ChannelAdvisor 2017 Analyst Meeting. March 8, 2017

Transcription

1 ChannelAdvisor 2017 Analyst Meeting March 8, 2017

2 Mark Cook - CFO ChannelAdvisor 2017 Analyst Meeting March 8, 2017

3 Safe Harbor Statement This presentation contains "forward-looking" statements that are based on our management's beliefs and assumptions and on information currently available to management. Forward-looking statements include information concerning our possible or assumed future results of operations, revenue visibility, key metrics, business strategies, financing plans, operating model, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition. Forward-looking statements include all statements that are not historical facts and, in some cases, can be identified by terms such as "anticipates, "believes," "could, "seeks," "estimates," "intends," "may," "plans," "potential," "predicts," "projects," "should," "will," "would" or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our management's beliefs and assumptions only as of the date of this presentation. You should read ChannelAdvisor s SEC filings, including the Risk Factors set forth therein, completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons why actual results could differ materially from those anticipated in the forwardlooking statements, even if new information becomes available in the future. This presentation includes certain non-gaap financial measures as defined by SEC rules. We have provided a reconciliation of those measures to the most directly comparable GAAP measures in our earnings release dated February 9, 2017 available at and under SEC Filings at

4 Agenda Session Speaker Title Introduction Mark Cook CFO Welcome David Spitz Paul Forte CEO VP, CRO Solutions Overview Link Walls VP, Digital Marketing Mark Vandegrift Mike Shapaker FY16 Financial Review Mark Cook CFO Q&A All speakers VP, Marketplaces VP, Brands

5 David Spitz - CEO ChannelAdvisor 2017 Analyst Meeting March 8, 2017

6 Our Mission To connect and optimize the world s commerce

7 Paul Forte - VP, CRO ChannelAdvisor 2017 Analyst Meeting March 8, 2017

8 Questions You Likely Have of Me What is my background? What do I stand for? What is the process I will use? Why did I join ChannelAdvisor?

9 Personal MA born and raised (Boston suburb) Education: Chemistry, Leadership, MBA Currently reside in Cleveland, OH Married with 4 children Hobbies: family, fitness, tennis, reading, outdoors and fun

10 Professional Army Nalco Chemical Company Parametric Technology Corporation (PTC) ecredit Ascential Software IBM: Director, Information Management M&A Director, NA Sales, InfoSphere VP, NA Sales, Information Management VP, Software Sales, Great Lakes Automic Software Monster Worldwide

11 Forte Overall Vision and Philosophy Leader FIRST I have been leading men and women since I was a 21-year-old 2LT in the US Army Foxhole Leadership Trust-based model we work together like a family challenge each other and support Part of a team, your individual contribution MATTERS, and WE have your back go execute Accountable Environment You OWN it your territory, your team, your geography, etc Act and execute like it s yours IT IS! Challenging at all times yet concurrently fun Maintain perspective and have a sense of humor Communicate, communicate You have a voice have firm convictions and tell it like you see it communicate, communicate Be authentic and unique High energy, insane passion, all the time

12 What Motivates Me?...Why Am I Here? People Leadership Impact Change/Transformation Unique Opportunities Having fun and being a part of something special!!

13 Digital Marketing Link Walls Marketplaces - Mark Vandegrift Brands Mike Shapaker ChannelAdvisor 2017 Analyst Meeting March 8, 2017

14 Industry Overview ChannelAdvisor 2017 Analyst Meeting March 8, 2017

15 Getting Goods to Market is Complex PAST: The path to purchase was uncluttered: Manufacturer, Distributor, Retailer, Consumer NOW: The path to purchase is much more complex; with multiple purchase points between Manufacturer and Consumer: Marketplaces, 3PL Direct, Brand D2C, Distributor Direct, Retailer, ecommerce, Brand Stores, and More

16 Diversified Consumer Touch Points SOCIAL NETWORKS PHYSICAL STORES THIRD-PARTY MARKETPLACES SEARCH ENGINES WEBSITES

17 One Market, Two Segments $1.9 Trillion Globally While businesses exist across the continuum from manufacturers to retailers and everything in between we segment our business today in two segments Brands and Retailers. The trends driving e-commerce are impacting both of these segments. Source: emarketer

18 One Market, Two Segments BRANDS RETAILERS While businesses exist across the continuum from manufacturers to retailers and everything in between we segment our business today in two segments Brands and Retailers. The trends driving e-commerce are impacting both of these segments. Source: Forrester Research

19 Trends Driving Ecommerce Behaviors Amazon continues to gain share Amazon s dominance is reshaping the retail landscape and how supply chains work Mobile drives consolidation/concentration Aggregators win when phone screens are small due to strength in selection, price, and convenience Brands going direct Brands are both working to help retailers compete with Amazon but are also shifting toward developing a direct ecommerce channel Logistics as a battle ground Consumer delivery expectations around fulfillment have increased and are a function of a great customer experience

20 Price Market Problems Product Promote Place Product How do I ensure rich product data? Are my products properly merchandised online? Place How do I expand distribution channels? Where are my products being sold online?? Price How do I track online pricing effectively? Promotion How to I promote online sales channels?

