Company Quick10K Filing
ChannelAdvisor
Price9.13 EPS-0
Shares29 P/E-197
MCap263 P/FCF35
Net Debt-48 EBIT-1
TEV214 TEV/EBIT-282
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-08-06
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-02-12
10-Q 2019-09-30 Filed 2019-11-07
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-02-13
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-09
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-02-13
10-Q 2017-09-30 Filed 2017-11-02
10-Q 2017-06-30 Filed 2017-08-03
10-Q 2017-03-31 Filed 2017-05-04
10-K 2016-12-31 Filed 2017-02-16
10-Q 2016-09-30 Filed 2016-11-03
10-Q 2016-06-30 Filed 2016-08-04
10-Q 2016-03-31 Filed 2016-05-05
10-K 2015-12-31 Filed 2016-02-25
10-Q 2015-09-30 Filed 2015-11-05
10-Q 2015-06-30 Filed 2015-08-04
10-Q 2015-03-31 Filed 2015-05-04
10-K 2014-12-31 Filed 2015-02-26
10-Q 2014-09-30 Filed 2014-11-06
10-Q 2014-06-30 Filed 2014-08-04
10-Q 2014-03-31 Filed 2014-05-05
10-K 2013-12-31 Filed 2014-02-27
10-Q 2013-09-30 Filed 2013-10-28
10-Q 2013-06-30 Filed 2013-08-07
8-K 2020-08-06 Earnings, Exhibits
8-K 2020-07-24 Earnings, Exhibits
8-K 2020-05-07
8-K 2020-05-01
8-K 2020-03-23
8-K 2020-02-12
8-K 2019-12-26
8-K 2019-11-26
8-K 2019-11-07
8-K 2019-08-07
8-K 2019-05-07
8-K 2019-05-01
8-K 2019-02-13
8-K 2018-11-08
8-K 2018-08-09
8-K 2018-05-10
8-K 2018-05-04
8-K 2018-04-19
8-K 2018-02-13

ECOM 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements and Supplementary Data
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 a20200630ex311.htm
EX-31.2 a20200630ex312.htm
EX-32.1 a20200630ex321.htm

ChannelAdvisor Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
15012090603002012201420172020
Assets, Equity
3526178-1-102012201420172020
Rev, G Profit, Net Income
2518114-3-102012201420172020
Ops, Inv, Fin

ecom-20200630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________
FORM 10-Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 001-35940
____________________________________________________
CHANNELADVISOR CORPORATION
(Exact name of registrant as specified in its charter)
____________________________________________________ 
Delaware 56-2257867
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
3025 Carrington Mill Boulevard, Morrisville, NC
 27560
(Address of principal executive offices) (Zip Code)
(919) 228-4700
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former
fiscal year, if changed since last report)
____________________________________________________ 
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par valueECOMNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No   ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Securities Exchange Act of 1934.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes      No  ☒
The number of outstanding shares of the registrant's common stock, par value $0.001 per share, as of the close of business on July 31, 2020 was 28,684,466.



TABLE OF CONTENTS
 
  
PAGE
1

Table of Contents
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHANNELADVISOR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
June 30, 2020December 31, 2019
 (unaudited) 
Assets
Current assets:
Cash and cash equivalents$63,875  $51,785  
Accounts receivable, net of allowance of $468 and $733 as of June 30, 2020 and December 31, 2019, respectively
23,864  22,126  
Prepaid expenses and other current assets11,772  10,452  
Total current assets99,511  84,363  
Operating lease right of use assets9,474  11,128  
Property and equipment, net9,066  9,597  
Goodwill23,486  23,486  
Intangible assets, net981  1,285  
Deferred contract costs, net of current portion12,797  12,810  
Long-term deferred tax assets, net2,908  3,584  
Other assets764  614  
Total assets$158,987  $146,867  
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$401  $409  
Accrued expenses11,608  8,577  
Deferred revenue19,264  21,000  
Other current liabilities5,088  6,431  
Total current liabilities36,361  36,417  
Long-term operating leases, net of current portion7,450  9,767  
Long-term finance leases, net of current portion15  27  
Other long-term liabilities815  1,007  
Total liabilities44,641  47,218  
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding as of June 30, 2020 and December 31, 2019
    
