ECOM - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q2 2021 ChannelAdvisor Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Raiford Garrabrant, Director of Investor Relations. Thank you sir, you may begin.

Raiford Garrabrant

good and April you, morning everyone. Thank ChannelAdvisors XXXX. to conference call of quarter second the for Welcome on call Operating me Officer; Cornetta, With the Chief Beth Chief Spitz, ChannelAdvisors, Segovia, Executive ChannelAdvisor, ChannelAdvisor, Officer. Chief Financial Officer; Rich today and are David a as This well details on performance outlook for the release our morning press with quarter second we XXXX XXXX. issued our as third quarter website release at the of Investor press Relations on can accessed ir.channeladvisor.com. our be This section

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

During we subsequent statements that from uncertainties considered cause reflect that are be today These a These call any obligation We are date. statements laws. under update will today's materially to of could summarized to and make issued not the any disclaim release statements our any differ may variety federal expectations. to risks representative to that or outlook. statements of business we our These of forward-looking as should related press today. views risks our in only be views results forward-looking considered and actual of securities as subject

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

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

the XXXX EBITDA contingent of of XXXX only adjusted consideration. value EBITDA costs July excludes acquisition acquisition in fair For with while excludes associated transaction change related XXXX for our adjusted BlueBoard, only,

is EBITDA revenue adjusted to as operating the cash which purchases by equipment less which free and related as our also divided margin, of cash calculated EBITDA flow, as refer flows We measure is operating well that gross press margin, includes operating expenses, we development issued gross income, profit, GAAP operating cash software non-GAAP and flow. net margin, reconciliations income non-GAAP release for costs. free today adjusted The EBITDA, capitalized adjusted to

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

our presentation quarterly the continue that be to future. Finally greater questions metrics provide our analyst provide at the or results. advised insight offer over may me we usual business call incremental our may Please let turn that of that into detail additional prepared responses times David. or the to to are we our comments in or in may With to not this dynamics to

David Spitz

XXth they vision Scot anniversary When ChannelAdvisor would and vision in managing and founders sellers is years as XX help ever would pure that as later been. started that be Raiford. July it's business. in marked huge our need our and Aris XXXX, Thanks, had it, a e-commerce

our for all ahead next to like to And employees us as this milestone, even and helping of the thank XX shareholders so I'd achieve partners, customers, we look years.

accelerated for of strong I'm adjusted durable I'll touch record to Our marketplace now quarter year-on-year longer-term a bullish and subscription keep and GMV COVID. to revenue a investments us particularly row the QX quarter in the growth brands, exceeded comps in on a lapping grew with full indicating the to tougher EBITDA, our for year fourth revenue we're drive pleased despite our highlights guidance double-digits that report expanding Overall growth XX% business trends of our our prospects. combined to momentum and on business continued growth few quarterly both growth, as GMV our results. that in execution, and

our revenue performance expectation to the teens. we're First, with revenue at increasing retention, in sales subscription we revenue more full-year maintain least coupled growth comparisons double-digit year-on-year for despite growth upper strong and and difficult continued

longer-term subscription our underlying revenues previously, said seen business. we've of in the growth strength an of indicator As we've as important

is total revenue financial we our as continued QX XX% year-on-year, QX revenue. XX% revenue up represent X year-on-year represented a our our positively with of believe pay enjoy Second, for drive customer subscription from the record we points record. rate and what the In unit proportion represented and off We will subscription our continue fastest economics the to we larger growth of on XX% to revenues. grow consistent brands increased on in focus grew they whopping quarter, Brands have benefit saw a of XX% year-on-year, performance our brands which and base. that brands to superior long-term a with revenue

the driven by strengthened expansions for our activity our ever. of strong achieve and level majority substantial new highest Third, in continued products with to gross bookings. demand which represent bookings brands, strong second us helping quarter, a was our This record

addition enhancements. momentum, platform recent In by we saw improvements driven retention our sales year-on-year services robust in to of efforts the team and our

enhancing base. customers. see customer brand invest We innovation and to in continued to our expect and innovation, area we our ongoing plan this Fourth, our investing growing strength product as to our heavily for to in services, continue value platform in deliver we've

