ECOM - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the third-quarter 2019 ChannelAdvisor earnings conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions].

to Mangini. conference like speaker to now Traci today, would hand over the your I

Traci Mangini

Carmen, good My Officer; Chief you, me ChannelAdvisor's for Chief Mangini, Thank Chief and ChannelAdvisor's Investor and on the conference to Director, Officer. Rich are Operating third Beth call the ChannelAdvisor's Executive call Segovia, quarter David And Officer; Financial XXXX. Relations. name today Traci morning, is with and Spitz, welcome ChannelAdvisor's Cornetta,

our a fourth press XXXX release XXXX. This third morning, of our the quarter as details for we quarter as well issued performance, with full-year outlook and

This accessed section release the ir.channeladvisor.com. of Investor press Relations can be at our website on

call after will is this and recorded, be addition, the a the available of replay In conclusion being call.

related considered reflect may of of business considered statements date. During of our to only our forward-looking be as federal statements These today's and be call, our laws. views today representative views securities as that will not under subsequent we should any make

obligation to actual results statements variety expectations. uncertainties issued press cause could disclaim release subject in or that summarized of differ risks that We materially a are are statements update today. These to from to any the These and outlook. forward-looking risks we any

XX-Q, the factors available of well risks are the Form a at please For discussion as further affect which and that other our website filings on our to contained as material Form www.sec.gov. in or recent XX-K important those could other refer results, actual SEC our most

severance stock-based will depreciation, nonrecurring and income measures, adjusted excludes including call, and During amortization, expenses. the financial course interest, expense, EBITDA, of refer related to non-GAAP we certain today's tax which compensation,

GAAP gross non-GAAP operating that income, margin, expenses, margin, gross reconciliations EBITDA, free release for non-GAAP we to Our adjusted flow. issued and operating operating today income, cash net includes press profit,

a section GAAP schedule in provide reconciliation ir.channeladvisor.com. our to the Relations website of supplemental Investor financial posted presentation non-GAAP on We at our also

offer responses we of business metrics our to our or greater analysts' usual in or that Finally, provide results. to presentation dynamics comments may incremental quarterly at our the prepared to questions, our in times are into insight

or his provide in that Please for the let to may over remarks. David that, the be call me we not additional advised prepared this turn continue future. detail may With to

David Spitz

and Thanks, good everyone. Traci, morning,

solid. Our the with million the positive of third $XX.X adjusted in to performance EBITDA that $X.X quarter improve our yield was profitability began in July we Revenues range. line in were results million. did work And to we as of posted guidance

compared last previous both $X.X currency $X primary Australian quarter of more these period represented doubling churn same bookings Substantially revenue strong performance year. guidance the The targets same again, and in Once drove better the in has regions for regions of cash our our EMEA than and period flow a Yield basis. double-digit recent revenue than and to growth with brands. the improvement compared our constant quarters, a to solid a particularly on year-over-year been XXXX. of million driver nearly against our percentage execution as in also million

year. revenue this, period our firmly we second is this near-term slightly we revenues continued in growth. same This primary compared do believe for position should Domestic focus. better can to the U.S. improving quarter, area And modest regions a the last from improvement both than the results declined sequential represented although and of

in gradual lack U.S. growth And has the quota contributing of has been a in over our of of over bookings a revenue number driver decline of the been carrying to period. years. last couple fundamental headcount the domestic this The performance that

brought span pleased additional need appropriate to capacity we last quickly our already I'm in the reps reps levels. training XX and run the of sales in aligns believe of level drive on agreed bookings capacity, as through U.S. to the Colucci hire growth this running our improves to our speak. Paul in in third better get in stepped days, We on Australia the those and up to sales to them improved have they're really When what the sales EMEA we we ability resources U.S. U.S. to report and board coverage we've with XXXX. quarter, that sales

with the already Importantly, in our call. and last offset you we cost contemplated been Rich other have incremental in reorganization reductions in areas investment the of was July this largely will our by numbers made shared on

transition sales coupled in year, optimistic that revenue and compared seen with improvement leadership better going report I'm growth net last positioned improvements to into to XXXX. revenue an bookings third year-to-date us smoothly, in we're went Our we've to drive pleased that quarter in the addition, making

As performance, quarter growth the accelerated mirroring in great on a Amazon's rate highest revenue to to the growth year-over-year for channel accelerating Amazon rate, is see. GMV in year third which overall