21 Solutions Overview Digital Marketing ChannelAdvisor 2017 Analyst Meeting March 8, 2017

22 Challenges for the Digital Marketer How do I reach all the channels? How do I optimize my products on each? How do I balance revenue and profitability?

23 ChannelAdvisor Solution Product Management Data feeds, Product Transformation Channel Expansion New Channels, New Ad Formats How do I provide great data? How will I grow? Channel Optimization Analytics, Bidding, Performance Management How do I compete?

24 Trends Driving Digital Marketing Product advertising growing rapidly Changes in popular ad formats put product data at the center of the ad campaign. Mobile becoming the primary sales channel Mobile not only driving majority of clicks, but at times the majority of transactions. Social growth represents new advertising possibilities Reach and penetration of Facebook combined with targeting capabilities are very powerful. Expanded audience capabilities create opportunity Advertisers can now be far more precise with new targeting capabilities from Google, Facebook and others.

25 $Billions Ad Spend Market Size $30 $25 +20% Global Retail Ad Spend $20 $15 $10 $5 +54%? $0 Source: Google, Facebook, ChannelAdvisor estimates.

26 Google Addressable Market Google Advertisers with > $100k Annual Spend $17 Billion ECOM Source: Google, ChannelAdvisor estimates.

27 Changing Mix of Digital Marketing Digital Marketing GMV Mix 4% While overall Digital Advertising continues to grow, the mix has significantly changed over the past 3 years away from Traditional CSE s (PriceGrabber, Shopzilla, etc.). 29% Q Q Q Q Q Q Q Q Q Q Q Product Ads Traditional CSE's Keyword Ads Source: ChannelAdvisor proprietary data.

28 Q1 Features Digital Marketing Facebook and Instagram Advertising Google Local Inventory Ads Amazon Marketing Services Product Content Optimization

29 Marketplaces Overview Mark Vandegrift - VP, Marketplaces ChannelAdvisor 2017 Analyst Meeting March 8, 2017

30 Marketplace Seller Challenges How will I be efficient? How will I grow? How will I compete?

31 ChannelAdvisor Solution Channel Operations How will I be efficient? Listing Creation, Quantity Management, Order Syncs Channel Expansion New Channels, New Countries How will I grow? Channel Optimization How will I compete? Analytics, Market Insights, Performance Improvement

32 Trends Driving Ecommerce Behaviors Amazon continues to gain share Amazon s dominance is reshaping the retail landscape and how supply chains work Mobile drives consolidation/concentration Aggregators win when phone screens are small due to strength in selection, price, and convenience Brands going direct Brands are both working to help retailers compete with Amazon but are also shifting toward developing a direct ecommerce channel Logistics a battle ground Consumer delivery expectations around fulfillment have increased and are a function of a great customer experience

33 Sizing the Amazon Seller Market Amazon Sellers with $100K+ in Annual GMV ~90K Amazon Sellers with $100K+ in Annual GMV Source: Amazon, ChannelAdvisor estimates.

34 Sizing the Amazon Seller Market Amazon Sellers with $100K+ in Annual GMV ~25K Amazon Sellers with GMV > $500K/Year Globally ECOM: <5% of Market > $500K per year $100K- $500K per year Source: Amazon, ChannelAdvisor estimates.

35 Q1 Features - Optimization Walmart Repricer & Benchmarking ebay Repricer Amazon Competition Dashboard and Reports

36 Q1 Features - Expansion First Party Support Dropship Wholesale Purchase Orders and Content

37 Q1 Features - Operations Fulfillment Network Shipping Integrations and Features FBA Integration and Features Existing Partnerships

38 Where to Buy / Product Intelligence Mike Shapaker VP, Brands ChannelAdvisor 2017 Analyst Meeting March 8, 2017

39 Challenges for Brands How do I reduce friction? How do I help channels? What is happening in market?

40 ChannelAdvisor Solution User Journey Reduce friction in path to purchase Channel Management Leads to Retailers How do I reduce friction? How do I help channels? Market Insight Product Coverage, Merchandising, Pricing What is happening in market?

41 Addressable Market: Branded Manufacturers Branded Manufacturers - Revenue Profile >500MM 17% ANNUAL REVENUE >1BN 5% >100MM 22% >25MM 56%

42 Q1 Features Brand Channel Mgmt Price Tracking Reviews Tracking Buy Local Enhancements

43 Putting it All Together ChannelAdvisor 2017 Analyst Meeting March 8, 2017

44 Price Market Problems Product Promote Place Product How do I expand distribution channels? Where are my products being sold online? Place Where are my products being sold online? How do I promote online sales channels? Price How do I track online pricing effectively? Promotion How do I ensure rich product data? Are my products properly merchandised online?