Amazon at This only Zalando, XXX comprising rate than three matters of larger tail Plus, top to us, than in marketplaces earnings that GMV of in channels middle channels we eBay breadth globally. time the far we're we the channels aggregate more our are expected continue and like by in Walmart others As number increase terms Target At Shopify the that pace. and and to announced QX we supported a marketplaces quarter of this XXXX, by was and supported ahead long our faster call February, of grow the so GMV. on second discussed second nearly of we and to well our aggressively over because XX expanding for

lead we across second and announce registration X sensitivity in curated annual will retailers agenda Adjusted to and operating the The issued product, management be but turn spectrum our a us. proud quarter good So rewarding like experience. teammates after cash not we large positive to this reduces to cash This and even specifically time in Beth discipline brands Best sales, and $XX hand, With XX% margin in extend of Eastern with year to market short, in and we eBay include delivered winner globally. of million. quarter of sweet Time. over that, seventh to Places the flow. it's the and you. initiatives. later about the in more market I'll excited today. will no I'm you opportunity broad with with a over Day I'm to a healthy see further Amazon. hope September from million increased particularly with for our be a channels all because online XXXX morning certain employee to share the helping have as live o'clock because us release conjunction the debt, us, us growth conference and does slower investments it only We're $X.X virtual a customers, more for model margins leadership, this And to investing channels to EBITDA there. to help Business cash extent and for of session press reach front year-on-year details presentations and also and how challenge a for flow Triangle and In Journal's on XXXX, Thank of we to growing of shoppers, distinction very won XX% on that Connect And robust our winning care hosting our also a intend Work market and was to will especially XX This our deeply even is reflects pleased Award. were to continue at this our we Q&A in fast-growing Analyst it's event all attract lastly, lean good diversification just our services, growth our financial is customers this our about increase announced And it's has

Beth Segovia

David months. over morning for positive QX another be to I'm maintaining excellent build you, was we pleased and us to saw Thank the quarter that past good momentum everyone. the XX plus report able so

our gross with SaaS Remy and our bookings in customers mentioned, added Reckitt formalize team achieved Cointreau the notable relationship We David As Benckiser, ever new and highest including Kodak, TikTok. XM, strategic QX. Solomon

our account ChannelAdvisor a of sales our drive level team record like client a of This closely the with testament goals. Clorox is and online did Gocandy. understanding beautiful needs new achieve a managers is in customers customers existing job which leveraging to to ways working their Our commerce with business numerous helping

ChannelAdvisor indicated and segments markets ratings focused more quarter progress. year-over-year QX, efforts know up favorability customer survey to with awareness key to Also feel help enable feel ChannelAdvisor. We our of to and and the since of Bookings, have of respondents expansions and a high completed in unaided of our of showed succeed XX% retention in same can familiar see fruits drivers among retailers online. target we'll marked how improvement. that brands and our we In sustained position XXXX. drive about are It's we and remain churn, The in survey on brand recent to trends. growth further gratifying and was also programs about really the important good improved success exciting we promoting good our more underway equity another than brand terms QX

deploying to cohort realized their enterprise structure new the one rollout should newest effectively to in we've three focused cohorts fully deployed QX. are service and helping We we And in on additional our staying of remaining customers just of With onboard continue QX. objectives. clients be our support level e-commerce

has and the our to organization, depth meaningful With relationships. has Our very stickier than are results we needs expected. been positive business global making success created our coverage expand cultivate increasing by in enhancing better to their brand services large this the serve and customers the engagement. across feedback of attracting investments and our initiative, initial Customer opportunity ability are

remains new an we've regarding brands share now me digital and our innovation update their transformation recently their achieve to objectives Enabling priority. Let released. accelerate capabilities e-commerce clear platform

As our integrations us were to enable adding as by at telling add many by at earlier the customers we can mid-XXXX where we compared to breadth of supported expand of year our fast XX plan this as channels channels shared they'll them XXXX. additional least we are end significantly

We velocity high QX. in to continue with move

of supports globally. now additions XXX new XX more integrations than ChannelAdvisor recent the over With channels