Notably, spend we third did Google, reflecting is Amazon on for time, Amazon this the Prime a we and how strong showing on our of been quickly on has a digital marketing marketing growth which channel. July contributors. first table results, Our in Day lately, quarter, the performance have continued managed has as tail than in recent of digital year-over-year solid and the for quarter. stakes Amazon one-day up in the also been stream become shipping more ad benefits

variable impact as in revenue a The Amazon our on to which see retailers the was first-party on and to our optimization, Amazon as expect solution on We help fulfillment, and Amazon partially strength quarter. most shipping, declines partner GMV manage management, the largest to advertising drop offset strategic positioned by selling, brands and price had continue uniquely from we believe success remain eBay, holistically and marketplace we channel. modest to complete on

we've platform on Interestingly, this than reached third eBay. a to see the quarter, where double Amazon through year, our more point what we GMV is

to our time. results So less while an customers a over that for be likely come, that expect gradually suggests remain us will are for to to we long channel trend our and important eBay impactful time this eBay's results

Rakuten the site long highlight are To among largest for enjoyed had division by is Ichiba, the strong tail Japan about marketplaces quarter. third one solid and in Continuing the sales, in before, supported world's which us growth. performance GMV U.S., that year-over-year the largest e-commerce recent of Rakuten one of haven't talked I a of trends

some as recently While marketplace for strategic expanded seller we time, relationship our adoption and result. substantial this in we've a volume improvement supported with experienced and them GMV have a

we on And Target+ when well. perform the our our continued demonstrated with our with highlights speaking marketplace, Google with targets work partners actions, As by benefits we with in mutual collaborate the to them. work closely collaboration Rakuten of see shopping

makes in launching in our exceptional XXXX. channels GMV to after our of the marketplaces. partner We our marketplace provides customers industry-leading newer countries terms of breadth of While invitation-only believe for to for sellers preferred Target+ supported has climbed dozens us and value largest across

XX-month We one-fourth also now trailing to of moment, brands on be our as with an driver comprising will make to and this continue focus And increasingly progress us. brands our continues strategic a Beth in good over business. a of important in customers becoming expanding acquiring, and revenue touch for servicing our key

growth. with U.S., I with profitability pleased blocking our few to execution, the in improving revenue as next focus the work we objective tackling the our improve over Now our quarter. primary this improved We're core to emphasize of and quarters especially is want that

look made getting holiday we the we our as customers for staffing to to year. Our in appropriate prepare our next as weeks, U.S. smooth levels sales think sales driving next we've for we over season leadership XXXX. outlook progress already another transition, our the selling And forward for the successful about few

expansion call numbers, to remarks. on turn our early call continued have over margin on Beth the little a growth more a It's revenue we're obviously now the but to returning next And for about to this XXXX. talk in We'll to and call. on few driving focused I'll front

months You'll recall Beth absorbing quarter, the she's including that several last busy to teams, officer, new couple was our promoted in product chief Beth? integrating been over last organization. operating and of

Beth Segovia

David, good everyone. Thanks, morning, and

It's been of role since few the productive in a months August. COO assuming

was to within areas resources to business organization changes, and and the implement optimize performance. reallocating Our included some first operations streamline which leadership key of step

we the already in improved now place, happy we with collaboration. very and efficiency are operating We departmental have seeing and inter structure are

of few a those changes. share me Let

has one This get our reduced have teams with We to resources. consolidated more unit. operations efficient into all internal of us allowed organizational

we've actionable intelligence more intelligence metrics team performance business the key will and new the visibility a for addition, monitor company. delivering that improving across created business, In providing analytics,

and acquisition, are that, Steve Steve as in where president, role start-ups, this We management variety to HubLogix platform. experience that vice VP role. and engineering held Steve leadership leading he Frechette part him Prior of take Qlik, a technology the role served to at pleased share recently on we on officer. of the came chief and see took software has are intelligence to development business a across product of enterprises product our XXXX analytics software excited of to as Steve XX the and years of ChannelAdvisor critical management. of

with our journey. are enhancing where comprehensive building Working their leverage digital By road we already value talented our out our platform our team, further on them for engineering and development strong product matter for will and map Steve focus leadership proposition and in market brands. no they position entire to maintaining a

of and and recent user of a So and onboarding customer rolled let speed for are some me retention to and especially this bit a and innovations we where little our year, in simplified of our April newer quality going. talk about improve modern In technology we rates, experience out customers. more

makes easier short and From Amazon that maintain topics invest In like console marketplaces. repricer them our multiple new our of feedback in velocity the Amazon shows clicks, capabilities need and tell and marketplace is advertising that pricing brands, Throughout app including extremely the our enhancements in position us to cross has use, sponsored leadership more layout capabilities, XXX% building the they just and Instagram, our it been to new adoption, to support, deployment we out like Amazon in we've Turkey adding automation a to them exciting health sponsored to And Google on sense France, to them, when the continued year, and five they our Checkout Shopping Clients months, where like reached saved the keyword finally, and information. relevant embedded channels UAE. display shipping management new and suite. pricing positive.