Common stock, $0.001 par value, 100,000,000 shares authorized, 28,647,086 and 28,077,469 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
29  28  
Additional paid-in capital284,075  278,111  
Accumulated other comprehensive loss(2,241) (1,740) 
Accumulated deficit(167,517) (176,750) 
Total stockholders' equity114,346  99,649  
Total liabilities and stockholders' equity $158,987  $146,867  
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
2

Table of Contents
CHANNELADVISOR CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Revenue$37,443  $31,932  $69,475  $63,506  
Cost of revenue 7,053  7,096  14,116  14,625  
Gross profit30,390  24,836  55,359  48,881  
Operating expenses:
Sales and marketing 12,619  14,092  24,959  28,405  
Research and development4,543  5,025  9,344  10,358  
General and administrative6,033  7,133  11,768  13,832  
Total operating expenses23,195  26,250  46,071  52,595  
Income (loss) from operations7,195  (1,414) 9,288  (3,714) 
Other income:
Interest income, net85  211  211  394  
Other income, net31  32  39  12  
Total other income116  243  250  406  
Income (loss) before income taxes7,311  (1,171) 9,538  (3,308) 
Income tax expense325  167  545  359  
Net income (loss)$6,986  $(1,338) $8,993  $(3,667) 
Net income (loss) per share:
Basic $0.25  $(0.05) $0.32  $(0.13) 
Diluted$0.24  $(0.05) $0.31  $(0.13) 
Weighted average common shares outstanding:
Basic 28,489,086  27,925,728  28,325,426  27,710,584  
Diluted29,700,524  27,925,728  29,362,886  27,710,584  
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

3

Table of Contents
CHANNELADVISOR CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Net income (loss)$6,986  $(1,338) $8,993  $(3,667) 
Other comprehensive income (loss):
Foreign currency translation adjustments299  (143) (501) (65) 
Total comprehensive income (loss)$7,285  $(1,481) $8,492  $(3,732) 
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

4

Table of Contents
CHANNELADVISOR CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Six Months Ended June 30,
 20202019
Cash flows from operating activities
Net income (loss)$8,993  $(3,667) 
Adjustments to reconcile net income (loss) to cash and cash equivalents provided by operating activities:
Depreciation and amortization3,000  3,142  
Bad debt expense504  434  
Stock-based compensation expense5,470  6,199  
Deferred income taxes532  352  
Other items, net(420) 192  
Changes in assets and liabilities:
Accounts receivable(2,426) 344  
Prepaid expenses and other assets(850) 1,609  
Deferred contract costs(901) (1,836) 
Accounts payable and accrued expenses1,177  (1,157) 
Deferred revenue(1,623) (1,082) 
Cash and cash equivalents provided by operating activities13,456  4,530  
Cash flows from investing activities
Purchases of property and equipment(580) (249) 
Payment of software development costs (1,407) (1,293) 
Cash and cash equivalents used in investing activities(1,987) (1,542) 
Cash flows from financing activities
Repayment of finance leases(1,415) (1,902) 
Proceeds from exercise of stock options2,134  951  
Payment of statutory tax withholding related to net-share settlement of restricted stock units  (169) 
Cash and cash equivalents provided by (used in) financing activities719  (1,120) 
Effect of currency exchange rate changes on cash and cash equivalents(98) (28) 
Net increase in cash and cash equivalents12,090  1,840  
Cash and cash equivalents, beginning of period51,785  47,185  
Cash and cash equivalents, end of period$63,875  $49,025  
Supplemental disclosure of cash flow information
Cash paid for interest$105  $214  
Cash paid for income taxes, net$163  $7  
Supplemental disclosure of noncash investing and financing activities
Accrued statutory tax withholding related to net-share settlement of restricted stock units$1,639  $3,089  
Accrued capital expenditures$203  $44  
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
5