45 Product Optimizing product data and analytics to better compete online

46 Single Catalog, Many Recipients Marketplaces XML CSV TXT XLS Transformation Enhancement Validation Syndication Retail Partners Ads Webstores

47 Formatting Customization Syndication Product Content Optimization Digital Marketing Sites Retailers Software Providers Retargeting Service Providers Affiliate Networks Review Platforms

48 Product Intelligence: Content Tracker

49 Benchmarking Leveraging scale of our data to provide unique benchmarks across Marketplaces and Digital Marketing

50 ote Place Expanding Distribution Channels with Rich Product Data Place

51 Single Catalog, Many Recipients Marketplaces XML CSV TXT XLS Transformation Enhancement Validation Syndication Retail Partners Ads Webstores

52 Access ChannelAdvisor

53 Fulfillment Network Order Routing Order Consolidation Multiple DCs Drop Ship Automation Label Printing Pick Lists Packing Slips Barcode Scanning Features and partnerships to facilitate fulfillment globally

54 uct Price Using Product Intelligence to Understand the Market and React Price

55 Product Intelligence - Pricing Understand pricing trends by retailer, category, and product Evaluate each retail partner s deviation from average product pricing Track retailers pricing strategies over time

56 Algorithmic Repricing for Marketplaces Competition varies by marketplace Different buy box algorithm for each marketplace Different data availability, frequency, and instrumentation Goal: Win buy box while maximizing margin over time

57 e Promotion Helping Brands and Retailers Promote their Products Online Promote

58 e Areas of Promotion Manufacturer Brand Website Marketplaces Search/Social Promote

59 Why Where to Buy? Channel management and relationships Promote online and local retail channel partners Carrot to retailers as brands go direct Consumer journey Ease path to purchase and keep consumer in brand experience Consumer insight Understand preferred retailers Sales data (where applicable) Baby steps to e-commerce Before After

60 Advertising on Marketplaces Amazon Sponsored Products ebay Promoted Listings

61 Advertising on Amazon

62 Advertising on Search and Social Campaign Management Bid Management Reporting and Analytics

63 Price Market Problems Product Promote Place Product Manage content and availability regardless of data source. Place Reach customers where they shop and track how retail partners merchandise your products. Price Compete with the market and know your pricing across your retail partners. Promote Market products across the internet and drive traffic to your site, your marketplace listings, or your retail network.

64 Lunch ChannelAdvisor 2017 Analyst Meeting March 8, 2017

65 Customer Success Videos Customer Success Videos

66 FY 16 Financial Review Mark Cook - CFO ChannelAdvisor 2017 Analyst Meeting March 8, 2017

67 Who is ChannelAdvisor? The Industry's Most Complete Solution to Grow Your E-Commerce Business Retail & Manufacturing customers worldwide 100+ channels supported worldwide Global transactions Global employees focused on e-commerce 67

68 Multiple Growth Drivers

69 FY2016 Highlights

70 GMV ($billions) Gross Merchandise Value (GMV) $9.0 $8.0 Annual Gross Merchandise Value GMV $billions $6.8 $8.1 21% CAGR $7.0 $5.7 $6.0 $5.0 $4.0 $3.1 $3.5 $4.4 GMV $3.0 $2.0 $1.0 $ Fiscal Year

71 Annual Revenue

72 Seasonality

73 Fixed Revenue

74 Variable Revenue

75 Revenue by Product 26% CAGR

76 Average Revenue per Customer

77 Revenue Customer Segmentation Q416: ~710 customers 68% of total revenue Q113: ~490 customers 68% of total revenue

78 Revenue per Employee

79 Improving Bottom Line Performance Twelve Months Ending December 31, Revenue 84, , ,200 Revenue Growth 24.8% 18.8% 12.5% Adj. EBITDA (19,532) 1,443 7,436 Operating Cash Flow (21,535) (1,459) 11,730

80 Improving Cash Performance

81 Adjusted EBITDA - Operating Leverage

82 Quota Bearing Sales Representatives (QBSR)

83 QBSR - Tenure

84 Key Investment Highlights Primary Financial Objectives: Exceed the rate of growth of e-commerce (~15%) and Reach long-term sustainable growth of over 20% while Maintaining a neutral P&L and cash flow profile (as measured by TTM Adjusted EBITDA) Rule of 40 longer-term goal

85 Key Investment Highlights Requirements to reach objectives: Focus towards brands Accelerate quality bookings Continue to reduce churn Invest prudently in Engineering Increase efficiency

86 Q&A ChannelAdvisor 2017 Analyst Meeting March 8, 2017