on Local for focus products. XXX availability brands, demand, real-time and our local we new to build for continuously as to improved at Including our promotions features enabling which Where product priority our stores local of capabilities local Buy provides analytics visibility deployed by have part by Buy and solutions. with retail With

improved then We self-serviced develop been enabling to have try a also model and approaches, business working products. including buy

In our repricing for technology self-lineup for Amazon. who first and because launched applications. This want to Elevate it cost solution is provides Amazon, zero-touch algorithmic important clients October, a ChannelAdvisor lower we self-launch a

us our In enterprise of bring to the customers. it some cost-effectively addition, gives opportunity capability new to

learn to simplify early as our for yet, it improved takes it our us enabling evolves. closely very self-service what are is it new watching Finally, to platform. is to this and enable approach overall we user This experience further endeavor

continues our forward, starter launched core our an fulfillment. marketplace needs us on journey. Buy This to enable and sellers the needs through digital solutions, product marketplace is in to of third-party serving step also and our Continuing map Looking improving address create to to Where technology. self-service to be strategy of one for road path best self-launch, clients version e-commerce categories, at better, of and marketing, first-party in focuses different from addition a their brands we for further partners This self-service stages pursue take will the enabling would in all a the and of solution and to create us adopting strategic good, opportunity capability. expected

content we placement, to expand platform. capabilities expand XXX media to plan social Longer-term, Buy visibility our enhance to promotion. within brands, build and our analytics new plan out Buy promotions, ratings, to leverage product online brands availability, price, around For capabilities to our our Where enable existing Where for we to and technology usage,

will we and usability the error channels current clients listening many continue invest for platform, Finally, improved new to our for improving core our resolutions. to in launching of including time or value by in closed

partners those plan As and to identify as marketplaces always, channels with opportunities. retailers and we add we

the year feel that and innovations position to so in our many have this for we We platform technologies clients far are we've success. proud of our released provided strongly critical

of We season. them goals are coming this working holiday looking each with their achieve forward to to

Now I'll call financials. to pass discuss to the the Rich

Rich Cornetta

morning, Beth, everyone. you, good Thank and

in on and August. by my start I'd our used execute their have to achieve July. call Together, like earnings to identify have opportunity across allowed for us to following remain the collaboration thanking improved this discussed remarks last efficiencies in These on we organization. cost goals the track reorganization our ChannelAdvisor annual to efforts the reduction team on prepared

talk otherwise our about regarding highlights a non-GAAP a comparisons practices, our my Please let's on with expenses will unless and basis, basis, So all bear the mind, historical specified. and quarter third be comments performance. in on of trends year-over-year are consistent

we As posted mentioned, David solid quarterly results.

with line the the compared well to high adjusted double while guidance to adjusted in us margin setting was exceeded range, range, EBITDA EBITDA the XXXX. end Revenue pace XXXX in guidance on of

We quarter. $X.X to about total total revenue slightly to X% X% another free X% total compared Total posted as increase revenue. million, quarter, of flow million, constant-currency overall and third net grew of year-ago XX% and for of was representing Fixed or percentage a a on achieved revenue. XX% the variable or and quarter less $XX.X revenue cash $XX.X period income fee of continues the subscription Fixed the revenue down for also strong was than revenue was basis. million revenue and

I shift customers our incorporate to higher tiers, and purely mentioned of revenue largely declines variable mix fees which revenues. pricing more XX% rate revenue the Variable revenue driven higher was trend, extent, and fixed fixed in from to partner toward just GMV. agreements moving by lesser year, last to some of to eBay recurring the compared primarily quarter third a instead the This in fixed was more quarter evolving down resulted strategic

in was China. our Looking revenue, the quarter, platform million and total by was revenue in for XX% marketing decline in U.S. million, Digital down up by the and the X%, represented period revenue. $X.X products, total was to marketplaces Consistent with marketplaces XX% compared and at comprised The with from revenue. year-ago revenue driven growth was for $XX.X of of period particularly quarter EMEA growth in U.S. last variable X% of as the revenue of quarter quarter, Amazon prior-year driver another the posted primary about advertising a the

for reasons the declined discussed. quarter From David X% the a perspective, revenue geographic U.S. from in the

declines outside was this the growth which as However, headwinds. the achieved currency X% in XX% to revenue from as from well down XX% as increased period, despite U.S. revenue, total of China, year-ago foreign