Table of Contents
CHANNELADVISOR CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS
ChannelAdvisor Corporation ("ChannelAdvisor" or the "Company") was incorporated in the state of Delaware and capitalized in June 2001. The Company began operations in July 2001. ChannelAdvisor is a provider of software-as-a-service, or SaaS, solutions and its mission is to connect and optimize the world's commerce. ChannelAdvisor's SaaS cloud platform helps brands and retailers worldwide improve their online performance by expanding sales channels, connecting with consumers around the world, optimizing their operations for peak performance and providing actionable analytics to improve competitiveness. The Company is headquartered in Morrisville, North Carolina and maintains sales, service, support and research and development offices in various domestic and international locations.
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Interim Condensed Consolidated Financial Information
The accompanying condensed consolidated financial statements and footnotes have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, as contained in the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, for interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of financial position, the results of operations, comprehensive loss and cash flows. The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results for the full year or the results for any future periods, especially in light of the potential effects of the novel coronavirus, or COVID-19, pandemic on the Company’s business, operations and financial performance. These unaudited interim financial statements should be read in conjunction with the audited financial statements and related footnotes for the year ended December 31, 2019, or fiscal 2019, which are included in the Company's Annual Report on Form 10-K for fiscal 2019. There have been no material changes to the Company's significant accounting policies from those described in the footnotes to the audited financial statements contained in the Company's Annual Report on Form 10-K for fiscal 2019. 
6

Table of Contents
Recent Accounting Pronouncements
StandardDescriptionEffect on the Financial Statements or Other Significant Matters
Standards that the Company adopted as of January 1, 2020
Financial Instruments:
ASU 2016-13, Financial Instruments - Credit Losses (Topic 326)

Effective date:
January 1, 2020

This standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more useful information about expected credit losses. The Company adopted this standard effective January 1, 2020. The adoption did not have a material impact on its consolidated financial statements, although it resulted in a change in accounting policy for accounts receivable. Refer to "Accounts Receivable" below for additional information regarding the Company’s accounting policy for accounts receivable following the adoption of ASU 2016-13.
Intangibles:
ASU 2018-15, Intangibles -Goodwill and Other - Internal-Use Software (Subtopic 350-40)

Effective date:
January 1, 2020

This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The Company adopted this standard effective January 1, 2020. The adoption did not have an impact on its consolidated financial statements.
Income Taxes:
ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes 
 

Effective date:
January 1, 2020
This standard amends the approaches and methodologies in accounting for income taxes during interim periods and makes changes to certain income tax classifications. The new standard allows exceptions to the use of the incremental approach for intra-period tax allocation, when there is a loss from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim period, when a year-to-date loss exceeds the anticipated loss for the year. The standard also requires franchise or similar taxes partially based on income to be reported as income tax and the effects of enacted changes in tax laws or rates to be included in the annual effective tax rate computation from the date of enactment. Lastly, the Company would be required to evaluate when the step-up in the tax basis of goodwill is part of the business combination and when it should be considered a separate transaction. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. 
The Company early adopted this standard effective January 1, 2020. The early adoption did not have a material impact on its consolidated financial statements or related disclosures.
7

Table of Contents
The Company has reviewed new accounting pronouncements that were issued during the six months ended June 30, 2020 and does not believe that these pronouncements are applicable to the Company, or that they will have a material impact on its financial position or results of operations.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
On an ongoing basis, the Company evaluates its estimates, including those related to the accounts receivable allowance, the useful lives of long-lived assets and other intangible assets, income taxes, assumptions used for purposes of determining stock-based compensation, leases, including estimating lease terms and extensions, and revenue recognition, including standalone selling prices for contracts with multiple performance obligations and the expected period of benefit for deferred contract costs, among others. Estimates and assumptions are also required to value assets acquired and liabilities assumed in conjunction with business combinations. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and liabilities.

