ChannelAdvisor crashes on weak net adds

|About: ChannelAdvisor Corp (ECOM)|By:, SA News Editor

ChannelAdvisor (ECOM -25.3%) beat Q2 estimates and provided healthy sales guidance: Q3 revenue of $20.5M-$20.9M vs. a $20.9M consensus, and full-year revenue of $86M-$86.7M vs. an $85.8M consensus.

But the company also reported adding only 108 net core customers in Q2, -21% Q/Q and -22% Y/Y. Total core customer count was 2,673 at quarter's end.

On the CC (transcript), COO David Spitz tried to downplay the net add decline by noting ChannelAdvisor "closed deals that were incrementally larger compared to prior quarters," and that it also "closed incrementally more business with existing customers."

However, he admitted the company is "seeing an uptick in suspensions by eBay and Amazon of smaller sellers," something that "affects the viability of some of these smaller customers." Moreover, this phenomenon is "unrelated to the length of [ChannelAdvisor's] relationship with customers."

Stifel (Buy) notes net adds fell well short of the firm's estimate of 150. But it also observes bookings rose 18% Q/Q, and ARPU 5% Y/Y. It views the numbers as proof ChannelAdvisor's "up-market momentum continues."

RetailMeNot, another company whose business revolves around helping online merchants grow their sales, is also plunging today.

Q2 results, PR