EMEA of Recall benefit when period. international by the revenue that one-third Australia higher were corresponding constant brands to a strength up Australia, much our U.S. about concentration lower levels. the customers a typically of driven economics churn on for were the compared in of a The quarter, combined combined better Australia and EMEA XX% which currency to which is prior unit basis compared customers, from the in about In EMEA and and brands, quarter one-fifth and

U.S. As we enter sales a U.S. our XXXX, expanding this key customer segment focus organization. in is the growing of

customer for Now count information to compared customer quarter. the ended We of the with the some the end third quarter stable on at second customers, metrics. X,XXX

quarter, the to toward improvement the on a a eclipsing Also, our XX-month quarter mix brands in revenue average of end trailing albeit the with continue see We modest shift customers third mark to total third the percentage expanding of as customers quarter. per from customer brands of our XX% basis. during of base over continued, the retailers XX,XXX

for support was international $X.X performance $X.X all reallocation up the a reorganization improved of adjusted reorganization points and a expansion of improvements representing to approximately and margin further strengthen our our in at direct sales, expense investments operations. million strong in strict return aimed the costs July that results U.S. enable Please substantially July. EBITDA the our quarter. line this in discipline across growth of from from in our and in adjusted cost to year, basis making Adjusted include during the of and not quarter, severance resulting of to from This result the million items reported services capital related EBITDA do note XXX period quarter prior-year the million for $X the EBITDA with

income loss success The For international of quarter, net efforts, year the cost period. last million of of was we from third by our $X.X in not million, driven strong the generated net also $X.X compared reduction only year-ago operations. to significant but improvement the

$X.X quarter; $X.X we the recorded million sheet. and XXXX. Turning flow. another an flow full-year the decrease and and beginning $XXX,XXX strong cash the equivalents the We of cash $XX.X of quarter since It's expect related for not cash $X to the million, quarter during cash positive of balance a would million enjoyed of during cash positive a quarter but the million the important million $X of free payments net note from have another flow the We cash with that highlighting to it's to of of XXXX, severance increase representing be quarter, of finished of significant improvement for year. use in the of

guidance. discuss let's now So

guidance $XXX anticipation revenue to headwinds. on million to are of $XXX X. narrowing as $XXX and greater Primarily from our August full-year potentially currency XXXX on foreign million to million declines GMV continued range We eBay $XXX million issued in

quarter, in $XX.X to As $XX.X we of result, for a are million. the guidance issuing fourth the range million as

end For million million million the adjusted million raising full-year narrowing $XX to our $XX.X to August EBITDA, guidance XXXX range $XX on we to X. the issued and range from are $XX.X of lower

in As fourth-quarter million EBITDA in $X.X $X.X XXXX improvement of million. At of an a of mid-point issuing nearly doubling model result, us the our XXX margin in this the guidance, We adjusted are guidance adjusted stronger, approximately with believe more profitability represents EBITDA future. a points we EBITDA compared to full-year position these our to margin. improvements adjusted to basis XXXX, drive efficient growth

combined the us sales the investments U.S. focus our by profitability are performance make future. with strong and our brands, within operations on improved we This organization, our making international about optimistic

to to we'd operator, that, questions. open the now call like With

Operator

a Please Thank of line [Operator William from Instructions]. Blair. we ahead. And Pfau Matt question the you. go have with

Matt Pfau

question. my taking for Thanks guys. Hey,

on comment to just sales in that Is growth you ramping just are us to other XXXX? maybe can give details there? back to up? on in U.S. there wanted pushing the returning primary force is the in of revenue the XXXX? growth that's some things a drivers more And involved there Or what's dig I you First, bit

David Spitz

This really the be just back in we kind Matt. say primary that talk Hey, I we're is that back of would headcount, about should we nominal levels had when that's XXXX. Dave. also clear getting capacity to driver. the And Yes, I our sales incremental

of from kind market cover that offsetting So just other a level to appropriate I the that's, to getting opportunity importantly, and in think, savings areas. back

on-boarded we've largely got on investment. And call, at as the that So capacity I this that point. mentioned

There's of it does the more obviously, incremental don't toward a but U.S. in continuously, improving they the And performance -- probably productive expect end improving the the few that we U.S. our be hires be with an eye ramping the bookings performance would driver of year. so revenue going before time, to become and in a overall primary

