ECOM - Earnings call transcript Q1 2022

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Operator

Good day and thank you for standing by. And welcome to the First Quarter 2022 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 Raiford conference Relations. Garrabrant, like speaker to now today, for Head would hand over the your I of Investor go ahead. Please

Raiford Garrabrant

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

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

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

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

of in will today’s measures, of certain are today. that call, the reconciled course which to we financial refer issued release the During we non-GAAP press all

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

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

David Spitz

strategy again Thank in financial you, a the XX% revenue like revenue was focused a Raiford. increasing solid is end confident We guidance to keep with and end prospects can few I’d we and in XX about year-on-year. us strong our in share adjusted and revenue coupled This first consistent adjusted range. million the of with guidance EBITDA. execution. quarter the of EBITDA XXXX million of exceeded results once targets strong, long-term our of high that XXX that delivered our now of brand’s highlights range the result at our our achieve high particularly direct Subscription that bullish

our time focus to pay total subscription XX% revenue. with an high our First, year-on-year brands XX% of of from and revenue, of revenue XX% off up first quarter on all to our continues brands

where generally benefit point business. a we’ve economics represent superior revenues from with brands will offer they Because brands. higher of will stickier enjoyed the tipping approaching We’re our brands the unit are to results, for percentage majority potential the fast continue believe we greater to grow as our expansion, and come our of

model. we Second, COVID. view move ecommerce our of high revenue slowing to our our helped despite beyond as durability a more guidance challenging macro end drive environment, the overall total testament as We subscription and range, a growth of this strong to growth revenue the revenue

the back half we comps bottom stronger and ease. year-on-year in in was finish year, growth the out QX in expect our to that expect quarter as we comps lapping Importantly, the tough as revenue growth of year-on-year the

the for In return the fact, for to in half strengthening the growth double-digit expected of full have we and in the back to of significant weeks, but year recent would the dollar year.

we’ve ongoing our in value continued to our to investments platform. Third, customers deliver through strong

has expanding globally, of of and channels maintained and we to us, three. breadth faster be over aggregate, I Walmart our tailed again second channel and that’s significant continued than to only larger Saks, XXX now much in Long differentiate us the expansion our potential to rapid channel has eBay why for for than a support was all we in supported Our and which customers. QX, Amazon, pace including GMV, channels anticipate grew

was European fast our before, you’ve third marketplace as time, for Zalando, surpassing mention channel first Additionally, largest growing the heard the Walmart.

to In addition, in Fourth, innovations to the $X strong million up total. cash product QX cash with generation recently of Beth out. remained quarter-on-quarter some many speak we’ve million will rolled XXX

pristine Our on delivering while investments, still balance to free returns attractive and and allowed debt capital cash robust have and flows. sheet significant make invested us profitability strong

excess and we Beth. normalize, remarkable a we of are approach committed with capital, disciplined we remains Although I’ll years that, pandemic align couple to In on growth. of rates turn as and driven following well to objectives. that positioned And opportunities growth returns strong even we our with deploy closing, ecommerce outlook it over drive continued opportunities a focus growth, our evaluate to remain financially potential to profitable our continue where believe to

Beth Segovia

that XX% recently expansion staff semi-annual we participated their are specific their employee Enabling we off season Coming good holiday brands you, benchmarks. in our with managers we above transformation of a objectives to Also, say survey, update improved XXXX. and momentum ecommerce of running satisfaction To we growth hit a high history our and in worked digital and priority, proud the and kept industry employee so clients to and company achieve to engagement our QX. in in QX, morning, our our strong accelerate conducted ground everyone. this year. well our start, remains the going for again, Thank and plans account to David, record

access walk you a now to like in terms delivered this more leadership, significant detail. through advancements to capabilities, we and and little Finally, of I’d product industry in channels,

channels. product journey, they are whether array platform release traffic more fulfillment customer or streamline and across to to all a them preferred across front, orders how the spring process help an enhancements, promote and how actively from and interface. brands gives drive with entire of marketing, that integrations the On their seeking will partnerships, to products, it’s retailers, even their selling, ChannelAdvisor that their innovation operations ways do ways scale they optimize brands e-commerce operations single

to our least by XX customers mid-XXXX, year, of compared Last XXXX. integrations of top adding for our of innovation by supportive our committed the to where priority new to were at at expanding channels. it One breadth make is consumers reach more we easier to end we