Japan, with Penny and and in dropship Germany Home first Australia. Joom marketplace in in new Depot Myer and six and party Canada, five in U.S., the in connections Lowe's New integration Petco Chewy in markets and Zolando in markets, six Rakuten in

still been initiative has in early this response is stages, While customer the super encouraging.

development presence, their media shoppable our is a offering. focused operations shoppers where, their optimize and seamless helping To on shop. we've and how customers also engage expanded when, deliver product they online experience brand elevate Our shopping

retailers landscape consumer products scooters, and offering product sellers purchase of such in sites and In pickup workflow A brand to known case delivery. tag. system ChannelAdvisor something segment brands decisions retail towards product. through by how insights These launched help ride the to ready e-commerce of which releases support Dynacraft, actionable to team brands bicycles, can visibility shopping or to improve defined display expectations and willing sold website our recently is in-store leveraging for services digital sales. for ChannelAdvisor sale. that visibility intelligence a advertising example recent and in curbside the our their embrace experience forms transformation on with how operate and managed always monitor for for optimization. powered just customers addition and platform In on critical insights up by This and and example capabilities. is response insights is achieving management and our solution as out a team uses Dynacraft sales have directing progress Let study drive latest by pivot equity, Connect, to increased leading shift an has brand shoppers arrivals, the consumer success, has provides XXX% their now our Walmart.com product using to inspiring provide year-over-year guidance online on Providing them demonstrates full streamline retailers new empowering battery and to their diversity, win changing brands powerful increase to available and online manufacturer brands an words, provide scheduling, with to providing expert and automation e-commerce our on ChannelAdvisor's and boldly increased Toys critical competitive with on inclusion. Walmart a managing update a me business product new the helped deeper to are top including in order task we've succeed ChannelAdvisor you bidding now as of product listing to strategic we campaigns, to ChannelAdvisor new been focus Dynacraft

We our XX% of of leaders. have including enablement training, and prioritized completed employee and our bias has awareness XX% staff unconscious

common formation together the enable led employees have employee and pulling networking, resource career groups, to employees with scale of seven development. addition In experiences

recruiting more increase colleges adding to wider vendor universities. with access with spend spend by have roles We relationships minority approach our modified and our available by that on increase expanding to our minority-owned vendors XXXX. and broadly set to and We've a on advertising at in track new numerous assessed are businesses

execution feedback what best QX be the to policy these see their choose our employees good XXXX individual we we we are XXXX earning pass see led flexible To continue their provide recognized level allowing while office, mentioned. with make and based work summarize, financial that, their award, success. Places also our with Rich start a on really like a David individually freedom enterprise to for and now the for expanding on Work that new best our enhanced these getting empowered adopted wonderful accelerated to a in remotely, more great it progress Rich? employees to as access performance. to or by them has works to service employees us exciting Finally and combined customer to for here believe forward of things on in Best to pool in positioned giving was in our XXXX we update With and QX work needs. fast pushing to mix, marketplace expansion initiatives and QX are rapidly globally. the to progress come. to to decide ChannelAdvisor detailed in gratifying on we to build made efforts It's I'll initiatives our date ChannelAdvisor on talent Based By enable we each in

Rich Cornetta

good and morning Beth, you, Thank everyone.

and of growth, of specifically We XX% revenue healthy year to success revenue, period that subscription growth, acceleration, to report comparison to QX We during entered quarter strong another regards brands performance, to areas topline increased difficult in a are ago. flow. investments faced a the strategic margins, proud double-digit knowing the and which variable we cash revenue sustained drive same year-over-year with

we're providing we on of more and in we an in benefits our innovation. subscription and to the second with excited the customer areas exceeded our teens of QX expansion retention for XX% report However, for from focus platform growth our we call, continue services the over and the we year to in quarter outlook subscription brands organization, total earnings represented of quarterly prior the in the growth Overall, progress our after brands in that the increased have revenue revenue organization, continued provided exceeded guidance revenue within upper May. control XXXX with made and EBITDA on investments success from expectations of adjusted achieved quarter The growth those mentioned as the growth. And sales we highlights revenue impressive last over even tremendous subscription revenue rapid of the XX% fourth subscription consecutive acceleration year made quarter. David in more we've both acceleration QX earlier, last from our that is year-over-year. subscription revenue

quarter me earlier So and Subscription million revenue. little our up best variable quarter, more a with levels. million was million GMV for year-over-year, quarter-over-quarter QX. at mentioned second Total ever line results and second on comps and record let revenue revenue our elevated driven challenging for for our in the reached $X.X revenue in color continued I outlook $XX by the despite another the represents X% quarter of reached up provide XX% $XX.X

