x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
|
|
56-2257867
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(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
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|
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3025 Carrington Mill Boulevard, Morrisville, NC
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|
27560
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
|
Trading Symbol
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Name of each exchange on which registered
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Common Stock, $0.001 par value
|
ECOM
|
New York Stock Exchange
|
Large accelerated filer
|
¨
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Accelerated filer
|
x
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Non-accelerated filer
|
¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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PAGE
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September 30, 2019
|
|
December 31, 2018
|
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
48,226
|
|
|
$
|
47,185
|
|
Accounts receivable, net of allowance of $848 and $652 as of September 30, 2019 and December 31, 2018, respectively
|
21,292
|
|
|
23,436
|
|
||
Prepaid expenses and other current assets
|
8,231
|
|
|
9,248
|
|
||
Total current assets
|
77,749
|
|
|
79,869
|
|
||
Operating lease right of use assets
|
12,030
|
|
|
—
|
|
||
Property and equipment, net
|
10,249
|
|
|
12,007
|
|
||
Goodwill
|
23,486
|
|
|
23,486
|
|
||
Intangible assets, net
|
1,438
|
|
|
1,894
|
|
||
Deferred contract costs, net of current portion
|
12,667
|
|
|
11,336
|
|
||
Long-term deferred tax assets, net
|
3,486
|
|
|
4,162
|
|
||
Other assets
|
784
|
|
|
1,515
|
|
||
Total assets
|
$
|
141,889
|
|
|
$
|
134,269
|
|
Liabilities and stockholders' equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
1,339
|
|
|
$
|
1,598
|
|
Accrued expenses
|
8,958
|
|
|
9,358
|
|
||
Deferred revenue
|
21,803
|
|
|
24,205
|
|
||
Other current liabilities
|
6,455
|
|
|
3,569
|
|
||
Total current liabilities
|
38,555
|
|
|
38,730
|
|
||
Long-term operating leases, net of current portion
|
10,597
|
|
|
—
|
|
||
Long-term finance leases, net of current portion
|
—
|
|
|
1,404
|
|
||
Lease incentive obligation
|
—
|
|
|
2,154
|
|
||
Other long-term liabilities
|
970
|
|
|
2,343
|
|
||
Total liabilities
|
50,122
|
|
|
44,631
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding as of September 30, 2019 and December 31, 2018
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value, 100,000,000 shares authorized, 28,058,807 and 27,347,115 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively
|
28
|
|
|
27
|
|
||
Additional paid-in capital
|
276,211
|
|
|
271,550
|
|
||
Accumulated other comprehensive loss
|
(2,302
|
)
|
|
(1,707
|
)
|
||
Accumulated deficit
|
(182,170
|
)
|
|
(180,232
|
)
|
||
Total stockholders' equity
|
91,767
|
|
|
89,638
|
|
||
Total liabilities and stockholders' equity
|
$
|
141,889
|
|
|
$
|
134,269
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
$
|
31,678
|
|
|
$
|
32,324
|
|
|
$
|
95,184
|
|
|
$
|
96,429
|
|
Cost of revenue
|
7,251
|
|
|
7,606
|
|
|
21,876
|
|
|
21,934
|
|
||||
Gross profit
|
24,427
|
|
|
24,718
|
|
|
73,308
|
|
|
74,495
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
12,403
|
|
|
14,921
|
|
|
40,808
|
|
|
45,785
|
|
||||
Research and development
|
4,803
|
|
|
5,350
|
|
|
15,161
|
|
|
16,989
|
|
||||
General and administrative
|
5,440
|
|
|
6,688
|
|
|
19,272
|
|
|
19,847
|
|
||||
Total operating expenses
|
22,646
|
|
|
26,959
|
|
|
75,241
|
|
|
82,621
|
|
||||
Income (loss) from operations
|
1,781
|
|
|
(2,241
|
)
|
|
(1,933
|
)
|
|
(8,126
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income (expense), net
|
205
|
|
|
120
|
|
|
599
|
|
|
351
|
|
||||
Other income (expense), net
|
(44
|
)
|
|
22
|
|
|
(32
|
)
|
|
2
|
|
||||
Total other income (expense)
|
161
|
|
|
142
|
|
|
567
|
|
|
353
|
|
||||
Income (loss) before income taxes
|
1,942
|
|
|
(2,099
|
)
|
|
(1,366
|
)
|
|
(7,773
|
)
|
||||
Income tax expense
|
213
|
|
|
188
|
|
|
572
|
|
|
435
|
|
||||
Net income (loss)
|
$
|
1,729
|
|
|
$
|
(2,287
|
)
|
|
$
|
(1,938
|
)
|
|
$
|
(8,208
|
)
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.06
|
|
|
$
|
(0.08
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.30
|
)
|
Diluted
|
$
|
0.06
|
|
|
$
|
(0.08
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.30
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
28,049,199
|
|
|
27,294,134
|
|
|
27,824,696
|
|
|
27,073,332
|
|
||||
Diluted
|
28,754,679
|
|
|
27,294,134
|
|
|
27,824,696
|
|
|
27,073,332
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income (loss)
|
$
|
1,729
|
|
|
$
|
(2,287
|
)
|
|
$
|
(1,938
|
)
|
|
$
|
(8,208
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(530
|
)
|
|
(250
|
)
|
|
(595
|
)
|
|
(732
|
)
|
||||
Total comprehensive income (loss)
|
$
|
1,199
|
|
|
$
|
(2,537
|
)
|
|
$
|
(2,533
|
)
|
|
$
|
(8,940
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net loss
|
$
|
(1,938
|
)
|
|
$
|
(8,208
|
)
|
Adjustments to reconcile net loss to cash and cash equivalents provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
4,806
|
|
|
4,509
|
|
||
Bad debt expense
|
911
|
|
|
1,036
|
|
||
Stock-based compensation expense
|
7,000
|
|
|
8,023
|
|
||
Deferred income taxes
|
513
|
|
|
373
|
|
||
Other items, net
|
43
|
|
|
(667
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
1,007
|
|
|
4,451
|
|
||
Prepaid expenses and other assets
|
2,282
|
|
|
10,588
|
|
||
Deferred contract costs
|
(2,661
|
)
|
|
(5,325
|
)
|
||
Accounts payable and accrued expenses
|
(2,112
|
)
|
|
(11,164
|
)
|
||
Deferred revenue
|
(2,337
|
)
|
|
(2,514
|
)
|
||
Cash and cash equivalents provided by operating activities
|
7,514
|
|
|
1,102
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property and equipment
|
(755
|
)
|
|
(1,586
|
)
|
||
Payment of software development costs
|
(1,972
|
)
|
|
(579
|
)
|
||
Cash and cash equivalents used in investing activities