new well another XX Germany months six Linio fast first-party including in X Spartoo result for planning AliExpress, to as January, dropship channels start got execution off integrations locales a European new of for adding QX are at exceeded XXXX. marketplaces connections similar rate in locales, and a and terrific in As Chile, to as to the that Austria. goal XX team, add we We and with Mexico, again in Walmart a new and by in Mexico early Douglas nearly in

to access integration. of these our channels, ChannelAdvisor XXX customers new addition the and marketplaces over provides now With retail

to content the to on in XX Amazon bringing of easier just than on in for the high new total third-party commerce content Success made first-party adding XX having locales, support product quality creation a given channel. more XX by locales. automate brands multi-channel also and it vendor We for listing relies a

fulfillment by such Wayfair. clients fulfillment Our as the leverage across enable support to ability and and automate advertising. release, deep fulfillment product sellers our and latest providing additional our go strategy native to to ChannelAdvisor is and on Bol.com their capabilities channels manage With our including key operations channels expands

deliver additional flexibility options over availability. product experience, integration, can sellers fulfillment selection best and the on-channel consumer while fulfillment With based inventory on these maintaining

status that XXX pleased by say year. used cementing mentioned to vendor I’m we multi-channel recently audiences. to On we partnership prestigious list these for innovations named a an were on our the management retail number year, advertising Google showcases These the the Commerce quarter, top achieved for established commerce that ChannelAdvisor managed retailers channel available new Continuous for quarter, the this released XXXX Premier be and in program, opportunities position And Criteo contributed Partner again reach consecutive Partners services of should one mid-year. joining this Last criteria as Google under front, X% for customers. leading advertising exclusive capabilities the by we media the to US. more expand tenth advertising API we in increasingly also is TikTok platform our to product Digital for brands like e-commerce. the have partners TikTok. with

of Tack equestrian on are ecommerce platform who increase changing automatically By in we of AJ partnering client’s and brands Tack that to solutions all team with expectations leading apparel great. customer firm drive partner, revenue almost Tack, more that ChannelAdvisor landscape. exceeded platform need recognized insights results same one-stop has from brands another case needed by repricer visit new shop tack Tack working its and of like easy Manager, a with QX ads. a the to Until on their on once of put came reach access premier support, if year-on-year see in ChannelAdvisor a ChannelAdvisor’s In and more and is shifts also please home on They to selling AJ board, But marketing. when utilizing May learn ChannelAdvisor the a the ChannelAdvisor place, the demand. XXXX, for ties eBay, stay multiple the our leveraged Noting advantage AJ to while growth our decor. focuses in fast increase ChannelAdvisor, both provider using about Walmart, ahead digital quote; AJ a conversions during Amazon, Amazon frequently. BuyBox managed words, long-term that marketplaces one help XX% was and and Ads, we As immediately. captured an the website specifically and the By closely platforms consolidating To for it high-quality marketplaces this together, they a saw Google respond ownership quarter. Google study repricing with XX% training to Strategy

Interparfums momentum Michelle of And as Perry as mentioned new customers our evidenced Saks. brand strategic addition was in Wine. landing Our and through customers new Ellis, Ste. the earlier, partner David such

collaborated there our continue expansions is customers, with growing approach on XXXX In existing of Lacoste, to Worldwide. are resonating made To sales customers QX, business with initiatives managers it account momentum the sign to continues to we we provide well-positioned numerous terms be and pass with with In our Wolverine our build their update in Epson our trends brands. performance. capitalize reach and and on like to team platform operations the streamline our detailed to to underway summarize, positive brands to ChannelAdvisor in on Rich Rich? empowering new offerings, going. With our keep the product customers, long-term to promote the more now financial that, By industry. a globally, I’ll progress

Richard Cornetta

Thanks, and the results, have quarter everyone. adjusted investments entered of cash the XXXX first EBITDA of months. robust made and morning, by generation, coming driven over good line the off growth, subscription and revenue top We past a record strong Beth, we year strategic XX

