September ChannelAdvisor Data Implies $440 Million Below Estimates

| About:, Inc. (AMZN)

ChannelAdvisor (NYSE:ECOM) has published its Same Store Sales for September 2013. In what concerns (NASDAQ:AMZN), the data was as follows:

September 2013 SSS Results

Amazon - In September, Amazon came in at 26.5%, which is a slight increase from August's 24%, and significantly above the rate of e-commerce growth (as reported by comScore).

Together with July and August data, this made for a Q3 2013 growth rate of 25.1%, which compares with 29% on Q2 2013. We are thus seeing a significant growth deceleration (-390 bps).

Modeling's Q3 2013 revenues

ChannelAdvisor's data is the most solid and transparent read we can get on before it reports its Q3 2013 earnings. There is a massive correlation (R2 = 0.8951) between's overall revenue growth rate and the growth rate reported by ChannelAdvisor for its 3P customers. This correlation actually exceeds the correlation between the ChannelAdvisor data and the North American segment (R2= 0.8073) or between ChannelAdvisor and the EGM North American segment (R2= 0.6711).

With such a solid relationship, by using ChannelAdvisor's Q3 2013 outcome (+25.1%) we can get a prediction of what kind of overall revenue growth is likely to report for Q3 2013. This is what we get (red dot is projection):

(Click to enlarge)

Hence, 25.1% ChannelAdvisor growth implies 18.3% revenue growth for the whole of in Q3 2013. The present consensus estimate, however, stands at 21.4% revenue growth. This means that is likely to miss the consensus revenue estimate.

Miss by how much?

Having a projected growth rate, we can answer this question as well. had revenues of $13 806 million in Q3 2012. A 18.3% growth rate thus projects revenues of $16 329 million for Q3 2013. With the present consensus being $16 770 million, this means is likely to miss revenue estimates by around $440 million.

The Wildcard has changed the nature of its relationship with book sellers, going from a commission to a wholesale model when accounting for ebook sales. This might have led to being able to report a lot more revenue (more than 3 times more revenue) for the same volume of ebook sales.

Since is not transparent about this change, it's impossible to know how much it inflates revenues, but it can be a substantial effect, adding up to $4.6 billion in revenue over a year. This means the impact on any single quarter can exceed $1 billion.


The most recent ChannelAdvisor data implies will miss revenue estimates for Q3 2013 by a full $440 million, likely coming in at a 18.3% growth rate where expectations are for a 21.4% growth rate. This is the result of a model with a very high R2 of 0.8951.

Disclosure: I am short AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.