|
(2,727
|
)
|
|
(2,165
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Repayment of finance leases
|
(2,357
|
)
|
|
(2,092
|
)
|
||
Proceeds from exercise of stock options
|
968
|
|
|
1,086
|
|
||
Payment of statutory tax withholding related to net-share settlement of restricted stock units
|
(2,101
|
)
|
|
(2,130
|
)
|
||
Cash and cash equivalents used in financing activities
|
(3,490
|
)
|
|
(3,136
|
)
|
||
Effect of currency exchange rate changes on cash and cash equivalents
|
(256
|
)
|
|
(333
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
1,041
|
|
|
(4,532
|
)
|
||
Cash and cash equivalents, beginning of period
|
47,185
|
|
|
53,422
|
|
||
Cash and cash equivalents, end of period
|
$
|
48,226
|
|
|
$
|
48,890
|
|
Supplemental disclosure of cash flow information
|
|
|
|
||||
Cash paid for interest
|
$
|
215
|
|
|
$
|
26
|
|
Cash paid for income taxes, net
|
$
|
64
|
|
|
$
|
81
|
|
Supplemental disclosure of noncash investing and financing activities
|
|
|
|
||||
Accrued statutory tax withholding related to net-share settlement of restricted stock units
|
$
|
1,206
|
|
|
$
|
635
|
|
Accrued capital expenditures
|
$
|
35
|
|
|
$
|
361
|
|
Finance lease obligations entered into for the purchase of fixed assets
|
$
|
—
|
|
|
$
|
4,217
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Activity For The Nine Months Ended September 30, 2019
|
|||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Accumulated
Deficit
|
|
Total
Stockholders'
Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||
Balance, December 31, 2018
|
27,347,115
|
|
|
$
|
27
|
|
|
$
|
271,550
|
|
|
$
|
(1,707
|
)
|
|
$
|
(180,232
|
)
|
|
$
|
89,638
|
|
Exercise of stock options and vesting of restricted stock units
|
681,944
|
|
|
1
|
|
|
936
|
|
|
—
|
|
|
—
|
|
|
937
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
3,398
|
|
|
—
|
|
|
—
|
|
|
3,398
|
|
|||||
Statutory tax withholding related to net-share settlement of restricted stock units
|
(178,071
|
)
|
|
—
|
|
|
(2,277
|
)
|
|
—
|
|
|
—
|
|
|
(2,277
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,329
|
)
|
|
(2,329
|
)
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
78
|
|
|
—
|
|
|
78
|
|
|||||
Balance, March 31, 2019
|
27,850,988
|
|
|
28
|
|
|
273,607
|
|
|
(1,629
|
)
|
|
(182,561
|
)
|
|
89,445
|
|
|||||
Exercise of stock options and vesting of restricted stock units
|
290,346
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
2,801
|
|
|
—
|
|
|
—
|
|
|
2,801
|
|
|||||
Statutory tax withholding related to net-share settlement of restricted stock units
|
(98,975
|
)
|
|
—
|
|
|
(981
|
)
|
|
—
|
|
|
—
|
|
|
(981
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,338
|
)
|
|
(1,338
|
)
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(143
|
)
|
|
—
|
|
|
(143
|
)
|
|||||
Balance, June 30, 2019
|
28,042,359
|
|
|
28
|
|
|
275,442
|
|
|
(1,772
|
)
|
|
(183,899
|
)
|
|
89,799
|
|
|||||
Exercise of stock options and vesting of restricted stock units
|
21,958
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
801
|
|
|
—
|
|
|
—
|
|
|
801
|
|
|||||
Statutory tax withholding related to net-share settlement of restricted stock units
|
(5,510
|
)
|
|
—
|
|
|
(49
|
)
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,729
|
|
|
1,729
|
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(530
|
)
|
|
—
|
|
|
(530
|
)
|
|||||
Balance, September 30, 2019
|
28,058,807
|
|
|
$
|
28
|
|
|
$
|
276,211
|
|
|
$
|
(2,302
|
)
|
|
$
|
(182,170
|
)
|
|
$
|
91,767
|
|
|
Quarterly Activity For The Nine Months Ended September 30, 2018
|
|||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Accumulated
Deficit
|
|
Total
Stockholders'
Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||
Balance, December 31, 2017
|
26,601,626
|
|
|
$
|
27
|
|
|
$
|
262,805
|
|
|
$
|
(789
|
)
|
|
$
|
(180,132
|
)
|
|
$
|
81,911
|
|
Cumulative effect of accounting change (1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,501
|
|
|
7,501
|
|
|||||
Exercise of stock options and vesting of restricted stock units
|
691,415
|
|
|
—
|
|
|
159
|
|
|
—
|
|
|
—
|
|
|
159
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
2,733
|
|
|
—
|
|
|
—
|
|
|
2,733
|
|
|||||
Statutory tax withholding related to net-share settlement of restricted stock units
|
(209,154
|
)
|
|
—
|
|
|
(1,963
|
)
|
|
—
|
|
|
—
|
|
|
(1,963
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,157
|
)
|
|
(3,157
|
)
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
109
|
|
|
—
|
|
|
109
|
|
|||||
Balance, March 31, 2018
|
27,083,887
|
|
|
27
|
|
|
263,734
|
|
|
(680
|
)
|
|
(175,788
|
)
|
|
87,293
|
|
|||||
Exercise of stock options and vesting of restricted stock units
|
247,664
|
|
|
—
|
|
|
845
|
|
|
—
|
|
|
—
|
|
|
845
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
2,316
|
|
|
—
|
|
|
—
|
|
|
2,316
|
|
|||||
Statutory tax withholding related to net-share settlement of restricted stock units
|
(52,902
|
)
|
|
—
|
|
|
(673
|
)
|
|
—
|
|
|
—
|
|
|
(673
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,764
|
)
|
|
(2,764
|
)
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(591
|
)
|
|
—
|
|
|
(591
|
)
|
|||||
Balance, June 30, 2018
|
27,278,649
|
|
|
27
|
|
|
266,222
|
|
|
(1,271
|
)
|
|
(178,552
|
)
|
|
86,426
|
|
|||||
Exercise of stock options and vesting of restricted stock units
|
42,565
|
|
|
—
|
|
|
82
|
|
|
—
|
|
|
—
|
|
|
82
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
2,974
|
|
|
—
|
|
|
—
|
|
|
2,974
|
|
|||||
Statutory tax withholding related to net-share settlement of restricted stock units
|
(9,745
|
)
|
|
—
|
|
|
(129
|
)
|
|
—
|
|
|
—
|
|
|
(129
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,287
|
)
|
|
(2,287
|
)
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(250
|
)
|
|
—
|
|
|
(250
|
)
|
|||||
Balance, September 30, 2018
|
27,311,469
|
|
|
$
|
27
|
|
|
$
|
269,149
|
|
|
$
|
(1,521
|
)
|
|
$
|
(180,839
|
)
|
|
$
|
86,816
|
|
|
Estimated Useful Life
|
Amortization Methodology
|
Customer relationships
|
7 years
|
Straight-line
|
Acquired technology
|
7 years
|