Our At high-end at of expected achieve and growth healthy and first challenging outlook even some acknowledged cash of high-end in revenue quarter revenue subscription revenue continued results in growth we XXXX XX%, our also same the generation that the growth investments. guidance mid adjusted the anticipated continue range. revenue better strong of than that range, to came for QX subscription the QX. report that to the I’m EBITDA comps time, margins, we year-over-year continue for our guidance pleased into with to variable strong of expect teens, with and exceeded the the

million We our last cohort X.X million variable during $XX.X of the get we associated into revenue reached with by year. details achieved year-over-year, brands outlook. what remained factored revenue QX. total at $XX.X million, So XX% growth $XX.X achieved up quarter, up record And in million the revenue with in year-over-year. revenue solid our line of matched XX% QX. QX was into the Revenue another performance, rate year-over-year let’s for X% reached subscription first Total driven which and results

cohort realized revenue, XX% revenue over last of year, we the record record. total a customer per by throughout roughly importantly, average strong revenue year QX, More basis customer the subscription strategic to retention brand XX.X of period. new brand’s prior million and our This is and subscription is representing increase Brand’s during XX% also count from continued revenue quarter. customers. growing our And driven XXX the up of points

the XXXk customers Our majority of represent continues ARR fastest to customers these our growing ARR. revenue be with greater cohort than and

to continue brands XXXX. from revenue end we that of majority the all come Given factors, expect will these a of of our by

The the outlook X.X at on was footprint million, throughout of lease end benefit $X.X EBITDA. We abandonment, adjusted adjusted our XX%. driven over generating well ahead EBITDA the which of QX finished EBITDA of to high assess an from million, well margin adjusted moving hiring, to primarily continue performance Now of our global will by we pace as the the year. across as of

remain While made last over been strategic sales the and growth, our biased still as margins, building organizations. towards maintaining expenses steadily we healthy we services investments product and our and have year, in operating

at healthy generation increase million QX, we million representing another approximately of respectively. than more in flow year-over-year. Operating cash during X.X million As had cash $XXX mentioned QX and with in an quarter equivalents sequentially earlier, free and remained X coming $X cash very $XX and reaching cash and again terrific and of million million

saw million year-over-year. up QX revenue deferred during increase record $X also We again levels, to

Now onto financial outlook. our

second between and outlook million range between adjusted the providing and XXXX, $X.X million. range million quarter of EBITDA $X.X of $XX.X For revenue a we’re million $XX and of

we As anticipate meaningful low-to-mid If saw QX on impact by higher least expected David quarter to decline up variable the revenue. revenue customers comps the which would reflects over our a result tailwinds of to over over financial past headwinds, to in in last due strength similar growth primarily strengthening expect outlook dollar subscription and earlier, for QX the we teens. benefits of rate have what our mid-teens. a and our year-over-year, our first lowering the points. had tiers revenue X few mentioned to be and subscription year-over-year the subscription stimulus difficult ago our respect the percentage not has revenue, the for FX to weeks growth subscription With anticipated been year, aided revenue growth We in a outlook, trading at continued because the year

in June year, Prime driving variable Amazon higher addition, held revenue Day ‘XX. In in QX was of last

the So the despite the financial respect the to outlook due normalization currency, respect coupled provide to we and COVID revenue from variable effects QX year. is subscription have of impact good visibility remainder the in in even left half FX, back This the we believe to with of see, revenue, a year. for recent the the be we growth volatility revenue as year. the seen we’ve will with will we of the We to last finally with low tailwinds point, of for excluding expect stimulus

half On $XXX we to have adjusted So revenue range for mid target double-digit to mid be the basis, as million and our would growth in $XX in On expected well growth to at XXXX. the as currency the of be on for low subscription back a full achieved year, subscription revenue basis, million. return outlook constant year, a the We revenue teens, $XX year. growth resulted constant in revenue least to in the a million of full outlook the to year million our full the would growth the teens. of anticipate top the significant EBITDA subscription $XXX in of be in rates range to in currency

So, with our have rate by brands, are we strategic in closing, remains in the focus subscription seen growth and revenue. encouraged we

our an and open strategy to hand of We the remain our continued that that to weighted cash average on the support only like ROI to of investments operator, judicious the questions. all With we’d with pursue potential that our appreciate that will brand supports We stakeholders. has now believe and cost we of our will call exceeds we capital. provide

Operator

Our Colin Sebastian from of question Baird. from the line Instructions] comes [Operator first

open. is Your line

Colin Sebastian

everybody. little I first, good David morning, I of guess, and questions macro a more have here. a on the thanks, bit couple environment. maybe Great,

I far think globally. been strong on seen has there we’ve not, been We’ve seen there’s certainly Amazon business. impact thus the if companies other no said in headwind spectrum from indicate Europe, their results, really has a

