| Summary | Score | MOS | Share Price | Sticker Price |
|---|---|---|---|---|
| On Sale | 16/20 | 70% | $20 | $72 |
ChannelAdvisor is an eCommerce company founded in 2001 and based in Morrisville, NC. They currently have about 850 employees which makes them a relatively small public company.
Most people have never heard of ChannelAdvisor but think of them as Shopify for big business. ChannelAdvisor is an enterprise SaaS (Software as a Service) with a suite of tools that helps large brands market, sell, and distribute products.
Some of their top customers include KitchenAid, TIMEX, ASICS, PartyCity, Razer, Clarins Paris, Candleberry, Nuby, Huawei, Fossil, REI, Crocks, and Charles & Colvard.
The suite of tools include the following:
Digital Marketing: With ChannelAdvisor you can set up and run google ads, Facebook Ads, Bing Ads, all from the same platform.
Market Place Distribution: With ChannelAdvisor you can set up and sell your products on Amazon, Walmart, eBay, Google, etc. They have approximately 160 marketplace integrations where you can automatically distribute and sell your products. This feature allows for massive distribution. Unlike most eCommerce platforms where you sell on your own shopping cart, this feature allows you to sell on multiple, well-established eCommerce platforms, at the exact same time.
First Party Distribution: With ChannelAdvisor you can drop ship your products from Wayfair, Target, Advance Auto Parts, Kohl’s, Foot Locker, Sam’s Club, Overstock, and more. In other words, your products can be sold on these platforms and shipped to the customer directly from your manufacturing facility.
Fulfillment: With ChannelAdvisor products may be shipped with USPS, UPS, FedEx, and other shipping providers.
Brand Analytics: With ChannelAdvisor you may track your product assortment, price and promotions, sales, and reviews from one simple interface.
Here is what the news has to say.
This article from Yahoo Finance states that ChannelAdvisor’s intrinsic value is potentially 80% above its share price, signaling that ChannelAdvisor is significantly On Sale.
This article from Yahoo Finance states that eCommerce is highly in-demand and the platforms that stand out above the competition are the ones that improve the efficiency of inventory and order management, increase distribution channels, and deploy actionable analytics. ChannelAdvisor checks all these boxes.
Here is how ChannelAdvisor stacks up against the competition:
SHOP (Shopify)
| Summary | Score | MOS |
|---|---|---|
| Overpriced | 6/20 | 0% |
BIGC (BigCommerce)
| Summary | Score | MOS |
|---|---|---|
| Overpriced | 5/20 | 1% |
ADBE (Adobe)
| Summary | Score | MOS |
|---|---|---|
| On Sale | 18/20 | 70% |
Adobe acquired Magento in 2019 which powers Adobe Experience Cloud, an enterprise eCommerce platform that has similar capabilities to ChannelAdvisor. We’ll talk more about this within the Moat below.
Now let’s take a look at the 4 M’s.
Tykr shows the financials are very strong. The Equity Growth Rate is 3/3, EPS Growth Rate is 3/3, Sales Growth Rate 2/3, Cash Growth Rate 3/3. The MOS is 70% and the Score is 16/20.
There are a lot of competitors in the eCommerce industry. This is not a complicated business model to duplicate. The platforms with the largest moats are the ones that can create the most integrations with other brands while at the same time making the platform easy to use and highly automated. ChannelAdvisor is definitely a market leader but the big threat is from Adobe. Adobe Experience Cloud is powered by Magento which was a stand-alone eCommerce leader for years. Now, with Magento and Adobe combined, they will certainly take some market share. This is something to keep in mind if you invest in ChannelAdvisor.
David Spitz is the current CEO of ChannelAdvisor. Before joining ChannelAdvisor, David founded and successfully exited multiple venture-backed software companies. David was president of Avesair, a mobile marketing company that was acquired by Inphonic. Previous to Avesair, David was co-founder and CTO of Netsation, a network management software company acquired by Nortel Networks. He’s currently a Senior Advisor at Susquehanna Growth Equity, a private equity firm. He also serves as a board member at Beazer Homes and Adwerx. Overall, David appears to be highly passionate about entrepreneurship. Not only is he a great leader for ChannelAdvisor, but he’s also a mentor for other well-established businesses.
Now let’s take a look at the financials. A good value investor should be able to read the income statement, cash flow statement, and balance sheet and within 60 seconds have a pretty good idea of how the business is performing.
Here are the last four years.
Revenue (Found on the Income Statement)
| 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|
| $122M | $131M | $129M | $145M |
Revenue has seen a nice increase in 2020.
Net Income (Found on the Income Statement)
| 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|
| -$16M | -$7M | $3M | $18M |
Net Income has significantly increased in 2020.
EPS (Found on the Income Statement)
| 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|
| -.63 | -.28 | .12 | .66 |
EPS has significantly increased in 2020.
Free Cash Flow (Found on the Cash Flow Statement)
| 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|
| -$6M | -$1.7M | $9M | $29M |
The Free Cash Flow has significantly increased in 2020.
Total Assets (Found on the Balance Sheet)
| 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|
| $140M | $134M | $146M | $180M |
The Total Assets have increased.
Total Liabilities (Found on the Balance Sheet)
| 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|
| $58M | $44M | $47M | $50M |
The Total Liabilities have remained somewhat level.
Total Debt (Found on the Balance Sheet)
| 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|
| $641K | $1.4M | $9.7M | $5.4M |
The Total Debt has decreased substantially in 2020.
Total Equity (Found on the Balance Sheet)
| 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|
| $81M | $89M | $99M | $130M |
The Total Equity has increased consistently.
With a score of 16/20 and a MOS of 70%, the business financials are looking great. We know that eCommerce isn’t going away anytime soon and we know ChannelAdvisor is capitalizing on the channel partner distribution functionalities for their customers. The MOS, Meaning, and Management all check out but the issue is the Moat. Adobe is the biggest threat and worth keeping an eye on if you invest in ChannelAdvisor.
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