Accounts Receivable

The Company extends credit to customers without requiring collateral. Accounts receivable are stated at amortized cost, net of an allowance for credit losses. The Company records an allowance for credit losses at the time that accounts receivable are initially recorded based on consideration of the current economic environment, expectations of future economic conditions, the Company's historical collection experience and a loss-rate approach whereby impairment is calculated by multiplying an estimated loss rate by the asset’s amortized cost at the balance sheet date. The Company reassesses the allowance at each reporting date. When it becomes apparent, based on age or customer circumstances, that such amounts will not be collected, they are charged to the allowance. Payments subsequently received are credited to the credit loss expense account included within general and administrative expense in the condensed consolidated statements of operations.
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3. STOCKHOLDERS' EQUITY
The following table summarizes quarterly stockholders' equity activity for the six-month periods ended June 30, 2020 and 2019 (in thousands, except number of shares):
Quarterly Activity For The Six Months Ended June 30, 2020
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders'
Equity
SharesAmount
Balance, December 31, 201928,077,469  $28  $278,111  $(1,740) $(176,750) $99,649  
Cumulative effect of accounting change (1)
—  —  —  —  240  240  
Exercise of stock options and vesting of restricted stock units394,998    87  —  —  87  
Stock-based compensation expense—  —  2,914  —  —  2,914  
Statutory tax withholding related to net-share settlement of restricted stock units(107,398) —  (980) —  —  (980) 
Net income—  —  —  —  2,007  2,007  
Foreign currency translation adjustments—  —  —  (800) —  (800) 
Balance, March 31, 202028,365,069  28  280,132  (2,540) (174,503) 103,117  
Exercise of stock options and vesting of restricted stock units330,692  1  2,046  —  —  2,047  
Stock-based compensation expense—  —  2,556  —  —  2,556  
Statutory tax withholding related to net-share settlement of restricted stock units(48,675) —  (659) —  —  (659) 
Net income—  —  —  —  6,986  6,986  
Foreign currency translation adjustments—  —  —  299  —  299  
Balance, June 30, 202028,647,086  $29  $284,075  $(2,241) $(167,517) $114,346  
(1) The Company recorded a reduction to accumulated deficit at January 1, 2020 as a result of its adoption of ASU 2016-13, Financial Instruments - Credit Losses.
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Quarterly Activity For The Six Months Ended June 30, 2019
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders'
Equity
SharesAmount
Balance, December 31, 201827,347,115  $27  $271,550  $(1,707) $(180,232) $89,638  
Exercise of stock options and vesting of restricted stock units681,944  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, 201927,850,988  28  273,607  (1,629) (182,561) 89,445  
Exercise of stock options and vesting of restricted stock units290,346    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, 201928,042,359  $28  $275,442  $(1,772) $(183,899) $89,799  
4. GOODWILL AND INTANGIBLE ASSETS
The Company has acquired intangible assets in connection with its business acquisitions. These assets were recorded at their estimated fair values at the acquisition date and are being amortized over their respective estimated useful lives using the straight-line method. The estimated useful lives and amortization methodology used in computing amortization are as follows:
Estimated Useful LifeAmortization Methodology
Customer relationships7 yearsStraight-line
Acquired technology7 yearsStraight-line
Amortization expense associated with the Company's intangible assets was $0.2 million for each of the three months ended June 30, 2020 and 2019, and $0.3 million for each of the six months ended June 30, 2020 and 2019.
There were no changes to the Company's goodwill during the six months ended June 30, 2020.
5. CAPITALIZED SOFTWARE DEVELOPMENT COSTS
Capitalized software development costs related to creating internally developed software and implementing software purchased for internal use are included in property and equipment in the accompanying condensed consolidated balance sheets. The Company capitalized software development costs of $0.7 million and $0.8 million during the three months ended June 30, 2020 and 2019, respectively, and $1.4 million and $1.3 million during the six months ended June 30, 2020 and 2019, respectively. Amortization expense related to capitalized internally developed software was $0.4 million and $0.2 million during the three months ended June 30, 2020 and 2019, respectively, and $0.8 million and $0.3 million during the six months ended June 30, 2020 and 2019, respectively, and is included in cost of revenue or general and administrative expense in the accompanying condensed consolidated statements of operations, depending upon the nature of the software development project. The net book value of capitalized internally developed software was $3.5 million and $2.9 million at June 30, 2020 and December 31, 2019, respectively.