Matt Pfau

brands on the big outside U.S. I in into EMEA are much you And the more details higher delta percentage U.S.? of that? number there's the what's between in it. to in of that customers Got wanted of brands the on to and some gave that number and then than and the in U.S. And brands metrics Australia. disconnect a customers our dig if driving the Maybe the just any as there's why that

Rich Cornetta

Rich. Yes. Hi, This Matt. is

the within started past which achieved of of I the our think, the brand's acquisition especially the really EMEA, we've were highly helped was byproduct, really brand's community. in that growth concentration, that back and amount in a XXXX, focused, off retail that spearhead mentioned brand in we large with the

signing we've and brands to We expansions SKUs platform, a maybe our with tremendous potentially these opportunity focused geography the of then and in and regards whereby with with or strength land seen brand's amount a at And realizing on few start a EMEA, and we're customers. growth the our a of opportunity two. expand

opportunity business. more but an grow to sales count more customer lending the to really brands providing not -- So

David Spitz

advertising going essentially brands, you EMEA, element shipping. particular, Amazon of thing or individual drop every to focus selling with Yes. began I'll our an meeting overall to really use Matt, solutions, Where know, can that, as add to because of or our one whether point pitching in we are earlier necessarily is marketplace Buy platform sales messaging team market initiative in on platform, the year it's this or instead platform

capabilities, focus that good. been think holistic than rather on message. really early together bringing so And returns that on I initiative And individual have platform indications of kind and

and is a alternative solution what want another stitch if then these for you So to brand, point you're together. in have an to up don't one a things solution sign find geography, do in geography

So has us is ChannelAdvisor you'll global platform. us. that holistic I differentiator the in this regions, see other fact approach is a well. And that for And think significant to as start adopt

Matt Pfau

Yes.

Okay. for me. Last one

the your Just for quarter. into on expectations going fourth Amazon

I impacting, is XP quarter has you guys the somewhat the to in platform fourth there and past been Amazon guys' of difficult in their results. of with predict what XP on for think mix terms your

you to Amazon have So just as or for there quarter? the sort of curious approach what going fourth expectations into

David Spitz

at great each question. seen that capabilities product customers. four think some that not GMV acceleration adoption it's driven our the a of we've a sequential if Amazon of in Yes, for least, three, is by I rolled We've out last And and quarters.

etc. advertising, repricing, it's whether So

think Amazon. I reasonably So well-positioned we're with

Now itself acceleration then of a a then last year had down came reaccelerated. and kind has nice bit Amazon

So trying of what little the to going depend bit we're to what's in -- to to holiday pull do spending it's what always retailers also of terms of some other predict, dynamic going It's kind on honestly, forward. see. hard a

in It season year. holiday days is of this of terms shorter a number

some look the forward If that to don't pull at Christmas, spending, are drive promotional time try means, are but that you spending nominal anticipate necessarily of between so if if it we could more Thanksgiving retailers people to that, just -- less activity. and overall, starting

is hard to that so predict. And dynamic

see. we've I been thoughtful quarter, so think this we'll about on brands have appropriately but we expect what And to with

Operator

from question ahead. Please go with next Needham. our And comes Ryan you. MacDonald Thank

Ryan MacDonald

guess, I clarify, declines my more heads? something, U.S. a in one of saw detail macro go that causing I and you Thanks perspective you in Or you. from that was David, on of first number was in the to the Can morning. taking some weakness? broader for saw the for about little of guess, business sort of God sales that you attrition was -- question. the a due there solely terms

David Spitz

No.

I last under that has right? growth a lower I primary driver been bookings just the in I call, And we gradual the sales number, the as been driving issue think approximate seen which as rectified. real So of of over far the mentioned on that U.S. to the view haven't capacity, well, has erosion years. sales think my couple that that of is is we've something capacity, bookings

revenue of There has little a been lumpiness probably over the last, say I'd in bit partner XX months so. or

of that. that's And comments, that to kind attribute about drive a eBay is think, to into ChannelAdvisor. some would worry I -- I declines, capacity, sufficient But GMV bit they go. important little really of to for and us business Those sales less I tend

that return revenue to growth. So we

So focus primary we on. that's to that view. need thing my That's the

Ryan MacDonald

Got of it. exit terms And China. of physical in then the from sort

declines of I about expect the was that of that for that you is that pace sort XX% long it business? of is we trending should year of the in think internal down terms And mentioned the sort tail versus year in quarter. impact of How how expectations the what over in the exit. of