April, you could little a the kind you I Is What seeing And you what you’re was on that Thanks. see a drill a provide I on have and follow from up. could during down did linearity through more that? specific? detail So if little hoping quarter channels of perspective bit. a

David Spitz

saw the Thanks, everybody I’ll to of I pandemic. stimulus moderation compared and was in in check pandemic, last Colin. had, Yeah, in remind that so, largest obviously, US the that March, we the GMV the during we middle think, the issued

things and And so sent previously in of GMV. sort dashboards checks I’ve those see because the referred on as and day to those a deposited can Amazon we out stimulus get our spike

against March. that in we’re particular comping So in

of mid the making April. it saw and up watermark in year March we But perspective that terms that late GMV stimulus what mid coinciding towards so comp. from low tough back a to around trend was we of creep last probably end trend is a -- in March the saw right with March And check, saw continue

I a this obviously So bubble you’re looking in bit think year stimulus comp large last that little repeated created year. a of wasn’t at that a part,

that, you course, I think depending think $X to I’m that has some you’d have -- be or Beyond effect where $X, not it’s spending is gas live. that $X to on when that crazy speculating, but of gallon, consumer a on inflation, discretionary

consistent, so I spending, discretionary I the not little as bit But that that weighed would I on would has that say well. patterns And they probably a say were expected fairly weren’t things look April. of trajectories you followed if our internally, that charts, look into specifically, and over I of QX the sort the all channel similar course the at at necessarily lines

Colin Sebastian

apples-to-apples walk could through an ultimately you down the increase to Can high bit think how of increase the of little sort basis? ARPU and that on on ongoing that sort go the drivers ARPC, you of of And I drill that’s a helpful. brand or subscription Great, there. kind want

David Spitz

you’ve Rich, some to to add, something you assessment if got join and, give qualitative in. feel free I’ll

entirety One nice about of use our really right. they things brands is that the of can the platform,

for we -- obviously, offer marketplace media, first-party also So known shelf analytics, integrations first we best but dropship, shoppable have our we media, right. also marketing, digital we’re -- retail

the of when multitude into us, other an line to they of XXX to they of with might expand be But they particular wide we they’re need. with could We are times capabilities channels, have of a with solution a and see over they then range one we lots expanding brand, brands, starting solve so time, lines. out XX because to of trying one actually initiate they be a with work start adding products, relationship opportunity with it acute have be additional Many customers could geographies. we growing could expand and brand other product product a

So contribute pretty with those all to a expansion opportunity of things significant brands.

we things I alone, wallet customer our the we we we at our addressable think existing million the just and was Day, Day we or share that felt on brands that XX One quintuple our Analyst revenue at at within million. were already did had could least Analyst we of brand the roughly revenue, that felt said meaning base our is at about we time our customers that market $XXX in from of that

additional and an So the obviously, opportunity expansion on pretty us. adding also remains significant for progresses, important focus we’re is brands as time focused but logos with

Richard Cornetta

there, than add driven XXXK, focus. prepared ARR greater in Yeah, thing remarks is, and the I the by I’ll mentioned and revenue our brands that’s our customers cohort fastest with our growing are that only Colin,

brands are over just our brands we put on site driven Day focused customers And the there. retention, also or focus at numbers net are Analyst -- revenue there. again, to behind mentioned brands by So XXX%, some how with regards to that

for put to David’s numbers statements. some just So

Colin Sebastian

when higher able services? of just the And brand, adopting expectation be terms clarify, monetization are of the as or you’ll Thanks. the pricing of sort of drive that size part to brands of pricing, growth to -- is beyond more you in these

David Spitz

a few there’s right. can grow, ways Yeah, we different

revenue they growth expanding you’re the we that at for that So and price opportunity or cases, join our expansion, itself, yeah, if platform in I lines neglected virtually that’s various brands another -- have, they’re also in is why as of just adding significant so come we to factor to growth right, us. And which contributor for charge those and so seeing grow additional expansion course, additional that expansion to a platform they geographies certainly those to mention products brands. GMV, sell we have more from or of an subscription monetize But our product with there’s all services. they new that

Colin Sebastian

Thank you.

Richard Cornetta

managed One advance customers other they to also their revenue is thing customers, to for more every e-commerce tend higher e-commerce pay there average of utilizing per and is that also that They’re experts our objectives customer. add our driver day a brands to so a premium that. be

Colin Sebastian

Thanks.