Straight-line
|
Balance Sheet - select financial statement line items
|
Ending balance
|
|
Effect of the adoption of
|
|
Beginning balance
|
||||||
|
December 31, 2018
|
|
ASC 842
|
|
January 1, 2019
|
||||||
Operating lease right of use assets
|
$
|
—
|
|
|
$
|
15,099
|
|
|
$
|
15,099
|
|
Other assets
|
1,515
|
|
|
(504
|
)
|
(1)
|
1,011
|
|
|||
Total assets
|
134,269
|
|
|
14,595
|
|
|
148,864
|
|
|||
Other current liabilities
|
3,569
|
|
|
3,116
|
|
(2)
|
6,685
|
|
|||
Total current liabilities
|
38,730
|
|
|
3,116
|
|
|
41,846
|
|
|||
Long-term operating leases, net of current portion
|
—
|
|
|
14,310
|
|
|
14,310
|
|
|||
Lease incentive obligation
|
2,154
|
|
|
(2,154
|
)
|
|
—
|
|
|||
Other long-term liabilities
|
2,343
|
|
|
(657
|
)
|
(3)
|
1,686
|
|
|||
Total liabilities
|
44,631
|
|
|
14,615
|
|
|
59,246
|
|
|||
Accumulated other comprehensive loss
|
(1,707
|
)
|
|
(12
|
)
|
|
(1,719
|
)
|
|||
Total stockholders' equity
|
89,638
|
|
|
(12
|
)
|
|
89,626
|
|
|||
Total liabilities and stockholders' equity
|
$
|
134,269
|
|
|
14,595
|
|
(4)
|
148,864
|
|
|
As of September 30, 2019
|
||
Assets
|
|
||
Operating lease right of use assets
|
$
|
12,030
|
|
Finance lease assets, included in Property and equipment, net (1)
|
2,273
|
|
|
Total leased assets
|
$
|
14,303
|
|
Liabilities
|
|
||
Current
|
|
||
Operating lease liabilities, included in Other current liabilities
|
$
|
4,462
|
|
Finance lease liabilities, included in Other current liabilities
|
1,404
|
|
|
Long-term
|
|
||
Long-term operating leases, net of current portion
|
10,597
|
|
|
Total lease liabilities
|
$
|
16,463
|
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
Operating lease cost, included in General and administrative expense (1)
|
$
|
1,108
|
|
|
$
|
3,418
|
|
Finance lease cost:
|
|
|
|
||||
Amortization of leased assets, included in General and administrative expense
|
546
|
|
|
1,639
|
|
||
Interest on lease liabilities, included in Other income (expense), net
|
26
|
|
|
114
|
|
||
Less: sublease income, reducing rent expense in General and administrative expense (2)
|
(41
|
)
|
|
(126
|
)
|
||
Net lease cost
|
$
|
1,639
|
|
|
$
|
5,045
|
|
|
Operating Leases (1)
|
|
Finance Leases
|
||||
2019 (remaining three months)
|
$
|
1,297
|
|
|
$
|
—
|
|
2020
|
5,084
|
|
|
1,507
|
|
||
2021
|
4,842
|
|
|
—
|
|
||
2022
|
4,153
|
|
|
—
|
|
||
2023
|
1,151
|
|
|
—
|
|
||
Total lease payments
|
$
|
16,527
|
|
|
$
|
1,507
|
|
Less: imputed interest
|
(1,468
|
)
|
|
(103
|
)
|
||
Present value of lease liabilities
|
$
|
15,059
|
|
|
$
|
1,404
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
|
2018 (1)
|
|
|
2019
|
|
|
2018 (1)
|
|
||||
Marketplaces
|
$
|
23,348
|
|
|
$
|
23,965
|
|
|
$
|
70,466
|
|
|
$
|
71,631
|
|
Digital Marketing
|
4,771
|
|
|
4,577
|
|
|
13,943
|
|
|
13,427
|
|
||||
Other
|
3,559
|
|
|
3,782
|
|
|
10,775
|
|
|
11,371
|
|
||||
|
$
|
31,678
|
|
|
$
|
32,324
|
|
|
$
|
95,184
|
|
|
$
|
96,429
|
|
|
Balance, beginning of period
|
|
Net additions
|
|
Revenue recognized
|
|
Balance, end of period
|
||||||
Deferred revenue
|
$
|
24,708
|
|
|
92,666
|
|
|
(95,184
|
)
|
|
$
|
22,190
|
|
|
Balance, beginning of period
|
|
Additions
|
|
Amortized costs (1)
|
|
Balance, end of period
|
||||||
Deferred contract costs
|
$
|
15,209
|
|
|
6,044
|
|
|
(3,559
|
)
|
|
$
|
17,694
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019 (1)
|
|
2018
|
|
2019 (1)
|
|
2018
|
||||||||
Cost of revenue
|
$
|
169
|
|
|
$
|
298
|
|
|
$
|
745
|
|
|
$
|
607
|
|
Sales and marketing
|
—
|
|
|
1,003
|
|
|
1,773
|
|
|
2,483
|
|
||||
Research and development
|
454
|
|
|
581
|
|
|
1,696
|
|
|
1,585
|
|
||||
General and administrative
|
178
|
|
|
1,092
|
|
|
2,786
|
|
|
3,348
|
|
||||
|
$
|
801
|
|
|
$
|
2,974
|
|
|
$
|
7,000
|
|
|
$
|
8,023
|
|
|
Number of Shares Underlying Grant
|
|
Weighted Average Grant Date Fair Value
|
|||
Stock options
|
554,545
|
|
|
$
|
4.51
|
|
Restricted stock units ("RSUs")
|
1,281,826
|
|
|
$
|
9.90
|
|
Total share-based awards
|
1,836,371
|
|
|
$
|
8.27
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Basic:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
1,729
|
|
|
$
|
(2,287
|
)
|
|
$
|
(1,938
|
)
|
|
$
|
(8,208
|
)
|
Weighted average common shares outstanding, basic
|
28,049,199
|
|
|
27,294,134
|
|
|
27,824,696
|
|
|
27,073,332
|
|
||||
Basic net income (loss) per share
|
$
|
0.06
|
|
|
$
|
(0.08
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.30
|
)
|
Diluted:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
1,729
|
|
|
$
|
(2,287
|
)
|
|
$
|
(1,938
|
)
|
|
$
|
(8,208
|
)
|
Weighted average common shares outstanding, basic
|
28,049,199
|
|
|
27,294,134
|
|
|
27,824,696
|
|
|
27,073,332
|
|
||||
Dilutive effect of:
|
|
|
|
|
|
|
|
||||||||
Stock options
|
169,354
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Unvested RSUs
|
536,126
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average common shares outstanding, diluted
|
28,754,679
|
|
|
27,294,134
|
|
|
27,824,696
|
|
|
27,073,332
|
|
||||
Diluted net income (loss) per share
|
$
|
0.06
|
|
|
$
|
(0.08
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.30
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Stock options
|
1,923,938
|
|
|
2,289,910
|
|
|
2,341,209
|
|
|
2,289,910
|
|
RSUs
|
269,552
|
|
|
2,312,407
|
|
|
2,206,636
|
|
|
2,312,407
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Domestic
|
|
$
|
23,551
|
|
|
$
|
24,476
|
|
|
$
|
71,120
|
|
|
$
|
74,013
|
|
International
|
|
8,127
|
|
|
7,848
|
|
|
24,064
|
|
|
22,416
|
|
||||
Total revenue
|
|
$
|
31,678
|
|
|
$
|
32,324
|
|
|
$
|
95,184
|
|
|
$
|
96,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Total revenue of $31.7 million and $95.2 million for the three and nine months ended September 30, 2019 decreased 2.0% and 1.3%, respectively, from the comparable prior year periods;
|
•
|
Average revenue per customer of $47,005 for the twelve months ended September 30, 2019 increased 2.0% compared with $46,073 for the twelve months ended September 30, 2018;
|
•
|