David Spitz

Yes.

is So expectations. China for us with trending

obviously, it's a in going go to get going into ongoing XXXX. So on there'll not of numbers as timing. is be and to view But we anticipate that XXXX. that specific business I'm not our material revenues part be too we our

is service which in team Australia, we continue from to sell our customers in we an China in to said having prior having to China, we office point that, what that do continue And continue China. into I will opportunistically to did out

view is as So complete I removing the just this exit physical from China. This footprint don't a there.

we to be we customers it to service we'll we significant to a in continue and customers We continue expect -- expect XXXX. but into sign go XXXX, continue as don't I driver

Beth Segovia

that. our our so support Australia, just about been to language, are seen of that require we've able they particularly we specific Mandarin, very play would which in a retaining resources our some that I really operations Yes, We've technical questions hiring in speak is China client -- like there. and and so and clients that really as service and add factor that have helpful, in It revenue. health in to looks China

clients to to as and stay leverage them of again, to as So and drive platform us advantage continue expect David Australia with from their they service take we businesses. see, the said, many

Ryan MacDonald

larger Are Got think last to talk I back for about to to net one look of how of me. trying in a market service to fact new on sort and customer you're And saw that, we starter sort trying on just when upmarket try one drive solution, it. position guess, for And that the then to of can you I edition based to I adoption? Beth the you, asked, I go down of win, moving shift XXXX, guess, we earlier? strategy sort XXXX, the again customers? we to customers back Thanks.

Beth Segovia

that they bite, are do otherwise the to think clients access that depending take maybe states is overall evolution their capabilities as our in can we're trying to business. more really what I allow a on

they so And to to multiple are start to have basic required capabilities them our that most take marketplaces. want we to of with some portions mature, as able platform. give be access then the And then advantage larger on them And that. of business do of

more better, strategy, this grow along best have good, us. to we earlier then them So allows think, really, clients journey their us right bring in with and in

David Spitz

our away couple we that starting And those was you moved with that Ryan, because strong. particularly smaller years customers One from customers with down, sold force. I'll difference reason associated Yes. customer acquisition through then the metrics ago thing just of the the not durability lifetime value, edition, was sales There's few force, is not So the upside sales add, is that with a no direct will the a starter were be right? that cost of something this is it.

through our planning go-to-market tend to even directly to market intend website. to not We it go to partners. We're own -- from

of that driving platform ultimately, zero So close this customer we'll at to hope adoption be what a we acquisition. be of to cost

though so that at higher churn anticipate even And to would be we segment.

close cap the LTV because the acceptable of zero. nominator ratio to is to That's

There low-cost we we bring market there. power But on can perspective, millions -- we us. to there's are of from very if So the up opportunity. and small. by at Amazon think customers to eBay them and other incremental larger, market down open quality brands and particular. on We quite are we that focus some And opportunity sellers a can a higher to think continue direct in significant platforms of a sales channel

Operator

Thank our next go D.A. Davidson. you. Forte from question comes with ahead. Thomas And Please

Thomas Forte

you. Thank Great.

questions So company-specific I two question. had industry and one

with question is industry the online tax. off kick to I So wanted sales

a U.S. half If the you is quarter, look basis fourth was XXX unfavorably the points Etsy that headwind GMV talking sales the more from about online points to at accelerated further And accelerated their it also the it to headwind part that quarter? growth then to first XXX XXX-basis-point in tax. in first September eBay, they and in basis suggested

I'll So then start go to with we'll that, and next the two?

David Spitz

mean, the impact Yes, that agree I of is, out Tom. we there. similar a do assume I that David. kind question there's This is you're Is asking? what

Thomas Forte

Absolutely.

excellent of of and use the an So I yes, a student understanding the industry. industry do have

from legislation? something as it in seeing vantage that perhaps your point, And one-year similar? from does the I are a just this, face make enforcing these the you we Or states roll-outs is longer-term? therefore, something So new issue then guess,

David Spitz

great question. Yes,

products a little the So improving are my of this process. the purchasing I continuous -- which in at and tend I the friction benefits the to And longer-term. delivered. I that reduction speeds about e-commerce And think think of think bit

to at we If as example. look day, an one Prime going

especially those value are consumers, for really, really strong propositions the things convenience of all consumer. think I

secular from shift, the that, created the me, incremental online that's is think just I And don't case. don't so kind think a sales of a for tax, driver away long-term I headwind by of e-commerce. example, to