$XX.X XX% QX, by million in prior our months, XXX revenue the from total has over significantly have Also remained we customers. and represented XX customer year our financial increased period. retail over higher count net previous revenue basis highlights up brand is subscription strategic additional subscription of specific for of As the customer per revenue average brands brands XX% brands points which cohort, to than

these As investments to our maintain brands the we XXXX. significant of of brands end the by goal customers, and coming our and making a revenue to than to achieving with more greater XX% as we strategic we sight piece of our mentioned stated business of emerge from of are quarter attract retain line every the continue total

finished ahead adjusted to We $X.X margin the our on of of of high at outlook EBITDA. $X.X an QX million, Moving adjusted EBITDA million XX%. end generating of

as While margins, product as our operating building in periods healthy still strategic organization investments made our as have investments maintaining services steadily we've sales. in in expenses been in incremental recent well and

to We continue we XXXX of expect sustained improving incremental with for of product retention, growth innovation, goal the generate business further growth. this year customer top-line the the accelerating trend into we revenue the as double-digit supporting back to reinvest our continue in balance and

to another turning QX of of and $XX.X of exceeding history. cash sequentially Now million solid with cash in year million cash $XX.X this for during half $X million generation fiscal quarter and increase Free the half year our best million equivalents flow had We balance the of year-over-year. cash sheet. of and the first an our with $XX representing first

We highlighted also by and million increase bookings up driven million we $X.X revenue the year-over-year, deferred saw $X.X again, up earlier. strong performance sequentially

for Consistent financial a over the upcoming year, outlook outlook are for for our last we our only Now with quarter. providing the practice financial QX.

issuing least million. growth So between million reflects of and at We subscription EBITDA $X.X $XX.X for third upper strong in a of and between revenue continued outlook in performance million the quarter target outlook million our revenue range adjusted QX are teens. XXXX the an of $X.X we $XX.X and range and and

revenue we as continue in also over to we to prior least increase reinvest QX OpEx in at million generated year incremental the have expect growth the We XXXX. $X

to investments well this we're that full In not from the teens, given subscription XXXX has subscription are in last in XXXX year half continued the considerably are of growth and early our this achieved guidance full-year likely adjusted be at as to at expenses momentum. for QX. an year than see anticipate mid-teens continue expected strong the this to first as maintain estimate will and the modestly to Additionally, strengthened continued also revenue we upper time, considering growth investments our providing designed growth revenue for year compared performance to full-year while the increase least our to support increasing we XXXX. and bookings year, continue But short, we designed our during full EBITDA lower

As mentioned represented XX and on for David solid Virtual execution hosting and metrics you of providing some on look be Analyst earlier, financial September QX additional our another of quarter to to all momentum half back the increased we'll business, financial beyond. results priorities. closing, and In leading a across forward Day of performance our and operational record XXXX we areas

growth plan the product investing Moving With continue support customers, forward sustained and to now focus margins healthy to our revenue in to we operator, our to maintaining strong that, further like double-digit customers and as call cash well those still strategically open on enable we'd to as to flow. our while employees questions.

Operator

[Operator Forte Your Instructions] Thomas Davidson. DA question comes from first with

Thomas Forte

on congrats off, quarter. the First

have one then and Second, questions. I'll in queue because I get question back and bunch have I the follow-up more one

amazing or spend on. height in expected were less travel on pandemic? forced think Is pandemic during to other that what's going than in physical weren't closed I where at have because to a and point money categories consumers David, able of in are travel general categories spending stores and So, more the the when love stickiness the on to just and thoughts shop vantage on they e-commerce the less on online consumers your hear you ChannelAdvisor, pretty