Revenue was comprised of 81.5% and 18.5% fixed and variable subscription fees, respectively, for the three months ended September 30, 2019 compared with fixed and variable subscription fees of 79.5% and 20.5%, respectively, for the three months ended September 30, 2018;
|
•
|
Revenue was comprised of 80.9% and 19.1% fixed and variable subscription fees, respectively, for the nine months ended September 30, 2019 compared with fixed and variable subscription fees of 77.2% and 22.8%, respectively, for the nine months ended September 30, 2018;
|
•
|
Revenue derived from customers located outside of the United States as a percentage of total revenue was 25.7% and 25.3% for the three and nine months ended September 30, 2019, respectively, compared with 24.3% and 23.2%, respectively, for the comparable prior year periods;
|
•
|
Gross margin of 77.1% and 77.0% for the three and nine months ended September 30, 2019, respectively, improved by 60 basis points and declined by 30 basis points, respectively, compared with 76.5% and 77.3% for the comparable prior year periods;
|
•
|
Operating margin of 5.6% and (2.0)% for the three and nine months ended September 30, 2019, respectively, improved by 1250 and 640 basis points, respectively, compared with (6.9)% and (8.4)% for the comparable prior year periods;
|
•
|
Net income (loss) of $1.7 million and $(1.9) million for the three and nine months ended September 30, 2019, respectively, improved compared with net loss of $(2.3) million and $(8.2) million, respectively, for the comparable prior year periods;
|
•
|
Adjusted EBITDA, a non-GAAP measure, of $5.2 million and $10.8 million for the three and nine months ended September 30, 2019, respectively, increased 124.2% and 145.1%, respectively, compared with adjusted EBITDA of $2.3 million and $4.4 million for the comparable prior year periods;
|
•
|
Cash and cash equivalents was $48.2 million at September 30, 2019 compared with $47.2 million at December 31, 2018;
|
•
|
Operating cash flow was $7.5 million for the nine months ended September 30, 2019 compared with $1.1 million for the nine months ended September 30, 2018; and
|
•
|
Free cash flow, a non-GAAP measure, was $4.8 million for the nine months ended September 30, 2019 compared with $(1.1) million for the nine months ended September 30, 2018.
|
•
|
Growth in Online Shopping. Consumers continue to move more of their retail spending from offline to online retail. The continuing shift to online shopping and overall growth has contributed to our historical growth and we expect that this online shift will continue to benefit our business.
|
•
|
Product Offering Expansion. As online shopping evolves, we continue to expand our product offerings to reflect the needs of companies seeking to attract consumers. We continue to enhance our product offering by increasing online shopping channel integrations, including marketplace and first-party retail programs, providing capabilities that allow customers to be more competitive, including support for advertising, advanced repricing and machine learning based demand forecasting and improving our analytics capabilities, fulfillment features and user experience.
|
•
|
Growth in Mobile Usage. We believe the shift toward mobile commerce will increasingly favor aggregators such as Amazon, eBay, Google and Walmart, all of which are focal points of our platform. These systems understand the identity of the buyer, helping to reduce friction in the mobile commerce process, while offering a wide selection of merchandise in a single location. The growth in mobile commerce may result in increased revenue for us.
|
•
|
Shift to Larger Customers Through Our Direct Sales Channel. We believe that the growth in online shopping increasingly favors larger enterprises. This move impacts our business both in longer sales cycles as well as increased average revenue per customer.
|
•
|
Evolving Fulfillment Landscape. Consumers have been conditioned to expect fast, efficient delivery of products. We believe that determining and executing on a strategy to more expeditiously receive, process and deliver online orders, which we refer to collectively as fulfillment, is critical to success for online sellers. Therefore, it will be increasingly important for us to facilitate and optimize fulfillment services on behalf of our customers, which in turn may result in additional research and development investment.
|
•
|
Focus on Employees. We strive to provide competitive compensation and benefits programs to help attract and retain employees who are focused on facilitating the success of our customers.
|
•
|
Seasonality. Our revenue fluctuates as a result of seasonal variations in our business, principally due to the peak consumer demand and related increased volume of our customers' GMV during the year-end holiday season. As a result, we have historically had higher revenue in our fourth quarter than other quarters due to increased GMV processed through our platform, resulting in higher variable subscription fees.
|
•
|
Dynamic E-commerce Landscape. We need to continue to innovate in the face of a rapidly changing e-commerce landscape if we are to remain competitive.
|
•
|
Brands and Retailers. As consumer preferences potentially shift from smaller retailers, we need to continue to add brands and large retailers as profitable customers. These customers generally pay a lower percentage of GMV as fees to us based on the relatively higher volume of their GMV processed through our platform. To help drive our future growth, we have made significant investments in our sales force and allocated resources focused on growing our customer base of brands and large retailers. We continue to focus our efforts on increasing value for our customers to support higher rates.
|
•
|
Strategic Partnerships. Our business development team's mission is to expand our sales and market opportunities through strategic partner relationships. We plan to continue to invest in initiatives to expand our strategic partnership base to further enhance our offerings for brands and retailers.
|
•
|
Increasing Complexity of E-commerce. Although e-commerce continues to expand as brands and retailers continue to increase their online sales, it is also becoming more complex due to the hundreds of channels available to brands and retailers and the rapid pace of change and innovation across those channels. In order to gain consumers' attention in a more crowded and competitive online marketplace, an increasing number of brands and many retailers sell their merchandise through multiple online channels, each with its own rules, requirements and specifications. In particular, third-party marketplaces are an increasingly important driver of growth for a number of brands and large online retailers. As a result, we need to continue to support multiple channels in a variety of geographies in order to support our targeted revenue growth.
|
•
|
Global Growth in E-commerce. We believe the growth in e-commerce globally presents an opportunity for brands and retailers to engage in international sales. However, country-specific marketplaces are often the market share leaders in their regions, as is the case for Alibaba in Asia. In order to help our customers capitalize on this potential market opportunity, and to address our customers’ needs with respect to cross-border trade, we intend to continue to invest in our international operations. Doing business overseas involves substantial challenges, including management attention and resources needed to adapt to multiple languages, cultures, laws and commercial infrastructure, as further described in this report under the caption "Risks Related to our International Operations."
|
|
|
|
|
|
|
|
|
|
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
|
•
|
adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation;
|
•
|
adjusted EBITDA does not reflect interest or income tax payments that may represent a reduction in cash available to us; and
|
•
|
other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income (loss)
|
$
|
1,729
|
|
|
$
|
(2,287
|
)
|
|
$
|
(1,938
|
)
|
|
$
|
(8,208
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Interest (income) expense, net
|
(205
|
)
|
|
(120
|
)
|
|
(599
|
)
|
|
(351
|
)
|
||||
Income tax expense
|
213
|
|
|
188
|
|
|
572
|
|
|
435
|
|
||||
Depreciation and amortization expense
|
1,664
|
|
|
1,550
|
|
|
4,806
|
|
|
4,509
|
|
||||
Total adjustments
|
1,672
|
|
|
1,618
|
|
|
4,779
|
|
|
4,593
|
|
||||
EBITDA
|
3,401
|
|
|
(669
|
)
|
|
2,841
|
|
|
(3,615
|
)
|
||||
Stock-based compensation expense
|
801
|
|
|
2,974
|
|
|
7,000
|
|
|
8,023
|
|
||||
Non-recurring severance and related costs
|
965
|
|
|
—
|
|
|
965
|
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
5,167
|
|
|
$
|
2,305
|
|
|
$
|
10,806
|
|
|
$
|
4,408
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
Period-to-Period Change
|
|
Period-to-Period Change
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Q3 2019 to Q3 2018
|
|
YTD 2019 to YTD 2018
|
||||||||||||||||
(dollars in thousands)
|
|
|
|
|
|||||||||||||||||||||||
Revenue
|
$
|
31,678
|
|
|
$
|
32,324
|
|
|
$
|
95,184
|
|
|
$
|
96,429
|
|
|
$
|
(646
|
)
|
(2.0
|
)%
|
|
$
|
(1,245
|
)
|
(1.3
|
)%
|
Cost of revenue
|
7,251
|
|
|
7,606
|
|
|
21,876
|
|
|
21,934
|
|
|
(355
|
)
|
(4.7
|
)
|
|
(58
|
)
|
(0.3
|
)
|
||||||
Gross profit
|
24,427
|
|
|
24,718
|
|
|
73,308
|
|
|
74,495
|
|
|
(291
|
)
|
(1.2
|
)
|
|
(1,187
|
)
|
(1.6
|
)
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Sales and marketing
|
12,403
|
|
|
14,921
|
|
|
40,808
|
|
|
45,785
|
|
|
(2,518
|
)
|
(16.9
|
)
|
|
(4,977
|
)
|
(10.9
|
)
|
||||||
Research and development
|
4,803
|
|
|
5,350
|
|
|
15,161
|
|
|
16,989
|
|
|
(547
|
)
|
(10.2
|
)
|
|
(1,828
|
)
|
(10.8
|
)
|
||||||
General and administrative
|
5,440
|
|
|
6,688
|
|
|
19,272
|
|
|
19,847
|
|
|
(1,248
|
)
|
(18.7
|
)
|
|
(575
|
)
|
(2.9
|
)
|
||||||
Total operating expenses
|
22,646
|
|
|
26,959
|
|
|
75,241
|
|
|
82,621
|
|
|
(4,313
|
)
|
(16.0
|
)
|
|
(7,380
|
)
|
(8.9
|
)
|
||||||
Income (loss) from operations
|
1,781
|
|
|
(2,241
|
)
|
|
(1,933
|
)
|
|
(8,126
|
)
|
|
4,022
|
|
179.5
|
|
|
6,193
|
|
76.2
|
|
||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest income (expense), net
|
205
|
|
|
120
|
|
|
599
|
|
|
351
|
|
|
85
|
|
70.8
|
|
|
248
|
|
70.7
|
|
||||||
Other income (expense), net
|
(44
|
)
|
|
22
|
|
|
(32
|
)
|
|
2
|
|
|
(66
|
)
|
*
|
|
|
(34
|
)
|
*
|
|
||||||
Total other income (expense)
|
161
|
|
|
142
|
|
|
567
|
|
|
353
|
|
|
19
|
|
13.4
|
|
|
214
|
|
60.6
|
|
||||||
Income (loss) before income taxes
|
1,942
|
|
|
(2,099
|
)
|
|
(1,366
|
)
|
|
(7,773
|
)
|
|
4,041
|
|
192.5
|
|
|
6,407
|
|
82.4
|
|
||||||
Income tax expense
|
213
|
|
|
188
|
|
|
572
|
|
|
435
|
|
|
25
|
|
13.3
|
|
|
137
|
|
31.5
|
|
||||||
Net income (loss)
|
$
|
1,729
|
|
|
$
|
(2,287
|
)
|
|
$
|
(1,938
|
)
|
|
$
|
(8,208
|
)
|
|
$
|
4,016
|
|
175.6
|
%
|
|
$
|
6,270
|
|
76.4
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Cost of revenue
|
$
|
1,046
|
|
|
$
|
919
|
|
|
$
|
2,947
|
|
|
$
|
2,671
|
|
Sales and marketing
|
205
|
|
|
224
|
|
|
607
|
|
|
658
|
|
||||
Research and development
|
94
|
|
|
92
|
|
|
277
|
|
|
280
|
|
||||
General and administrative
|
319
|
|
|
315
|
|
|
975
|
|
|
900
|
|
||||
Total depreciation and amortization expense
|
$
|
1,664
|
|
|
$
|
1,550
|
|
|
$
|
4,806
|
|
|
$
|
4,509
|
|
•
|
Identify the promised services in the contract;
|
•
|
Determine whether the promised services are performance obligations, including whether they are distinct in the context of the contract;
|
•
|
Determine the transaction price;
|
•
|
Allocate the transaction price to the performance obligations based on estimated selling prices; and
|
•
|
Recognize revenue as we satisfy each performance obligation.
|
•
|
Salaries and personnel-related costs for employees providing services to our customers and supporting our platform infrastructure, including benefits, bonuses and stock-based compensation;
|
•
|
Co-location facility costs for our data centers;
|
•
|
Infrastructure maintenance costs; and
|
•
|
Fees we pay to credit card vendors in connection with our customers' payments to us.
|
•
|
$(0.6) million in compensation and employee-related costs, including stock-based compensation expense, due to reductions in headcount, primarily as a result of the 2019 Actions; partially offset by
|
•
|
$0.2 million in non-recurring severance and related costs in connection with the 2019 Actions.
|
•
|
$(0.4) million in compensation and employee-related costs due to reductions in headcount, primarily as a result of the 2019 Actions; partially offset by
|
•
|
$0.2 million in non-recurring severance and related costs in connection with the 2019 Actions.
|
•
|
Salaries and personnel-related costs for our sales and marketing and customer support employees, including benefits, bonuses and stock-based compensation;
|
•
|
Amortization of capitalized sales commissions and related incentive payments over their expected term of benefit;
|
•
|
Marketing, advertising and promotional event programs; and
|
•
|
Corporate communications.
|
•
|
$(2.6) million in compensation and employee-related costs, including stock-based compensation expense, due to reductions in headcount, primarily as a result of the 2019 Actions; partially offset by
|
•
|
$0.4 million in non-recurring severance and related costs in connection with the 2019 Actions.
|
•
|
$(3.6) million in compensation and employee-related costs, including stock-based compensation expense, due to reductions in headcount, primarily as a result of the 2019 Actions; and
|
•
|
$(1.4) million in our promotional event programs, marketing and advertising and travel, primarily due to reductions in costs associated with our annual e-commerce conference; partially offset by
|
•
|
$0.4 million in non-recurring severance and related costs in connection with the 2019 Actions.
|
•
|
Salaries and personnel-related costs for our research and development employees, including benefits, bonuses and stock-based compensation; and
|
•
|
Costs related to the development, quality assurance and testing of new technology and enhancement of our existing platform technology.
|
•
|
$(0.4) million in compensation and employee-related costs, mainly due to an increase in capitalized employee-related costs attributable to software development to support the enhancement of our product offerings; and
|
•
|
$(0.4) million in compensation and employee-related costs, including stock-based compensation expense, due to reductions in headcount, primarily as a result of the 2019 Actions; partially offset by
|
•
|
$0.1 million in non-recurring severance and related costs in connection with the 2019 Actions.
|
•
|
$(1.4) million in compensation and employee-related costs, mainly due to an increase in capitalized employee-related costs attributable to software development to support the enhancement of our product offerings; and
|
•
|
$(0.6) million in compensation and employee-related costs due to reductions in headcount, primarily as a result of the 2019 Actions; partially offset by
|
•
|
$0.1 million in non-recurring severance and related costs in connection with the 2019 Actions.
|
•
|
Salaries and personnel-related costs for administrative, finance and accounting, information systems, legal and human resource employees, including benefits, bonuses and stock-based compensation;
|
•
|
Consulting and professional fees;
|
•
|
Insurance;
|
•
|
Bad debt expense; and
|
•
|
Costs associated with compliance with the Sarbanes-Oxley Act and other regulations governing public companies.
|
•
|
$(1.3) million in compensation and employee-related costs, including stock-based compensation expense, due to reductions in headcount, primarily as a result of the 2019 Actions; partially offset by
|
•
|
$0.2 million in non-recurring severance and related costs in connection with the 2019 Actions.
|
•
|
$(0.6) million in compensation and employee-related costs, including stock-based compensation expense, due to reductions in headcount, primarily as a result of the 2019 Actions; and
|
•
|
$(0.5) million in professional fees in connection with the assessment by our independent auditors of the effectiveness of our internal control over financial reporting, which was required for the first time as part of our Annual Report on Form 10-K for fiscal 2018, and our implementation of the new revenue recognition standard in 2018; partially offset by
|
•
|
$0.5 million in executive severance costs in connection with changes in management; and
|
•
|
$0.2 million in non-recurring severance and related costs in connection with the 2019 Actions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash and cash equivalents provided by operating activities
|
$
|
7,514
|
|
|
$
|
1,102
|
|
Less: Purchases of property and equipment
|
(755
|
)
|
|
(1,586
|
)
|
||
Less: Payment of software development costs
|
(1,972
|
)
|
|
(579
|
)
|
||
Free cash flow
|
$
|
4,787
|
|
|
$
|
(1,063
|
)
|
•
|
The amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business;
|
•
|
The amount and timing of customer payments;
|
•
|
The seasonality of our business, as noted above, which results in variations in the timing of invoicing and the receipt of payments from our customers;
|
•
|
In 2018, the amount we paid in settlement of a sales tax audit; and
|
•
|
In 2019, the amount we paid in non-recurring severance and related costs in connection with the 2019 Actions.
|
•
|
Capitalized expenditures to create internally developed software and implement software purchased for internal use; and
|
•
|
Purchases of property and equipment to support the expansion of our infrastructure and acquisitions.
|
•
|
Proceeds from the exercises of stock options;
|
•
|
Payments on finance lease obligations; and
|
•
|
Tax withholdings related to the net-share settlement of restricted stock units.
|
•
|
a $2.7 million increase in deferred contract costs consisting of sales commissions and a portion of other incentive compensation that is deferred and amortized to expense over the expected period of benefit;
|
•
|
a $2.3 million decrease in deferred revenue as a result of the timing of revenue recognition for managed-service contracts; and
|
•
|
a $2.1 million decrease in accounts payable and accrued expenses driven by the timing of payments to our vendors during the period and payments for certain customer arrangements for which we collect and remit monthly activity-based fees incurred for specific channels on behalf of our customers (referred to as "agency of record" activities). These decreases in cash were partially offset by increases in cash due to
|
•
|
a $2.3 million decrease in prepaid expenses and other assets, primarily related to agency of record receipts (we record the amounts due from customers as a result of these arrangements as other receivables); and
|
•
|
a $1.0 million decrease in accounts receivable as a result of increased cash collections during the period.
|
•
|
$2.0 million of capitalized software development costs; and
|
•
|
$0.8 million of capital expenditures primarily related to the purchase of computer equipment.
|
•
|
$2.4 million used for the repayment of finance leases; and
|
•
|
$2.1 million used for the payment of taxes related to the net-share settlement of restricted stock units; partially offset by
|
•
|
$1.0 million in cash received upon the exercise of stock options.