I share the of a to share what but journey expand Etsy for gains. time, or So that of they collecting a it more and visibility Amazon same e-commerce for long some of tax I sales platforms of a perspective, headwind speed a give been we speak abandonment the quite from -- bit kind has to more as like continuing card bump likely of and do they have of you that accelerate accelerate them think along know, eBay wallet. sense necessarily little continue things into can't other would quantitative as and don't or is

my So personal online sales consumer continue on more going is to from perspective. any convenience the it's customer permanent. view And is online. the balance, than is view tax temporary extent headwinds shop particular, in to My that to an or there's

Thomas Forte

All Good. right.

margin of new question How is, you're example, greater making sales products my So product and second versus select real having similar the it services think choose should as on sounds giving your or as initiatives and flexibility higher to the pick an market like far for customers to your the progress maybe margin solution. end-to-end one's these gross we about lower? legacy to impact, is potential new

David Spitz

be early honest. super say, It's Tom, to to Yes.

we like is you drive adoption, drive a this app optimizing would us, that. We're what for say Elevate, an zero-touch app how launched, if about self-service, conversions which and the learning is, I look things to think I essentially deliver how market and still at we we've our completely it repricing that right? to means experiment,

So very learning I in phase. we're still say much would the

for starter for ourselves, substantial -- in far of want previous monthly I ahead edition these more pure-play ask as is to responded efficiency this be and SaaS of a have expect we to apps of think you as Obviously, don't get fairly, hazard, from them straightforward, still to at this offerings, objectives the we gross obviously, lot question, to From important fairly have at would point. a us internal to these to we are margin from And any I about as bring it's contemplating XXXX, initiative. public perspective, right, like more XXXX, pretty think I me, about scale if too have previously meaningful I perspective, point these a partnerships to we're fixed think that see. kind P&L the but products. We would monthly But a not fees, these at market. contribution attractive. some like But

Thomas Forte

Okay.

So third of on teased this and final. one. And, David, sort you

is you services? is not to training Are think is share that with to have they other their you is on basis. other or a So marketplaces products expect out consumer do on you do Amazon have on going the to as So do to one-day going impact to are basically, everything Amazon Amazon? the Will Amazon to think How expect do what one-day you a efforts? one-day from the basis? to think lose roll similar consumer respond training think or is marketplaces? Or one-day they own further or not shipping

David Spitz

I this of Amazon quickly think, like And of as in just the possible. sort as Look, to cost, I case. want expectations etc. page purchasing the and absolutely, at terms instant convenience, gratification, they're the raise that's the end relentless get is efficiency, continuing the consumer think another to of of products people day, playbook that people

now in a gross is say rolling to that previously, probably Prime is You but in delivery cost a including essentially, the rewards. Whole the what noticed brand right? So reduction shot Foods I memberships, compared was that's free, it in Prime, Amazon out which obviously, across shouldn't

still the of lot delivery. space I to the match a e-commerce of up is how that in yes, challenges kind other So think one are people in of spooling two-day

moved. think now, is And increasingly basically as the goalposts so day. now, to become same the have And I going important one-day

how Amazon's of have advantage competitors footprints. lot a is they So have store the

everybody's to They have match condition in that -- promise. some told the to continue start I they're and we hypothetically, it's play And consumer my expect extent. to that be to it they physical have at to to to But continued networks gratification, instant least, to view, -- going already can catch-up. of think distribution kind absolutely,

Operator

Cummins ahead. Thank question our go is Riley from Zach Please next you. with B. And FBR.

Zach Cummins

Thanks Hi, morning. good my for Yes. question. taking

interested to terms So little feedback a I'd in just trials it actually conversion feedback be rates over I new non-free you solution. know on customer the any early just potentially ago, had or month of subscriptions? sort have of a launched one you're but around Elevate seeing in question your I paying

David Spitz

Yes, we're offering Zach. It's, early, like, XX-day super trial. so a

for at the have up, of that mark. signed folks we're XX-day not that a lot so even XX-day, And

rates a that. So on little it's things conversion I like and premature to comment think

strong it's think a I offering. But

there's an a drive really also stand-alone there's remember, really, attractively. And sales opportunity into priced opportunity leads revenue it's our think Elevate, team. with I to potentially There's a dual but benefit here.

your are example, can also Amazon account to you driving we platform. then that drive for for and repricing. we account, moment Elevate overall sign for they us our help expect, it as you may the candidates attach sufficient helps be that But and up it identify that attached customers volume So