Operator

come Cummins question Our will Securities. B. from from Zach Riley line of next

line open. is Your

Zach Cummins

Thanks morning. Hi, good question. for taking my

one of assumptions year about making talk you’re me, Rich, that being into outlook in guidance the First for here currency of kind baked as and QX can what’s you some well? full the

Richard Cornetta

of we’ve an with We What the the in of in couple much not, made for remarkable. consensus alone impact on us roughly year. was had in we let weeks pretty the seen mentioned last it’s recently matter, really ago, we -- QX. just it more three few essentially, point for and QX, consensus to which right FX, Yeah, if two how would of a forecast that adjustments current line be impact, our QX, surprising a a rest it updated for and weeks, then

year, baked remainder the as a For point result that’s anywhere current between FX five model. to into of see we four our the could what’s impact, of and

Zach Cummins

of terms in terms guess, carrying of be and enough, Can at to sales juncture meet sufficiently And last you’ve sales force I the in capacity the in quota a about that’s build helpful. you of That’s you? I front to investments really the out able investing working demand new you’re to of talk innovation. at year know, bit a in for with Understood. this the having product in plus, probably been force a where

David Spitz

Yeah, Zach. is It David.

that. sales bit of hard the there came closing the completely worked on really year, to last course we address very of and pleased close may recall a really to the capacity four are with over would so a months into gap. -- And we’ve We we I say are gap you the

year-end to so QX, of target, hopefully, actually should resolved we’re that of we that And that. by and I to end short our We’re few fully a have just to anticipate little with bench over trying the headcount hire a create on but and bit hire actually the maybe and, some we a strong luck, of April bit progress made front. in into that little quarter

Zach Cummins

out there? That’s geared any a have were that. helpful. customers has theme your that from question marketplaces Understood. the breaking And specific majority regions about, to in Can specific you initial seems sort talk mean, bit it guess, I terms been towards expectations little put be final ahead there in the marketplace brand’s of been that of I strategy, of into? expansion well key interested targets or pacing of

Beth Segovia

question. the for Thanks

I think a one. it’s good

opportunity still I in of quite think Europe, bit expansion. to the looking a There’s that you’re as lot do a on of emerging on terms money opportunity well right Asia in we what clients Pacific. are of as focus across our in

regions. space, and been in the would of of certainly channels so I marketplaces. year efforts but to a seen activity those expansion say and We’ve integrations, have has over in activity added our lot lot has really XP focused the connections. And Asia the driven we’ve of European So on last been also the Pacific strongly which a majority weighted in certainly continue do United the States

that’s wide they pretty and areas, a we marketplaces, on things, cool beyond what’s different on or specific focused a So, number and of they’re variety product as customers, have actually focused of are categories. specific that, about

our as customers so, their footprint, follow on focus out And building suit. we

customers market to and where consumers. of going terms the trying tend marketplaces new reach just more to and emerging where on focus we in So is are

Zach Cummins

Got helpful, Beth. the and questions it. That’s best taking with my the the rest for quarter. Thanks of of luck

David Spitz

Thanks, Zach.

Operator

Blair. Our Pfau comes of from line William question Matt next

Your open. line is

Matt Pfau

for guys. Great. questions Thanks my taking

new with wanted you’re terms relative GMV obviously, have either what environment, impacted you some ask or is Just of that ecommerce the has revenue been continued seeing? existing some of from terms to in with momentum variable that so, the there’s you how bookings by front to in impact expansions at on here customers seeing of guys demand the but customers, all normalization or that of the the

David Spitz

they I a But of that Hey, helpful transformation there and companies remains Matt. their Yeah, that are there many, terms us. Obviously, into companies of demand COVID, strong. gear number many that in was during the things, are to right. where they high environment think to the two these getting were went digital of triage staffing, dealing year point mode either address spent kind more fulfillment things. all the in finally chain where or last can They kinds those with of or supply or were

I so And would demand say the environment strong. remains

Matt Pfau

with what And relative team have, terms to roadmaps clients sort you’re think strategic of longer-term has being initiatives sort Any of in, change of customers in of of hearing some part plans Gotcha. term marketplace or expansion is. Beth e-commerce the that of either from the longer the her more some I done with have is enterprise general? thinking I guess, about they in that you and maybe their