David Spitz

tail channels lapping on of some a you. volume Growth which larger despite Thank growth you vibrant have Where reported saw of We GMV of some know, strong pretty was Tom. COVID. slower of some growth marketplaces. and saw in as was Hey, not. have the that which we long really pretty and

think, we're democratization boost our of good a helps pretty that value it's and think I sort seeing, it the I characterize and I actually So e-commerce I encouraging proposition. think of would is that's

would or think around to as I things mean, far as Delta year As seen, we that. think attributable right, like part I the say of year still tough I spending has a predict. come pretty that's basically we reason provided really variant year. mean June, causing just and haven't to of and, it's maybe spike you've people sort how overall I saw last it but big as consumer shut conferences and was to stimulus checks trends, July robust comp to but these hard super rethink. downs, of got Travel reopening seems full things so much remain just not we've remarkable it things I last and was are a

company a looks see pretty it say, would consumer year against rest we'll the of out the number the and a I like It's looks how So to tougher of me plays bit still healthy. just

Thomas Forte

Excellent. All right.

quarter quarter? you eight So something I this records like when highlighted really the Can you last achieved in appreciated achieved. records about talk you that

David Spitz

Yes, well.

in So had seasonal revenue QX is which QX, our typically It's number line time beat one, a a high. topline revenue. that since long been we

book revenue far lapping year-on-year, customer certainly the be fastest. the growth a to those XX% was last super then pretty our, really that of which revenue XX% out I to noisy of bit through think demand is is brand again another And those but at get revenue team. little subscription at to variable not for to sales is was our momentum as Gross of and XX% you go the addition our in headlines excited back data where going growth in we and of Where bookings, subscription one to just but acceleration this strong. segments could our the year-on-year period, accelerating as exciting. performance subscription as revenue products look at we So sort that's is is look we look our continued probably least indicating I

with to performance strong really really, which want So is see. we brands exactly what

Operator

with Pfau Matt William from is question next Blair. Your

Matt Pfau

solutions wondering to in ask like economy terms as conversations into reopen you considering sort for reopened coming seem just but taking changed, for there any the the your the nice quarter. Thanks did wanted had customer was bookings, economy I customers gross demand change as and quarter. especially record just about of U.S. in of or anything the questions if Didn't in U.S. more quarter. the my pipeline

David Spitz

Matt. Thanks, Yes.

of a that certain, were acknowledgment point it's a at think in level plans digital a and a I accelerate reality certain have had COVID there point people lot urgency that digital that this a they slow transformation caused and pace couldn't that of and to continue to their those acceleration transformation plan.

I think that's permanent. Right.

So in had function to a even which we're we that we as it. step now increase moderate GMV expect volumes, lapping

there was and I longer accelerate shift no fundamental market consumer the advance the to the to and to that to particular where profile brands demand think online. in used when the generates comes they the is what a path that how to digital ball channel and in be our need it realize it in research

we've increased So our on based what the… I seen would hasn't to back it's that if in diminished, sale say, appetite just anything

Matt Pfau

to if Great. then to competition there, you're the added have some platforms. channel any seeing change software ask functionality And management providers I e-commerce more on their wanted of

Just impact that if you any has wondering guys. on

David Spitz

it expect don't I to.

a that still think it's penetrated. under I is really market large

lift is tide rising that a all boats. there think can I

think this come I great see space. to it's people into

what day, the the need, our space the but I different customers, differentiated ChannelAdvisor course is with in it's doing. is ecosystem. our and focus really great think chart to highly competition offer leader number on you of partners partnerships think and have customers keep they customers not on in so a so are what know ability we the with that eye and an the have. certainly globally a of I for things, our We these we an at end the acknowledgment and much needs multitude of that solutions functional

of ultimately of their and best some capabilities We Sometimes lead them. offerings ours our decide can customer overlap product for and what's okay. with some that's

Matt Pfau

in half commentary on just the couple into this key the investing of some are back Great. for seen year, the back of Last the the investment you've that business XXXX. one me, of around the remainder of upside maybe over priorities the just what quarters past