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6. REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue Recognition and Disaggregation of Revenue
The Company derives the majority of its revenue from subscription fees paid for access to and usage of its SaaS solutions for a specified period of time. A portion of the subscription fee is typically fixed and is based on a specified minimum amount of gross merchandise value, or GMV, or advertising spend that a customer expects to process through the Company's platform over the contract term. The remaining portion of the subscription fee is variable and is based on a specified percentage of GMV or advertising spend processed through the Company's platform in excess of the customer's specified minimum GMV or advertising spend amount. In addition to subscription fees, contracts with customers may include implementation fees for launch assistance and training. Fixed subscription and implementation fees are billed in advance of the subscription term and are due in accordance with contract terms, which generally provide for payment within 30 days. Variable fees are subject to the same payment terms, although they are generally billed the month after they are incurred. The Company also generates revenue from its solutions that allow brands to direct potential consumers from their websites and digital marketing campaigns to authorized resellers. The majority of the Company's contracts have a one year term. The Company's contractual arrangements include performance, termination and cancellation provisions, but do not provide for refunds. Customers do not have the contractual right to take possession of the Company's software at any time. Sales taxes collected from customers and remitted to government authorities are excluded from revenue.
The Company's customers are categorized as follows:
Retailers. The Company generally categorizes a customer as a retailer if it primarily focuses on selling third-party products.
Brands. The Company generally categorizes a customer as a brand if it primarily focuses on selling its own proprietary products.
Other. Other is primarily comprised of strategic partnerships.
The following table summarizes revenue disaggregation by customer type for the three and six months ended June 30, 2020 and 2019 (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Retailers$23,273  $21,002  $42,988  $42,076  
Brands11,494  9,127  21,780  17,977  
Other2,676  1,803  4,707  3,453  
$37,443  $31,932  $69,475  $63,506  
Contracts with Multiple Performance Obligations
Customers may elect to purchase a subscription to multiple modules, multiple modules with multiple service levels, or, for certain of the Company's solutions, multiple brands or geographies. The Company evaluates such contracts to determine whether the services to be provided are distinct and accordingly should be accounted for as separate performance obligations. If the Company determines that a contract has multiple performance obligations, the transaction price, which is the total price of the contract, is allocated to each performance obligation based on a relative standalone selling price method. The Company estimates standalone selling price based on observable prices in past transactions for which the product offering subject to the performance obligation has been sold separately. As the performance obligations are satisfied, revenue is recognized as discussed above in the product descriptions.
Transaction Price Allocated to Future Performance Obligations
As the Company typically enters into contracts with customers for a twelve-month subscription term, substantially all of its performance obligations that have not yet been satisfied as of June 30, 2020 are part of a contract that has an original expected duration of one year or less. For contracts with an original expected duration of greater than one year, the aggregate transaction price allocated to the unsatisfied performance obligations was $26.0 million as of June 30, 2020, of which $15.4 million is expected to be recognized as revenue over the next twelve months.