David Spitz

don’t change. I I’ll see say, any let Beth on level, comment high a at I would really that, but

closer distance to brands, And owners of industry, the right, media growth the instructive nobody consumers like, transformation a is also the placing the expected e-commerce, terms look continuously bets the many on indefinitely, Blockbuster share they Video per and about any e-commerce consumer, way of their to consumer. probability not brands increasing consumer industries, Internet they compressing closer is grow don’t the sky, getting means it’s the has at to in cases in path proprietary anymore, about look consumer. of of producers really get other entries rates everybody of it’s not room just that it’s content have at and If importance that to it’s a have the to how get understands we COVID to and that continue recognize rapidly, grow e-commerce just of closer but shifting right, it’s nobody all think during got e-commerce, for in to product, to the I and the a growth the lot reach wallet. se, to different so, who has between

that of the to the around And, fundamental customer overall long-term kind long-term that’s the or sort So, dynamic commentary e-commerce. anything of lot on want of secular add growth you Beth, had a behavior, of is know, top roadmap. just you of if the don’t changing just I

Beth Segovia

Yeah, steady say, she would as I goes, right. mean, I

of I efforts But we move just activity needed quickly. as brands, So interest would commitment tremendous from these realized and the they an consuming. say acceleration to digital time certainly saw and transformation and more are

direct-to-consumer expand look brands how and many on effort. with, time. that footprint, their these their capabilities, and it depending to want and out grow marketplaces, many steady their as takes consistent they countries a fulfillment businesses, So, on do global how take to And things build brands,

so significant expanded more made. year, progress was we’ve meet lead there’s demand, to last that’s while and to and channels progress that And made much yet be

are to service. our So level of in invest enterprise continuing we

We’re continuing quarter-by-quarter board. are focus we plan, to customers new this really we annual and resources And we those how year, to what doing on an to what’s channels to go every exercise, year bring many on mentioned, those new so and and to execute enable apply planning are those going plans. expansion I as the we

our mode I would acquire so new process existing execution the going then we And with and that’s we go expect with multiple-years start again and we’ll on to for in clients, them. are logos, as

Matt Pfau

and update on just those there? what maybe more one on me network, commerce the you’re for seeing just efforts And Great. an

Beth Segovia

that Sure, I’ll one. take

network So the going commerce well. is

have both of our that together. capability brings networks sides our that’s -- So we

customers, to to retail it to our to find a enables also log and gives bring sellers seek regular market, go So partners and it on. our find to opportunity out new into to market and basis more software channels obviously brand to our an on

that for network matchmaking would as some opportunity went and so And and seen both steady through had engagement, a expansion And QX. say opportunity creates we I this nice sides of we’ve we’ve network. very engagement

creation an our started in for and partners steady and she the sharing lot a a on and uptick and our As sharing and heat profile plans died We’ve a got profile seen of our customers lot and down little focusing I goes. bit of year, a so the sort QX as of engagement of it’s execution partner happening. the think we

platform. We the are nurturing

throughout plan to well. as the goes release roadmap new year, into and continuing year for We’re capabilities and this next

we So as Thank you’ll you. in updates but the going more, about give talk us you as planned. hear it’s it future,

Matt Pfau

Appreciate Great, it. thanks, guys.

David Spitz

Matt. Thanks,

Operator

will [Operator Tom Forte come Davidson. from DA the line of Instructions] next question Our from

may You begin.

Tom Forte

my Thank three. you questions. for Great. taking I had

one, to the know like about first are So labor it, David, you including e-commerce I’d talked about the at inflation level, how level. the ChannelAdvisor inflation? at you managing inflation

David Spitz

we would Xx do so market by year was in Yeah, keep the and a that I with being for increased more we Thanks. standing kind was higher as our merit Tom. the make increase thoughtful normal our of and for our it normally than to Hey, we than annual up believe year, work we’re employees. employees significantly -- a increase, sure

that’s been So, a part it. of

we view entire kicked base. customer offset work at and increases and, our also seen. at off We time of some wages as book pricing the offset increased we’ve our in least to increase we beginning to so But that’ll -- that that through our partially the price QX, helping of obviously, take

Tom Forte

one second have Then after I question my this and more one. Great.

travel, of So on industry advertising. Apple’s I e-commerce efficacy wanted two to to spending your digital thoughts returning for on and second, discretionary the the the privacy the talked about companies then that, emphasis items. One, impact seen get some and affecting