David Spitz

Matt. Yes,

it's think the this themes we've year. that of had I a continuation

of nicely a We've profitable, very of cash we've so and sales a behind So expect more add balance things again plenty sheet, great investments. got capabilities and capacity, that. focused on do, profile disciplined out investment asking profile good been there And got demand unlike investments, make there. flow a we've on trying nicely we've a we're this product to we're to lot do but companies decisions us innovation, we've and durable make very which out so to and seeing services, we're lot more be can make pretty strong demand we customers capacity and got the a those got very returns we that of very we capital to drive comfortable from we investing

Operator

Your next question is from Joshua Needham. Reilly with

Joshua Reilly

Thanks quarter. question. for on strong my the Congrats taking

having the impact from when of marketplaces, of Prime of as moving was Prime of the the in off, volatility think Day of the Amazon the quarter specific quarter business impact maybe tail quarter taking quarter like second should have how some what Day the then you here? we long events the about starting maybe quarter out And to well? So to

David Spitz

to Joshua, Hi welcome call.

phenomenon a years, the there's rapidly started been and think major I a has aggregate long exciting, grow XXXX it our and I couple size but rival towards things, to marketplaces. of when mid-to-end number of building start of to probably for the really of think some it became see tail we really

and Amazon, tail. then and our top to just marketplaces long before, We refresh this that eBay are said three So Walmart everybody.

And and several clip faster really, bigger really so, now is tail a times than long rapid at Walmart even eBay than Amazon. that and growing has been

Zealand, that Germany Zalando New footprint global customers. and from maybe channels on to Poland, Right, So it And becomes its apparel we country. channels eventually specific to have wants the other it's then these sell ecosystem expand represents really for attractive in vibrant an of brand you to an name that as to channels.

or So Amazon what this bit eBay how if owning that for guys. sometimes I that impact you say has down, us removes people everything a good little been overhang ends if think does and like, slowing much thing of is that really up

is that and days. differentiator become wouldn't pretty a GMV it's typically bumper a out seen I is see high it's it's see revenue. increase rate impact. there on how long But volumes you take its I revenue flows, of effect great of in it huge has to question, your mean, our don't bigger when but a talking fact Prime a So couple and Prime GMV We days the us. and charts on is huge say not I To variable complete correlation, continue Day. We Day there two but for a our and that definitely quarter. the correlation growth think when degree tail GMV a of has exciting XX-day that it of

don't are. that time we thinking just more customers a thinking lot thinking about making spend about financial sure and we We our So do about smoothly everything time it. spend of ramifications what the runs for

Joshua Reilly

And Okay, then bit was we that? it looks driving had gross in above quarter. margin the What's great. like what modeled a the compression year-over-year

David Spitz

Yes.

of we're ChannelAdvisor. in front white we glove come the that customers to to the strong want base expect includes investing we and growth that see anticipate making we're customer few indicated, a to sure in of be demand, customer have teams that part investments different our our to capacity that implementation rapid team, that areas, we've as make there'll our So make right of from sure in as that continued our service support, give

Rich Cornetta

Yes. one add that year-over-year to is And, regards comparison. the thing Josh, I'll there other

bottom year year essentially much the driven of margin. recall If flows to growth last top by you top which line, variable to was revenue, directly the last is gross line

you'd why that's some see year-over-year. So compression

Joshua Reilly

The to count in some of of being attribute demand? here. brand customer I'll year-over-year, you Thank added sales customers how the that much just these quick XX% Okay, great, you've one the, then one and incentives more you. in that to just to would versus up natural the when throw organization

David Spitz

any It's Josh. to real precision. hard Yes, say with

chunk we it course is that brands have been brands. just now but plans, structure our really segment we're focus one I doesn't the a up That's think are primarily wow, to to woken and where market customer that demand seeing. team of that that commission probably that it is said, and motivates is sales we that's our on accelerate action big organic the a need hurt digital the of

that effect it. some sure I'm on has So

Operator

Cummins with next Your is from Riley Securities. Zach B. question

Zach Cummins

David brands? little what Thanks came guess, quarter. of got logos I my sense another bookings mean, new that just record mix expansions congrats the gross versus can on for you us give percentage a a kind of taking of of kind the strong and I questions performance. of of from and just bit

