on bigger companies, Spitz said.
“We estimate that ChannelAdvisor has only tapped into 5% of its prospective client market to date, and additionally, can drive further penetration within most existing client accounts,” Colin Sebastian, an analyst at Robert W. Baird & Co., wrote in a note to investors.
ChannelAdvisor has 2,898 customers as of the end of 2015, up 2.0% from 2,841 customers at the end of Q4 2014. The number of customers, however, was down 12% from Q3 2015, Spitz said on the call. He said the decline in customers quarter over quarter is in part a result of not adding smaller clients.
In another sign of the company’s shift to serving larger clients, average revenue per customer, calculated on a trailing 12-month basis, increased 9.9% to $34,513 in Q4 compared with $31,400 a year ago.
The value of goods sold on marketplaces through ChannelAdvisor’s platform increased 22% year over year in Q4, and it processed more than $1 million in gross merchandise value on average every hour throughout the quarter, Spitz said on the call. Gross merchandise value in 2015 increased 20% year over year to $6.8 billion, he said.
“ChannelAdvisor has over 2,000 core customers, and supports hundreds of online channels,” Sebastian wrote. “We believe this breadth of channels helps attract new clients to the platform, and as the customer base grows, we believe that ChannelAdvisor gains more influence with the individual marketplaces.”
ChannelAdvisor during the third quarter of 2015 added support for selling on online marketplaces Jet.com and AliExpress.com, the global retail site of Chinese e-commerce giant Alibaba Group. Spitz on the call said Jet.com is already driving volume for ChannelAdvisor customers, but he did not comment on specific performance for the quarter.
Amazon.com Inc. is the company’s largest channel and continues to grow , Spitz said. He added that eBay Inc. will not be a significant growth driver over time and is becoming a smaller portion of ChannelAdvisor’s business.
The addition of new marketplaces on the web could drive more growth for ChannelAdvisor, Sebastian says. “Marketplace ecosystem complexity should increase value of ChannelAdvisor services. Even as large platforms consolidate market share from direct B2C [business-to-consumer] sales, there is an emerging crop of new potential marketplaces that will likely serve to increase the complexity of selling products online,” Sebastian wrote.
For the fourth quarter ended Dec. 31, ChannelAdvisor reports:
- Revenue of $29.4 million, up 23.5% from $23.8 million in Q4 2014.
- A net loss of $700,000 compared with a net loss of $6.5 million.
- Fixed subscription fees were 69% of revenue, compared with 71% of revenue. Variable subscription fees were 31% of revenue in Q4, compared with 29%.
For full-year 2015, ChannelAdvisor reports:
- Revenue of $100.6 million, up 18.5% from $84.9 million in 2014.
- A net loss of $21.0 million compared with a net loss of $34.5 million.
- Fixed subscription fees were 76% of revenue in 2015, compared with 74%. Variable subscription fees were 24% of revenue, compared with 26%.