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Deferred Revenue
Deferred revenue represents the unearned portion of subscription and implementation fees. Deferred revenue is recorded when cash payments are received in advance of performance. Deferred amounts are generally recognized within one year. Deferred revenue is included in the accompanying condensed consolidated balance sheets under "Total current liabilities," net of any long-term portion that is included in "Other long-term liabilities." The following table summarizes deferred revenue activity for the six months ended June 30, 2020 (in thousands):
Balance, beginning of periodNet additionsRevenue recognizedBalance, end of period
Deferred revenue$21,459  49,599  (51,512) $19,546  
Of the $69.5 million of revenue recognized in the six months ended June 30, 2020, $10.8 million was included in deferred revenue at January 1, 2020.
Costs to Obtain Contracts
The Company capitalizes sales commissions and a portion of other incentive compensation costs that are directly related to obtaining customer contracts and that would not have been incurred if the contract had not been obtained. These costs are included in the accompanying condensed consolidated balance sheets and are classified as "Prepaid expenses and other current assets," net of any long-term portion that is included in "Deferred contract costs, net of current portion." As of June 30, 2020, $6.3 million was included in "Prepaid expenses and other current assets." Deferred contract costs are amortized to sales and marketing expense over the expected period of benefit, which the Company has determined to be five years based on the estimated customer relationship period. The following table summarizes deferred contract cost activity for the six months ended June 30, 2020 (in thousands):
Balance, beginning of periodAdditions
Amortized costs (1)
Balance, end of period
Deferred contract costs$18,414  3,857  (3,194) $19,077  
(1) Includes contract costs amortized to sales and marketing expense during the period and the impact from foreign currency exchange rate fluctuations.
7. STOCK-BASED COMPENSATION
In February 2020, the Company’s Compensation Committee implemented changes to the equity compensation program for the Company’s executive officers. Beginning in 2020, 50% of each executive's equity awards were granted in the form of performance-based vesting restricted stock units, or PSUs, that are eligible for vesting only if the Company achieves pre-defined targets set by the Compensation Committee for the Company’s combined year-over-year revenue growth and adjusted earnings before interest, tax, depreciation and amortization, or EBITDA, margin over a multi-year measurement period (a two-year measurement period for fiscal 2020 grants), subject to the executive’s continued service with the Company. For any PSUs to vest, revenue growth must be positive over the performance period. Vesting of these PSU awards is based on a sliding scale of actual performance against the pre-defined goals. The sliding scale ranges from zero vesting and forfeiture of the awards if the Company does not achieve the performance threshold, to an award of up to 150% of the target number of awards if the pre-defined maximum performance is achieved. As soon as reasonably practicable after the completion of the performance period, the Compensation Committee will determine the level of attainment of the performance goal and if the performance threshold is achieved, on the second anniversary of the grant date, subject to the executive’s continued service as of that date, 50% of the earned PSU awards will vest and, on the third anniversary of the grant date, the remaining 50% of earned PSU awards will vest, subject to the executive’s continued service as of that date. The Committee may make adjustments to the manner in which the achievement is determined as it deems equitable and appropriate to exclude the effect of unusual, non-recurring or infrequent matters, transactions or events affecting the Company or its consolidated financial statements; changes in accounting principles, practices or policies or in tax laws or other laws or requirements; or other similar events, matters or changed circumstances. Each adjustment, if any, shall be made solely for the purpose of maintaining the intended economics of the award in light of changed circumstances to prevent the dilution or enlargement of the executive’s rights with respect to the PSUs. The fair value of the PSU awards is determined using the Company’s stock price on the grant date. These awards are equity classified and will be expensed over the requisite service period based on the extent to which achievement of the performance metrics is probable.
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The Company recognizes stock-based compensation expense using the accelerated attribution method, net of estimated forfeitures, in which compensation cost for each vesting tranche in an award is recognized ratably from the service inception date to the vesting date for that tranche.
Stock-based compensation expense is included in the following line items in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2020 and 2019 (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Cost of revenue $238  $191  $557  $576  
Sales and marketing 777  737  1,517  1,773  
Research and development543  512  1,223  1,242  
General and administrative998  1,361  2,173  2,608  
Total stock-based compensation expense$2,556  $2,801  $5,470  $6,199  
During the six months ended June 30, 2020, the Company granted the following share-based awards:
Number of Shares Underlying Grant Weighted Average Grant Date Fair Value
Restricted stock units620,530  $9.62  
Performance stock units142,317  $9.27  
Total share-based awards762,847  
8. NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding for the period. Diluted net income (loss) per share is calculated giving effect to all potentially dilutive shares of common stock, including stock options and restricted stock units. The dilutive effect of outstanding awards is reflected in diluted earnings per share by application of the treasury stock method.
The following table summarizes the calculation of basic and diluted net income (loss) per share (in thousands, except share and per share data):
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Basic:
Net income (loss)$6,986  $(1,338) $8,993  $(3,667) 
Weighted average common shares outstanding, basic28,489,086  27,925,728  28,325,426  27,710,584  
Basic net income (loss) per share$0.25  $(0.05) $0.32  $(0.13) 
Diluted:
Net income (loss)$6,986  $(1,338) $8,993  $(3,667) 
Weighted average common shares outstanding, basic28,489,086  27,925,728  28,325,426  27,710,584  
Dilutive effect of:
Stock options259,774  —  154,854  —  
Unvested restricted stock units951,664  —  882,606  —  
Weighted average common shares outstanding, diluted29,700,524  27,925,728  29,362,886  27,710,584  
Diluted net income (loss) per share$0.24  $(0.05) $0.31  $(0.13) 
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The following equity instruments have been excluded from the calculation of diluted net income (loss) per share because the effect is anti-dilutive:
 Three Months Ended June 30,Six Months Ended June 30,
 20202019