David Spitz

probably I brands front realm over from or I on me, the now would guys you customers put on up say, specific have previous Yes, don't mode up saying, of little did a heavy foot overall. the a it's pretty now brand the signed we getting last the percentage of it overall standing different off and maybe I than more number it gas higher we're And bit in seen have brands. year standing it's the but something or in expansion. in job ground our country us QX or two-thirds, marketplaces, for a gotten expand QX, was equation, in the great of okay, speaks maybe three on we've maybe to expansion quarters. XX pedal product what a little and and past think expand of we we're a line a two the the heavier to side to and lot of

I expansions, typical So between I this don't was, and call, it in over weighting towards probably that XX. activity with was, side base the breakdown, balanced we quarter expansion time to I organically as proportion and of on of honest logos the is more have expect be incremental And there expansion in expand about would say saw a to specific it way, our climb the opportunity burst more but by the brands. QX fairly see see of we'd much There's expansion that equation. so XX to would a new them. customer

in penetrated Our we probably XX% dollar base. we're think brand XX% our estimates customer have that maybe to been

of a in expansion opportunity proportion a that as brands, So revenue be over I time. from bigger and comes macro our think sort customers there'll of growth

Zach Cummins

your year move helpful. are you're coming in to the about overall That's we your last feeling How I just forward now that in what the sales you the right environment. team the sales are capacity, continue to as Understood. just seeing as demand given you plans And and quarters? have of terms in to mean, add

David Spitz

succeed planning very expect growth can you seen. we're bookings and some XXXX incremental investments of like you that. both sales we've the would be as engineering at what that as call, and, with sales evaluating so the Yes, would least functions us But thick continue peripheral capacity well, momentum of brands and incremental to in I imagine investments, maintain in I right would now, some to degree the adds that to say also capacity help it additional we're

obviously So, have we're line about XXXX than to sense that but incremental revenue at to evaluating in makes least point, with growth anything a my be it bit and this say expectation in more looking would at that. little growth do don't specific at whether

Zach Cummins

you I for it. what That's I'm GMV revenue unpack just Rich, revenue just mean, assumptions months coming on then helpful the for variable to I making subscription the trends guided Got assumptions the you and and that growth of line? the are curious believe guidance. can of in there QX. just high-teen you're QX that some

Rich Cornetta

QX, the in expect we've to more then X% We developing continued X% guidance, XXXX, of everyone Sure. did a second want more the in just last move pretty Again GMV that growth. bit QX. upper over momentum had on in in I quarters. we Yes, get subscription of of remind throughout as and far year, the much seen growth in the teens. challenging And revenue to flat revenue as comps couple we so little bumping least at subscription QX half last we mention focus similar

in growth But that to of revenue, off just guidance and at you of as similar teens driving least about expecting given, again GMV the then upper QX, top from coming continued So provided. we QX. variable we're growth. results if line QX as committing midpoint type the use XX% to were still in I'm that. And excited far strong momentum in

Zach Cummins

thanks quarter. and the my well congrats for questions taking again strong on Great,

David Spitz

Thank you, Zach.

Operator

Your question Road with is Battle Research. from next Rowe Jonathan

Jonathan Rowe

Thanks for taking my question.

you focus improve growth see to this segment? your do from retailer any is growth the brands potential know I So anything but revenue, on

David Spitz

our it's customer business, allow helped at more and brands that growth allows in by Yes, capital I business our COVID. we a think in think obviously the us cash saw that us harvest possible, retail mature modest Advisor's I year, great to is that for look I Channel invest, segment business customer segment some last that is our growth and as mode, engine more move to a mature see but I really flows into generates

Jonathan Rowe

one more. just So,

you I So know really strong you're mentioned balance sheet.

focus like, You're thing acquisitions. at But you'd potentially or may segment investment be or be looking of there looking looking is strong type for potential any that specific or at acquisition for you that? that on investments

