EventHorizon1984 Log: ChannelAdvisor INC Responds To Michael Jones Revenue Targets On AuctionBytes

22 June 2010

ChannelAdvisor INC Responds To Michael Jones Revenue Targets On AuctionBytes

ChannelAdvisor INC Responds To Michael Jones Revenue Targets On AuctionBytes
22 June 2010
EventHorizon1984

AuctionBytes posted an article titled "Update: Michael Jones Leaves ChannelAdvisor, Headed for eBay", where a comment was made regarding ChannelAdvisor's revenues.

"after consistently failing to reach revenue targets, rumor has it that the split was not a case of greener pastures but of a nudging-out-the-door-nature. What this will mean for CA is unknown."

ChannelAdvisor INC responded to that comment.

Update - More information from ChannelAdvisor and confirmation from eBay:
eBay confirms that Michael Jones will be joining the company as Vice President of North American Business Development for eBay Marketplaces. A ChannelAdvisor spokesperson said he has not yet left the company; he's actively working in the office until June 30th, and, she said:

"Your source indicated that MJ was "consistently failing to reach revenue targets," yet we've reported record growth for ChannelAdvisor and its customers in our past three quarters: link, link, link.

"In the interest of full disclosure, I think you owe it to your readers to let them know that that blog post was written by a former ChannelAdvisor employee who now works for a competitor, Mercent."

The ChannelAdvisor INC spokesperson may be the contact person listed in the Press Releases.

Contact:
Delisa Reavis
ChannelAdvisor
delisa.reavis@channeladvisor.com
919.636.0659

We did a little research, and posted a comment to ChannelAdvisor's response.

> ''yet we've reported record growth for ChannelAdvisor and its customers in our past three quarters: link, link, link.''

These are standard vacuous Press Releases. Of course those Press Releases avoid answering the question of ''revenue targets.''

Press Release #1 talks about the growth of ChannelAdvisor INC customers during that quarter. But there is not one mention of ChannelAdvisor INC revenue during that quarter.

Press Release #2 has ChannelAdvisor INC CEO Scot Wingo stating, ''For ChannelAdvisor, 2009 was a fantastic and transformative year as we achieved our profitability goal of becoming EBITDA positive''. Of course there is no mention of any objective dollar amount. And what of ''EBITDA''?

ChannelAdvisor INC Press Release #3 makes the same claim, ''for the 12 months ending September, 2009, ChannelAdvisor achieved for the first time in company history a full year of positive EBIDTA '', but there is more. Here's the rest of the quote following the ''positive EBIDTA'': ''(earnings before interest, depreciation, tax and amortization.'' Incidentally EBIDTA stands for Earnings Before Interest, Taxes, Depreciation and Amortization.

If earnings are ''positive'' BEFORE taking out expenses, one has to wonder if earnings would remain ''positive'' AFTER expenses. The ChannelAdvisor INC Press Release is woefully silent.

Perhaps earnings AFTER expenses misses the ''revenue target''? Or perhaps something else?

There are interesting pieces of data that ChannelAdvisor INC provides in it's Press Releases, that might explain whether ''revenue targets'' are being hit or missed. At the bottom of each of these Press Releases:

Press Release #1 dated April 26, 2010:
''In 2009, ChannelAdvisor managed $2.6 billion in gross merchandise value (GMV)''

Press Release #2 dated January 20, 2010:
''In 2009, ChannelAdvisor managed $2.6 billion in gross merchandise value (GMV)''

Press Release #3 dated November 3, 2009:
''In 2008, ChannelAdvisor managed over $2.6 billion in gross merchandise value (GMV)''

If you look at ChannelAdvisor INC Press Release dated January 23, 2009 (
http://www.channeladvisor.com/news/2009/pr090123.html ), you will find:

* ''for the full year, ChannelAdvisor recorded GMV of $2.6 billion.''

Fascinating. ZERO GMV growth, as stated by ChannelAdvisor INC, between 2008 and 2009. To state the obvious, ChannelAdvisor INC derives some revenue by assessing a fee on sales (percentage of GMV).

How much does ChannelAdvisor INC make on that ''$2.6 billion'' From It's Customers? According to that Press Release, ''for the full year, ChannelAdvisor recorded revenue of over $35 million.''

Let's put that amount in perspective.

eBay seller Buy.com (bought by Rakuten), who is also a ChannelAdvisor INC customer, earlier this year had 30 day gross sales of $2.5 million. Or using a very very rough calculation, that could be $30 million in sales for a year.

Here's what you'll find in another ChannelAdvisor INC Press Release dated September 04, 2008:

''ChannelAdvisor, the leading provider of e-commerce channel management solutions, today announced it has received an additional $20 million in funding to accelerate its growth.''

When you have ''$35 million'' ''recorded revenue'' (Net or Gross?), a $20 million cash infusion (with eBay as one of the investors) is a significant amount.

Maybe this cash infusion did not produce an appropriate increase in revenue, thereby missing ''revenue targets''?

Hmmm, maybe these press releases are not so vacuous after all.

/*

''but like a poor marksman, you keep missing the target''
Admiral James T. Kirk, Star Trek The Wrath of Khan (1982)

It was rather sloppy of us to forget the link to the September 04, 2008 ChannelAdvisor INC Press Release.

That Press Release is titled "CHANNELADVISOR SECURES $20 MILLION IN FUNDING" and this is the link, http://www.channeladvisor.com/news/2008/pr080904.html to that Press Release.

And the tale of ChannelAdvisor INC competitor Mercent INC? According to their February 2, 2010 Press Release: