Notes from the ChannelAdvisor S-1 IPO Filing

Way back in the spring of 2002 I took the FastTrac program at the Council of Entrepreneurial Development in Durham, NC. As part of the program there was a weekly speaker and one of the most memorable speakers was Scot Wingo, talking about starting and selling two previous companies followed by introducing his new startup ChannelAdvisor, then only a year old. One detail I remember from Scott’s talk was when he explained their level of scrappiness and how he didn’t want to spend $60,000/year on a sys admin, so he did it himself to save money.

Now, 11 years later, it’s with great pleasure that I get to read the S-1 IPO filing from ChannelAdvisor Corporation. Here are my notes:

• ChannelAdvisor has a Software-as-a-Service (SaaS) application that enables optimizing products across multiple online channels (pg. 1)
• Customers processed over $3.5 billion in gross merchandise value in 2012 (pg. 1)
• Over 1,900 customers including 27% of the Internet Retailer 500 (pg. 1)
• Customer contracts include a base fee and a percent of the transactions (pg. 1)
• Revenues (pg. 8)
  2010 – $36.7mm
  2011 – $43.6mm
  2012 – $53.6mm
• Losses (pg. 8)
  2010 – $4.7mm
  2011 – $3.9mm
  2012 – $4.9mm
• Accumulated deficit of $79.5mm (pg. 11)
• Some customers pay for a managed services offering where ChannelAdvisor runs programs on behalf of customers (pg. 13)
• Seasonality of revenue with Q4 always being the strongest (pg. 15)
• Total redeemable convertible preferred stock – $90.5mm (pg. 36)
• $28,050 average annual revenue per customer (pg. 40)
• 189 employees in sales and marketing (pg. 43)
• Reasons for the growth of ecommerce (pg. 66)
  – the availability of a broader selection of merchandise online;
  – consumer convenience and ease of use;
  – more competitive and transparent pricing;
  – increased functionality and reliability of e-commerce websites;
  – the emergence of mobile connected devices and specialized websites; and
  – the proliferation of online distribution channels.
• Competitive strengths (pg. 71)
  – Industry leader
  – Channel independence
  – Network effects from customer base
  – Economies of scale
  – Global presence
• Key platform functionality (pg. 73)
  – Inventory and order management
  – Product matching
  – Business rules and templates
  – Price optimization
  – Reporting and analytics
  – Developer ecosystem
• 405 employees (pg. 81)
• Venture capitalists own 67% of the business (pg. 102)
• The two co-founders own a combined 19.2% (pg. 102)
• Co-founder/CEO owns 10.6% (pg. 102)

This is an interesting one because the SaaS company is based on the Southeast, has good but not amazing growth, and the cofounders still own a solid share of the business — many unusual characteristics for a recent tech IPO filing. Overall, I’m optimistic for the company and looking forward to another successful SaaS IPO.

What else? What are your thoughts on the ChannelAdvisor S-1 IPO filing?