David Spitz

first with privacy. second me, excuse start the or I’ll around the Yeah,

policies, privacy I time. going from think see stringent app on I that’s the going regulatory maybe to Google where over right. their that’s keep and pressure some get don’t in a considerations trend right, whether from more environment don’t just Apple, also it’s of an front,

And users don’t cross trying we’re and historically not has my a cookies, this actually across duopoly really between Google to channels. we kind is this what a what open. kind a use tailwind, so, in think been channel and track it’s And us, cracked has of for taken bit of view has I it Facebook been of done

Amazon partnership like of going to us exist a growing fastest That’s things our of the of with So retail or for advertising across advertising, media any is is broader retail set those. the segments much sites. Criteo And different us. strategic programs attach that help to one

data these creating an actually to sites is have first-party and desire think, more opportunity to I driving intense directly. and monetize privacy, more So, for to an

economy more first discretionary us not That’s have To just interest a behemoths increases it benefit and obviously it to healthy a to or in consumer out for and does slow was think as inflation think uncertain that I report and from, I’m of but indicator. it’s net-net, relates environment some what really probably the a the and continue does travel, down rates, I pretty remains lagging So, of sites. again, traditional strong. question came think, dedicated and to a your causes in have I shift about dollar spending macro a saw economist, I the -- do soft that the we’re sort to jobs landing probably abruptly. it

I the so energy, -- and food, to response to kind rest toughest at are spending, of Tax is moderate part that and on time, to growth see and the the substantially. somewhere. You’re first view you know, that discretionary have that going normalized I ease year. I canary but to -- believe credit in way that think sort a think coal ago, starting of house with pretty spending, get and think I consumer gone But said, up we be the and has year that’s And discretionary travel. inflation. GMV impact sort a those earlier of basics, have fuel some Whether Child to on quarter of had of year up of we least monthly contemplate in imagine of question, to that we the companies at a think strong, stimulus unprofitable for basis look have you’d right, away of the and for that’s do because of the again, as pretty don’t to the comps you out with was is necessities maybe while meaningful they comps, way checks prices there’s demand on an that second you pent we the lot the out a going go period costs and food the the the first it’s when of expect a the mine. quarter But startups impact our hard the layoffs, I back in that’s look prices at the half are, fuel

another We Day right. have Prime that’s point, and

mentioned last year. interesting year-over-year. QX, of it’s that’ll half July, normal be moment of Prime the in Rich little compares a think think this bit the how we Day that’s Prime QX; first to was pretty half looks the year see in Day I so scheduled for But so the more comments, to his year year, back a compared

Richard Cornetta

[Multiple Speakers] Tom, sorry interrupt. to

anticipating XXXX, you So to thing the back add, financial increased are return to half almost of travel, levels. well in travel to just year one mentioned when previous modeling, specific the a as as some we in

additional be So there’s up as financial your to more acceptable and has some economies become factor to travel then expenses incurred, open into more that models.

Tom Forte

right. All Excellent.

my Zalando. three third remarkable now said you That’s like case of I David, study. number was So on is a spot the Walmart. almost thought question something ahead that

it But achieve GMV to what’s three for because emphasizing hit is that for maybe we’ve the were Zalando Walmart’s you on grocery? e-commerce to is point apparel in of sort step European if So or your list? markets back, enabled penetration because some spot inflection

David Spitz

it’s of think probably couple I Yeah, things. a

consumer during Walmart, some of they’re do you one Walmart that. right, products, of stuff buying towards tended think as of if typically these of up the some you a when and -- think result the products, you shifted to when -- staples the And what kind pandemic, of think course because about it online, emphasis be brought first-party I of these people to showing I so sites, like go search. were all

think think to fulfillment focused is way has category, the the the be type the a to things and about of sort marketplace fashion should bit gets is Zalando, of a done of that’s well of I rolling and it storytelling very to other they’re I in European you that of probably one with space things perspective. a help and lap really as a aren’t PE, fashion isn’t one establish how exposure is site, those who everybody against a in the and different continue -- year-on-year for marketplace. kind necessarily I go format, that fashion, go next think and storytelling. QX the But I for marketplaces they’ve Zalando to in past that winner marketplace, European towards shift they themselves so from will services, that shopping our that aside closely specific the of And right. provides environment that it’s of with big done so I’ve QX, little or most And automotive haven’t if based not think to in thing to one Germany, familiar, said it’s in same think was fantastic necessarily just it’s work a category moment, so putting and general really on there and be retailer, a I another the think transactional So done one is the -- has it’s it’s compete like, dissipate -- brands a merchandise picture because a out because job more in every it’s of a characteristics,