|
•
|
an $11.2 million decrease in accounts payable and accrued expenses driven by the timing of payments to our vendors during the period and a $1.0 million payment in 2018 to settle a sales tax audit;
|
•
|
a $5.3 million increase in deferred contract costs consisting of sales commissions and a portion of other incentive compensation that is deferred and amortized to expense over the expected period of benefit; and
|
•
|
a $2.5 million net decrease in deferred revenue as a result of our adoption of ASC 606 and the timing of revenue recognition for managed-service contracts. These decreases in cash were partially offset by increases in cash due to
|
•
|
a $10.6 million decrease in prepaid expenses and other assets, primarily related to agency of record receipts (we record the amounts due from customers as a result of these arrangements as other receivables); and
|
•
|
a $4.5 million decrease in accounts receivable as a result of increased cash collections during the period.
|
•
|
$1.6 million of capital expenditures primarily related to the purchase of computer equipment; and
|
•
|
$0.6 million of capitalized software development costs.
|
•
|
$2.1 million used for the repayment of finance leases; and
|
•
|
$2.1 million used for the payment of taxes related to the net-share settlement of restricted stock units; partially offset by
|
•
|
$1.1 million in cash received upon the exercise of stock options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Potential customers may choose to continue using or to develop applications in-house, rather than pay for our solutions;
|
•
|
The channels themselves, which typically offer software tools, often for free, that allow brands and retailers to connect to them, may decide to compete more vigorously with us;
|
•
|
Competitors may adopt more aggressive pricing policies and offer more attractive sales terms, adapt more quickly to new technologies and changes in customer requirements, and devote greater resources to the promotion and sale of their products and services than we can;
|
•
|
Current and potential competitors have established or may establish cooperative relationships among themselves or with third parties to enhance their products and expand their markets, and consolidation in our industry is likely to intensify. Accordingly, new competitors or alliances among competitors may emerge and rapidly acquire significant market share;
|
•
|
Current and potential competitors may offer software that addresses one or more online channel management functions at a lower price point or with greater depth than our solutions and may be able to devote greater resources to those solutions than we can; and
|
•
|
Software vendors could bundle channel management solutions with other solutions or offer such products at a lower price as part of a larger product sale.
|
•
|
seasonal patterns in consumer spending;
|
•
|
the addition of new customers or the loss of existing customers;
|
•
|
changes in demand for our software;
|
•
|
the timing and amount of sales and marketing expenses;
|
•
|
changes in the prospects of the economy generally, which could alter current or prospective customers' spending priorities, or could increase the time it takes us to close sales;
|
•
|
changes in our pricing policies or the pricing policies of our competitors;
|
•
|
costs necessary to improve and maintain our software platform; and
|
•
|
costs related to acquisitions of other businesses.
|
•
|
hire additional personnel, both domestically and internationally;
|
•
|
implement additional information management systems;
|
•
|
maintain close coordination among our engineering, operations, legal, finance, sales and marketing and client service and support organizations; and
|
•
|
further develop our operating, administrative, legal, financial and accounting systems and controls.
|
•
|
difficulties in integrating the operations, technologies, services and personnel of acquired businesses, especially if those businesses operate outside of our core competency of providing e-commerce software solutions;
|
•
|
cultural challenges associated with integrating employees from acquired businesses into our organization;
|
•
|
ineffectiveness or incompatibility of acquired technologies or services;
|
•
|
failure to successfully further develop the acquired technology in order to recoup our investment;
|
•
|
potential loss of key employees of acquired businesses;
|
•
|
inability to maintain the key business relationships and the reputations of acquired businesses;
|
•
|
diversion of management's attention from other business concerns;
|
•
|
litigation for activities of acquired businesses, including claims from terminated employees, customers, former stockholders or other third parties;
|
•
|
in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries;
|
•
|
costs necessary to establish and maintain effective internal controls for acquired businesses; and
|
•
|
increased fixed costs.
|
•
|
recruiting and retaining employees in foreign countries;
|
•
|
increased competition from local providers;
|
•
|
compliance with applicable foreign laws and regulations;
|
•
|
compliance with changing foreign privacy, data protection and information security laws and regulations and the risks and costs of noncompliance;
|
•
|
longer sales or collection cycles in some countries;
|
•
|
credit risk and higher levels of payment fraud;
|
•
|
compliance with anti-bribery laws, such as the Foreign Corrupt Practices Act;
|
•
|
currency exchange rate fluctuations;
|
•
|
tariffs, customs, trade sanctions, trade embargoes and other barriers to importing or exporting materials and products in a cost-effective and timely manner, or changes in applicable tariffs or customs rules;
|
•
|
foreign exchange controls that might prevent us from repatriating cash earned outside the United States;
|
•
|
economic and political instability in some countries, including terrorist attacks and civil unrest;
|
•
|
less protective intellectual property laws;
|
•
|
compliance with the laws of numerous foreign taxing jurisdictions in which we conduct business, potential double taxation of our international earnings and potentially adverse tax consequences due to changes in applicable U.S. and foreign tax laws;
|
•
|
increased costs to establish and maintain effective controls at foreign locations; and
|
•
|
overall higher costs of doing business internationally.
|
•
|
hurt our reputation;
|
•
|
adversely affect our relationships with our current or future customers;
|
•
|
cause delays or stoppages in providing our services;
|
•
|
divert management's attention and resources;
|
•
|
require technology changes to our software that would cause us to incur substantial cost;
|
•
|
subject us to significant liabilities; and
|
•
|
require us to cease some or all of our activities.
|
•
|
actual or anticipated variations in our operating results;
|
•
|
changes in financial estimates by us or by any securities analysts who might cover our stock;
|
•
|
conditions or trends in our industry;
|
•
|
stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the software industry;
|
•
|
announcements by us or our competitors of new product or service offerings, significant acquisitions, strategic partnerships or divestitures;
|
•
|
announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;
|
•
|
capital commitments;
|
•
|
investors' general perception of our company and our business;
|
•
|
recruitment or departure of key personnel; and
|
•
|
sales of our common stock, including sales by our directors and officers or specific stockholders.
|
•
|
only one of our three classes of directors is elected each year;
|
•
|
stockholders are not entitled to remove directors other than by a 66 2/3% vote and only for cause;
|
•
|
stockholders are not permitted to take actions by written consent;
|
•
|
stockholders cannot call a special meeting of stockholders; and
|
•
|
stockholders must give advance notice to nominate directors or submit proposals for consideration at stockholder meetings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit Number
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Description of Document
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3.1
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3.2
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4.1
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10.1+
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*
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10.2+
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10.3+
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31.1
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31.2
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32.1
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**
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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Filed herewith.
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These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
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Indicates management contract or compensatory plan.
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CHANNELADVISOR CORPORATION
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Date:
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November 7, 2019
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By:
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/s/ Richard F. Cornetta
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Richard F. Cornetta
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Chief Financial Officer
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(On behalf of the Registrant and as Principal Financial Officer)
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i.