David Spitz

if et disclose concept but the we're to to it -- cash, Well, I what I with would capital thought a investments, as always look, the on overall cetera. inorganic, right allocation about one be our thinking and had call, I say wouldn't probably giving do thing is organic

our inbound smaller on There's our tuck-in acquisitive acquisitions over in spending no certainly that been and focused get. capabilities enhancing platform. shortage typically typically the of of calls the years, been we somewhat a more have We are nature

valuation are given certain expect what where markets now and a think right little companies frothy terms price people of in terms are. of I in

conservative. be balance pretty we're expectations right expansion to be an IR But we do, it's to process the comes there we opportunities and with is capital. think on reasonable with our So generate are experienced whether a thing a year along we interesting at everything run would it's having making say do try going of whether bite return right have geographic acquisition, like reasonable that a price, and also know, financially disciplined you it's don't make But would I that then strong platform our look or on and platform capabilities, potentially to tend we we we're which if we last to I We at. rigorous expanding sheet necessarily that. investments in sure what what BlueBoard that we invested time organically acquisition expansion, financially things to that through for something the like terms again, tend

specific always and comments no terms So looking we're always be of at acquisition interest could in us obviously of interested to that but things targets,

Rich Cornetta

financial little encourage Jonathan, priorities. is And our Analyst attend expand on to in September a XX. to jump capital presentation allocation listeners Rich. and I our more Day on and want the just bit this certainly again We'll framework

Operator

Forte question Thomas follow-up with Davidson. DA from a have We

Thomas Forte

me. taking Last them. few from Thank for you

of but marketplace of this you on touched versus $X GMV $X talk before, Amazon of can the you about for another from margin sales impact David, and a a GMV from So, ChannelAdvisor?

David Spitz

are a say it's up that in of tail marketplaces if for may their of of be GMV kind because GMV new to it of with so any customers specificity particular below may lot thresholds the that depends aggregate Yes, customers subscription they we mix. be you the on their hard will. Right, that they while are long making much in they block still so signing growing so, have up and

variety and been high So, partnership I say focus years us of comes on often team, over us most I that and that suppliers a ours a last economic to a of working relationships many, would quality our few large but we to come high channels in and what channels level, those now and is on with in benefit of enjoy get at hypothetically say selling their would with with arrangements interested ChannelAdvisor. it's the our particular fact, are marketplace

So it could volume be variable be that tied growth. subscription could fees, it are fees to

profitable don't us control all Amazon. where the out about. guess, We So coming GMV flows. I dollar long equal marketplaces shop than GMV and tail thinking incrementally on a don't of But of you spend how more and consumer I cycles being $X they else for say could probably really where is that shop

we about, can to So level not. or I pull don't of thinking some spend somewhere time another a we're lot VNB drive

wherever making our as as to give our to them. channels easier shop, those for Our possible, consumers sure integrate for that many possible, is mission as main we're customers as consumer many creating make and trying value to customers access by

Thomas Forte

Excellent.

David, appreciate, is I antitrust touched would in little tech your level e-commerce this lot a scrutiny but and on big thoughts. and high my now before of a So in question regulatory last right general. There and you

potential And so, for and implications high-level thoughts ChannelAdvisor? any

David Spitz

certainly rail that's topic. Well the third

much career technology IBM to qualified my I but decade a They the guess and long on in very, having Tom, to industry entire battles in more Microsoft opine these speak So 'XXs or more. over others, the typically the draws I that term 'XXs, from very obviously the out are specific studied been won't, than are to am companies. any everything any in play and I

about. And in over plus because that I there dramatic around timeframe. more I'm net the world tail or is that more thinking sudden something aggressive tech decade that kind of time like extent any pretty us are, that impeding timeframe more growth don't up lot change somehow history, of there channels and I a I long positive the that probably think players. manage. diversification the are we the play that's so, will is at posture the to it's spend in there on whole a I a suppose to going that To those landscape by some be might any look of those, you on of or splitting out focused the But dynamics governments accelerate a long is about expect if the talked whether again, there the that for larger guess

front. cycles And on so plan we about we how contingencies that don't thinking spend

Operator

will There pass remarks. closing further Raiford time. to at over questions I are no this now it back for

Raiford Garrabrant

for today. We to Thank joining speaking you everyone again forward us soon. look you with

Operator

this for participating. conference and call. today's Ladies Thank concludes gentlemen, you

You may disconnect. now

ChannelAdvisor (ECOM) 8 Aug 212021 Q2 Earnings call transcript