And so much it's very got, very, I think, some as dual stage. benefits point, early would it characterize there. But at this I

of where our We're We're identify points in, a able able coming were early a Through bit of got that. and customers stuck, still know improve process. pickup we're I we to our still learning. the on that into product, instrumentation couple little to tweaking.

into So much what giving I us get that's stuck. part the customers can as where of better like this areas some it's visibility of program about

into well. And our product, some of that learning back as core goes

So to numbers. I still think very benefits, long-term on some it's it's good but got early any comment

Zach Cummins

move is about are the for your my just to and acquiring thinking And cash brands being and the capability? organic Understood. But the expectations by is return well-positioned M&A strategy to positive. cash another commentary. Yes. year. Thanks you How closer balance to potentially other free all of next growth the question that company with appearing the to sheet on flow

David Spitz

Zach. Yes,

the last bit I on on As a call. touched that little

being want quarters. really I to tackling. the and few emphasizing our and over by that blocking next focus clear Is start So

driving making levels get growth. organic are sales only back but that sure we It's the we productive our capacity, to think that then appropriate, not that U.S. and really

we that intention. and risk not put lot extent transformative by That's the balance wheelhouse. That's there's sheet we the at M&A. that do if really really, a would concern that trying somehow of think the to leverage put balance our sheet I to -- a on that our in not big

gives our changes us view making. kind to the assets make flexibility fact for got as of that strong balance a we've been we The the strong that we've sheet generative, and cash us and

now, I really back is performance. on the U.S. to think for focus blocking tackling to and that the So get

Zach Cummins

helpful. all my now, with That's had of And taking questions. for thanks but Understood. the the questions year. luck rest the That's for best I again of

David Spitz

Zach. Thanks,

Operator

Thank you. [Operator Instructions].

from Please is Analysis. First question with next our go And David ahead. Gearhart

David Gearhart

to Hi, we you questions. the prior-year of that get period, XX% first just good the trailing get comparable is of you revenue. sense mentioned question represent XX-month my morning. trajectory? a taking customers from the brand Can number My for Thank

David Spitz

I don't think that. that we have provided

see that what think, can brands don't about is and let's the feel you very good. would I We So what that we trends provided look business. I are our tell good historically. at But provide. we've

David Gearhart

past know growth And quarters, can you provided I provide you the the growth Because year-over-year on rate? rate.

get we hopefully, this you metric quarter, last can quarter? think I that didn't it, provide but

David Spitz

continues haven't We provided it strong. to be

ongoing intending you we're metric brand's But performance. necessarily quarterly tell is that with to can continue that not be is about our what to we pleased an view we talk be for our think metric. I really every I

David Gearhart

Okay. And question. of it's more then me, a lastly high-level for

on With shift the that whole to focus marketplace brands and selling.

over customer several the quarter, this quarters, and Your three up last customers. additions have been down and some you last lost additions quarter,

they accounts. and of up, clean by And at focusing channel do the of losing or going if in your marketplace up from brand shift some in are who's as of sales effect that and you larger clean on up sell strategies? shift understand I that know the to past, to brands marketplaces need besides we a small to their as to of tighten a -- on there's kind capacity customers nature risk dynamic you allowed products inherently adopt your reseller your there's another wondering sort growth themselves strategy, of had brand on? But inherently appreciate Just you that better issue base focus in base

David Spitz

in. Yes. brands to I more continues. area that need time, digital dynamic as and for probably that critical say I they and going see that, David. e-commerce What a industry, question, long been continue, will right, is on expect Great be would think that's I involved the as that in a

if an five And is through share will to or or for without with of going forward that reason direct fast wallet It's continue be brands that the that you that ChannelAdvisor, anticipation likely of we very brands years. have than right? would shifted So intermediaries. likelihood part years the higher of XX

acquisition but -- our important did So reason customer an retail. was That's brands this for will that hypothesis why the the whole of become segment.

customer strategic as why a focus segment. continue to that and we A on few years ago, that's

So think that's a don't I phenomenon. new

been very I that But something it's market. are like that something to continue to that's well-positioned expect serve happening. feel think I I that's will happen. we

question. that So answers hopefully, your

Operator

turn Thank to call for queue. her the you. the any Traci back remarks. in would to And like I'm questions not showing further Mangini I final

Traci Mangini

look support. you, your for continued with soon. us forward morning everyone, thank Well, this We and again to for you speaking joining

Operator

gentlemen, And this concludes ladies you Thank and for thank you conference today’s participating. call.

You disconnect. now may

ChannelAdvisor (ECOM) 8 Nov 192019 Q3 Earnings call transcript