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ChannelAdvisor shall pay to You a payment equal to six (6) months of Your base compensation (“Base Compensation”) plus one month of Your Base Compensation for each Year of Service up to a total maximum of twelve (12) months of Base Compensation. A “Year of Service” means a calendar year of service You complete from the date of Your hire until the Termination Date, rounded up to the nearest whole year if You are 6 months and a day or more into the next Year of Service.
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1.
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If You timely and properly elect COBRA continuation coverage under ChannelAdvisor’s group health plan for medical or dental coverage, ChannelAdvisor shall pay the monthly premium for the coverage directly to the insurance provider for a period of up to 12 months following the Termination Date. If You receive subsequent employment that includes one or both of these benefits, then upon the first date You are eligible to receive the benefits, You shall promptly notify ChannelAdvisor in writing. Upon receipt of Your notice, ChannelAdvisor shall cease payment for any benefits that are provided by Your new employer. If You delay in notifying ChannelAdvisor of a change in benefits status, You shall promptly return all overpayments.
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2.
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ChannelAdvisor shall accelerate vesting of all of the Awards that are unvested as of the Termination Date by one quarter of a year (3 months).
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3.
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ChannelAdvisor shall extend the exercise period for the Awards until two (2) years from the Termination Date, but in no event will the exercise period extend beyond the original term of the Award.
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(i)
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the Covered Payments which do not constitute nonqualified deferred compensation subject to Section 409A of the Code shall be reduced first;
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(ii)
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all other Covered Payments shall then be reduced as follows: (A) cash payments shall be reduced before non-cash payments; and (B) payments to be made on a later payment date shall be reduced before payments to be made on an earlier payment date; and
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(iii)
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in the event that accelerated vesting of Awards is to be reduced, such acceleration will be cancelled in the reverse order of the dates on which the Awards were granted.
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5.
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Compliance with Section 409A of the Code
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a.
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pay Employee an amount equal to $___________ pursuant to Section 2(B)(1) of the Agreement, which total amount shall be paid in a one-time lump sum payment on the next available regularly scheduled payroll date within sixty (60) days following the Separation Date, and,
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b.
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if Employee timely and properly elects COBRA continuation coverage under ChannelAdvisor’s group health plan for medical or dental coverage, ChannelAdvisor will pay the monthly premium for the coverage directly to the insurance provider for a period of up to 12 months. If Employee receives subsequent employment that includes one or both of these benefits, then upon the first date Employee is eligible to receive the benefits, Employee shall promptly notify ChannelAdvisor in writing. Upon receipt of Employee’s notice, ChannelAdvisor shall cease payment for any benefits that are being provided by Employee’s new employer. If Employee delays in notifying ChannelAdvisor of the change in benefits status, Employee shall promptly return all overpayments.
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EMPLOYEE
By:
Name: __________________________
Date:
Forwarding Address:
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CHANNELADVISOR CORPORATION
By:
Name: __________________________
Its:
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i.
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ChannelAdvisor shall pay to You a payment equal to six (6) months of Your base compensation (“Base Compensation”) plus one month of Your Base Compensation for each Year of Service up to a total maximum of twelve (12) months of Base Compensation. A “Year of Service” means a calendar year
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1.
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If You timely and properly elect COBRA continuation coverage under ChannelAdvisor’s group health plan for medical or dental coverage, ChannelAdvisor shall pay the monthly premium for the coverage directly to the insurance provider for a period of up to 12 months following the Termination Date. If You receive subsequent employment that includes one or both of these benefits, then upon the first date You are eligible to receive the benefits, You shall promptly notify ChannelAdvisor in writing. Upon receipt of Your notice, ChannelAdvisor shall cease payment for any benefits that are provided by Your new employer. If You delay in notifying ChannelAdvisor of a change in benefits status, You shall promptly return all overpayments.
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2.
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ChannelAdvisor shall accelerate vesting of all of the Awards that are unvested as of the Termination Date by one quarter of a year (3 months).
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3.
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ChannelAdvisor shall extend the exercise period for the Awards until two (2) years from the Termination Date, but in no event will the exercise period extend beyond the original term of the Award.
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(i)
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the Covered Payments which do not constitute nonqualified deferred compensation subject to Section 409A of the Code shall be reduced first;
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(ii)
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all other Covered Payments shall then be reduced as follows: (A) cash payments shall be reduced before non-cash payments; and (B) payments to be made on a later payment date shall be reduced before payments to be made on an earlier payment date; and
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(iii)
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in the event that accelerated vesting of Awards is to be reduced, such acceleration will be cancelled in the reverse order of the dates on which the Awards were granted.
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a.
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pay Employee an amount equal to $___________ pursuant to Section 2(B)(1) of the Agreement, which total amount shall be paid in a one-time lump sum payment on the next available regularly scheduled payroll date within sixty (60) days following the Separation Date, and,
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b.
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if Employee timely and properly elects COBRA continuation coverage under ChannelAdvisor’s group health plan for medical or dental coverage, ChannelAdvisor will pay the monthly premium for the coverage directly to the insurance provider for a period of up to 12 months. If Employee receives subsequent employment that includes one or both of these benefits, then upon the first date Employee is eligible to receive the benefits, Employee shall promptly notify ChannelAdvisor in writing. Upon receipt of Employee’s notice, ChannelAdvisor shall cease payment for any benefits that are being provided by Employee’s new employer. If Employee delays in notifying ChannelAdvisor of the change in benefits status, Employee shall promptly return all overpayments.
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EMPLOYEE
By:
Name: __________________________
Date:
Forwarding Address:
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CHANNELADVISOR CORPORATION
By:
Name: __________________________
Its:
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Member of the Board of Directors
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$50,000
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Lead Independent Director
Chair of the Audit Committee
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$12,500
$20,000
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Chair of the Compensation Committee
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$10,000
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Chair of the Nominating and Corporate Governance Committee
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$6,000
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Member of the Audit Committee
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$7,000
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Member of the Compensation Committee
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$5,000
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Member of the Nominating and Corporate Governance Committee
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$3,000
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1.
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I have reviewed this Quarterly Report on Form 10-Q of ChannelAdvisor Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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November 7, 2019
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By:
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/s/ David J. Spitz
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David J. Spitz
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Chief Executive Officer
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(principal executive officer)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of ChannelAdvisor Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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November 7, 2019
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By:
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/s/ Richard F. Cornetta
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Richard F. Cornetta
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Chief Financial Officer
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(principal financial officer)
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition of the Company as of the end of the period covered by the Report and results of operations of the Company for the period covered by the Report.
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/s/ David J. Spitz
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/s/ Richard F. Cornetta
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David J. Spitz
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Richard F. Cornetta
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Chief Executive Officer
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Chief Financial Officer
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November 7, 2019
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November 7, 2019
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