Thursday, January 22, 2009
Change is in the Air at ChannelAdvisor
There have been some rumors going around that ChannelAdvisor was preparing layoffs. The company has issued the following press release: (I will add my 15% at the end)
Just my 15%
CHANNELADVISOR ACHIEVES OPERATING PROFIT AND ANNOUNCES RESTRUCTURING
Leading provider of e-commerce channel management solutions has solid fourth quarter growth despite tough economic backdrop
Research Triangle Park, NC– January 23, 2009 – ChannelAdvisor, the leading provider of e-commerce channel management solutions, announced today that it reached operating profitability in the fourth quarter of 2008. Additionally the company plans to undertake restructuring to further streamline its business and better position itself for an uncertain economic downturn.
In the fourth quarter of 2008, ChannelAdvisor recorded gross merchandise value (GMV) of $775 million and for the full year, ChannelAdvisor recorded GMV of $2.6 billion. This represents 34% growth in GMV from 2007. Additionally, the company continues to experience strong customer growth, now boasting more than 110 top internet retailers from the prestigious Internet Retailer magazine’s Top 500 list.
Over the last year, the average ChannelAdvisor customer’s sales grew at 7% while eCommerce grew at 4% proving that retailers continue to find great value from ChannelAdvisor’s solutions during this economic slowdown.
In the fourth quarter of 2008, ChannelAdvisor recorded revenue of over $10 million and for the full year, ChannelAdvisor recorded revenue of over $35 million. This represents 44% growth in revenue from 2007. Even in this challenging economic environment, ChannelAdvisor reached operating profitability in the fourth quarter of 2008 and will continue to see growth, reach goals and strengthen their position as an industry leader.
ChannelAdvisor plans to undertake changes geared to optimize its workforce, facilities and products in order to adjust to the current economy while positioning to leverage future growth in 2009. As part of the changes, ChannelAdvisor is reducing its global workforce by 19%. Those whose jobs will be eliminated will be offered severance.
“ChannnelAdvisor had a solid quarter and we will continue to focus on profitability and growth in 2009,” said Scot Wingo, Chief Executive Officer of ChannelAdvisor. “The restructuring steps we’re taking are designed to better position the company for potentially deteriorating macro economic conditions. These steps will lower our overall operating costs and enable us to weather the current economic storm.”
About ChannelAdvisor Corporation
ChannelAdvisor Corporation provides technology and services that enable leading online retailers to maximize their products across multiple ecommerce marketplaces such as eBay, Amazon.com and Overstock.com, comparison shopping engines such as Shopping.com, Shopzilla, Nextag and Google Product Search and search engines such as Google, Yahoo! and MSN. In 2008, ChannelAdvisor managed over $2.6 billion in gross merchandise value (GMV) on behalf of its customers. ChannelAdvisor solutions combine best practices, on-demand software and integration technology to help retailers sell more products, faster, by automating labor-intensive, manual functions so they spend less time optimizing campaigns and more time solving marketing and business issues. ChannelAdvisor has expanded its retail technology and services by acquiring Rich FX media solutions. MyRichFX™, RichImage™, RichCatalog™, and RichCircular™ are now part of the ChannelAdvisor rich media technology and service solutions that ChannelAdvisor offers. ChannelAdvisor's customers include GSI Commerce, Brookstone, Abebooks and Motorola. ChannelAdvisor Corporation is headquartered in Research Triangle Park, NC with offices in Atlanta, Seattle, New York, the United Kingdom, Australia, Ireland and Germany. For more information, visit http://www.channeladvisor.com/.
So yes, the rumors are true, they are having layoffs in addition to other cost cutting measures; "ChannelAdvisor plans to undertake changes geared to optimize its workforce, facilities and products in order to adjust to the current economy while positioning to leverage future growth in 2009. As part of the changes, ChannelAdvisor is reducing its global workforce by 19%. Those whose jobs will be eliminated will be offered severance." according to the press release. By my calculation that would put the number of laid off worldwide at around 50.
I spoke with ChannelAdvisor CEO Scot Wingo about the restructuring and he said; "2009 is going to be a challenging year. We reached operating profitability in Q4 and we liked that, we plan to maintain that profitability throughout a tough 2009."
Layoffs are never fun, but are sometimes necessary to get a business to the right size for sustained profitability. ChannelAdvisor reached operating profitability in Q4 on $10 million in revenue and in light of the current state of ecommerce, management felt more layoffs were needed to continue 2009 profitably.
Now, I've been hanging around the CA guys for years and I've never seen them release annual revenue numbers before, so with this announcement it appears they are being as transparent as possible -- $35 million in annual revenue is not a small company, especially in the SaaS (Software as a Service) space and hard choices needed to be made.
Reaching operating profitability in Q4 was quite an accomplishment, especially this year, but you can't just assume that business will stay the same. Hopefully the laid off employees will find work shortly.