image very call how videos community, is year, Automotive So and we fitment geared video make, which obviously, model, and based. fashion is and more towards to much

build so can to And general category-specific marketplaces. you of that experiences compared really sort of sort compelling are merchandise

executed for has a quickly those only were a partner, anticipate so that Zalando everyone, a a with to to it enjoyed think really on, integration great know I So just, them, them. with we view good bring well. we’ve and not because had ChannelAdvisor strategic partnership continue I to consumer brands is I grow We’ve relationship they frankly, able as will ultimately nicely quality and experience, translates which very for fruitful high important us. build

Tom Forte

Beth. Rich. Thanks, Thanks, Thanks, Great. David.

David Spitz

Tom. Thanks,

Operator

I final question from will from know Reilly come Josh And Needham.

Your line open. is

Josh Reilly

in on question trends US ecommerce Europe questions. Hey, in slow in faster guys. you the the here. my throw to are Nice started? execution Are a seeing closer another quarter, maybe significantly is than macro you taking macro. I’m has between to job divergence for a Thanks challenging of going the world the since US and of parity? out it How trends and or Europe much the seeing here Ukraine and rest war the

David Spitz

of analysis, frankly, it’s impact as said, right right. my go to Yeah, have the is, because, and and currency, some rerun I an question actually interesting biggest back now Rich

the the the me, yeah, look have biggest exposure I to So normally of so at April, I of April, go to you’ll -- British demand need week would reparse if see and the we’ve the just of excuse rapid actually see to pound to strong would currency. dollar three to perspective, the fairly and that strengthening see continue meaningful so from you unusually weeks, seen of last And or to compared sort over couple chart the -- and you euro. we neutralizing in a what of But back say, of and effects two those periods, Europe. impact that’s during just demand a we

we alluding was work the an lot we’ve space, is that done a that a of of products, more lot good and is had channel of the that a perspective, is sort who from cover around fragmented the some think of expansion so those in Europe. e-commerce the are to on I we Europe of to opportunities Europe. so want bit attractive based predicated sell fragmented Beth more more we’ve in that to

point. don’t of and Spain, France UK, have point, our Eastern and probably at exposure, So, I exposure least that to it’s meaningful a currency, us adjust Europe we say, -- is from I And, I seen at pretty Netherlands. suspect this for decline this you say there, we’ve actually for significant thus strong once at we a I far, tell Italy, that that maybe would can not would and Germany, a so then area directly most

that direct So anyway. I standpoint this meaningful point we’re a seeing at from don’t think a impact at least

Josh Reilly

here, variable gross margin products gross not revenue Got know, Shoppable Analytics, gross offsetting it. think we headwind year? are That’s helpful. just variable to And Brand as margin? the on the GMV rest lower we with which, about the one given like should and throughout then And maybe how on the Media based margin, of

Richard Cornetta

And, variable we margins falls further Yeah, that saw to last obviously, the with even couple over driven some the revenue our continue success and to by bottom now was right of revenue. we said again, line. years variable see most the of

our our growth And just lot of profit opportunity there’s future. to the the to We made investments benefit in and quarters, expansion things back relationships supportive is contributing expect see has half control, of we line. again, There there which COGS customer we’ve I focus mentioned, QX. in you in think there in that margin top brand’s I’m subscription opportunities the a the COGS couple should in customers with our customers the expand some base, our margin, see been gross over line with some to if sorry, normalization there of our with last no line And to regards this I But start XX% we’ll as through we gross can and is -- the some -- on continued revenue. base. as deceleration in in investment investments year, gross

Josh Reilly

Thanks, it. Got guys.

David Spitz

Thanks, Josh.

Operator

you. Thank

call over turn no remarks. like We further the for back Raiford the I’d in are questions showing any closing to to queue.

Raiford Garrabrant

forward with you to soon. We look thank Thanks, Victor, speaking today. again you, and us for joining everyone,

Operator

concludes Thank this call. you participating. for And conference today’s

may You have a now and disconnect good day.

ChannelAdvisor (ECOM) 6 May 222022 Q1 Earnings call transcript